USPTO Director Issues Sanctions for Abusing IPR Process in OpenSky/VLSI

by David Hricik, Mercer Law School

The October 4, 2022 presidential decision awarding sanctions against OpenSky LLC and its counsel is here.  There are several amici briefs that went into this order which is a doozy.

Boiled way down, after VLSI obtained a verdict for $675 million against Intel, OpenSky was formed and, according to the Director, was formed solely to file an IPR petition that it copied from one that Intel had previously filed, but which had not been instituted based on the Finitiv factors.  The petition included copy of Intel’s expert’s declaration from it. Later, Intel joined the petition.

Then, OpenSky sought money from both Intel (or it would abandon/not zealously pursue the IPR, and so not save Intel from potential damages) and VLSI (or it would do so, and so jeopardize the judgment VLSI had obtained).  As the order found (because OpenSky refused to provide discovery as ordered by the Director):

In other words, in the absence of contrary evidence due to its discovery misconduct, OpenSky’s behavior and complaints about budgeting establish that it did not intend to pursue the patentability merits but instead intended to leverage the IPR’s existence only to extract a payout from one side or the other.

Continue reading USPTO Director Issues Sanctions for Abusing IPR Process in OpenSky/VLSI at Patently-O.

Judge Albright Identifies Outcome-Determinative Discrepancies in Federal Circuit Interpretations of Fifth Circuit Law Under 1404(a)

by David Hricik, Mercer Law School

Judge Albright granted Google’s motion to transfer venue under 28 U.S.C. 1404(a) from the Western District of Texas to the Northern District of California in an opinion in Motion Offense LLC v. Google, LLC (here).  Transfer is governed by regional circuit law, and so here, the law of the Fifth Circuit. What is interesting is the judge noting that the only reason transfer was granted is that the Federal Circuit had reached conclusions different from the Fifth Circuit on what Fifth Circuit law was.

First, one factor in determining whether the transferee venue is more convenient is whether process will be needed to compel testimony and so, if a witness is more than 100 miles from the courthouse, the witness is beyond subpoena power. Thus, if transfer makes it easier to compel more witnesses to testify, that indicates the transferee forum is more convenient.   Judge Albright noted that under Fifth Circuit precedent, the party seeking to transfer has the burden to show there are witnesses and they are unwilling and so transfer will aid in compelling testimony; but unpublished Federal Circuit cases “applying” Fifth Circuit law, say the opposite: unless there is a showing a witness is willing to testify, the court presumes they are not.

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Another Reason to File an Answer: Voluntary Dismissal Does not Make Defendant Prevailing Party

By David Hricik, Mercer Law School

In Haynes Holding Group LLC v. ESR Performance Corp. et al (C.D. Cal. 8:21-cv-02033 JVS (JDEx) (I can’t find a free version of the opinion), after the patentee sued, the defendant served a motion to dismiss for lack of personal jurisdiction.  The defendant did not file an answer and then move to dismiss for lack of personal jurisdiction, leaving the patentee free to file a notice of voluntary dismissal, which it did, since the defendant had not answered.

The defendant then argued it was a prevailing party under Section 285 and entitled to fees. Judge Selna (correctly in my view) reasoned that because the dismissal by operation of the Federal Rules of Civil Procedure was without prejudice, and so the patentee could sue on the same claim, the defendant had not prevailed and denied the motion. In part, the court reasoned:

Cases across multiple districts align in holding that voluntarily dismissing a case without prejudice does not render the other party the “prevailing party,” whereas dismissing with prejudice or filing for the dismissal of previously-voluntarily-dismissed claims. See, e.g., Realtime Adaptive Streaming LLC v. Netflix, Inc., 2020 WL 7889048 at *4-5 (C.D.

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Interesting Case on Assignability of Legal Malpractice Claims

By David Hricik, Mercer Law School

After Prince, the musician, died an engineer who had unreleased recordings hired a Massachusetts firm who advised the engineer that he was a joint author of the recordings and jointly owned copyright in them, and so could distribute the recordings subject to paying Prince’s estate a share of royalties.  He arranged to do so, and in part arranged it so the law firm would receive a percentage of sales.

Prince’s estate filed suit to enjoin further distribution.  The Massachusetts firm initially represented the defendant, but then was named as a defendant. The firm later was dismissed for lack of personal jurisdiction.  The case against the engineer settled, and as part of the settlement agreement the engineer assigned any claim against the lawyer to Prince’s estate.

Prince’s estate filed a legal malpractice suit — asserting the advice to the engineer had been flawed — against the Massachusetts law firm in Massachusetts.  The law firm moved to dismiss because legal malpractice claims are not assignable under Minnesota law.  The trial court granted the motion, but this court reversed, holding that under conflicts of law principles, Massachusetts law controlled and it permitted assignment (with exceptions).  

Continue reading Interesting Case on Assignability of Legal Malpractice Claims at Patently-O.

Interesting Case on Assignability of Legal Malpractice Claims

By David Hricik, Mercer Law School

After Prince, the musician, died an engineer who had unreleased recordings hired a Massachusetts firm who advised the engineer that he was a joint author of the recordings and jointly owned copyright in them, and so could distribute the recordings subject to paying Prince’s estate a share of royalties.  He arranged to do so, and in part arranged it so the law firm would receive a percentage of sales.

Prince’s estate filed suit to enjoin further distribution.  The Massachusetts firm initially represented the defendant, but then was named as a defendant. The firm later was dismissed for lack of personal jurisdiction.  The case against the engineer settled, and as part of the settlement agreement the engineer assigned any claim against the lawyer to Prince’s estate.

Prince’s estate filed a legal malpractice suit — asserting the advice to the engineer had been flawed — against the Massachusetts law firm in Massachusetts.  The law firm moved to dismiss because legal malpractice claims are not assignable under Minnesota law.  The trial court granted the motion, but this court reversed, holding that under conflicts of law principles, Massachusetts law controlled and it permitted assignment (with exceptions).  

Continue reading Interesting Case on Assignability of Legal Malpractice Claims at Patently-O.

Community Property and Patent Ownership

By David Hricik, Mercer Law School

Judge Payne in Mobile Equity Corp. v. Walmart (Case No. 2:21-cv-00126-JRG-RSP) (not available on line for free from what I can see) addressed an accused infringer’s argument that the assignment of the patent-in-suit from the sole inventor (Afana) to the plaintiff, Mobile Equity, was ineffective, and so the patentee lacked standing. The basis for the argument was that the application that led to the patent-in-suit had been filed while Afana had been married (to Kassam) and, by operation of Texas’ community property law, Kassam had an ownership interest in the issued patent that had not been assigned to Mobile Equity and had not been joined as a co-plaintiff.

The facts did not support that result here, it seems, and the motion to dismiss for lack of standing was denied.  The basis was that, ownership of the application had been held only in Afana’s name, as sole inventor), and as a result it had been properly conveyed to Mobile Equity.  Here is the key part (with citations and some quotations omitted):

Section 3.104, 4 entitled “Protection of Third Persons,” provides “where community property is held in one spouse’s name only, there is a presumption that the property is sole- management community property.

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Amicus Brief in Novartis v. Accord

By David Hricik, Mercer Law School

Dennis on the main page had written a couple months back about the opinion of Novartis Pharm. Corp. v. Accord Healthcare, Inc., 38 F.4th 1013 (Fed. Cir. 2022), and the “strange” way the result flipped from a 2-1 panel decision affirming a factual finding by a district court (which had been consistent with prior findings by the PTAB and others) that there had been written description, to a new panel issuing a 2-1 decision on re-hearing reversing the district court.  A group of us filed an amicus brief, not about the merits and “negative limitations” and written description doctrine, but about, to use Dennis’ word, that strange procedure. It is here.

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Disqualification due to Foreseeable Conflict Leads to $32m Malpractice Judgment

By David Hricik, Mercer Law School

Ordinarily, a conflict of interest leads to disqualification, but they can lead to fee disgorgement (an attorney is supposed to be loyal, and like any other agent, is not entitled to keep a fee earned while being disloyal) and, on occasion, damages.  In a case affirmed by the Ohio Court of Appeals, those damages were $32 million.

In RevoLaze LLC v. Dentons US LLP, 2022-Ohio-1392 (Ohio App. Apr. 28, 2022), requires understanding what a “verein” is. It is a legal entity recognized under Swiss law somewhat similar to an association. A few law firms are organized this way, including Dentons.

In RevoLaze, Dentons US (part of a verein of many Dentons “entities”) had represented a patentee, RevoLaze, in an ITC proceeding and 17 related infringement suits. At the start of the matter, Revolaze received funding from a litigation funding group, and Dentons US agreed to reduce and cap its fees but had the right to a percentage of any recovery. Dentons had indicated to the litigation funding group that the recovery indicated potential damages of around a billion dollars, and so it vetted the patents and the case and after that agreed to fund the proceeding and related litigation, in phases, for up to $8 million.

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