In-House Lawyer Fired for Complaining that Application Filing Quota Caused Ethics Violation Able to Sue

The Third Circuit reversed the grant of the dismissal of a lawsuit by in-house counsel who sued because, he alleged, he was forced to choose between complying with an application filing quota or complying with his ethical obligations to the USPTO.  The case, Trzaska v. L’Oreal USA, INc., (3rd Cir. July 25, 2017), is here.

The claim was based upon New Jersey’s whistle blower statute, the New Jersey Conscientious Employee Protection Act (“CEPA”), N.J. Stat. Ann. § 34:19-1 et seq.  The complaint alleged that complying with the quota meant filing “frivolous” patent applications.  In a two-one panel decision, the Third Circuit held the complaint stated a claim.

Judge Finds McKool Smith Violated Prosecution Bar

This one is fun for me, since I teach civil procedure, patents, and ethics, and have written about prosecution bars way too much.

Prosecution bars are used when a court concludes that, although the usual rule is that lawyers will abide by provisions in a protective order that say “don’t use information disclosed in this suit for any other purpose,” there’s a risk that a lawyer will, perhaps even inadvertently, misuse the opposing party’s information disclosed in discovery because of work the lawyer does for his client.  Here, in a case Eolas (represented by McKool) filed for its client against Amazon (and others), it seems that as part of the protective order, McKool agreed that its lawyers were in such a position — they were prosecuting patents for Eolas in similar technologies, presumably, to what was involved in the suit — and so the protective order provided that no McKool lawyer who received certain categories of confidential information from Amazon would prosecute patents for Eolas in those fields, for a time.

And there is the issue: how long? The protective order stated (in part — I’d want to see the entire thing to really understand this), that the bar expired “one (1) year following the entry of a final non-appealable judgment…”

Eolas lost at trial, and the Federal Circuit affirmed and entered judgment on July 22, 2013.

If the one year date runs from there — which I so far think it does — then it expired on July 22, 2014.  And it was only after that date that McKool lawyers allegedly violated the prosecution bar.

However, Eolas could have petitioned for cert for the 90 days after July 22, 2013. If you use the expiration of those 90 days as the date for “entry” of the final judgment, then the “entry of a final non-appellable final judgment” occurred in October, and one -year later puts you in October, 2014.  Eolas didn’t seek cert, however. (I don’t think that matters, but I’ll come back to that.)

And of course, it was after July and before October 2014 that McKool allegedly started the work that violated the protective order. When Amazon saw a patent issue which, it seems, resulted from McKools’ pre-October 2014 work, Amazon moved for sanctions, asserting (among other things) that the patent should be unenforceable.

The judge ruled that entry of final judgment occurred in October 2013 and so there was a violation.  McKool has filed a motion to reconsider.

I honestly don’t think this is a close case: the judge got it wrong.  First, it says “entry.” That occurred in July.  It says “non-appealable”  A judgment from a circuit court, including the CAFC, isn’t appealable to any court: you can file a petition for cert, but that’s not an appeal. Finally, it could have said (and some protective orders do) “until everything at the Supreme Court is over and done,” but it seemingly didn’t do that.  I also have grave doubts that under Aptix and other cases from the Federal Circuit that Amazon’s request that the patent be held unenforceable as a result of litigation misconduct will fail, but, again, I think we never get there.

So, what’s this mean for your practice?

First off, suppose there isn’t an appeal in a district court case.  You go to trial, you get judgment on July 22, 2013, and nothing happens.  On July 22, 2014, can you start work?  Well, there’s 30 days after entry of final judgment that the other side could appeal, so don’t you have to wait until August 22, 2014 (or 21, whichever)?

If there is an appeal to the CAFC, do you need to add 90 days to the date of entry of judgment even though they don’t apply for cert, and even if it doesn’t say “and we’re done at the supreme court?”

I think this one is clear.  Do you?

Another Client Loses Privilege Because Employer Policies Allowed Monitoring

I’ve written about this a few times but, sadly, no one listens to me!

Here’s the fact pattern:  your client is emailing you from their work email account, or your client is using a computer that its employer owns.  (Your client is not the employer, but an individual.)  Whether your client is in litigation with its employer — or someone else! — if the employer has policies in place and in use that allow it to monitor employee email or the computer itself, there likely is no reasonable expectation of privacy in those emails or in the files on the computer and, if so, no privilege.

Another case, this one from New York and involving an employer’s laptop and a suit with the company, applied the leading test to determine whether the employee knew that monitoring was allowed, and in fact occurred, and found the employee– former general counsel —  could not withhold more than 106 files that he had created after he had been fired by the company on its laptop.  Miller v. Zara USA, Inc., (N.Y. App. Div. June 6, 2017).  The appellate court remanded the case to the trial court to determine if any of the documents were, although not privileged, nonetheless protected by work product.

Realize this: even if the dispute is between your client and some third party, that third party can also rely on the lack of a reasonable expectation of confidentiality and show there is no privilege.  And, finally, if you draft these policies, your client’s employees may not realize that this isn’t just “gee my employer can review my emails if I get in a fight with it,” it’s “if you get in a fight with anyone, you’re not going to have privilege.”  I bet your clients would like it if you made that really clear, since that’s not intuitive.

New York City Bar Cautions Lawyers to Use Care if U.S. Customs Asks to Review Electronically-Stored Information

New York City Bar Opinion 2017-5 (July 2017), here, provides some interesting information about the care lawyers must take before allowing a lawful search of an attorneys’ smartphone, laptop, or the like.  The opinion is obviously important given the international nature of intellectual property practice and the growing frequency (still small, though) with which Customs officials ask for passwords that could reveal client confidences.

The opinion states in part that lawyers should consider whether they should not carry electronic devices that could permit disclosure to sensitive client information when traveling abroad, and, if asked upon return to provide access to the device, the opinion states:

At the border, if government agents seek to search the attorney’s electronic device pursuant to a claim of lawful authority, and the device contains clients’ confidential information, the attorney may not comply unless “reasonably necessary” under Rule 1.6(b)(6), which permits disclosure of clients’ confidential information to comply with “law or court order.”  Under the Rule, the attorney first must take reasonable measures to prevent disclosure of confidential information, which would include informing the border agent that the device or files in question contain privileged or confidential materials, requesting that such materials not be searched or copied, asking to speak to a superior officer and making any other lawful requests to protect the confidential information from disclosure. To demonstrate that the device contains attorney-client materials, the attorney should carry proof of bar membership, such as an attorney ID card, when crossing a U.S. border.

Finally, if the attorney discloses clients’ confidential information to a third party during a border search, the attorney must inform affected clients about such disclosures pursuant to Rule 1.4.

I’ve never been asked to provide a password, or to handover an electronic device, but the opinion provides some useful reminders of precautions that may be necessary in today’s world.

Machine Aided Patent Drafting: A Second Look

Back in June, I wrote about a service that augments patent drafting by allowing a practitioner to submit claims, and receive back the rest of a draft specification.  That post is here.  I pointed out then that the terms of service revealed that the business, Specifio, had seemingly thought through a lot of the ethical issues that I could see.

A month later, I posted here about how faster speed-to-market, and shorter product life cycles, mean that for a greater number of products, patents make less sense: having a right to exclude spring into existence after the product has come and gone isn’t very valuable.  Of course, there are other reasons to have patents, and a patent may still be useful even if technology has marched on, to prevent others from following that lead.  But, using Track 1 and other means to speed up issuance may be needed more often. (I have an article coming out soon with a billion footnotes, and I’ll let you know about it.)

Since then, I’ve been researching the ethical issues arising from artificial intelligence, machine learning, and related developments.  These things are here, now.  Early adopters obviously have to be careful, but late adopters may be left in the dust.

In light of all of the above, if you take into account the increasing need for speedier issuance (and the need to file first under the AIA), the need for speedier drafting is obvious.  The capacity of AI to satisfy that need is here, and its role will increase. (I’ve read about memo drafting services that area already in operation, for example. That’s coming on fast, too.)

In light of all of this, I had a conversation with one of Specifio’s founders and was given the opportunity to see how it worked. (They offer a free trial, too.)  So, I took a claim from a published application and submitted it by email to their system. The actual patent application is here, and the first draft back from Specifio is here.

Take a look.  And I missed the fact that the draft spec did include drawings, here.

As for me, I was surprised and impressed.  Now remember, the draft spec was drafted by automation entirely off of the single claim I submitted — nothing else — and that process took about 5 minutes of my time (less if I had formatted the claim the way it told me to.)

5 minutes of lawyer time for a first draft.

Second, obviously the specs are different.  One key reason is that I only submitted Claim 1, so there’s obviously more in the actual spec than the one from Specifio.    I would hope that the initial draft of the actual patent was also significantly different from what you see in the filed version. I also know that no one would take a draft spec from a young lawyer and file it.  But take a look.  (The fact that a computer would draft differently is an interesting thing, and I’ll return to that below.)

Second, on top of the speed discussed above, automation like this has the potential to free practitioners from the time of preparing at least the initial draft of the spec.  (The boring part.)  This has obvious benefits to lawyers and clients: fees can be reduced, time can be better leveraged, and lawyers can do more interesting work.  In that regard, Specifio’s lawyers use the system to draft its own specs.  They report that rather than taking 15 to 20 hours to write a case, so two full days of attorney time, a lawyer can draft five cases in a day.

Think about that for a minute.

There are some other things.  The system will obviously write specs the way it “likes” to.  It will have its own approach.  That is good, and bad. Things will need to be “fixed,” no doubt.  Substantive errors will need to be spotted.  And, idiosyncratic things — suppose you don’t like “wherein” but like “in which” — will need to be changed, too.  But the consistency will allow lawyers to create macros to quickly deal with such things.

I’m curious what you all think.

Inequitable Conduct and Regeneron Pharmaceuticals, Inc. v. Merus N.V.: Trouble Waiting to Happen

Dennis wrote up the facts of this case on the main page, here.  Boiled down, a district court held a bench trial and held that people substantively involved in prosecution of the ‘018 Patent knew of but-for material references, which were not disclosed.  Although the district court had intended to hold a separate trial on intent to deceive, instead it held that the patentee’s discovery abuses (and other apparent misconduct) warranted an adverse inference of intent to deceive.  The discovery abuses were related to the inequitable conduct issue.  Accordingly, it held the patent unenforceable for inequitable conduct.

The panel split (Judge Newman dissenting), but affirmed 2-1, holding that the withheld art was in fact but-for material and that the district court had not abused its discretion by, under regional circuit law, imposing an adverse inference (more on that, the key and troublesome issue, below).

Before getting into the repercussions too much, one thing jumped out at me:  a few days before receiving a notice of allowance for the ‘018 Patent, a third-party submitted the later-withheld references in the parent application of the ‘018 Patent.  Rather than submit those references to the examiner (either by way of an RCE or otherwise), the patentee let the ‘018 Patent go to allowance, but then submitted those references in related applications that remained pending.  That fact jumped out at me because this is a recurring problem — learning of art at the last minute. I know there are ways to at least submit the art, but it won’t be considered (not sure if that procedure was available when the ‘018 was prosecuted).  Anyhow, the fact that the art was later disclosed in related cases obviously makes it harder to argue it was cumulative of art in the ‘018 prosecution, but also obviously, not disclosing the art later, in the other cases, would have created its own difficulties.

Let’s be clear what was decided:  the panel majority held that the district court had not abused its discretion under regional circuit law by imposing an adverse inference of specific intent to deceive because of litigation misconduct during efforts to enforce the ‘018 patent.  That inference is what allowed the district court to hold the ‘018 Patent unenforceable.

This case creates some complexities and lessons for trial counsel.

First off, according to the panel-majority, mere negligence by litigation counsel is enough to justify an adverse inference under the law of this regional circuit.  Here, much of the discovery fight seems to have been over the scope of what is the “same subject” when privilege has been waived by disclosure of some documents on a subject.  Determining the breadth of waiver — what is the “same subject — is not always a simple issue, and reasonable people can disagree about scope of waiver. From the panel-majority’s opinion, the patentee’s positions did not seem tenable, but the lesson for trial counsel is to be very careful because aggressively arguing for narrow scope can be found to be “negligent” and that can result in loss of a patent right.

Second, it seems to me odd that the Federal Circuit would rely on regional circuit law where, as here, the adverse inference goes to an issue of patent law — intent to deceive under Therasense, which interprets “unenforceability” as a defense listed specifically in the Patent Act.

Third, and related to that, an adverse inference instruction where the issue is intent to deceive is, effectively, even more draconian than terminating sanctions (e.g., striking a complaint or an answer).  The impact of the adverse inference here went far beyond making one party the winner in a specific case: it took away a presumptively valid property right, and, of course, will result potentially at least in fee-shifting under Section 285.

Finally, two broader points.

First, the approach of the panel-majority of relying upon an inference is going to lead to satellite litigation and erosion of Therasense.  Why bother trying to show clear and convincing evidence that the single most reasonable inference is is deceptive intent when you can try the trial lawyers?

Second, when the OED becomes aware of a judicial finding of inequitable conduct by an practitioner, it investigates.  I’m not sure the OED would here — where the adverse inference instruction is what led to the holding of inequitable conduct — but if the OED does do so, will prosecution counsel have a claim against litigation counsel for “negligently” litigating so that this inference arose?  What about the patentee suing the litigators?

Don’t misunderstand me:  I have no idea if the lawyers “deserved” this adverse inference instruction.  The panel-majority’s conclusion that the district court did not abuse its discretion is not a holding that they did deserve it.  But this one, well, she’s a doozy.

Exergen, Therasense, and the Amended Rules of Civil Procedure

I teach civil procedure, patent law, and ethics, and so this opinion granting a motion to modify a scheduling order, and to allow an amended pleading, to plead inequitable conduct jumped out at me because someone successfully navigated the pleading issues created by a combination of case law and the amended rules limiting discovery to claims or defenses plead.

The problem that lawyers face is this:  the combination of Exergen and Therasense require (generally) pleading that a person substantively involved in prosecution knew of but-for material information, knew the information was material, but withheld it with an intent to deceive (or engaged in “affirmative egregious misconduct) and — according to Exergen (which I think was wrongly decided, in an article I wrote before it was decided, and available here) — do so under the rigorous pleading standards of Rule 9(b).  Before pleading fraud with particularity, the lawyer of course has to have a Rule 11 basis to make the allegations.

Therein comes the limitation on discovery in the 2015 amendments to the rules of civil procedure:  even with good cause, there can be no discovery into issues that are not relevant to a claim or defense.  So, how do you get discovery needed to plead inequitable conduct when you can’t plead it without discovery (usually)?

I know some courts have dealt with this problem by local rule or order, allowing discovery into knowledge of prior art, for example, even when it ordinarily isn’t relevant to validity that an inventor knew, or didn’t know, of particularly prior art (derivation being an obvious exception).  Even, however, if you can get the discovery, you then face the problem that, ordinarily, the cut-off to amend pleadings in most scheduling orders occurs long before fact discovery closes.

So, now you know why I found this case, Marical Inc. v. Cooke Aquaculture Inc. (D. Maine, July 31 2017) interesting.  On the last day of fact discovery, the accused infringer took the 30(b)(6) deposition of the inventor, who testified (basically) that he knew information that was but-for material but wasn’t disclosed to the USPTO during prosecution.  The patentee opposed the motion to amend the accused infringer’s pleading to assert inequitable conduct, arguing (a) there was no good cause to modify the cut-off date for amending pleadings, long past and (b) even if there were, the amendment was futile because it could not meet the Exergen/Therasense standard.

The magistrate held there was good cause (it said that the accused infringes was justified in waiting to assert inequitable conduct until after it deposed the inventor), and that the amendment was not futile because it met the Exergen/Therasense standard.

There’s a lot here to think on. One is to make sure that, if you have a local rule or case management order, that you follow it to make sure you plead inequitable conduct timely.  Another is, if there is no such order or rule, to be diligent and to perhaps put the other side on notice, early and before depositions, that you’re going to seek information relating to inequitable conduct even though you haven’t pled it, because you can’t plead it until you have discovery.

With Speedier Time-to-Market and Shorter Product Life Cycles: Diligent Prosecution and Beyond

I just finished a long article that attempted to look at what the past changes in the law, combined with ever-increasing changes in technology, means about patents.  I didn’t try to add a whole lot to the literature about the cases — you know that almost every case the Supreme Court has decided this century has in some way negatively affected the strength of patents, making them harder to get (e.g., KSR, Nautilus), easier to invalidate (same and of course Alice, Myriad), and riskier to enforce (e.g., Octane Fitness).  I also didn’t try to add a whole lot to the literature on how IPRs (and CBMs) have likewise negatively affected the strength of patents.

What I did try to do was look at what is happening, ever increasingly, which is that in many areas of technology time-to-market has become shorter, and, likewise, product life cycles have become shorter.  We get new products more often, and so obviously they’re coming and going more quickly. In many instances, and in a growing number, the product can get to market long before a patent issues after the (average) 25 month pendency, and it may not be on the market long enough to recoup investment. There was some interesting analysis of those last two points.

Where we are increasingly at is a place where economics may not justify applying for a patent.  Not everywhere, but more often, practitioners will find themselves in that place.

I have no idea the degree to which that is the case now, or the extent to which it will become the case more in the future. It is no doubt patent and industry specific.  But if you combine the negative legal landscape with market realities, you see less need for patenting. The direction is clear; the degree, no idea.

Add to that mix the rise of 3D printing, and you can see that infringement will also be occurring in a diffused manner, by individual consumers, and in circumstances often hard to detect.  (CADster should be a great domain name; grab it now.)

Competent practitioners should consider several things.  One is to recognize that diligent prosecution is becoming more important for clients.  Another is that examining whether to discuss with clients the use of Track One, PPH, or the pilot program (or the program — forget its name — that allows for accelerated examination when there’s an older inventor named).

Another is an odd provision in Section 154(d) that allows recovery of damages accruing after a defendant knows of a published patent application, to the extent that it “infringed” those published claims. Mailing copies of published applications to those who may infringe upon issuance may be good practice in some areas.

Anyhow, I’m about to head on vacation for two weeks, and thought I’d leave you with some broader thoughts.

And… a court says “You could’ve done what TC Heartland’s Defendant did”

Following up to the post below, in iLife Technologies v. Nintendo (N.D. Tex. June 27, 2017), the court held a venue challenge waived, writing in part: the “intervening twenty- seven years may have created reliance on VE Holding by litigants, including Nintendo, but that does not change the harsh reality that a party could have ultimately succeeded in convincing the Supreme Court to reaffirm Fourco, just as the petitioner in TC Heartland did.”

Where we are, I think is: (a) if venue is “now” improper in a case, you better be moving on it, no matter what you did in the past as far as waiving, raising, or conceding it, and filing your motion as soon as possible; but (b) there’s going to be, I think, deference given to district court decisions on this when and if one gets to the Federal Circuit. (I vaguely recall mandamus is available if a district court transfers a case out of a circuit, and that line of review may apply here, so maybe we’ll get a review before a final judgment, or maybe a judge will certify a case for interlocutory review, or it’s appeasable under Cohen, though I doubt that.)  Finally, people ought to look at the cases where, after a few recent Supreme Court cases narrowing general personal jurisdiction, folks tried to make a similar argument — that the law had changed.

Raising Venue Post TC Heartland

There’s going to be a lot of litigation over whether a defendant who failed to object to venue pre-TC Heartland can raise it now.  In fact, why not a plaintiff?

One argument has succeeded, but I honestly wonder about its foundation.  The argument goes like this:  (a)  Rule 12 only operates to waive certain 12(b) “defenses,” including improper venue, only if the defense was “available” when the defendant filed its answer or filed its pre-answer motion (waiver also occurs if someone includes an objection to improper venue in its answer, but doesn’t raise it promptly in a post-answer motion); (b) because of VE Holdings, the objection to improper venue was not available; and so (c) there was no waiver and the objection is now available.  A recent district court Westech Aerosol Corp. v. 3M Co. (W.D. Wa. June 21, 2017) accepted this argument, allowed the objection to be raised.  It did, however, consider issues like prejudice and delay — which, ordinarily, aren’t issues in improper venue motions.

Well, okay maybe.  But if I were a judge, especially if the case had been pending a while, I’d say: “the defendant in TC Heartland raised the issue, so are saying you’re special, and it was ‘available’ only to that defendant?”  Put in legalese, there has been a non-frivolous basis for arguing that VE Holdings was wrongly decided since, well, the day that case was decided.

Granted, there is probably a spectrum here:  a defendant who included the objection to improper venue in its answer, but then did not move to dismiss, is no doubt in a better place than a defendant who did not include it at all (at least as far as atmospherics go), and plainly courts should consider the disruption and prejudice that these “now available” motions will raise.

Competent lawyers should think about whether to raise the defense (it may be a bad idea for a client, even if it is available), and how to defeat it.  Likewise, a plaintiff might consider a strategic motion, too!


Texas Supreme Court to Hear Arguments on Patent Agent Privilege

The Federal Circuit last year in In re Queen’s University held that its law controlled and there was a patent agent-client privilege. That brought some clarity, since there had been a split on even the existence of the privilege.

Enter Texas, where one of its court of appeals held that, because the claim in that case was not patent infringement, but a state law claim, Texas law applied, and under it, there was no patent agent privilege.  My earlier post about it is here.  That post also links to the amicus brief I filed, arguing a point not raised by the parties: that under Texas choice of law principles, Federal Circuit law applied and there was good reason to defer to its approach.

The Texas Supreme Court just announced that it will hold oral argument on the pending petition for mandamus relief.  My instincts tell me that this means the court is likely going to reverse, which would be a good thing because clarity will reduce costs.  No date is set, yet.

PTAB Grants Permission to File Motion to Disqualify Expert

The PTAB in Fujifilm Corp.  v. Sony Corp. (IPR 2017-01267 & 2017-01268) granted permission to the patentee to file a motion to disqualify an expert for the petitioner.   APJ Kokoski, after a teleconference, granted permission to file the motion.

Expert witnesses are not subject to the more familiar rules that govern loyalty and attorneys.  To disqualify an expert, the decision explained:

Disqualification of an expert is a drastic measure we hesitate to impose except when absolutely necessary. See LaCroix v. BIC Corp., 339 F. Supp. 2d 196, 199 (D. Mass 2004) (noting that “courts are generally reluctant to disqualify expert witnesses”). To resolve a motion to disqualify an expert, district courts generally apply a two-prong test to determine (1) whether it is objectively reasonable for the moving party to believe that it had a confidential relationship with the expert; and (2) whether the moving party disclosed confidential information to the expert that is relevant to the current proceeding. Id. at 199–200. A court is compelled to disqualify an expert only when the answers to both inquiries is affirmative. Wang Labs., Inc. v. Toshiba Corp., 762 F. Supp. 1246, 1248 (E.D. Va. 1991); see Agila Specialties Inc. v. Cephalon, Inc., Case IPR2015-00503, slip. op. at 4 (PTAB Aug. 19, 2015) (Paper 13).

It will be interesting to see if the patentee can meet this standard, but a takeaway is to monitor for conflicts (and to check to see, for example, if a prosecution bar in a prior case might prohibit conduct that the ‘common law’ of expert disqualification might not reach.

Issue Preclusion and Disqualification

As a general rule, unless the former client consent, a lawyer cannot represent a client in a matter that is materially adverse to a former client if it is the same matter he had represented the former client in, or if the adverse matter is “substantially related” to his prior work.  So, for example, ordinarily, if I represent Client A in a suit asserting the ‘123 Patent, I can’t later represent a defendant against whom Client A asserts the ‘123 Patent; that would be the “same” matter, and obviously representing a defendant against a plaintiff is materially adverse.

Figuring out what is “substantially related” to the ‘123 Patent, however, is a complicated problem.  The starting point obviously is the ‘123 Patent and what it discloses.  But how broad technologically speaking do we go?  Does it include patents issued off of continuations?  Probably.  Issued off of CIPs?  Maybe.  What about information I learned in litigation by reason of representing Client A that wasn’t really technologically related?  For example, what if I learned of its financial situation? While the vast majority of courts recognize that the fact that I might have learned how Client A litigated patent cases doesn’t “count” in this context, a few do.  So where do I draw the line(s)?

That uncertainty is underneath a decision from the divided Colorado Supreme Court, in a non-patent case but one worth noting because patents are often asserted serially, or concurrently, against multiple parties.  (There are several cases where Law Firm 1 represents a “Client A” against non-clients, while other firms assert the same patent for Client A against a client of Law Firm 1, which creates related issues.)

Because of the nature of patent litigation, whether a representation against a former client is ethical, or not, could come up more than once. Suppose it’s fully litigated the first time.  Does the fact that in the first motion to disqualify, a court holds there is no “substantial relationship” mean that, in a subsequent very similar later case, there also won’t be one?

In Villas of Highland Park Homeowners Ass’n. v. Villas at Highland Park, LLC, (Yolo. May 22, 2017), a law firm defeated a motion to disqualify brought by its former client.  It showed up again in another suit, very similar. The former client again moved to disqualify.  The trial court in the second case, at least in the 4-judge majority’s view, reasoned that because the first suit was not substantially related to the lawyer’s work for his former client, neither was the very similar second suit.

The majority held that the trial court abused its discretion and emphasized that determining whether there is a substantial relationship is fact-intensive.  Three judges dissented, and bemoaned the fact that this could lead to seriatim disqualification motions.

So, for patent lawyers, this case means to always carefully assess a potential representation.  Perhaps you avoided disqualification earlier: that doesn’t mean you are free and clear this time.

Tech Transfer Reports on AIA Drafting Flaw Affecting Thousands of Patents

No idea if this is correct, but figured it deserved a post.  The article asserts that if a provisional was filed in the name of the assignee (applicant), it cannot serve as the basis for a priority claim because the statute says only that a provisional filed by “an inventor” can serve that purpose.  Anyone have insight? Further, the article portrays this as affecting only universities, but one would think a broader impact more likely?

Discovery Ethics: 30(b)(6)


Lawyer sends over a 30(b)(6) request trying to get the deposition of the corporation as to why certain prior art had not been submitted during prosecution.  Rather than have an employee investigate and figure out why the art wasn’t disclosed, or object to the notice, the recipient produces an employee who basically says, “I didn’t investigate but we’re an honest company and so if we didn’t disclose it, it’s because we didn’t know about it or it wasn’t material.”

The judge wasn’t amused, and the decision in Raytheon v. Cray (E.D. Tex. Payne, J., June 6, 2017), is here.  “The rules don’t give Ratheon the right to ignore” the 30(b)(6) notice is about as simple as it gets.  Boy, there are days I don’t miss litigation!

Augmented Patent Drafting and Ethics

We live in interesting times.  Specficio (here) allows registered practitioners to submit a claim set (one independent with as many dependent as desired), and the software drafts a specification for review before submission.  Currently, it supports only software-related inventions.  The biographies of the founders reveal a lawyer, a venture capitalist, a linguistic expert, and more.

AI is going to affect everything in the law, and it happened already and will increase in speed exponentially (literally) over the next few years.  Beyond the basic question of the quality of the value-add the service provides, I had these questions:

First, what about conflicts?  This entity is going to provide a specification to anyone who submits a claims set.  So, imagine two competitors, and a lawyer for Company A and a lawyer for Company B submit claim sets, and submit them.  This company provides specs for claims that interfere.  Conflict of interest?  If it’s not, why not?  In this regard, the TOS says that it is not providing legal advice, and so any ethical rules about conflicts would not apply, presumably.

Second, and related to that, what about confidentiality?  The privacy policy states that it is taking steps to avoid “cross pollination” of applications and that no human looks at the text. The privacy policy is a complex read:

  1. Privilege and Confidentiality.


You are engaging Specifio to provide the Site and Services in order to assist you in providing provision of legal advice to your client.

It is understood that only you and your client have the right to assert or waive the attorney-client privilege, not Specifio.

To the extent permitted by law, it is intended and agreed that any communications made to Specifio by you or your client in connection with your use of the Site and Services shall be privileged and that any such communications shall be made to facilitate communications between you and your client and to aid you in rendering legal advice to your client.  We, therefore, shall not divulge to anyone any communication (or part or substance thereof) received from you or your client in connection with the Site and Services.

Definition of Confidential Information

For the purposes of this paragraph 1, “Confidential Information” means patent claims, and any resultant draft patent application specifications and/or drawing figures generated by the Services, that you e-mail to us or that we e-mail back to you in accordance with the intended use of the Services.

Restrictions on Use and Disclosure 

Keeping your Confidential Information safe is paramount for Specifio.  In addition to our obligations respecting privilege described above, we will not use your Confidential Information except to provide you with the Services and as described in this Privacy Policy.  We will maintain in confidence and protect your Confidential Information using at least the same degree of care as we use for our own information of a similar nature, but in all events at least a reasonable degree of care.

Your patent claims can be e-mailed to Specifio in password-encrypted Microsoft Word documents, which is how Specifio returns draft specifications to you.  Specifio runs on secured (data encrypted) U.S.-based servers and does not keep copies of Confidential Information, except for the obscured content-stripped versions described below.  At every step of the way, Confidential Information is guarded from human eyes or other outside access, as described in this Privacy Policy.

We may keep and use obscured content-stripped versions of your Confidential Information; however, the content words will be removed from the documents and replaced with nonspecific symbols so that the meaning of the text cannot be ascertained.  For example:

The statement

The present disclosure relates to systems and methods for facilitating review of a confidential document by a non-privileged person by stripping away content and meaning from the document without human intervention such that only structural and/or grammatical information of the document are conveyed to the non-privileged person

would look something like this:

the p0018 d0017 r0019s to systems and methods for f0000ing r0001 of a c0002 d0003 by a n0004 p0005 by s0006ing a0007 c0008 and m0009 from the d0003 without h0010 i0011 such that only s0012 and/or g0013 i0014 of the d0003 are c0015ed to the n0004 p0005.

We use these obscured content-stripped versions for limited internal purposes only, such as to analyze document structures and word forms, which helps use do things like provide you with better support services and improve the Services.

In addition, Specifio does not train its machine-learning models on the content of any Confidential Information.  This helps ensures there is never “cross pollination” between patent applications.

We will not disclose to anyone that you are a Specifio customer or that you are using the Services, without your prior written consent in each instance.


The restrictions set forth in paragraph 1 will not apply with respect to any Confidential Information that: (i) was or becomes publicly known through no fault of ours; (ii) was rightfully known or becomes rightfully known to us without confidential or proprietary restriction from a source other than you who has a right to disclose it; (iii) is approved by you for disclosure without restriction in a written document which is signed by you; or (iv) we independently develop without access to or use of your Confidential Information.  The restrictions set forth in paragraph 1 will not restrict us from disclosing Confidential Information pursuant to the order or requirement of a court, administrative agency, or other governmental body, provided that we give you reasonable notice to enable you to contest such order or requirement

The restrictions set forth in this paragraph 1 will survive the termination or expiration of your use of the Site and Services.

You agree to reimburse us for reasonable legal fees and expenses incurred in connection with any litigation or administrative proceeding resulting from: (i) our failure or refusal of to comply with any attempt to compel us to disclose any communication described in described in this paragraph 1 (or part or substance thereof) or to produce documents or (ii) the obtaining of, or attempt to obtain, a court order compelling us to disclose any communication described in this paragraph 1 (or part or substance thereof) or to produce documents.

Given this, one would think the information submitted would remain privileged because of normal privilege doctrine (a lawyer can have non-lawyers help her draft a spec, for example, without waiving privilege), and the site’s privacy policy quoted above indicates that it will do its best to preserve whatever privilege you have.  (Though apparently it won’t assert privilege.)

To sum up for a moment, the folks behind this seem to have thought a number of issues through, and there is great comfort in the TOS and privacy policy in some respects.  But, if I were you, I’d do some due diligence on what is behind the words, in part because of the limitations on liability and other limitations you will be agreeing to on behalf of your client. Among other things, the TOS basically eliminates, prospectively, almost all liability, requires you to indemnify it for any claims, and requires you arbitrate — which may require consultation with your client.

Next, despite saying that it’s not providing legal services, drafting a specification is — at least as the term is now understood — the practice of law.  If that is so, then we have a corporation providing legal services.  Can you use a corporation to provide legal services to your client in your state?  That might be the unauthorized practice of law, so check.  Further, the founders, presumably sharing the fees, do not appear to all be lawyers, or registered practitioners.  Lawyers cannot let non-lawyers control representations.  Lawyers cannot share legal fees with non-lawyers.  It all could be perfectly fine, but those facts gave me pause. Again, it’s a new world.

Further, the TOS says the services can be performed anywhere in the world.  That could create a need for disclosure to a client, and, potentially at least, some other issues if the information in the claims is particularly sensitive.

Please note: I’m not saying this is unethical, illegal, or a bad idea.  I have no informed opinion. I see issues.  I am a big fan of reducing legal costs and speeding up patenting (that’s going to be critical in the near future).  But, despite looking at the entity’s web page, I have questions that, if I were you, I’d investigate first.

PTAB Judges and the Lack of an Applicable Ethics Code

Someone reached out to me and pointed out that Gene Quinn over on ipwatchdog is quite upset by the fact that there is no code of judicial ethics specific to PTAB judges and the like. His latest article, of many, is here.  That’s a good idea.

There should be a specific and distinct set of ethical rules applicable to them. I’m not sure there isn’t one already. 28 USC 455 applies to all federal judges, including somewhat analogous magistrates, and could be interpreted to extend to them. (I doubt it, but I haven’t researched it.)  If it doesn’t, the USPTO could by regulation (or internal operating procedure, perhaps) simply adopt the language of Section 455 and get this done.  And it should.

Mr. Quinn goes on at length about alleged personal unethical conduct, and makes some sharp accusations and personal attacks that I don’t want to leave any impression that I agree with.

But some of his accusations arise from his belief about legal ethics or federal law that go directly to the idea of the substance of a code and so I’ll touch on those limited ones, and only some of those.  For example, Mr. Quinn writes  “there is no time limit on a duty to a former client, at least if you are a patent practitioner. So the 1-year recusal period is wholly without precedent and inappropriate for PTAB judges.”  Likewise, Mr. Quinn states that federal law governing Article III judges “has specific provisions that would seem to absolutely prohibit a judge from handling a case where a litigant is a former client.”

Neither argument should be taken seriously in crafting a PTAB code.

With respect to lawyers, pretty much every jurisdiction recognizes there is a “time limit” (as he puts it).  It works this way:  I can be adverse to a former client if information I learned from the former representation has become generally known or has become “stale.”  So there is a “time limit” of sorts, by rule in most jurisdictions and in case law in others so far as I know.

As for judges, there is no prohibition against a judge ever adjudicating a dispute involving even a former client the lawyer personally represented.  No, the federal statute regulating Article III judges (and magistrates) (28 USC 455) and the Code of Judicial Conduct don’t state some  minimum amount of time that must pass after a lawyer represents a client before she can judge a dispute involving that former client. But, with the federal judiciary, two years seems to be the outside long “norm” for a judge to wait before adjudicating cases involving former clients the judge actually and personally represented.  See, e.g., Sphere Drake Ins. Ltd. v. All Am. Life Ins. Co., 307 F.3d 617, 621-22 (7th Cir. 2002) (“The norm among new appointees to the bench is that once two years pass, perhaps even earlier, a judge is free to sit in controversies involving former clients”) (emph. added)).

My point is that having a set of rules specific to adjudicative officials is probably a good idea.  I do hope the USPTO takes the idea to adopt a set of rules applicable to adjudicative officials seriously, both to encourage confidence in the system and to avoid subjecting officials to criticism unanchored to a well-known standard like Section 455.

New Patent Assertion Entity Flying Above the Radar: Blackbird

Perhaps there are other entities like this, but if so they haven’t made the boom that this one has.  Blackbird Technologies was founded by former big-firm (WilmerHale, Kirkland Ellis) patent litigators. It buys (or somehow obtains rights to assert) patents and asserts them with its own in-house staff of litigators.  Its “news” page reports a number of suits — at least 100 in its short life — and reports that it settled many.

It came onto my radar because of an interesting case involving a prosecution bar.  A defendant pointed out that because Blackbird’s business is buying patents to assert, no lawyer at it should see the defendant’s highly confidential information because those lawyers could then go acquire patents that covered the defendant’s planned products.  The court resolved the issue by requiring the company to covenant not to sue with respect to future products, an interesting resolution of the problem.  A pertinent part of the order in Blackbird Tech LLC v. Service Lighting and Electrical Supplies, Inc., et al., C.A. No. 15-53-RGA (D. Del. May 18, 2016) (Andrew, J.) provides:

the Court will require that Blackbird agree to a covenant not to sue any of these Defendants for infringement of patents involving lighting technology that are acquired during the time between the entry of the protective order and one year after the conclusion of the litigation. To be clear, if Blackbird acquires a patent on any lighting technology6 during the restricted time period, it may never assert that specific patent against these Defendants.

(As an aside, I would love to see how it acquires patents, since some interesting ethical issues could arise from its acquisition practices, since it’s a corporation but it’s practicing law, it seems.  There are some very odd issues that arise sometimes.)

Then I read that Blackbird has sued Cloudflare (Blackbird Tech LLC v. Cloudflare, Inc., which it seems is an Internet security company.  In response, Cloudfare put a “bounty” on every Blackbird patent.  That story is reported widely, including here and here, for example.

Blackbird states that it is designed to help small inventors overcome the obstacles of patent litigation, including the obstinate, more powerful defendant.  I am know that small inventors, and small companies, sometimes face the 800 pound gorilla defendant who refuses to deal fairly, and so the benefit that something like Blackbird can bring is real.  It will be interesting, however, to see if that is what Blackbird is, or if it is going to bring a bunch of nuisance suits, which Cloudflare believes it has done, as it has stated here.

Nova Chemicals v. Dow Chemical: Does 285 Apply to Independent Actions to Set Aside Judgments and Does the CAFC Have Subject Matter Jurisdiction?

This one, Nova Chemicals Corp. v. Dow Chemical Co., __ F.3d __ (Fed. Cir. May 11, 2017) (here) is interesting because of the issue it doesn’t raise, but more on that in a moment.  Patentee Dow sues and obtains a judgment against Nova.  Years later, the defendant believes that the judgment had been obtained by fraud, and brings an independent action in equity (as allowed by FRCP 60) to set aside that earlier judgment.  Basically, Nova asserted that Dow had lacked standing, basing its argument on some later testimony in an unrelated case, and that the infringement proofs had been misleading.

To set aside a judgment under these circumstances, through an independent action, requires proof of fraud on the court or a truly grave miscarriage of justice.  The district court dismissed the complaint and the CAFC affirmed that dismissal under Rule 36, without any opinion.

Then Dow moved in the district court for fees.  The district court granted them under Section 285, which of course allows a court in patent cases which are “exceptional” to award fees.  Nova never argued 285 did not apply, and the CAFC noted that on appeal.

The CAFC affirmed the district court’s findings, and it’s an odd case not likely to recur, so the substance of the panel’s 285 analysis isn’t too revealing.

But what is interesting to me are two things.  First, the apparent concession by Nova that 285 applies to equitable actions to set aside judgments. I’m not sure that is so clear but presumably they looked at that.  But it is also interesting to me, and is related to that, that this appeal (and the earlier appeal) was taken to the Federal Circuit, not to a regional circuit.  The Federal Circuit’s appellate jurisdiction is limited to civil actions arising under the patent laws, which an independent action to set aside a judgment is not, one would think…