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So, What Does Chief Justice Roberts "Really" Think of the U.S. Patent Office?

Question by C. J. Roberts at oral argument in Quanta v. LG, earlier this week:

we’ve had experience with the Patent Office where it tends to grant patents a lot more liberally than we would enforce under the patent law. (Transcript, p. 49, January 16, 2008).

The issue in Quanta is whether the licensed sale of components used in a patented invention exhausts the patent owner’s patent rights. The comment by Chief Justice Roberts was a reference to the Supreme Court’s decision in KSR Int’l v. Teleflex, Inc., which has been widely understood to have made it more difficult to obtain new patents and defend existing patents.

The Patent Office has been widely criticized for issuing unworthy patents. Do you think anyone there is paying attention?

David Byrne on the Evolution of Business Models in the Music Industry

David Byrne has published an interesting article in Wired on the various business models in the music industry, and how the Internet and digital music is changing those models and offering artists more opportunities.

David Byrne’s Survival Strategies for Emerging Artists – And Megastars

Where there was one, now there are six: Six possible music distribution models, ranging from one in which the artist is pretty much hands-off to one where the artist does nearly everything. Not surprisingly, the more involved the artist is, the more he or she can often make per unit sold. The totally DIY model is certainly not for everyone – but that’s the point. Now there’s choice. . . .

Recommended reading.

Amazon Caught in Common Settlement Trap

If you’re in the middle of a trial, don’t tell the judge that you’ve settled the case unless you absolutely, positively mean it. Amazon fell into this trap in its recent litigation with Basis Technology, a Massachusetts linguistics software company. On the third day of trial over a dispute arising out of a contractual relationship the parties informed the judge that the case had been settled. The judge ended the trial, but the settlement agreement that the parties then attempted to negotiate for signature foundered over the calculation of Amazon’s minority stock ownership in Basis, an important element of the settlement. After the dispute was brought to the attention of the trial judge she examined the negotiations and held that the intention of the parties had been to settle. She ruled that all of the material terms of the settlement had been agreed upon, and that Amazon’s objection to the stock calculation was a “post hoc objection” insufficient to derail the settlement. The trial judge refused to reopen the trial, and entered judgment on the terms sought by Basis.

Amazon appealed the judgment entered by the trial court, but the Appeals Court rejected the appeal. In addition to affirming the reasoning of the trial court judge, the Appeals Court emphasized an important principle, long recognized by many courts: when you report a case settled during trial, the court will bend over backwards to enforce the settlement, even if the terms are only oral.This case doesn’t create new law, or even apply a novel legal principle, but it serves as a reminder to be extremely careful, when reporting a settlement during trial, that in fact you have every important aspect of the settlement nailed down, and in writing. Amazon, or it’s counsel, forgot this, and paid the price.

You can read the full decision here.

Life: What A Concept

Edge has posted as a free online publication the complete transcript of this summer’s Edge event, Life: What a Concept! as a 43,000- word downloadable PDF book.

This is a transcript of an event that took place at Eastover Farm in Bethlehem, CT on Monday, August 27th, 2007. Invited to address the topic “Life: What a Concept!” were Freeman Dyson, J. Craig Venter, George Church, Robert Shapiro, Dimitar Sasselov, and Seth Lloyd. These scientists are some of the most visionary scientific thinkers in the world. Warning: this is heaving going ….

Click here to download the pdf file.

Lawyers Sanctioned $8.5 Million and Reported to State Bar Over Failure to Produce Electronic Evidence

When I was a new lawyer, working at Howrey in Washington, D.C, the firm ‘s client, Litton Industries, was sanctioned in the amount of $10 million for discovery misconduct – the failure to produce relevant documents during discovery. But for the sanction, Litton would have been entitled to an award of its costs and attorneys fees in the litigation, which it had won. I suspect, however, that Litton (and Howrey) took this with good graces – Litton had been awarded $277 million in damages. See Litton Systems, Inc. v. AT&T, 91 F.R.D. 574 (S.D. N.Y 1981), aff’d, 700 F.2d 785 (2nd Cir. 1983).

Ironically, the documents in question (which were produced very late but before trial) were ruled inadmissible at trial, and therefore the defendant suffered no prejudice as a result of the late production.

Even though I was not involved in this case while at Howrey, this painful episode for the firm and the lawyers directly involved left a lasting memory upon my young and impressionable mind, and I recalled it as I read about the pickle in which a group of California lawyers have found themselves in the patent case Qualcomm v. Broadcom.

In the Qualcomm case a key issue was whether Qualcomm, which accused Broadcom of patent infringement, had participated in the Joint Video Team (“JVT”), a standards-setting body. Broadcom aggresively sought discovery from Qualcomm on its involvement in JVT, under the theory that had Qualcomm participated in this process, it would have been barred from suing companies which used the Qualcomm technology that was adopted as part of the standard.

Qualcomm denied participation throughout discovery, but Broadcom had a few documents which gave it reason to believe that Qualcomm had participated in JVT. However, while preparing one of their witnesses during trial Qualcomm’s attorneys searched the witnesses’ laptop computer for the first time, and discovered 21 emails that contradicted Qualcomm’s position in the case, but which had not been produced. Even then the Qualcomm lawyers tried to avoid producing these documents (questioning this witness in such a way that she would not disclose their existence), and only on cross-examination of the witness by Broadcom did the truth begin to emerge. To make a long story short, Qualcomm’s case disintegrated during trial, and after trial (which Qualcomm lost), Qualcomm performed a search of its employee’s email archives, only to discover that there were more than 46,000 documents, totalling over 300,000 pages, that Qualcomm had failed to produce.

One can only imagine the feelings of Qualcomm’s outside counsel as this problem was uncovered and the full extent of the problem emerged. At first they tried to coverup the nondisclosure, and when they finally admitted the true facts the lawyers knew that this problem would be pinned on them as well as on their client. Lawyers are responsible, to some extent, for their client’s failure to provide discovery, and the ball and chain fell heavily on Qualcomm’s outside counsel. In fact, the judge found that Qualcomm had intentionally withheld the documents, that this could not have occurred without assistance or deliberate ignorance by its outside attorneys, and that significant sanctions were appropriate. The outside lawyers were hamstrung in their ability to defend their actions, since Qualcomm would not waive the attorney-client privilege.

The judge ordered Qualcomm to pay more than $8.5 million to Broadcom, which amount represented Broadcom’s attorney’s fees and expenses. He also referred several of the Qualcomm lawyers to the California State Bar, for possible sanctions for ethical violations.

What does this case say to lawyers representing clients in the future? In today’s business environment every comany has electronic evidence. In the “old days” a lawyer had only to search her clients’ file cabinets and warehouses to find relevant evidence. In fact, in the Litton/AT&T case discussed above, the hidden evidence was sitting in the desk drawer of an AT&T employee during the entire case. Now, an outside lawyer knows that failing to properly review a client’s electronic files can result not only in financial sanctions against the client, but in serious sanctions against the lawyer as well. This case emphasizes the reality that lawyers must carefully oversee their clients’ electronic discovery, that they cannot rely exclusively on their clients’ assurances, and that they must be alert to any inconsistencies or hints that full production of evidence may not be taking place.