All posts by thomason

About thomason

My favorite comment to clients is that "in a typical case," but then, "I've never had a typical case." After 25 years litigating complex commercial cases, e.g, patent, environmental, antitrust, all that I can say for sure is that "I'm still practicing." Despite volumes of precedent and statutory law, outcomes are no more predictable. Still, when I sit in the courtroom, hearing the witnesses, viewing the evidence, and appraising what's in the eye of the Judge or the jurors, I get a strong and clear feeling of what conclusion the case is heading toward. If your ship must travel a straight course, through still water, then any mate can handle that. If however, rough water or unexpected difficulties may be encountered, then you are better served with a captain who has completed many such voyages before.

Back when I was losing on False Patent Marking.

Proof of objective facts and subjective intent are essential to success on a false patent marking claim (as well as on the inequitable conduct defense).  Showing that ‘patented’ was in some form marked on a product should not be hard.  In all ‘false’ conduct actions, the most difficult aspect is proving intent.

In a case some years past, the Judge issued fairly straightforward rulings that “intent” raised fact questions precluding summary judgment on a false patent marking claim. The court noted that the product was promoted as “patented” before an application had been filed, and that notice of the misidentification was received, also before the patent application was filed. The one promoting it may have believed it was patented.  http://bit.ly/aZ8zWA   http://bit.ly/awa5fK 

Seemed plain – accepting favorably an inference of ‘good faith’  despite a mistaken belief that the product was “patented.”  This did not spawn hordes of mismarking cases, and intent should remain difficult to prove.

Word density

Why is that parties are limited to only so many words or pages, or density of type when pleading a cause, but courts can use unlimited pages to set out their decisions.  Presumably, the pleader is the better editor, relying on clearer, declarative sentences, while the deciders just let it all flow across endless pages. 
Maybe some judicial decisions should be released on  twitter.

Remember When You First Heard “Kick Out The Jams!”

Hey Forever 21 got sued, again, for copyright infringement – and it’s not over clothing design.
It is alleged in a L.A. Federal Court complaint that F21 made and sold clothing bearing a copyrighted photo of the [to some, legendary] rock band, the MC-5. Said photo, exhibit A to said complaint, was on the F21 garment “H81Rock-N-Roll Studded Top.” That’s rock and roll with a capitol N, and in caps MC-5 (Motor City 5).

Well-known rock icon photographer, Robert Matheu, intends to kick the jams out of that F21, H81 “Studded Top.” His photo, taken in the ‘summer of `69’ was not attached to the PACER copy, but it’s likely this photo on his website, http://www.robertmatheu.com/mc5-photo.htm. Matheu’s suit filing nearly coincides with the passing of another legend of Detroit hard rock, Ron Asheton of the Stooges. The filing is 2:2010cv0214-CAS (C.D. Cal.).  Rock on Ron.

Except as Provided Elsewhere, or Trumped, I’ll Own all the IP.

An IP decision of the Delaware Chancery Court reminds of two risks – wholesale incorporation by reference between separate IP agreements, and judicial misreading of patent law. In Cepahlon v. Johns Hopkins, 2009 WL 4896227 (Del. Ch. 12/18/09), three forms of agreement dealt with the ultimate ownership of IP developed by a university researcher. Rather than reading these separately and, if possible, consistently, the Vice Chancellor ruled that the terms of one “trumps any contrary language” in the other. Also, instead of defining the agreed terms using the common and accepted meanings, the VC applied definitions unique to patent law.

The first lesson is to avoid having two provisions dealing with the same subject matter, because of the risk of inconsistency, or of inconsistent interpretations. A form of drafting simplicity, to be avoided in IP transactions, is simply referring to parts of separate agreements rather than making revisions so as to make it all consistent. What good can come in court from phrases like ‘except as otherwise provided in [other provisions or agreements],’ or that ‘the foregoing does [not] supersede provisions [else where] not inconsistent herewith.’ Those flaws were not found in this case, but the outcome on ownership was not what Cephalon expected.

Cephalon supported the research, and its agreement with JHU (A) required the JHU researcher to “disclose to Cephalon any discovery or invention, whether or not patentable, that is conceived or reduced to practice,” and (B) it granted to Cephalon “all rights in and title to …all Inventions that result from the …use of” its proprietary compounds, and to “all ..intellectual property rights related thereto.”

The first misstroke of the pen was having the duty to disclose provision end with a shorthand, collective term “Invention.” On that basis, the court took that “Invention” definition and applied it where it appeared in the grant provision. The effect was that Cephalon did not own “any discovery.” Rather its ownership was limited to any “Invention” that was “conceived or reduced to practice,” and limited to conception and reduction to practice as defined in patent caselaw. An alternative construction would recognize that “any discovery” is much broader than “invention”, and broadened still by the term “whether or not patentable.” A “discovery” implies no usage confined to any legal regime.  Discovery is just that, and is distinct from an “invention,” which flows from legally-cognizable “conception” and “reduction to practice.”  Indeed, the opinion suggest that the researcher made discoveries about what compounds met certain criteria, but that only after all the agreements had expired did the claimed invention reach the stage of being an invention.

The next pointer is not to introduce shorthand definitions, mid-sentence. It always is difficult to define known IP, and even harder to set metes and bounds on IP yet to be developed. “The possibilities of such circumstances cannot possibly be enumerated. If the inventor had merely a conception or was working towards development of that conception, it can be said there is not yet any ‘invention’.” UMC Electronics Co. v. U.S., 816 F.2d 647, 656-7 (Fed. Cir. 1987). Such definitional terms must be well-crafted, not shorthanded, and threshold definitions deserve to be set out early in the agreement, in or near the primary grant clause.

The crucial misstroke was a later-made amendment incorporating by reference the IP “policies” of Johns Hopkins, along with what the court called the “primacy” provision. Ostensibly, the amendment clarified that, although Cephalon was compensating the researcher, his primary duties were as a researcher in Hopkins’ employ. The incorporated “policies” gave Hopkins “the right to obtain [IP] developed as the result” of its supporting the research. The court ruled this was an outright grant of ownership to Hopkins, rather than an executory “right to obtain.” That conclusion hinged too on boilerplate that the “Hopkins’ policies” and the researcher’s “obligations to the University shall govern and be afforded primacy in the event a conflict arises with” the agreement granting all ownership to Cephalon.

It had to be unpleasant when that incorporation by reference provision was given primacy, so as to ‘trump’ an express grant of ownership; particularly, when fn. 94 points out that Cephalon never “received a copy of [the] JHU IP policy.” To that pain point, the court added the irritant that “Cephalon cannot rely on ignorance.”

Vive la Different Way of Co-creating.

The French court decided a design case by a petit-mains, which are seamtresses who present design samples to major fashion houses, hoping to secure a contract to purchase.  Basically, the court issued a split decision, granting both sides damages that nearly offset, and ruling for each side on some claims.  The case highlights how in IP, the ‘old ways’ used in design industries – working without contracts or copyrights – hit up against the modern, rights-based rules of IP ownership.

Press reports leave it unclear whether the court rendered a verdict, with some oral explanation, or also issued a written opinion on the claims and their disposition.  The backstory is that Carmen Colle, grew a firm of seamtresses in France, and her products were adopted in the several major fashion lines.  A crocheted sample was presented to Chanel, but her offer was not accepted.  Later, Colle saw a finished garment, incorporating her sample design, being sold in a Chanel store in Asia.  She called it to Chanel’s attention, but no resolution was reached.  She sued for counterfeiting her design, and for breach of contract. Chanel cut off business to Colle, and countersued for commercial disparagement (based either on the suit allegations, or more likely, public comments by Colle about the alleged taking of her original design).  The historic practice of not copyrighting the designs (allowed under French law), and not having an agreement setting out ownership rights or limits on use without attribution, left Madam Colle without much of a remedy in court.

Consistent with modern IP practice – “get it in writing” is the norm.  Sure, software writers, screenplay editors, collaborators, etc., still put their creative contributions in the hands of others to use, or refuse, and often without an expectation of specific remuneration.  Old way -> bad; written IP agreements – > often best.

The further points of interest are how Chanel’s pre-trial defenses fit or misfit with the verdict.  Colle’s counterfeit charge was tossed out, but the reasons are not clear.  In pre-trial comments, Chanel’s stated defenses were either that the design was the result of specific instructions it gave to Colle, and/or that Chanel had used a design that was ‘at the very least a product of collaboration’ by the parties.  The first of those often arises with software or screenplays – write me a routine that performs these functions, or a story which has these plot elements.  Both wind back to the question of who owns, or has any rights to the end product, where only one person wrote the work, but the other suggested the content.  The second of those defenses, joint ownership or collaboration, is more an acknowledgment of the uncertain nature of the relationship.  If both own, that is, own an undivided joint interest in the work, then one cannot appropriate from the other entirely, but neither must account to the other for gains made from a joint work.

Madam Colle believed that the exchange of designs, as a step to reaching an agreement, was understood as a matter of “honour and justice and noblesse.”  Her lawsuit, however, provoked Chanel to point out the lack of a copyright and of a written understanding about ownership and exploitation of the disclosed designs.  Again, the ‘old way’ is passing away, supplanted with the ‘rely on rights and writings’ approach now necessary to those in the creative industries.

Business Method – Reverse Auction by USPTO.

Your USPTO needs copy paper, and it solicits bids in a notice in FedBizOpps.  But, it is not a lowest, when-opened bid solicitation.  Rather, the Commerce Dept. uses a reverse auction method, as stated in the solicitation:                                            “United States Patent and Trademark Office intends to conduct an online competitive reverse auction to be facilitated by the third-party reverse auction provider, [which] has developed an online, anonymous, browser based application to conduct the reverse auction. An Offeror may submit a series of pricing bids, which descend in price during the specified period of time for the aforementioned reverse auction. The United States Patent and Trademark Office is taking this action in an effort to improve both vendor access and awareness of requests and the agency’s ability to gather multiple, competed, real-time bids.”                                             With its ‘other hand’ the USPTO has been issuing patents on methods for conducting online competitive reverse auctios, such as USP 7,376,593 or 7,571,131 or 7,412,412.  Perhaps the copy paper is needed for office actions on these sorts of business methods.

Rule 403 Prejudice Comes with the Combo.

As one Delaware jurist used to ask, ‘how many times do you patent lawyers want me to try your case?’  It was a rhetorical inquiry, since the judge had the power to keep it to one, even though the lawyers might prefer 3 trials: claim construction, liability and damages (plus maybe a TRO mini-trial on the front end).

The new school of patentee’s counsel tend to prefer one trial, hit hard and quick on the big issues, then shift the burden to infringer’s counsel to bore the jurors with proving all of the details.

That approach went under reconsideration after reading St. Clair IPC v. Fuji Photo, 1:03-CV-231 (D. Del. 11/19/09).  The jury upheld the patent and awarded damages based on .5% royalty rate.  St. Clair moved for a new trial on damages because evidence of other licenses, obtained under litigation duress, were excluded from evidence.  The judge ruled that the risk of prejudice outweighed the probative value, “particularly in light of the fact that damages and liability were being tried together.”  The obverse of that ‘particular’ may be that had damages be tried separately, then the litigation-induced licenses would have been admitted for the jury to consider.
The ‘whoops’ factor (scarred litigator-speak) was that someone in the courtroom must have thought having two trials was the better option, and it wasn’t St. Clair.  “In this regard, the Court notes that St. Clair opposed the bifurcation of liability and damages.”

There are plenty of cases, pro and con, on admitting evidence of royalty rates in licenses obtained after litigation was threatened or underway.  It can be held out, especially where those are the only licenses.  It can come in with a cautionary instruction to the jury, or it can just come in after cross-exam and closing argument explain the differences between arms-length and arm-twisting.

In that perfect world of the engineering mind, each issue would get full treatment, and if that takes separate trials, then OK.  But, the litigator’s mindset is to get to verdict as soon as possible, without being unduly rushed. For that, one trial plainly is preferable.  If a choice between bifurcation, trifurcation or singularity carries a risk of my evidence being excluded from the single trial, but admitted in one of separate trials, then tell me that – before any trial, and before I decide on bifurcation.

Ariad v. Lilly – amicus diverge.

My initial reading of the amicus briefs to the Federal Circuit, on the two en banc questions about the written description requirement, indicated two clusters of argument.  There are contentions that the requirements “as applied” impact the life sciences harshly.  Others contend that there is, or is not, a description requirement in 112,1 separate from having to enable.

The “as applied” contentions may have merit, or may be anecdotally accurate.  Either way, anecdotes are not a sound basis for precedential rulings.  The statute says what it says.  No one would desire a result that allows a patent to issue, before the invention is to the point of invention.  So sure, there are applications and issued patents that get treated harshly, especially if the final claim set is more a product of negotiation with the examiner than based on a restatement of the specification.

As part of my adjunct professor work, an amicus brief was filed with the assistance of law students in the IP Law Society at the University of Kentucky College of Law.  It now is published on scribd.com, and accessible at:   http://www.scribd.com/doc/22480653/Brief-UKIPLS-11-11-2009

Twombly’s Alternatives Make Pleading Personal Jurisdiction Particularized.

The seeds of legal change often are found in unpublished, Circuit opinions. Among that mix are decisions interpreting, expansively, the Supremes’ remarks about adequate pleading in the Twombly and Iqbal cases. Serious parsing and explanations emerge when a panel decision extends the “plausible” requirement, without at the same time, implicitly amending federal civil procedure rules 8 and 9. Newly-defined pleading rules for personal jurisdiction over national distributors of infringing works are the seeds sown by a Sixth Circuit in Palnik v. Westlake Enter., 2009 WL 2707368 (6th Cir. August 31, 2009), a case over distribution of films that had an infringing soundtrack.

Without repeating here the elemental facts needed to sustain personal jurisdiction, it needs to be recalled that those pleaded facts are ‘taken as true’ when challenged by a Rule 12(b) motion. Then though, the plausibility inquiry kicks in. If the pleader opts for jurisdictional discovery, then that forfeits the advantage of the pleaded jurisdictional facts being favorably construed in the pleader’s favor. The Circuit panel ruled that Palnik didn’t plead enough facts, that what he did plead didn’t pass its plausibility test, and that Palnik never asked for jurisdictional discovery.

What was new in this case was the combined hurdles of pleading jurisdictional facts, with plausibility and with “reasonable particularity.” As best as research indicates, only the 6th and 3rd Circuits require jurisdictional facts to be pleaded with “reasonable particularity.” It’s not in Civ. Pro. Rule 9. But, those Circuits differ in the approach. The 6th makes it essential to the pleading, while the 3rd views particularity as a indicia of the need for jurisdictional discovery – even if that wasn’t requested. Consider C.J. Stapelton’s recent remark in dissent “I read ‘with reasonable particularity’ to mean that if a plaintiff suggests a realistic basis for believing that personal jurisdiction exists, he or she should be allowed to pursue discovery before having to prove that such jurisdiction does exist.” Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 340 (3rd Cir. 2009), and Toys “R” Us, Inc. v. Step Two, 318 F.3d 446, 456, 65 U.S.P.Q.2d 1628 (3rd Cir. 2003). The 5th Circuit follows the 3rd Circuit on that approach. Cable Electronics, Inc. v. N. Amer. Cable Equip., Inc., 2009 WL 2382561 (N.D.Tex. Aug. 10, 2009).

The twist added in Palnik’s case derives from Twombly defining a “plausible” allegation as that which does not admits of two possible “alternative explanation[s]”. 550 U.S. at 567. When the well-pleaded facts support a persuasive, and perhaps likely, “obvious alternative explanation” to the pleaded facts, then that can defeat an assertion of personal jurisdiction as not “plausible.” That obvious-but-unfavorable notion seems hostile to construing facts in favor of the pleader, viz., if the allegations admit of two explanations, then doesn’t the pleader get the most favorable one? “Palnik’s complaint fails not because he lacked sufficient information to state the facts supporting jurisdiction or because the defendants leveraged their possession of information to hide the true facts, but because the allegations contained in his complaint were capable of multiple interpretations regarding the defendants’ involvement in the distribution of the film”.

A slap added to the twist was the panel’s suggestion that Palnik could have satisfied the “reasonable particularity” requirement by alleging the mots’ magique upon “information and belief,” and as enabled to do so  to the extent possible under Rule 11(b). “Palnik had his chance …and did not take advantage of it.” This suggestion seems to urge overstatement, in place of notice pleading – all in pursuit of singular interpretation and reasonable particularity (which aren’t in the rules).

The decision, albeit unpublished, comes from a distinguished panel, which suggests where the requirements to plead personal jurisdiction may be heading. It too raises concern because the Palnik case involved whether distributors of a film containing infringing music “caused it to be distributed to Ohio through a national or regional distribution contract,” and the reasonable particularity requirement came in a case involving internet commerce. These modes of distribution are likely to arise in most all cases, which today infrequently involve locally-based authorized distributors of products. These new layers of requirements come out, just when you’d been practicing long enough to think you were starting to understand that personal jurisdiction material presented in your first year of law school.

CAFC Could Be Cited As Authority In Rocket Clemens Defense.

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.