Voluntary CLE for Patent Attorneys and Patent Agents: What are the Issues?

By David Hricik, Mercer Law School

Curious for your comments on this.

The USPTO has promulgated a final rule. Originally, it was going to charge a fee every two years for practitioners to register, but it has backed off of that.  However, instead of having a fee and allowing a deduction for those who take 6 hours of CLE every two years — one hour of ethics, and 5 hours of CLE related to “patent law and practice” and one on “ethics” — it is going to create an on-line directory where practitioners who certify compliance with that CLE requirement will be listed by the Office.

The USPTO explained:

As noted in response to Comment 81 above, the USPTO has elected not to implement the proposed annual active patent practitioner fee at this time. In addition, under the Final Rule, completion of CLE remains voluntary. However, practitioners may be recognized in the online practitioner directory if they certify completion of six credit hours of CLE (five in patent law and practice; one in legal ethics) in the preceding 24 months

The rule implementing this final rule states in pertinent part:

(2) Biennially, registered practitioners and persons granted limited recognition may be required to file a registration statement with the OED director for the purpose of ascertaining whether such practitioner desires to remain in an active status. Any registered practitioner, or person granted limited recognition under § 11.9(b), failing to file the registration statement or give any information requested by the OED director within a time limit specified shall be subject to administrative suspension under paragraph (b) of this section.

(3)(i) A registered practitioner, or person granted limited recognition under § 11.9(b), who has completed, in the past 24 months, five hours of continuing legal education credits in patent law and practice and one hour of continuing legal education credit in ethics, may certify such completion to the OED director.

(ii) A registered practitioner, or person granted limited recognition under § 11.9(b), may earn up to two of the five hours of continuing legal education credit in patent law and practice by providing patent pro bono legal services through the USPTO Patent Pro Bono Program. One hour of continuing legal education credit in patent law and practice may be earned for every three hours of patent pro bono legal service.

The USPTO is to release “guidelines” to implement the rule in the near future “with a request for public comment on them.”  Those guidelines “will address the types of CLE courses that may qualify for recognition and the form of recognition for patent practitioners who certify that they have completed the CLE.”  (The Rule and comments to the proposed rule are here.). Some guidance is given, however:

Generally, the same types of courses and activities that qualify for CLE credit for a state bar will qualify for credit for purposes of the CLE recognition in the online practitioner directory, so long as it covers the appropriate topics. It is expected that these CLE reporting periods will not align with all state bar reporting periods, as they vary from state to state. Each CLE certification for the purposes of recognition in USPTO’s online practitioner directory should be supported by the completion of different CLE courses. In other words, practitioners may not use the same courses to certify to the USPTO more than once that they have completed the six credits of CLE.

So, given that if you take 6 hours of CLE over two years, you get to be listed on this registry, what issues do you see?

To me, putting aside the definitional issues of what is “patent law and practice,” the proposal creates an odd thing: it will cause only patent lawyers to be listed in this directory, not patent agents, unless patent agents think it’s worthwhile to do CLE to be listed on this registry.  That is, because all but two states (I think) require CLE for lawyers (but none do for patent agents), patent lawyers will get listed, but my instinct is that patent agents aren’t likely to pay a couple hundred dollars in CLE fees to be listed, one would think.

In that regard, though, others had raised a concern about the original proposal — a $100 discount off the now-rejected bi-annual registration fee would make no sense for patent agents — and in response the USPTO stated in the final rule announcement that it was going to provide free CLE courses, “thus alleviating the financial burden of obtaining CLE credits.”

That helps, obviously, but still means six hours of time over two years for patent agents.  Does that create a disincentive strong enough to not be on this registry?  Do patent agents get business that way anyway?

What other issues do you see? (Yes, it’s another sign of the destruction of American democracy, but in the comments address more mundane things, please!). Will insurance companies likely ask about compliance?  What about lawyers in states without CLE requirements — is this registry an incentive?

Webcast (self-study CLE?) on the Impact of AI, IoT, and 3D Printing on Patenting

By David Hricik, Mercer Law School

I did a 65 minute conversation with Shubha Ghosh of Syracuse University College of Law on that topic, and you can find the YouTube video here.  I have had several conversations with practitioners recently where these issues, as well as the Supreme Court’s 20 year march toward less patent protection and the current 101 miasma, have made patents less valuable.  This discusses why that may be so and ways to speed up patenting to help with some of the issues that faster time-to-market and shorter time-on-market create.

What if AI Invents Some or All Claimed Inventions?

By David Hricik, Mercer Law School

I’ve written a few posts about how I used specif.io to draft a patent application: I submitted a claim I’d found in a published application and the service drafted a 15-page spec, and created two figures.  Plainly, I invented nothing but assume for a moment I’d invented what had been claimed and that there was more disclosed in the spec than what I’d invented — the latter I think is fact but let’s assume it. Let’s also assume that I add claim 2 once I see the machine has conceived of something more than I had thought of.  So: claim 1 is my invention; claim 2 is not. I hire you to represent me.

The USPTO, the EPO, and the UKIPO have all stated (here, here, and here in respective orders) that only natural people can be inventors. Fair enough. The USPTO has stated that a person who is not an inventor cannot be named. Also fair enough, because of the statute and 102(f).  So… what do you do?

With my hypo, I think you have to name me since I invented what was in claim one.  I guess you don’t have non-joinder because the machine invented whatever else is in the spec and you can’t name it.

Now let’s turn to the facts of the application the USPTO rejected: the inventor took the position that only a machine was the inventor. So, let’s assume that fact pattern: AI invented what was in claim 1 and also what was in claim 2.

Now what?  That may explain why the EPO and UKIPO, at least, are studying this further and WIPO and AIPLA committees are, too.  Thoughts?

Patent Agent Privilege: Another Case Recognizes its Limited Scope

by David Hricik, Mercer Law School

In Luv N’ Care, Ltd. v. Williams Intellectual Prop., Civil Action No. 18-mc-00212-WJM-KLM, 6-7 (D. Colo. Jun. 12, 2019) (here) the court addressed a claim of privilege over communications between client and a patent agent. The case is a reminder that, while the privilege exists, its scope is limited.

Specifically, the court stated that, although federal courts had uniformly followed the Federal Circuit’s 2-1 decision recognizing the privilege exists, they had also recognized it had substantial limitations. The court stated that the scope of the privilege was limited to communications within the concept of “practice before the Office,” which it then defined:

Practice before the Office in patent matters includes, but is not limited to, preparing and prosecuting any patent application, consulting with or giving advice to a client in contemplation of filing a patent application or other document with the Office, drafting the specification or claims of a patent application; drafting an amendment or reply to a communication from the Office that may require written argument to establish the patentability of a claimed invention; drafting a reply to a communication from the Office regarding a patent application; and drafting a communication for a public use, interference, reexamination proceeding, petition, appeal to or any other proceeding before the Patent Trial and Appeal Board, or other proceeding. Registration to practice before the Office in patent cases sanctions the performance of those services which are reasonably necessary and incident to the preparation and prosecution of patent applications or other proceeding
before the Office involving a patent application or patent in which the practitioner is authorized to participate.

Thus, the court reasoned, “communications which are not ‘reasonably necessary and incident to the preparation and prosecution’ of patent proceedings before the USPTO are not protected by the patent-agent privilege. For example, communications with a patent agent who is offering an opinion on the validity of another party’s patent in contemplation of litigation or for the sale or purchase of a patent, or on infringement, are not reasonably necessary and incident to the preparation and prosecution of patent applications, and thus are not protected by the privilege.” Id. 

In my experience, the limitations on “practice before the Office” that often get overlooked include: (1) non-infringement or validity opinions — as the court recognized — but also (2) assignments. Another limitation is that a state court may not follow the Federal Circuit’s lead and the Luv N’ Care court even suggested that regional circuit law, not Federal Circuit law, would control.

New Article “Avoiding Responsibility: The Case for Amending the Duty to Disclose Prior Art in Patent Law”

By David Hricik, Mercer Law School

The student comment, by John O. Curry, appears at 95 Wash. L. Rev. 1031 and is available here. The abstract states:

Federal regulation requires patent applicants in the United States to disclose to the United States Patent and Trademark Office (USPTO) a wide range of references that might be material to their invention’s patentability. Applicant disclosure of prior art currently plays a large role in the prosecution and litigation of patents. The effects are quite deleterious, resulting in the filing of unnecessary references that go unreviewed in the USPTO and providing plausible grounds for the assertion of inequitable conduct defenses in patent infringement actions. This Comment looks at the history of the laws that evolved into the codified duty to disclose prior art and finds that the historical rationales no longer justify such an imposition. It also examines several foreign jurisdictions that differ from the United States in their mandates to disclose prior art, ultimately recommending the adoption of the standard used by the European Patent Office as a way to resolve both the administrative and legal challenges posed by the current standard.


Competent Lawyering in an Age When Everyone can be Groucho Marx

By David Hricik

Mercer Law School

I regularly present on legal ethics in patent practice at CLE conferences around the country, and, less often, on general ethics or other IP ethics areas, such as trademark practice.  While doing some research a couple of years ago for one of those, I ran into the phenomenon of “trademark bullying,” which is when a powerful trademark owner sends a C&D letter to a small business, threatening a tour of the pits of misery (wait for it) if the small business doesn’t stop using the big business’ mark.

Of course, these letters are often necessary for trademark owners to avoid dilution, and so on.  And, of course, C&D letters aren’t as significant a part of a patent litigation as trademark litigation, but there are lessons to be learned for all. So excuse the slightly off-topic post.

The hook I developed for talking about this is a bit of interesting history.  It seems that after Warner Brothers released the movie Casablanca, the Marx Brothers decided to do their parody of “Night in Casablanca.”  Apparently (there is some doubt), this caused Warner Brothers to inquire about the movie.  Groucho Marx used that request to create a firestorm of publicity, poking fun at the (alleged) claim to own the word “Casablanca,” which, of course, was the name of a city.  Marx’ letter and a bit about this is here.  It’s worth a read (even though if you’re like me, you would rather do anything than look at a computer screen).  Marx’ tactic of using sarcasm and portraying WB as a bully worked and the Marx Brothers’ movie was more of a hit than it likely otherwise would have been.

So what’s that got to do with ethics.  Well, today, everyone can be Groucho, thanks to social media.  If you look, you can find very humorous responses (that put the TM owner, unfairly no doubt, in a bad light) to C&D letters from Starbucks (TM — don’t want to receive a C&D), Caterpillar (TM, same concern), and others (Google “trademark bully” and take a few minutes off).  If you’re short for time, read the Starbucks (TM) one.  These C&D letters — threatening immediate misery and litigation — may have been needed, but the tone and the threats may be not.

So, there’s the lesson.  Compare the “if you don’t stop we will crush your bones to dust” approach of some C&D letters with the approach taken by Jack Daniels (TM but they won’t C&D me, and in fact I bet they’ll send me some free bourbon.  (Hint).). A fellow published a book and the cover was plainly based on a Jack Daniels label (TM and, as a further hint if you’re reading, Mr. Daniels, I’ve never had any fancy Jack Daniels, though I hear it is quite good).  The in-house lawyer for the company wrote a very effective letter but explained that the author and Mr. Daniels’ interests were aligned. The full story can be found here, but here is a portion of the C&D:

“We are certainly flattered by your affection for the brand, but while we can appreciate the pop culture appeal of Jack Daniel’s, we also have to be diligent to ensure that the Jack Daniel’s trademarks are used correctly. Given the brand’s popularity, it will probably come as no surprise that we come across designs like this on a regular basis. What may not be so apparent, however, is that if we allow uses like this one, we run the very real risk that our trademark will be weakened. As a fan of the brand, I’m sure that is not something you intended or would want to see happen…

In order to resolve this matter, because you are both a Louisville ‘neighbor’ and a fan of the brand, we simply request that you change the cover design when the book is re-printed. If you would be willing to change the design sooner than that (including on the digital version), we would be willing to contribute a reasonable amount towards the costs of doing so.”

So, it may be that a tour through the pits of misery (Budweiser, I like beer, too, and the Super Bowl) (oh, TM) is what is needed, but lawyers need to recognize that in today’s world everyone can be Groucho, and more harm than good may come of that type of threat.

Addendum:  Don’t “Google” (TM) those words; search for them using Google (TM).

CLE Opportunity: Patent Law Institute 2020: Critical Issues & Best Practices

By David Hricik, Mercer Law School

In part shameless self-promotion (wait, I didn’t get paid to do it…!?), but I’m also betting a lot of you need CLE and need it virtually.  I speak about 15 times a year at CLEs on ethical issues in patent practice and general practice, and did so at this Practicing Law Institute CLE recently. It has a lot of good and varied coverage and the on-line format lets you have a lot of flexibility in topics between the East and West coast versions. The link is here.

Here’s their description:

What You Will Learn

  • New! Review of ITC patent practices by industry specialists
  • New! IP-specific AI tools for corporations and law firms
  • New! Perspectives on patents from three different judicial vantage points
  • Recent court decisions shaping patent law
  • Latest USPTO rules and guidelines
  • Patent subject matter eligibility of computer-implemented inventions
  • Latest developments in patenting medical therapies
  • Corporate counsel discuss the effects and concerns of recent court decisions/ USPTO activity
  • Building a strong patent portfolio

How Would You Teach Professional Responsibility?

By David Hricik

Mercer Law School

Hi, all,

Slightly off-topic question and not limited to patent-IP related courses.   If you have any thoughts on what you’d do to improve legal ethics courses in law school, fire away.  I am teaching it this summer (I’ve taught it at half dozen schools) and I’m doing a much more problem-based even than usual but I always feel like the course could have more “real life” to it but… anyhow maybe that’s not even the right thought.  Any thoughts or comments appreciated: I practiced full-time for 14 years, and part-time for another 16, and so I bring more “practical” content to the course than many professors but I never feel good about the course.


Failure to Identify Related Cases on Civil Coversheet: A Throwback

By David Hricik

Mercer Law School

A very long time ago, probably 1989 or so, I was involved in a case where a lawyer failed to identify a “related case” on a civil coversheet.  Long story short, the plaintiff had filed suit in one jurisdiction (let’s say Iowa state court), and then filed a second suit in another jurisdiction (let’s say Ohio federal court). It waited to serve, and ended up serving the Ohio federal court suit, I guess because Ohio federal court was better than Iowa state court.  However, at that time, the federal civil cover sheet asked if there were any pending cases — anywhere — and the lawyer had not listed any.

Probably nothing would have happened except the defendant, I surmise, learned of the Iowa state court before an important hearing in Ohio federal suit, and at that hearing the defendant’s counsel skillfully (it seemed to me) got the judge to ask questions about previously filed suits, and the attorney for the plaintiff said there had been none.

That resulted in sanctions, and even dissolution of a TRO that the plaintiff had obtained, if I recall it right.

Fast forward quite a number of years and a plaintiff’s lawyer filed a number of patent suits in the United States District Court for the District of Delaware.  112 or so, it seems.  The plaintiff’s lawyer filed five more suits in Delaware on the same three patents and, among other things, failed to identify any cases as related on the civil cover sheet.  Judge Noreika dismissed the suits without prejudice and issued other directives to plaintiff’s counsel in Rondevoo Technologies, LLC v. Behold.AI Technologies, LLC, on May 5, 2020.

Of course, dismissals without prejudice don’t prevent re-filing, but I assume it costs another filing fee per case and, of course, it gives the defendant(s) time to file declaratory judgment actions in some other forum.

Hadn’t thought of that case from 30 years ago in a long time. I teach my students how to file a case, including a civil coversheet. I’ll have to keep this case around for a learning lesson as to why these forms matter.


If the PTAB Denies Institution Based on a Reference under Phillips, Does that Mean it was not Material Under BRI?

By David Hricik

Mercer Law School

The decision in Jaguar Land Rover Ltd.v. Bentley Motors Ltd (E.D. Va. Apr. 30, 2020) (here) merely denied an amendment to add a counterclaim for inequitable conduct. There are a lot of those. But it is interesting because it brings into play the new approach PTAB uses of determining unpatentability with the Therasense approach to determining materiality based upon the broadest reasonable interpretation.

The accused infringer filed for institution of an IPR of the ‘828 Patent based upon what the parties called the Porsche 959 prior art. The accused infringer also defended the suit for infringement of the ‘828 patent by, among other things, asserting the Porsche 959 prior art anticipated.

While the IPR petition based upon the Porsche 959 art was pending before the PTAB, the accused infringer sought to amend its answer to allege a counterclaim based upon the failure to disclose the Porsche 959 art to the Office during prosecution, asserting inequitable conduct.

On February 20, 2020, the PTAB denied institution, but it did so based upon the November 2018 rule change to use Phillips interpretation for unpatentability.  ( here) So, we know that, at least based on the PTAB’s construction and the record made there, under Phillips the Porsche 959 art didn’t anticipate.

But, in denying the motion to amend the answer to add inequitable conduct, the trial court relied upon the PTAB decision to hold that it would be futile to permit the amendment. It reasoned that it was implausible that the Porsche 959 art could have been but-for material because of the PTAB’s decision.

But Therasense requires materiality be based upon the broadest reasonable interpretation standard, not Phillips. Thus, the PTAB decision doesn’t decide materiality: if anything, it decided there was no anticipation based on the PTAB’s claim construction under Philips.

Even weirder, the trial court held in denying amendment that it could still find invalidity based upon the Porsche 959 prior art. If anything, that would be precluded  by the PTAB’s decision (I’m not even sure that’s right, however). Finally, and I may be misremembering (I’m grading finals!), but I thought there was also Federal Circuit precedent finding materiality even on submitted art? (I know you can find invalidity that way.)

Will the Court Correct the Mess that is GS CleanTech Corp. v. Adkins Energy LLC?

by David Hricik, Mercer Law School

In my earlier post, I noted some of the clear errors in the panel decision in GS CleanTech Corp. and Cantor Colburn LLP v. Adkins Energy LLC (Fed. Cir. 2020) .  The patentee has filed for rehearing en banc, and the petition is here.  I wish I had time to write an amicus brief in support, but after giving a CLE today about the case (here is link but you have to buy it, I think) and reading that brief, I believe the problems with the case run far deeper than I originally thought and even deeper than that brief points out.

Here’s why.

When inequitable conduct is asserted, often it is bifurcated from validity/infringement. Where either a jury finds invalidity, or as in CleanTech the judge did on summary judgment, and that finding is based upon allegedly withheld art, the patent owner will need to appeal (to avoid CleanTech). But, there is, under those circumstances, no final judgment.

Nor will any judgment fall within any exception — at least not very often. The patentee likely won’t be able to seek appeal under Fed. R. Civ. P. 54(b), because it only applies if there are multiple claims or multiple parties, so in a single-patent-single-defendant case, it wouldn’t likely be available.  While possibly a trial court could certify a case for appeal under 1292(b), that requires there be a controlling question of law and substantial ground for disagreement, that won’t often be the case and the Federal Circuit has to also agree to certification.  The collateral order exception won’t apply because the order won’t be separate from the merits. Any judgment will not (unless a preliminary injunction was granted and then dissolved because of an invalidity finding) grant or deny, an injunction (it will decide no liability and that’s not the same as denial of an injunction).  Mandamus won’t be available.

So, the appeal will be from the judgment entered after the inequitable conduct trial.  The CleanTech case held that “abuse of discretion” applies to review of inequitable conduct — to the findings of materiality (even though in CleanTech it was a question of law based on underlying facts), to the fact findings of knowledge of materiality, and to the finding of intent to deceive.  Standard of appellate review on materiality will be much looser than if validity had been appealed, in other words. The standards of review for knowledge of materiality and of intent will be looser than TheraSense, too.

But it gets worse if summary judgment was the basis for invalidity (and, so, materiality).

On appeal of summary judgment, facts are viewed in the light most favorable to the non-moving party and all reasonable inferences are taken in the non-movant’s favor.  So, in CleanTech the panel should have, without deference to the trial court, asked whether there was no genuine issue of disputed fact and no reasonable jury could find other than, by clear and convincing evidence, there had been an offer to sale (and not an experimental one) that invalidated a claim.  Under the panel decision, instead, the question is whether the district court abused its discretion in making that determination.

None of that makes sense.

But what does make sense is that any litigator representing a patentee who loses on invalidity must do whatever is reasonably possible to appeal because otherwise the CleanTech approach will apply. And, of course, it will permit creative defense lawyers to argue to trial courts that (somehow) determining the propriety of summary judgment is not conducted as the Supreme Court has repeated admonished (most recently in Tolan v. Cotton).

I hope the full court realizes the panel decision — whether the result is right or not — is from a procedural view irreconcilable with Therasense and settled standards of review, and, further, will result in efforts to try piecemeal appeals that will waste judicial resources and, if uncorrected, lead to improper findings of inequitable conduct.

The Many Mistakes in the Panel Decision in GS CleanTech Corp v. Adkins

By David Hricik, Mercer Law School

Over on the main page, Dennis has written up GS CleanTech Corp. and Cantor Colburn LLP v. Adkins Energy LLC (Fed. Cir. 2020) [Fed Cir Decision][DCT Decision] (does Dennis ever sleep?), which affirms a holding of inequitable conduct.

That finding can ruin careers.  Dennis examined the merits: I want to examine the procedure used on appeal. (I’ve taught civil procedure for decades now, and served as a clerk on the court a few years ago… this case is in need of correction by the full court or the panel on rehearing — whether it changes the outcome, or not, a point on which I have no view.) Whatever the merits, the panel mistates key issues of appellate review of inequitable conduct and contradicts prior panel decisions and even Therasense itself — and does so in a way that radically increases the scope of this equitable defense while, at the same time, failing to analyze the equities, oddly enough.

Specifically, first, the panel states the the standard of review of a fact finding of materiality underlying inequitable conduct  is for abuse of discretion. That is just flat wrong. “[W]e review the district court’s findings of materiality… for clear error.” Am. Calcar, Inc. v. Am. Honda Motor Co., 768 F.3d 1185, 1189 (Fed. Cir. 2014). Accord, Regeneron Pharm., Inc. v. Merus N.V., 864 F.3d 1343, 1351 (Fed. Cir. 2017).

Worse, invalidity “under the on-sale bar is a question of law with underlying questions of fact.” Robotic Vision Sys., Inc. v. View Eng’g, Inc., 249 F.3d 1307, 1310 (Fed. Cir. 2001). Accord, The Medicines Co. v. Hospira, Inc., 881 F.3d 1347, 1350 (Fed. Cir. 2018). The panel examines for abuse of discretion of, not just the underlying factual questions, but the legal question. That is wrong. Indeed, it applied abuse of discretion to whether the invention was ready for patenting, which is also wrong.

As stated,  reviewed the findings of intent to deceive for abuse of discretion: that’s wrong. “This court reviews the district court’s factual findings regarding what reasonable inferences may be drawn from the evidence for clear error.”
Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1291 (Fed. Cir. 2011)

And, third, the panel never (as the district court apparently failed to do) analyzed equitable balancing — given the circumstances should the entire patent be held unenforceable?  I’ve often observed that nothing in Therasense changed the rule that, if the accused infringer meets its burden of showing both materiality and intent, “then the district court must weigh the equities to determine whether the applicant’s conduct before the PTO warrants rendering the entire patent unenforceable.” Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1287 (Fed. Cir. 2011).

The panel applied the standard of review on the ultimate issue — equitable relief — to fact findings and legal conclusions. It’s a slippery slope, and one with severe consequences to the boundaries created by Therasense: it allows district courts to make clear errors on factual findings and legal conclusions, but be affirmed on appeal so long as they do not abuse their discretion. Finally and in addition, lack of careful appellate review will lead to OED investigations into practitioners, as well as ruined businesses and scientific careers.

Another Example of a Repeating Fact Pattern Implicating Privilege Waiver

By David Hricik, Mercer Law School

Of course, patent prosecution and litigation involves a lot of confidential information. As a result, protective orders, prosecution bars, and clawback arrangements are part and parcel of most patent suits. Perhaps because confidential and privileged information is more frequently involved than in some other forms of litigation, waiver issues are also common.

Over the years, I’ve bumped into this issue a couple of times:  an email from a client (or client’s representative) is claimed to be privileged even though the sender shared the email account with their spouse.  This happened recently in RTC Indus., Inc. v. Fasteners for Retail, Inc. (N.D. Ill. Feb. 26, 2020) (here).  The judge there held privilege was not waived, in part because married couples naturally share email accounts and there was no evidence the spouse had actually viewed the email.

That is not a universal approach, however. In addition, where an email account, or computer, is shared by people who are not married (such as roommates), a greater risk of privilege waiver exists. Finally, many employers monitor employee email, and, so, for example, if an employee e-mails a lawyer from a work computer, it may be that privilege is waived.  To be clear, this can happen even where the dispute is between the employee and some third party, not between employee and employer.

Jury Awards $32m Against Dentons for Damages Caused by its Disqualification

By David Hricik, Mercer Law School

A “verein” is a legal entity recognized under Swiss law somewhat similar to an association. Several law firms are organized this way, including Dentons.  Dentons agreed to represent a patentee, Revolaze LLC,  in an ITC proceeding when another “arm” of Dentons represented one defendant, The Gap.

The Gap moved to disqualify, arguing that Dentons was a single law firm and so it could not be adverse to its own client. The ITC agreed, and disqualified Dentons.

The patentee then sued for damages caused by the disqualification.  On February 20, and Ohio jury awarded what is reported to be the largest malpractice verdict in Ohio history, over $32 million.  Presumably, the damages were in part caused by the rapid pace of an ITC proceeding, but the details I know of are sketchy.

There are articles about the case, one behind a paywall (here) and the other not, but it seems mostly based on a conversation with the plaintiff’s lawyers, here.

Disqualification of a Party’s Expert Who Migrates to the Firm of a Court-Appointed Expert

By David Hricik, Mercer Law School

An order by Judge Alsup in Oracle Am., Inc. v. Google, LLC (N.D. Cal. Jan 28, 2020 (here)) reflects an unusual fact pattern.  The court had appointed an expert (in docket 2143, which by itself says a lot) who worked with the firm of Charles River Associates (“CRA”).  Google had an expert, Dr. Leonard.  Google notified Oracle that Dr. Leonard was to become “affiliated” with CRA, prompting Oracle to file an “objection” with the court.

In response, Judge Alsup issued an order stating the most it could say so far was “that Dr. Leonard (and Google) have made this move at their peril.”  He asked for motion practice and an appropriate record.

Expert witnesses are not subject to the same rules of conflicts of interest as lawyers (even when a lawyer is serving as an expert witness).  I know of cases where opposing parties choose experts who end up at the same firm, but never one where a court-appointed expert is affiliated with the same firm as a party’s expert.  If it is a conflict — and one that can’t be obviated by a screen of Dr. Leonard and other appropriate measures (I can think of many) — presumably Google will suffer disqualification of its expert, which would presumably cause tremendous problems with its case if, as you’d think, Dr. Leonard is serving an important and non-cumulative role.

Interesting problem.

Access to Prior Art Initiative of the USPTO to Ease Importation of Prior Art References from Parent Cases

By David Hricik, Mercer Law School

The USPTO is a couple of years into its Access to Prior Art Initiative, which in its first phase was designed to create for the examining corps a single list of references combining those cited in an application (by applicant and examiner) and references from the immediate U.S. parent applications (cited by applicant and examiner, but not third parties).  In the first phase, if an application met criteria for inclusion (among other things, only certain Art Units were included), the Office would notify the practitioner that the prior art was automatically imported, reducing the burden o cite that art.  The project was intended to then expand to include foreign counterpart and PCT applications.

In looking for exactly how broadly this has been implemented, I was unable to find much information after January 2019.  As Carl Oppedahl recently pointed out, it’s a great idea and means to avoid unnecessary work and issues about disclosure.  If you’ve had any involvement and can share, that’d be great.  I’m curious, for example, if the process is working: for example, is the importation complete and accurate?   I’ll also reach out to the Office and see if I can learn anything and will amend this post if so.

While I can understand why the list might not automatically include third party submissions, the omission does create a potential “trap” where a practitioner in the child fails to cite third-party art from the parent which was material to the parent, or is (or becomes) material to the child.

Another Disqualification Based Upon Implied Attorney-Client Relationships with Corporations Affiliated with the Client

By David Hricik, Mercer Law School

Over on the main page, Dennis summarized the grant of a motion to disqualify in the non-precedential decision in Trimble Inc. v. PerDiem Co. (Fed. Cir. Jan. 28, 2020) (Taranto, J.).  The firm representing PerDiem on appeal (another firm had represented it in the trial court) was at the same time providing prosecution advice to a subsidiary of Trimble.  Applying an amorphous multi-factor test that is common, the panel held that because the firm was representing the subsidiary, it could not be adverse to the parent on appeal. Hence, the firm was disqualified.

Oddly enough, probably at the moment this opinion was released, I was speaking at the Association of Corporate Patent Counsel meeting, with Mercedes Meyer, and discussing this recurring one:  the corporate client moves to disqualify a lawyer who is adverse, not to the corporate client, but to a subsidiary, parent, or affiliate.  Where, as here it seems was the case, the lawyer and client do not clearly define whether representation of one entity means the lawyer represents others, they leave it for a court to decide which entities are “the client” by examining the corporate structure, how the entities’ legal services are provided, and other often unpredictable factors.

It may be a difficult issue to broach at the onset of a representation, but it also may be better for both client and lawyer to understand what scope of loyalty the client expects and the lawyer can understand what potential future business she must forego, and that benefits the firm, its future clients, and the corporate entity.

Texas Bar Opinion on Encouraging Positive On-Line Reviews by Current or Former Clients

By David Hricik, Mercer Law School

This month, the Professional Ethics Committee for the State Bar of Texas issued Opinion No. 685, which addressed whether a lawyer could encourage current or former clients to post favorable reviews or comments on social media sites.  The Texas opinion stated that, so long as nothing of value was given for the reviews and that the lawyer did not encourage false, misleading, or unfounded statements, this would be appropriate.

On the other hand, while not deciding whether a lawyer has an obligation to monitor posts, the opinion joined the views of other states and explained that “if lawyer becomes aware that a client posted a favorable review that is false, misleading, or unfounded, the lawyer should take reasonable steps to see that the statement is corrected or removed.”  The opinion suggested that, if the lawyer controlled the site, the statement should be removed, but even if the lawyer did not, the lawyer should ask the author to address the concern, or “consider” asking the owner of the site to address the concern.  Finally, it suggested that if that failed, the lawyer should make a “curative statement” — but one that did not violate client confidences.

Lawyers have been taken to task several times for revealing client confidences, but it has been after someone posts a negative comment and the lawyer, defending herself, revealed client confidences. The Texas opinion, like others, emphasized that revealing confidential information even in response to a negative review is improper, unless the client consents to disclosure.

I’m imagining a former client posting “David got me a better result than any other lawyer could have,” and me having to post something in response! So, below, please only post truthful things and don’t overstate my abilities or I’ll have to cure your kindness.

ABA Opinion Limits Ability of Firms to Restrict Departing Lawyers

By David Hricik, Mercer Law School

An issue I’ve frequently been asked to discuss is the ethical constraints on firms to impose restrictions or requirements on departing lawyers — such as precluding a lawyer from doing logistical work on setting up a new, separate firm upon departure — as well as the departing lawyer’s obligations to her clients and soon-to-be-former firm.  In addition, migrating lawyers create issues for the new employer, such as imputed disqualification of former client conflicts.

In December 2019, the ABA issued a formal ethics opinion that clarified the ability of firms to restrict departing lawyers.  In American Bar Association Formal Ethics Op. 489 (available here).  The synopsis provides a good summary:

Lawyers have the right to leave a firm and practice at another firm. Likewise, clients have the right to switch lawyers or law firms, subject to approval of a tribunal, when applicable (and conflicts of interest). The ethics rules do not allow non-competition clauses in partnership, member, shareholder, or employment agreements. Lawyers and law firm management have ethical obligations to assure the orderly transition of client matters when lawyers notify a firm they intend to move to a new firm. Firms may require some period of advance notice of an intended departure. The period of time should be the minimum necessary, under the circumstances, for clients to make decisions about who will represent them, assemble files, adjust staffing at the firm if the firm is to continue as counsel on matters previously handled by the departing attorney, andsecure firm property in the departing lawyer’s possession. Firm notification requirements, however, cannot be so rigid that they restrict or interfere with a client’s choice of counsel or the client’s choice of when to transition a matter. Firms also cannot restrict a lawyer’s ability to represent a client competently during such notification periods by restricting the lawyer’s access to firm resources necessary to represent the clients during the notification period. The departing lawyer may be required, pre- or post-departure, to assist the firm in assembling files, transitioning matters that remain with the firm, or in the billings of pre-departure matters.

It is important, in my experience, for departures (and arrivals) to be done with sensitive both to the various relationships involved when a lawyer departs, and, as well, to the complex conflict issues that face the new employer.  This ABA opinion helps on the first issue and suggests the need, for example, to examine partnership or other policies or agreements among lawyers to ensure good practices.