Category Archives: Patents – Federal Circuit

Was this award of counsel fees “exceptional” or less.

The premise of prosecution history estoppel has strength in claim interpretation, but is a weak reason for assessing “exceptional case” attorneys fees.  The Judge awarded attorney’s fees to the accused infringer in iLor v. Google, 5:07CV109 (E.D. Ky. 10/15/2009), based on a remark in the prosecution history and promotional comments on the patentee’s commercial webpage.  The Court did not consider litigation misconduct, or continuation of the case past certain rulings.  The award of attorneys fees, to an accused infringer, is exceptional for being based almost solely on file wrapper estoppel.

The ruling gives passing mention of the “clear and convincing” standard for exceptional case determinations.  The actual analysis, however, suggests that the court disagreed with the plaintiff’s claims construction, and on that same basis, found the case exceptional.  Imposing a disclaimer as an aspect of claim construction is one matter, but since the CAFC reverses nearly half of the Markman rulings, it is quite a different matter to equate disagreement over disclaimer and its scope with clear and convincing evidence of “exceptional,” bad faith pleading.  “If this court had reversed the district court’s construction of the portable computer limitation, CDSC might have been able to prevail …[and so], the district court did not clearly err in refusing to find the case exceptional.” Computer Docking, 519 F.3d 1366, 1380.

In the file wrapper, the plaintiff/patentee iLor has argued that a reference had five differences from the claimed combination.  One of those argued distinctions was ruled contrary to iLor’s infringement theory, and caselaw does support disclaimer as to the one.  The “applicants distinguished their invention from the prior art in multiple ways. Nonetheless a disavowal, if clear and unambiguous, can lie in a single distinction among many.”  Computer Docking, 519 F.3d at 1377.   In the latter part of the prosecution, other claims were added, including the claim allegedly infringed.  The disclaimer was extended to the later-added claim, because of (what sounded like a boilerplate) remark that the newly added claims ‘were allowable for the same reasons’ as earlier-examined claims.

The element of "subjective" bad faith was said to be proven by the patentee promoting its product on its website, specifically noting the point of novelty, which was the crux of the non-infringement ruling.  But quare: commercial speech about one's product is irrelevant to claims construction - you can't ask Mr. Markman what his patent covered.  Also, iLor's patent claimed various embodiments, some or none of which may have been what its website was promoting.

Exceptional is supposed to connote something substantially greater than failing to prevail on an aggressive or expansive reading of one's claims. You can’t fault Google for seeking recovery of fees, but that doesn’t mean the Judge is correct in awarding them.

Headless Calvaryman Unseated by Iqbal.

In the old days – what, like five years ago –  an infringement defendant sued by a competitor was likely to counterclaim based on patents possibly applicable to both parties’ product lines.  Such counterclaims served a zero-sum strategy, and often was a gambit toward settlement by cross-licensing.  The practice persists, but is of no use when defending against patent holding companies that have no product lines.

Saddling a competitor’s suit with a routine counterclaim for infringement now may require a change of riders.  Like the rider encountered by Ichabod Crane, an infringement counterclaim may be deemed a ‘headless’ soldier when it chases down Iqbal.  A “formulaic” counterclaim for infringement, devoid of factual underpinning, can cause heads to roll.

In Elan Micro. v. Apple, 5:09-CV-1531 (N.D. Cal. 9/14/09), some counterclaims were dismissed, with leave to amend, because there was “nothing more than a bare assertion” of patent infringement.  The counterclaims identified the patents, and alleged “upon information and belief,” infringement by Elan’s “touch sensitive input devices or touchpads, including but not limited to the Smart-Pad.”  This pruning exercise, especially is surprising in the N.D. Calif., because of its rules requiring initial disclosure of infringement contentions.  The counterclaims might have pleaded with more detail, but Apple would soon have had to present a claim chart.  Just having another round of pleading amendments was what the Iqbal justices would want, but getting on with the case is too a worthwhile judicial act.

The recency and frequency of decisions dismissing claims based on Twombly and Iqbal may be all the rage, but those perhaps are false efficiencies.  My procedure professor explained that in a perfect justice system, a dispute ensues, full disclosure is made, and a judicial officer decides promptly a just result – all at once.  But not so in a reality-TV universe.  A a formbook pleading is followed by incomplete disclosures, which provokes supplemental discovery and extended deadlines, then late-made amended pleadings plus revisions to initial contentions, and when the case gets its semiannual one-hour perusal by a judicial officer, the result is a partial Rule 12 dismissal with leave to amend, and maybe an extension to the CMO dates.  Does that help move the case to just and efficient conclusion, or is that about as effective as throwing a pumpkin across a bridge?
Note too that
the Elan decision departs from the belief that use of the FRCP Form 18 complaint to plead infringement will suffice.  Further, it rejects the argument that Rule 11(b)(3) enables a party to obtain discovery about matters pleaded in good faith “upon information and belief.”

If enough air is released, everyone held aloft by the joint defense balloon may need to have packed their own parachute.

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.

About my lapsed patent, unpaid maintenance fees and the contours of your breaches, ‘See you in Court’ – somewhere.

A Michigan legal malpractice suit against patent attorneys, alleged a lapse due to unpaid maintenance fees, having to settle patent litigation on unfavorable terms, as well as “sundry other breaches … the precise contours of which breaches are not altogether clear from the Complaint.” The alleged nonfeasance regarded patenting an improved “lacrosse stick head.” Suit began in state court, but then the patent attorney defendants persuaded the plaintiff to re-file in federal court, based on two Federal Circuit rulings that found federal jurisdiction over two legal malpractice cases pleaded under Texas law.

So, in Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C., 2009 WL 1975383 (E.D.Mich. July 10, 2009), the adversaries were of one mind about federal court jurisdiction over malpractice claims arising from patent practice, but the district court felt obligated to self-check its power to act.

It did not check out, and the court found “unpersuasive” the arguments that there was any “substantial question of federal patent law.” At the crux, was whether proving damages proximately caused by legal malpractice required proving the underlying patent dispute as a “necessary element.” In answer to that inquiry, it was held that alleged malpractice did not require that the court “engage in claim construction, evaluate the viability of underlying patent litigation, or determine if others are infringing the patent in question.” The case was dismissed and sent back to state court, which plaintiff hopes will agree that it has jurisdiction. Guess that answers where the parties will have to go to deal with the “precise contours” of their “breaches.”

Thou Shalt Not Convey Away Just Before Reckoning Day.

When an owner/patentee feels the ship listing, then the IP often gets assigned, reclaimed, conveyed, etc. No specific or legal remedy can prevent this, but typically pleaded is an action for imposition of a constructive trust, as in The Compak Companies v. Johnson, 03-cv-7427 (N.D. Ill. June 1, 2009). Even if it is an available remedy, there still is a shell game to play, hoping to impose the equitable trust on the correct transferee. After 20+ pages of analysis, the court held that it would “decline the parties’ invitation to declare who owns” the patents.
After passing several opporutnities to find ‘meaning’ in recent cases about patents for subatomic combinations of matter, I took to blawing about insolvency of IP-only-asset companies as in this Compak case.  It deals with “Communion Packaging,” and the patents claim containers for “wine and communion wafers.”  Holy gobbledegook, Antony!  But here, an intervening bankruptcy (not a moral one) affected the title to the patents for the holy vessels. 

The case and claimed subject matter altogether provoked surmise about what sort of advertising or promotion was used for the patented containers. ‘We transport what you transubstantiate.’ A related curiosity was whether the ruling could be rendered without using any Latin; and, it could not: holding that a post-insolvency license was not void “ab initio.” Taking a quick look at USP #5,246,106, I was reminded of that travel cup my folks gave me for the long bus ride to summer camp – that, was unholy.
The ruling is a worthy read for those who counsel start-ups, where the patentee/owner either holds the IP personally or has licensed it to the start-up. The actions and uncertainties that can ensue when the start-up faces insolvency, and its only asset is the IP, make the case useful to consider.

In re Bilski – Could be Transformative

News that the Supreme Court will review In re Bilski is quick to set off currents of speculation.  In its un-reviewed form, Bilski was relief from the State Street hangover and was a work-around to the stunted state of reforming the Patent Act.  Now, one wonders how the Supremes can keep intact their string of smackdowns on CAFC rulings, when Bilski seems to have been a reaction to prior whippings.

$540 for Your Thoughts, Sir.

Rulings on counsel fee motions give some idea of what IP litigators charge, as well as how much courts are willing to award, for New York minutes.

Reduced fees were awarded in a ruling yesterday in a case over “patterns, fabrics and color schemes that are identical or virtually identical to the patterns, fabrics and color schemes featured in the copyrighted Anthropologie Garments.” The Magistrate noted first that the attorneys “charged discounted hourly rates ranging from $540.00 for a senior partner to $380.00 for a senior associate,” and that the party in opposition did “not quarrel with the hourly rates charged.” The disagreement was over the number of hours spent on some discovery disputes.

In one instance, the court cut the fee request for a “brief telephone scheduling conference,” deeming the “hours of time spent by three lawyers in preparing for and participating in the conference,” an approach that “seem[ed] like overkill from a billing perspective.” On a later topic, the court assayed certain motion practice to have required nothing more than “plain vanilla” responses {hear the cost cutter starting to turn}. The “hourly rates charged bespeak considerable experience and skill on the part of plaintiff’s counsel, which should yield efficiencies that are simply not very evident from the submitted time records [and], the use of six attorneys for what is (or should have been) a fairly straightforward motion to compel bespeaks a level of overstaffing that should not be rewarded.”

The whole business of seeking and justifying attorney fee awards may be no different that the general proposition of pleading for more than you think will be awarded, and so, getting more or less the amount that you expect to recover. Anthropologie, Inc. v. Forever 21, Inc., 2009 WL 1383605 (S.D.N.Y. 2009).

A Path that is Wide, but the Gate is Narrow.

How many roads must a patentee go down, before he can see the sky?  The patentee wishes to invest in plowshares, but those infringers divert some of the budget to swords.  Then, at the reckoning, what is gained.

Passages from two recent decisions that deny post-judgment recoupment remind us that when the fire burns out, there may be nothing to carry away.

In Star Navigation Systems Group, Ltd. v. Aeromechanical Services Ltd., 2009 WL 1313208 (N.D.Cal. 2009), the accused infringer’s motion was denied after the plaintiff-patentee voluntarily dismissed the case.  A “press release issued after Star voluntarily dismissed [explaining] that Star dismissed the action after concluding any award of damages it might obtain would be outweighed by the costs it would incur in prosecuting the matter” did not prove that Star had prosecuted the suit in bad faith.

Also denied was a post-judgment motion for attorneys fees, after a jury ruling, a JMOL, and a CAFC reversal, in Sundance, Inc. v. De Monte Fabricating, Ltd., 2009 WL 1324901 (E.D.Mich. 2009).  The Hon. Avern Cohn, who has seen a lot in 30 years on the federal bench, noted all of the hoops that the patentee had hurdled, before the CAFC ruled de novo and declared invalidity ab initio.  “The ′109 patent was not only duly granted; it was thrice examined. That the Court and three (3) patent examiners got it wrong in the view of the Federal Circuit does not make this an exceptional case.”

A variety of reasons suggest why the Patent Act needs to be reformed, but the gauntlet that the CAFC requires be run before a final decision can be reached, is a good one.

Still Trying to Make the Grade.

As the mid-point of 2009 approaches, I hope to get re-grounded in that somewhat worthwhile pursuit of blawging.  As the year began, I had the pleasure of being the guest blawgger on techlawforum.net.  Doesn’t look like anyone picked up that gig after I left it.  Next, I served at the pleasure of my alma mater as an adjunct professor of IP law.  That too was a most worthwhile pursuit, but I should wait until I turn in my grades before calling it a wrap.

What then?  Sure, I’ll get back to posting about the latest cases, even though it’s my sneaking suspicion that the CAFC judges are not taking heed of my insights.

The patent landscape seems to be going from greened-up to a whiter shade of desolation.  Without the Patent Act being revised, decisions and protections will hinge on the ‘yet to be set contours’ of the Festo, KSR, and Bilski rulings.  Having a branch of government, other than the legislative, exercising the power to “promote the Progress of Science and the Useful Arts by securing” IP rights to America’s “Authors and Inventors,” is not what the framers had planned.

It just what we blawgers do. 

When ‘Fudging’ Conduct is Inequitable.

Many proposals for patent reform legislation suggest changes to the inequitable conduct defense. One recurring proposal is to require that the defense spring from information material enough to get the a patent rejected or granted.  Just checking the wrong box on a form, even intentionally, would not be material enough.  Withholding or mischaracterizing prior art, or information about a statutory bar, would be enough for a patent to be declared unenforceable. Those notions of patent reform, though, remain simply notions.

Malfeasance, which may be immaterial to a patent having being granted, is now enough to render it unenforceable.  Perhaps Applied Materials v Multimetrixs (N.D. Cal. 7/22/2008) is such a case or controversy. After an inventor signs a declaration, the PTO rules require no further signature by that inventor (provided he signed a power of attorney).  The Multimetrixs’ inventors did not sign a power, at the outset, and so, they continued to sign filings.  After notice of allowance, the application went abandoned.  Before allowance, one of the named inventors had died.  His signature on his inventors’ declaration was original, but then, was forged on filings made posthumously.  An attorney was hired, and he dealt with the abandonment issue. In the later suit, Applied alleged its engineers, not Multimetrixs, were the true inventors. Applied sought a correction of inventorship, and Multimetrixs counterclaimed for infringement.  The judge declared Multimetrixs’ patent unenforceable, but made no declaration about inventorship.

In the garden-variety case, the applicant withholds prior art or a prior sale, or makes arguments favoring patentability that were contrary to the truth or to other known information.  In this case, the Judge stated that the applicant’s “misrepresentations did not relate to patentability,” and that it was “irrelevant that [the late] David Marguiles’ signature may nor have been required” on the later-filed prosecution.  Seems like a good case for discussion of meaningful patent reform.

The decision lacks the step of “balancing” the materiality and the intent.  The forgery plainly was intentional, but there was not much in the materiality bucket to balance that.  In place of that analytical step, the Judge hits hard on the lack of credibility of the applicants-cum-forgers.  The opinion even recites the ‘other bad acts’ evidence abpout one of the named inventor’s conviction for “selling freon for meth[] and for money laundering,” and added for emphasis, that it was for “selling four times the amount of freon necessary to satisfy the meth[] needs of the entire California Bay Area for a year.”  That’s plainly pertinent to credibility, but the fact of forging the dead inventor’s signature was never really in doubt.  What was missing was materiality, not more evidence of intent.  The applicant’s conduct cannot be condoned, but either the patent is valid, and the inventorship is correct, or it is invalid or derives from a false claim of inventorship.  That what is material, not how much freon the applicant sold. 

Note: the author had a past, attorney-client relation with Applied, but has no knowledge of any aspect of this lawsuit other than what is set out in the recent court opinion.