by Dennis Crouch
This is a quirky case, but the holding is troubling — that a patent owner’s state of residence can prohibit the patentee from using the federal courts to assert their patent rights. I would think the 14th Amendment is on point: “nor shall any State deprive any person of life, liberty, or property, without due process of law.”
Walter Tormasi v. Western Digital Corp. (Fed. Cir. 2020)
Tormasi is serving a life sentence at the Maximum Security New Jersey State Prison in Trenton for murdering his mother. Tormasi is also a patentee — his U.S. Patent No. 7,324,301 covers a particular disk drive construction — and the claims appear quite broad.
In 2019, Tormasi sued Western Digital in N.D. Cal. for patent infringement seeking $5 billion in damages. The district court quickly dismissed the case — holding that Tormasi lacks the capacity to sue to enforce his patent rights. On appeal, the Federal Circuit has affirmed. Here is the logic:
- FRCP 17(b)(1) indicates that an individual’s capacity to sue or be sued is determined “by the law of the individual’s domicile.” For Tormasi, that is New Jersey.
- Although N.J. has a broad capacity-to-sue statute, N.J. law also prohibits inmates from “commencing or operating a business … without the approval of the Administrator.” N.J. Admin. Code § 10A:4-4.1. No approval has been granted.
- Joining these two laws together, the court held that Tormasi’s lawsuit here is a continuation of his business activities and thus prohibited by the “no business” provision. And, the court tied this to his capacity-to-sue — holding that his enforcement lawsuit is simply prohibited.
Truthfully, this holding makes very little sense from a statutory construction approach. It is not surprising that neither judge in the majority (Wallach or Chen) were willing to sign as the opinion author.
Judge Stoll penned a short dissent — explaining that New Jersey’s capacity to sue statute should govern here, and there is no indication that the prohibition of in-prison business was designed to further limit someone’s capacity to use the Federal Court system. “It makes little sense to narrow the New Jersey statute on capacity to sue in light of the ‘no business’ rule, which is an administrative rule of the Department of Corrections that prescribes sanctions for certain ‘prohibited acts.'”
We also have the particular issue here of Federal Patent Rights and the state’s role in limiting a patent owner from asserting and enforcing those rights.
Rather than really addressing the issue, the unsigned majority opinion concluded that Tormasi had waived the argument:
- Majority: Mr. Tormasi did not argue to the District Court that the “no business” rule cannot generally limit the scope of an inmate’s capacity to sue. The argument is, accordingly, waived, and Mr. Tormasi has therefore conceded that the no business rule may limit his capacity to sue.
- Dissent: To the contrary, in his briefing to the district court, Mr. Tormasi asserted that the “no business” rule “was never intended to supersede [his] right to file civil lawsuits in his personal capacity.”
The majority also explained that Tormasi abandoned his constitutional arguments on appeal.
So much outrage in these comments, so much naivete. This is perhaps best exemplified by Dennis’ weird comment at the front of this article: “I would think the 14th Amendment is on point: ‘nor shall any State deprive any person of life, liberty, or property, without due process of law.'” But Tormasi had due process. He was convicted by a 12-person jury in 1998 of having murdered his mother by shooting her 10 times. That conviction has been affirmed multiple times after almost 20 years of legal challenges, including direct appeals and post-conviction motions filed to collaterally attack the conviction. He clearly had due process, and the evidence of his guilt was overwhelming.
A person in prison like Tormasi, having been duly convicted of a serious felony after due process, forfeits certain privileges enjoyed by the public at large. In New Jersey, one of those privileges is running a business without the warden’s consent. And if you look at the history of this case (and there’s been litigation around Tormasi’s patent application activities going back at least 12 years), it’s beyond question that Tormasi was trying to run a business, and the patent suit he filed here was just a further attempt to advance that business.
This is not a civil rights case. Had Tormasi filed a federal lawsuit for violation of his civil rights based on the conditions of his confinement, New Jersey’s capacity-to-sue statute could not stand in the way of such a lawsuit. But the right to file patent applications and infringement lawsuits is not so sacrosanct as to be immune from state regulations governing activities of incarcerated individuals. Mr. Tormasi has no constitutional right to amuse himself and pass the time of his life sentence by filing patent applications and pursuing infringement lawsuits.
A lot of people seem troubled by the idea that a state law here could override the ability to file a lawsuit in federal court. But Federal Rule of Civil Procedure 17 expressly incorporates state law in determining a plaintiff’s capacity to file a civil suit on this context; and last time I checked, a Federal Rule of Civil Procedure represents federal and not state law. Moreover, the federal preemption argument wasn’t sufficiently developed by Tormasi such that the CAFC had to fully consider it.
There’s also a practical reality to this decision; the Federal Circuit was no doubt concerned with creating a new pastime for tens of thousands of life-in-prison convicts with nothing but time on their hands (i.e., filing patent applications and then suing companies for infringement from prison). I imagine a new wave of NPE lawsuits by convicted killers wouldn’t be particularly beneficial to the image of the U.S. patent system.
LR,
That is more than somewhat officious.
If there be a wave of innovation from within the prison system, because “they have nothing but time on their hands,” this would be a good thing.
This would be good for innovation.
This would be good for the rehabilitation aspect of correctional facilities.
You seem to suggest that those being sued are somehow the victim.
You have turned the enforcement of a personal property right into being a vile act.
You need to check yourself.
Agree with most of this. 2 points I’d object to.
1. There’s this, which I think is true but beside the point: “A person in prison like Tormasi, having been duly convicted of a serious felony after due process, forfeits certain privileges enjoyed by the public at large. In New Jersey, one of those privileges is running a business without the warden’s consent.”
The dissent addresses this. There’s probably no consititutional problem with prohibiting prisoners from running businesses without the warden’s consent. The more interesting question is what the consequences are for violating that prohibition. Does the New Jersey statute actually deprive prisoners of capacity to sue within the meaning of FRCP 17, or does it impose different consequences that prison administrators apply and that have nothing to do with capacity to sue? The dissent says it’s the latter, and I’m tentatively convinced.
2. This part seems ridiculous: There’s also a practical reality to this decision; the Federal Circuit was no doubt concerned with creating a new pastime for tens of thousands of life-in-prison convicts with nothing but time on their hands (i.e., filing patent applications and then suing companies for infringement from prison). I imagine a new wave of NPE lawsuits by convicted killers wouldn’t be particularly beneficial to the image of the U.S. patent system.
How would this work, exactly? NPEs have to get the patents in the first place, which either means paying lots of fees and wearing down a patent examiner, or buying them. Then they have to find people they can profitably sue. Patent litigation is expensive and time-consuming, especially from prison, and if a prisoner is filing frivolous lawsuits for amusement and profit, they’re easily shot down at the outset. It’s much easier and more profitable to spend time figuring out new collateral challenges to your conviction, suing the warden under the 8th Amendment over prison conditions, or filing other lawsuits that don’t require the time and expense of acquiring patents. That’s not to say that zero prisoners will ever be patent plaintiffs, but the idea of a wave of “tens of thousands” of “convicted killers” is hard to imagine.
Finally, far better for the “image of the U.S. patent system” if courts apply the laws fairly to everyone than that the courts bend them in particular cases based on personal feelings about particular litigants. If New Jersey’s statute, fairly read, deprives prisoners like Mr. Tommasi of capacity to sue while in prison, so be it. But if that’s not what the statute actually does, fear of a hypothetical wave of prisoner-patentee lawsuits is an illegitimate basis to bend the statute.
LR tends to be an Ends justifies the Means kind of guy.
He should look up Sir Thomas More.
How is this not a First Amendment case?
Michael Cohen is writing a book and having it published.
Yes, but it is likely that Mr. Cohen will not see profit from the book.
OT, but seeing how this unfolds:
link to apple.news
D gave it to em lol
This is a disgraceful opinion that shows the cowardice of the Federal Circuit, their continuance of anti patent opinions, and the weakness of this opinion. If Wallach and Chen didn’t have the confidence or courage to sign their names to the opinion, the court should overturn it without much argument. Tormasi sued in his personal capacity, not under any business, and the last time I checked my bar exam materials, state laws cannot prohibit the exercise of federal laws. Perhaps Wallach and Chen should retake their bar exam or hire law clerks that have passed it.
This really isn’t a patent decision, but rather a prisoner’s rights decision in the cloak of a patent. If the state has the general power to restrict the activities of the prisoner, it doesn’t seem to matter those activities stem form a Federal statute or a state statute. The state has an extraordinary power over prisoners.
Not that I agree. I think he should have been able to file. I also generally think that states should have less power over prisoners and that any further depredation of liberty other than that which comes with physical incarceration should have a requirement to show a good cause. But I acknowledge tradition and law are regretfully not on my side on this manner.
Indeed, the underlying district court opinion shows that the district court judge approached the case as being a prisoner rights issue, and not a patent issue; including how the 14th Amendment applied. The district court noted that the plaintiff, contrary to a prior representation he made during proceedings in the Third Circuit, was trying to conduct a business while in prison by seeking to “monetize[e] his patents and obtain[] $5 billion in compensatory damages for patent infringement, in contravention of the New Jersey regulations.” The district court ruled that “‘Lawful incarceration brings about the necessary withdrawal or limitation of many privileges and rights, a retraction justified by the considerations underlying our penal system.’ Stroud v. Swope, 187 F.2d 850, 851 (9th Cir. 1951) (quoting Price v. Johnston, 334 U.S. 266, 285 (1948)). While the Fourteenth Amendment protects the right of access to the courts, it does not guarantee the right to freely conduct business. Accordingly, the Court finds that Plaintiff, as an inmate of the New Jersey Department of Corrections, lacks the capacity to sue for patent infringement.” Tormasi v. Western Digital Corp., No. 19-cv-00772-HSG 2019 WL 6218784, *2-*3 (N.D. Cal. Nov. 21, 2019), aff’d, No. 2020-1265, __ Fed.Appx. __, __, 2020 WL 4873764, *2-*4 (Fed. Cir. Aug. 20, 2020) (nonprecedential).
Thank you Bob.
So, if I have a home (property), would I be trying to conduct a business were I to attempt to protect my property rights from trespass?
Anon says:
>So, if I have a home (property), would I be trying to conduct a
>business were I to attempt to protect my property rights from
>trespass?
Umm, if you were trying to collect rent from people who were using your property, then sure, you’d be conducting a business. That’s basically what Tormasi was trying to do.
You are missing the point here LR.
I think the soft default at the FedCir is to issue per curiam opinions in the cases where one of the parties is pro se and the case is submitted on the briefs. Dissents in those cases are rare. Sometimes a dissent prompts the majority to remove the “per curiam” designation and sign the author’s name, but not always. That seems to be what happened here rather than 2 judges lacking “confidence or courage.” Also, it’s only 2 judges, so there’s really nowhere to hide.
I’m not sure what bar exam materials say about preemption or the supremacy clause, but capacity to sue sometimes depends on state law. Parties often dispute whether a plaintiff is the rightful owner of a patent, and the answer can turn on interpretation of the contract under state law. As the post points out, under FRCP 17, “Capacity to sue or be sued is determined… by the law of the individual’s domicile.”
Just reading the opinions, though, I think Judge Stoll’s dissent probably has the better of the argument. It seems odd to interpret a law about prisoner conduct as affecting the prisoner’s capacity to sue. As the dissent points out, the New Jersey law spells out the consequences:
Under this “no business” rule, the prohibited act of “commencing or operating a business or group for profit . . . without the approval of the Administrator” is subject to “a sanction of no less than 31 days and no more than 90 days of adminis-trative segregation,” id. § 10A:4-4.1(a)(3), as well as one or more of the sanctions listed at section 10A:4-5.1(i–j) of the New Jersey Administrative Code, which includes loss of correctional facility privileges, loss of commutation time, loss of furlough privileges, confinement, On-The-Spot Cor-rection, confiscation, extra duty, or a referral of an inmate to the Mental Health Unit for appropriate care or treat-ment.
In other words, it says that if you operate a business without permission, there may be consequences–not that your actions operating that business will be deemed void by a court, and not that lawsuits for the benefit of that business should be dismissed for lack of capacity to sue.
Judge Stoll also seems right that the earlier Third Circuit decision has no bearing on this.
Maybe the majority’s right that Mr. Tommasi waived his argument, but–as Judge Stoll points out–that seems like a overly strict application of waiver to a pro se litigant.
The decision seems wrong, but I would assume Mr. Tommasi is stuck with it unless someone in the majority changes their mind. Cert or en banc rehearing are unlikely where the errors are misapplication of the waiver standard or misinterpretation of a New Jersey state statute. I suspect that “correction” is more likely to come from the New Jersey Supreme Court or the Third Circuit in some later case–a defendant might cite Tommasi to try to get a prisoner’s lawsuit dismissed, and the court might say that the Tommasi dissent is right and the Tommasi majority depends in part on waiver in any event.
Off topic, but big development in Christy Inc. v. United States: the CAFC (Lourie, Reyna, & HUGHES) today held—in an appeal from the Court of Federal Claims—that invalidation of patent claims in an IPR is not a compensable taking. In other words, a case is now properly in position to make a V amendment takings appeal to the SCotUS following an IPR. I do not think that the plaintiff has much of a chance here, but it is at least interesting to see that some plaintiff has finally decided to do the work necessary to put itself in a procedural posture sufficient to make the takings argument properly.
link to cafc.uscourts.gov
Thanks for the note and hotlink Greg. In this Christy Inc. v. U.S. appeal from the Court of Federal Claims the CAFC disposed of all six alleged legal bases for takings, refunds or other compensation for IPR claim cancellations.
[We also have the particular issue here of Federal Patent Rights and the state’s role in limiting a patent owner from asserting and enforcing those rights.]
I fail to see the issue. It is indeed the Federal Rules that expressly defer to the state’s determination of capacity. Maybe if they didn’t, this would be an open question.
[I would think the 14th Amendment is on point: “nor shall any State deprive any person of life, liberty, or property, without due process of law.”]
What makes you think he was sent to prison without due process?
There is a lot more to this case than what is described above. For example, prior to filing the application (and while imprisoned), he surreptitiously formed a patent holding company and assigned all of his patent rights to that holding company. He was running a sole member company from his prison cell.
“Having been barred from filing suit on behalf of ADS by the District of New Jersey, Mr. Tormasi, while he was still incarcerated, directed ADS to adopt a corporate resolution to assign and transfer “all right, title, and interest” in the ’301 patent to himself in December 2009. A.A. 155 (2009 Corporate Resolutions), 157 (2009 Assignment). Mr. Tormasi asserts that “[t]he purpose of the transfer in ownership was to permit [Mr. Tormasi] to personally pursue, and to personally benefit from, an infringement action against [WDC] and others.” A.A. 138.”
The majority then held:
“Mr. Tormasi’s attempt to file this lawsuit as a personal action merely repackages his previous business objectives as personal activities so he may sidestep the “no business” regulation. Because these actions are a mere continuation of his prior business activities, we find that here, as in Mr. Tormasi’s previous lawsuit, Mr. Tormasi’s characterization of his suit as personal, as opposed to related to business, to be without merit. “Mr. Tormasi’s attempt to file this lawsuit as a personal action merely repackages his previous business objectives as personal activities so he may sidestep the “no business” regulation. Because these actions are a mere continuation of his prior business activities, we find that here, as in
Mr. Tormasi’s previous lawsuit, Mr. Tormasi’s characterization of his suit as personal, as opposed to related to business, to be without merit.”
Now, I am not suggesting I agree with the holding here. But this case is not quite as simple as portrayed above.
Curious if and how the patent maintenance fees were paid by a jail inmate – I wonder if either court ever thought to check?
Could not this inventor have sold his patent to anyone who Could sue if it actually was infringed or had any other value?
Absolutely misses the point vis a vis the sanctity of property.
“Could not this inventor have sold his patent to anyone who Could sue if it actually was infringed or had any other value?”
Had the same thought, Paul. Until I realized that such a sale could also (incorrectly) constitute conducting “business.” Especially should the sale include a continuing licensing / settlement revenue share.
An infringer would almost certainly attempt to rely on the Dist. Ct. and CAFC’s hackneyed reasoning to argue that any patent assertion is barred.
It is possible that Mr. Tomasi could sell his patent to a legitimate third party. A single one-off sales and assignment transaction arguably wouldn’t constitute “conducting a business” so long as the transaction involves no ongoing involvement by the inmate (other than perhaps giving deposition testimony under subpoena), and a one-time payment to the inmate’s estate. A creative lawyer could even style the assignment transaction as part of a broader estate and financial plan for the inmate and his successors, and typically estate planning like is not prohibited. Even if the warden hated Mr. Tomasi and was uncooperative, you’d still have a much better chance of forcing them to allow the transaction if someone “on the outside” was pushing for it.
But from a practical standpoint, Paul, it is unlikely that a third party would want to get anywhere near this patent. This comes down to a simple question: do you want to be the guy who files a patent infringement lawsuit where the sole inventor is a guy who was convicted of murdering his own mother?
And I know what you’re saying, couldn’t the judge just keep the jury from hearing about the inventor’s conviction and incarceration? Maybe not. This was not a patent that Mr. Tomasi conceived and filed before his incarceration; he filed the application about six years into his life sentence. His incarceration is thus part of his “invention story,” and a defendant would legitimately question how he stayed abreast of current developments in hard disk drive design given the limits of his incarceration. He was isolated for many years from the crowded field in which he was patenting at the time of filing. This would all be fair game for discovery and trial. He would definitely be subject to a jailhouse deposition, and that testimony could be shown to the jury.
Also, from the standpoint of the third party purchaser, they’d have to weigh the fact that the trial judge will of course know throughout the case that the inventor was a convicted killer. The unsympathetic nature of the patent would make it less likely that a trial judge would call balls and strikes on evidence admissibility, and other issues, in the plaintiff’s favor.
When the ends are known, the means come easy.
Tormasi was robbed.
I can’t believe I’m still practicing in this area of law. We are clearly on the downside of the tipping point. It really is time to start looking for a new practice area. The writing is clearly on the wall. We are 5-10 years away from the complete collapse of the US patent system. Can I obtain a patent for a client? Of course. It’s that patent worth the paper it’s written on or the capital cost of that could have been diverted to other better uses? All you need to do is ask PEGs with knowledge about patents. Most of them see patents as a net-negative now because every company must now prepare to have its patents challenged in IPR.
Whoever is the last to leave please turn off the lights.
Dennis left out an important fact: the patentee acted pro se.
I hear you AM. Also consider this:
“The District Court issued an order concluding that Mr. Tormasi lacked capacity to sue under Federal Rule of Civil Procedure (“FRCP”) 17(b), but did not “reach the standing issue.”
Refer to footnote 2, which includes:
“[W]e have appellate jurisdiction if the district court’s original jurisdiction was based in part on section 1338, as determined by the plaintiff’s well-pleaded complaint.”
How ‘well-pleaded’ could this have been with the waiving of basic Constitutional positions?
Has the anti-patent ‘feelings’ pressed that deeply so has to be arriving at a desired result no matter how bizarre the means?
The term “well-pleaded complaint” has nothing to do with the quality or thoroughness of a complaint. It’s a term of art that simply refers to a complaint that, on its face, pleads at least one cause of action that arises under federal law, and thus, properly invokes the jurisdiction of the federal court. A well-pleaded complaint has nothing to do with preserving possible constitutional arguments. The plaintiff in the case waived those arguments by not presenting them in response to the motion to dismiss that the defendants brought in the district court.
Maybe then that term of art needs to be re-evaluated given the immediate effects here, eh LR?
How did that ‘invoking’ go? Seems to have had some serious defects in it.
Let’s try to be less wooden with your views.
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