Tag Archives: Inequitable Conduct

Texas Appellate Court Lets Trial Court Ruling of no Patent-Agent-Client Privilege Stand

Earlier this year, the Federal Circuit in a 2-1 panel decision in In re Queen’s University held there was a privilege over communications between a patent agent and client with respect to patent prosecution.  That decision is here.  I gave a talk earlier this year about how I think this case creates some risks even if it is followed, and the powerpoint for that talk is here.

A civil case in Texas has given another reason to be careful.  Plaintiff filed a patent application and apparently used a patent agent to do the work.  When the defendant refused to pay the plaintiff for using the invention (it seems), the defendant sought discovery of all communications between the patent agent and the plaintiff.  The trial court ordered their disclosure.

The plaintiff sought mandamus review.  The court of appeals refused to grant that extraordinary relief, stating in part:

No Texas statute or rule recognizes or adopts a patent-agent privilege. The trial court declined to recognize such a privilege here. Relator asks this Court to recognize a new discovery privilege and determine that the trial court abused its discretion for not recognizing the new privilege. Neither this Court nor the trial court has the authority to adopt a new discovery privilege. In re Fischer & Paykel Appliances, Inc., 420 S.W.3d at 848. We decline to do so here and, therefore, conclude the trial court did not abuse its discretion by refusing to adopt the privilege.

Further, Queen’s University is not binding here. The Federal Circuit applies its own law for substantive and procedural issues if those issues are “intimately involved in the substance of enforcement of the patent right.” 820 F.3d at 1290. This includes determination of whether documents are discoverable “in a patent case because they relate to issues of validity and infringement.” Id. at 1291. If the case involves substantive issues of patent law, such as claim construction, validity, and inequitable conduct, then the Federal Circuit applies its own patent law precedent. Id. Communications between a non-attorney patent agent and his client “that are not reasonably necessary and incident to the prosecution of patents before the Patent Office,” however, are outside the scope of a patent-agent privilege. Id. at 1301–02. Whereas the federal common law governs privilege in a federal case, “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.” Id. at 1294 (quoting FED. R. EVID. 501).

This case is not a patent infringement case. It is a breach of contract case governed by Texas law. The underlying dispute does not involve a determination of the validity of the patent or whether Tabletop Media, LLC infringed on the patent. The Queen’s University court expressly excluded such cases from the scope of the privilege, and neither this Court nor the trial court is required to apply federal patent law to the merits of the case. Where, as here, the substantive claims are governed by state law, the state privilege law also applies. Texas does not recognize a patent-agent privilege, and we decline to create a new common law privilege.

A copy of that decision, In re Andrew Silver (Dallas Ct. App. 05-160074-CV, Aug. 17, 2016) is here.

I am not sure that reasoning makes sense, since the choice of law analysis underlying it is missing:  whether a communication is privileged doesn’t turn on where the proceeding is filed or what law gave rise to the claim, which seems to be the Dallas court of appeals’ view.  (For example, the Dallas approach would mean that a communication that is not privileged under some foreign country’s law would be privileged if suit were filed in the US.)

Hopefully the Texas Supreme Court will fix this, since it seems to be wrong and is going to make a mess.

Halo, Civil Procedure, and Defending On-going Infringement Suits

I was listening to conversation about Halo, the decision of the Supreme Court to make it easier to establish willful infringement.  If the case is “egregious” and not “typical” infringement, enhanced damages are now available.  Further, the key time period is the time of moving forward with what turned out to be infringement of a valid patent, not the time of trial.

Of course, the obvious lesson going forward is that it will be more likely for accused infringers to rely upon an opinion of counsel indicating lack of infringement or invalidity (or some other way to avoid liability, like 101 or unenforceability like inequitable conduct or prosecution laches).  No news flash there.  And, of course, the fact that the timing of the opinion — earlier the better — means that there are likely going to be more opinions generated.

So, looking forward:  there will be more opinions used more often, you would think.

What I think is interesting are pending cases where a decision has already been made not to rely upon an opinion of counsel.

There are, no doubt, many pending cases where it is too late because of a scheduling order to disclose an opinion of counsel previously obtained.  The battle there will be over whether there is good cause to modify the scheduling order.  Lawyers in the position of needing to make that modification should do so quickly. I can imagine arguments cutting both ways in a particular case.  But competent lawyers in need of buttressing a defense against willfulness would get on that analysis, and soon.

What if, in contrast, a lawyer had advised a client– based upon the pre-Halo standard — not to get a formal opinion, with the idea being that the defendant would rely upon litigation defenses that were basically expressed to the client somewhat informally at the time of infringement.  Can the defendant now get into evidence the fact that those litigation defenses were communicated originally informally?  Does this implicate the need to modify the scheduling order or comply with some other local rule about waiver of privilege for opinions?

Finally, lawyers should consider cases where clients may pre-Halo have not needed an opinion but now may want to have one.  That advice needs to be given soon!

There are probably other fact patterns, but those jumped out at me sitting and listening today.  Thoughts?

Finally, and on a related note:   The Supreme Court’s statement that it’s the time of infringement that matters and not later is really unworkable and flawed.  A defendant, for example, who finds another piece of prior art later, closer to trial, surely can rely upon that evidence (and/or opinion analyzing it) as (a) confirming the strength of an earlier opinion or  (b) providing evidence that, from that time forward, its infringement was not “egregious”?

Litigation Screen Fails to Avoid Inequitable Conduct (But Almost Succeeded)

Ohio Willow Wood Company v. Alps South (Fed. Cir. 2016)

Professor Rantanen wrote about the 2013 Federal Circuit OWW v. Alps decision that, inter alia, reversed the lower court’s determination of no inequitable conduct by the patentee OWW.  (U.S. Patent No. 5,830,237, covering a gel-cushion used for prosthetics).  The setup involves two ex parte reexaminations initiated by Alps.  On remand, the district court found no inequitable conduct during the first reexamination but that OWW did commit inequitable conduct during the second reexamination. On appeal, the Federal Circuit affirmed both findings.

Starting from the end, the aforementioned second reexamination was based upon a competitor’s prior art advertisement for a different product along with testimony from the competitor’s engineer (Comtesse) who explained in his submitted testimony how the product worked (in the same way as OWW’s claimed invention).  However, the Board found Comtesse’s testimony unreliable based upon OWW’s statements that he was a “highly interested” and receiving royalties from the competing product. During the reexamination, OWW also told the USPTO that there was  “no other evidence of any sort” corroborating Comtesse’s statements.  Following these arguments, the USPTO Board confirmed patentability of the claims.  It turns out that OWWs statements were untrue and that at least one person involved in the reexamination for OWW (Colvin) was aware of evidence from the parallel litigation that corroborated Comtesse’s statements.

The court found (1) that Mr. Colvin was aware that OWW’s reexamination counsel had represented to the Board that Mr. Comtesse’s testimony was entirely uncorroborated; (2) that Mr. Colvin was aware of materials that corroborated Mr. Comtesse’s testimony; and (3) that Mr. Colvin failed to correct his counsel’s misrepresentations.

All these conclusions came together to confirm a finding that Colvin had intent-to-defraud the USPTO.

Faulty Screen: The key to all of this here was that information from the litigation seeped into the reexamination prosecution.  Interestingly, it was the same law firm handling both litigation and the reexamination. However, the firm had established an “ethical screen to separate the attorney handling OWW’s reexamination proceedings from the attorneys handling OWW’s litigation matters.”  The Federal Circuit seemingly found no inequitable conduct problem with use of a screen that results in keeping relevant documents from the hands of patent prosecutors.  Rather the problem for OWW occurred because one of OWW’s employees was deeply involved with both the litigation and the reexamination prosecution.

Attorney Fees and Mootness: Although the courts had already found the patents unenforceable due to inequitable conduct in the second reexamination, ALPS asked that the Federal Circuit find them doubly unenforceable based upon misconduct in the first reexamination.  That seems like a moot point – unenforceable is unenforceable.  However, the Federal Circuit chose to rule on the issue (ultimately finding no inequitable conduct) because of the potential fee award under 35 U.S.C. 285.

A judgment of unenforceability based on both the first and second reexaminations would expose OWW to a larger attorney fee award than a judgment based on the second reexamination alone. It was therefore proper for Alps to press its argument as to the first reexamination by way of a cross-appeal.

This is a fairly substantial ruling and may end up offering additional power to defendants who wish to continue to pursue non-infringement and invalidity claims even after winning the case.  If broadly applied in this manner, then the ruling is also probably wrong.


3M Liable for $26 Million for Fraudulent Patent Enforcement

By Dennis Crouch

Transweb v. 3M (Fed. Cir. 2016)

Although 3M was the initial litigation aggressor, TransWeb’s response is the more successful.  Here, the lower court sided with TransWeb – finding 3M’s asserted patent claims invalid based upon pre-filing public uses by TransWeb and unenforceable due to inequitable conduct during prosecution. In addition, the jury awarded TransWeb $26 million for antitrust violations based upon 3M’s attempts to maintain its monopoly by asserting a fraudulently obtained patent. On appeal, the Federal Circuit has affirmed.  The technology at issue here involves Plasma-fluorinated filters as covered by 3M’s U.S. Patents 6,397,458 and 6,808,551.

Public Use based upon Oral Testimony: The evidence of pre-filing public use came from TransWeb’s founder Kumar Ogale who orally testified that he attended an expo in May 1997 and handed out “T-Melt” samples (more than one year before 3M’s 1998 priority filing date).  Although it was clear that Ogale did attend the expo and that samples were distributed, 3M challenged the oral testimony based upon the lack of corroborating evidence that Ogale handed-out samples that included the plasma-fluorinated material at the expo.  Oral testimony of an interested party is ordinarily insufficient to invalidate an issued patent.  Rather, the ‘clear and convincing’ evidence standard requires further documentation or testimony to that corroborates the account.  However, “there are no hard and fast rules as to what constitutes sufficient corroboration, and each case must be decided on its own facts.”  In this case, the Federal Circuit rejected 3M’s argument that each and every factual conclusions leading to an invalidity determination must be corroborated by additional evidence.  Rather, the rule of corroboration is a “flexible, rule of reason demand” designed to ensure that “as a whole” the oral testimony is credible.  Here, there was corroborating evidence that Ogale attended the expo and distributed materials; that his company had been producing the plasma-fluorinated material for several months and had filed for patent protection on some aspects of the material; etc.  Reviewing this evidence, the Federal Circuit found “abundant support” for Mr. Ogale’s testimony and for the jury’s verdict of prior public use.

Inequitable Conduct:  As an equitable judgment, the determination of whether a patent is unenforceable due to inequitable conduct is ordinarily within the purview of the judge rather than the jury.  Here, however, the judge permitted the jury to offer an ‘advisory opinion’ of unenforceability that the judge then enforced based upon reaching the same conclusion.  On appeal, the Federal Circuit only reviewed the judge’s conclusions.

The basic facts are that 3M had a sample of TransWeb’s filter and notified the examiner of that fact.  Based upon this notice, the examiner rejected the pending claims as obvious.  At that point, 3M offered the ‘dubious’ assertion that the TransWeb samples were only received after signing of a confidentiality agreement and thus could not constitute prior art.  That assertion was, of course, sufficient for the examiner who withdrew the rejection.  In reviewing what happened, the district court also found that 3M’s in-house counsel “undertook an intentional scheme to paper over the potentially prior art nature” of its TransWeb samples that a 3M collaborator (and later subsidiary) had received from TransWeb one-moth after the aforementioned expo.   Based upon these (and additional facts explained in the decision), the appellate panel affirmed that the fraud upon the patent office was both intentional and material – thus affirming the inequitable conduct finding.

Antitrust Violation:  In the 1965 Walker Process decision, the Supreme Court held that an antitrust-plaintiff can prevail by showing (1) that a patentee enforced its patent, knowing the same to have been obtained by willful fraud upon the patent office leading to (2) monopolization (or attempted monopolization). Although the “willful fraud” element of a Walker Process claim was previously described as a higher burden than that used in inequitable conduct. Following Therasense, the court now sees these as “nearly identical.”

The jury found that the actual harm suffered by TransWeb for the monopolization was a measly $34,000 in lost profits.  However, TransWeb also spent over $10 million in legal fees fighting the patent infringement claims ($7.7 million) and asserting the antitrust claims ($3.2 million).  Under the Sherman Act, “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws . . . shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.”  Following that rule, the district court awarded $3.2 million for the cost-of-suit but then trebled the $7.7 million as the damages for fraudulent patent enforcement.  On appeal, the Federal Circuit affirmed that result – holding that “3M’s unlawful act [of enforcing its fraudulently obtained patent] was in fact aimed at reducing competition and would have done so had the suit been successful.”


Michael Williams (Quinn Emanuel) represented TransWeb in the appeal while Seth Waxman (Wilmer) represented 3M.


PTO Rules: File Sharing and Correcting Foreign Priority Claims

By Dennis Crouch

NOTE: See final paragraph for Nov. 5 pending rule change for correcting foreign priority claims.

The USPTO has published a new Final Rule notice titled: Changes To Facilitate Applicant’s Authorization of Access to Unpublished U.S. Patent Applications by Foreign Intellectual Property Offices. This is a follow-up to the proposed rules from 2014. As its name suggests, the proposal would allow the USPTO to share otherwise secret information regarding pending-unpublished US applications with foreign patent offices, such as the EPO. A major caveat here though is that the sharing of information requires applicant authorization. The change is part of the general major shift toward worksharing and international procedural harmonization. The following comes from the notice:

[The USPTO] is revising its rules of practice to include a specific provision by which an applicant can authorize the Office … all or part of the file contents of an unpublished U.S. patent application in order to satisfy a requirement for information imposed on a counterpart application filed with the foreign IP office. … The final rule changes consolidate the specific provisions of the regulations by which applicants give the Office authority to provide a foreign IP office with access to an application in order to satisfy a requirement for information of the foreign IP office. The Office is also revising the rules of practice to indicate there is no fee for providing a foreign IP office with an electronic copy of an application-as-filed or an electronic copy of file contents pursuant to a bilateral or multilateral agreement. Additionally, along with changes to the application data sheet (ADS) form [to facilitate authorization], the final rule changes simplify the process for how applicants provide the Office with the required authorization, thereby reducing the resources applicants must expend to comply with these foreign IP office requirements, and enhance the quality of patent examination.

The change has a November 30, 2015 effective date.

In this process, the PTO is setting up a major roadblock to more complete worksharing by only sharing documents when authorized by applicants. One comment to the proposed rules focused on this issue:

Comment 4: One comment asserted that the proposed rule change is based upon the assumption that a specific authority is required from an applicant in order to send out pre-publication information to a foreign IP office where applicant has filed an application and that the Office should reconsider this assumption. The comment further asserted that once an applicant files an application in a foreign IP office, applicant inherently agrees to the rules and requirements of that foreign IP office. Accordingly, the comment suggests that the Office does not need a separate authorization to either send a priority document or pre-publication information to that foreign IP office. Therefore, the comment requested that the Office reconsider the need for any authorization for access in this circumstance. The comment stated that if the Office adopts this position, then the entire authorization section from the ADS can be removed and a filing of an application in a foreign IP office by an applicant can serve as authorization for access to send priority documents and/or pre-publication information to that foreign IP office(s).

Response: After due consideration of the comment, the Office has decided to not adopt the position expressed in the comment. The written authority requirement is in accord with 35 U.S.C. 122(a), and consistent with current Office policy, practice, and procedure regarding access. Therefore, the Office is retaining the requirement for written authority from an applicant for access to the file contents of an unpublished application.

Here, the statute properly quoted by the Patent office does require that these non-published “applications for patents shall be kept in confidence by the Patent and Trademark Office and no information concerning the same given without authority of the applicant or owner unless necessary to carry out the provisions of an Act of Congress or in such special circumstances as may be determined by the Director.”

The USPTO has also announced “Change in Practice Regarding Correction of Foreign Priority Claims.” The changes – becoming effective on November 5, 2015, will make it more difficult to correct errors in foreign priority claims. Starting this week, a correction of a foreign priority claim made outside of the one-year deadline will require a petition to accept an unintentionally delayed benefit claim.

The Leahy-Smith America Invents Act (AIA) … provides that the filing date of an earlier foreign patent application may now be the effective prior art date for subject matter disclosed in a U.S. patent or a U.S. patent application publication. Therefore, U.S. patent application publications should reflect accurate foreign priority information to minimize the burden on examiners and members of the public in assessing the effective prior art date for subject matter disclosed in such U.S. patent application publications. The USPTO will thus now require that any correction of the identification of the foreign application (by application number, country (or intellectual property authority), and filing date) in a foreign priority claim after the time period for filing a priority or benefit claim be via a petition to accept an unintentionally delayed priority claim, and once the petition is granted in a pending application, will now publish a corrected patent application publication reflecting the accurate foreign priority claim information.

So, if you have a correction to make regarding foreign priority, it is probably best to get it done in the next two days. In general, the “unintentional” standard is fairly easy to overcome, but does require sworn statements that may later open-the-door to charges of inequitable conduct if it turns out that the error was known for some time. I’ll also note here that the parallel correction of US priority already requires the petition.

New Discovery Rules: Act Now?

I’m headed to speak at the Eastern District of Texas Bench & Bar Conference and then at the AIPLA meeting in DC. One result of this (and of teaching civil procedure this year) is becoming very concerned about the new discovery rules, coming into effect in December. If you haven’t read them, do so. If you file a case after December 1, they will control; they also will control, to the extent practicable and just, to cases filed before then.

Apart from doing away with all forms except the one relating to waiver of service of process, the key change is with respect to the scope of discovery.  Here is the old rule:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense—including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

Here is the new:

Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

There are a lot of changes.

First, discovery has to be — not just relevant to an existing claim or defense — but also proportional to several factors or considerations.  The answer to whether an issue is important is quite subjective, and, no doubt, turns on viewpoint.  Does it bring in a subjective element?  How do we determine whether the cost will exceed the likely benefit without knowing what the discovery would reveal?

But the key concern I have is the elimination of any ability to allow discovery beyond relevancy to a claim or defense.  Given that there must be a rule 11 basis to plead something, how can certain affirmative defenses (especially inventorship and inequitable conduct) ever be pled?  Because of this change, if it can’t be pled, there won’t be discovery.  Local rules, of course, can’t be inconsistent with the FRCP.

The amendments are here.

Implementing the AIA: First to File Patents

By Dennis Crouch

It is hard for me to believe that the America Invents Act of 2011 is now four-years old.  Some changes (Joinder, Fees, e.g.) had fairly immediate impact.  Although somewhat slower coming on-line, the new Inter Partes Review and Covered-Business-Method Review systems are now major fixtures in patent enforcement-defense strategies.

The final major element of the AIA is actual implementation of transformation of the prior art rules in 35 U.S.C. 102.  The new first-to-file law applies to patent applications having at least one claim whose earliest effective priority filing date is on or after March 16, 2013.  In the past 30 months since then, hundreds of thousands of AIA patent applications have been filed – and those are beginning to trickle out as issued patents.  I pulled-up the PAIR files for 800+ recently issued patents (from the first two weeks of Sept 2015) and looked at the reported AIA-Status of those patents. (Table 1 below)

 Table 1: All Patents Only Patents Filed Post-AIA
AIA Patents



Non-AIA Patents






Percent AIA



95% CI (+/-)



Of the 868 patents, 147 are “AIA” patents – meaning that none of the claims of the patent (or application) could have effectively an effective filing date before March 16, 2013 (the “AIA-date”). This represents 17% of the total number of patents in my sample and 36% of the number of patents in my sample that were filed after the AIA-date. I also report the 95% confidence interval that is based upon the simple binomial calculation (p(1-p)/n). The chart below considers the same type of data, but uses a time-series stretching back to the beginning of 2015 showing a linear fit to the data.

Where the AIA Status is Defined: My understanding is that the AIA data field in PAIR has been populated as “no” for any application filed prior to the AIA date; populated as “yes” for any application filed after the AIA-date that has no pre-AIA claims for priority or benefit; and finally, for transitional applications filed post-AIA but with a pre-AIA priority claim, populated according to the AIA-question in the Application Data Sheet. [The AIA-status of an application is obviously information material to patentability and so we will likely see some inequitable conduct allegations down the line.]

Not Yet Litigated: Although there are now several thousand AIA patents issued, there have been no court cases yet involving an AIA patent or patent application.  Likewise, we have no Post Grant Review (PGR) final decisions and we have no PTAB decisions from ex parte cases involving AIA applications. Those will come, but meanwhile many patent attorneys will continue to operate with some ambiguity regarding how Section 102 will be interpreted going forward. Important big questions: Do non-enabling commercial uses; confidential sales; and confidential offers-to-sell still qualify as invalidating prior art? What activities will count as “otherwise available to the public?” How narrowly will the narrowed grace period of 102(b)(1) be interpreted? (e.g., does the grace period only apply to pre-filing disclosures of the claimed invention itself as suggested by the text or instead can any pre-filing disclosure by or from the inventor qualify?) What is the impact of elimination of Section 102(f)?

Fee Shifting as Patent Policy Lever: How to Ensure Sufficient Torque

Guest Post by Professor Shubha Ghosh, University of Wisconsin Law School

Congratualtions to Hannah Jiam for her great work on attorney’s fee shifting after the Supreme Court’s 2014 Octane Fitness and Highmark decisions! The forthcoming article provides a deep portrait of how attorneys have responded to the new regime under Section 285 and how courts have ruled.  She also makes an insightful observation about the role of judicial discretion and the need for legislative reform of Section 285 to provide more detailed guidance for judges in order to direct and focus their discretion. Many scholars speak about attorney’s fees as a policy lever to limit frivolous litigation and the questionable practices of NPE’s. What I learned from Hannah’s article is that we also need to consider the torque of any particular policy lever (to take the nerdy techno-metaphor to the next level).

I have been pursuing research on Section 285 during my leave year from the University of Wisconsin as an AAAS Law, Science, and Policy Fellow at the Federal Judicial Center in Washington, DC. A completed paper summarizing my research will be available in a few months. Here, I would like to present some preliminary findings in order to complement Ms. Jiam’s work.

Where my methodology differs is to focus on the regimes pre-Octane Fitness as well as decisions after 2014. I am examining published judicial opinions ruling on 285 motions over three periods: (1) from the founding of the Federal Circuit in 1982 to the Brooks Furniture decision in the first week of 2005; (2) from 2005 to the Octane Fitness decision in 2014; and (3) from 2014 to the present. While there are methodological problems in looking at published opinions (which I address at the end of this post), looking at what courts have done and said with regards to 285 motions offers useful information on when courts have found a case to be exceptional and when not.

My principal finding is that judicial discretion matters regardless of the stated standard for the award of attorney’s fees.  In other words, raising the standard, as occurred with Brooks Furniture, or lowering the standard, as occurred with Octane Fitness, may not matter over all as to how courts exercise their discretion. The tentative implication is that the torque of attorney’s fees as policy levers depends on an articulation of what factors courts are required to use in awarding fees and perhaps ultimately on whether or not the fees are automatic.

Some preliminary findings from various data sources illustrate these points.  Table 1 reports findings from Lex Machina, which reports on various patent litigation events starting in 2000.  The database captures awards of attorney’s fees across jurisdictions.  Unfortunately, the database, when examined in March, 2015, did not report denials.  Nonetheless, consideration of the three periods for my study, we can see an above average of attorney’s fees awards per year during the Brooks Furniture period (from 2005 to 2014).  The relative size of this number, as compared to the pre-Brooks Furniture period, may be surprising since Brooks Furniture presumably made it more difficult to obtain attorney’s fees. The magnitude is most likely the result of increased patent litigation during this period, as reported by other scholars.  More careful study of the types of cases arsing during the Brooks Furniture period would explain the larger annual award rate by the district courts.

Terminated cases with award Yrs Cases/yr
Period 1 (2000-2005) 113 5 22.6
Period 2 (2005-2014) 292 9.33 31.29
Period 3 (2014-2015) 24 .9 26.67
TOTAL 429 15.23 28.17

TABLE 1: Lex Machina data on awarded attorney’s fees from 2000 to the present

Looking more closely at the 24 identified awards of attorney’s fees post-Octane, 17 of these cases involved awards to patent owners while 7 were awards to the alleged infringer (who of course prevailed at trial). Of the 17 cases in which the patent owner obtained attorney’s fees, 4 were default judgment cases and a different 4 also involved the award of enhanced damages. The last finding suggests that fees are awarded in cases that would not meet the standard for willful infringement.

One way to obtain a sense of types of cases is to look at the time towards final judgment from initial filing, what is reported in Lex Machina as “time to terminate.”  Of the 7 cases in which the alleged infringer obtained attorneys’s fees, 5 were cases with above average time to terminate, meaning cases that were initiated sometime before the Octane Fitness decision. Of the 17 cases in which the patent owner received fees, 8 involved above average time to terminate. If cases with longer times to terminate are viewed as more contentious cases, it seems that cases in which alleged infringers prevail on fee shifting are more contentious than the cases in which the patent owner prevails on fees.

The main limitations with respect to the Lex Machina data are the selection effects that arise with respect to examining reported cases and the exclusion of fee denials.  Nonetheless, even looking solely at instances of attorney fee awards, there does not seem to be a pro-defendant orientation in judicial decisions. But to fully understand whether Octane Fitness serves as an effective policy lever to control frivolous patent litigation, we need to compare the post-Octane world with the regimes that existed before.

Below, I provide some preliminary summary statistics about the denial and grant of attorney’s fees over three periods from 1982 to the present.  These three periods are divided into the pre-Brooks Furniture regime (1982-2004); the Brooks Furniture regime (2005-2014); and the Octane Fitness regime (2014 to the present). The following results are based on reported decisions in Westlaw on 285 motions.  The decisions include both grants and denials. I conducted the search of these cases in early January. I am currently working on updating the searches and expanding the coding of the cases for various factors pertinent to understanding what constitutes an exceptional case. I should emphasize that what I am presenting is still preliminary. But I believe there is enough here for discussion especially in light of Ms. Jiam’s study.

My Westlaw search identified 24 reported decisions on attorney’s fees post-Octane, 205 reported cases from the Brooks Furniture regime, and 147 from the period between the formation of the Federal Circuit and the Brooks Furniture ruling.  I examined a random sample of 20% of the cases from the Brooks Furniture regime and 16% from the pre-Brooks regime.  These two random samples provide the basis for the statistics presented below.

Table 2  reports on the 24 reported cases post-Octane. Of these 24 cases, 12 resulted in grants and 12 in denials. Of the 12 grants, 9 went to the non-patentee as prevailing party. This may suggest that non-patentees are more successful post-Octane in obtaining attorney’s fees awards. But what must also be taken into consideration is that the 12 denials of awards all were in cases where the non-patentee’s motion was denied by the court. Just to be clear, these denials involved cases in which the non-patentee was the prevailing party but the court determined that the case was not exceptional. Unlike the Lex Machina data, the Westlaw reported cases capture both grants and denials. The denials are important to take into consideration in examining the effectiveness of section 285 as a policy lever. To highlight this point, consider the following. Of all the 24 reported cases involving fee shifting, 21 involved motions from the non-patentee. The disproportionate number of non-patentee motions would suggest that the Octane Fitness regime might be more favorable to the non-patentee.  But of these 21 motions, only 9 resulted in a grant, suggesting that the motions were successful in less than half the cases, as reported in Westlaw.  On the other hand, patent owners had a 100 % success rates based on the 3 reported cases involving a motion brought by the owner.

n Patentee Nonpatentee Infringement Declaratory  Judgment
Grant 12 3 9 11 1
Deny 12 0 12 10 2
 TOTAL  24 3 21 21 3

Table 2: Attorney fee awards reported decisions post-Octane

How the litigation environment has changed under the Octane Fitness decision requires comparison with the world before hand.  Tables 3 and 4 report similar statistics for the pre-Brooks and Brooks regimes, although based on random samples from the respective population of cases.

 n Patentee Nonpatentee Infringement DJ
Grant 9 2 7 7 2
Deny 15 6 9 13 2
 TOTAL 24 8 16 20 4

Table 3: pre-Brooks reported cases. Total=147. N=24 (16% random sample) 

Patentee Nonpatentee Infringement DJ
Grant 12 4 8 12 0
Deny 28 10 18 24 4
 TOTAL  40 14 26 36 4

Table 4: Brooks Furniture reported cases. Total=205. N=40 (20% random sample)

These two tables are based on random samples from the population of cases and hence are very preliminary.  Nonetheless they raise some hypotheses to examine in considering the entire population of cases.

The first point to emphasize once again is that denials need to be taken into consideration in gauging the effectiveness of a particular attorney’s fees regime. Under the pre-Brooks regime, there were about 62 % denials among the reported cases ruling on attorney’s fees. By comparison, there were 70 % denials among the reported cases ruling on attorney’s fees during the Brooks Furniture regime.  Since the Brooks decision raised the standard for the award of attorney’s fees, it is not surprising that the denial rate is higher. But perhaps surprisingly, the rate may not be significantly higher (I have not done this test yet).

Furthermore, even though reported cases deal with motions from nonpatentees more frequently than motions from patent owners, nonpatentees are more likely to be denied fees under both the the pre-Brooks and Brooks regimes. Nonpatentees had a 44%  grant rate under the pre-Brooks regime and a 31 % grant rate under Brooks. By comparison, patentees had a 25% grant rate pre-Brooks and a 28% grant rate under Brooks.

Once again, the various statistical tests of significance have not been applied yet to provide a full interpretation of these data. But two points are important at this stage of the research.  In order to understand the effectiveness of Octane Fitness (its torque), we need to understand what the world of attorney’s fees looked like before the 2014 decision.  Furthermore, we need to examine how grants and denials are awarded between patentees and nonpatentees. What the data suggest so far is that the various standards, however characterized as easy or hard, do not seem to favor one side over the other in patent litigation. To me, this suggest that judicial discretion may be working around the articulated standards to make decisions on a case by case basis. Part of the research is to determine what courts articulate as the relevant standard.

Table 5 partially addresses the big question of what courts deem to be exceptional cases. The table reports frequently used phrases across the various regimes in the published opinions.

Pre-Brooks Furniture “dilatory tactics”; “inequitable conduct”; “willfulness”; “failure to investigate”; “fraud on USPTO” “no intent to deceive”; “no willfulness”; “no vexatious litigation”; failure to meet burden
Brooks Furniture “vexatious litigation”; “misconduct in USPTO”; “bad faith”; “obj and subj baseless in light of claim construction” failure to meet burden; “no willfulness”; “no misconduct”
Post-Octane litigation misconduct; discovery abuse; relitigating arguments; “lit theory inconsisitent with claim construction”; uncivil tacticsnuisance suit; Fogerty factors No misconduct; Reasonable tactics; No bad faith

Table 5: What courts say and do 

An advantage of examining reproted cases, despite the limitations, is the ability to discern what courts are thinking in granting or denying fees. Let me focus on a few highlights here given my space restrictions.  First, notice the prevalence of identified misconduct by the patentee or nonpatentee and attorneys as a basis for granting awards. Second, notice the prevalence of failure to meet the burden of proof in denying awards under the Brooks Furniture standard. Finally, notice the discussion of willfulness across the various regimes indicating that the determination of awarding fees occurs in the broader context of inequitable conduct and enhanced damages. My main conclusion from reading and assessing these cases is that courts seemingly exercise their discretion in determining what constitutes an exceptional case in similar ways despite the stated standard for granting fees. The policy prescription would be that the torque from using fee shifting as a policy lever may be dampened by judicial discretion. Whether legislative reform should cabin such discretion is at the core of how effective and politically feasible such reform would be.

One last word about my methodology.  There are obvious selection effects from examining reported cases as I have done here. These selection effects are also relevant for Hannah’s article. Reported cases are not the typical case. Although we need to consult reported cases to determine what courts consider “exceptional,” we need to keep in mind that the reported cases are not representative of the population of cases that fee shifting rules are supposed to regulate.  One goal of fee shifting rules is to prevent frivolous litigation and specifically extracted settlements based on frivolous claims. The effect of fee shifting on settlement is a complex one. Assuming that frivolous cases can be precisely identified by a judge, patent owners may be less willing to bring frivolous cases. At the same time, nonpatentees may be less willing to settle all cases, particularly frivolous ones. Looking solely at reported cases does not allow a researcher to determine how effective a fee shifting regime is in controlling frivolous litigation and settlement. Therefore, we should be wary of making global conclusions from looking at reported cases.  Nonetheless, the summary statistics I provide here, in conjunction with Ms. Jiam’s excellent work on post-Octane developments, shed some light on a critical aspect of the patent reform debate.

At a Conference on Life Sciences

I’m speaking shortly on ethics (inequitable conduct, mostly), but have been listening intently to the various speakers.  Some big picture issues:

They all think that the 101 jurisprudence is unworkable and puts at risk entire industries. First, (by definition) pretty much everything involves natural phenomenon or a natural product.  Second, it’s idiotic:  if you discover (which, despite the Constitution and the definitions in the statute is not an “invention” according to the Supreme Court) a natural product, if it’s easy to make use of you can’t get a patent; if it’s really hard to use, then you can. (That is, if you can use (viewed post hoc, of course) conventional methods on the newly discovered natural product, you can’t get a patent, but if it takes a lot of new stuff beyond that, you can.)

They’re worried about the Akamai mess and divided infringement and its impact on method claims in this field.

People should obtain opinions of counsel due to the “you believe it’s invalid” aspect of inducement.

More on that point:  suppose I know I induce infringement of a patent. But, I reasonably believe it’s invalid. But it turns out the CAFC, PTO, etc. say it’s valid.  Does it matter for pre- CAFC conduct versus post-CAFC?  What if I have art that the CAFC/PTO didn’t consider?  Commil is wrong, imho.

This was live-blogged so excuse my grammar/typos.

Upcoming Conferences and Workshops

By Jason Rantanen
Three upcoming conferences that may be of interest to readers:
This Friday and Saturday, January 16 and 17, the University of San Diego School of Law’s Center for Intellectual Property Law & Markets is holding its 5th Annual Patent Law Conference.  This year’s topic is “Patent Invalidity after the America Invents Act.”  Speakers include Judges Bencivengo, Bartick & Chen.  I attended last year as part of PatCon and thought it was a great event.  More details here: http://www.sandiego.edu/law/centers/ciplm/detail.php?_focus=49377#overview
Hal Wegner’s 3rd Annual Naples Patent Law Experts Conference will be held February 9 and 10.   This beachfront Conference in Naples, Florida, will involve  an interactive discussion by more than thirty faculty members.  Topics to be covered include recent and pending Supreme Court patent law decisions, potential legislative activity, issues of international law, and more. Further information from the sponsoring organization, the University of Akron, is available here: http://www.uakron.edu/law/ip/naples-midwinter.dot
On March 5-6, Don Chisum and Janice Mueller will conduct a two-day patent roundtable seminar.  The program is limited to a total of ten participants to maximize opportunities for interactive discussion and debate.  All sessions are led by treatise authors and educators Don Chisum and Janice Mueller. Coverage focuses on recent significant patent decisions of the Federal Circuit and U.S. Supreme Court. Topics currently planned for discussion include:
  • The Supreme Court’s Alice Corp. decision on patent-eligible subject matter and subsequent Federal Circuit decisions applying Alice
  • The Supreme Court’s grant of certiorari in Commil USA concerning the intent requirement for inducing infringement;
  • The Supreme Court’s grant of certiorari in Kimble v. Marvel concerning the propriety of post-patent expiration royalties;
  • The Supreme Court’s pending decision in Teva v. Sandoz on review of patent claim construction;
  • The Federal Circuit’s grant of en banc review in SCA Hygiene to determine whether the Supreme Court’s Petrella decision changed the law of laches as a defense to patent infringement;
  • Patent Practice Gone Wrong: Lessons from Patent Malpractice, Exceptional Case and Rule 11 Sanctions, and Inequitable Conduct Cases;
  • Patent Claim Construction and Definiteness in the Wake of Nautilus (and Anticipating Teva); and
  • Inter Partes Review: Two-Year Snapshot and Lessons from Case Studies.
No advance preparation is expected or required. The Supreme Court of Ohio Commission on Continuing Legal Education has approved the seminar for 12.0 hours of CLE instruction. For additional details on the venue, topics, and registration form, see http://chisum-patent-academy.com/upcoming-patent-law-seminars/advanced-patent-law-seminars-cincinnati-oh/ or e-mail info@chisum.com.


Court Affirms Inequitable Conduct for Inventor’s Failure to Submit Prior Art

American Calcar v. American Honda (Fed. Cir. 2014)

Back-Link: Jason Rantanen previously discussed the court’s first decision in the case here: Calcar v. Honda: CAFC’s First Post-Therasense Inequitable Conduct Opinion (2011).

EvidentiaryStandardsIn a split opinion, the Federal Circuit has affirmed the district court’s determination that Calcar’s three asserted patents are unenforceable due to inequitable conduct during prosecution.  The case teaches about “but-for materiality” and holds that the withholding of information can be the but-for cause of a patent issuance even if that information is insufficient to render any of the patent claims invalid in court. See also Therasense. The court winds this tale by noting the evidentiary difference: PTO only requires a preponderance of evidence of nonpatentability while invalidation in court requires clear and convincing evidence.

Duty of Disclosure, Candor, and Good Faith Dealing: Although lawyers always bear certain good faith obligations, those practicing before the before the PTO bear a more significant duty of disclosure, candor, and good faith dealing.  Failure to meet this high standard has a number of potential repercussions — for patent owners, the greatest issue is the potential that resulting patents may be held undenforceable due to inequitable conduct in proceedings before the USPTO.  Importantly, for any particular patent case, the duty of disclosure extends to all “individuals associated with the filing or prosecution.” 37 C.F.R. 1.56. This certainly includes named inventors as well as “every other person who is substantively involved” with the application.  Id.

Therasense En Banc: In Therasense (Fed. Cir. 2011) (en banc), the court made it a bit more difficult to render a patent unenforceable by requiring (a) proof of a ‘bad’ act that is a but-for cause of the patent issuing as well as (2) particular intent that the act was intended to deceive the PTO.  Conventional wisdom is that Therasense (as well as Excergen) has dampened many claims of unenforceability — especially those where the allegation is merely a failure to fully disclose to the USPTO all information related to patentability of the case in question.

large-luxury-carFailure to Disclose Photos Taken of Prior Art: This case involves a family of three patents directed to a multimedia system used to access vehicle information and control vehicle functions.  The district court found that Calcar’s founder and named inventor Michael Obradovich had particular information about a prior Acura 96RL navigation system that he failed to submit to the PTO.  In particular, prior to starting work on his invention, Obradovich had driven the Acura, operated its navigation system, and taken photographs as well written a “QuickTips” guide.  Although the application identified the 96RL system as prior art, Obradovich did not write a summary of his experiences or submit the photographs or the owner’s manual.  The district court found this failure to be material to patentability and also that the “only reasonable inference from the evidence” was that Obradovich withheld the information with “specific intent to deceive the PTO.”  On appeal, the Federal Circuit affirms.

But For Materiality: An interesting aspect of this case comes from the fact that the jury considered the non-submitted prior art but found that it failed to render any of the patent claims invalid. Yet, the courts here hold that the non-submitted prior art can still be considered a but-for cause of the patent issuing in the first place.  The reasoning for this discrepancy is that that the PTO’s evidentiary standard for refusing to issue a patent is only a preponderance of evidence – a much lower standard that the clear and convincing evidence required to invalidate an issued patent.  Here, the finding is that the USPTO would have found at least one of the claims obvious if it had seen the non-submitted prior art.

But Obviousness is a Question of Law: Under Graham and KSR, obviousness is a question of law that relies upon an underpinning of factual determinations. Although the court ignores the Graham inquiry in its analysis here, it appears that the only disputed issue is the ultimate legal question of obviousness and not the factual underpinning.  The fact that we’re talking about a question of law is important because questions of law are not governed by evidentiary standards but rather both the PTO and Courts must approach that ultimate question with the same framework of simply correctly determining the law based upon the evidence presented.

The majority opinion was written by Chief Judge Prost and joined by Judge Wallach. Judge Newman wrote in dissent.

Judge Newman focuses on an interesting issue. She argues that, rather than speculating about what the PTO might do, lets look at what it actually did when it saw the references.  Namely, the ‘497 patent (invalidated by the jury and not at issue here) was reexamined by the PTO during the course of the litigation and the examiners reviewed the previously non-submitted prior art and then confirmed all of the claims as patentable.  However, Judge Newman’s arguments appear more appropriately addressed to the earlier court opinion in this case.

Nonetheless, my colleagues rule that the patents are unenforceable based on the initial failure to send the Owner’s Manual and photographs to the PTO. The inequitable conduct with which Mr. Obradovich is charged is that he “did not tell Mr. Yip [his patent attorney] about his experience with the 96RL, nor did he provide Mr. Yip with the Owner’s Manual or the photos of the navigation system display screens.” Dist. Ct. Op. at 11. However, the PTO established, on reexamination of the ’497 patent, that the purportedly withheld information was not material to patentability. In accordance with Therasense this ended the inequitable conduct inquiry, for the PTO sustained patentability in view of this information.

In addition, there was no evidence of intent to deceive the PTO. The panel majority impugns Mr. Obradovich’s credibility, although they do not say what is disbelieved. The jury heard and saw Mr. Obradovich, on examination and cross-examination, and did not find deceptive intent. My colleagues “infer” clear and convincing evidence of deceptive intent from Mr. Obradovich’s initial failure to send his patent attorney the Owner’s Manual and the photographs of the Acura display. They postulate that a savvy inventor and businessman such as Mr. Obradovich
would have known the information was material to patentability and would therefore withhold it in order to deceive the PTO. However, a more likely inference is that a savvy inventor and businessman would know that a patent obtained through concealment of a material reference is not a reliable commercial asset.


Failure to Disclose Adverse Litigation Claim Constructions During Ex Parte Reexam States Inequitable Conduct Claim

Masimo Corp. v. Philips Elect. North Am. Corp. (D. Del. Sept. 2, 2014) addressed whether the accused infringer would be permitted to amend its answer to include a claim for inequitable conduct.  The district court rejected Masimo’s contention that the answer failed to state a claim and allowed amendment.

The substantive allegations of the claim were that during ex parte reexam the patentee knew of but failed to disclose a district court’s claim interpretation that contradicted its position in reexam.  Specifically, the District Court had construed the claims to not require that claimed calculators actually determined a particular ratio, but in the PTO it argued the opposite — that the claimed calculators do require calculating the two ratios.

The district court acknowledged that the broadest reasonable construction standard applied in the office, but not in court, but nonetheless found the allegations sufficient under Exergen and Rule 9(b) and allowed amendment and also discovery into the issues.

Case dismissed as sanction for misrepresentations

Judge Keith Ellison issued a scathing order dismissing a patent case after it had been tried to verdict.  Tesco Corp. v. Weatherford Int’l., Inc. (S.D. Tex. Aug. 25, 2014).  Four days into a three-week trial over infringement of some patents relating to drilling rig equipment, an inventor testified that a brochure that constituted 102(b) prior art showed his invention.  The following day, a Friday, patentee’s counsel told the court he would spend the weekend getting to the bottom of the facts about it (there was even a dispute over whether the brochure had been produced to the defendants).

Come Monday, the patentee’s lawyer said that the brochure had been rendered by someone else, Karr, not the inventor and that Karr would unequivocally, no doubt, for sure, and so on say that it was not the inventor’s device.  Trial proceeded.  There was a mixed and inconsistent verdict rendered by the jury.  Rather than enter judgment, Judge Ellison let the case proceed to other issues.

After trial during discovery relating to exceptional case and inequitable conduct, Karr testified that he had had nothing to do with the brochure and that everything the patentee’s counsel had said was false.

The defendants, not surprisingly, moved for sanctions.  Making matters worse, in opposition to those motions, the patentee’s counsel quoted portions of the deposition excerpts that, Judge Ellison felt, were at best misleading.

In this order, the judge dismissed the claims with prejudice, holding that nothing less would protect the judicial system.  It then invited motions for attorneys’ fees to be submitted.  Stay tuned.

One More Reason Not to Litigate Patents Your Firm Prosecuted

One issue I get asked about a lot is what are the pros and cons of litigating a patent you/your firm prosecuted.  There are obvious benefits:  expertise and efficiency being the obvious two.  There are obvious downsides.  Perhaps the most glaring one occurs when the defendant accuses the attorney of having committed inequitable conduct. (There are lots of pros and cons; those are a couple.)

I hadn’t thought of this one, or don’t think I have, but add it to the con list: the continuous representation doctrine.  Under this doctrine, the statute of limitations on a legal malpractice claim is tolled while the firm continues to represent the client.  Depending on state law, this can mean that, even if the client discovered the harm, limitations is tolled.

So, if you prosecute a case, and then litigate it, you may be extending limitations on any error that occurred during prosecution.  (You also, by the way, have a duty to disclose any error you learn about to your client.)  For a recent case applying this doctrine and resulting in a $17m judgment being upheld against a firm (though not in the patent context), see Red Zone LLC v. Cadwalader, Wickersham & Taft, LLP (N.Y.App. Div. June 19, 2014).

Patent Examiners and Litigation Study

Guest Post by Prof. Shine Tu.  Dr. Tu is an Associate Professor of Law at the West Virginia University College of Law and a shareholder in PatentCore. His research focuses on large-scale empirical studies of the patent examination system.

In August of 2013, the GAO recommended that the PTO examine trends in patent infringement litigation and link this information to internal data on patent examination to improve the quality of issued patents and the patent examination process.  In our current study, we attempt to answer these questions: (1) which patent examiners are issuing litigated patents, (2) are examiners who are “rubber stamping” patents issuing litigated patents at a disproportionately higher rate, and (3) are examiners with less experience issuing more litigated patents?  In sum, do patent examiners who issue litigated patents have common characteristics?  Intuition would argue that those examiners who issue the most patents (approximately one patent every three business days) would exhibit a higher litigation rate.  Surprisingly, this study suggests that this is wrong.

This study uses two new patent databases, that code for nearly 1.7 million patents and approximately 12,000 patents that were litigated between 2010 and 2011.  This study determined that litigated patents mainly come from primary examiners who grant between 45-60 patents per year with between three to five years of experience.  These examiners are contributing to the litigated patent pool at a higher rate than expected.  Interestingly, the highest volume primary examiners (examiners who on average grant more than 80 patents per year and have more than 8 years of experience) do better than expected.

In the figures below, the dotted line represents the “expected litigation” based on the proportion of patents issued by the examiner.  The solid line represents the “actual litigation” rates seen.  Thus, when the solid line is above the dotted line, the examiners in that group issue more litigated patents than expected.  Conversely, when the dotted line is above the solid line, the examiners in that group issue less litigated patents than expected.

Figure 1Figure 2Certain structural factors, combined with the Preist-Klein type selection may explain the phenomena that primary examiners with 3-5 years of experience have higher than expected rate of litigated patents. During the first four or five years, when the examiner does not yet have full signatory authority, the examiner is under heavier scrutiny (review by a primary examiner as well as Quality Control).  During these years, the examiner removes easy cases from their docket (by allowing the clearly allowable cases, or by rejecting the unpatentable cases), and builds up a docket of “on the fence” applications.  Once a primary examiner obtains permanent full signatory authority (usually years 3 and above) are no longer heavily scrutinized. Additionally, production rates increase when a primary examiners acquires full signatory authority (usually an examiner moves to a GS-14 after gaining permanent full signatory status). Thus, new primary examiners who have permanent full signatory authority are in the new position of increased production rates while experiencing reduced supervision, with a larger docket of “on the fence” applications. Accordingly, these primary examiners (usually with more than 2-3 years of experience as a primary examiner) may issue these “on the fence” applications on their docket that they would have been hesitant to allow beforehand. Furthermore, applications that are “on the fence” might be more litigated than most patents. This is because strong patents could be allowed quickly by the examiner, and competitors would most likely need to license these patents, thereby avoiding litigation. Correspondingly, weak patents might take longer to issue, but would most likely not be litigated because of their weak standing. However, patents where validity is unclear may require litigation. These more uncertain patents may be issued at a higher rate when the primary examiner first receives full signatory authority (without supervision), thereby explaining the higher litigation rates in years 3-6.

There are many limitations to this study.  First, the database that we use is a broad database but suffers from some selection bias due to the examiner-matching step. Specifically, temporal selection bias occurs in the database since the examiner database contains only those patents that were issued between 2001 and 2012. Accordingly, litigations dealing with “older patents” (i.e., those patents issued before 2001) are not included in our database. Additionally, since we only have data starting from 2001, there may be a “left justification” issue.  Because we start at 2001, examiners who have worked prior to 2001 (inclusive) will be coded as working less years than they actually have worked.  For example, if an examiner started working in 1998 and quit in 2003, our database would code the examiner as working for 3 years, while in actuality the examiner was at the office for 6 years. We are currently segmenting the data to account for these examiners.  Accordingly, our results may be slightly positively skewed.

Another limitation is based on the fact that there are many reasons to bring litigation, but many of these reasons may not represent errors by the patent examiner. For example, a patent could be litigated and found invalid because of inequitable conduct. In this situation, the patent examiner may have issued a valid patent based on the fraudulent information given to her by the applicant. Another example deals with a patent that was found valid, but non-infringed. Here, the litigated patent may have been correctly issued, but litigated due to incorrect interpretation of the scope of the claims. Accordingly, simply because a patent is litigated, does not mean that there were errors made at the patent office.

To address these issues, we are currently working on a study that reviews only those patents that have been litigated to final judgment and found invalid. We then connect these invalidated patents to their corresponding examiners to determine if there are any common characteristics among the examiners who issue invalidated patents. However, we note that the pool of litigations that are litigated to final judgment dramatically reduces the sample size.

The paper will be published in 17 Stan. Tech. L. Rev. 507 (2014).  A draft of the paper is available on ssrn at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2458140

Oregon Supreme Court Permits Patent Firm to Claim Privilege Over Communications with Internal Counsel

Given the conversation in posts below about interpreting statutes, this case is interesting for reasons beyond the issue involved.  In Crimson Trace Corp. v. Davis Wright Tremaine LLP (Or. May 30, 2014), the court held that a law firm could claim privilege over communications between a lawyer who was concerned about litigating a patent case where one of the firm’s own lawyers was accused of inequitable conduct and the firm’s in-house lawyers.

The court noted that some courts had recognized a “fiduciary exception” to privilege, which basically bars a lawyer who owes a fiduciary duty to a client to assert privilege against it.  However, the court noted that those courts that had recognized this exception were in common law jurisdictions, not ones, like Oregon, where the scope of privilege and its exceptions were set by the legislature.  Given that the legislature had spoken on the subject, the Oregon court held that it was not free to make-up additional exceptions.

Of course, CLS bank will be just like it in that regard. ha, ha.

35 USC 282

I was reading an article that suggested that the AIA was unclear  whether a patent could be held unenforceable due to inequitable conduct based upon the failure to disclose the best mode.  To me, the AIA amendment to 282 answers that question pretty clearly: no.  See the language below.

But that directly implicates a pet issue of mine:  that inequitable conduct is not based in the statute.  I think it is.  35 USC 282 provides:

Defenses.— The following shall be defenses in any action involving the validity or infringement of a patent and shall be pleaded:

(1) Noninfringement, absence of liability for infringement or unenforceability.
(2) Invalidity of the patent or any claim in suit on any ground specified in part II as a condition for patentability.
(3) Invalidity of the patent or any claim in suit for failure to comply with—

(A) any requirement of section 112, except that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable; or
(B) any requirement of section 251.
(4) Any other fact or act made a defense by this title.
 My own view, based on reading Federico’s Commentary and the legislative history of the 1952 Act is that “inequitable conduct” is authorized as a defense by the phrase “or unenforceability” in subsection (1).
The reason this is significant is that a court’s job in determining what a statute means is very (very, very, very) different than when it’s making up common law.  Octane is a good example of that.  Courts look at ordinary meaning, purpose, legislative history (in varying degrees, depending on judicial philosophy), not their own personal policy perspectives.
This has other repercussions.  Foremost, the substance of the inequitable conduct defense is not something that any court should “change” (as the Federal Circuit has, most recently in Therasense).  That’s not a court’s job: it’s for Congress.  Further, if it’s going to “change” its interpretation, various doctrines like congressional acquiescence come into play. (I.e., Congress didn’t mess with the interpretation of the CAFC for decades; doesn’t that (remotely) suggest that the court was right, and so any change, improper? (Don’t misunderstand me, that’s a narrow, narrow doctrine.))  Further, as a general principle when in the rare case courts have acknowledged that they are changing an interpretation, their interpretation is (often) only prospective:  thus, for pre-Therasense inequitable conduct, pre-Therasense standards should apply.
So, is inequitable conduct a statutory defense, or is it just made up?  If it’s statutory… there are repercussions… only a few of which are listed here.

Did Therasense bury burying?

In my reading of post-Therasense cases to update our Ethics in Patent Prosecution book (buy yours soon!), the only clear trend I’ve seen so far is that district courts are lining up behind the proposition that “burying” important information can no longer lead to inequitable conduct.

For courts finding inequitable conduct based upon burying (at least arguably), see Costar Realty Info., Inc. v. LoopNet, Inc., 946 F. Supp.2d 766 (N.D. Ill. 2013) (refusing to decide whether burying is never inequitable conduct and finding additional allegations sufficient to state a defense); Golden Valley Microwave Foods Inc. v. Weaver Popcorn Co., Inc., 837 F. Supp. 1444, 1477, 24 U.S.P.Q.2d (BNA) 1801 (N.D. Ind. 1992) (finding inequitable conduct where attorney listed reference but discussed less relevant aspects of it); Penn Yan Boats, Inc. v. Sea Lark Boats, Inc., 359 F. Supp. 948, 175 U.S.P.Q. (BNA) 260 (S.D. Fla. 1972) (finding inequitable conduct where 13 references were listed in letter stating that they had been found in prefiling search, but in fact 13th reference was a patent that had issued afterward).

For courts finding no inequitable conduct, see Molins, 48 F.3d at 1184 (finding that attorneys’ mere submission of long list of references soon after they were discovered did not evidence intent to deceive); Seaboard Int’l, Inc. v. Cameron Int’l Corp., 2013 WL 3936889 (E.D. Cal. July 13, 2013) (no inequitable conduct despite allegedly burying art within hundreds of thousands of submitted pages of litigation materials); Parkervision, Inc. v. Qualcomm Inc., 2013 U.S. Dist. LEXIS 8467 (M.D. Fla. Jan. 22, 2013); Semiconductor Energy Lab. Co. v. Samsung Elecs. Co., 749 F. Supp.2d 892 (W.D. Wis. 2010); Symbol Techs., Inc. v. Aruba Networks, Inc., 609 F. SUpp.2d 353 (D. Del. 2009); Semiconductor LabSunrise Med. HHG, 95 F. Supp. 2d at 460–61 (finding no inequitable conduct based on lack of materiality of buried reference); Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 68 F. Supp. 2d 508 (D.N.J. 1999) (finding accused infringer unlikely to prevail on claim of “burying references” because of lack of evidence of intent to mislead); C&F Packing Co. v. IBP, Inc., 916 F. Supp. 735, 750 (N.D. Ill. 1995) (“An examination of the IDS at issue … does not support a finding that the applicants buried” the prior art).

I’ve got to say that I don’t agree with the proposition that burying should never be inequitable conduct. I was involved in one case, for example, where a critical, single piece of paper was submitted in weird places (not on an IDS, but truly random places, including, once, as a Figure to the patent application).  I’ve also seen cases where, it seemed to me, the practitioner in fact put the key information on an IDS with a bunch of junk.

Further, given that the narrower “materiality” standard from Therasense should mean less “junk” is being cited, there should be little need to file as much information as before, leaving submission of lots of marginally relevant information, along with something known to have been key information, more, not less, suspect.  It will be interesting to see how this doctrine develops.


An Update on Therasense and Exergen

Just sharing a casual observation, not empirical research. I’m plowing my way through a four-inch stack of cases decided since Therasense that cite both it and Exergen.  The intended effect of both was to reduce inequitable conduct claims.  No idea if they did that, or not, but of the cases where inequitable conduct was raised, so far in maybe 25% of the cases the defense is sticking, at least past the pleading stage.

So, despite the more difficult substantive barriers in Therasense, and the much higher pleading requirements of Exergen, folks are stating claims.  Of course, whether they’ll prove them, or whether the CAFC will affirm them, remains to be seen.

One more small data point.  I’m about to read, closely, the cases that past muster, and if there’s anything to learn, I’ll share it.