If a patent lawyer represents separate clients applying for patents involving the same subject matter, has she violated her ethical responsibility to either client?
On December 23, 2015, the Massachusetts Supreme Judicial Court became one of the first state courts to address this issue. Maling v. Finnegan Henderson, Farabow, Garrett & Dunner, LLP.
The central issue in this case was whether the simultaneous representation of clients competing for patents in the same technology area — a so-called “subject matter conflict” — was a conflict of interest. The court found no conflict, stating, “we conclude that although subject matter conflicts in patent prosecutions often may present a number of potential legal, ethical, and practical problems for lawyers and their clients, they do not, standing alone, constitute an actionable conflict of interest that violates [Mass. R. Prof. C.] rule 1.7.”
However, the court suggested a few ways in such “potential” problems might give rise to an actionable conflict of interest.
First, it would be improper, without disclosure and consent, for a lawyer to represent two clients where the claims are identical or obvious variants of each other and a reasonable patent lawyer should reasonably foresee that an interference proceeding (or, under the American Invents Act, a derivation proceeding) was likely.
Second, the patent lawyer must be careful to avoid a directly adverse conflict. Finnegan avoided such a conflict in this case when the plaintiff sought a legal opinion from Finnegan regarding the likelihood that he might be exposed to claims by the second client. Finnegan declined to provide this opinion. The court suggested that had Finnegan provided such an opinion the interests of Finnegan’s two clients would then have been “directly adverse,” and therefore a violation of the rules of professional conduct in Massachusetts. Importantly, there was no allegation that Finnegan had agreed to provide such an opinion in its engagement letter with the plaintiff. Moreover, the plaintiff did not allege that Finnegan should have reasonably anticipated that the plaintiff would need such an opinion.
Third, a patent lawyer may not engage in “claim shaving”- altering the claims in one client’s application because of information contained in a different client’s application.
Fourth, the plaintiff in this case did not allege that the representation of two patent prosecution clients in the same subject matter area led to the disclosure of client confidences, or was used to one client’s advantage over the other client. For example, there was no allegation that Finnegan delayed filing the plaintiff’s patent application to ensure the success of the second client’s application. This likely would have been a violation of the rules of professional conduct.
More generally, the court discussed what constitutes an adequate conflict check in an environment where law firms have offices in multiple states (Finnegan has five offices in the U.S., and this case involved lawyers in different offices). That fact is no excuse for the failure to implement what the court characterized as “robust processes” — a phrase never before used by any U.S. court in the context of conflict checks or professional conduct generally — to detect potential conflicts. The court noted that it has not defined a minimum protocol for carrying out a conflict check in the area of patent practice, or any other area of law, and it declined to do so in this case, leaving this to be developed on a case-by-case basis.
While patent lawyers may be breathing a sigh of relief at this decision, the court’s list of horribles leaves them with a lot to think about, particularly in the areas of engagement letters and effective conflict checks. And, it may prompt clients to ask some tough questions when engaging patent counsel – “hey, by the way, are you providing patent services to anyone else in my subject matter area? Can you tell me about that so I can be sure there’s no direct conflict? Could that possibly create a problem for me down the road?”
It’s safe to say that in-house ethics counsel in law firms with large patent prosecution practices and multiple locations will have something to keep them busy on January 4th.
Maling v. Finnegan Henderson, Farabow, Garrett & Dunner, LLP (December 23, 2015).
[As initially published in the September 1, 2014 issue of Massachusetts Lawyers Weekly]
A lot has changed in the realm of intellectual property law following the record-breaking ten intellectual property cases decided by the U.S. Supreme Court in its 2013 term. Highlights of the six unanimously decided patent cases include suits in which the Court narrowed the scope of patent protection for inventions implemented on computers, made it easier to invalidate a patent for indefiniteness, and made it easier for the district courts to shift attorneys’ fees to prevailing defendants.
The Court issued two copyright decisions, including an important ruling that may have implications for cloud computing. And, one of the Court’s two Lanham Act opinions established a new doctrine for standing in false advertising cases.
Medtronic v. Mirowski Family Ventures (Jan. 22, 2014) was the first of five decisions overruling the Federal Circuit outright. The Court held that in a declaratory judgment action for non-infringement brought by a patent licensee, the burden of proving infringement lies with the licensor/patent holder, not the licensee. Medtronic can be seen as an extension of the Court’s 2007 decision in MedImmune, Inc. v. Genentech, holding that patent licensees have standing to bring declaratory judgment actions for non-infringement or invalidity, even as they continue to make royalty payments for the product in controversy.
By placing the burden of proving infringement on patent owners, the Court has made it easier for patent licensees to challenge a patent during the license term.
Octane Fitness v. ICON Health and Fitness (April 29, 2014), may have important consequences for attorneys’ fee awards in patent cases. The case was a challenge to the Federal Circuit’s “exceptional case” standard for awarding attorneys’ fees in patent litigation under 35 U.S.C. §285. That standard required a party seeking fees to show by “clear and convincing evidence” that the case was “objectively baseless” and brought in “subjective bad faith.”
Overruling, the Court held that an “exceptional case” is “one that stands out from others with respect to the substantive strength of a party’s litigating position (both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated … considering the totality of the circumstances.” The Court also changed the standard of proof to a preponderance of the evidence.
While the fee-shifting statute applies to both parties, Octane should make it easier for patent defendants to force losing plaintiffs to pay attorneys’ fees.
Highmark v. Allcare Health Management System (April 29, 2014), a companion case to Octane, held that the standard established in Octane should be left to the discretion of the district courts rather than, as the Federal Circuit had held, be subject to de novo review on appeal.
Octane and Highmark give the district courts substantial leeway within which to decide fee awards and may impact the debate over the reform of the patent laws to curb abusive lawsuits. An important component of proposed reform legislation has been to encourage judicial fee shifting, until now a rarity. These cases may be a significant step in that direction.
That said, until the lower courts demonstrate how aggressively they will apply Octane’s fee-shifting standard, the full impact of these cases will be unclear. Adding to this uncertainty is the risk that the standard will be applied unevenly in different districts (and even from judge to judge), with little authority left to the Federal Circuit, under Highmark, to intervene and shape uniform national application.
In Nautilus v. Biosig (June 2, 2014), the Court addressed the patent statute’s requirement that patent “claims particularly point out and distinctly claim the subject matter which the inventor or a joint inventor regards as the invention.” 35 U.S.C. §112(b).
The Federal Circuit had held that a patent claim passed that threshold so long as the claim was “amenable to construction” and the claim, as construed, was not “insolubly ambiguous.” Reversing the Federal Circuit for the fourth time, the Court held that “a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention” at the time the patent was filed.
While making it easier to challenge a patent based on indefiniteness, the Court left it to the district courts to interpret and apply the standard. Nevertheless, the decision also appears to be consistent with the Court’s trend during the term: to pull in the reins on a patent system widely perceived to be out of control.
The last two cases stand out as the most complex and likely most important patent decisions of the term.
In Limelight Networks v. Akamai Technologies (June 2, 2014), the issue was whether patent infringement could occur when separate entities perform the steps of a method patent, so-called “divided infringement.”
In a controversial decision, the Federal Circuit ruled that a defendant could be liable if it “induced” several parties to jointly carry out the steps necessary for infringement, whether or not the defendant performed any of the steps itself. Reversing again, the Supreme Court held that a defendant cannot be held liable for inducing patent infringement in the absence of direct infringement, which requires that all steps of a patent be performed by a single actor. The Court was not persuaded by the argument that its holding might enable defendants to evade liability by dividing performance among multiple actors.
However, the Court noted that its ruling was based on a 2008 Federal Circuit decision establishing the single actor rule for direct infringement. The Court assumed, without deciding, that that holding was correct, implying that there might be some room for the Federal Circuit (or the Supreme Court) to modify the single actor rule on which the holding in Akamai is based. In the meantime, a divided infringement defense will be a potential loophole for defendants in industries with distributed activities.
The last and most highly awaited patent case in the 2013 term was Alice Corp. v. CLS Bank Int’l (June 19, 2014). At issue was whether claims directed to a computer-implemented financial process were patent-eligible subject matter.
While many in the patent community feared (or hoped) that the decision would render software and business method inventions unpatentable, the Court was careful to avoid that outcome. Rather, it held that, like laws of nature and natural phenomena, “abstract ideas” — such as the business practice in Alice — must contain a sufficient “inventive concept” to “transform” the idea into a patent-eligible application. However, that cannot be achieved solely with a generic computer implementation. In Alice, the claims amounted to “‘nothing significantly more’ than an instruction to apply the abstract idea,” using some “unspecified, generic computer.” That was “not ‘enough’ to transform an abstract idea into a patent-eligible invention.”
While Alice did not create a per se exclusion for software and business processes, these categories will face heightened scrutiny in both prosecution and enforcement. But application of Alice will be complicated by minimal guidance on what constitutes an “abstract idea.” While using a general purpose computer to implement an abstract idea will not achieve patent-eligibility, software that improves a physical process or the functioning of the computer itself may provide the “something more” identified by the Court as a requirement to transform an abstract concept into patent-eligible subject matter.
However, those distinctions were left to the lower courts to resolve on a case-by-case basis.
In Petrella v. Metro-Goldwyn-Mayer, the first of two copyright cases decided in the 2013 term (May 19, 2014), a 6-3 Court reversed the 9th Circuit, holding that the copyright statute’s three-year “rolling” statute of limitations (17 U.S.C. §507) could not be shortened by the common law doctrine of laches. However, an unreasonable, prejudicial delay in filing suit may be relevant to awarding equitable relief and damages based on the infringer’s profits, making it less likely that the ruling will spark a flood of hitherto dormant copyright suits.
The second copyright ruling, ABC v. Aereo (June 25, 2014), involved the legality of Aereo’s system of using micro-antennas and individual digital copies to stream over-the-air TV on the Internet. Reversing the 2nd Circuit, a unanimous Court held that Aereo’s streaming service violated the copyright statute’s public performance right. The Court rejected Aereo’s argument that it was legally indistinguishable from a TV antenna/DVR supplier, holding instead that Aereo transmitted a public performance through “multiple, discrete transmissions,” and that Aereo was substantially similar to cable TV companies, which are required to pay royalties to retransmit TV broadcasts.
The impact of the decision on cloud computing remains to be seen, as does the accuracy of the three-justice dissent’s warning that the rationale of the case will “sow confusion for years to come.”
In Lexmark Int’l v. Static Control (March 25, 2014) the Court unanimously reversed the 6th Circuit’s holding that Static Control could not proceed with a false advertising counterclaim against Lexmark under §43(a) of the Lanham Act because the parties were not direct competitors. The Court announced a new, two-part test: (1) Is the claim within the “zone of interests” protected by the Lanham Act? (2) Did the alleged conduct proximately cause the alleged injury? To meet the second part of the test, a plaintiff must plead “economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising,” and that the deception causes consumers to withhold business from the plaintiff.
The ruling eliminates circuit conflicts and liberalizes standing under federal false advertising law.
In POM Wonderful v. Coca-Cola (June 12, 2014), another false advertising case, POM complained that the label for Coca-Cola’s “pomegranate blueberry” juice blend was deceptive and misleading, in violation of the Lanham Act.
The 9th Circuit held that POM’s claim was precluded by the Food, Drug and Cosmetic Act, which regulates the misbranding of food by means of false labeling. The Court reversed, holding that the federal law was not a safe harbor from the Lanham Act, and, therefore, food and drink labels are subject to competitor claims under the act.
The extent to which the ruling will lead to an increase in false advertising lawsuits over food and drink labeling remains to be seen.
It would be difficult to find a more straightforward application of the Supreme Court’s recent ruling in Alice Corporation Pty. Ltd. v. CLS Bank International (June 14, 2014) than the Federal Circuit’s August 26th decision in Planet Bingo, LLC v. VKGS LLC (Fed. Cir. August 26, 2014) (non-precedential).
While practitioners and observers of patent law seemed to agree that Alice didn’t spell doom for software and business method patents, it was clear that it did mark the end for patents that do nothing more than recite a generic computerized implementation of an abstract idea.
While it is true that a patent may be obtained for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” (link), the Supreme Court has held, in a series of decisions, that there is an implicit exception to the patent statute: laws of nature, natural phenomena, and abstract ideas are not patentable.
In Alice the Court held that “abstract ideas” are not patentable unless they contain an “‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” While the precise line between an impermissibly abstract idea and a patentable process remained undefined in Alice (and may never be fully defined), one thing seems clear: once an invention is identified as an abstract idea, a generic computer implementation of that idea is not patentable.
Planet Bingo filed its patent application in 2000, long before the decision in Alice, and it was awarded the patent in 2002. The system described in the patent allows players to select their own numbers and store them for later use, allows players to print off game tickets at the Bingo-playing site with those pre-selected numbers, and enables Bingo hall operators to track and validate these sets of numbers.
Higgins & Jeong
However, obtaining a patent and enforcing it are two different things, and Planet Bingo ran headlong into a defense of patent ineligibility when it brought suit to enforce the patent against a competitor in federal district court in Michigan in 2012 (apparently only one of many cases filed by Planet Bingo). The federal district court declared the patent invalid under the Federal Circuit’s holding in Alice, and the Supreme Court’s 2014 decision in Alice sealed Planet Bingo’s fate when it appealed to the Federal Circuit.
In one of the first of what is likely to be many cases invalidating patents under Alice the Federal Circuit identified the steps set forth in the patent as an abstract idea because they are “mental steps which can be carried out by a human using pen and paper.” Furthermore, the Federal Circuit observed, these steps can be “carried out in existing computers long in use.” The patent lacked the “inventive concept” essential to transform the patent’s ideas into a patent eligible invention. Accordingly, the patent was held invalid.
For a similar case invalidating a patent that claimed a system of computerized meal planning which the court described as a “computer program that allows the user to create meals from a database of food objects, … to change those meals by adding or subtracting food objects, and to view the dietary impact of changes to those meals on a visual display,” see DietGoal Innovations LLC v. Bravo Media LLC (S.D.N.Y. July 8, 2014) (patent “recites nothing more than the abstract concept of selecting meals for the day, according to one’s particular dietary goals and food preferences”). This case also includes a helpful summary of the evolution of patent-eligibility in the Supreme Court from 1972 to 2014.
In September 2012 I wrote a post titled Why Can’t We All Get Along? CAFC Fractures Over Divided Infringement. The post discussed an August 31, 2012 Court of Appeals for the Federal Circuit (“CAFC”) en banc decision in two cases consolidated on appeal, Akamai v. Limelight and McKesson v. Epic Systems (link). As I described in that post, the 11 judges on the CAFC, were unable to agree on whether patent infringement occurs when separate entities perform the steps of a patented method.
Six of the CAFC judges — a bare majority — formulated a new doctrine of “induced infringement”: a party can be liable for inducing infringement if it either (1) induces several parties to jointly carry out the steps necessary for infringement, or (2) performs some of the steps of the claimed method itself and induces a third party to perform the remaining steps claimed. In other words, the CAFC held that all the steps of a claimed method must be performed in order to find induced infringement, but all the steps need not have been performed by a single entity.
The losing parties before the CAFC appealed to the U.S. Supreme Court, which accepted review of the case, and which had no trouble holding (unanimously) to the contrary. A defendant cannot be held liable for inducing infringement of a patent method claim when no single entity has directly infringed the claim, and direct infringement is not established unless all steps of the claim are performed by a single entity (subject to the “control or direction” exception discussed briefly below). The Court noted that the Federal Circuit’s approach would “deprive [the inducement statute, 35 U.S.C] §271(b) of ascertainable standards,” and would have led to “two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement.” The Court was not persuaded otherwise by the argument that its holding would permit “a would-be infringer to evade liability by dividing performance with another.”
The Supreme Court’s decision was based, in large part, on the CAFC’s 2008 decision in Muniauction, Inc. v. Thomson Corp., where the CAFC held that where different steps of a method claim are performed by different entities, direct infringement requires a defendant to exercise “control or direction” over the steps the defendant itself does not perform. As the Supreme Court pointed out, the CAFC is free to revisit Miniauction in the future, but the Court declined to review it in the current appeal.* Until the CAFC revisits (and reverses or modifies) Miniauction, direct infringement will continue to require that every step of a claimed method be attributable to one actor (or satisfy the “control/direction” test), and no inducement can be found when no direct infringement has been committed. Until then, “divided infringement” will remain a defense to a claim of patent infringement, as well as a potential “design around” strategy for companies that can avoid a single actor performing, directing or controlling all of the steps of a method patent.
*[Note:] In its discussion of Muniauction the Court suggested the “possibility that the Federal Circuit erred by too narrowly circumscribing the scope of [direct infringement under] § 271(a).”
I can’t resist quoting Dennis Crouch, quoting Don Chisum, on the the Supreme Court’s pending review of the CLS Bank case:
The Supreme Court often intervenes to resolve splits among the various courts of appeal. Here a split exists within a circuit that the circuit itself is unable to resolve. The circuit judges’ varying interpretations of a body of recent and not-so-recent Supreme Court precedent riddled with fuzzy language and inconsistent results caused the split. Now, the Court has the opportunity (and the obligation) to clean up a mess that is, to a major extent, of its own making.
As I’ve written before, getting sued for patent infringement in Texas (often the Eastern District, or “EdTX”) is generally viewed as undesirable by corporate America. Apparently seeking to avoid this unpleasantness, TomTom, Inc. filed a suit in Massachusetts, asking the court to declare that it did not infringe several patents held by Norman IP Holdings, Inc., over which Norman had already sued TomTom in EdTX. As its name suggets, and as best I can determine, Norman is a non-practicing entity that has been active in the courts of EdTX.
However, TomTom’s strategy of avoiding Texas appears to have failed. Massachusetts U.S. District Court Judge Saylor has upheld a decision by Magistrate Judge Judith Dein concluding that the Massachusetts court did not have jurisdiction over Norman, and therefore could not force Norman to confront it over these issues in Massachusetts. It appears that Texas is where TomTom will have to defend itself against Norman.
I will quote, not for the first or last time, the words of General Phillip Sheridan: “if I owned Texas and Hell, I’d rent out Texas and live in Hell.” Words that ring true for Texas patent defendants.
TomTom, Inc. v. Norman IP Holdings, LLC (D. Mass. September 4, 2012)
“. . . the intolerable wrestle with words and meanings . . .” East Coker, by T.S. Eliot
Congress enacts laws. The courts interpret and apply them in cases. Often, there is disagreement over what the words mean, and judges debate the meaning in published decisions. Judges on the same court may agree, disagree, dissent, concur, and form shifting majorities and minorities. Occasionally, congress will take notice and attempt to clarify a law by amendment. Sometimes, this only adds to the confusion.
The eleven active judges on the Court of Appeals for the Federal Circuit, the patent appeals court, exemplify this dynamic in their August 31, 2012 en banc decision in two cases consolidated on appeal, Akamai v. Limelight and McKesson v. Epic Systems (link). The decision, totaling over 100 pages, is comprised of three opinions, each with dramatically different views of a fundamental issue in patent law.
The core issue the judges on the CAFC were unable to agree upon on is this: does patent infringement occur when separate entities perform the steps of a patented method?
To take a simple example, assume that a patent claim involves just two steps: first, delivering a web page to a customer’s server, second, the some form of manipulation of the page by the customer (e.g., tagging or data hashing).*
In fact, this is, in highly simplified form, analagous to some of the patent claims at issue in this appeal. (U.S. Patent No. 6,108,703).
Until August 31st, the patent owner could not successfully claim patent infringement, because this was “divided” infringement – multiple parties (in this example two parties) performed different parts of the single claimed patent method. As the CFAC stated in BMC Resources, Inc. v. Paymentech, L.P.), “infringement requires, as it always has, a showing that a defendant has practiced each and every element of the claimed invention.”
In Akamai/McKesson the CAFC agreed to reconsider the divided infringment doctrine en banc. However, the eleven judges were barely able to eek out a 6-5 majority opinion.
Six of the CAFC judges — the thin majority — formulated a new doctrine of “induced infringement”: a party can be liable for inducing infringement if it either (1) induces several parties to jointly carry out the steps necessary for infringement, or (2) performs some of the steps of the claimed method itself and induces a third party to perform the remaining steps claimed. Under this new interpretation of the law all the steps of a claimed method must be performed in order to find induced infringement, but all the steps need not have been performed by a single entity. However, importantly, it appears that the CAFC intends only for the “inducer” to be liable for patent infringement, not the parties that directly infringe the patent claim.
Four of the eleven judges dissented, arguing that there should be no patent infringement where the steps are “divided.” In other words, this group argued for adherence to the “single-entity” rule that had been in effect.
One judge, Pauline Newman, dissented separately, arguing that under the patent statute when more than one entity performs all of the steps, the claim is directly infringed. As she states, “The court should simply acknowledge that a broad, all-purpose single-entity requirement is flawed, and restore infringement to its status as occurring when all of the claimed steps are performed, whether by a single entity or more than one entity . . ..”
What is the statutory language the judges cannot agree upon? It is this:
whoever without authority makes, uses, offers to sell, or sells any patented invention . . . during the term of the patent therefor, infringes the patent (35 U.S.C. 271(a))
While the dissenters cannot agree whether the word “whoever” requires a single actor or permits several actors to combine to infringe a patent, the majority ducks this question altogether, focusing instead on section 271(b) of the statute: “Whoever actively induces infringement of a patent shall be liable as an infringer,” and concludes that this provision permits liability based on inducement. Of course, as the dissenters point out, this approach begs the question whether there has been an “infringement” in the first place if multiple actors perform the elements of a patent claim.
The decision leaves unanswered questions and poses contradictions, not the least of which is that it appears the patent owner cannot sue the direct infringers when more than one entity participates in the infringement, an odd result indeed. It leaves unanswered whether the patent holder can obtain injunctive relief against the direct infringers, or whether the should even be named as defendants. It muddies the lines between direct, contributory and vicarious patent liability, which lines were already far from clear before this decision. And, most fundamentally, it fails to answer the question whether direct patent infringement can exist where the steps are “divided” – if it does not, there can be no “induced” infringement, since it is beyond question that direct infringement must exist before induced infringement can occur.
The fact that the en banc court was unable to reach consensus on such a fundamental issue of patent law is disturbing. Speculation that the Supreme Court will attempt to straighten out this mess began almost immediately after release of the decision. Perhaps the Supreme Court will answer the central question dodged by the majority in Akamai/McKesson, whether multiple-actor infringement constitutes patent infringement, and thereby serve as the basis for induced infringement, and vindicate one of the dissenting positions. However, the Supreme Court has been known to make matters worse, not better, when it comes to “the intolerable wrestle with words and meanings,” particularly in cases involving patent law.
Akamai Techs., et al. v. Limelight Networks and McKesson Techs., Inc. v. Epic Systems Corp.
[Update: Reversed by U.S. Supreme Court on June 2, 2014. Link]
I’ve been meaning to post a link to the jury verdict form in the Apple v. Samsung patent case. Here it is, linked at the bottom of the post. And no, that’s not some weird crossword puzzle on the left, it’s a tiny section of the verdict form.
If this isn’t the most complex jury verdict form in American legal history, I can’t imagine what is. The Verge did a nice job of dissecting the jury verdict form pre-verdict, and concluded that a decision on the approximately 700 decision points would “not go quickly.”
Turns out The Verge was mistaken; the jury was able to wrap things up in just over two days, awarding over $1 billion to Apple. They did this with the help of a jury foreman who had applied for and obtained a patent – the only juror who had even the slightest familiarity with patents before this trial. Do you think his (presumably) pro-patent views influenced the outcome in this case? Did Apple get really, really lucky? Could make a person wonder ….
Jury verdict in Apple v. Samsung (on Groklaw)
The Internet has made following trials in real time feasible, more or less. For the press to cover controversial trials is nothing new, but in the past these were mostly criminal cases. Today, thanks to sites like groklaw.net, people can follow technology industry cases in detail – descriptions of what is going on in the courtroom, documents and (in the case of groklaw), unsparing commentary.
Groklaw is following Apple v. Samsung from a distance (at least compared to its recent coverage of Oracle v. Google), and the traditional press appears to be covering the case heavily, but only at a general level of detail. However, someone has put together a twitter feed consolidating the tweets of several industry reporters. It’s almost like a shadow jury, but a jury of people more knowledgeable about the companies involved than the average juror. And, in some cases, openly opinionated.
The lawyers involved in this case, and certainly in any case covered in detail by groklaw, must dread the possibility that jurors are reading these materials.
The twitter feed is here.
It seems that Google’s “bounce back” patent is going to play a big role in the trial between Apple and Samsung, underway in federal district court in Palo Alto. References to it in Apple’s opening statement highlighted this patent. I wasn’t sure what the “bounce back” was, but I think I’ve tracked it down.
How do you know that you’ve reached the bottom or top of a page on an iPhone or iPad? The screen “bounces back” in the opposite direction. Or, as described in patentese in U.S. patent 7,469,381, issued to Apple in December 2008:
In accordance with some embodiments, a computer-implemented method for use in conjunction with a device with a touch screen display is disclosed. In the method, a movement of an object on or near the touch screen display is detected. In response to detecting the movement, an electronic document displayed on the touch screen display is translated in a first direction. If an edge of the electronic document is reached while translating the electronic document in the first direction while the object is still detected on or near the touch screen display, an area beyond the edge of the document is displayed. After the object is no longer detected on or near the touch screen display, the document is translated in a second direction until the area beyond the edge of the document is no longer displayed.
The patent is titled, List scrolling and document translation, scaling, and rotation on a touch-screen display.
“Bounce back” is a far more jury-friendly term than “an area beyond the edge of the document is displayed . . . .” Whether Apple can withstand Samsung’s challenge to the validity of this and other patents is the real question.
“It’s not clear that we really need patents in most industries . . .. You just have this proliferation of patents. “It’s a problem.”
Judge Richard Posner, Silicon Valley MercuryNews.com, July 5, 2012
Do you recall the final scene in Monty Python and the Holy Grail? After 90 minutes of farcical medieval/King Arthur-inspired humor the film concludes with a big attack scene (cliché visuals of swords, spears and knights in armor, opposing armies lined up in a field, battle music ….). King Arthur makes a Crusades-inspired speech and yells charge. Just as the armies are about to engage a police car pulls up with siren blaring. 20th century British bobbies jump out and arrest some of the knights, who put up no resistance. Others are simply told to go home. The war is cancelled. (video).
This is not very different from what just happened in the patent war between Apple and Motorola Mobility (owned by Google) over smartphone patents. In that case, initially filed in federal court in Wisconsin in late 2010, a year before Steve Jobs’ death, each side accused the other of multiple patent infringements. To put things in context, this case was part of the war against Google’s Android OS that Jobs initiated before his death. According to the Isaacson biography of Steve Jobs, Jobs stated that Android’s use of Apple’s ideas equated to “grand theft,” and that Jobs was “willing to go thermonuclear war on this.” He is also reported as saying that “I will spend every penny of Apple’s $40 billion in the bank to right this wrong.” (both quotes referenced here).
When it was first filed in 2010, the case was assigned to a Wisconsin federal trial judge. In mid-2011, Google purchased Motorola Mobility (owner of the patents) for $12.5 billion, to strengthen its patent position with Android. In October 2011 Jobs passed away. Then, in December 2011, the case was hit by an earthquake: the case was re-assigned to Judge Richard Posner, an appellate judge on the 7th Circuit and possibly the most highly respected federal appellate judge in the country. According to reports Posner requested that the case be assigned to him. Hmmm, why did he do that? And why this case?
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.
Newriver v. Newkirk