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.

Marlboro Man Seeks to Snuff Out t-Shirt Maker

The fellow kicks the habit and then makes a t-shirt with a rough parody of Marlboro’s red box, but with “blood” dripping from the red part and “Death” instead of “Marlboro.”  Marlboro sends a C&D letter.  Story here.

I’ve been reading a lot about moral issues associated with patents on medicine, and so this struck me as relating enough to ethics to put it up.

Now back to medicine. CAFC announces its cases shortly, and the Supremes no doubt will issue some fun cases today or Monday…. but not on IP.

Federal Circuit Holds Mediator Violated Duty of Disclosure, but Relief Under FRCP 60(b) Unwarranted

This is an interesting result, to say the least.  The case, Ceats, Inc. v. Continental Airlines, Inc., is here.  The opinion (KO-Auth; SP; RR) began three years before his case, in another unrelated matter. In the Karseng arbitration, a former magistrate, Faulkner, served as an arbitrator.  He failed to disclose significant personal ties to a Fish & Richardson lawyer, Johnson, who appeared in that arbitration on behalf of a client, going so far as to act as if he had never met Johnson, though they had spent significant social time together.

Once the existence of some relationship was discovered, the party who had lost the arbitration sought discovery as to its extent.  The state court denied that relief and affirmed the arbitral award.  Various appeals ensued, and ultimately Fish lawyer Melsheimer argued for its client, the arbitration winner, on appeal in state court arguing that Faulkner had not violated any disclosure obligations by not disclosing his personal relationship with Fish lawyer Johnson.

Meanwhile, in this patent case, Faulkner had been appointed as a mediator (not arbitrator).  After the first mediation session but before the second, the Texas appeals court held that Faulkner in fact had violated his disclosure obligations and so it vacated the arbitral award.

While all of that was happening, Fish was representing clients in the mediation.  Neither it nor Faulkner disclosed the appeals of the arbitral award.  Mediation did not succeed and the case was tried, with the jury finding infringement but invalidity.  Then,  the parties to the arbitration sued Fish and Faulkner for nondisclosure in Texas state court.

All of this came to light to Ceats after judgment had been entered in this case, and so it sought relief under Rule 60(b), asserting that the judgment should be set aside because of Faulkner (and Fish’s) failure to disclose the Karlseng arbitration controversy.  The district court denied relief, holding that no obligation of disclosure was violated.

The Federal Circuit reversed that part of the holding, but held that even though the Karlseng matter should have been disclosed, relief from judgment was inappropriate.  With respect to the first point the panel stated, “Because parties arguably have a more intimate relationship with mediators than with judges, it is critical that potential mediators not project any reasonable hint of bias or partiality.”  In pertinent part, it reasoned:

In this case, at the same time Faulkner served as the court-appointed mediator, the Faulkner-Johnson-Fish relationship was directly at issue in a state appellate court. Importantly, this meant that Fish, as a firm, was actively defending Faulkner’s personal disclosure deci- sions while he was mediating this case. Despite the absence of a formal attorney-client relationship, Fish’s on-going defense of Faulkner’s award reasonably could give rise to the appearance impropriety. After the Texas appellate court remanded the case for discovery regarding the Faulkner-Johnson relationship in Karlseng I, moreover, Faulkner was compelled to provide testimony. Though the record does not reveal any coordination between Fish and Faulkner, the mere fact that Faulkner testified in support of the arbitration award and was asked, not just about his relationship with Johnson, but with the Fish firm and its clients as well, further empha- sizes the need for disclosure on these facts.

Furthermore, the Texas appeals court’s decision holding that Faulkner breached his disclosure obligations in the Karlseng litigation was released on June 28, 2011— between the first two mediation sessions in this case, and well before the third. See Joint Appendix (“J.A.”) 1095 (explaining that the parties engaged in official mediations on June 21, 2011 and June 30, 2011). Thus, the state court found that the Faulkner-Johnson-Fish relationship was a disqualifying, social and business relationship, which “could reasonably be seen as raising a question about the mediator’s impartiality” while this case was ongoing. ABA Standards for Mediators § III.C; see Karlseng II, 346 S.W. 3d at 87–94 (detailing the lengthy Faulkner-Johnson relationship, including lavish gifts and outings and discussing matters in which Fish retained Faulkner as a neutral, and the fact that Faulkner re- quested and was granted an opportunity to make a presentation to Fish attorneys, which the state court characterized as a business development pitch by Faulkner); see also Potashnick v. Port City Const. Co., 609 F.2d 1101, 1114 (5th Cir. 1980) (recognizing that a partner in a participating law firm will always have some interest in the outcome of a case handled by his firm).

However, the court denied relief, reasoning in part:

We agree with Continental that CEATS has failed to show a meaningful risk of injustice in this case. Although we conclude that Faulkner should have disclosed the circumstances surrounding the Karlseng litigation and his relationship with the Fish firm relating thereto, we find that CEATS ultimately was able to fully and fairly pre- sent its case before an impartial judge and jury. As CEATS admitted at oral argument, moreover, there is no evidence in the record that suggests that Faulkner wrong- fully disclosed confidential information, and CEATS never sought discovery of Faulkner in an effort to determine if any such disclosure occurred. See Oral Argument at 6:54. Because of this, we find no risk of injustice in this case based on Faulkner’s failure to disclose.

Turning to the second Liljeberg factor—the risk of in- justice in other cases—CEATS argues that, by failing to provide a remedy for Faulkner’s non-disclosure of the Karlseng litigation, mediators in future cases will have less incentive to disclose potential conflicts of interest and parties will lose faith in the mediation process. Indeed, CEATS also contends that, if the district court’s ruling is allowed to stand, the mediator’s disclosure requirement would be meaningless. Continental responds that there is no risk of injustice in other cases because there was no duty for Faulkner to disclose in this case, an argument we have already rejected. Continental asserts, moreover, that far more injustice and disruption would result from allowing losing parties to throw out unfavorable judg- ments by challenging a mediator’s disclosure requirement.

We too have concerns about failing to provide a remedy for a mediator’s non-compliance with his or her disclosure obligations. We certainly do not want to encourage similar non-disclosures. On this record, however, we do not believe there is a sufficient threat of injustice in other cases to justify the extraordinary step of setting aside a jury verdict. We find it unlikely that mediators will simply ignore their disclosure obligations if we deny relief here. To the contrary, our decision serves to reinforce the broad disclosure rules for mediators by holding that Faulkner had a duty to disclose in this case. The mere fact that the final judgment after a full jury trial will not be overturned every time a mediator fails to disclose a potential conflict is not likely to affect the disclosure decisions of other mediators. Accord Liljeberg, 486 U.S. at 863–64 (holding that relief from judgment is not automat- ic even if the presiding judge violates § 455 by failing to recuse himself). Beyond his failure to disclose, moreover, there is no evidence that Faulkner acted inappropriately or ineffectively when mediating this case. See Oral Ar- gument at 6:54. We therefore find that the denial of relief in the circumstances of this case will not risk injustice in other cases.

Regarding the third Liljeberg factor—the risk of un- dermining public confidence—CEATS asserts that Faulk- ner’s non-disclosure undermines public confidence in the neutrality of court-appointed mediators. Again, Conti- nental’s only response is that, because Faulkner did not have a duty to disclose anything, there can be no danger of undermining public confidence.

While we find that public confidence in the mediation process will be undermined to some extent by our failure to put greater teeth in the mediators’ disclosure obliga- tions, we do not find that fact justifies the extraordinary relief CEATS seeks. Because CEATS had the opportunity to present its case to a neutral judge and jury, we do not believe that refusing to grant the relief CEATS seeks will undermine public confidence in the judicial process as a whole. As the Supreme Court explained, Rule 60(b)(6) “should only be applied in ‘extraordinary circumstances.’” Liljeberg, 486 U.S. at 864 (quoting Ackermann v. United States, 340 U.S. 193, 199 (1950)). CEATS is seeking relief from judgment by an impartial jury after litigating the matter before an unbiased judge; granting that relief is what would be most extraordinary. Because we find insufficient risk to public confidence in the justice process as a whole, we hold that the third Liljeberg factor does not weigh heavily in favor of relief under Rule 60(b)(6).



Which Side of the Mushroom did Alice Eat From?

If you don’t know the story, Alice meets up with a hookah-smoking caterpillar who tells her that if she eats out of one “side” of a (round) mushroom, she’ll get bigger, but out of the other side, she’ll get smaller.  He doesn’t fully explain to Alice what will happen to make her taller and shorter, and so here is a fun read:

This time Alice waited patiently until [the caterpillar] chose to speak again. In a minute or two the Caterpillar took the hookah out of its mouth and yawned once or twice, and shook itself. Then it got down off the mushroom, and crawled away in the grass, merely remarking as it went, ‘One side will make you grow taller, and the other side will make you grow shorter.’

‘One side of what? The other side of what?’ thought Alice to herself.

‘Of the mushroom,’ said the Caterpillar, just as if she had asked it aloud; and in another moment it was out of sight.

Alice remained looking thoughtfully at the mushroom for a minute, trying to make out which were the two sides of it; and as it was perfectly round, she found this a very difficult question. However, at last she stretched her arms round it as far as they would go, and broke off a bit of the edge with each hand.

‘And now which is which?’ she said to herself, and nibbled a little of the right-hand bit to try the effect: the next moment she felt a violent blow underneath her chin: it had struck her foot!

She was a good deal frightened by this very sudden change, but she felt that there was no time to be lost, as she was shrinking rapidly; so she set to work at once to eat some of the other bit. Her chin was pressed so closely against her foot, that there was hardly room to open her mouth; but she did it at last, and managed to swallow a morsel of the lefthand bit.

‘Come, my head’s free at last!’ said Alice in a tone of delight, which changed into alarm in another moment, when she found that her shoulders were nowhere to be found: all she could see, when she looked down, was an immense length of neck, which seemed to rise like a stalk out of a sea of green leaves that lay far below her.

Since law professors are, no doubt, going to beat the hell out of the Alice-in-Wonderland connection, I thought I’d stake my claim early. I’ve been reading a lot of law professor views, and several (if not many) think software patents are dead, or largely so.  Kappos, in contrast, thinks Alice ate out of the side that’s going to make software patents larger, or at least not shrink. His view is here.

My guess is Alice is going to cause us all to bang our heads, stub our toes, and wander through Wonderland for many years to come.


Patent Agent and Criminal Defense Lawyer? Not.

In re Campbell was a recent default judgment taken by the OED against a patent agent.  Among other things, the default states that the patent agent took money without doing the prosecution work he’d promised to do. But he also showed up in Colorado state court to defend a criminal case, and basically represented to the judge that he was an attorney… licensed by the PTO.  That didn’t sit well with the judge, the Colorado bar, or the OED.

I’m filing this under:  “I hope that this is prohibited is not news to you.”

Judge Rader on Judge Rader’s Retirement

You can read his email to a journalist here, which is similar to what I’ve heard privately.

I’ve had journalists, friends, lawyers, and others contact me for my thoughts.  Here are my thoughts:

I loved clerking for Chief (sorry, he’ll always be that).  The man is wicked smart, kind, full of life, and funny.  He cares passionately about the court and patent law.

His plan to move on now doesn’t surprise me, since I know he loved to teach (had the privilege of teaching one class for him at GW while I was up there) and he loves to travel (I’ve never seen someone bound off an airplane after 20 hours of flight with more energy than him).

The best is all I can wish for him, along with a good ticket to the next Stones tour.

Biosimilars, Ethics, and my Takeaways

If you haven’t notice, I do a lot of CLE speeches.  In part, of course, it’s to promote Mercer, my school.  In part it’s service. In part I enjoy it (though the travel sucks).  Primarily it’s to stay in some contact with what matters to practitioners (I don’t remember the last time I read a law review article).  Anyhow, yesterday I sat through 4 hours on biosimilars.  Fascinating stuff, and a mess.

My powerpoint is here (2014 biosimilar hricik part). It makes pretty much all the point the paper does, and some more.  If you’re doing the information exchange under the BCPIA, you need to have an agreement.  This ppt points out some of the glaring problems with the statute.

I also listened to how disruptive Myriad (and the 101 guidelines) have been for this field — cutting edge of technology and a huge part of the future.  I also learned a few people actually read m Alito blog post (below).

Anyhow, it was an excellent program, and I got to see some friends, too!

Court Affirms Rule 11 Sanctions for Frivolous Claim Construction, Infringement Position

Source Vagabond Sys. Ltd v. Pearl Cohen Zedek Latzer LLP (Fed. Cir. June 5, 2014) is here.  Judge Wallach (with KM and JR (not EW)) affirmed imposition of Rule 11 sanctions against the firm that had represented the patentee.  Not a lot of new law, but it does make it clear that you’d better do a reasonable pre-suit investigation (claim charts not required always, but a good idea…) before you file a suit.

Ego, Law, and Justice Alito’s Opinion

On the main page, they’re talking about how Justice Alito wrongly criticized the Federal Circuit for “fundamentally” misunderstanding what infringement requires, but in doing so ignored the Federal Circuit’s own opinion, on review, on that subject in Limelight.

I’ve written a lot about how, in my humble view, the Supreme Court doesn’t understand patent law.  I observed this first hand in watching oral argument in Gunn v. Minton.  I experienced it first-hand as a clerk in assisting the court during the CLS Bank appeal, when the Federal Circuit clearly struggled with following the statute, following the cases, and giving a comprehensible framework for the patent community.  I’ve seen it in reading Justice Scalia’s joinder in Myriad, where he basically said that he had no idea what the science was, and in seeing that, in fact, the Court completely botched that case.  I’ve seen it in the silliness that was Biosig.  Where are we now?

What we need is judicial restraint by the Supreme Court.  They do not understand the technology, the law, or implications of what they do, and this is particularly true in 101 jurisprudence, where they simply can’t seem to read the statute or harmonize their own cases (no one can).

Rant over.