Recently in Patent Litigation Category

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?

Monsanto Corporation is the manufacturer of RoundUp pesticides, which function by inhibiting the function of the enzyme EPSP synthase, which is necessary for a step in the synthesis of amino acids by the plant. The company also distributes seeds that are resistant to its pesticides though the insertion of a patented chimeric gene sequence that enables the plants to grow in the presence of the pesticide.

Monsanto v. David dealt with infringement of the gene patent due to David's practice of saving seeds from previous harvests, in violation of their mutual agreement. On appeal from a judgment for Monsanto, David argued that, as the Monsanto patent claims a gene sequence and not a seed or plant variety, it is limited to the gene sequence and not to the seed containing the gene. The CAFC disagreed with such a limitation on the utility patent, stating that if a seed contains the patented gene, planting that seed is an infringing act. The court also reiterated its decision in Monsanto v. McFarling, 302 F.3d 1291, that while the Plant Variety Protection Act permits farmers to save seeds of registered plants, such an exemption does not apply to a seed under a utility patent.

On January 16, 2008, the Supreme Court is set to hear arguments in the Quanta v. LG Electronics case. The case involves the patent exhaustion doctrine, which states that a patent holder may not restrict the manner in which a purchaser of the patented product uses it after the sale.

LG had licensed several patents to Intel and required the company to notify its customers not to combine Intel technology with non-Intel components. While Intel complied, several of Intel's customers—Quanta being one of them—did not, prompting LG to initiate an infringement suit. While the District Court ruled that LG's patents were exhausted, the Court of Appeals for the Federal Circuit reversed, stating that there was no exhaustion due to the notification that LG required Intel to send to its customers.

 Twenty-seven amicus briefs have been filed since the Supreme Court decided to hear the case. Companies that generate a large percentage of their revenue from patent licensing argue that a licensor should be able to collect royalties from different levels of the production chain, while supporters of Quanta argue that the first purchaser of a patented technology should be able to pay a full royalty to the patent holder.

27 June 2007 the United States Court of Appeals for the Federal Court decided on The Saunders Group, Inc. v. Comfortrac, Inc., and Care Rehab and Orthopaedic Products, Inc. The main question was if the District Court had properly judged the scope of the claims of the Saunders Patent, 6899690 (the '690), namely Claim 1. 

This patent was a continuation of 6506174 (the '174).  The purpose of the device in the '174 was is stretch out the lower back to relieve pain due to inflamed nerves.  The purpose of the device described in the '690 is generally the same except meant to stretch out the neck/upper back.  Both patents, in their independent claims, call for at least one pressure activated seal for use in pneumatic cylinders that both devices employed, but claim 1 of '690 did not mention the seal.

The District Court claimed that surely the use of a pressure activated seal was assumed for claim 1 of '690.  CAFC disagreed and now wants to review the rest of the District Courts decision.

The CAFC's full opinion can be found at http://www.fedcir.gov/opinions/06-1576.pdf.

USPTO Grants First Patent Under New Accelerated Review Option
Patent Issues in 6 Months, 18 Months Sooner Than Under Regular Process

The Department of Commerce's United States Patent and Trademark Office (USPTO) announced it has issued the first patent under its accelerated examination program that began in August 2006. The patent, for a printer ink gauge, was filed with the USPTO on September 29, 2006, and was awarded to Brother International, Ltd. on March 13, 2007. Average review time for applications in the ink cartridge technology area is 25.4 months. This patent issued in 6 months, a time savings of 18 months for the patent holder.

"Accelerated examination allows any innovator in any technology to get a full patent review and decision within twelve months," noted Jon Dudas, under secretary of Commerce for Intellectual Property. In return for cutting the time to obtain a patent decision by 25-75%, the agency asks the applicant for a better application and process. Inventors who want speedy results can get them, so long as they help improve the process."

USPTO Releases New Five-Year Strategic Plan
Plan builds on record breaking progress in 2006

The Department of Commerce’s United States Patent and Trademark Office (USPTO) released the agency’s “2007-2012 Strategic Plan,” which lays out goals and objectives to guide the agency in accomplishing its mission of fostering innovation and competitiveness by providing high quality and timely examination of patent and trademark applications, guiding domestic and international intellectual property policy and delivering intellectual property information worldwide.

The plan builds upon the record-breaking progress the USPTO made during fiscal year 2006 in the areas of quality production, electronic filing and processing, teleworking and hiring.

The Strategic Plan has three complementary strategic goals: (1) optimizing patent quality and timeliness; (2) optimizing trademark quality, and (3) improving intellectual property protection and enforcement domestically and abroad. The plan outlines approaches toward attaining these goals, articulates underlying challenges and opportunities, and identifies steps that can be taken toward implementation. It provides a framework for continuing to make measurable quality improvements, reducing patent application pendency, increasing the percentage of patent applications filed electronically and improving worldwide intellectual property expertise.

The five-year plan also has a management goal of achieving organizational excellence. As part of this goal, the agency will strive to become an employer of choice with a culture of high performance and to enhance organizational communication, prerequisites to achieving the strategic goals focused on the agency’s core mission.

The plan is the outcome of a collaborative process that included input from the public, stakeholders and employees. A draft Strategic Plan was released in September 2006 and comments were solicited. Through public comment, employee focus sessions and the input of the Patent Public Advisory Committee and the Trademark Public Advisory Committee, the plan’s ambitious goals are more clearly stated.  Further, the final plan seeks to outline transformational strategies that balance the short-term needs of today’s applicants with strategic changes needed to deal the increasing complexity and numbers of patent applications.