New ABA Opinion of Particular Interest

A lawyer may be adverse to a former client, but not in the same matter in which she represented the client, or in one which is “substantially related” to the representation of the former client.  Generally, this requires determining whether it is reasonably likely that in the representation, the lawyer likely learned confidential information that likely can be used against the former client now.

One part of that analysis can require determining what information “counts.”  This varies by jurisdiction: some, for example, do not include information known to the new client, or “playbook” information (e.g., how a client approaches IPRs), and so on.  And, some do not count information if it has become “generally known.”

In the context of prosecution, for example, does the fact that an application has published mean it is “generally known” and so no longer counts?

The ABA just released an opinion on this point, ABA Formal Eth. Op. 479 (Dec. 15, 2017), here.   The abstract explains:

The “generally known” exception to the duty of former – client confidentiality is limited. It applies (1) only to the use, and not the disclosure or revelation, of former – client information; and (2) only if the information has become (a) widely recognized by members of the public in the relevant geographic area; or (b) widely recognized in the former client’s industry, profession, or trade. Information is not “generally known” simply because it has been discussed in open court, or is available in court records, in libraries, or in other public repositories of information.


Need 3 hours of Ethics CLE? (Self-promotion warning).

I do a lot of speaking on ethics, mostly on ethical issues in patent prosecution and litigation.  I’ve worked with for decades now (they were I think the first on-line provider), and I put together what I think is a cool presentation on the impact of technology on practice.  You can take it here.  (California, Texas, and perhaps other states are pre-aproved but read the fine print.)

Their ad is below…  (My article about how innovation affects patenting is coming out soon, they say, all 294 footnotes of it.)

** available on demand any time of day and in time increments convenient to you ** is pleased to present a special online legal ethics program in which Professor David Hricikaddresses the myriad of practical ways that technology creates ethical issues for practicing lawyers. Professor Hricik discusses both the potential major trends — artificial intelligence changing daily legal practice, and technological developments like driverless cars potentially reducing car accidents which could affect entire practice areas — as well as the more immediate concerns. The latter includes the risks of communicating with clients while they are at work, inadvertent transmission of email, metadata (“hidden” confidential information in things like Word documents), cloud storage, and dealing with negative on-line reviews. This presentation mixes humor, fear, and practical tips to give 3 solid hours of Legal Ethics that matter and are immediately relevant to your law practice. The course features streaming video and audio (as well as downloadable MP3 audio) presentations.

Some of the subjects for this course include:

  • Exponential Change and Impact
  • A Future Full of Legal Disruption?
  • What Will Ethically, Successful Lawyering Require?
  • Hackers, Passwords, and Lawful v. Unlawful Interception
  • Invisible Confidential Information: “Metadata” and Related Issues
  • Confidentiality: How Many Vulnerabilities?
  • Due Diligence and Cloud Storage
  • Responding to Unhappy Clients
  • Litigation-Specific Technology Ethics
  • Evidence Everywhere … Wearable Devices
  • Social Media: Practical Tips and Pitfalls
  • The Law You Really Must be Prepared for Will Happen Before It’s Written About

*** Course Link ***

The speaker for this course is Professor David Hricik, of Mercer University School of Law in Macon, Georgia. Professor Hricik was elected to the American Law Institute in 2016. He has authored the only treatise on ethical issues in patent litigation, and co-authored the only treatise on ethical issues in patent prosecution. In addition to serving leadership positions on ethics committees with the AIPLA and ABA and serving as an expert witness, he has written dozens of articles and given well over 100 presentations on issues at the intersection of ethics and patents. His articles and testimony have been adopted by both state and federal courts.
This course is approved for credit by the MCLE Committees of the STATE BAR OF TEXAS and the STATE BAR OF CALIFORNIA (MCLE Provider #8648). These are not self-study credits, but rather ‘participatory’ credits as you would receive for attending a traditional, live CLE seminar.

In addition, regular CLE credits for this seminar may also be available in a number of other states through CLE Reciprocity, such as FLORIDA, or as an “Approved Jurisdiction”, such as TENNESSEE.  Please check with the Tennessee State Bar for accreditation information.

Technology and Ethics: Lex Machina

So, I signed up for training on Lex Machina for its public interest use. I was thrilled  They set up a conference call to train me and a bunch of other people. Free access for research purposes, but you have to go through the training (it looked pretty simple).

Someone signed on, but is (literally now) having a call with, I think a client, broadcasting this conversation on the training session.  Not only that, they had the training call muted, so this person couldn’t hear the poor trainer trying to get his attention to stop broadcasting confidential information.  She cancelled the call as a result, perhaps saving this fool from a disciplinary violation.

Just thought I’d share a reminder that we all should recall from Donald Trump and open mics.


Interesting Legal Malpractice Claim Based on Failure to Assert Exceptional Case

The facts of the case are sparsely set out in the appellate court decision in Smith, Gambrell & Russell, LLP v. Telecomm. Sys., Inc., 63 N.Y.S.2d 384 (N.Y. Sup. Ct. App. Div. Nov. 14, 2017), but are set out in more detail in the trial court’s decision, here.

Apparently, the firm represented the patentee, and won at trial.  It did not argue fees should be shifted under 285 (after Octane), but instead filed a motion for sanctions arguing inherent power. (That, of course, is a much more difficult hurdle than 285.)

The firm sued for fees owed, and the patentee counterclaimed, asserting the firm had missed the deadline for filing the motion, which is the later of 14 days after judgment is entered or post-judgment motions are resolved.  The evidence showed, however, that the motion had been filed within the latter time limit, but it was never ruled on (the underlying patent case settled).  Accordingly, the counterclaim for malpractice was dismissed.

The appellate court affirmed but also addressed an alternative argument made for the first time on appeal, which was that instead of filing for sanctions, the lawyers should have relied on 285 and Octane.  The appellate court stated that choosing inherent power over 285 was a judgment call, and so was not actionable, and also stated that the complaint failed to allege facts that showed the case was exceptional. (You would think those would be in the motion for sanctions that was filed.)

Interesting case for a couple of reasons: (1) if you sue for fees you likely will face a counterclaim for malpractice (it’s not always but it is often); and (2) remember that because of Gunn v. Minton, malpractice cases based upon mishandled patent litigation or prosecution will be decided by state courts. I’ve testified in state courts on patent matters and it is a different world out there.

USPTO Adopts Rule Adopting Patent Agent-Client Privilege

The adoption of the final rule, which relates to admissibility in post-grant proceedings, is here, and the substance is:

§ 42.57 Privilege for patent practitioners.

(a) Privileged communications. A communication between a client and a USPTO patent practitioner or a foreign jurisdiction patent practitioner that is reasonably necessary and incident to the scope of the practitioner’s authority shall receive the same protections of privilege under Federal law as if that communication were between a client and an attorney authorized to practice in the United States, including all limitations and exceptions.

(b) Definitions. The term ‘‘USPTO patent practitioner’’ means a person who has fulfilled the requirements to practice patent matters before the United States Patent and Trademark Office under § 11.7 of this chapter. ‘‘Foreign jurisdiction patent practitioner’’ means a person who is authorized to provide legal advice on patent matters in a foreign jurisdiction, provided that the jurisdiction establishes professional qualifications and the practitioner satisfies them. For foreign jurisdiction practitioners, this rule applies regardless of whether that jurisdiction provides privilege or an equivalent under its laws.

(c) Scope of coverage. USPTO patent practitioners and foreign jurisdiction patent practitioners shall receive the same treatment as attorneys on all issues affecting privilege or waiver, such as communications with employees or assistants of the practitioner and communications between multiple practitioners.

In-House Lawyer Fired for Complaining that Application Filing Quota Caused Ethics Violation Able to Sue

The Third Circuit reversed the grant of the dismissal of a lawsuit by in-house counsel who sued because, he alleged, he was forced to choose between complying with an application filing quota or complying with his ethical obligations to the USPTO.  The case, Trzaska v. L’Oreal USA, INc., (3rd Cir. July 25, 2017), is here.

The claim was based upon New Jersey’s whistle blower statute, the New Jersey Conscientious Employee Protection Act (“CEPA”), N.J. Stat. Ann. § 34:19-1 et seq.  The complaint alleged that complying with the quota meant filing “frivolous” patent applications.  In a two-one panel decision, the Third Circuit held the complaint stated a claim.

Judge Finds McKool Smith Violated Prosecution Bar

This one is fun for me, since I teach civil procedure, patents, and ethics, and have written about prosecution bars way too much.

Prosecution bars are used when a court concludes that, although the usual rule is that lawyers will abide by provisions in a protective order that say “don’t use information disclosed in this suit for any other purpose,” there’s a risk that a lawyer will, perhaps even inadvertently, misuse the opposing party’s information disclosed in discovery because of work the lawyer does for his client.  Here, in a case Eolas (represented by McKool) filed for its client against Amazon (and others), it seems that as part of the protective order, McKool agreed that its lawyers were in such a position — they were prosecuting patents for Eolas in similar technologies, presumably, to what was involved in the suit — and so the protective order provided that no McKool lawyer who received certain categories of confidential information from Amazon would prosecute patents for Eolas in those fields, for a time.

And there is the issue: how long? The protective order stated (in part — I’d want to see the entire thing to really understand this), that the bar expired “one (1) year following the entry of a final non-appealable judgment…”

Eolas lost at trial, and the Federal Circuit affirmed and entered judgment on July 22, 2013.

If the one year date runs from there — which I so far think it does — then it expired on July 22, 2014.  And it was only after that date that McKool lawyers allegedly violated the prosecution bar.

However, Eolas could have petitioned for cert for the 90 days after July 22, 2013. If you use the expiration of those 90 days as the date for “entry” of the final judgment, then the “entry of a final non-appellable final judgment” occurred in October, and one -year later puts you in October, 2014.  Eolas didn’t seek cert, however. (I don’t think that matters, but I’ll come back to that.)

And of course, it was after July and before October 2014 that McKool allegedly started the work that violated the protective order. When Amazon saw a patent issue which, it seems, resulted from McKools’ pre-October 2014 work, Amazon moved for sanctions, asserting (among other things) that the patent should be unenforceable.

The judge ruled that entry of final judgment occurred in October 2013 and so there was a violation.  McKool has filed a motion to reconsider.

I honestly don’t think this is a close case: the judge got it wrong.  First, it says “entry.” That occurred in July.  It says “non-appealable”  A judgment from a circuit court, including the CAFC, isn’t appealable to any court: you can file a petition for cert, but that’s not an appeal. Finally, it could have said (and some protective orders do) “until everything at the Supreme Court is over and done,” but it seemingly didn’t do that.  I also have grave doubts that under Aptix and other cases from the Federal Circuit that Amazon’s request that the patent be held unenforceable as a result of litigation misconduct will fail, but, again, I think we never get there.

So, what’s this mean for your practice?

First off, suppose there isn’t an appeal in a district court case.  You go to trial, you get judgment on July 22, 2013, and nothing happens.  On July 22, 2014, can you start work?  Well, there’s 30 days after entry of final judgment that the other side could appeal, so don’t you have to wait until August 22, 2014 (or 21, whichever)?

If there is an appeal to the CAFC, do you need to add 90 days to the date of entry of judgment even though they don’t apply for cert, and even if it doesn’t say “and we’re done at the supreme court?”

I think this one is clear.  Do you?

Another Client Loses Privilege Because Employer Policies Allowed Monitoring

I’ve written about this a few times but, sadly, no one listens to me!

Here’s the fact pattern:  your client is emailing you from their work email account, or your client is using a computer that its employer owns.  (Your client is not the employer, but an individual.)  Whether your client is in litigation with its employer — or someone else! — if the employer has policies in place and in use that allow it to monitor employee email or the computer itself, there likely is no reasonable expectation of privacy in those emails or in the files on the computer and, if so, no privilege.

Another case, this one from New York and involving an employer’s laptop and a suit with the company, applied the leading test to determine whether the employee knew that monitoring was allowed, and in fact occurred, and found the employee– former general counsel —  could not withhold more than 106 files that he had created after he had been fired by the company on its laptop.  Miller v. Zara USA, Inc., (N.Y. App. Div. June 6, 2017).  The appellate court remanded the case to the trial court to determine if any of the documents were, although not privileged, nonetheless protected by work product.

Realize this: even if the dispute is between your client and some third party, that third party can also rely on the lack of a reasonable expectation of confidentiality and show there is no privilege.  And, finally, if you draft these policies, your client’s employees may not realize that this isn’t just “gee my employer can review my emails if I get in a fight with it,” it’s “if you get in a fight with anyone, you’re not going to have privilege.”  I bet your clients would like it if you made that really clear, since that’s not intuitive.

New York City Bar Cautions Lawyers to Use Care if U.S. Customs Asks to Review Electronically-Stored Information

New York City Bar Opinion 2017-5 (July 2017), here, provides some interesting information about the care lawyers must take before allowing a lawful search of an attorneys’ smartphone, laptop, or the like.  The opinion is obviously important given the international nature of intellectual property practice and the growing frequency (still small, though) with which Customs officials ask for passwords that could reveal client confidences.

The opinion states in part that lawyers should consider whether they should not carry electronic devices that could permit disclosure to sensitive client information when traveling abroad, and, if asked upon return to provide access to the device, the opinion states:

At the border, if government agents seek to search the attorney’s electronic device pursuant to a claim of lawful authority, and the device contains clients’ confidential information, the attorney may not comply unless “reasonably necessary” under Rule 1.6(b)(6), which permits disclosure of clients’ confidential information to comply with “law or court order.”  Under the Rule, the attorney first must take reasonable measures to prevent disclosure of confidential information, which would include informing the border agent that the device or files in question contain privileged or confidential materials, requesting that such materials not be searched or copied, asking to speak to a superior officer and making any other lawful requests to protect the confidential information from disclosure. To demonstrate that the device contains attorney-client materials, the attorney should carry proof of bar membership, such as an attorney ID card, when crossing a U.S. border.

Finally, if the attorney discloses clients’ confidential information to a third party during a border search, the attorney must inform affected clients about such disclosures pursuant to Rule 1.4.

I’ve never been asked to provide a password, or to handover an electronic device, but the opinion provides some useful reminders of precautions that may be necessary in today’s world.

Machine Aided Patent Drafting: A Second Look

Back in June, I wrote about a service that augments patent drafting by allowing a practitioner to submit claims, and receive back the rest of a draft specification.  That post is here.  I pointed out then that the terms of service revealed that the business, Specifio, had seemingly thought through a lot of the ethical issues that I could see.

A month later, I posted here about how faster speed-to-market, and shorter product life cycles, mean that for a greater number of products, patents make less sense: having a right to exclude spring into existence after the product has come and gone isn’t very valuable.  Of course, there are other reasons to have patents, and a patent may still be useful even if technology has marched on, to prevent others from following that lead.  But, using Track 1 and other means to speed up issuance may be needed more often. (I have an article coming out soon with a billion footnotes, and I’ll let you know about it.)

Since then, I’ve been researching the ethical issues arising from artificial intelligence, machine learning, and related developments.  These things are here, now.  Early adopters obviously have to be careful, but late adopters may be left in the dust.

In light of all of the above, if you take into account the increasing need for speedier issuance (and the need to file first under the AIA), the need for speedier drafting is obvious.  The capacity of AI to satisfy that need is here, and its role will increase. (I’ve read about memo drafting services that area already in operation, for example. That’s coming on fast, too.)

In light of all of this, I had a conversation with one of Specifio’s founders and was given the opportunity to see how it worked. (They offer a free trial, too.)  So, I took a claim from a published application and submitted it by email to their system. The actual patent application is here, and the first draft back from Specifio is here.

Take a look.  And I missed the fact that the draft spec did include drawings, here.

As for me, I was surprised and impressed.  Now remember, the draft spec was drafted by automation entirely off of the single claim I submitted — nothing else — and that process took about 5 minutes of my time (less if I had formatted the claim the way it told me to.)

5 minutes of lawyer time for a first draft.

Second, obviously the specs are different.  One key reason is that I only submitted Claim 1, so there’s obviously more in the actual spec than the one from Specifio.    I would hope that the initial draft of the actual patent was also significantly different from what you see in the filed version. I also know that no one would take a draft spec from a young lawyer and file it.  But take a look.  (The fact that a computer would draft differently is an interesting thing, and I’ll return to that below.)

Second, on top of the speed discussed above, automation like this has the potential to free practitioners from the time of preparing at least the initial draft of the spec.  (The boring part.)  This has obvious benefits to lawyers and clients: fees can be reduced, time can be better leveraged, and lawyers can do more interesting work.  In that regard, Specifio’s lawyers use the system to draft its own specs.  They report that rather than taking 15 to 20 hours to write a case, so two full days of attorney time, a lawyer can draft five cases in a day.

Think about that for a minute.

There are some other things.  The system will obviously write specs the way it “likes” to.  It will have its own approach.  That is good, and bad. Things will need to be “fixed,” no doubt.  Substantive errors will need to be spotted.  And, idiosyncratic things — suppose you don’t like “wherein” but like “in which” — will need to be changed, too.  But the consistency will allow lawyers to create macros to quickly deal with such things.

I’m curious what you all think.

Inequitable Conduct and Regeneron Pharmaceuticals, Inc. v. Merus N.V.: Trouble Waiting to Happen

Dennis wrote up the facts of this case on the main page, here.  Boiled down, a district court held a bench trial and held that people substantively involved in prosecution of the ‘018 Patent knew of but-for material references, which were not disclosed.  Although the district court had intended to hold a separate trial on intent to deceive, instead it held that the patentee’s discovery abuses (and other apparent misconduct) warranted an adverse inference of intent to deceive.  The discovery abuses were related to the inequitable conduct issue.  Accordingly, it held the patent unenforceable for inequitable conduct.

The panel split (Judge Newman dissenting), but affirmed 2-1, holding that the withheld art was in fact but-for material and that the district court had not abused its discretion by, under regional circuit law, imposing an adverse inference (more on that, the key and troublesome issue, below).

Before getting into the repercussions too much, one thing jumped out at me:  a few days before receiving a notice of allowance for the ‘018 Patent, a third-party submitted the later-withheld references in the parent application of the ‘018 Patent.  Rather than submit those references to the examiner (either by way of an RCE or otherwise), the patentee let the ‘018 Patent go to allowance, but then submitted those references in related applications that remained pending.  That fact jumped out at me because this is a recurring problem — learning of art at the last minute. I know there are ways to at least submit the art, but it won’t be considered (not sure if that procedure was available when the ‘018 was prosecuted).  Anyhow, the fact that the art was later disclosed in related cases obviously makes it harder to argue it was cumulative of art in the ‘018 prosecution, but also obviously, not disclosing the art later, in the other cases, would have created its own difficulties.

Let’s be clear what was decided:  the panel majority held that the district court had not abused its discretion under regional circuit law by imposing an adverse inference of specific intent to deceive because of litigation misconduct during efforts to enforce the ‘018 patent.  That inference is what allowed the district court to hold the ‘018 Patent unenforceable.

This case creates some complexities and lessons for trial counsel.

First off, according to the panel-majority, mere negligence by litigation counsel is enough to justify an adverse inference under the law of this regional circuit.  Here, much of the discovery fight seems to have been over the scope of what is the “same subject” when privilege has been waived by disclosure of some documents on a subject.  Determining the breadth of waiver — what is the “same subject — is not always a simple issue, and reasonable people can disagree about scope of waiver. From the panel-majority’s opinion, the patentee’s positions did not seem tenable, but the lesson for trial counsel is to be very careful because aggressively arguing for narrow scope can be found to be “negligent” and that can result in loss of a patent right.

Second, it seems to me odd that the Federal Circuit would rely on regional circuit law where, as here, the adverse inference goes to an issue of patent law — intent to deceive under Therasense, which interprets “unenforceability” as a defense listed specifically in the Patent Act.

Third, and related to that, an adverse inference instruction where the issue is intent to deceive is, effectively, even more draconian than terminating sanctions (e.g., striking a complaint or an answer).  The impact of the adverse inference here went far beyond making one party the winner in a specific case: it took away a presumptively valid property right, and, of course, will result potentially at least in fee-shifting under Section 285.

Finally, two broader points.

First, the approach of the panel-majority of relying upon an inference is going to lead to satellite litigation and erosion of Therasense.  Why bother trying to show clear and convincing evidence that the single most reasonable inference is is deceptive intent when you can try the trial lawyers?

Second, when the OED becomes aware of a judicial finding of inequitable conduct by an practitioner, it investigates.  I’m not sure the OED would here — where the adverse inference instruction is what led to the holding of inequitable conduct — but if the OED does do so, will prosecution counsel have a claim against litigation counsel for “negligently” litigating so that this inference arose?  What about the patentee suing the litigators?

Don’t misunderstand me:  I have no idea if the lawyers “deserved” this adverse inference instruction.  The panel-majority’s conclusion that the district court did not abuse its discretion is not a holding that they did deserve it.  But this one, well, she’s a doozy.

Exergen, Therasense, and the Amended Rules of Civil Procedure

I teach civil procedure, patent law, and ethics, and so this opinion granting a motion to modify a scheduling order, and to allow an amended pleading, to plead inequitable conduct jumped out at me because someone successfully navigated the pleading issues created by a combination of case law and the amended rules limiting discovery to claims or defenses plead.

The problem that lawyers face is this:  the combination of Exergen and Therasense require (generally) pleading that a person substantively involved in prosecution knew of but-for material information, knew the information was material, but withheld it with an intent to deceive (or engaged in “affirmative egregious misconduct) and — according to Exergen (which I think was wrongly decided, in an article I wrote before it was decided, and available here) — do so under the rigorous pleading standards of Rule 9(b).  Before pleading fraud with particularity, the lawyer of course has to have a Rule 11 basis to make the allegations.

Therein comes the limitation on discovery in the 2015 amendments to the rules of civil procedure:  even with good cause, there can be no discovery into issues that are not relevant to a claim or defense.  So, how do you get discovery needed to plead inequitable conduct when you can’t plead it without discovery (usually)?

I know some courts have dealt with this problem by local rule or order, allowing discovery into knowledge of prior art, for example, even when it ordinarily isn’t relevant to validity that an inventor knew, or didn’t know, of particularly prior art (derivation being an obvious exception).  Even, however, if you can get the discovery, you then face the problem that, ordinarily, the cut-off to amend pleadings in most scheduling orders occurs long before fact discovery closes.

So, now you know why I found this case, Marical Inc. v. Cooke Aquaculture Inc. (D. Maine, July 31 2017) interesting.  On the last day of fact discovery, the accused infringer took the 30(b)(6) deposition of the inventor, who testified (basically) that he knew information that was but-for material but wasn’t disclosed to the USPTO during prosecution.  The patentee opposed the motion to amend the accused infringer’s pleading to assert inequitable conduct, arguing (a) there was no good cause to modify the cut-off date for amending pleadings, long past and (b) even if there were, the amendment was futile because it could not meet the Exergen/Therasense standard.

The magistrate held there was good cause (it said that the accused infringes was justified in waiting to assert inequitable conduct until after it deposed the inventor), and that the amendment was not futile because it met the Exergen/Therasense standard.

There’s a lot here to think on. One is to make sure that, if you have a local rule or case management order, that you follow it to make sure you plead inequitable conduct timely.  Another is, if there is no such order or rule, to be diligent and to perhaps put the other side on notice, early and before depositions, that you’re going to seek information relating to inequitable conduct even though you haven’t pled it, because you can’t plead it until you have discovery.

With Speedier Time-to-Market and Shorter Product Life Cycles: Diligent Prosecution and Beyond

I just finished a long article that attempted to look at what the past changes in the law, combined with ever-increasing changes in technology, means about patents.  I didn’t try to add a whole lot to the literature about the cases — you know that almost every case the Supreme Court has decided this century has in some way negatively affected the strength of patents, making them harder to get (e.g., KSR, Nautilus), easier to invalidate (same and of course Alice, Myriad), and riskier to enforce (e.g., Octane Fitness).  I also didn’t try to add a whole lot to the literature on how IPRs (and CBMs) have likewise negatively affected the strength of patents.

What I did try to do was look at what is happening, ever increasingly, which is that in many areas of technology time-to-market has become shorter, and, likewise, product life cycles have become shorter.  We get new products more often, and so obviously they’re coming and going more quickly. In many instances, and in a growing number, the product can get to market long before a patent issues after the (average) 25 month pendency, and it may not be on the market long enough to recoup investment. There was some interesting analysis of those last two points.

Where we are increasingly at is a place where economics may not justify applying for a patent.  Not everywhere, but more often, practitioners will find themselves in that place.

I have no idea the degree to which that is the case now, or the extent to which it will become the case more in the future. It is no doubt patent and industry specific.  But if you combine the negative legal landscape with market realities, you see less need for patenting. The direction is clear; the degree, no idea.

Add to that mix the rise of 3D printing, and you can see that infringement will also be occurring in a diffused manner, by individual consumers, and in circumstances often hard to detect.  (CADster should be a great domain name; grab it now.)

Competent practitioners should consider several things.  One is to recognize that diligent prosecution is becoming more important for clients.  Another is that examining whether to discuss with clients the use of Track One, PPH, or the pilot program (or the program — forget its name — that allows for accelerated examination when there’s an older inventor named).

Another is an odd provision in Section 154(d) that allows recovery of damages accruing after a defendant knows of a published patent application, to the extent that it “infringed” those published claims. Mailing copies of published applications to those who may infringe upon issuance may be good practice in some areas.

Anyhow, I’m about to head on vacation for two weeks, and thought I’d leave you with some broader thoughts.

And… a court says “You could’ve done what TC Heartland’s Defendant did”

Following up to the post below, in iLife Technologies v. Nintendo (N.D. Tex. June 27, 2017), the court held a venue challenge waived, writing in part: the “intervening twenty- seven years may have created reliance on VE Holding by litigants, including Nintendo, but that does not change the harsh reality that a party could have ultimately succeeded in convincing the Supreme Court to reaffirm Fourco, just as the petitioner in TC Heartland did.”

Where we are, I think is: (a) if venue is “now” improper in a case, you better be moving on it, no matter what you did in the past as far as waiving, raising, or conceding it, and filing your motion as soon as possible; but (b) there’s going to be, I think, deference given to district court decisions on this when and if one gets to the Federal Circuit. (I vaguely recall mandamus is available if a district court transfers a case out of a circuit, and that line of review may apply here, so maybe we’ll get a review before a final judgment, or maybe a judge will certify a case for interlocutory review, or it’s appeasable under Cohen, though I doubt that.)  Finally, people ought to look at the cases where, after a few recent Supreme Court cases narrowing general personal jurisdiction, folks tried to make a similar argument — that the law had changed.

Raising Venue Post TC Heartland

There’s going to be a lot of litigation over whether a defendant who failed to object to venue pre-TC Heartland can raise it now.  In fact, why not a plaintiff?

One argument has succeeded, but I honestly wonder about its foundation.  The argument goes like this:  (a)  Rule 12 only operates to waive certain 12(b) “defenses,” including improper venue, only if the defense was “available” when the defendant filed its answer or filed its pre-answer motion (waiver also occurs if someone includes an objection to improper venue in its answer, but doesn’t raise it promptly in a post-answer motion); (b) because of VE Holdings, the objection to improper venue was not available; and so (c) there was no waiver and the objection is now available.  A recent district court Westech Aerosol Corp. v. 3M Co. (W.D. Wa. June 21, 2017) accepted this argument, allowed the objection to be raised.  It did, however, consider issues like prejudice and delay — which, ordinarily, aren’t issues in improper venue motions.

Well, okay maybe.  But if I were a judge, especially if the case had been pending a while, I’d say: “the defendant in TC Heartland raised the issue, so are saying you’re special, and it was ‘available’ only to that defendant?”  Put in legalese, there has been a non-frivolous basis for arguing that VE Holdings was wrongly decided since, well, the day that case was decided.

Granted, there is probably a spectrum here:  a defendant who included the objection to improper venue in its answer, but then did not move to dismiss, is no doubt in a better place than a defendant who did not include it at all (at least as far as atmospherics go), and plainly courts should consider the disruption and prejudice that these “now available” motions will raise.

Competent lawyers should think about whether to raise the defense (it may be a bad idea for a client, even if it is available), and how to defeat it.  Likewise, a plaintiff might consider a strategic motion, too!


Texas Supreme Court to Hear Arguments on Patent Agent Privilege

The Federal Circuit last year in In re Queen’s University held that its law controlled and there was a patent agent-client privilege. That brought some clarity, since there had been a split on even the existence of the privilege.

Enter Texas, where one of its court of appeals held that, because the claim in that case was not patent infringement, but a state law claim, Texas law applied, and under it, there was no patent agent privilege.  My earlier post about it is here.  That post also links to the amicus brief I filed, arguing a point not raised by the parties: that under Texas choice of law principles, Federal Circuit law applied and there was good reason to defer to its approach.

The Texas Supreme Court just announced that it will hold oral argument on the pending petition for mandamus relief.  My instincts tell me that this means the court is likely going to reverse, which would be a good thing because clarity will reduce costs.  No date is set, yet.

PTAB Grants Permission to File Motion to Disqualify Expert

The PTAB in Fujifilm Corp.  v. Sony Corp. (IPR 2017-01267 & 2017-01268) granted permission to the patentee to file a motion to disqualify an expert for the petitioner.   APJ Kokoski, after a teleconference, granted permission to file the motion.

Expert witnesses are not subject to the more familiar rules that govern loyalty and attorneys.  To disqualify an expert, the decision explained:

Disqualification of an expert is a drastic measure we hesitate to impose except when absolutely necessary. See LaCroix v. BIC Corp., 339 F. Supp. 2d 196, 199 (D. Mass 2004) (noting that “courts are generally reluctant to disqualify expert witnesses”). To resolve a motion to disqualify an expert, district courts generally apply a two-prong test to determine (1) whether it is objectively reasonable for the moving party to believe that it had a confidential relationship with the expert; and (2) whether the moving party disclosed confidential information to the expert that is relevant to the current proceeding. Id. at 199–200. A court is compelled to disqualify an expert only when the answers to both inquiries is affirmative. Wang Labs., Inc. v. Toshiba Corp., 762 F. Supp. 1246, 1248 (E.D. Va. 1991); see Agila Specialties Inc. v. Cephalon, Inc., Case IPR2015-00503, slip. op. at 4 (PTAB Aug. 19, 2015) (Paper 13).

It will be interesting to see if the patentee can meet this standard, but a takeaway is to monitor for conflicts (and to check to see, for example, if a prosecution bar in a prior case might prohibit conduct that the ‘common law’ of expert disqualification might not reach.

Issue Preclusion and Disqualification

As a general rule, unless the former client consent, a lawyer cannot represent a client in a matter that is materially adverse to a former client if it is the same matter he had represented the former client in, or if the adverse matter is “substantially related” to his prior work.  So, for example, ordinarily, if I represent Client A in a suit asserting the ‘123 Patent, I can’t later represent a defendant against whom Client A asserts the ‘123 Patent; that would be the “same” matter, and obviously representing a defendant against a plaintiff is materially adverse.

Figuring out what is “substantially related” to the ‘123 Patent, however, is a complicated problem.  The starting point obviously is the ‘123 Patent and what it discloses.  But how broad technologically speaking do we go?  Does it include patents issued off of continuations?  Probably.  Issued off of CIPs?  Maybe.  What about information I learned in litigation by reason of representing Client A that wasn’t really technologically related?  For example, what if I learned of its financial situation? While the vast majority of courts recognize that the fact that I might have learned how Client A litigated patent cases doesn’t “count” in this context, a few do.  So where do I draw the line(s)?

That uncertainty is underneath a decision from the divided Colorado Supreme Court, in a non-patent case but one worth noting because patents are often asserted serially, or concurrently, against multiple parties.  (There are several cases where Law Firm 1 represents a “Client A” against non-clients, while other firms assert the same patent for Client A against a client of Law Firm 1, which creates related issues.)

Because of the nature of patent litigation, whether a representation against a former client is ethical, or not, could come up more than once. Suppose it’s fully litigated the first time.  Does the fact that in the first motion to disqualify, a court holds there is no “substantial relationship” mean that, in a subsequent very similar later case, there also won’t be one?

In Villas of Highland Park Homeowners Ass’n. v. Villas at Highland Park, LLC, (Yolo. May 22, 2017), a law firm defeated a motion to disqualify brought by its former client.  It showed up again in another suit, very similar. The former client again moved to disqualify.  The trial court in the second case, at least in the 4-judge majority’s view, reasoned that because the first suit was not substantially related to the lawyer’s work for his former client, neither was the very similar second suit.

The majority held that the trial court abused its discretion and emphasized that determining whether there is a substantial relationship is fact-intensive.  Three judges dissented, and bemoaned the fact that this could lead to seriatim disqualification motions.

So, for patent lawyers, this case means to always carefully assess a potential representation.  Perhaps you avoided disqualification earlier: that doesn’t mean you are free and clear this time.

Tech Transfer Reports on AIA Drafting Flaw Affecting Thousands of Patents

No idea if this is correct, but figured it deserved a post.  The article asserts that if a provisional was filed in the name of the assignee (applicant), it cannot serve as the basis for a priority claim because the statute says only that a provisional filed by “an inventor” can serve that purpose.  Anyone have insight? Further, the article portrays this as affecting only universities, but one would think a broader impact more likely?