Federal Circuit Authorizes Qui Tam False Marking Cases

In a decision interpreting the false marking section of the Patent Act, 35 U.S.C. § 292, the Federal Circuit authorized so-called “quit tam” suits against defendants who falsely mark their goods with an intent to deceive, and held that "the statute's plain language requires the penalty to be imposed on a per article basis." The decision, Forest Group, Inc. v. Bon Tool Company, No. 2009-1044, ___ F.3d ___ (Fed. Cir. 2009)  (Rader, Plager, Moore, JJ.), held that the district court erred when it assessed only $500 in penalties against Forest where the evidence supported a decision that multiple articles were falsely marked with an intent to deceive. In dicta, the court noted that “Congress’ interest in preventing false marking was so great that it enacted a statute which sought to encourage third parties to bring qui tam suits to enforce the statute.”  Slip Op. at 12.

A writ of qui tam is a common law writ given to private individuals who assist prosecution, permitting them to receive all or any part of the penalty imposed.  Judge Moore, who authored the panel’s unanimous decision, reasoned that “[b]y permitting members of the public to sue on behalf of the government, Congress allowed individuals to help control false marking.”  Slip Op. at 13.

Allegations of infringement in the case were based on U.S. Patent No. 5,645,515 (the ’515 patent), which includes claims covering spring-loaded parallelogram stilts of the type commonly used in construction. Following a claim construction and summary judgment order resulting in a determination of non-infringement, the district court held a bench trial on the defendant’s false marking counterclaims. The district court found that Forest falsely marked its stilts with its ’515 patent number after a summary judgment order of noninfringement was entered in an unrelated case pending in the District of Minnesota against another defendant, Warner Manufacturing Company, and assessed Forest a $500 fine for a single offense of false marking.  The court found that the summary judgment order of non-infringement in the Warner case provided Forest with knowledge that its own articles were not covered by the ‘515 patent.  Slip Op. at 4.

In reversing the district court’s construction of § 292, the Court held that “[t]he plain language of the statute does not support the district court’s penalty of $500 for a decision to mark multiple articles. Instead, the statute’s plain language requires the penalty to be imposed on a per article basis” and reversed on that basis for a calculation of the penalty on a per-article basis. The statute provides a fine of “not more than $500” for each offense. Slip Op. at 8. “By allowing a range of penalties, the statute provides district courts the discretion to strike a balance between encouraging enforcement of an important public policy and imposing disproportionately large penalties for small, inexpensive items produced in large quantities.” Slip. Op. at 13. 

i4i Prevails on Appeal

Today, the CAFC decided the i4i appeal in what appears to be a sweeping victory for i4i. "We affirm the issuance of the permanent injunction, though we modify its effective date to accord with the evidence. In all other respects, we affirm for the reasons set forth below."

My previous posts on this case are found here. There will certainly be more to say about this opinion, but one thing that jumps out at me immediately is the sharp criticisms of certain decisions made by trial counsel not to seek per-verdict JMOL on the amount of damages.  Failing to seek pre-verdict JMOL is unfortunately a common error, but in this case, the decision appears to have been a deliberate one for strategy reasons.  What strategy, I'm not sure; there is little doubt, however, that Microsoft has some of the most high-powered and talent lawyers, so I'm sure there are reasons.  This is from the opinion:

"Although Microsoft now objects to the size of the damages award, we cannot reach that question because Microsoft did not file a pre-verdict JMOL on damages. ... Had Microsoft filed a pre-verdict JMOL, it is true that the outcome might have been different. Given the opportunity to review the sufficiency of the evidence, we could have considered whether the $200 million damages award was 'grossly excessive or monstrous' in light of Word’s retail price and the licensing fees Microsoft paid for other patents. Cf. Lucent, 580 F.3d at 1325-32.  As this court did in Lucent, we could have analyzed the evidentiary basis for the Georgia-Pacific factors, and whether the benchmark (XMetaL) was sufficiently comparable. Id."

Federal Circuit Scraps Point of Novelty for Design Patents

I'm happy to report that the case I recently argued at the Federal Circuit resulted in new law for anticipation of design patents.  Here is the article written for Darby & Darby.  Articles have also appeared in the National Law Journal and IP 360 (subscriptions required for both).

The Court of Appeals for the Federal Circuit has changed the law of anticipation for design patents.  The so-called "point of novelty" test was recently scrapped in a case handled by Darby & Darby.  Representing Walgreens and its supplier, Darby litigator Mark P. Walters argued for the Court to bring its case law in line with another recent decision that had changed the law of design patent infringement, Egyptian Goddess v. Swisa, 543 F.3d 665 (Fed. Cir. 2008). "The Court's decision in Egyptian Goddess eliminated the point of novelty test for infringement, so it made sense that the same should happen for anticipation," Walters said.  Writing for the majority, Judge Timothy Dyk agreed, saying "[i]t has been well-established for over a century that the same test must be used for both infringement and anticipation."  The case is International Seaway Trading Corp. v. Walgreens, (2009-1237), and the patents-in-suit are U.S. Patent No. D529,263; D545,032, and D545,033.

Implicit Networks Accuses Windows Seven of Infringement

If it wasn't any good, no one would be accusing it of infringement, right?  Unwelcome flattery of this nature was thrust upon Microsoft and its successful Windows Seven product last week when a patent infringement case was brought by local patent licensing company, Implicit Networks.

Implicit owns US 6,629,163, Method and System for Demultiplexing a First Sequence of Packet Components to Identify Specific Components Wherein Subsequent Components are Processed without Re-Identifying Components.  According to the complaint, this technology is used in Microsoft's Windows Seven "Filtering Platform."

The True Cost of Discovery Disputes

"The parties have done their level best to avoid and undermine the purposes of the meet and confer requirements," was Judge Lasnik's opening sentence for a recent ruling granting in-part a motion to compel discovery filed by Defendants Industrial Ventilation, Inc. This is a case for patent infringement brought by Pace International who owns U.S. Patent No. 6,723,364 ("Fog Treatment Method Using a Liquid Composition For Treating Fruits And Vegetebles")

While Defendants were granted some of the relief requested, their approach was harshly criticized in the order.

"In the circumstances presented here, compliance with the Rules would have involved face-to-face or telephonic communications regarding the particular deficiencies defendants perceived in plaintiffs’ discovery responses. Instead, defendants wrote two letters identifying deficiencies, demanding supplementation, and stating that if plaintiffs “would like to discuss this matter further,” they should contact defense counsel. In the midst of a separate dispute regarding defendants’ expert report, defendants demanded that plaintiffs “provide supplementation of discovery or renewed objections by the end of the day [October 9, 2009]” or defendants would proceed with a motion to compel. Decl. of Brandon H. Pace (Dkt. # 41), Ex. 13. Plaintiffs correctly pointed out that they had already agreed to supplement their responses, that the parties were not at an impasse, and that a motion to compel in that situation was not likely to succeed. Decl. of Brandon H. Pace (Dkt. # 41), Ex. 14. Plaintiffs ultimately failed to produce any additional documents or make any further response to defendants’ discovery requests by the end of the day on October 14, 2009. Defendants filed this motion on October 15th.

There is no evidence that the parties had substantive face-to-face discussions regarding any of the issues raised in defendants’ motion. As is clear from the memoranda, the positions of the parties were unknown when defendants filed their motion, a sure sign that the requirements of Rule 37(a) have not been satisfied. 

Defendants' were not alone in their receipt of criticism


The fault is not solely on defendants’ side, however. After indicating a willingness to reevaluate their objections and supplement their responses, plaintiffs failed to act, leaving defendants in the untenable position of having to restart the meet and confer process or file a premature motion. Because both parties are responsible for the failure to comply with the meet and confer requirements of Rule 37(a), the Court will address the parties arguments with the warning that future failures may result in sanctions under General Rule 3."


This is an unfortunate reminder how discovery disputes can undermine both litigants' credibility with the presiding judge.  Many other districts have magistrate judges handle discovery disputes.  In this district, by design, the presiding judge will hear discovery disputes.  Built into this system is a strong incentive to avoid discovery disputes at all cost, for it is rare indeed that one party will emerge from the dispute untarnished by the process.

Seattle Patent Litigation Update: December 2009

As we enter the last month of 2009, there is much to report on the state of local patent litigation.

Here are some interesting orders that were issued over the past few months.

On October 23, 2009, Judge Pechman stayed a patent case filed by National Products, Inc. against Gamber-Johnson LLC. The case involves allegations that Gamber-Johnson has willfully infringement NPI's U.S. Patent Number US 7,573,706.  No reasons were given for the stay other than the fact that a request for reexamination of the patent-in-suit was filed.  (See Dkt. No. 20: "The Court has considered the submissions of the parties and determined that a stay is proper.")

On November 19, 2009, Judge Jones granted a motion for partial summary judgment in favor of Defendant Toyota Motor Corporation in a patent suit brought by independent inventor (and former Boeing in-house Patent lawyer), Conrad Gardner.  Mr. Gardner is the named inventor on U.S. Patent number 7,290,627, "Extended Range Motor Vehicle Having Ambient Pollutant Processing," with claims drawn to "[a] hybrid motor vehicle."  The priority date on the '627 patent is June 23, 1997, which is well before any of Toyota's patents in the hybrid vehicle space.  This all sounds good for the plaintiff, but unfortunately, the case is not going very well at all for Mr. Gardner.  Recently, Claim 6 (ostensibly the broadest claim) was invalidated as indefinite.  The grounds: lack of antecedent basis.  Claim 6 of the '627 patent had a glaring error in that the element "said speed demands," a remnant of a former dependent claim, lacked any antecedent basis at all.  This is true despite the fact that Claim 6 was the product of two CIPs, one Continuation application, and a successful Appeal to the Board of Patent Appeals and Interferences, which in 2005 reversed the Examiner's prior art-based rejections. 

Reading Judge Jones' order (and that's all I've read in connection with Toyota's motion), it is not immediately clear whether Gardner addressed this error head on, or whether attempts to file a reissue to correct this drafting mistake were initiated.  For example, Judge Jones' order states "Mr. Gardner does not respond directly to Toyota’s claim of the lack of express antecedent basis. Instead, Mr. Gardner’s response offers multiple constructions of the term 'said speed demands.'"

On September 24, 2009, local software company specializing in wireless data and communications, Airbiquity Inc., settled its patent case involving claims of infringement against AT&T Mobility LLC.  The patents in suit are U.S. Patent Nos. 6,681,121 ("Circuitry for Activating a Modem in a Cellular Telephone") and 7,206,305 ("Software Code for Improved In-band Signaling for data Communications Over Digital Wireless Telecommunications Networks").

The Airbiquity settlement comes after its counsel, Dorsey & Whitney, sought leave of court to withdraw as counsel for Airbiquity in view of its existing representation (unrelated matters) of Motorola and Apple who are not parties to the action, "but whose interests might be adversely affected if plaintiff prevails in this matter."  The motion raised novel issues under Washington law with respect to possible ethical concerns raised by representation of a litigant on legal issues that might be adverse to an existing client, although the current representation is not "directly adverse" to any existing client.

From Judge Zilly's order:

"Washington courts have not yet had occasion to opine on the ethical concerns raised
by Dorsey in this case. In this matter, Dorsey represents a patent holder claiming that a
cellular telephone service provider is infringing one or more of its patents. Dorsey also
provides unrelated legal services to a manufacturer of cellular telephones that has an
exclusive service arrangement with the provider being sued in this matter. In its motion to
withdraw, Dorsey has represented to the Court that the infringement contentions asserted by
Dorsey on behalf of one client (plaintiff) reach one or more of the products manufactured by
Dorsey’s other client (Apple). Motion at 1 (docket no. 133). Dorsey also indicates,
however, that plaintiff does not intend to join Apple as a party in this litigation."


Further, the order goes on to state:

"The Court is not persuaded that Dorsey has a concurrent conflict of interest. The
Court recognizes that the conflict of interest rules concerning current clients are different
from those involving former clients, and that the prohibition against representing clients
whose interests are adverse applies even when the matters in which the lawyer has provided
services are not the same or substantially related. Compare RPC 1.9(a) (“A lawyer who has
formerly represented a client in a matter shall not thereafter represent another person in the
same or a substantially related matter in which that person’s interests are materially adverse
to the interests of the former client unless the former client gives informed consent,
confirmed in writing.”). The concurrent conflict rule is premised on an attorney’s duty, and a
client’s legitimate expectation, of loyalty. See Concat LP v. Unilever, PLC, 350 F. Supp. 2d
796, 815 (N.D. Cal. 2004). It is also designed to safeguard client confidences. See
Prudential Ins. Co. v. Anodyne, Inc., 365 F. Supp. 2d 1232, 1237 (S.D. Fla. 2005). Dorsey
has not shown that either of these goals would be compromised if it is not allowed to
withdraw from representation of plaintiff in this action."


In addition to the above happenings, the following new cases were filed since September, bringing our year-to-date patent case total to 34, well behind where we were last year on this day; 42 patent cases filed in 2008 by December 3 of that year.  Numbers seem to be down everywhere, including East Texas.  On December 3, 2008, East Texas had 290 patent cases filed.  This year, just 230 cases filed by December 3. (Source: justia.com).  Numbers are down in East Texas for many reasons, not just the economy.  Indeed, some of you may have heard that yesterday, the CAFC granted mandamus again, reversing an order refusing to transfer venue to the E.D. of North Carolina.  See In re Hoffmann La-Roche Inc., 09-M911 (Fed Cir. 2009). That is the third time in less than a year that the CAFC has granted mandamus in order to reverse the Eastern District of Texas, albiet applying Fifth Circuit Law. See In re TS Tech USA Corp., 551 .3d 1315, 1322 (Fed. Cir. 2008) and In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009).  Times, they are a-changin'

Now, the list of Washington cases since September 2009.

Lectent LLC v. SAS Group Inc et al  (September 29, 2009)

Logan v. BabyPlus Company et al (October 1, 2009)

Laughing Rabbit Inc v. Stever (October 5, 2009)

Direct Route LLC v. OnOffline Inc et al (October 22, 2009)

LED Dental Ltd et al v. Trimira LLC et al (November 6, 2009)

Cequint Inc v. Toysoft Development Inc (November 6, 2009)

WRE-Hol LLC v. Pharos Science & Applications Inc et al (November 17 2009)

That's all for now.