Case dismissed as sanction for misrepresentations

Judge Keith Ellison issued a scathing order dismissing a patent case after it had been tried to verdict.  Tesco Corp. v. Weatherford Int’l., Inc. (S.D. Tex. Aug. 25, 2014).  Four days into a three-week trial over infringement of some patents relating to drilling rig equipment, an inventor testified that a brochure that constituted 102(b) prior art showed his invention.  The following day, a Friday, patentee’s counsel told the court he would spend the weekend getting to the bottom of the facts about it (there was even a dispute over whether the brochure had been produced to the defendants).

Come Monday, the patentee’s lawyer said that the brochure had been rendered by someone else, Karr, not the inventor and that Karr would unequivocally, no doubt, for sure, and so on say that it was not the inventor’s device.  Trial proceeded.  There was a mixed and inconsistent verdict rendered by the jury.  Rather than enter judgment, Judge Ellison let the case proceed to other issues.

After trial during discovery relating to exceptional case and inequitable conduct, Karr testified that he had had nothing to do with the brochure and that everything the patentee’s counsel had said was false.

The defendants, not surprisingly, moved for sanctions.  Making matters worse, in opposition to those motions, the patentee’s counsel quoted portions of the deposition excerpts that, Judge Ellison felt, were at best misleading.

In this order, the judge dismissed the claims with prejudice, holding that nothing less would protect the judicial system.  It then invited motions for attorneys’ fees to be submitted.  Stay tuned.

Here’s a Fun One: Judge Hughes Reversed for Imposing Sanctions on Patentee

This case, KI Ventures, LLC v. Fry’s Electronics (Fed. Cir. Aug. 28, 2014) is really a fun read.  The panel reversed the judge’s sua sponte dismissal, with prejudice, of a patent infringement suit.  Among other things, the judge had issued an “order on confusion.”  (Which is classic Judge Hughes.)  You need to read the case to see how much of the transcript the panel quoted (for a reason, I assume) but here’s a sample:

MR. RAMEY: I’m not sure that the design on the front page of that patent is an accurate represen- tation of the claims as they issued.

THE COURT: Why is it here then?

MR. RAMEY: We’re not the ones that drafted the patent.

THE COURT: I’m sorry, you’re stuck with what- ever this thing is. That’s what you own.

Reading Between the Lines of Octane

When I read this odd non-prec per curiam opinion, I had several thoughts.  The panel consisted of Judge Newman, who authored the now-overruled Brooks Furniture decision, along with Judge Mayer and Lourie.

First, as a non-prec opinion it went out without the imprimatur of the court as such. Sort of odd since they had asked for additional briefing after remand from SCOTUS.

Second, the opinion refers to Brooks as the “then-authoritative test,” when, in fact, it was a panel decision that had already been chipped away at prior to Octane coming by, and which as I and others have shown was at odds with prior panel decisions of the CAFC.  (And, which SCOTUS held was wrong.)  It is an interesting choice of words, in other words: it seems defensive.

Finally, the defensiveness or some emotion like it comes through with the panel’s repeated statements that 285 remains an issue for discretion, even in exceptional cases.  I don’t know if that was simply a message to remind the district court on remand that there is still discretion to deny fees, or what, but it seemed odd to me in this nonprec per curiam remand.

Just my two cents.

News Flash: Don’t go to the Jury Assembly Room to Observe Jurors.

There’s a story here about how a lawyer told his young associate to go to the jury assembly room to take notes about potential jurors.  She did so, but court staff recognized her, made her leave, then told the judge.

The judge dismissed the jurors (bet they were sad about that), but refused to order the lawyer to turn her written notes over to the other side.

I just spent a day — a full day — as a potential juror at Dekalb County superior court here in Georgia, and you wear a sticker around that indicates that you’re a juror, so I’m not sure someone could sneak into that room (nor how much they’d learn if they did).

Don’t do this…

Should You go to Law School?

Hmmm… here’s one professor’s take at Forbes.  I don’t know him, but I’ve got to say that he’s not very cognizant of realities, imho, at least if he seriously believes this and it’s not a Modest Proposal type thing.

Here’s how he describes what should make the decision:

Are you interested in pursuing Justice, in making the world/your country/your state a place  governed by the Rule of Law, freer from predators and safer from tyrants than it currently is?  Are you interested in helping the 50% of Americans with legal problems who cannot currently afford legal help to resolve them?  Are you interested in soberly attempting to understand and solve the incredibly difficult, and incredibly interesting, intellectual problems that underly so many of today’s legal disputes, and that are so misconstrued by a journalistic profession obsessed with political correctness?  IF so, welcome to law school, we need you  badly, you will find your studies fascinating and enriching, and you will be able to make a real difference in the world.    There is no subject more difficult than Law, because of its encyclopedic nature (nothing is irrelevant!).  And there is, I think, no subject more important today.

On the other hand, if you’re in law school because you didn’t know what else to do after your BA, because you hate Math (and erroneously think Law doesn’t require Math skills) and the sight of blood, therefore couldn’t be a physician, and have no goal other than to make a lot of money, and if you dislike work but have always relied on your IQ and adrenaline to ace all your courses, well, you chose the wrong generation to go to law school.  Get thee out now whilest  a partial refund of  tuition is still available.

One More Reason Not to Litigate Patents Your Firm Prosecuted

One issue I get asked about a lot is what are the pros and cons of litigating a patent you/your firm prosecuted.  There are obvious benefits:  expertise and efficiency being the obvious two.  There are obvious downsides.  Perhaps the most glaring one occurs when the defendant accuses the attorney of having committed inequitable conduct. (There are lots of pros and cons; those are a couple.)

I hadn’t thought of this one, or don’t think I have, but add it to the con list: the continuous representation doctrine.  Under this doctrine, the statute of limitations on a legal malpractice claim is tolled while the firm continues to represent the client.  Depending on state law, this can mean that, even if the client discovered the harm, limitations is tolled.

So, if you prosecute a case, and then litigate it, you may be extending limitations on any error that occurred during prosecution.  (You also, by the way, have a duty to disclose any error you learn about to your client.)  For a recent case applying this doctrine and resulting in a $17m judgment being upheld against a firm (though not in the patent context), see Red Zone LLC v. Cadwalader, Wickersham & Taft, LLP (N.Y.App. Div. June 19, 2014).

Rule 36 Summary Affirmances

Every day I read (or at least scan) the new CAFC opinions.  Today, there were a number of Rule 36 affirmances, meaning that the court affirmed what happened below, but we don’t know why.

There are nine, so far, in August.

When I was a lawyer, I had a case Rule 36′d on our client, and I hated it.  We’d written briefs, mooted the argument, traveled to DC, and then… nothing.  When I clerked for the court a year ago, a Rule 36 meant that we didn’t have to write an opinion, because there was nothing really to say except “Hey, 102 says you can’t patent what’s old, and you did.”  (I exaggerate, obviously.)

I wonder what y’all think about Rule 36 affirmances. I’m not sure if the CAFC does them more, or less, than other courts…

OED Activity… Not Much

I monitor the cases issued by the OED (here) and there’s not been a lot of activity.  Primarily, the cases have involved reciprocal discipline (i.e., when L is disciplined by her state; the OED will start a proceeding to discipline the lawyer in the PTO).  Often the lawyers don’t even contest these proceedings.

Even when they do, the grounds for avoiding reciprocal discipline are pretty narrow — a few factors apply but largely the lawyer has to show a due process violation of some kind, or some highly unusual circumstance….

Telework: How much did you work? Nobody Knows!

By Dennis Crouch

In another seeming bombshell for the Patent Office, the Washington Post has published a 2012 internal USPTO memorandum on telework fraud. Lisa Rein from the post writes:

Some of the 8,300 patent examiners, about half of whom work from home full time, repeatedly lied about the hours they were putting in, and many were receiving bonuses for work they didn’t do. And when supervisors had evidence of fraud and asked to have the employee’s computer records pulled, they were rebuffed by top agency officials, ensuring that few cheaters were disciplined, investigators found.

Oversight of the telework program — and of examiners based at the Alexandria headquarters — was “completely ineffective,” investigators concluded.

Further, the report indicates that “USPTO management demonstrates reluctance to take decisive action when the misconduct is egregious and the evidence is compelling.” At the time, the USPTO was led by Director Kappos.

The original report was then substantially tamed-down (with the most damning elements removed) before it was provided to the DOC Office of the Inspector General. Based on the evidence found in the secret original document, the OIG has indicated that it will now launch a probe of the USPTO’s workforce quality control.

Production versus Hours: The facts here are disturbing. However, one underlying assumption of the report is that we should be looking to the hours-worked by examiners rather than focusing on whether the work is completed (i.e., production).  Examiner production is closely monitored and measured on a bi-weekly basis and there is no sense in the industry that examiners can avoid those production quotas without major repercussions.

 

White House Seeks Input on Innovation Strategies

A request for input was published on July 29, and is available here.  The summary states:

The Office of Science and Technology Policy and the National Economic Council request public comments to provide input into an upcoming update of the Strategy for American Innovation, which helps to guide the Administration’s efforts to promote lasting economic growth and competitiveness through policies that support transformative American innovation in products, processes, and services and spur new fundamental discoveries that in the long run lead to growing economic prosperity and rising living standards. These efforts include policies to promote critical components of the American innovation ecosystem, including scientific research and development (R&D), technical workforce, entrepreneurship, technology commercialization, advanced manufacturing, and others. The strategy also provides an important framework to channel these Federal investments in innovation capacity towards innovative activity for specific national priorities. The public input provided through this notice will inform the deliberations of the National Economic Council and the Office of Science and Technology Policy, which are together responsible for publishing an updated Strategy for American Innovation.

Another District Court Struggles with Whether a Pre-AIA Prosecution Bar Applies to IPR Proceedings

Can’t find this case on line, but it’s a nice read on Westlaw or Lexis.  The court in Paice, LLC v. Hyundai Motor Co., 2014 WL 3773666 (D. Md. July 29, 2014) held that the parties’ negotiated bar did not cover the later-enacted IPR proceedings.

My article (link a few posts below) talks about this issue in detail, and the need to pay attention to both sides of this issue:  is your client protected because the bar applies to IPR, and are you complying with the bar by not participating, or going ahead and doing so, in IPR.  Traps on both sides.

Patent Prosecution Bars: My New Article

My new article (well, I finished it months ago) is now available online at St. Mary’s Journal on Legal Malpractice & Ethics.  It’s called Is Litigation Counsel Who Also Engages in Competitive Decision-Making Wrong for the Part?, and is available here.

The abstract:

In-house counsel wear different hats, and are often involved in business decisions regarding products, marketing, and other strategic issues. It was in this context that courts began to adopt protective orders that precluded in-house counsel who provided their clients advice with “competitive decision-making” from having access to information from a competitor disclosed in discovery. Prosecution bars present numerous issues for courts and counsel. It may be that because of prosecution counsel’s knowledge of the technology that her service as trial counsel would lead to cost savings and other benefits to her client. However, due to the myriad problems that arise from having litigation counsel also engage in other activities, she may be wrong for the part. Only through careful analysis of the policies involved, and careful drafting of any protective orders can courts, clients, and counsel be sure of their casting decisions.

Alice being Applied to Allowed but Unissued Patents

Thanks to Jim Hallenback for letting me re-post this (it is not legal advice).  This is going to be a mess for a while and practitioners need to watch for unintended consequences.

As a follow up to my email from Thursday regarding Post-Alice activity at the USPTO, I first want to thank those of you that have responded.  If you have yet to respond, I am still interested in hearing from you, but again remember not to share any confidential or privileged information.

Based on the information I have gathered in recent days, I submit the following update.

The Office believes it has a continuing obligation to examine all cases that are prior to issuance, even if in an allowed state.  This may not be a change in Office policy or procedure, although it seems this may be the first time this is being done based on a court case issued after issuance of a Notice of Allowance.

Examiners were asked to look at their own cases that were/are in an allowed state.  SPE’s and Tech Center experts were available/involved.  So contrary to what some have reported, it does not sound like there is a select group reviewing all allowed applications.  The phone calls are being given as a courtesy, which I believe is prudent and of benefit to applicants.

The standard being applied is that outlined in the Preliminary Examination Instructions<http://www.uspto.gov/patents/announce/alice_pec_25jun2014.pdf>.  From the information I have gathered, the Office of Patent Examination Policy prepared the instructions without specific instruction from outside of the USPTO, again contrary to rumor.

While I do not believe there are any technology areas of specific or targeted interest, there are certainly areas that are more susceptible or more likely to raise rejections under the recent Alice decision.  For example, financial areas are more likely to raise rejections, while GUI’s are less likely.  In particular, classes 700-707, 726, and 434 are getting a lot of activity.  Other classes in the 700 range are likely implicated as well and in particular, class 705.  I don’t have specific numbers of cases involved, but the USPTO takes pride in being a transparent agency and provides vast amounts of data with regard to their operations.  I would expect that data, such as numbers of allowances that are being withdrawn and classes and tech centers involved, is identifiable and the USPTO will most likely be forth coming with this data in the near future.  This data will be quite useful for counseling clients on timing for payment of issue fees.


Regarding Payment of Issue Fees

 The Office will refund issue fees.  See MPEP 1308.01.  This is an exception to Rule 1.26 and I confirmed the Office will honor it.


Going a bit further down the rabbit hole, for an application filed with small entity status but the entity no longer qualifies, payment of the issue fee is point where the entity status is to be updated for payment of the proper fees.  If a small entity pays the issue fee at the large entity amount, they are certifying they are no longer a small entity.  If such an application is returned to prosecution, the large entity fees would then have to be paid.  The trailing benefit of small entity status would be lost potentially costing applicants significantly more money in USPTO fees.  In such cases where an issue fee is coming due and the involved technology is potentially within the realm of the new USPTO Alice instructions, it may be prudent to wait a bit to pay the issue fee to not only prevent the issue fee funds from landing in limbo, but also to avoid losing small entity fee status.

Kindest regards,

Jim
Chair, AIPLA Electronic and Computer Law Committee

James D. Hallenbeck
Shareholder | Attorney
Schwegman Lundberg & Woessner, P.A.
1600 TCF Tower<image002.gif>121 South Eighth Street<image002.gif>Minneapolis, MN 55402

Panel asks Highmark Litigants for Additional Briefing on Remand

The order in the Highmark case asking for additional briefing is here.  But in full it states:

The parties are hereby directed to file briefs, not to exceed fifteen pages each, addressing the impact of the Supreme Court’s decisions in Highmark, Inc. v. Allcare Health Management Systems, Inc., 134 S. Ct. 1744 (2014) and Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014) on this case and how the court should proceed following the remand of the case from the Supreme Court. The briefs shall be filed no later than July 28, 2014.