The Maling Decision from Massachusetts on Subject Matter Conflicts

In late December, the high court of Massachusetts issued a decision in Maling v. Finnegan, Henderson.  The decision is accessible, if you search for “Maling,” here.

Boiled down, the court affirmed the grant of the firm’s Rule 12(b)(6) motion to dismiss a complaint that in broad terms alleged that the Finnegan firm had a conflict because it represented the plaintiff and another client in obtaining patents claiming screwless eyeglass hinge inventions.  There are two broad issues:  when is prosecution of patents for one client adverse to another, and when are two patent applications so close that prosecuting them creates a material limitation on the lawyer’s ability to represent either client.

With respect to adversity, this form of conflict is sometimes viewed as a “finite pie” conflict, where two clients are fighting for a resource that cannot meet both their demands.  In Maling, the court relied on a case that I’ve cited for two decades now that involved a firm representing two companies each pursuing a license to a radio channel.  The court reasoned there that so long as they were not fighting over the same channel, and there was no electrical interference between the two channels, there was no direct adversity and so no conflict.  By analogy, the court’s essential holding was that unless patent claims interfere or are to obvious variations of each other, there is no direct adversity.  (The court also noted that giving an infringement opinion to one client about another client’s patent would be adverse, but that was not alleged, apparently, here.)

With respect to material limitations, this form of conflict arises when a lawyer’s obligations to anyone (including himself) precludes him from competently representing a client.  The basic test is:  imagine what a lawyer without the “obligation” would do; and then ask whether the obligation the allegedly conflicted lawyer had would result in a material limitation.  Simple example:  if a lawyer represents a car wreck plaintiff, the lawyer generally cannot cross-examine that plaintiff even in an unrelated matter if it doing so would involve, say, exposing eyesight problems that could be used against the plaintiff in the car wreck. The court in Maling contrasted the allegations in the complaint to situations where firms have shaved claims for one client to avoid another client’s patent.  There was nothing like that here, and nothing like what the court suggested might otherwise be a material limitation.

The court ended with admonitions to lawyers to be sure to monitor for conflicts carefully.  I’ll end by noting that this is not the first, or last, word on this topic.

“Be careful out there,” as they said in Hill Street Blues.


PTAB Allows Filing of Motion for Sanctions for Alleged Protective Order Violation

Lately I’ve had a lot of calls about ethical issues in IPR proceedings. The rules are not clear in a number of instance and the case law is sparse and not always easily harmonized with the plain text of the rules.  This case caught my eye, though, for a different reason.

The order is paper 23 in RPX Corp. v. Applications on the Internet Time, LLC, IPR 2015 (Dec. 4, 2015).  The actual order itself grants the petitioner authority to file a motion for sanctions for alleged violations of the Standing Default Protective Order.  Obviously, parties need to police against such violations.

What the case reminds us is that the Standing Default Protective Order is not… a standing default protective order.  Instead, it is entered only by motion of the parties, and that motion must include the proposed protective order.

Here, the parties had previously agreed to be bound by the protective order, and so the fact that they had not requested entry of any protective order did not matter. However, remember that there really is no default standing protective order… a misnomer that can hurt you.

S.D. Florida shifts fees from date of claim construction onward

Advanced Ground Info. Sys., Inc. v. Life360, Inc. (S.D. Fla. Civ. A. No. 14-cv-80651), is an interesting case .  The patent-in-suit covered some sort of smart phone app (it’s not clear what).  The key dispute over infringement centered on whether the end user, alone, performed each step of the patented method.  Of course, a method claim cannot be infringed without preponderant evidence of direct infringement by someone.

Here, the asserted method claims survived the accused infringer’s motion for summary judgment of non-infringement, but were found by the jury to be not infringed.  Even though the case got to a jury, the district court awarded fees to the prevailing accused infringer, rejecting the argument that simply because the case got to trial meant it was not subject to shifting.

Instead, the court emphasized that after Akamai and the district court’s claim construction, it had been clear that there could be no infringement.  To oppose fees, the accused infringer pointed out that the court had denied the defendant’s motion for summary judgment after both Akamai and claim construction.

Why then, did the district judge deny the motion for summary judgment?

In granting fees in its November 30, 2015 order, the judge explained that he had “considered granting” the motion but had not done so because of the patentee’s explanation of how the app worked. Specifically, the judge stated that he denied summary judgment of non-infringement of the method claims based on the patentee’s argument that when the end user used the app was used, the app “automatically,” performed the remaining steps and so directly infringed the method claims.  That turned out to be untrue, and so the denial of summary judgment, alone, was insufficient to avoid an exceptional case finding.

In addition, the judge in granting fees also mentioned that the patentee had never sold any products, sued a start-up that had never made a profit, and yet the patentee argued that it had suffered irreparable harm.  Given the facts, the judge awarded fees from claim construction onward.

The lessons are several, but not unusual or new.  One is obviously to have a viable infringement claim and evidence of it; lawyer argument is not evidence.  The other is to keep in mind that, post-Octane it is important to evaluate infringement and other arguments carefully after claim construction (and any other similar event) and advise the client on, not just whether the case is meritorious, but whether it is marginally so and thus continued litigation puts the client at risk of fee shifting.

Judge Real Enters Default Against Infringement Defendant for Discovery and Other Abuses

On December 1 in United Construction Products, Inc. v. Tile Tech, Inc. Judge Real of the Central District entered terminating sanctions — default judgment admitting patent infringement, inducement, and more — and found a case exceptional.  Among other things, the judge found that defendant’s counsel, among other things, missed pretty much every deadline, made misrepresentations to the court about meeting deadlines, and more.

No, this sort of conduct isn’t common in federal litigation (to this degree), but terminating sanctions are rare.

Federal Circuit Asked on Mandamus to Recognize Patent Agent Privilege

In In re Queen’s University at Kingston (App. No. 2015-0145), the court yesterday heard oral argument on whether to recognize the patent agent privilege.  The oral argument is here.

Judges Lourie and O’Malley (if I’m recognizing their voices by memory correctly) seemed to believe that the court should recognize the privilege, but judge Reyna was skeptical of using mandamus to reach the issue.

This issue does need resolution by the court.  The amount of money cost fighting over whether this privilege exists is money spent not addressing the merits, and whether this privilege exists comes up fairly frequently (and will more so in future cases, since patenting has become more of an international endeavor since the mid-1990s).  I’ve written about this issue (and other patent agent ethics issues) here.  The petitioner pretty much echoed my argument in the paper!  Hopefully Judge O’Malley will quote me in her decision.

The USPTO also held some roundtables on the privilege (see here).

New Discovery Rules: Act Now?

I’m headed to speak at the Eastern District of Texas Bench & Bar Conference and then at the AIPLA meeting in DC. One result of this (and of teaching civil procedure this year) is becoming very concerned about the new discovery rules, coming into effect in December. If you haven’t read them, do so. If you file a case after December 1, they will control; they also will control, to the extent practicable and just, to cases filed before then.

Apart from doing away with all forms except the one relating to waiver of service of process, the key change is with respect to the scope of discovery.  Here is the old rule:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense—including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

Here is the new:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

There are a lot of changes.

First, discovery has to be — not just relevant to an existing claim or defense — but also proportional to several factors or considerations.  The answer to whether an issue is important is quite subjective, and, no doubt, turns on viewpoint.  Does it bring in a subjective element?  How do we determine whether the cost will exceed the likely benefit without knowing what the discovery would reveal?

But the key concern I have is the elimination of any ability to allow discovery beyond relevancy to a claim or defense.  Given that there must be a rule 11 basis to plead something, how can certain affirmative defenses (especially inventorship and inequitable conduct) ever be pled?  Because of this change, if it can’t be pled, there won’t be discovery.  Local rules, of course, can’t be inconsistent with the FRCP.

The amendments are here.

Georgia Annual Corporate IP Institute October 27-28 in Atlanta

By David Hricik

On October 27-28, 2015, the Ninth Annual Corporate IP Institute® is being held in Atlanta.  I’ll be speaking along with a lot of other folks.  As usual, the Intellectual Property Owners Association (IPO) has organized a panel for the event for corporate IP management best practices.  Registration for the Institute (and a bonus charity golf game, the CIP CUP® — these folks obviously have trademark and marketing lawyers around) is available here.


California Bar Reportedly Drops Reines Inquiry

The only reports I can find about this are behind paywalls, but the reports are that the California bar association dropped its investigation into whether there was any wrong-doing involving Mr. Ed Reines and his interactions with former Chief Judge Rader.  As you’ll recall, the Federal Circuit wrote an opinion (which I thought had an awful lot of holes in it, available here).

What is that expression about where do I go to get my reputation back?

Professionalism in Communications with the USPTO

I gave a talk last night in New York City, and I talked about various prosecution and litigation issues.  In attendance was a primary examiner.  We got to discussing nasty communications from practitioners.

She told me some things that should be obvious, but apparently my sense of what is obvious differs from a lot of practitioners.

First, being snarky doesn’t work.  Telling someone they are stupid is not going to advance prosecution.

Second, when a particularly nasty communication comes in, it becomes the topic of conversation.  “You won’t believe this one…”  It’s a small world so if you’re practicing in one area, being nasty to one examiner may affect your reputation among several examiners in that art group.

Despite those two fairly common-sense things, nasty-grams continue.  The OED occasionally gets involved.

Patent prosecution is, of course, an adversary process, with the practitioner attempting to overcome an examiner’s arguments as to why certain claims are unpatentable (among other things). Examiners are under time pressures, as are practitioners whose clients need efficiently delivered legal services. Sometimes that leads one “side” or the other to lose its cool.

That is understandable, and perhaps forgivable.

What seems to happen too often is that practitioners unload vituperative communications on examiners. This is probably counter-productive – telling someone they are stupid and wrong in my experience is likely not to change that person’s mind. Yet, practitioners persist in this nasty conduct.

Primary examiners have told me that when these sorts of nasty communications come in, they are passed around and ridiculed at the office. I doubt that is testimony to their effectiveness.

Beyond that, these are passed along to the OED. The OED has made it clear that it will not tolerate unprofessional behavior. In one recent disciplinary case, In re Schroeder, D2014-08 (May 5, 2015), the OED entered a default judgment against a practitioner who clearly went beyond the boundaries of decency. The practitioner wrote:

            Are you drunk? No, seriously … are you drinking scotch and whiskey with a side of crack cocaine while you “examine” patent applications? (Heavy emphasis on the quotes). Do you just mail merge rejection letters from your home? Is that what taxpayers are getting in exchange for your services? Have you even read the patent application? I’m curious. Because you either haven’t read the patent application or you are … (I don’t want to say the “R” word) “Special.”

The practitioner also stated:

Since when did the USPTO become a post World War II jobs program? What’s the point in hiring 2,000 additional examiners when 2,000 rubber stamps would suffice just fine? So, tell me something Corky, what would it take for a patent application to be approved? Do we have to write patent applications in crayon? Does a patent application have to come with some sort of pop-up book? Do you have to be a family member or some big law firm who incentivizes you with some other special deal? What does it take Corky? Perhaps you might want to take your job seriously and actually give a sh.t! What’s the point in having to deal with you Special Olympics rejects when we should go straight to Appeals? While you idiots sit around in bathtubs farting and picking your noses, you should know that there are people out here who actually give a sh. t about their careers, their work, and their dreams.

Perhaps indicating that he was having a bad day, on the same day that practitioner filed a response in another application. That examiner had also rejected the claims based on the prior art. Rather than overcoming the substance of the rejection, the practitioner wrote:

Apparently, the current Examiner to which this application has been assigned, does not speak the native language here in the United States of America. Perhaps in Farsi, really ancient Latin, or even the post-Nimoy Vulcan dialect, the word “stud” just so happens to be synonymous with the term “ridge”. But here in this country, the same country to which [sic] Examiner receives his stipend, the word “stud”, and the word “ridge” have two separate and distinct meanings.

He also wrote examiners were like “athletes who participate in the Special Olympics [who] might initially make the same mistake after a wild night of cocaine and strippers in Las Vegas.” Finally, he said he had consulted an online dictionary “called,” where, sure enough, a picture and name of the current examiner was found. Not surprisingly, enumerated synonyms include the following: ‘Down’s Syndrome, idiot, lazy, incompetent, blind, stupid, worthless.’”

Don’t do this.

In Scotland a Juror who Misuses Technology Can Face Two Years in Prison!

I’ve written an article or two on ethics and technology, and am in the middle of writing a chapter for an ABA book.  It is remarkable to me the number of jurors who do not listen to the judge’s admonitions not to do research about the case but, instead, to listen to the evidence.  Also, jurors sometimes text to friends, family, and each other about the case.  I know that a juror in one trial I was involved in a couple years ago was tweeting during a patent trial (mostly about how boring it was and, I have to say, I agreed!).  There’s even a blog about jurors misbehaving called!

Over in the UK they’ve decided to take this fight one step further and criminalize some aspects of this.  Up to 2 years in prison! The article is here.

Not sure I’d lock someone up for two years for doing this, but I do know that, especially in the criminal arena, misconduct has caused mistrials, motion practice, and more.  Perhaps it would serve as a strong deterrent?

Anyone have any stories to share?

Illinois: In-house counsel who limit practice to that before the USPTO do not need to register

Some states permit in-house counsel to practice in the state so long as they only represent their corporate employer and register with the state.  Registration is not free or hassle-free.  However, in Opinion No. 15-01 (May 2015), the Illinois State Bar concluded that in-house counsel who limited his practice to patent practice did not need to register.

This issue comes up in many forms.  For example, what can a patent agent do?  The USPTO has defined what is, and is not, practice before the office and those definitions should be carefully consulted.  But this Illinois opinion is a bit of good news to in-house counsel in my law school’s state.

Is it Appropriate Prosecute Patents for Direct Competitors on Inventions on Similar Technology without Disclosure and Waivers?

by Dennis Crouch

[Prof  Hricik may have more to say on this conflict-of-interest case, but I believe it is an interesting one and important for discussion.]

Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, SJC-11800.

A patent law malpractice case is pending before the Massachusetts Supreme Court that has major implications for patent prosecution practice.  Many patent patent attorneys and law firms develop technology-specific specialties as a marketing strategy.  The professional responsibility problem arises when the strategy is successful enough to attract multiple clients with substantial technological crossover.  Of course, this likelihood is intensified in larger law firms where more lawyers means more clients and more (potentially overlapping) invention disclosures.

Back in 2003, Maling hired Finnegan Henderson to prosecute a set of patent applications relating to screwless eyeglass hinges.  According to the allegations, it turns out that Finnegan was also representing a competitor (Masunaga) with a similar invention in the same screwless eyeglass hinge field.  Finnegan says that these were “attorneys in different offices.”  Neither client was informed or gave consent to this alleged conflict of interest and Maling argues that Finnegan’s “independent professional judgement” was impaired by the conflicting representation in violation of the Massachusetts Rules of Professional Conduct.  Among the various harms Maling alleges a delay in filing his application and wasted efforts on technology not sufficiently protected by patent.


The state trial court dismissed on failure-to-state-a-claim for the civil action with the court finding no direct adversity of interests and no nexus between the conflicting representation and the claimed harm.  The Supreme Judicial Court of Massachusetts (MA’s highest court), is now focused on the question of whether an actionable conflict arises when a single law firm files and prosecutes patent applications for similar inventions on behalf of two existing clients.

Massachusetts law:

  1. 1.7(a): “A lawyer shall not represent a client if the representation of that client will be directly adverse to another client.”
  2. 1.7(b) “[A] lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person, or by the lawyer’s own interests.”


Finnegan here argues that the allegations of filing and prosecuting a competitor’s “similar” invention is “insufficient” to even suggest a conflict of interest.   Rather, Finnegan argues an ethical conflict only arises if one of the client’s inventions are blocked by patent disclosures made by another client.

The distinction between “similar” and “novel and non-obvious” is well-illustrated by the Maling and Masunaga inventions described in the patents at issue in this case. Both inventions attempt to solve the problem of how to construct an eyeglass frame without utilizing screws. As the PTO concluded, however, each patent claims a novel solution to this problem. . . .
Here, there is no allegation that Maling and Masunaga ever were “directly adverse” to one another, in patent proceedings or otherwise. Maling cites to no case law, nor is Finnegan aware of any, in which a court has held that parties are directly adverse to one another simply because each seeks to patent technology in the same field. Such a standard, moreover, would be inconsistent with the statutory-framework discussed above, which recognizes that multiple patents may be granted in the same field so long as each claims a “new and useful” invention, or a “new and useful improvement thereof.”

Finnegan also explains that conflicting-out large law firms would make it difficult for inventors to find representation — quoting Hricik as saying that “a rule that limits a firm to representing only one client in a particular technical field ‘imposes unnecessary costs on lawyers, clients, and the system.'” Hricik & Meyer, Patent Ethics: Prosecution (2015).

In his brief, the plaintiff-appellant argues that its allegations of violation and harm are sufficient to overcome a motion to dismiss. Their brief does not detail an explanation of how similarity should be treated.

In an amicus filing, a group of major law firms, including Knobbe Martins; Honigman Miller; Nixon Vanderhye, and others arguing that direct conflict issues only arise if the inventions are so close as to lead to an interference (pre-AIA).

The amicus brief suggests that the rules may be different post-AIA because the new law sets up more of a race to the PTO (first-to-file vs first-to-invent).  This, of course, is disingenuous as the pre-AIA system included a large number of adverse impacts caused by delays in filing.

One interesting issue that arises here is that Maling had Finnegan conduct a pre-filing prior art search in 2003.  At that point, the Masunaga patent was on file, but not yet published and so did not turn-up in the search results – even though Finnegan attorneys knew of the reference and knew that it was prior art.

Michael McCabe has more of a discussion of the case on his IP Ethics and Insights Blog.

= = = = =

Most civil-action malpractice claims fail because of the difficulties of proving harm. At the USPTO and State Bars, mere violation – even without client harm – is actionable as a violation of the rules of professional responsibility. It will be interesting to see how the USPTO treats this case.

= = = = =

Read the Briefs:


Dickstein Shapiro Dodges Malpractice Suit by Showing Long-Ago Issued Claims Were to Ineligible Subject Matter

By David Hricik

This one will make your head spin, especially the statutory construction part.  The case is Encylopaedia Britannica, Inc. v. Dickstein Shapiro LLP (D. D.C. Aug. 26, 2015).

The Dickstein Shapiro firm was retained by Encyclopaedia Britannica, Inc. (EB) in 1993 to file a patent application. The patent issued, and in 2006 EB sued several companies for infringing it. The patent was held invalid due to “an unnoticed defect” in the 1993 application.  The basis for invalidity was not 101, however.

EB then sued the law firm for malpractice in prosecuting the 1993 application.  EB contended that, but for the firm’s negligence, it would have made a lot of money in the infringement suit.

After the malpractice suit was filed, Alice was decided.  The firm then argued that, as a result, the claims were ineligible and so any malpractice by it in 1993 could not have been the but-for cause of harm.  The claims would have been “invalid” under 101 even had it not botched the 1993 application, and so there was no harm caused by any error it made.

To put this in context:  Because of a 2014 Supreme Court decision, the 2006 case would have been lost anyway because, in 1993, the claims were not eligible for patenting.

And the argument worked.  The district court granted a motion to dismiss for failure to state a claim, finding the subject matter ineligible on the face of the patent.

I’ll leave the merits of that to others.

What is interesting is the court’s approach to retroactive application of Alice.  The issue was whether in the 2006 case, even had the firm’s alleged malpractice not caused the invalidity judgment, the claims were “invalid” under 101 then.  The district court held that Alice did not change the law, but merely stated what it had always been.    Specifically, the district court stated:

When the Supreme Court construes a federal statute… that construction is an authoritative statement of what the statute has always meant that applies retroactively.  Alice represents the Supreme Court’s definitive statement on what 101 means — and always meant.  Because the underlying case is governed by 101, it is appropriate for this Court to apply the Supreme Court’s construction of 101 as set forth in Alice.

(Citations omitted).

For this and other reasons, the court reasoned that “the only rule that makes sense in this context is to apply the objectively correct legal standard as enunciated by the Supreme Court in Alice, rather than an incorrect legal standard that the [district court in the 2006 infringement case] may have applied prior to July 2015 [when the court was deciding the motion.]”  The court then applied Alice and found the claims “invalid” under 101.

There’s a lot to unpack here.

First, the retroactivity of Alice bodes ill for lawyers who obtained patents now being held “invalid” under 101.  If the law “always” was this way, why did you advise your clients to spend so much money on a patent so clearly invalid that a judge could decide it by looking at it? But keep reading, because you and I know Alice and the rest changed the law.  (Indeed, the USPTO changed its examination procedures to adjust to it!)

Second, there could be enormous consequences if Alice changed the Court’s prior interpretations of 101.

While as a matter of statutory construction the retroactivity principle relied upon by the district court is correct, retroactivity does not ordinarily apply when an interpretation is changed.  (This perhaps explains why the Supreme Court is careful to avoid saying it is changing an interpretation, because changes to interpretations of a statute are prospective, only, as a general rule.  In that regard, think about Therasense for a moment.) So, if Alice changed the law, then the district court was likely wrong to apply it retroactively.

More broadly, however, if Alice (and the rest) changed the meaning of 101, then it means many patents now being held “invalid” should not be judged under Alice.

I’ve been waiting for someone to make the retroactivity argument (as with Therasense, which clearly changed the CAFC’s interpretation of “unenforceability”).  It would be fun to try to see someone use Alice and apply it to the Supreme Court line of cases and make them all fall in a line.

Kyle Bass’s Response to Motions about Abuse of IPR in IPR2015-01092 

The response in Coalition for Affordable Drugs v. Celgene (IPR2015-01092) is here.

Here’s the introduction:

Celgene’s motion is littered with references to the Petitioner’s and Real Parties-in-Interest’s (collectively, “CFAD”) “admitted profit motive,” and makes the curious argument that filing IPR petitions with a profit motive constitutes an “abuse of process.” Yet at the heart of nearly every patent and nearly every IPR, the motivation is profit. Celgene files for and acquires patents to profit from the higher drug prices that patents enable. Generic pharmaceutical companies challenge patents to profit from generic sales. Celgene’s argument is in conflict with Supreme Court precedent expressly finding it in the public’s interest for economically motivated actors to challenge patents. See Lear v. Adkins, 395 U.S. 653, 670 (1969) (holding public interest requires permitting licensees to challenge validity because they “may often be the only individuals with enough economic incentive to challenge the patentability” and “[i]f they are muzzled, the public may continually be required to pay tribute to would-be monopolists”). Having an economic motive for petitioning the government simply does not turn the petition into an abuse of process.

CFAD anticipates that fees and costs to complete an IPR for a single drug is approximately $1 million dollars. There are a limited number of entities capable of making that financial commitment. And fewer can make such a commitment without the prospect of profiting from their efforts. The fact is CFAD’s motivations do not change the social value of its activities. Poor quality patents enable pharmaceutical companies to maintain artificially high drug prices and reap unjust monopoly profits paid for by consumers and taxpayers.

Celgene accuses CFAD of motives that are not entirely “altruistic.” That is a truthful irrelevancy. The U.S. economy is based largely on the notion that individual self-interest, properly directed, benefits society writ large. Celgene’s motive is to profit from consumers and taxpayers from drug sales. Celgene’s patent-conferred monopoly results in Revlimid prices that exceed $580 per pill—creating costs in excess of $200,000 per patient year. (See Exs. 1021-23, showing prices for three Celgene drugs protected by challenged patents.) Revlimid sales were nearly $5 billion in 2014. Celgene is not giving Revlimid or its profits away.

CFAD’s IPRs are part of its investment strategy, and it will only succeed by invalidating patents, which would serve the socially valuable purpose of reducing drug prices artificially priced above the socially optimum level. And even if, despite its best efforts, it does not profit—each petition that knocks down a barrier to generic entry benefits the public. It should be axiomatic that people do not undertake socially valuable activity for free—not Celgene, not generics, not shareholders, and not investment funds. Low drug prices will not simply materialize. They must be brought about by agents who will invest significant capital and do the hard work of identifying and challenging weak patents. Generics sometimes serve this function. But the law does not render it “abuse” for others, including CFAD, to also play this important societal role.

Another Parallel Litigation Disqualification Case

I can’t find it on line, but it’s Milwaukee Electric Tool Corp. v. Hilti, 2015 WL 1898393 (E.D. Wis. Apr. 27, 2015).  DLA Piper was representing Snap-on Tools.  Another client asked it to sue several potential infringers, one of which was Snap-on.  The firm appeared in all of the cases — all of which involved the same patent — against every defendant except Snap-on.

Snap-on moved to disqualify DLA Piper.  It contended that, by representing the patentee against the non-clients, it was adverse to Snap-on.  Basically, the argument that has been made (in this circumstance in several patent cases, and in other contexts) is that a lawyer should not be a part of building a case against his own client.

The court discussed the three other patent cases on this issue, and some of the other cases, but denied the motion to disqualify.  It found that DLA Piper was not adverse to Snap-on, but it noted that it was a very close question.

Here’s my question:  obviously, DLA Piper cannot coordinate with those lawyers who are adverse to Snap-on.  (I can’t do out of court what I couldn’t do in it.)  How can a law firm competently represent a patentee in an infringement suit without coordinating arguments (claim construction, etc.) with other counsel?  For a discussion of those issues, see Arrowpac Inc. v. Sea Star Line, LLC, 2013 Wl 5460027 (M.D. Fl. Apr. 30, 2013).

This case is somewhat like the Akin Gump case, discussed below, which resulted in a $500,000 judgment against that firm.

Public Confidential Information: California Weighs In, Asks for Comments

By David Hricik


I’d normally only put this on the ethics page, but Dennis is on vacation and this issue pops up a lot in patent practice.

Suppose you get a call from a third party about a matter you’re handling for a client.  She tells you that she had written a blog post about a prior dispute she had had with your client, which your client had paid to settle.  Per your request, she emails you a link to the blog post.  You forward the link to a friend, saying nothing about it other than “this is interesting.”

Did you do anything wrong?

The information you forwarded was not privileged:  it came from a third party, so that doctrine doesn’t apply.  But, lawyers’ obligation of confidentiality extends far beyond privileged information, to protecting “confidential” information.  Whether information is “confidential” turns on applicable law, and in some states it includes even information that was publicly available when the lawyer was representing the client.  Generally, confidential information must be kept confidential if revealing it would be detrimental to the client, or former client, or the client had asked it not be revealed.

The California bar association has a proposed bar opinion that would make it clear that, while not privileged, even public information must be accorded protection as confidential information. The California bar has asked for comments, and you can do so here, and find the entire opinion.

Now think about patent practice.  You learn about a piece of prior art while representing Client A.  For whatever reason, it wasn’t pertinent to Client A’s application, so you didn’t disclose it.  Patent issues. Matter ends.

Now you’re representing Client B in prosecution. You remember that piece of prior art, and if you disclose it in Client B’s case, it is more likely that Client B will get a patent that, let’s say, will aid it compete with former Client A.  Can you?  Must you?

There are a lot of ways this issue comes up in patent practice, and some states like this proposed California opinion take a counterintuitive view of what is confidential.

Be careful out there and be sure to think about whether the USPTO rules, or your state rules, would control on that question.

My Rant on Versata: Non-existent Statutory Analysis Continues

by David Hricik

Over on the main page, Dennis has done a good job laying out the court’s “analysis” in Versata v. SAP of whether section 101 is a defense to invalidity.  The court recognized that, by the text of the statute, it is not.

But, it reasoned that because, today, section 101 challenges are a cottage industry, that that interpretation must be wrong.  It cites to dicta from old Supreme Court cases.  And, it says basically, “well, people are doing it so it must be right.”

Um, wrong:   See Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 177 & 191 (1994) (overruling six decades of case law implying a cause of action), superseded on other grounds by 15 U.S.C. § 78(t)(e). Whatever a court says a statute says, the Constitution makes paramount what the enacted text actually says.  Courts can get something wrong for a long time; a judge’s Constitutionally required job is not to continue the nonsense; it is to stop it.

The fact is that no court has ever actually analyzed whether 101 is a defense, particularly after 1952, when (I believe) Congress meant to get rid of this “inventive concept” and other nonsense that courts had, previously, read into the word “invention” in what was then 101.  Congress put all of those odd requirements into the objective section 103.  But… the point is:  no court has analyzed the text — about whether “eligibility” is a defense to any infringement suit (and obviously not in CBM proceedings), and when this court did, it recognized the text did not support Section 101 as an invalidity defense.

That should have been the end of the inquiry, absent (a) an absurd result; (b) ambiguity; or (c) some other narrow exception to ignoring the plain text.  But the panel went further, and suggested that some sort of history precluded giving the statutory text its plain meaning.  (I wrote a book on statutory interpretation; I won’t bore you with the details.)

Let’s go past the text and look for some strong reason to ignore its plain meaning.  What is this evidence?

Courts sometimes use the purpose of a statute to interpret it.  Likewise, they look at legislative history to discern meaning or to find purpose.  What if there was some huge committee report droning on about 101 and so on?  We should likely take that into account.

But it’s not there.

The legislative history shows that the purpose CBM was adopted to address shortcomings with the PTO’s ability in the late 1990’s to find prior art, and that was Congress’s intent.  The House report makes clear that the purpose was to deal with the perception that in the late 1990’s, the PTO had not found the best prior art to apply under sections 102 and 103:

A number of patent observers believe the issuance of poor business-method patents during the late 1990’s through the early 2000’s led to the patent ‘‘troll’’ lawsuits that compelled the Committee to launch the patent reform project 6 years ago. At the time, the USPTO lacked a sufficient number of examiners with expertise in the relevant art area. Compounding this problem, there was a dearth of available prior art to assist examiners as they reviewed business method applications. Critics also note that most countries do not grant patents for business methods.

The Act responds to the problem by creating a transitional program 1 year after enactment of the bill to implement a provisional post-grant proceeding for review of the validity of any business method patent. In contrast to the era of the late 1990’s-early 2000’s, examiners will review the best prior art available….

H. Rep. 112-98, at p. 54 (June 1, 2011) (emphases added).  Thus, the committee report shows that the purpose of the amendments adding CBM is consistent with the statute’s plain text:  to allow people to bring CBM to show that the invention was not new or would have been obvious in light of “the best prior art available.”  The report emphasized the lack of “a sufficient number of examiners with expertise in the relevant art area.” 

Conversely, nothing in the House report mentions the failure to recognize “abstract ideas” or the failure to properly apply Section 101.  Further, it is absurd to suggest that in the late 1990s lack of access to prior art or lack of sufficient examiners with familiarity with prior art had any impact on the ability to determine what is a “law of nature,” or “abstract idea,” or the like.  Indeed, courts are doing this now on 12(b)(6) motions based on their own “evidence”(?) of what is known, etc.

So, so far:  purpose and history, based on the “good” legislative history (committee reports and such usually get more weight than other stuff), 101 is  not a defense.

What about random statements of legislators?  Once you get into random statements, the legislative history of the AIA on this transitional program is, like almost all legislative histories in this granular level, murky.  I have reviewed the remarks made on the Floor of the Senate, and there is no doubt that a few members of Congress mentioned business method patents.  A fair reading is that at least some members of Congress thought the source of the problem to be addressed was with “abstract” patents, while others believed the failure to consider the most pertinent prior art was the source of the problem.

I have also considered other aspects of the legislative history that this panel didn’t cite.  For example, then-Director Kappos observed:  “a key House Committee Report states that ‘the post-grant review proceeding permits a challenge on any ground related to invalidity under section 282.’ H.R. Rep. No.112-98, at 47 (2011).” Yet, it is undeniable – and the Versata court held — that the text of the adopted statute points to only two subsections of Section 282, and so this sentence from that report flatly contradicts the enacted statute.  (It accurately reflects the text at the time Kappos spoke; but Congress didn’t adopt it.)  A sentence in a committee report that directly contradicts the enacted language does not control.  As with most bills, the legislative history of the AIA contains many statements that are not the law, and a few that contradict the enacted statute.

Others have pointed to this statement from a senator from Arizona, Senator Kyl:  “section 101 invention issues” were among those “that can be raised in post-grant review.”  157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011).  Relying on this statement for the proposition that eligible subject matter is covered by the text is doubly problematic.  Foremost, “section 101 invention issues” is not in the enacted text, as the Versata court correctly held. Further, the Supreme Court has long and repeatedly rejected relying upon one legislator’s statement as having been enacted into federal law.  Doing so jeopardizes the Constitutional requirements of enactment and presentment.  This is especially true where, as here, that statement contradicts the plain text as well as other more weighty evidence of legislative intent.  Those sources – which, if entitled to any weight — are entitled to more weight than one Senator’s floor statement – contradict Senator Kyl’s subjective interpretation of the statute.  Again, however, I believe none of this matters here.

So, at best, there is some slight indication that a few members of Congress thought that “abstract” patents (whatever that might mean”) is the problem.

But it is long-settled there has to be some reason, much stronger than a few random statements, to ignore the plain text of an enacted statute.  What controls is the language Congress enacted, not our speculation about the intent of a handful of elected representatives.

Let’s go further.

Sometimes courts interpret statutes in light of existing case law, and that’s what the Versata court relied upon.  Well, what about case law, and the notion this court adopted that there’s some sort of “long-standing” understanding that 101 is a defense.  This is weird:  despite the plain language, and despite Congress knowing that 101 should be a defense, it did not list it.  Think about judicial activism for a moment.

And let’s be real here.

First, post-1952 it was not until Myriad that there was a challenge in the Supreme Court to an issued patent based on 101.  All the others were fights with the PTO.  No one in Myriad litigated whether 101 was a defense in terms of section 282. It’s not, as even this panel recognized.

So, saying there’s some long-standing line of cases from the Supreme Court is simply wrong:  there’s now two cases, one just decided (Alice).  Further, we all know that 101 defenses were about as rare as a blue zebra until a few years ago.

But maybe there is some long-standing interpretation, even in dicta?

Wrong.  If you read the authority relied upon by the court, they don’t support the this “history” at all — instead they undermine it.

Foremost, the Supreme Court case relied upon is Graham v. John Deere Co., 383 U.S. 1 (1966).  That famous case about Section 103 had nothing to do with whether “eligible subject matter” was a condition for patentability, and did not decide that issue. Instead, in dicta analyzing the “condition for patentability” in Section 103, the court noted:

The Act sets out the conditions of patentability in three sections. An analysis of the structure of these three sections indicates that patentability is dependent upon three explicit conditions: novelty and utility as articulated and defined in § 101 and § 102, and nonobviousness, the new statutory formulation, as set out in § 103.  The first two sections, which trace closely the 1874 codification, express the ‘new and useful’ tests which have always existed in the statutory scheme and, for our purposes here, need no clarification. The pivotal section around which the present controversy centers is § 103 . . . .

383 U.S. at 12-13.

That statement actually undermines the argument that “eligible subject matter” is a condition for patentability.

Here’s why:

Graham explains that the Patent Act of 1793 had only two conditions for patentability:  utility and novelty (both of which were once in the same statute, a precursor to sections 101 and 102).  Id. at 10 (“Although the Patent Act was amended, revised or codified some 50 times between 1790 and 1950, Congress steered clear of a statutory set of requirements other than the bare novelty and utility tests reformulated in Jefferson’s draft of the 1793 Patent Act”).  The Graham Court recognized that in 1952 Congress had added a third condition, non-obviousness.  See id. at 14 (“Patentability is to depend, in addition to novelty and utility, upon the ‘non-obvious’ nature of the ‘subject matter sought to be patented’ to a person having ordinary skill in the art.’”) (quoting Section 103).

So… the Graham case suggests — if anything, as it is dicta — that “eligible subject matter” is not a condition for patentability.  If Graham stated that utility, novelty, and non-obviousness were the three conditions for patentability, then the Court’s statement that there are “three conditions” means “eligible subject matter” is not one:  if “eligible subject matter” were also a condition for patentability, then there would be four, not three, conditions.

The panel also cites dicta in a footnote in Aristrocrat Techs., Austl. PTY LTd. v. Int’l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008).  Although the merits of a Section 101 issue was decided in Dealertrack, the patentee did not contend that Section 101 was not a statutory defense, and the court did not decide that issue.  Further, dicta in that case traces directly back to the dicta from Graham.  So, there is no long line of cases that, somehow, Congress knew about and intended to adopt.

Worse, there is loose language in other cases saying exactly the opposite, that only 102 and 103 are conditions of patentability (i.e., are consistent with the plain text.).  For example, the Federal Circuit has stated: “The two sections of part II that Congress has denominated ‘conditions of patentability’ are § 102 . . . and § 103 . . . .”  Myspace, Inc. v. GraphOn Corp., 672 F.3d 1250, 1260-61 (Fed. Cir. 2012).   The Supreme Court made essentially the same observation in Diamond v. Diehr, 450 U.S. 175, 190-91 (1981).

So… in fact there is no case law supporting this history, and instead the “case history” is, at best, split and unclear.

The important fact to me is that none of these cases parse the statutory text, or examine the purpose and legislative history of the AIA discussed here.  Ignoring the actual text in favor of what courts have said a statute says is obviously incorrect.  In that regard, the Supreme Court has overridden judicial interpretations of statutes that failed to adhere to the text, and has done so even after decades of having lower courts adhere to those incorrect constructions.  See Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, 177 & 191 (1994) (overruling six decades of case law implying a cause of action), superseded on other grounds by 15 U.S.C. § 78(t)(e). Whatever a court says a statute says, the Constitution makes paramount what the enacted text actually says.

To sum up, absent some good reason to ignore the plain text, in my opinion random statements from one or two legislators and dicta in cases does not control.  Dicta in cases that do not analyze the statutory text do not control.  A committee report that flatly contradicts the enacted text does not control.  And one Senator’s opinion is not enacted statutory text.

I understand why the panel did what it did.  But the Constitution is more important than judicial politics.

Finally, let’s be real again:  if you look at what Congress did in 1952, it was to get rid of this subjective nonsense.  I strongly believe that then Chief-Judge Rader’s opinion, and “additional views” in CLS Bank v. Alice (which, textually, this panel confirmed in holding 101 is not even a listed defense) need to be raised and litigated.  Statutes should matter.

(You can find the original version of this, with citations and footnotes at:

Courts Adhering to Objective Frivolousness Despite Octane… and They Should

I did a canvas of post-Octane 285 cases a while back, and found it curious that district courts were continuing to evaluate fee shifting based, in part, on whether the arguments made by the loser had been “objectively frivolous.”  That, of course, is not required to shift fees post-Octane.

But perhaps it should be; or, to put it a different way:  courts should interpret 285 in light of Rule 11.

Here’s why.

To the extent that a gap develops between Rule 11’s requirements on lawyers — pursue arguments so long as non-frivolous, to summarize it bluntly — lawyers who represent their clients within the bounds of Rule 11 can have their clients pay fees under 285.  This will dampen lawyer zeal.

So, while perhaps statutory interpretation principles show Octane was right in rejecting the Brooks Furniture approach, determining what an exceptional case is should, nonetheless, have some mooring to Rule 11.

The Federal Circuit seems to be following the district court’s lead in applying the pre-Octane standard under the guise of Octane.  A recent case is Gaymar Indus. Inc. v. Cincinnati Sub-Zero Products, Inc., (Fed. Cir. June 25, 2015).