Interesting Article Providing Data Analyzing Exergen/Therasense’s Impact

Ethics

The article by Robert Swanson, published in the Stanford Law Review, is here.  The abstract:

This Comment empirically investigates the doctrine of inequitable conduct in patent law. Inequitable conduct is a defense to patent infringement that accuses the patent holder of committing fraud on the U.S. Patent and Trademark Office to secure the patent. Before the Federal Circuit’s recent Exergen and Therasense decisions, the defense was seen as chronically overused. As a result, patent applicants cited more prior art in their applications to avoid later being charged, during litigation with fraudulent omissions. The Federal Circuit responded with Exergen and Therasense, which heightened the pleading standard and raised the legal proof required for inequitable conduct, respectively.

Many commentators, and especially members of the patent defense bar, now feel that the Federal Circuit has gone too far in restricting the inequitable conduct defense, to the point that it is essentially a dead doctrine. This Comment informs the debate by adding comprehensive data. To better comprehend the effects of the Exergen and Therasense cases, this Comment calculates the rates at which accused infringers plead and prove inequitable conduct—for every patent case over the periods in question. The results show that the inequitable conduct defense is used significantly less often than many assume, contradicting assertions by the Federal Circuit’s Therasense majority. Moreover, the data indicate that Exergen and Therasense have both contributed to an even further decline in accused infringers’ use of the inequitable conduct defense. Based on a full exploration of the data, the Comment concludes that the Federal Circuit went too far in Therasense (but not in Exergen). A better formulation of inequitable conduct doctrine would be the test advocated by the dissent in Therasense, which embraced the U.S. Patent and Trademark Office’s lower standard of materiality.

Patent Reform: It’s now or never?

Ethics

There’s an article here suggesting that, if the Senate doesn’t move now, this bill will die (because of the election and so on).  I’m not sure why the Senate would move on things like fee-shifting with Octane and all up there – I’m hopeful they’ll get this matter of statutory interpretation right; meaning, they’ll agree with me (see post below).

Judge Robinson Finds Patentee Violated Rule 11 for Asserting a Claim that Required “printed” Material Covered Amazon’s Kindle

Ethics

The order in Technology Innovations, LLC v. Amazon, Inc., 2014 WL 1292093 (D. Del. March 31, 2014) is here.  It’s a nice order addressing what appears to be a very overly aggressive claim construction position by the patentee, where it asserted that its patent covered Amazon’s Kindle.  This picture perhaps explains the result:

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The opinion points out that Amazon in its brief had cited the NYT Op-ed I co-wrote with Chief and Prof. Chief to support the argument that section 285 sanctions may be proper where a litigant “distorts a patent claim far beyond its plain meaning and precedent for the purpose of raising the legal costs of the defense.”

Interesting North Carolina opinion: Clients may be entitled to e-files in a preferred format

Ethics

Given the number of proprietary platforms used in prosecution, N.C. Opinion 2013-15 (January 24, 2014) is worth noting.  It joins several other opinions analyzing whether a lawyer must provide to a former client e-files and how far the lawyer must go in finding them. But, more than that, it answered this question:

When the representation terminates and the client requests the file, is the lawyer or law firm required to provide the records in the format (electronic or paper) requested by the client?

 With the following analysis:

Many clients, or successor counsel, will have the technical expertise and financial ability to receive client records in an electronic format without experiencing any problem or undue expense in opening, using, or reproducing the records. These clients will probably prefer to receive the records in an electronic format. However, there are clients, such as individuals or small businesses with limited financial means or technical expertise, that cannot afford to purchase expensive software or computer equipment simply to gain access to the records in their own legal files. There must be a weighing of the interests of the lawyer or law firm in producing the client’s file in an efficient and cost-effective manner against the client’s interest in receiving the records in a format that will be useful to the client or successor counsel.

Therefore, records that are stored on paper may be copied and produced to the client in paper format if that is the most convenient or least expensive method for reproducing these records for the client. If converting paper records to an electronic format would be a more convenient or less expensive way to provide the records to the client, this is permissible if the lawyer or law firm determines that the records will be readily accessible to the client in this format without undue expense. Similarly, electronic records may be copied and provided to the client in an electronic format (they do not have to be converted to paper) if the lawyer or law firm determines that the records will be readily accessible to the client in this format without undue expense. See 2002 FEO 5 (“in light of the widespread availability of computers,” emails may be provided to a departing client in an electronic format even if the client requests paper copies).

A lawyer should in most instances bear the reasonable costs of retrieving and producing electronic records for a departing client. However, a lawyer or law firm may charge a client the expense of providing electronic records if the client asks the lawyer or law firm to do any of the following: (1) convert electronic records from a format that is already accessible using widely used or inexpensive business software applications; (2) convert electronic records to a format that is not readily accessible using widely used or inexpensive business software applications; or (3) provide electronic records in a manner that is unduly expensive or burdensome.

Nevertheless, if the usefulness of an electronic record in a client file would be undermined if the document is provided to the client or successor counsel in a paper format, the record must be provided to the client in an electronic format unless the client requests otherwise. For example, providing a spreadsheet without the underlying formulas or providing a complex discovery database printed in streams of text on reams of paper would destroy the usefulness of such data to both the client and successor counsel. Similarly, a video recording cannot be reduced to a paper format and therefore must be provided to the client in its original format.

If you are not already dealing with this and related issues at the outset, consider doing so!

2d Edition of Ethical Issues in Patent Litigation now available!

Ethics,

Woo hoo!  You have no idea how much work it is to create something like this.  Very proud of the second edition and a huge thanks to the good folks at Oxford University Press, and then LexisNexis, for making it happen.  Buy (many copies of) it here.  The abstract:

Patent Ethics: Litigation (2014 Edition) by David Hricik, is a unique guide to the ethical issues arising in the course of the patent litigation process. By providing relevant rules and case law, it allows practitioners to identify ethical problems before they arise and to address them most effectively when they do. This treatise and its companion volume (Patent Ethics: Prosecution, by David Hricik and Mercedes Meyer) are the first of its kind to combine rules and patent-specific cases with author commentary, which distills the author’s experience and expertise into effective practice strategies. The 2014 Edition has been completely revised and includes discussion of ethical issues arising under new AIA post-grant proceedings, including prosecution bars. It also includes new chapters on ethical issues in alternative fee agreements and in settlement agreements, and expanded chapters on selection, compensation, and use of expert witnesses.

My paper on judicial ethics and social media, the Internet, etc., now available

Ethics

The abstract says it all, and brilliantly:

This paper was written for judges to assist them in understanding: their obligations concerning Facebook and other social networking sites, including “friending” lawyers; the confidentiality of email, texts, and other e-communications; the use of the Internet by lawyers to research jurors or potential jurors; the use of the Internet by judges to research the facts and law; and how to admonish jurors not to use the Internet to research the case before them or to discuss it prior to deliberations.

The full paper is here.  It’s pithy and just amazing, so so says me!

Client, Firm Lose 12(b)(6) Motion to Inventor who Claims Firm Stole his Trade Secrets

Ethics, Trade Secret,

Nicolo v. Patterson Belknap Webb & Tyler, LLP, is a suit brought by an inventor-patentee who claims that a Patterson attorney met with him under the guise of seeking to represent him in a suit against third-parties, while the real purpose was to obtain information for its client, Ethicon.  The judge recently denied the defendants’ 12(b)(6) motion, reasoning that Pennsylvania law protects against mere acquisition of trade secrets through improper means (subsequent use/disclosure need not be alleged, in other words).  The opinion doing so is here.

In addition to the obvious lessons, at the Emory conference I mentioned, one of the panelists asked how often large corporations take advantage of solo inventors. If the allegations here are true, this could be one such example.  “Troll” is a word that might have been applied to the inventor had he sued Ethicon, in other words.

Stay tuned.

New York State Bar Issues “Guidelines” on Lawyer Use of Social Media

Ethics

The opinion is here.  It discusses these points, and is worth a read:

  • Attorney Advertising
  • Furnishing of Legal Advice Through Social Media
  • Review and Use of Evidence from Social Media
  • Ethically Communicating with Clients
  • Researching Social Media Profiles or Posts of Prospective and Sitting Jurors and Reporting Juror Misconduct

I’ve written up a paper on judicial ethics and social media which I’ll post soon.  There’s a lot of gray out there…

California Opinion Enters the Fray on What is Puffing, What is Fact, in Negotiations

Ethics

California earlier this year issued for comment Cal. St. B. Standing Comm. on Prof’l Responsibility & Conduct Proposed Formal Op. 12-0007 (Jan. 24, 2014).  This is a mess of an area, but this doesn’t shed much light, imho.

Some background.  Rule 4.1 prohibits lawyers from making false statements of material fact.  However, everyone knows that during negotiations people say things that sure sound like facts, but which no one takes as such.  For example, “we won’t pay more than 3% for this license” is seldom taken as meaning that, in fact, you won’t pay 4%.  It’s bargaining.

The problem is that it’s hard to distinguish what is a “fact” from non-fact in this environment.  The comment to the Model Rule says that what’s a fact can “depend on the circumstances” and gives 3 examples of what are not facts… no example of what is a fact, and points lawyers to “generally accepted conventions” to figure out the difference.

The California opinion doesn’t break a lot of new ground.  It says:  (a) L can’t say a witness saw the defendant texting while driving when no such witness exists; (b) L can’t say the plaintiff’s income was $X when in fact it was $Y; (c) L can lie about the bottom line settlement number of its client; (d) L can’t misrepresent the extent of insurance coverage (that is, from my research, the most common factual misrepresentation); (e) L can’t say his client will file for bankruptcy if he knows his client doesn’t qualify and (f) L can’t hide the fact that his client got a new job if the parties have agreed to supplement information.

So… not much to learn, but it tries.

I’ve done a CLE on this topic for patent lawyers over the years, and even have it up on cleonline.com if you need CLE credit.  It includes cartoons!

New York Ethics Opinion: You can pay for physical evidence, but….

Ethics

The New York State Bar Association Committee on Professional Ethics in Opinion 997 (1/24/14) analyzed whether a lawyer could pay a store owner for a video tape from the store’s surveillance camera that was pertinent to a personal injury claim the lawyer had brought.  You can imagine that sort of issue arising in patent litigation.

The bar association recognized that Rule 3.4(b) (in all states I’m aware of) severely limits payments to witnesses, limiting for example payments to fact witnesses to reimburse for reasonable time and expenses.  The bar opinion said that payments to physical evidence were outside the scope of the rule, but had two central limitations:  falsification of evidence was obviously a concern when payment was demanded; payments can’t be masked witness payments that violated Rule 3.4(b).

On the other hand, the opinion suggested that there may even be an affirmative duty to buy the evidence!

 

What I Learned at the Emory Troll CLE

Ethics,

We have a great turn-out and a good time at Emory.  The panel consisted of me, an in-house lawyer for a big company, and an outside patent litigator.

First, whether someone innovates, or not, is what defines “troll” to most people.  Thus, an aggregator is a “troll” because it doesn’t invent anything. It’s not the act of manufacturing that bothered people — it is the lack of innovation. So, Bob the Inventor can file a suit and no one would call him a troll.  Likewise, if Google were to assert a patent that, for whatever reason, it was not commercializing, no one would call it a troll.  Same thing with universities, which pretty much only license.

Second, condemning the purchaser of patents for asserting them ignores the innovation, and payment, that preceded the purchase.  For example, if an aggregator, or Google, acquires a patent from Bob the Inventor, that’s a good thing. Bob may not be able to commercialize his invention.  Further, sometimes patents are purchased in distress circumstances (e.g., bankruptcy) and liquidity is good.

Third, the problem does (as Chief Judge Rader, Professor Chien and I argued in our NYT op-ed) come from the fact that a non-practicing entity doesn’t make anything.  But it’s because it can (a) take advantage of asymmetric discovery costs; (b) has no business disruption; (c) doesn’t have to worry about counterclaims; and (d) doesn’t have to worry about its reputation in the market.  It is not that it doesn’t innovate — it paid the innovator.

Fourth, better enforcement of 285 is only part of the solution. If the patentee is an LLC with no asset besides the patent, then getting fee shifting may not work. (Query:  can 285 be used to shift fees to plaintiffs’ counsel?).  What may work is early claim construction followed by greater enforcement of Rule 11 against patentees who assert infringement after an adverse Markman ruling.  (In my second edition of my patent ethics – litigation book, I survey the Rule 11 cases and pretty much all of them are not for incorrectly filing a suit (how can a judge sanction a lawyer on a close claim construction question when the CAFC reverses district judges so much?), but for continuing to assert infringement after a Markman ruling makes it clear there is none. So, if you move up Markman, and then apply those cases… sanctions are available against the lawyers.

Finally, what is the real gripe seems often to be with patent quality.  That’s not solved by looking at who owns a patent, however.

Judge Robinson Issues Prosecution Bar Regarding IPR, Etc.

Ethics

Her order in Versata Software, Inc. v. Callidus Software, Inc. is here.  It is quite interesting as it permits the patentee to designate a person to coordinate parallel patent proceedings (litigation and post-grant, e.g.), but subject to a bar.  It also has a one-year bar, not two, which in my view (especially in software field) is closer to the appropriate length, though she measures it from end of litigation, which seems too long for me.

This could be a useful model.