Recently in Patent Litigation Category

According to an article on IPWatchdog, Solo Cup "successfully rebutted the presumption of deceptive intent" in Pequignot v. Solo Cup Co. by seeking advice of counsel and taking the "good faith step of replacing worn out molds with unmarked molds."The Federal Circuit affirmed the grant of summary judgment by the district court.

This decision could halt the momentum qui tam suits have been gaining since the Forest Group decision, holding that the false marking penalty accessed is assessed per item marked.  While merely denying knowledge of the false marking is not sufficient to rebut the presumption of deceptive intent, Solo Cup's showing here was fairly unremarkable and, thus, it looks like the bar has been lowered for rebutting the presumption with this decision.

In the absence of legislation reforming false marking suits, it also seems that this decision is indicative of a tough line being drawn by the Federal Circuit.  It will be interesting to observe subsequent decisions by the CAFC on false marking and see if this tougher stance continues.

The ITC is now going to investigate HTC's claim to determine if Apple products (iPhone, iPad, iPod, etc.) infringe on HTC's patents.  This comes after Apple sued HTC for alleged infringement of 20 its patents in March.

The battle between HTC and Apple is part of a larger war between Apple and Google.  Phones utilizing Google's Android operating system compete with the iPhone, which is one of the largest, if not the largest, revenue streams for Apple.  HTC makes a variety of phones that run the Android operating system and, consequently, Apple likely wants to squeeze them out the market and make potential market entrants more hesitant to enter.

HTC, as well as other players in the smart phone market, will increasingly have the strength of the patents, as well as their "design-arounds", tested as Apple continues to aggressively defend their intellectual property.  We will continue to monitor developments in the litigation between Apple and HTC.

Under "New Patent Litigations" on PriorSmart today were several new qui tam marking cases recently filed by the same plaintiff against some notable companies.  Links to the PriorSmart page with a portion of the complaint are provided below:

McNamara v. Country Life, LLC et. al.

McNamara v. Natural Organics, Inc. et. al.

McNamara v. Vitamin Shoppe, Inc.

McNamara v. Elizabeth Arden, Inc.

We mentioned in a previous blog post the rise of qui tam suits that has occurred since the Forest Group decision (we also discuss the issue more in-depth here).  It looks qui tam marking suits are here to stay until reform legislation cuts them off.

TiVo has recently gotten two of their claims struck down by the PTO during reexamination.  The rejection was made on obviousness grounds.  Most importantly, the two claims struck down were the two claims that the jury in 2006 found that Dish infringed.  Although TiVo can now file a continuation, this is still a blow to TiVo, as two of the most important claims for the case for infringement against Dish Network are now in doubt.

TiVo's stock dropped from $7.74 per share to $7.22 per share at the closing bell, a drop of 6.7% during Wednesday trading.  As mentioned before, the enormous value of IP cannot be more apparent than here, where reexamination proceedings can cause such dramatic fluctuations in the stock price.  We will continue to monitor any further developments in the case.

The Court of Appeals for the Federal Circuit has recently agreed to an en banc review of the litigation between TiVo and Dish Network.  TiVo's seemingly endless patent dispute is a perfect illustration of how important an asset IP is to a corporation and the effect that IP litigation can have on a particular market.

For concrete evidence, one need look no further than the fluctuations of TiVo's stock price during their litigation.  The news that TiVo had prevailed against Dish network broke on March 2, 2010 and TiVo's stock price closed that day at $10.03.  By the closing bell of March 4, 2010, TiVo's stock price had soared to $16.53, an increase of nearly 65%.

Subsequently, TiVo's win was vacated by the appeals court on May 14, 2010.  The closing price on May 13, 2010 was $17.39.  By the close of May 14, 2010, the price had dropped to $10.16, a decrease of about 42%.

TiVo undoubtedly has a great deal more litigation in its future as well.  Microsoft has also recently joined the fray, suing TiVo for infringement in the hope that they can push TiVo into a licensing agreement.  Over the coming months, we will be tracking how all of the TiVo litigation plays out and the resulting impact on TiVo's operations.

In Crocs v. ITC, the Federal Circuit overturned an ITC ruling on whether or not imitation shoes based on the Crocs design infringed both design and utility patents Crocs held.  The ITC had originally ruled that there was no infringement due to the middle strap not being uniform and not having evenly spaced holes as claimed in Crocs design patent.  However, on appeal, the Federal Circuit took a more holistic approach and used the "ordinary observer" test--whether or not an ordinary observer could be deceived into believing the infringing product is actually the same as the patented design--to make a determination regarding infringement.

The court found little difference between the patented design and the imitation: "If the claimed design and the accused designs were arrayed in matching colors and mixed up randomly, this court is not confident that an ordinary observer could properly restore them to their original order without very careful and prolonged effort. . ."  The court further warned against using small differences "as a checklist for infringement" and instead stressed the importance of viewing the small differences in the context of the product as a whole.

The ITC also had alternatively rejected Crocs utility patent for obviousness.  In holding the utility patent non-obvious, the court noted the commercial success of Crocs:

"[T]he Commission found, based on substantial evidence, that Crocs shoes practice the '858 patent and that the Crocs shoes were commercially successful"

Additionally, the court noted "industry praise" for the improvement of the utility patent:

"This court gives even more credit to the administrative judge's finding of substantial industry praise for the claimed invention and the products covered by the claimed invention."

Seagate relied on outside counsel for opinions on patents and relied on the advice of counsel defense to rebut charges of willful infringement. The District Court held that this amounted to a waiver of privilege with any counsel, including trial counsel. The CAFC reversed, stating: "[Asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute ] waiver of the attorney-client privilege for communications with trial counsel. We do not purport to set out an absolute rule. Instead, trial courts remain free to exercise their discretion in unique circumstances to extend waiver to trial counsel, such as if a party or counsel engages in chicanery."

It is not a bright-line rule that waiver is cut-off as to trial counsel if separate counsel wrote the opinion that is relied upon; such a rule could lead to negative consequences, for example, causing opinions to be converted into insurance-type documents, rather than business documents. Opinion counsel should serve to provide an objective assessment for making informed business decisions, while trial counsel focuses on litigation strategy and evaluates the most successful manner of presenting a case to a judicial decision maker. Fairness counsels against disclosing trial counsel's communications on an entire subject matter in response to an accused infringer's reliance on opinion counsel's opinion to refute a willfulness allegation. However, questions regarding in-house counsel still linger.

In Osram v. Nillsen, (CAFC 2008), Osram argued that Nilssen waived attorney-client privilege without proper notice because Nilssen relied on his tax counsel in determining that his company was eligible to pay small entity maintenance fees on the patents at issue, and Nilssen waited until the trial to make this claim. The District Court agreed with Osram, and the CAFC affirmed there was waiver and used it as a factor in determining inequitable conduct and, ultimately, that the case was 'exceptional'. While the waiver ruling was not central to the case, it did mesh with the ruling in Seagate.

Discovery proceedings in a typical patent case will usually seek documents and communications concerning a wide variety of matters, including testing, design and development by inventors, consideration of third party patent rights, patentability of the invention, study of prior art, invention disclosures, draft applications and notes, and prosecution of the patent application. The Knogo line of cases states that technical information from client to attorney may be privileged. To that end, the client must make a communication intending that the communication be kept confidential. The mere fact that the communication consists of information from public domain does not negate privilege. Knogo, 213 U.S.P.Q at 940-941.

The Jack Winter line of cases, however, concludes that communications between patent lawyer and client concerning technical information needed for patent application generally not privileged. The rationale behind this conclusion is that the attorney is a "mere conduit" for the information and that business advice is not legal advice. Furthermore, there is no expectation of confidentiality by client because of to the duty to disclose the technical information to the Patent Office. Jack Winter, Inc. v. Koratron Company, Inc., 54 F.R.D. 44, 47 (N.D. Cal. 1971).

The Federal Circuit has been critical of the Jack Winter rationale. In re Spalding involved the issue of whether an invention record prepared by the inventor for in-house counsel was privileged. The privilege issue was decided as a matter of Federal Circuit law. The invention record in Spalding was privileged because it was a communication to in-house counsel, the purpose of which was to determine patentability. Furthermore, it was not necessary for the document to expressly request legal assistance, as the "overall tenor" of the document indicated that it was a request for legal advice or services. In re Spalding, 203 F.3d 800, 803-06 (Fed. Cir. 2000).

Some district courts have extended rationale of Spalding to other types of communications and documents. However, the Jack Winter decision has never been expressly overruled, even though no post-Spalding cases follow it.

To determine whether privilege applies to patent-related communications, the reasoning of Spalding should be applied. Additionally, a privilege claw-back and non-waiver provision should be included in a protective order. While an effective document retention and control policy may moot some of these issues, any such policy must be for legitimate purpose; furthermore, one can not destroy documents if it is known or believed that they are relevant to an actual or potential litigation.

Stay tuned to Post Grant for the next installment in this series: When is attorney-client privilege waived?