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Category Archives: Sanctions

SoCal IP Institute :: December 17, 2012 :: Withdrawing Terminal Disclaimers and Rule 11 Sanctions

We will be discussing two Federal Circuit cases during our weekly SoCal IP Institute meeting on Monday, December 17, 2012. Brief synopses are presented below.

In Re Yamazaki, Case No. 2012-1086 (Fed. Cir. December 6, 2012) (attached).

During the prosecution of U.S. Patent 6,180,991, Applicant Yamazaki filed a terminal disclaimer to overcome an obviousness-type double patenting rejection based on his earlier issued U.S. Patent 4,581,476.  Yamazaki later amended each independent claim of the application such that he believed the claims were now patentably distinct over the prior ’476 patent.

Accordingly, Yamazaki filed a petition request to withdraw the terminal disclaimer. Unfortunately, the PTO did not act on the petition for some time.  The examiner issued a Notice of Allowance and Yamazaki paid the issue fee while the petition to withdraw was still pending.  The ‘991 patent issued on January 30, 2001.  The PTO eventually dismissed the petition based upon its conclusion that a terminal disclaimer cannot be nullified after issuance.

On January 16, 2002 Yamazaki filed a reissue application seeking to rescind the terminal disclaimer.  The PTO did not act on the reissue until 2004, which is after the ’991 patent with the terminal disclaimer had expired. After an in-person interview in 2005, the examiner agreed in writing that a Reissue application could be used to correct a terminal disclaimer. However, the PTO delayed further action for more than two more before issuing another non-final office action rejecting the reissue application as premised on a defective basis for reissue.

Yamazaki then appealed to the BPAI on September 24, 2007.  The BPAI did not issue its initial decision until January 11, 2011, where they held that the PTO could not reissue the ’991 patent to remove the terminal disclaimer under 35 USC § 251 because the statute (1) prohibits reissuing an expired patent, and (2) precludes expanding a reissued patent’s term beyond that set when the original patent issued.

On appeal, the Federal Circuit affirmed, holding that the plain language of § 251 along with § 253 prohibit using a reissue to expand a patent’s term.

Raylon LLC. v. Complus Data Innovations, Inc., Case No. 2011-1355 (Fed. Cir. December 7, 2012) (attached).

Raylon owns U.S. Patent No. 6,655,589, directed to a hand-held identification investigating and ticket issuing system.  The object of the invention is to provide an affordable, durable system that reduces the amount of time a user spends identifying and issuing tickets and allows the user to maintain visual contact with the individual throughout the process. The system has a housing with an input assembly for entering data, an elongated slot for receiving identification forms that have a magnetic tape, an elongated aperture for access to the housing’s interior, a transceiver assembly to communicate remotely with a computer, a printer assembly for printing tickets, and a display, pivotally mounted on the housing.

Raylon filed three suits in the US District Court for the Eastern District of Texas against software integrators and product component manufacturers of various ticket-writing and enforcement handheld devices, alleging direct infringement literally and under the doctrine of equivalents, induced infringement and contributory infringement. The defendants filed motions in each suit for Rule 11 sanctions, stating that Raylon’s complaints violated Rule 11(b)(2) and Rule 11(b)(3) because, inter alia, Raylon’s claim construction positions were unsupportable by intrinsic evidence and its infringement positions with regards to the display, magnetic strip reader, and printer elements of the asserted claims were unreasonable.

The district court granted summary judgment in favor of the defendants, denied their motions for Rule 11 sanctions, and denied attorneys’ fees and costs under 35 U.S.C. 285, citing its Rule 11 decision.

The Federal Circuit reversed as to Rule 11, stating that the district court erroneously evaluated Raylon’s damages model and early settlements to determine whether it brought its suits in good faith or merely to obtain nuisance value settlements.   The Court stated that the district court should not have evaluated what Raylon’s motives were in bringing the litigation, rather should have conducted an objective inquiry.  “The district court denied Rule 11 sanctions through the lens of an erroneous view of the law, and thus abused its discretion.”  The Court also vacated as to the denial of attorneys’ fees because the court’s evaluation of section 285 relied on its Rule 11 analysis.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, December 17, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.


SoCal IP Institute :: July 30, 2012 :: Monetary Attorney Sanctions and Patentable Subject Matter

We will be discussing two Federal Circuit cases during our weekly SoCal IP Institute meeting on Monday, July 30, 2012. Brief synopses are presented below.

Rates Tech., Inc. v. Mediatrix Telecom, Inc., Case No. 2011-1384 (Fed. Cir. July 26, 2012) (attached).

In a patent infringement suit related to systems for converting existing telephone systems to voice-over-IP systems, the district court dismissed the case and imposed monetary sanctions against the plaintiff and the plaintiff’s counsel for failing to comply with the court’s repeated orders to respond to defendant’s interrogatory.

The plaintiff’s counsel did not appeal the dismissal of the case.  Rather, the plaintiff’s counsel argued that he should not be sanctioned for failing to provide information that he did not have.  The Federal Circuit pointed out that the magistrate judge had determined that the plaintiff and plaintiff’s counsel did have the information sufficient to respond to the interrogatories and that to the extent he lacked information it was because he “failed to take the most basic steps needed to fulfill the plaintiff’s discovery obligations.  Monetary sanctions in the amount of $86,965.81 affirmed.

Bancorp Serv., L.L.C. v. Sun Life Assurance Co. of Canada, Case No. 2011-1467 (Fed. Cir. July 26, 2012) (attached).

This case is a patent infringement suit involving two patents disclosing systems and methods for administering and tracking the value of life insurance policies in separate accounts.  The district court held that the patents failed to meet the “machine-or-transformation” test and found that the recited computer components were not necessary for carrying out the patented process.  “[A]lthough it would be inefficient to do so, the steps for tracking, reconciling and administering a life insurance policy with a stable value component can be completed manually.”

The Federal Circuit affirmed, stating that a computer-implemented abstract process is ineligible for patent protection under 35 U.S.C. § 101 where the computer does not play a significant part in the performance of the claimed invention.  The computer increased efficiency but was not necessary to perform the process.  The Court distinguished this case from its recent CLS Bank v. Alice Corp. case stating that the computer limitations in CLS Bank played a “significant part” in the claimed method.  In this case, however, the computer was just a facilitator to using an abstract concept.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 30, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.

SoCal IP Institute :: July 23, 2012 :: Scope of Waiver and Attorney Fees

We will be discussing one Federal Circuit case and one California Court of Appeals case during our weekly SoCal IP Institute meeting on Monday, July 23, 2012. Brief synopses are presented below.

Wi-Lan, Inc. v. LG Electronics, Inc., Case No. 2011-1626 (Fed. Cir. July 13, 2012) (attached).

Wi-LAN’s attorneys at Kilpatrick Townsend (formerly Townsend & Townsend) prepared a letter analyzing the scope of LG’s infringement of Wi-LAN’s patent, which allegedly reads on the “V-chip” technology in television sets.  Wi-LAN forwarded the Townsend letter containing the analysis to LG in hopes of convicing LG to pay royalties. When LG refused to pay royalties, Wi-LAN sued for patent infringement.  Once litigation started, LG requested that Kilpatrick disclose documents and testimony relating to the Townsend letter.  Kilpatrick refused based upon its argument that the requested information was protected by attorney-client privilege.  LG argued that any privilege was waived by Wi-LAN’s voluntary disclosure of the letter.  The district court for the Northern District of California sided with LG and held Kilpatrick in contempt-of-court when they failed to produce the information.

On appeal, the Federal Circuit asserted jurisdiction to review the district court’s contempt order in an ancillary proceeding to a patent infringement case.  The Federal Circuit determined that Ninth Circuit law controls in reviewing the district court’s ruling and then tried to predict how the Ninth Circuit would decide the issue.  In vacating the district court’s decision, the Federal Circuit held that the district court applied the wrong standard in determining the scope of waiver and stated that a fairness balancing is required.  The Federal Circuit vacated the district court’s orders and remanded for further proceedings.  The court also vacated the entry of contempt sanctions.

SASCO v. Rosendin Electric, Inc., Case No. G045229 (Cal.App.4th July 11, 2012) (attached).

SASCO sued Rosendin and three of its employees, who were formerly SASCO employees, claiming that the employees had misappropriated trade secrets and used the trade secrets to win a bid for a contract for the Verizon Tustin Project.  During discovery, the two sides had several disputes and the court had to enter at least three orders pertaining to the discovery disputes.  SASCO was unable to find sufficient evidence that the former employees misappropriated any trade secrets and dismissed its claims rather than respond to a motion for summary judgment by defendants.  The defendants then sought attorney fees, claiming that the action had been brought in bad faith.

The trial court found that SASCO had brought the case in bad faith under California’s version of the UTSA. The trial court stated that SASCO only had a suspicion that its former employees had taken other trade secrets, but lacked a sufficient basis for asserting the claim and faulted SASCO for not conducting a thorough investigation before filing the lawsuit.  The trial court granted the defendants’ motion for attorney fees and costs, awarding a total of $484,943.46.

The California Court of Appeals affirmed the award of attorney fees and costs, holding that the trade secret claims were “objectively specious” which it defined as an action that superficially appears to have merit but for which there is a complete lack of evidence to support the claim.  The defendants had submitted declarations by the former employees and the general contractor on the Verizon Tustin Project attesting that they did not provide Rosendin with any trade secrets from SASCO.   The Court stated that the defendants were not required to conclusively prove a negative.  Instead, under the “objectively specious” standard, it was enough for defendants to point to the absence of evidence of misappropriation in the record.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 23, 2012 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Attalla by 9 am Monday morning.

SoCal IP Institute :: August 1, 2011

We will be discussing the following two cases in our weekly meeting on Monday, August 1, 2011. Brief synopses of the two cases are presented below., Inc. v. EDriver Inc. (9th Cir. 7/28/2011) (attached)

In an action arising from a very close imitation of the state DMV’s website by a private, commercial website and alleging unfair competition and false advertising, judgment of the district court is affirmed in part and reversed in part where the court held that defendants violated section 43(a) of the Lanham Act, 15 U.S.C. section 1125(a), but rejected plaintiff’s state unfair competition claims with an injunction ordering the defendants to publish a disclaimer on its website, while denying plaintiffs’ monetary relief and attorney’s fees.

General Protecht Gp. (Zh. Dongzheng) v. Leviton Mfg. (Fed. Cir. 7/8/2011) (attached)

In a dispute arising from the grant of a preliminary injunction to enforce a forum selection clause in a settlement agreement, judgment of the district court is affirmed where it correctly determined that the forum selection clause applies to the case and did not abuse its discretion in granting the preliminary injunction.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, August 1, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.

SoCal IP Institute :: July 25, 2011 :: Exceptional Cases Under 35 U.S.C. 285 and The USPTO’s Proposed Changes to 37 C.F.R. 1.56(b)

We will be discussing one district court case awarding attorney’s fees under 35 U.S.C. 285 in a patent suit and the USPTO’s proposed new rule 1.56(b) after Therasense.  We will discuss the case and proposed rule in our weekly SoCal IP Institute meeting on Monday, July 25, 2011.  Brief synopses are presented below.

Precision Links, Inc. v. USA Product Group, Inc., Case No. 3:08cv576 (W.D.N.C. July 13, 2011) (attached). This is a district court decision from a district court we do not typically follow closely, but the decision implicates patent plaintiff’s potential liability for bringing a patent suit without an adequate pre-filing investigation.  In the case, Precision Links brought suit for infringement of a patent related to a tie-down strap used to hold cargo in place as it is transported.  After the defendants succeeded on a motion for summary judgment of noninfringement, they moved for an award of attorneys’ fees and costs under 35 U.S.C. 285.  The primary basis for the assertion that the case was “exceptional” was that the case was instituted in bad faith and objectively unreasonable.

The court agreed with the defendants who argued that the claim construction for the phrase “dimensioned for the passage therethrough” was completely lacking in support and was, therefore frivolous.  The court also agreed that the opinion of counsel sought by the plaintiff prior to bringing suit failed to follow the canons of claim construction, included no citations to the specification or prosecution history, and provided no analysis as to how the counsel chose to construe the patent claims.  Accordingly, the opinion relied upon by the plaintiff before bringing suit was unreasonable.  As a result, the court concluded that the case was exception under 35 U.S.C. 285 and awarded attorneys’ fees and costs.

Proposed Amendment to 37 C.F.R  1.56(b) (attached).  This is the USPTO’s revision to 37 C.F.R.  1.56(b) in response to the Therasense Federal Circuit inequitable conduct decision.

The proposed amendment, now open for comment, is as follows:

(b) Information is material to patentability if it is material under the standard set forth in Therasense, Inc. v. Becton, Dickinson & Co., ___ F.3d ___ (Fed. Cir. 2011). Information is material to patentability under Therasense if:

  1. The Office would not allow a claim if it were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction; or
  2. The applicant engages in affirmative egregious misconduct before the Office as to the information.

The proposed change mirrors the language of the Therasense decision.  This change lowers the bar on the duty of disclosure.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, July 25, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.

SoCal IP Institute :: April 11, 2011 :: Fed. Cir. R. 28(d) Sanctions and Likelihood of Confusion Analysis

We will be discussing two recent, relevant opinions in our weekly SoCal IP Institute meeting on Monday, April 11, 2011.  The first case is a decision imposes sanctions on an over-zealous use of confidential designations in Federal Circuit briefing. The second case affirms a TTAB decision to deny a trademark opposition.  A brief synopsis of the cases is presented below.

In re Violation of Rule 28(d), Misc. 976 (Fed. Cir. March 29, 2011) (attached). This is an order imposing sanctions upon a patent defendant, Sun Pharmaceutical Labs for extensive use of confidentiality desginations in violation of Fed. Cir. R. 28(d).  This is an appeal of a decision by the district court to enter a consent decree it believed was inconsistent with the terms to which it agreed.

Throughout Sun’s briefing of the appeal, it utilized confidential designations for legal argument, case citations and factual elements.  The Federal Circuit found the extensive use of confidential designations against public policy and otherwise unnecessary.  As a result, the Federal Circuit took the unusual step, for any court but especially for the Federal Circuit, of ordering sanctions of $1,000 against Sun’s counsel.

Citigroup, Inc. v. Capital City Bank Group, Inc., 2010-1369 (Fed. Cir. Mar. 28, 2011) (attached).  Citigroup appealed a decision of the Trademark Trial and Appeal Board to deny Citigroup’s opposition to several trademarks filed by Capital City Bank Group.  Citigroup has a number of marks including “CITI” and “CITIBANK”.   Capital City’s applications were for registration of various marks, each including the phrase “CAPITAL CITY BANK”.  The TTAB determined that Capital City’s marks should be allowed to register.

The TTAB reviewed the relevant DuPont factors and determined that the Capital City marks were not likely to cause confusion with the Citigroup marks.  While Citigroup’s marks were famous, the goods offered under the marks are similar and the channels of trade and classes of consumers are similar, the remaining factors weighed in favor of such a finding.  In particular, the spellings and words themselves were different and the word “Capital” was included in every Capital City application, therefore the marks themselves were distinct from one another.  The TTAB also determined that the was no actual confusion between the two sets of marks.  In view of these determinations and, having substantial evidence in support of the TTAB decision, the Federal Circuit affirmed.

All are invited to join us in our discussion of these cases during the SoCal IP Institute meeting on Monday, April 11, 2011 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Amanda Jones by 9 am Monday morning.