August 28, 2009 by thomason.

The Ad world tends to self-publicize events involving itself, such as the suit against WPP and JWT arising from an ad campaign for Microsoft’s Bing search service (they’re so cool, everyone in the club knows them by their initials). News reports suggested a patented method to produce a “program-intergrated advertisement” was allegedly infringed. Actually the suit began as a breach of an NDA against Mindshare, a subsidiary of WPP (Del. Ch. dkt. #4659-VCL), seeking injunctive relief. That now has expanded to a damages suit under the UTSA, in the Delaware Superior Court (dkt. #09C-08-138), against WPP, which owns JWT and Mindshare. The origin of both cases was a meeting between plaintiff Denizen’s principals and Mindshare’s reps.

There’s a wide path to travel when suing for misappropriation of trade secrets under the UTSA, or based on a NDA, where the technology is patented or was published in a patent application, but it leads to a narrow gate. “It is well established that disclosure of a trade secret in a patent places the information comprising the secret into the public domain.” Stutz Motor Car of America, Inc. v. Reebok Intern., Ltd., 909 F.Supp. 1353, 1359 (C.D.Cal. 1995), aff’d, 113 F.3d 1258 (table) (case involving “The Pump” hi-tops from Reebok - which you really wanted!). The method of producing a “program-intergrated advertisement” was patented “in 2005″ according to plaintiff Denizen’s pleadings. Separate research disclosed that the BPAI (Appeal no. 2008-0732) upheld rejection of all claims in a CIP of Denizen’s USP 6,859,936.

The case recalls those NDA forms that define “Confidential Information” to include “patents,” followed by the anti-definition that excludes information in the public domain. I know what thou art, but what art thou not?  It too recalls words like foreclosed, preempted and barred.

What Denizen pleads is its confidential disclosure, and Mindshare’s misappropriation of, how “to implement program integrated advertisements, such as …ways to shoot the ad[]s, strategies for obtaining [SAGuild] contracts, methods to gain access or rights to [TV] program content, and how an ad[] agency could work with a production house or network.” Curiosity suggests that persons at JWT/WPP with skill in the art, may have known much about those elements of the secrets.  Denizen’s method is patented, some further methods in its CIP were rejected as anticipated, but Denizen’s suit alleges that how “to implement” what it had disclosed (presumably in an enabling manner) in its patent and patent applications, are trade secrets.

It’s no secret that in all litigation, and so too, in IP litigation, to win - you’ll need some luck.

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August 18, 2009 by thomason.

Husband & wife IP lawyers, working in-house, raised with their superiors the possibility of a material, pre-merger non-disclosure by a merger partner about its key patent, which could impact the post-merger revenue that the patent may generate. Within weeks, both lawyers were fired by execs who came over from the merger partner.

The Ninth Circuit reviewed the summary judgment dismissing the lawyers’ whistleblower claims under the Sarbanes-Oxley Act, as an issue of first impression in that Circuit. Van Asdale v. Int’l Game Technol., 2009 WL 2461906 (9th Cir. Aug. 13, 2009). With a bit of recasting of the facts, the decision could be the basis to turn inequitable conduct into grist for SOX whistleblower suits. While the panel emphasizes that no fraud may be proven later, they did reverse the summary judgment and remand for further proceedings.

Section 1514A of the SOX Act proscribes discriminatory action against employees for providing information about “conduct which the employee reasonably believes constitutes a violation of” federal statutes against fraud. The employee must have a subjective belief that the reported conduct violates those laws, and the belief must be objectively reasonable. To make the claim, the employee must establish a nexus between the “protected activity” of reporting possible fraud and the adverse employment action, here, getting fired right after the report. On that point, the decision holds that “causation can be inferred from timing alone.” The Van Asdales were fired days after the meeting where the fraud issues were discussed.

The facts, taken in the light most favorable to the plaintiffs, were that the merger partner had a patent that generated much of its revenue, which was described as “the Crown Jewel” that the merger partner brought to the deal. That patent was being asserted against a competitor, but the due diligence did not disclose a “flyer” that, as described, appears to have been Section 102(a) prior art. After the merger, one of the plaintiffs obtained the “flyer” from outside counsel, and that provoked his concern that its non-disclosure was material to the valuation of the merger partner, as well as to the revenue stream generated by the patent.

In a broad sense, awareness by counsel for publicly-traded companies that acquired IP may be challenged as invalid or unenforceable must be considered seriously. In the Van Asdale case, the employed lawyers had “allegedly accused high-level IGT executives who had previously worked at Anchor of intentionally withholding material information prior to the merger.” However, the SOX wrong only occurs if management takes adverse employment actions that ostensibly were done to retaliate against or to silence employees who reported the conduct.

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August 13, 2009 by thomason.

Showing their every-widening expertise in everything from IP to HGH to Latinisms, the Federal Circuit has reversed 2-1 a decision over the firing of a federal correctional officer, who had tested positive for steroids after losing his bout in a Ultimate Fighting Championship event UFC 75 in London. 

http://sportsillustrated.cnn.com/2009/writers/josh_gross/01/15/ufc-testing-in-uk/

Anthony Torres used what sounds like the same defense employed by The Rocket, and other [alleged] sports-roiders – that ‘I didn’t know what the trainer injected in me.’  Torres filed a grievance over being fired by the U.S. Bureau of Prisons, and the CAFC reversed the arbitrator’s decision.  Torres v. DOJ, (Fed. Cir. 8/10/2009).  The CAFC decided that to have been fired for “illegal conduct,” it would have to be proved that Torres knew he’d been injected with illegal drugs.   As it is with hair color and tan tones, ‘only his trainer knows for sure’ what was injected.

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August 11, 2009 by thomason.

An expedited appeal to the 2nd Circuit {09-2878 by the author known as J.D. California} of the injunction against his unauthorized sequel to Salinger has garnered several amici, including some IP Law professors.  As briefs by amici-teachies tend to be, this one is a position paper on the fair use/transformative test and against a presumption of irreparable harm when infringement is likely.  In sum, it argues that a likely fair use defense must trump a presumption of non-economic harm if drawn from the likelihood that the derivative work infringes the original.

The profs challenges the presumption of irreparable harm, in sort of a say-it-ain’t-so manner. Where likely infringement can be shown, these learned amici had to acknowledge that many Circuit cases permit that presumption.  They stare down those decisions as being “no longer compatible with controlling law,” viz. MercExchange.  To stretch that incompatibility contention further, they cite a recent 5-4 Supreme Court decision on environmental policies and law, which I for one have a hard time believing translates to First Amendment and Copyright clause cases. Also, the reversal in that NEPA case was based on the 9th Circuit being “lenient” in displacing the “likelihood” of harm with the “possibility” of environmental harm. Winter v. NRDC, 129 S.Ct. at 375. Note too, that the majority in Winters never cited MercExchange, suggesting that IP and NEPA considerations are unrelated.

MercExchange regards whether a presumption of harm, appropriate in the pre-proof setting of a TRO, remains appropriate when all the evidence has been heard and liability adjudged.  MercEx said ‘no,’ and reversed the rule of automatic, permanent injunctions.  In the TRO setting though, the court is charged to assess likelihoods, use presumptions, and balance the four-factors.  The amici-professors argue that each factor is mandatory, and that a copyright owner must ‘win’ on each factor.

Also, the amici-professors argue, perhaps in a transformative or mash-up way, that the harm prong of the preliminary injunction assessment is trumped by the harm inquiry of the fair use defense.  The fair use inquiry “must take account not only of harm to the original but also of harm to the market for derivative works.” Campbell v. Acuff-Rose, 510 U.S. at 590.   Amici were dismissive of the opinion of Salinger’s agent about how much would be paid for the author to publish his sequel to “The Catcher.”  Mainly though, the contention is that the author’s exclusive right to create derivative works is overwhelmed by the potential worth of transformative works, “even if the new author is ultimately a poor craftsperson and fails to reach his or her audience.”  Even “poor” Derivation, if transformative, is assigned value.

In an argument that practically concedes that the to-be-commercialized derived sequel is, on a literary scale, substantially similar to the original, amici contend that it has fair use value as critical comment on the original author’s work.  Instead of a derived tale of a later-life Holden, the unauthorized sequel embodies a foundation of similarities over its root, subtextual commentary on Salinger’s work.  “Because of the widely recognized link between the book and its creator, however, it is particularly appropriate to repurpose Catcher to engage with the cultural relevance of its creator.”  That re-purposing is fine, when literati are waxing philosophically over glasses of wine, but to argue that commentary is commercially distributable and insulated from the copyright owner’s exclusive rights is a hard sell.

Rather than try to sum up the profs lengthy arguments about works that are “transformative,” suffice it to say this.  Definitionally, and perhaps legally, the term transformative connotes metamorphic changes, not a re-write or a do-over.  Transformative work cannot equate to plagiarized or substantially derived work.

Last, the amici-profs argue that Salinger’s rights as author and copyright owner were given too much worth, to the point that his statutory rights were equated to droit suite.  “By framing the question as one of Salinger’s interest in leaving his artistic vision untouched, the District Court imported moral rights concepts …[which] are not part of U.S. Copyright law.”  Plainly; but, to argue that a later-writer deserves a “right” to publish for profit a deriviative work, despite the author’s exclusive rights, is to elevate fair use to a moral right of that later-writer. 

In a contest between the author’s rights as the copyright owner, and the fair use protection for the writer of a derivative work, it’s less a matter of droit suite than a contest over who has the right to profit from the author’s original work.

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August 10, 2009 by thomason.

An article by Zuzha Elinson in The Recorder points out the risks attendant to joint defense groups in patent litigation. The prime risk is being unprepared to go it alone when everyone else settles out around you. Two cases are mentioned, one defense verdict and one for the plaintiff, from which it is implied that winning or losing “singlehandedly” was the result of being unprepared, or not, to “scramble” from a “back-seat” posture to taking the wheel.
While preparedness is perhaps the most important aspect of patent litigation - that you can control - it’d be uninformed to discount away all of the uncontrollable factors. You win for a lot of reasons, and you can lose for every more reasons.

The article gives less insight into what needs to be secured in a joint defense agreement (JDA), as well as the other estimable risks. It is suggested that a lesser participant in the joint defense effort was left with no trial expert. A well-crafted JDA always should cede the jointly-retained expert to the use of any party that doesn’t settle. Of course, if a “back-seat” participant doesn’t get that expert prepared for trial with a report that covers the issues of importance to that party, then unpreparedness will cut off their options.

The greater risks can result from a ‘compromise’ defense strategy. Rarely are each of the defendant’s interests, and product mix, exactly aligned with all defendants. The effect then is to seek jointly a one-size-fits-all claims construction; to not pursue certain counterclaiming strategies; to limit discovery to topics acceptable to all defendants; and, to let the defendants with the largest exposure have the final say in all strategy decisions. It’s cheaper for the lesser defendants to ride in the back-seat, but in those jurisdictions that stringently enforce pre-trial disclosure rules, if the big-guns go silent, then it’ll be hard to negotiate a good settlement with a plaintiff that sees that the issues unique to that defendant were not addressed in the final claims construction statement, or in the joint expert’s report.

The article notes a trend toward common counsel, rather than a joint defense group with a liaison counsel. As good an approach is to have common counsel for the defense, but separate counsel for each counterclaimant. That way, several theories of invalidity or even inequitable conduct can be pursued, while common counsel can keeps the main defense moving straight ahead.
For the full article, see the Aug. 7th edition of The Recorder.

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