August 20, 2007 by thomason.

Three factors converged in and around the ruling on the mandamus petition by Seagate to bar discovery of evidence related to its state of mind respecting willful infringement.  First, the lack of any statutory constraints.  Next, the ‘Scalia’ factor that urges this CAFC to start conforming its rulings with Supreme jurisprudence.  Third, no mere pruning of the outgrowths and brambles from prior CAFC caselaw on willfulness and waiver would suffice.

Advocates of reforms to the Patent Act start with complaints about the cost associated with proving and defending willfulness claims.  The better starting point would be to codify some provision on willfulness.  Worrying over common law vagaries is needless, if there’s a Congress that can first write the basic principle into the statute.  The CAFC in Seagate opens with the premise that the patent statute “is devoid of any standard” for increasing infringement damages.  No wonder that this void bounds the Wonderland of willfulness.

Next, the CAFC challenges itself, and decides that it set an incorrect standard for willfulness.  Prior rulings that impose an “affirmative duty” which sounds in “negligence” rather than comporting with the “general understanding of willfulness in the civil context.”  Where does the CAFC turn to gain such an understanding - the same Supreme Court that has reversed it with some regularity of late.  Let me digress on that.  Working off recollection, not statistics, it may be that before 2005, for the CAFC to quote from non-patent rulings of the Supreme Court was as uncommon as a Papal encyclical quoting the Talmud.  Today though, the CAFC looks up first, then decides.  In this case it all but concedes that the standard for proving willfulness is not part of this appeal, more simply, the “dispute in this case is the proper scope of discovery.”  To bridge that gap, the CAFC calls on Scalia’s statement in Arcadia v. Ohio Power, that a “court may consider …an issue the parties fail to identify and brief.”  Cited along with that FERC case, is an abortion case over Medicaid, in which the Court refused to consider an extraneous issue.  Show of hands, please: has anyone cited a FERC or abortion case in a patent appeal brief to the CAFC?  Again, as rare as Talmudic cites in an encyclical.

If Scalia, et als. say that willful means “objective recklessness’, and that an appellate court can rule on “antecedent” issues beyond the point of the appeal, then that the CAFC says that you can take that to the en banc.  It goes further in erasing CAFC precedent, to hold that the “state of mind of the accused infringer is not relevant to” the objective inquiry about recklessness. 

Having reframed the threshold inquiry, the CAFC discourses about the underpinnings of the privilege and waiver doctrines.   It casts a somewhat approving eye on the matter of whether the non-infringement opinion was authored by in-house counsel, or opinion counsel, which need to be disconnected from litigation counsel.  The section on the privilege, again reminiscent of how the Supremes closed their opinions in Festo and KSR, closes with no “absolute rule” but only seeds sown in the “evolutionary” (imaginary) field where “privileges’ are developed.

The final section on work product waiver is almost an after thought, once they had changed the standard for willfulness, and ruled that the privilege between a client and opinion counsel can be selectively waived.  With both privileges, the guiding light is the unfettered ability to tell your litigation counsel that you knew about the patent, and worried that you infringed, but worried more about being ‘left in the dust’ by your main competitor.

The concurrence takes the issue a measure further outside the box of a mandamus petition regarding discovery.  It advocates taking the willfulness element away from enhanced damages altogether, since the statute does not mention that element. 
Regrets go to all the infringers’ counsels, who between the ruling in Echostar and Seagate, had to open up their files for examination by opposing counsel.  The scope of the ruling in Seagate was unexpected, just like when you take your car in to have the headlights adjusted, and the garage requires that you get a new battery and alternator.

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August 20, 2007 by thomason.

I retain the weirdest comments that come in.  Only those germane to something IP get posted.  Here are the two oddest comments so far this month.

Whether instead it is time to us to drink coffee and to discuss male hair braids.
The plan of bonification is fantastic, therefore with few indications you can form a net of distribution with much success.

When can we sit down to unscramble this wreck of cars.

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August 17, 2007 by thomason.

In Alberta v. Rambus, the CAND (J. Whyte, 8/10/07) refused to dismiss the interference counts in an infringement suit, because “Resolution of the issue” of an interference-in-fact requires more “understanding of the technology, the state of the art at the relevant time and the level of ordinary skill in the art at that time.”  In essence, factual determinations that trump a rule 12(b) motion to dismiss.

Is interference-in-fact, a question of fact, or do claim construction and obviousness make the threshold inquiries matter of law?  Presumably, an interference complaint will involve competing technology and similar products or processes.  The Markman issues may directly answer whether the alleged interfering patents claim the “same or substantially the same subject matter in similar form.”  Medichem v. Rolabo, (CAFC).  As important are whether the claimed inventions are the “same”, as in PTO Rule 601(n), or patentably distinct, that is, non-obvious in view of the other.

Cases where a patentee sues for infringement, and defendant counterclaims with a similar patent, could more often provoke an interference count.  That result is avoided due to (1) interference-in-fact being determined strictly by the claims, and not the spec, and (2) the “two-way test.”  With the newly-wrought vagaries of KSR-style obviousness, the district court may be unable to rule on the jurisdictional issue of interference-in-fact until after a Markman decision and development of a record as to obviousness.

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August 15, 2007 by thomason.

Due to its saga of litigative history, it took 27 pages to dismiss attempted monopolization and Walker Process claims in Sumitomo v. MEMC (N.D. Cal. 8/13/2007).   In 2001, MEMC sued for patent infringement, losing in 2004 on summary judgment of no infringement, which the CAFC reversed in part.  On remand, the patent was held invalid as non-enabling, but not anticipated, and the appeal remains pending.  In between those two appeals, Sumitomo sued in D. Del. claiming MEMC pled a baseless suit in an attempt to monopolize.

Again, I draw upon the visual metaphor of the Spy v. Spy comic strip from Mad Magazine, here to show the necessary relation between claims of invalidity, inequitable conduct, and sham litigation monopolization.  Spy I claims infringement, Spy II counterclaims invalid.  Spy I distinguishes the cited prior art, and argues it is immaterial.  So, Spy II identifies inconsistencies between that and positions that Spy I had argued to the USPTO to get claims allowed, and notes that Spy I knew of some prior art but didn’t cite it or mischaracterized it.  Spy I acknowledges knowing of the art, so Spy II argues inequitable conduct.  Cross-motions for summary judgment are denied.  Spy II counterclaims for attempted monopolization.   Yikes - even if the Spy’s patent is invalid, the collateral litigation will go on for three more years. 

The English language is apparently lacks words to describe the level of proof needed.  To prove inequitable conduct, or invalidity, requires clear and convincing evidence.  Some more stringent level of proof is needed to elevate inequitable conduct up to proving an attempt to monopolize. What, clearly clear and convincingly convincing; crystal clear and totally convincing?  As Judge Armstrong states: “Walker Process fraud requires a much greater showing of materiality and intent than the showing required to establish inequitable conduct.”  The claimant “must have affirmative evidence of fraudulent intent.” Sumitomo lacked that proof, indeed, it could not make out a material factual dispute sufficient (clear enough?) to overcome a summary judgment motion. 

It’s sham litigation theories can be categorized as: (a) litigation positions on prior art that differ from statement to USPTO, (b) technical flaws in prosecution, (c) omitted inventors, (d) anecdotal evidence of early sales never disclosed to examiner, (e) allegedly knowing that patent was obvious or non-enabling.

Judge Armstong dismissed (a) because the alleged differences in position taken were held to be mis-interpretations by Sumitomo’s expert.  That he came “to a different conclusion regarding the correctness or salience of this distinction …does not raise a triable issue.”  The technical flaw as to claims of priority did not raise a material dispute, because Sumitomo’s expert report, instead of supporting that claim, opined that it presented “issues of material fact.”  Apparently, Judge Armstrong did not view that as within the expert’s expertise.  The omitted inventors (c) theory was dismissed because it could not rise to the point of proving that the patent would not have issued ‘but for’ the claimed omissions.  As to non-disclosures related to the on sale bar (d), there was no record of any sales in the U.S., only one witness’ anecdotal recollection. 

Sumitomo’s assertion that the litigation was a sham that fronted MEMC’s knowledge of invalidity was based on its “expert” on patent prosecution.  His opinion did not, per FRE 702, “assist” Judge Armstrong, who noted that the expert had “prosecuted all of one patent during his entire career.” 

In patent cases that involve inequitable conduct and sham litigation counterclaims, what needs to be ground down are the standards of proof, and case management tools for getting rid of unprovable contentions - earlier.  The caselaw varies, needlessly, about whether an infringement case, which gets past a summary judgment motion, can be proven later to be a “baseless” sham suit.  In the Sumitomo ruling, the appeal of the non-infringement ruling included a cross-appeal of a denial of Rule 11 sanctions.  The CAFC found that the patentee’s counsel had done “a good faith, informed comparison of the claim …[vs.] the accused” products, and a finding that the count for inducing infringement could go to a jury.

Even those findings did not provide a ‘free-pass’ that would end the later-pleaded complaint alleging that the infringement suit was baseless.  The “Court’s ruling on the [R. 11] attorneys fee motion does not wholly foreclose” the attempted monopolization claim of baselessness.  Well, why does it not?  Because the law is unclear.  The standards for inequitable conduct need to be clarified by statute, and as well, the elements necessary to prove the sham litigation exception for attempted monopolization claims against a patentee.  Now, it all about interpreting the caselaw, conflating the majority and minority rules, distinguishing what Judge Zigalockoouse did in some unreported case from the District of Whereas, and so on.  That lack of clarity enables cases, like the Sumitomo case, to go on for six years, at which point, only a summary judgment has been entered, then the CAFC gets the case for a third time. 
If there is no hope of statutory repair - real reform, then the Dickensian remedy may be viewed as the next best alternative.  Clearly.

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August 8, 2007 by thomason.

It would not be hard to find a commercial litigator with a story about how opposing counsel withheld information requested in discovery.  Two of the better exposés this year are Judge Hellerstein’s ruling sanctioning law firms that represented companies that insured the WTC, and the ruling by Judge Brewster on sanctions in Qualcomm v. Broadcom (S.D. Cal. 8/6/2007).  Something is needed on occasion to restore confidence in the system.  Lessons can be learned.
Qualcomm sued for infringement of patents that, to some degree, embody a video coding standard promulgated by participating technology companies.  Judge Brewster found that participation in the standards setting body imposed a duty to disclose those patents held by participants “that reasonably may be essential to practice” the standard.  Qualcomm did not disclose patents to that body.  The non-disclosures more troubling to the Court, were documents and e-mails not produced before trial, and mistaken testimony by Qualcomm representatives in depositions, that “evidence unequivocally contradicts Qualcomm’s assertions at summary judgment, during trial, and at the post-trial hearing on waiver and inequitable conduct.”  Based on the late-made production, the Judge found misconduct by Qualcomm and its witnesses that was “extensive” and “intentionally organized to shield” material facts.
Qualcomm’s misconduct was accomplished, to an extent, by “aggravated litigation abuse,” by “constant stonewalling, concealment, and repeated misrepresentations,” and by “presentation of numerous witnesses who steadfastly testified falsely.”  Also implicated were “Qualcomm’s lead and co-counsel” who had “adamantly denied the obvious” then when the truth was “exposed by the document production, sequentially” denied “relevance” and contended “mistake, and finally non-awareness.” 
The ruling quotes errorneous testimony by Qualcomm’s witnesses, who denied being involved in the standards setting.  It’s 30(b)(6) representative testified: “Is Qualcomm a member of the JVT? “No, Qualcomm is not. “Has Qualcomm ever attended any meetings of the JVT? “Qualcomm is not aware of any attendance to any JVT meetings.”  Months later, “Qualcomm produced over one hundred emails post-trial related to Qualcomm’s participation in the JVT and attendance of JVT meetings.”
Counsel for Qualcomm employed a discovery response that every patent litigator has seen: “Qualcomm will produce non-privileged relevant and responsive document [re: topic], if any, which can be located after a reasonable search.”  But, did it ever produce those?  Still, Magistrates from coast-to-coast will accept that response, coupled with non-production, in case after case.  Why?
What defense could counsel proffer – “having been ‘kept in the dark’ by their client.”
The lessons that come from such scorched earth are these.  Take care as counsel when repeating to the Court what your client represented to you.  Instead of saying, ‘there’s no e-mails – none,’ stick to ‘needing to protect as privileged what my client has told me, suffice it to say that a serious search effort was made, and all relevant non-privileged documents provided to my office were produced, and the rest are on the log.’  When you repeat a client’s representation, then it becomes your representation, and you lose the ability to amend later what you have represented.  Next, when your client conceals discoverable information, the prime unpleasantness is that, ethically, you cannot ‘rat out’ your own client.  All you can do is amend/withdraw the erroneous or incomplete state of the facts – and deal with all the sanctions motions.  You can ask your client (the company, not the individuals) to distance itself from persons responsible for the errors, and that may save counsel and the company from being sanctioned.
There have been too many cases where requested, relevant discovery has been withheld, not logged, and the courts do nothing to address it or to correct it.  No wonder it keeps happening.

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August 3, 2007 by thomason.

Not knowing the facts, let me jump right to a conclusion about the CAFC reversal in Sony, et al v. Guardian.  If 27 of the 35 pages of the opinion detail ‘facts,’ then one may find odd the finding that “Because the relevant facts are undisputed, we review de novo.”  Indeed, is de novo the standard of review for a denial of declaratory jurisdiction?

The Sony v. Guardian decision attributes the de novo standard to its earlier rulings in SanDisk v. STM (CAFC 2007) and Arrowhead v. Ecolochem.   In STM though, the stated standards were “plenary appellate review” on the law, and review of “underlying factual findings for clear error.” STM cited back to Gen-Probe v. Vysis, which confirms Supreme Court precedent that declaratory jurisdiction issues are “inherently fact-specific.”  It holds that the CAFC “may not disturb factual findings, including those on a reasonable apprehension of suit, unless they are clearly erroneous.”   The Sony panel appears to disagree, de novo, with the “factual findings” of no reasonable apprehension.

How often has the criticism been made about the CAFC using the de novo standard as an end-justifies-the-means approach to ‘achieving uniformity’ in patent law matters?  One need not disagree with the result in Sony, but might view it as a result-oriented analysis overlying the de novo standard.   The threshold to applying that standard in Sony was accepting the appeal issue as a dismissal for lack of subject matter jurisdiction, rather than as a discretionary refusal to exercise declaratory jurisdiction over the suit.  However the ruling below is cast, it relied wholly on a factual assessment of the “sufficient immediacy” and “reasonable apprehension” contentions, which again, it seems impossible to believe were, as the CAFC panel viewed them, “undisputed.”  Wearing de novo glasses alters that view.

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August 1, 2007 by thomason.

This week’s best read on the art of hindsight reconstruction is In re Icon Health & Fitness, (CAFC 8/1/2007).  It recalls the fable of how truth became a story, then the story became a metaphor, and eventually, the metaphor replaced the truth.  At some point in the obviousness analysis, it should be asked whether “the differences between” the claimed invention and the several prior art references “are such” that the invention would have been obvious.  The term “differences” is truly in the statute, and truly in Graham v. Deere.  That has evolved into the ‘could’ve been combined’ test, and even that standard gets lowered in Icon.  Starting from a point of combining, supplants the true first step of identifying the differences.

Perhaps still smarting from its “rigid” test being undone by KSR, the panel in Icon focuses on the motivation to combine a catalog ad for a folding treadmill with a feature on a folding bed, as proof of the obviousness of a gas spring assist on a folding treadmill.  To turn a hindsight reconstruction into an obviousness conclusion, first overlook the differences, and don’t forget to blur the lines between evidence that is relevant, and that which genuinely is proof.

Icon argued that a bed and a treadmill are non-analogous arts, and the CAFC agreed – BUT, the problem being addressed was similar.  The decision equates coil springs on a folding bed with the gas spring claimed as an element of the folding treadmill. 

While one may agree that the similarity of the problem suggests that the art is not non-analogous, the CAFC takes that one step higher, and finds that similarity is itself proof of a motivation to combine.  What?  The panel in Icon finds that showing that the references addressed a similar problem “goes a long way towards demonstrating a reason to combine” those references.  Perhaps the opposite proposition is logical: non-analogous = non-obvious; but, a similarity of the problem at hand, does not IMHO “further support[] the idea that one skilled in the art would combine” features on a bed to innovate a treadmill.  That is where TSM had provided some glue between the “differences” and the claimed invention.  Now, if the art show is analogous, then it’s only a short drive further to obviousness.

The panel’s synthesis of wider ranging points recalled the deposition testimony of an expert opining about obviousness, who stated that although he could point to nothing that would suggest the art being combined, that when he had all the prior art in his mind, he could close his eyes, and “see a bridge forming” between their separate teachings.  The Judge, hearing his first patent case, got this expression of ‘Doctor, are you self-medicating.’  Here, a person of ordinary sleeping skill, lying on a folding bed likely would dream of sheep trodding upon a folding treadmill, or himself sleepwalking on a bed, and Eureka – it’s obvious to combine those.

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