Massachusetts U.S. District Court William Young has been teaching evidence law for as long as I can recall, even as far back as his pre-federal court days, when he was on the Superior Court bench (Judge Young was appointed to the federal bench in 1985, and had been a Massachusetts Superior Court Judge from 1978 to 1985).
So it comes as a surprise to many when Judge Young admits he made an evidence-related error during a recent patent trial, and that as a result he will order a new trial.
The case is NewRiver, Inc. v. Newkirk Products, Inc.In brief, NewRiver’s patent claimed as an invention a computer-assisted method for manipulating securities information in the SEC EDGAR database to extract only certain information, such as mutual fund prospecti. After trial the jury held some claims to have been infringed, and others to be invalid as obvious. The issue that has attracted attention is contained in Judge Young’s decision addressing the usual tsunami of post-trial motions for judgment notwithstanding the verdict.
The problem arose in connection with NewKirk’s challenge to the validity of NewRiver’s patent. On this issue Newkirk’s expert testified as follows:
Q: Dr. Szymanski, please read claim 9.
This is the independent claim. It states: A system for providing access to mutual fund compliance information comprising: An obtainment subsystem for acquiring securities information from one or more database sources and for extracting compliance information from at least two documents each comprising compliance information for a particular mutual fund. And the second restriction reads: An accessing subsystem for providing access to extracted compliance information for at least two mutual funds offered to investors by different fund issuers of a computer communication link.
Q: Do you have an opinion as to the validity of that claim?
A: Yes, I do.
Q: And what is your opinion?
A: My opinion that it would be obvious for the person of ordinary skill in the art, this invention would be obvious to the person of ordinary skill in the art.
However, the expert gave no basis for this opinion – he didn’t reference the “prior art” that would support that opinion, and his testimony was “general and conclusory.”
Now the rub. The Federal Rules of Evidence permit an expert to state his or her conclusion, as the expert did in this example. Rule 704 and 705 state:
Rule 704… testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact.
Rule 705… The expert may testify in terms of opinion or inference and give reasons therefor without first testifying to the underlying facts or data, unless the court requires otherwise. The expert may in any event be required to disclose the underlying facts or data on cross-examination.
And, what’s worse, NewRiver didn’t object to this form of testimony. As a “teacher of evidence” (as Judge Young describes himself in the decision), that should be enough. However, in the context of a patent case, it was not. As Judge Young observed, “Federal Circuit case law renders legally inadequate the opinions of qualified experts on the ultimate issues of anticipation, obviousness, and doctrine of equivalents unless the bases therefor are spelled out on the record.”
Even worse (for defendant NewKirk), NewRiver’s failure to object to this “fatally flawed” testimony (or the “palpably wrong” jury charge premised on it) as the basis for an invalidity challenge (except post-verdict) wasn’t enough to constitute a waiver that would forgive this legal error.
Judge Young is a man of strongly held views, but when he makes a mistake no one is harder on him than he is on himself. Here is how is he resolved to correct this error:
In short, I botched the jury charge.
What of it? argues NewRiver. In the final analysis, obviousness is matter of law. . . . It is, therefore, rare for a trial judge to vacate a jury verdict on obviousness, having already implicitly ruled that the record is sufficient to support the ultimate finding.
Here, my mistake was more fundamental. I did consider the record sufficient to support the jury’s finding of obviousness. It never occurred to me that patent law trumped the Federal Rules of Evidence on the issue of obviousness. Now, recognizing my error, it is clear that the jury’s verdict cannot stand.
. . . Here, I failed to appreciate the applicable legal framework and thus sent the jury off on a wild goose chase. To disregard their work now and decree a contrary result is to give substance to a good-natured rebuke I once received from a friend, a distinguished British jurist. “You Americans are hypocrites,” he told me. “You praise the jury and do everything you can to keep it from getting in the way.” Not in this Court.
. . .
Upon this botched and murky record, the Court’s duty is clear. . . there must be a new trial before a properly charged jury on the issue of the obviousness vel non of claims 9-11. Likewise, there must be a new trial on the issue of the infringement of claims 9-11 as well. This is only fair since the jury here was a fully empowered and engaged body.It well knew that, as to claims 9-11, it was awarding the ultimate verdict to NewKirk. To insure the requisite degree of confidence in the overall jury verdict, there must be a new trial both on the issue of the obviousness of claims 9-11 and on the issue of the infringement of those claims by Newkirk.
Of course, the courts rarely care much for expense or inconvenience to the parties, and the fact that the parties here must endure another full trial (no small matter), is beside the point.
Lastly, Judge Young included with this comment:
Usually, of course, the law of evidence operates in the shadows. It plays no role until an objection is made. Without objection, the proffered evidence is received for its full probative value. See Peterson v. Gaughan,404 F.2d 1375, 1380 (1st Cir.1968) (noting that although appellant had right to move to strike testimony presented in district court that was permeated with hearsay, counsel did not make motion; evidence was therefore received, and counsel had “intelligently relinquished that right”). I can think of but three instances where a judge is expected to intervene sua sponte. These are questions of witness competence, Rule 601 (because no incompetent testimony may be received), application of the rape shield rule, Rule 412 (because prompt judicial action is thought necessary to protect the putative victim of sexual assault), and the parol evidence rule in contract actions (because it is a substantive rule of commercial transactions and not part of the shadow law of evidence).
There is now, at least in Judge Young’s court, a third instance where a judge must intervene sua sponte, and that is to ensure that an expert witness testifying on anticipation, obviousness, or the doctrine of equivalents in a patent case state the basis for an opinion on these issues.
Out of more than 30,000 cases filed against downloaders by the record companies only two end-user download cases have gone to trial and judgment: the Tenenbaum case in Boston, and the case against Jammie Thomas-Rassett in Minnesota.
In the second case, the jury awarded the copyright owners $2 million for downloading (and allegedly distributing) 24 songs. The federal judge to whom the case is assigned has now lowered that amount to $2,250 per song (the legal term of the judge’s action is “remittitur”).
Some quotes from the Thomas-Rassett January 22, 2010 decision:
After long and careful deliberation, the Court . . . remits the damages award to $2,250 per song – three times the statutory minimum. The need for deterrence cannot justify a $2 million verdict for stealing and illegally distributing 24 songs for the sole purpose of obtaining free music. . . . although Plaintiffs were not required to prove their actual damages, statutory damages must still bear some relation to actual damages.
. . . This reduced award is significant and harsh. It is a higher
award than the Court might have chosen to impose in its sole discretion, but the decision was not entrusted to this Court.
. . . Thomas‐Rasset argues that the ratio of the statutory damages award to actual damages in this case, when measured in songs, is 1:62,015. She bases this calculations on a cost of $1.29 per song online.
. . . Thomas‐Rasset asserts that, at most, she was a single mother who merely downloaded and shared music when she had already lawfully bought CDs of much of that music and had no commercial motive to infringe.
. . . The need for deterrence cannot justify a $2 million verdict for stealing and illegally distributing 24 songs for the sole purpose of obtaining free music.
. . . The Court will not substitute its judgment for the judgment of the jury. Rather, it will remit the award to the maximum amount sustainable by the record, so that the statutory damages award is no longer shocking or monstrous.
It will be interesting to see if this decision has any impact on Judge Nancy Gertner, the federal judge assigned to the Tenenbaum case in Boston. In that case, the jury awarded $22,500 for each work infringed, and a motion for remittitur is pending.
Here is a link to the full opinion in Thomas-Rasset:
A table from Branko Gerovac’s website, Empirical Reality compares the technology areas of Massachusetts and Silicon Valley The two areas are far more alike, on the statistical level, than I had realized –
2008
Boston CSA*
San Francisco CSA
Total population
7,514,759
7,354,444
Population 25 years and over
5,086,671
5,013,980
Bachelor’s degree
21.80%
24.70%
Graduate or professional degree
15.60%
16.60%
Population 16 years and over
6,047,131
5,888,844
In labor force
69.60%
67.60%
Unemployed
4.00%
4.10%
Median household income (dollars)
66,723
77,247
Mean earnings (dollars)
90,213
104,526
Per capita income (dollars)
34,324
39,069
Households
2,835,304
2,628,007
Owner-occupied housing units
64.60%
58.80%
Median home value (dollars)
345,000
656,500
(* CSA stands for “Combined Statistical Area”)
However, it’s no more accurate to say these two regions are comparable than it is to say that two 175 pound men are comparable – one may be all muscle, the other, well …..
Unfortunately, as Mr. Gerovac details in a number of other posts, Boston is far behind Silicon Valley in innovation, start-ups, and a variety of other key factors central to business development. Mr. Gerovac quotes from an October 2009 TechCrunch article by Vivek Wadhwa, who wrote as follows (selected quotes):
Ever heard of Route 128? To my surprise, neither have any of my students at Duke or the entrepreneurs I’ve met in Silicon Valley. I’m surprised because it wasn’t so long ago that Silicon Valley was considered a poor cousin of Boston’s tech center—a cluster of technology companies located along this freeway which partially rings the city. Starting in the 1960s and on through the 1980s, Route 128 was, if anything, more closely associated with tech than Silicon Valley. Today few young technology workers even know where Route 128 is located, let alone its importance in the tech world. Silicon Valley has simply left Boston’s tech center behind.
In the 1980’s … if you were betting on one you’d have been wise to bet on Route 128 because of its longer industrial history and proximity to a large number of high quality educational institutions . . . and proximity to Bell Labs and other large corporate research centers. . . . Now, . . . Boston is a distant second nationally to Silicon Valley in technology entrepreneurship. So, what happened to Boston?
A young professor at UC-Berkeley, AnnaLee Saxenian, wrote a book in 1994 which answers this question. At a time when Boston still thought it was the powerhouse of the tech industry, Saxenian declared Boston the loser in the tech race and explained why it would only fall further behind. This book was titledRegional Advantage: Culture and Competition in Silicon Valley and Route 128. It kicked off a firestorm of criticism from the Boston elite. Saxenian also alienated friends at her alma mater, MIT.
She noted that Silicon Valley had an amazing dynamism about it. There were extensive professional networks, job hopping was the norm, information was exchanged openly, and the culture encouraged risk taking. The Silicon Valley ecosystem supported entrepreneurial experimentation and collective learning. In other words, Silicon Valley was a very open network—a giant social networking site working in analog before the concept of such a thing even existed.
This organizational mechanism was in sharp contrast to that of Route 128. Dominated by large, vertically integrated, and secretive minicomputer producers such as DEC, Wang, Prime, and Data General. Technology, skill, and know-how were trapped within the boundaries of the large corporations.
The differences were evident at many levels: venture capitalists in Silicon Valley had deep roots in local networks and were far more nimble than their east coast counterparts; educational institutions and research labs in the West partnered with local startups as well as more established firms, while those in the East worked only with the largest corporations; and the meritocratic openness of Silicon Valley made it a magnet for non-traditional talent and immigrants.
By the mid-1990s the east had missed the shift from minicomputers to personal computers as the flexible Silicon Valley ecosystem sped ahead with innovation across a diversifying range of components and systems going from chips, routers, and application software to ecommerce and search engines. Today Silicon Valley is the leading location for cleantech venture activity, an area widely considered to be the next big value creation engine for the U.S. and the world.
Boston, however, is no slouch. The Route 128 community remains the second biggest in the U.S. in terms of venture funds committed. Boston has powerful research institutions, still, and lots of very strong companies. In some areas, such as biotech, Boston may even rival Silicon Valley. But overall, its pretty clear that the Valley has not only won but is racing further ahead.
Most entrepreneurs and engineers that come to Silicon Valley, come to experience this network and to embrace the culture it has created. That’s why I came, too. Network effects don’t just work for fax machines. But then again, most of them knew that intrinsically. University guys like me need to do a bunch of surveys to figure it out. They voted with their hearts and feet.
Gerovac presents an interesting graph on his site comparing the percentage of tech company founders who established a start-up in the same state in which they received a degree. California ranks tops at 69%, compared with 29% in Massachusetts (which is below the study average of 45%).
In our firm we’ve been talking informally about this phenomenon for years, and these posts are food for much thought. Could it be simply that California is a lot softer on noncompete agreements than Massachusetts is? I’ve always wondered whether it could be something as simple as the weather.
Joel’s last chance before Massachusetts Federal District Court Judge Gertner (“Joel Fights Back”) is his post-judgment motion to set aside or reduce the damages award against him on the grounds that the judgment is unconstitutional – after all, what government would punish a student to the tune of tens of thousands of dollars for a crummy mp3 download he could have purchased for less than a buck? Ours, of course.
Joel’s Harvard Prof. lawyers filed a motion – punitive and unconstitutional, said they.
The DOJ disagrees. Quite proper, say they, per brief below.
It’s not for me to say, but I’m thinking that there are some pretty big egos on the defense side of this case. Nothing wrong with that, of course ….. 😉
The ConnectU/Facebook legal saga is truly astounding. Imagine a mature Oak tree. Now give the it properties of Kudzu vine (the “vine that ate the South”). Each branch of this tree is another lawsuit involving ConnectU, Facebook, the principals, and their lawyers.
Now, a new branch has burst forth. Wayne Chang has sued ConnectU and its lawyers in Superior Court Business Litigation Session in Suffolk County, Boston, claiming that Chang is entitled to as much as 50% of the value of the ConnectU/Facebook settlement (so called, since ConnectU has challenged the finality of the settlement).
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or the entrepreneurs I’ve met in Silicon Valley. I’m surprised because it wasn’t so long ago that Silicon Valley was considered a poor cousin of Boston’s tech center—a cluster of technology companies located along this freeway which partially rings the city. Starting in the 1960s and on through the 1980s, Route 128 was, if anything, more closely associated with tech than Silicon Valley. Today few young technology workers even know where Route 128 is located, let alone its importance in the tech world. Silicon Valley has simply left Boston’s tech center behind.
