Company sues Kilpatrick Townsend, Claiming Firm Gave its Secrets to a Client to Patent

The story is, hopefully not behind a paywall, here.  I tried to find the pleadings to post but had no luck, even on Pacer.  MV Circuit is the plaintiff, claiming Kilpatrick conspired with its client, Omnicell, to patent MV Circuit’s technology concerning some “Riocart” technology in Omnicell’s inventor’s name.  The gist of the complaint according  to the story is this:

Omnicell allegedly told MV Circuit that, in order to determine the value and patentability of MV Circuit’s intellectual property, MV Circuit needed to disclose its confidential intellectual property to William Daley, Omnicell’s attorney at Kilpatrick Townsend — even though Omnicell had already determined the technology was patentable.

Omnicell falsely represented to MV Circuit that Daley was not Omnicell’s regular patent counsel and would not be involved in developing any patent applications on Omnicell’s behalf, the complaint said. Omnicell further falsely claimed the Kilpatrick Townsend attorney would not disclose MV Circuit’s intellectual property to Omnicell, according to the complaint.

However, MV Circuit claims that neither Omnicell nor Daley told MV Circuit that the firm was in fact Omnicell’s regular patent counsel and that partners from the same Denver office of Kilpatrick Townsend as Daley were working on Omnicell’s nonpublic patent applications related to the technology in the RIO Cart, according to the complaint.

OED reprimands lawyer for unreasonable fees, improper fee division, and related issues.

In re Lehat reads like a law school final exam.  The facts are a little unclear (be sure to read the opinion) as to some issues, but the facts seem to be as follows:

The lawyer was doing trademark work for the office, but was not registered to prepare patent applications.  He acquired a client through a legal services program provider he worked for who needed a patent filed on an improvement to a hair weave system.  (If you have seen my picture, or me, you will know I am not its target audience.)  Rather than simply refer her to a patent lawyer, or get a proper fee division agreement (e.g., he would receive fees in proportion to the work, which would have not been much) he took $5,000 from the client.  He paid $3,000 to a practitioner to prepare the case, who later returned $2200 of it, saying that he had really earned $800.  The practitioner thus had $4,200.  He did not put any part of the $4,200 he kept into his trust account, but deemed it a “relationship fee” that was earned upon payment.

The client brought a state action seeking refund of the $5,000 and the lawyer took the position that the $4,200 was his.  He seemed to assert both that he was reasonably billing $1,000/hour as a “relationship attorney” and that the $5,000 was a flat fee that was predicated on 5 hours work at $1,000 per hour.

The OED did not agree.  Based upon mitigating factors, it gave him a public reprimand and ordered him to return the money.

It is interesting to me for two reasons.  One is: only a reprimand?  The second is that the opinion discusses the distinction between a general retainer — earned upon payment, and is paid simply for the lawyer to be available in the future, at which time he’ll bill his hourly rate — and a special retainer, which we usually think of as an advance on fees, which goes into the trust account and is drawn down as the money is earned.

Law Prof Ethics and Publications: a Rant

One of the many things that surprised me when I became a professor 12 years ago is the “law review game.” What happens is this: prof writes an article and sends it out to a ton of journals. Once he gets one acceptance, he then tries to “leverage it up” to “higher” journals. If he gets a higher one, then he tries again. It’s led to all sorts of things — expiring offers to publish, and so on, as well as writing that is intended to be published in journals “at the top,” which may or may not reflect what lawyers and judges want and need to read.

It’s all silly. Law students have no clue as to what is good writing, or important subjects, and so they go by labels (“ooh, a professor from harvard wrote this so it must be important” and the converse) or, imho, whether the article fits with what they’re being taught in law school (so, students at the more “theoretical” schools will think theory is what is important to “the profession,” whatever that means to them).

Of course, all scholarly work is now on line and so accessible by searching. So, placement in the sense of getting information out means absolutely nothing and, perhaps, the opposite if the “profession” includes most practicing lawyers, who read predominantly bar journals and practice-specific materials (the latter, such as “the X law school journal of law and technology” are generally not viewed by law profs as being as good as the law review of school X).

This leads to law professors trying to further their careers by openly admitting they write for a small segment of students at “high end” law reviews.  Usefulness to lawyers, judges, legislators… not much of a factor.

In my own view we ought to be writing for judges and lawyers, not each other or for second year law students at Harvard.

Sigh.

Practitioner’s Non-Lawyer Assistant Signs Documents, Fabricates, E-mails: OED Acts.

In the Matter of Druce, Proc. No. D2014-13 (OED Sept. 5, 2014), a practitioner admitted to neglecting matters entrusted to him by not preventing his non-lawyer assistant from cutting and pasting a digital version of the lawyer’s signature onto petitions, fabricating emails to the Office, doctoring postcards to show receipt by the Office of papers, falsifying Express Mail labels, and backdating certificates, among other things.   The lawyer did not know of the conduct, and in fact the non-lawyer assistant kept the information from the lawyer.  The lawyer agreed he had not adequately supervised the non-lawyer.

Procedure and 101: I haven’t ranted in a while.

I teach Civ Pro and have even written a book on it, so…

1.   A defendant has to plead 101 as a defense (if it is one, and you all know how I feel about the plain text of 282, but let’s not go there).

2.  The patent is entitled to a presumption of validity.

3.  If we get into “preemption” or “conventionality” or “inventiveness” the facts pop up pretty quickly (how do we know if it preempts a lot without knowing what non-infringing alternatives there are; isn’t ‘conventional’ and ‘inventiveness’ like obviousness? What time are they measured from — from just before the invention?)

4.  “Enough” and “invention” are not legal doctrines.

 

Rant over.

Buy Your Opponents’ Computers at Auction and then Have Fun!

In Kyko Global, Inc. v. Prithvi Info. Solutions, Ltd., (Wd. Wash. June 13, 2014), plaintiff’s attorneys in a civil fraud suit bought a computer that had been seized from one of the defendants.  The defendants figured it to and moved to disqualify the firm. The court denied the motion because the plaintiff’s lawyers had done nothing wrong., even though they went digging for meta-data mining on the hard drive.

Interestingly, the court held that privilege had not been waived by the plaintiff because he had believed that he had adequately erased the hard drive.

Lots of lessons. I remember being told the military burns computer hard drives because they can’t be truly “erased.”

Failure to Disclose Adverse Litigation Claim Constructions During Ex Parte Reexam States Inequitable Conduct Claim

Masimo Corp. v. Philips Elect. North Am. Corp. (D. Del. Sept. 2, 2014) addressed whether the accused infringer would be permitted to amend its answer to include a claim for inequitable conduct.  The district court rejected Masimo’s contention that the answer failed to state a claim and allowed amendment.

The substantive allegations of the claim were that during ex parte reexam the patentee knew of but failed to disclose a district court’s claim interpretation that contradicted its position in reexam.  Specifically, the District Court had construed the claims to not require that claimed calculators actually determined a particular ratio, but in the PTO it argued the opposite — that the claimed calculators do require calculating the two ratios.

The district court acknowledged that the broadest reasonable construction standard applied in the office, but not in court, but nonetheless found the allegations sufficient under Exergen and Rule 9(b) and allowed amendment and also discovery into the issues.

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.