July 26, 2007 by thomason.

Per my recent post, an IP theft case arose in Formula One racing, in which the team currently leading in the points for the driver and team championship was found in possession of a 780-page “technical dossier” stolen from the current second-place team, Ferrari.  Today, an emergent hearing was conducted before the World Motor Sporting Council (WMSC) in France, which is the venue where who didn’t win the Tour de France, or who wins the pairs Olympic figureskating, gets decided.

Today the WMSC reached a ruling that would not stand in a Uniform Trade Secrets Act jurisdiction, or any common law court.

 “The WMSC is satisfied that Vodafone McLaren Mercedes was in possession of confidential Ferrari information and is therefore in breach of article 151c of the International Sporting Code. However, there is insufficient evidence that this information was used in such a way as to interfere improperly with the FIA Formula One World Championship. We therefore impose no penalty.”

One enjoyable comment was the observation that it is like catching a robber with a bag of money stolen from the bank, but imposing “no penalty” because he had not yet spent any of it.  A more serious criticism was from Ferrari, noting that even very small technical developments translate into the milliseconds that separate first from second place in Grand Prix motor racing.   Save the Tifosi, full throttle to the WDC!

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July 20, 2007 by thomason.

A lot of ink went for naught in analysis of the Leahy-Hatch 2007 patent reform bill.  Now though, a House version has moved to the floor for vote.  Patent litigators should favor Sections 10 and 11 in the “Amendment in the Nature of a Substitute to H.R. 1908” put forth by Hon. Messrs. Berman, Smith, Conyers and Coble.

Section 10 permits, but does not grant a right to, an interlocutory appeal of claim construction rulings.  The Leahy bill stayed the case upon the filing of these appeals.  The Berman bill grants the district judge “discretion whether to approve” the appeal request, and “if so, to stay proceedings” during the interlocutory appeal.  This revision, IMO, accords control properly to the district judges, rather than forcing an appeal and a stay after every Markman ruling.  Too often, patent reform proposals try to divest the district judges of control, and push everything back to the patent office or up to the CAFC.

Section 11 in the Berman bill adds back in a provision on inequitable conduct that I have been pushing for since 2004. (note to link below).  It codifies the essential aspects of the defense, rather than leave it all to any one court’s efforts to divine all that represents CAFC panels’ decisions on materiality, intent, balancing, and exceptions thereto.  The Leahy bill had no provision on inequitable conduct. 

The Berman bill codifies that the defense (1) must be pleaded with particularity, and (2) proven by clear and convincing evidence.  It defines the two elements of proof, a “material” omission or submission, and intent to deceive.  Materiality is that which a “reasonable patent examiner would consider important in deciding whether to allow” the application.  That excludes technical omissions like an inventor’s address or mistakes about small entity status.  Information that is “cumulative to information already in the record” is outside the definition of material information. 

One excellent aspect of the intent definition is that the proof must be evidence “beyond materiality of the information” omitted or submitted.  This prevents the defense from collapsing into the one issue of materiality.  Further, the proofs must evince “conscious or deliberate behavior” and that keeps a negligence case from being twisted into an intentional wrong.  These definitions, by the lack of mention, hopefully take away the “balancing” test created by the CAFC, along with the “discretion” to invalidate aspect.  The Berman bill recognizes that patents related to one “found enforceable …may also be held to be unenforceable.”  Again, this puts the proper authority with a district court, which “may” extend the determination of unenforceability to related applications.  Other proposals were wide of the mark, either limiting unenforceability to only one or more claims, or requiring that all patents in the family be deemed unenforceable.

It had been hoped that a patent reform bill would “define the contours” of the defense, and provide a “blueprint for district judges” so that inequitable conduct was handled uniformly by our courts.   That hope for codification, as expressed in my comments at an FTC Town Hall (link below, at pgs. 102 – 105), never got much traction until this amended H.R. 1908.  Finally.

http://www.aipla.org/Content/ContentGroups/Meetings_and_Events1/Roadshows
/20058/TownMeeting_Chicago_Transcript.pdf

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July 19, 2007 by thomason.

Decide for yourself, but reviewing the history leading up to the BPAI decision in Ex parte Smith (6/25/2007) is reminiscent of either Frodo’s pilgrimage burdened with the Ring, or that of Sisyphus with the ball.  The Smith decision gets noticed because each post-KSR explication of §103(a) obviousness is newsy.
The application was filed in 1999, and after a number of rejections and amendments and rejections, a BPAI appeal sustains the final rejection in 2007.  Anyone with male insecurities typical of patent attorneys would be drawn to a story of perseverance in the face of multiple rejections.

Plainly in Smith, the “art to which the subject matter pertains” is familiar to any lawyer, with at least minimum-wage experience in replacing pocket parts in law books.  Here, Smith’s claimed improvement to bound volumes, on a functional level, dealt with CD’s or DVD’s which have replaced the tissue-sheeted pamphlets we once slipped into an integral pocket.  One wonders whether the hands that wrote KSR may too have erased “any new and useful improvement” from §101 patentable subject matter.  The examiner combined three references, which altogether arguably contained some form of each element claimed by Smith.  Sure, insert features in books are not new, but was Smith’s improved design obvious.

Perhaps the TSM test hobgoblined my simple mind; it was finite.  Since KSR, the word spew attempts to expound some workable test amuse me.  What could be less obviously provable than a “predictable variation” or what was not “uniquely challenging”?  For an improvement, is there still territory not yet surrendered (allusion to Festo) between §102 “inherency” and §103(a) obviousness?  The Board in Smith quotes from KSR, that §103(a) contemplates a “person of ordinary creativity” – forget PHOSITA, they need only be a POOC.  It should not be overlooked that KSR intends to seek out “an apparent reason to combine,” not one based on hindsight.

The Board’s recent ruling does acknowledge, as do all IP commentators, the primacy of the Graham v. Deere factors.  How deep is that vein?  Smith quotes two passages from KSR that, IMO, collide.  Obviousness rejections need “articulated reasoning with some rational underpinning,” but the Rejector “need not seek our precise teachings directed to specific subject matter of the challenged claim.”  Smith, pg. 14.  That sounds a bit like a ‘close enough for Gov’t work’ standard that need not be “precise” or get “specific”.  If “the analysis need not seek our precise teachings,” then IMO the first two Graham inquires are left incomplete.  The file wrapper of Smith’s application shows many disagreements about scope and content of the prior art, which reached the BPAI in reformulated form following amendments.  What approach has been suggested to reach a correct understanding about the content of the prior art, when there is disagreement.  If something is not shown or is unstated in the art, is it inherent?  If no artisan combined the known elements, is the combination “predictable,” creative, “obvious”?

The techtonic shift that erupted into KSR was urged by cries about “bad” patents and inadequate examiners.  The Smith file wrapper contains many, well-stated office actions, which put forth reasons for rejection and which counter contentions made with amendments by the applicant.   The examiner did an excellent job, and presumably, everyone involved did their job. 

Smith is not about a “bad” patent or “inadequate” examination.  It perhaps is about an innovator working to improve, and to create a better design, but in a crowded field of art.  If claims to an improved design for holding supplements in a book can be rejected based on the arguable obviousness of elements, suggested in, three separate patents – one issued in 1924 for “improvements to loose leaf sheets” using “stitching,” combined with two patents from fifty years later drawn to a file folder and a photo album, then why not a rejection on a combination of fifty patents, none of which specifically, precisely, or plainly identify all the elements, and each from a “field of endeavor” that is “different” from the claimed ‘predictable’ invention.

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July 16, 2007 by thomason.

Judge Rakoff (S.D.N.Y.) granted summary judgment, effectively invalidating patents granted to NYU, which were asserted against Autodesk.  Not often will you see patents nullified based on the Administrative Procedure Act, 5 U.S.C. §701.  NYU did not respond timely to a final Office Action, and the Examiner wrote a note that a call to the applicant’s attorney confirmed abandonment.  About a year later, a petition to revive was filed, claiming that abandonment was “unintentional.”  The filing was made in routine format, without much explanation, and it was granted without much explanation.  The Judge held that the agency could not “find that NYU’s decision not to take action …for the entire [one-year] period …was ‘unintentional.’”

The ruling reviewed the administrative record, and found reasons for revival, or for claiming an “unintentional” action, lacking.  Also lacking was a stated explanation for the agency’s decision to grant the petition and revive.  As a result, the district court granted summary judgment to defendant “Autodesk dismissing NYU’s Complaint in its entirety.”  What struck me as odd was why, under the APA, the Judge did not remand the matter to the USPTO to provide an opportunity for it to state an explanation for granting the petition to revive.

In the typical APA review case, the lack of support for the agency’s decision always leads to a remand, not a final decision in the District Court.  “If that finding is not sustainable on the administrative record made, then the Comptroller’s decision must be vacated and the matter remanded to him for further consideration.”  Camp v. Pitts, 411 U.S. 138 (1973) and Vt. Yankee, 435 U.S. at 549.  Where the agency’s lack of a sufficient explanation overwhelms the district court’s review, then remand is typical under the APA.  “If the record before the agency does not support the agency action, if the agency has not considered all relevant factors, or if the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it, the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation.”  Florida P. & L. Co. v. Lorion, 470 U.S. 729, 744 (1985).

In those instances where an application went abandoned, and a petition to revive was necessary, the focus was on who would accept blame and pay the associated costs.  I confess never to thinking that the petition, even if granted, might result in the patent being unenforceable or invalid.  Never too did receipt of a one-line order granting revival ever provoke worry that the lack of explanation could result in the later-issued patent being useless.  More typically, it provoked a sigh of relief.

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July 14, 2007 by thomason.

In April 2007 an Italian court convicted two of the high crime of stealing Ferrari technical data and providing it to Toyota F1.  German police arrested the former head of Toyota F1 and others, but there cases await the outcome of appeals from the Italian court’s convictions.

Then, in an unrelated May 2007 incident, the manager of a copy shop in Woking tipped police that a woman was copying hundreds of pages of Ferrari F1 technical documents.  (Give that man box seats to this year’s Italian GP at Monza).  The woman, Trudy Coughlan, is married to the chief designer of McLaren-Mercedes F1, the main rival to Ferrari in this year’s races.  He was booted, and called before the High Court in the UK. About the same time, the Chief Engineer of Ferrari F1 was let go, accused of passing the 780 pages of design documents to the McLaren designer.  He faces charges by Italiam prosecutors.  Then too, a strange white foreign substance earlier discovered in the fuel tank of the Ferrari race car, was reported to be detergent, and it is rumored that the accused engineer tried to sabotage the Ferrari’s performance at the recent British GP.  To me, this is way more interesting that theft of formulae for pertochemical intermediates, even more compelling than classic Spy vs. Spy comic strips from Mad Magazine.

Here’s a procedures that weren’t heard about in our law school.  Search warrants overseas can be executed by private parties, rather than the police.  Ferrari agents got to search the home of the McLaren designer, where the stolen secrets were found. The High Court in the UK ordered the McLaren designer to explain how he came into possession, and assessed him the legal fees incurred by Ferrari.  The designer agreed to provide an affidavit and other information, but on the condition that the affidavit would not be disclosed to Italian authorities.  That’s like being arrested in D.C., after a search by a private litigant, being forced to incriminate yourself, but the D.C. court seals the affidavit so that authorities in other states cannot prosecute you.  It was published in this morning’s Italian newspapers.

The wording of denials is always more fun to dissect that terms in a patent claim.  The principal of McLaren F1 insists that their car has ‘no Ferrari technology’ used on it.  How can he know that, unless he’s completely familiar with all the details in the 780 pages of stolen design information?   Techno-auto-inspectors will tear apart the McLaren searching for ‘fruits of’ the Italian Stallion.  There intrigue, inside jobs, sabotage, espionage, and really really fast nice cars.

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July 10, 2007 by thomason.

Around the Federal District Courts in the Northern District of California are the offices of many lawyers, litigators and patent attorneys.  Even so, that Court continues to get motions to disqualify counsel based on client conflicts.  Judge Schwarzer recently decided two such motions, in one case, against opposing counsel in Friskit, Inc. v. RealNetworks, Inc.

The case has a 2003 docket number, so it is not new to those listed on the docket.  In early 2007, the president of Friskit meets with attorneys at Howrey, discloses confidences, and gets “advice and strategic ideas for Friskit’s case,” as he searches for “new counsel.”  What got past everyone, briefly, was that Howrey was one of “two firms representing RealNetworks.”  Also, Howrey was hiring RealNetworks in-house counsel, who had been actively working on the case.  Friskit moved to disqualify Howrey, based on the president’s meeting.  Judge Schwarzer denied that motion, but ordered an “ethical screen” between the case and the lawyers who had met with Friskit.

But wait, there’s more.  In March 2007, the CEO, Board Chairman and majority owner of RealNetworks, Rob Glaser, had hired Foley in an unrelated litigation.  Guess it?  Foley represents Friskit in the case against RealNetworks.   Glaser moved to disqualify Foley in the California case.  Judge Schwarzer denied that motion, because Glaser was the “later-acquired client” of Foley, and their “duty of loyalty runs to the first client.”

Judge Schwarzer took the road most-traveled when disqualification motions are made - he steered past the matters.  The bench tends to think that such motions are “often tactically motivated,” and it has little interest in enforcing the rules of professional conduct.  It’s like roadkill, you just drive past it, thinking ‘yeeechh.’

The obvious oddity is how the chief executives of both litigants, in a case ongoing for years, would be unaware of what law firms represent the adverse party.  Equally odd is how lawyers would be as unaware, and would meet and confer with the chief executive of a party adverse to their own client.  Are there so few law firms in Silicon Valley, and do they not have high-tech systems for conflict checking?

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