Rule 36 Summary Affirmances

Ethics

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

Ethics

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!

Ethics, Patent

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

Ethics, Patent

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

Ethics

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

Ethics

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

Ethics

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

Ethics

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

Ethics

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

Ethics

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?

Ethics, Patent

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.

 

CNN on 10 Cool Inventions

Ethics

The story is here.  The music device from Neil Young et al intrigues me because I *hate* the sound of CDs and MP3s, particularly when playing music that I know well from my youth and “audiophile” stereo.  Ah, those were the days…

Patent Agent and Criminal Defense Lawyer? Not.

Ethics

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.”