Our Book Reviewed

The book I’ve co-authored with Mercedes Meyer has been reviewed in JPTOS by the editor in chief.  Here’s a snippet:

Patent Ethics: Prosecution is a comprehensive meditation on the complicated world of prosecution ethics. The book is illustrated with real world examples and includes substantial discussion of the varying case law on the many ethical dilemmas faced by patent practitioners. While the case law is often murky, the Authors’ analysis is clear and straightforward. It is an excellent reference on a matter that few practitioners truly understand.

By your copy now by clicking Amazon.

Court’s Holding that Malpractice Measured at Time of Representation Saves Firm from Later Change in Law

Rich Products Corporation asked Kenyon & Kenyon to file applications in Mexico and Columbia.  Apparently, the firm timely filed the Mexican application as of how the law was then-interpreted; but the law later changed, and the application was deemed filed too late.  Rich Products then sued the firm for malpractice.  The New York Supreme Court, Appellate Division, held that because malpractice is measured at the time of the events, the lawyer had breached no duty.  The case is here.

This is something I often think about, given the changing nature of the “rules” about claim interpretation.  For example, certain claim formats have grown less helpful over the years.  I also wonder how much this defense works if it’s a foreseeable change in the law (it’s not clear here what, exactly, changed in Mexican law).

The case was remanded to figure out the Columbian claim.

PTAB authorizes patentee to file motion for sanctions against Bass for abuse of IPR

In this order in Coalition for Affordable Drugs v. Celgene, the PTAB authorized Celgene, the patentee, to file a motion for sanctions based upon the premise that the Coalition was using IPR to affect Celgene’s stock price, not for legitimate purposes.  This is interesting, pitting lawyer’s obligations of competent and zealous representation and the First Amendment right to petition against the IPR scheme.   Stay tuned to see, among other things, if the PTAB comes up with some federal patent law of abuse of process….

CAFC Opinions Available on Pacer Hours before Court’s Website

I learned just the other day that Pacer posts CAFC opinions more than an hour before they become available on the court’s web page.  If you’re of record in the case,  you get the usual notification, and so you’ll know of the opinion — and outcome — before most people, and could take advantage of that “public” information to make some money on the market.

I don’t know securities laws, but this seems like it could be a problem for that and other reasons.  No?

Expert’s Violation of Prosecution Bar Warrants His Disqualification

My book on ethical issues in patent litigation (shameless plug there!) spends a significant amount of time on prosecution bars.  They create more issues than most people think, and deserve careful attention by counsel.  Perhaps because of the difficulty of policing violations, there are not many decisions addressing what to do if there is a violation.

Magistrate Judge Grewal out in the Northern District of California recently faced that.  The defendants learned that the plaintiff’s expert had prosecuted a patent application in a “barred” area.  The magistrate ordered the expert to return the information he had received during the suit, to not use any information he remembered for any purpose, and excluded the expert as a witness in the case.  The magistrate, however, pointed out that the plaintiff could retain another expert.  It did not award any costs.  Avago Technologies Fiber IP (Singapore) PTE. Ltd. v. IPtronics Inc., 5-10-cv-02863 (N.D. Cal. June 11, 2015) (Grewal, M.J.).  (Opinion here.)

There are lessons all around.  For experts, it is to understand what these bars mean.  For counsel, it is to ensure that experts understand what those bars mean.  For everyone, it means to use reasonable care to ensure compliance — by your team as well as the other side’s.

IPR Ethics?

Hi, all. I’m doing some speaking and writing on IPR ethics.  I’ve read Professor Dolak’s article (an earlier version is here; I couldn’t find the recently published version on-line).  I’m not sure I agree with her 100%, but it’s a very good piece.

What ethics issues have you run into (or, more precisely, have you heard others have run into) during post-grant proceedings?  I’d love to know because that’s where my writings are headed next.

Been thinking about it for a while. One obvious thing is the fun games that a lawyer will play in deciding what “inconsistent” information he must submit.  Others?

Persuading Examiner Through Examiner Performance Statistics?

In recent months, a few services have come online that provide ways to determine, among other things, whether a particular examiner has longer pendency, more rejections, and so on, than others.  Can be useful information to see how long you can expect a case to remain pending, for example.

What I was shown, however, was that some lawyers are taking those reports to examiner interviews and, it seems, saying in effect, “look how slow  you are compared to your colleagues.”  This seems questionable to me.  It’s not merits-based.  I’d also be really suspicious of lawyers who do not make those documents of record.

I am not sure if the PTO will take a stand on this, but I wouldn’t want to be the test case.

What do you all think?

Some thoughts on Best Mode

As you know, a US application must still disclose the best mode.  The statute’s language and its legislative history (and the fact that the statute still says best mode!) demonstrate that beyond doubt.  However, the AIA made it so that a best mode violation cannot lead to invalidity or unenforceability (among other things).

I’ve been repeatedly told that practitioners are being asked by clients to omit the best mode, particularly in bio/chem areas where it may be best. That is, claim around the best mode, etc.

The PTO’s position is that best mode is required to issue a patent; as a result, leaving it out leaves out information material to patentability.  So you must include it.

How do you get a client’s interest to align with your own?  You candidly have to advise them that the patent will not be invalid/unenforceable if they leave it out. So what downside?

My thoughts have always been that, though by itself its omission cannot now lead to invalidity or unenforceability, perhaps evidence of its omission could be used to bolster intent to deceive, or affirmative egregious misconduct.

Yesterday, while speaking at the PRG program in Orlando (for six hours, just me, on ethics and professionalism — we had a great time, really!), someone suggested that it could also be used in the ITC; you have to be practicing your invention to have a domestic industry. If you’re not…

Any other thoughts?

Leaving Something off the Final Pre-Trial Order?

I teach, in addition to ethics and patent law, federal civil procedure.  So, I enjoyed and sent to my students this case, Insite Vision Inc. v. Sandoz, Inc., (Fed. Cir. Apr. 9, 2015) (Linn-auth; Prost; Newman).  The district court’s order denying the defendant’s motion to amend the final pretrial order was affirmed.  Apparently, the defendant had left off of the final pretrial exhibit list a file history from counterpart EPO patents that would have assisted its obviousness defense.

Now, of course, there are plenty of reasons things are left off of exhibit lists, but I teach my students that if you leave something off the list, or a witness or depo degs off of it, the odds of it getting changed are slim to none in many instances.  “Manifest injustice” is the standard, and it’s higher than “good cause” to amend a scheduling order and is further subject to an abuse of discretion standard of review.

Curious to see if there’s anything else that happens.

(Sorry for the long time between posts.  Buying a house and teaching an extra IP course this semester!)

Paul Vapnek Passes Away

Had the pleasure of providing CLE to Townsend Townsend & Crew back in the day and sparring (occasionally) with Mr. Vapnek.  He brought a lot to IP ethics, particularly in California.

There’s a story here, with links.

Nothing happening at the OED.

The OED publishes its public decisions in the “FOIA Reading Room,” here.  Although I’m sure you look there regularly, in case you miss a day I check every week or so for new cases.

There hasn’t been one since the end of December.

A two month ‘gap’ hasn’t happened since August-October 2012.

So, you all must be being more ethical?  I hope so. But it also probably has something to do with the switch from Director Moatz to Director Covey.

But I’ve been an expert for the OED, and I’ve been an expert against it, and I’ve represented lawyers against it, and I’ll tell you: stay away from the OED.  I refer to it as a gila monster: slow moving and sorta cute, but once it bites it hangs on.

(Revised) Akin Gump Found to Have Breached Duty of Loyalty to Client: Important Lesson for Fee Agreements

The opinion from the district court in the breach of fiduciary duty suit of SAS Institute, Inc. v Akin Gump Straus Hauer & Feld, LLP (W.D.N.C. Feb. 6, 2015),  is here.  This post discusses only part of the 55-page decision.

Beginning in 2006, AG began representing SAS in federal lobbying activities.  Six months later, it worked to get JuxtaComm, a patent monetization entity out of Canada, as a client.  JuxtaComm owned the ‘662 patent.

During the due diligence period on whether AG could take on JuxtaComm’s enforcement of the ‘662 patent, AG did due diligence, determining (a) who were participants in the market the ‘662 affected; (b) ran a conflicts checks; and (c] made a determination as to whether a good faith infringement claim could be brought.  In this regard, it hired an outside consultant, Precedia to do a patent study.

AG soon learned that (you guessed it) SAS was the largest target.  Learned that fact twice, as a matter of fact.  AG went so far as to learn the identity of specific SAS products that “may have been infringing” the ‘662 patent.  Thus, AG knew SAS was a current client; was the leader in this field; and made products that “potentially infringed” the ‘662.  (The district court noted that, in a later suit by JuxtaComm against SAS — in which AG did not participate — one of these products in fact was the subject of a claim by JuxtaComm.)

AG then told JuxtaComm that it believed SAS was an infringer!  (The court’s words: not “potential” or “theoretical” but “an infringer.”)

In the fee agreement, AG got $10m as an up-front retainer and would get 20% of all future proceeds AG secured.  The fee agreement carved out SAS (and others) from the scope of potential defendants that AG would sue.

But, the fee agreement went further. It stated that the litigation AG was bringing would be the “foundation and framework upon which JuxtaComm [could]” start enforcing the patents against other infringers.  In consideration of this work, the fee agreement also provided that AG would get 20% of the value received… (wait for it) even if AG was not involved in obtaining that value.

And..  what happens next is a little disturbing to me.  After its representation of SAS had ended, Akin Gump went ahead and represented the patentee against SAS.  SAS moved to disqualify.  In sworn testimony in that disqualification motion, Akin Gump lawyers apparently persuaded the court that they hadn’t targeted SAS before long after the representation had ended.  Here’s a quote from the district court decision denying the motion to disqualify:

JuxtaComm first contemplated suing SAS in the fall of 2009. Kiklis Declaration, Docket No. 163-1 at ¶20. Indeed, in its motion SAS argued that JuxtaComm’s pre-suit investigation and contemplation of suit occurred in the fall of 2009. Based on Kiklis’s declaration, the conflict arose in the fall of 2009.

The conflict between JuxtaComm and SAS arose in the fall of 2009, when JuxtaComm began contemplating bringing this suit. This was more than twelve months after Kiklis’s representation of SAS ended. Accordingly, the conflict did not arise while JuxtaComm and SAS were concurrent clients, and the rules for concurrent conflicts of interest do not apply.

Juxtacomm-Texas Software, LLC v. Axway (E.D. Tex. Nov. 29, 2010).  Apparently, the engagement letter — which showed this fact finding was, in my view, was wrong — was not provided to the court.  By successfully persuading the court that Akin Gump had not become adverse to SAS until after its representation of SAS had ended, Akin Gump was able to use the former client rules and, as a result, dodge disqualification.

Then what you’d expect to happen happened:  SAS sued Akin Gump for breaching its fiduciary duty to SAS.  At the bench trial, AG testified that, despite the provision in the fee agreement giving it 20% of all funds (and, apparently, despite the fact that it actually sued SAS for the patentee???), Akin Gump would “never have taken any money from SAS.”  But, AG also testified that that part of the fee agreement “mean exactly what they say, nothing more, nothing less.”

From this, the district court concluded that AG had taken a pecuniary interest adverse to SAS, in violation of D.C. Rule 1.8, which requires disclosure and consent under such circumstances. It also found that because AG hadn’t told SAS of this deal, SAS did not give informed consent for AG to continue to represent it in the lobbying efforts.

I’d be surprised if this is the last word on this one. If I’m not understanding the timeline, I’d appreciate Akin Gump correcting me, since it seems pretty straightforward what happened here.

I’ve seen a lot of contingent fee agreements over the years, and a lot them avoided this problem by carving out any monies the patentee receives from the firm’s clients.  I’m not sure that solves the problem — in fact, it probably doesn’t or might not depending on how smart the parties are.

They didn’t do that here… and they did more.

CAFC Reverses Award of 285 Fees: Biax Corp. v. Nvidia Corp.

In a non-prec opinion in Biax Corp. v. Nvidia Corp., the panel (Dyk-auth; Lourie; Taranto) reversed the district court’s award of section 285 fees and affirmed its denial of sanctions under section 1927.  The case was decided before Octane and so had a fun procedural path to get to this point.

The district court had found that the patentee had asserted objectively baseless infringement claims after the district court had construed the claims.  Thus, under Brooktree, it awarded fees under Section 285.

There are many cases where courts have awarded fees when, after claim construction, a party has no reasonable basis to contest, or assert, infringement, yet continues to do so.  Here, however, the Federal Circuit found there was such a basis, and it reversed the fee award.

What is odd, however, is the panel’s decision not to remand.  In its concluding paragraph the court wrote:

Because neither the expert testimony nor the claim construction orders foreclosed Biax’s position and there was nothing unreasonable about Biax’s infringement position, the basis for the district court’s award of fees no longer exists. Thus, even applying the deferential standard of review under Highmark, the district court’s fee award must be set aside. In some cases decided under the old Brooks Furniture standard, we have remanded for the district court to consider whether the case is “exceptional” in light of the new Octane Fitness standard. See, e.g., Checkpoint Sys., Inc. v. All-Tag Sec. S.A., 572 F. App’x 988 (Fed. Cir. 2014). A remand is not necessary here because neither the defendants nor the district court has suggested any basis for awarding fees other than the lack of objective reasonableness, and the resulting bad faith from continuing to litigate an objectively baseless position. Therefore, we reverse rather than vacate the fee award.

This strikes me as odd, since from the case, it appears that the only basis, pre-Octane to seek fee shifting was objective baseless.  To not give the defendant the right to assert that, regardless of objective reasonableness, the case was not “ordinary” under Octane seems odd.


Foley Partner Responds to SCOTUS Show Cause Order: I had no choice and you’re overreacting

The full response is here:  Shipley_Response

Foley went all out, hiring Paul Clement to write it.  Boiled (way way down – it’s 41 pages), the approach was to say that the client wanted this petition this way, and the client is in charge of the goals of the representation.  “I had no choice and you’re overreacting,” might be the headline.

Here’s the introduction:

In this case, attorney Howard Shipley had to reconcile the competing demands of the duty of loyalty that he owed his client and the duty that he owed this Court as a member of the Supreme Court Bar. Mr. Shipley’s client had deeply held views about patent law and insisted on articulating his basic argument (that the Federal Circuit was ignoring the guidance of this Court) in his own words, as he had done in prior amicus briefs filed in this Court by other counsel. The result is an unorthodoxpetition that clearly and faithfully reflects the views of the client, right down to the client’s favored locutions and acronyms employed in his other writings about the patent system. Mr. Shipley counseled the client and helped to ensure that the petition complied with this Court’s rules on matters such as format and the necessary components. The petition is not the one Mr. Shipley would have filed for a more deferential client, but the petition undoubtedly reflects his client’s wishes and instructions.

Mr. Shipley certainly had the option to withdraw from the representation, but doing so likely would have prejudiced his client’s ability to pursue the last legal option available to save his patent from invalidation. And, of course, even if Mr. Shipley had withdrawn, any substitute counsel retained by Dr. Schindler would have faced the same dilemma as Mr. Shipley. Mr. Shipley ultimately did not withdraw, and he made the arguments his client wanted this Court to hear. That decision was a good faith effort to reconcile the competing demands of the ethics rules. Other lawyers may well have made a different choice, but Mr. Shipley’s decision does not amount to sanctionable misconduct. The proper remedy for filing an unconventional or difficult to-follow certiorari petition should be denial of the petition (or rejection of the filing), not disciplining the lawyer who filed it.

And the conclusion:

In a perfect world, lawyers and their clients would always be on the same page in terms of both the goals of the representation and the means of pursuing this goals. In the world in which we actually live, lawyers will inevitably face competin demands to their clients and to the tribunals in which they practice. Here, Mr Shipley chose to hew closely to his client’s explicit instructions, while working in good faith to help ensure compliance with this Court’s rules, even though the result was an unconventional filing. In doing so, Mr. Shipley elected to file the petition rather than withdraw from the representation of a longstanding client in a manner that likely would have prejudiced the client’s ability to seek Supreme Court review at all.

Reasonable lawyers can differ over whether they would have filed this petition under their signature. But Mr. Shipley respectfully submits that his good-faith efforts to accommodate the competing ethical interests at stake do not reflect conduct unbecoming a member of this Court’s Bar, and should not result in a sanction that would have very serious consequences for his career.

I personally agree that, in this particular case, this is probably the right place to go, and the Court has, no doubt, sent a message to lawyers.  So, hopefully the matter will go away. But, I could see the court trying to say “you have a choice, but we overreacted” to try to affect things more.

We’ll see.

The WSJ on NPEs

Dennis over on the main page has an analysis of the WSJ op-ed which blames most of the patent system’s woes on NPEs.  Five years ago, I was asked to write on the legal ethics of NPE counsel, and wrote this article “Being on the Receiving End.”  This is from the intro:

The symposium invited me to speak on the legal ethical issues that face counsel who represent non-practicing entities (“NPEs”) in patent litigation as plaintiff patentees. My first reaction was that, although obviously the same common law, statutes, ethical rules, and procedural rules apply to such counsel as any other, owing to the tremendous costs of patent litigation, that counsel who represented such a “troll” necessarily would have enhanced obligations to court and opposing counsel to ensure that the suit was not brought in bad faith, nor so conducted.

Upon analysis, however, I came to the somewhat counterintuitive conclusion that, although the NPE’s counsel owes somewhat heightened duties, it is in fact the lawyer for the defendant, the accused infringer, whose duties are most implicated by the presence of an NPE in a patent suit. I arrived at that those twin conclusions based upon the following analysis and with some surprise.

Remember, I wrote that five years (probably six — published five) ago.

Interesting Ex Parte Contact Case

I’m updating my book on ethical issues in patent litigation, and found one of those “no way” cases.

Jones Day lawyer is representing a defendant in patent litigation.  The plaintiff designates its expert.  Lawyer gets on the Internet and, through email sent through that expert’s company’s web page, asks him some general questions by email, through a fake gmail address, not his Jones Day address.

For various reasons, the district court denies the motion for disqualification and sanctions.  One of the reasons was that the information provided was the same sort of information the expert would have provided to any customer contacting him.

Interesting one. It’s IPatt Group, Inc. v. Scotts Miracle-Gro Co., 2013 WL 3043677 (D. Nev. June 17, 2013).

Guess the date of this quote

The ‘invention requirement’ leaves “every judge practically scot-free to decide this often controlling factor according to his personally philosophy of what inventions should be patented, whether or not he had any competence to do so or any knowledge of the patent system as an operative socioeconomic force.”

No cheating.