You know all those used music stores you used to love to go to back in the day when you bought music on CDs?  You could browse through used CDs and buy them for less than retail.  Maybe you still do (kudos to Deja Vu Records in Natick, Mass.).  Of course, you can do the same thing online.

The founders of Massachsetts-based Redigi figured, why can’t we create a marketplace that will allow people to do the same thing with their digital music files?  Or, as Redigi puts it: ” Sell your old songs legally – The world’s first used digital music marketplace - Buy used music insanely cheap”.  However, in starting this business Redigi may have run smack into the disconnect between the U.S. copyright statute and digital media.  And, it has been forced to defend against a full-on assault by the RIAA  (in the form of its apparent designee, Capitol Records).

Redigi’s service launched in October 2011, and by reason of the sheer chutzpah of its business model the copyright industry (the usual ragtag collection of lawyers, industry types, bloggers, reporters and hangers-on) was soon debating the legality or illegality of its service. By early November Redigi was holding a ”roll over and die” letter from the RIAA. By early January 2012 Capitol had filed suit against Redigi in the Southern District of New York.

Issue was joined quickly when Capitol filed a motion for preliminary injunction seeking, in effect, to shut Redigi down and end the case with a single, crushing legal blow.  The district court denied the motion, so Redigi remains alive for now.  However, the case is on a fast track – Capitol and Redigi have waived a jury trial, and the parties will be filing summary judgment motions this summer.  The case is likely to be resolved before the end of the year, at least in the trial court.

At the heart of the Redigi case is what seems to be a question of first impression under copyright law: does the the copyright “first sale” doctrine apply to the transmission of digital audio files?  The first sale doctrine says, in essence, if you have purchased and own a work protected by copyright law, you can resell it.*  If this were not the case it would be illegal for the owners of books, records, cassette tapes, CDs and DVDs to resell them.  Stephen King cannot complain, under copyright law, if a copy of  11/22/63 is legally purchased and then sold and resold 50 times, depriving King and his publisher of what might have been the revenue from 50 separate sales.

*But not if you’ve “licensed” it, and the license prohibits resale.  That is a whole other topic. And, it is likely the reason Redigi limits itself to music that originated with iTunes.  The same practice using music files from Amazon might not be permissible, since Amazon does purport to “license” its downloads, and the license prohibits transfers. 

However, its not clear that the first sale doctrine applies to digital recordings.  Capitol records argues it does not, at least in the form sold by Redigi, and the motivation behind its position, at least in part, is no secret – since you can replicate a digital audio file without limit, and every copy is identical to the original (no degradation in quality), what’s to stop someone from selling a copy and keeping the original?  If you are the prospective purchaser of the 30th resale of a Stephen King novel, you may hesitate – what shape is the book in? What’s that dark smudge on page 200?  Whose phone number is written in the margin of page 2?  If you’re buying a used CD you have to ask whether it’s scratched.

In the world of digital files, these concerns don’t exist – the distinction between an “original” and a “copy” is non-existent.  If you can purchase a legal “used” copy of Thunder Road for 79 cents through Redigi (yes, that tune is for sale (resale?) on Redigi), why pay $1.29 for it on iTunes?  And, of course, the RIAA executives are asking themselves, what’s to stop people from uploaded and selling tens of thousands of audio files on Redigi while keeping a “copy” that is the same, in all respects, on another device?  Looking beyond Redigi, who knows what Pandora’s box of illegal copying may be opened if first sale permits the resale of digital recordings?  Better to stop the leak before it becomes a flood.  Or so the RIAA may be thinking.

Redigi claims to have an answer to the music industry’s objections to its service, and it is quite clever.  Redigi advertises that it “has the technologies in place to ensure that once you sell a song, you no longer have access to it.  This is how ReDigi stays legit, and how you now have access to a new marketplace where rights long accepted in the physical world may now be applied to digital goods.”  More specifically, Redigi claims that its technology (1) verifies a potential seller owns a non-infringing copy, and  (2) ensures that any items sold will not remain on their computer or synced devices, such as an iPod or iPhone. Of course, this assumes a certain level of naiveté - if the seller is motivated and clever enough to move a “copy” of the file to an unsynced device, the owner of the file can have the file and sell it too.  Two computers will do the trick.  However, the fact that a user may go to this extreme to game the system seems irrelevant (legally) – Redigi is not encouraging it, and the fact that a legal product may be put to an illegal use is hardly the legal responsibility of the product’s manufacturer, as long as the illegal use is not encouraged.

Digging more deeply, it is clear that Redigi has put together an ingenious system.  As I understand it from the various court filings (mea culpa), Redigi operates as follows:

Step One: the user establishes a Redigi account and uploads a music file to the Redigi “music locker.”  The user, and only the user, can stream the track on her computer.  This act is legal under copyright law, since this kind of “space shifting,” as its called, is protected as “fair use.”  Thus far, Redigi asserts, it’s in the clear.  Moreover, in this process Redigi verifies that the file was purchased from iTunes and it is legal – that is, it was not ripped from a cd or is itself a copy.  Redigi digitally fingerprints the file, so that multiple copies of the file cannot be sold on Redigi.  And, importantly, Redigi deletes the copy on the user’s computer and synced devices, such as an iPod.  Thus, at this point the file exists only on the Redigi servers, the “Redigi cloud.”  If the user wants to listen to it, they must do so by streaming from the cloud.

Step Two: At some point the user tags the track as “for sale,” and potential buyers are able to see that the track is for sale.  If someone decides to purchase the track, it is re-designated in Redigi’s system as belonging to the new owner.   Redigi does not create a new copy of the file, it simply transfers “title” to the file on its system.

Step Three: The new owner can leave her new audio file on the Redigi server (the cloud locker) and stream it for her listening pleasure.  If the new owner decides to download it to her computer, it is deleted from Redigi.  A download by the new user is legal, since moving a file between the cloud and the owner’s computer is permissible.

This fiendishly clever invention has some serious brainpower behind it (Larry Rudolph, who has a PhD in computer science and has worked at MIT, Carnegie-Mellon and Hebrew University), and a patent pending.

How does Capitol respond?  Poppycock, claims Capitol Records in its lawsuit.  To quote a Capitol court filing, “rather than acknowledge what its service really does, Redigi recasts itself as a benign ‘cloud storage’ medium.  It dissects its service into isolated components, where users upload and download songs to ‘space shift’ for ‘personal, non-commercial’ use, and ‘pointers’ are ‘modified in the cloud’ so that no copying occurs during a resale transaction.”  In truth, Capitol argues, Redigi is an illegal “marketplace,” and Redigi is falsely trying to recast itself as a “cloud service.”

On another level, apart from name calling, hyperbole and accusations aimed at Redigi’s “true” purpose (all standard stuff when it comes to lawyering, I’m sorry to say), the case is being debated at in highly technical terms – technical in both the “computer sense” and the “copyright sense.”  Capitol has raised a multitude of claims, and Redigi as many defenses, but after you filter out the arguments that appear to be weak or red herrings, the central issue appears to be whether the resales facilitated by Redigi are protected by the first sale doctrine.  The law does not, Capitol argues, permit the resale of a digital file unless a material object changes hands, and Capitol assumes that electrons are not material objects.

Capital argues that the first sale doctrine permits owners of a “particular copy” (a “material object”)  in which a copyrighted work is “fixed,” to ”dispose of the possession of that copy.” However, the first sale doctrine does not apply to digital transmissions, which by their very nature do not involve the physical transfer of a material object, or so Capitol claims. If a digital resale can only be accomplished by reproduction of the original file and creation of a new copy, first sale does not apply.  Simply put, you don’t have the right to copy a copyrighted work in order to distribute or sell it to someone else, even if you destroy the original.  When a Redigi buyer purchases an audio file from Redigi, she is purchasing a “copy” of the purchasers file.  The only way this would not be true is if the purchase involved the physical object holding the file.  That, after all, is what a CD is – a disk holding digital files.  The first sale doctrine protects this kind of sale, whether the object being sold is on a vinyl disk, cassette tape, CD or DVD.  It would even allow someone to sell their iPod, loaded with iTunes songs.  But it doesn’t allow a digital transmission of a file, even if the original is simultaneously destroyed.

Many of these issues came to a head for the first time (but hopefully not the last) in early February, when U.S. District Court Judge Richard J. Sullivan heard Capitol’s motion for a preliminary injunction in federal court in New York.  Before the hearing Google requested leave to intervene in the case, noting the “complex and profound legal issues” raised by the case.  Judge Sullivan denied that motion.  However, Google made many of its point in its request letter, and Judge Sullivan undoubtedly got the message that in the small world of digital copyright law, this case is a big deal.

The outcome of the hearing was both good and bad for Redigi: the judge denied the injunction (which would have shut Redigi down while the case proceeded, and likely have ended Redigi’s existence altogether).  However, he did this on the relatively narrow, non-copyright-specific, ground that Capitol would not suffer “irreparable harm” without an injunction – that is, that Capitol could recover money damages if it ultimately won the case, and therefore any injunction should await final judgment in the case.  For Redigi, this was good.  However, according to the transcript of the hearing the judge also made comments suggesting he thought Capitol had the better case: “ I think likelihood of success on the merits is something that plaintiffs have demonstrated.”  This was bad.

The transcript (link below) makes interesting reading.  The judge appeared to be prepared, and he peppered the lawyers on both sides with hypothetical questions that the lawyers sometimes had difficulty addressing. For example, Capitol’s lawyer conceded that Capitol was not challenging the right to store a legally purchased digital recording in the cloud, if the purpose is not resale of the recording.  In a humorous exchange Capitol also allowed that it would have no objection to the Judge selling his iPod, loaded with recordings, to his law clerk.  ”That’s fine, because you transferred the material object.”*

* Tough question since it’s hard to disagree with a hypothetical that restricts the  judge and his clerk’s freedom of action.  The Capitol lawyer didn’t point out that if the original copies of these songs remained on the Judge’s computer (as is typically the case with iTunes music files), this would be an illegal transfer.  

However, based on a reading of the briefs and the transcript, it’s not clear that the judge really had a nuanced understanding of how Redigi works, or how copyright law might apply to Redigi’s system. Nothing in the transcript suggests that the judge understood that each “step” in the Redigi process was permitted, and therefore the system as a whole may be permissible.  Most judges and lawyers are not strong on computer technologies, and the hearing seemed to suffer from this shortcoming all around.  The judge even seemed to think it was relevant that Redigi could be misused (by the “second computer” trick, mentioned above). However, if Redigi doesn’t encourage misuse of the system, it can’t be blamed for the hypothetical misuse of it, so this should be irrelevant.

The case is now scheduled for summary judgment motions to be filed in mid-July, with oral argument to follow on August 17th.  A decision on these motions is likely to arrive sometime this Fall, and almost certainly by year end.  Hopefully, the outcome won’t turn on whether an electron is a “material object.”  And, one hopes that should the outcome be adverse to Redigi, it will have the resources to pursue an appeal to the Second Circuit Court of Appeals, which might be more receptive to the the “complex and profound” issues that lie at the heart of this case.*

Redigi Oral Argument Transcript (scribd)

Redigi Bench Ruling on Preliminary Injunction (scribd)

*Rick Sanders, at Aaron Sanders in Nashville, has written about this case at length (and in real time, as information on Redigi has been disclosed and the lawsuit has evolved) in a series of blog posts that are required reading for those seeking deeper understanding.  Click on “Redigi” under “Popular Tags” on Aaron Sanders site.

I’ve written before about how generous juries in the federal courts in the Eastern District of Texas (EdTX) are to patent plaintiffs. (link).  After I wrote about this a year ago there was a feeling that this trend might be reversing itself. However, Johnson & Johnson’s $1.6 billion judgment against Abbott and i4i’s $200 million verdict against Microsoft last summer put an end to those thoughts.

So, when Apple, Sirius XM and others were recently sued for patent infringement in EdTX they quite naturally looked for a way out.  Massachusetts, they told the Texas district court, was a far better choice, particularly when you considered the fact that that the patent owner, a non-practicing entity, had set up a Texas company shortly before filing suit, and located its business in the offices of its Texas lawyers.

But, it’s not that easy.

After the EdTX trial court refused to transfer the case to Massachusetts, Apple and its co-defendants filed a “mandamus” with the Federal Circuit.  Mandamus is a rare procedural tool.  Its a way to ask a court (typically an appellate court) to take an action that isn’t really an appeal (because the there is no final judgment), and no specific statute authority authorizing interlocutory appeal. I think it fair to say that fewer than one in a hundred lawyers has ever filed a “writ of mandamus,” (more likely fewer than one in five hundred).

However, Apple was desperate.  And it had a good argument, or so you would think.  Clearly, the plaintiff in this case set up the Texas corporation for one reason only: to establish venue in Texas.  One would think that even if the Texas court refused to transfer the case out of the state, the CAFC would see the unfairness in this tactic. Sadly, for Apple, this was not to be the case.  The district court denied the motion to transfer, and the Federal Circuit upheld this decision on appeal, stating:

To be sure, the status of Personal Audio, LLC, as a Texas corporation is not entitled to significant weight, inasmuch as the company’s presence in Texas appears to be both recent and ephemeral—its office is apparently the office of its Texas litigation counsel, and it appears not to have any employees in Texas. Nonetheless, the petitioners have not made a compelling showing that Massachusetts is a more convenient forum, particularly in light of the fact that none of the defendants is headquartered there. The district court also addressed and rejected the petitioners’ claim that Massachusetts would be a more convenient forum for prospective witnesses in the case, and we are not prepared to hold that the court’s conclusion in that regard was plainly incorrect. In sum, the petitioners have failed to satisfy the demanding standard required to justify the issuance of a writ of mandamus.

Link on Scribd.

I considered tagging this under “humor,” but that wouldn’t be right.  Several more of these at the author’s Youtube site

Attached below is Judge Judith Fabricant’s lengthy decision in Hilb Rogal & Hobbs v. Sheppard, decided by Judge Fabricant in the Suffolk Business Litigation Session early this year. To my knowledge, this decision and order became publicly available only recently.

This restrictive covenant case is interesting in one unusual respect: it involves what some lawyers like to call “employee raiding” – a perjorative term that one sometimes hears when a large group of employees leaves to join a new firm. Here, the group was unusually large, consisting of 24 employees who resigned en masse, leaving Hilb Rogal & Hobbs (HRH) identical resignation letters and advising HRH to contact the same lawyer in the event any legal communications were necessary.

HRH filed suit and moved for a preliminary injunction, presenting Judge Fabricant with a complex set of facts (the employees did not all have the identical agreements), and factual variations in their circumstances.

The decision breaks no new ground in Massachusetts noncompete law, but it’s worth making a few observations about how the Judge approached the case:

• Employees whose agreements were entered into in connection with a business that had been sold to HRH earlier were treated much more strictly than the “rank and file” employees, as one would expect given Massachusetts law.
• The Judge viewed HRH’s claim of interference with contractual relations favorably, given that the new employer offered it’s prospective employees defense and indemnification for anticipated litigation arising from a breach of their agreements. Since employers are often asked to provide this sort of protection for new employees who fear litigation of this sort, this decision emphasizes that a decision to hold the employee harmless can backfire.
• While the Judge was unwilling to say that agreements signed by employees as a condition of ongoing employment lacked consideration, she did treat this as an equitable factor that weighed against issuance of a preliminary injunction.
• There is no discussion of “raiding” in the decision and order.  In the past I’ve seen lawyers argue that the fact that the new employer hired a large number of employees should, of itself, give rise to some presumption of liability.  However, to my knowledge no Massachusetts judge has ever recognized a cause of action for “raiding”.  I don’t know if HRH made that argument in this case, but if it did Judge Fabricant did not address it.

Here is a link to the full decision.

Today, the Supreme Court agreed to decide this issue:

Whether an individual who used a false means of identification but did not know it belonged to another person can be convicted of “aggravated identity theft” under 18 U.S.C. 1028A(a)(1).

The case involves an illegal alien who was prosecuted for use of false identity papers. It must be hard enough to be arrested as an illegal alien, but much worse to discovery that your punishment will not be deportation, but rather indictment and trial for aggravated identity theft, a felony punishable with two years imprisonment with no probation allowed. Your defense: you may have purchased false identification in order to work, but you didn’t know that you were using another person’s social security number, as opposed to a purely fictitious SSN.

This is the situation that Ignacio Carlos Flores-Figueroa faced when the U.S. Court of Appeals for the Eighth Circuit held that the government was not required to prove that Mr. Flores-Figueroa knew that he was using another person’s ID, and upheld his two year sentence under 18 U.S.C. 1028A(a)(1). This was the second time that the Eighth Circuit had ruled this way on this issue.

Surprisingly, another federal appellate court saw it differently, and held that knowledge is an element of the crime. Thus, the Supreme Court was presented with a split of authority between the federal circuits which it has agreed to resolve.

Here’s the question, legal beagles and lovers of grammar and clear writing. The law reads:

[w]hoever, during and in relation to any felony violation enumerated in [§ 1028A(c)], knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years.

The Eighth Circuit held that this law is unambiguous, and therefore it need not look beyond the language of the law to examine the legislative history and congressional intent. If held that “knowingly” only modifies “transfers, possesses, or uses”, and therefore the government is not required to prove that a defendant knew the means of identification belonged to another person (as opposed to a fictitious person).

In U.S. v. Villanueva-Sotelo the U.S. Court of Appeals for the District of Columbia saw the issue differently, holding that the law was ambiguous, thereby permitting it to review the legislative history and the congressional purpose of the law. Based on this review the D.C. Circuit Court concluded that the mens rea (knowledge) requirement extends to the phrase “of another person,” meaning that the government must prove the defendant actually knew the identification in question belonged to someone else.

What do you think?

One of the great benefits of the Suffolk Business Litigation Session (the BLS) is that the judges tend to write detailed opinions explaining their decisions. This tends to be less true elsewhere in the Superior Court. Recently-retired Superior Court Judge Allen van Gestel created a tradition of written jurisprudence while he headed the BLS, and his successors are keeping up the tradition. While these decisions are not published in an official reporter, and they are not binding precedent in the strict legal sense, they are often made available on the Internet, on legal search engines such as Westlaw and in the unofficial Mass. Law Reporter. In this way attorneys and the public are informed on how the BLS judges tend to see issues that come before them. And of course, any given judge is likely to be greatly influenced by a decision he or she has authored on a particular issue; there’s nothing better than citing a judge back to herself.

The extensive and detailed opinion in The National Economic Research Associates, Inc. v. Evans, decided by Judge Ralph Gants in early September 2008, shows that the new BLS judges are continuing Judge van Gestel’s tradition of written decisions.

In NERA v. Evans Judge Gants was asked to decide (on summary judgment) a claim that David Evans had violated a covenant not to compete with NERA, his former employer. The noncompete issues were decided under New York law (the choice of law specified in the contract), but a number of other non-contractual claims made by NERA were decided under Massachusetts law.

While Judge Gants’ detailed application of New York state law to the issue of the enforceability of a noncompete provision is of limited relevance (except in future cases where the BLS is required to apply New York law in this context), it is interesting to note that Judge Gants (who ruled that the case should proceed to a damages trial on NERA’s claim that Evans violated his noncompete contract) warned the parties that at trial, NERA would have to prove that the clients that followed Evans to his new job would have continued to have been clients of NERA had Evans stayed at NERA.

This is a potentially difficult burden on NERA, since it requires NERA to prove a hypothetical. Former NERA clients may be willing or able to testify at trial to what they would have done had Evans stayed at NERA. Judge Gants’ ruling on this issue illustrates why noncompete cases (regardless of which state law applies) are usually won or lost at the outset of the case, when the former employer seeks a preliminary injunction prohibiting the former employee from working for the new employer. Once that stage of the case is over the plaintiff/former employer will rarely pursue damages (as NERA did here) given the difficulty of proving damages.

Apart from his ruling on the noncompete contract under New York law, Judge Gants entered some interesting rulings “off the contract” under Massachusetts tort law.

Ruling on NERA’s claim of tortious interference with contractual relations against the new employer, Judge Gants held that the alleged interference must be “improper in motive or means.” The injured party must prove “spiteful, malignant purpose unrelated to the corporate interest.” Since the former employer was unable to provide any evidence of this sort against NERA, this claim was dismissed. While it seems that companies that hire an employee subject to a non-compete agreement are sued as a matter of course under this theory, Judge Gants’ decision shows how difficult it may be to establish liability. One way in which this can be accomplished is to show that the new employer induced or encouraged the former employee to steal trade secrets or confidential information from the former employer, but conduct of that sort is somewhat rare.

NERA also claimed breach of fiduciary duty against the former employee, who had been an officer of NERA, and therefore owed a fiduciary duty to NERA. However, Evans had gone no farther than to “prepare” for competition before leaving NERA, and under the SJC’s Augat v. Aegis decision this claim also was dismissed. Interestingly, Judge Gants held that the fact that the de minimus use of NERA funds by Evans, and his occasional use of NERA’s phones and computer to negotiate his departure from NERA, “fell far short of a breach of fiduciary duty.”

Judge Gants dismissed the former employer’s rather bizarre claim (Judge Gants politely called it “clever”) that Evans had usurped a corporate opportunity belonging to NERA by negotiating his own departure from NERA. As Judge Gants stated, “If ones own employment were to be considered a corporate opportunity, then no officer of a corporation would be free to leave his employment unless he first offered ‘the opportunity’ of his services to his current employer and his employer rejected the opportunity.”

Lastly, Judge Gants dismissed NERA’s M.G.L. c. 93A claim against Evans’ new employer, holding that the inducement of a breach of an employment agreement alone, without improper motive or means, fell short of the type of “immoral, unethical, opppressive or unscrupulous” conduct necessary for a violation of Chapter 93A.

In the Medtronic v. BrainLab patent litigation in U.S. District Court in Colorado, Senior U.S. District Judge Richard P. Matsch has sanctioned Medtronic Navigation, Inc. and its lawyers $4.3 million, an amount which represents part of the attorney’s fees and costs incurred by BrainLab in defending this case. This order is a follow-up to his decision last February ordering that Medtronic be sanctioned, but not deciding (at that time) the precise amount of the sanction.

Unusual circumstances led to this disaster for Medtronic and its counsel. As many readers of this blog know, the judge, not the jury, determines the scope of the patent claims in patent litigation. This is done by the judge before trial, in what is often referred to as a “Markman hearing.” The name of the hearing is based on the 1996 U.S. Supreme Court decision in Markman v. Westview, which held that patent “claim interpretation” is the province of the judge, not the jury. After the judge determines the scope of the patent and the meaning of the claims, he or she instructs the jury accordingly, and the lawyers are expected to honor the judge’s rulings and tailor their case to the judge’s pre-trial claim interpretation.

So, what went wrong in the Medtronics case? Apparently, during the jury trial on infringement the lawyers for Medtronic (the plaintiff), argued outside of the scope of claim interpretation determined by the judge.

Making a federal judge angry is almost always a bad idea. This is especially true when the judge is 78 year old U.S. District Court Judge Maitch, who has been on the federal bench since Richard Nixon appointed him 34 years ago and seen it all. (Judge Maitch presided over the Timothy McVeigh Oklahoma city bombing case. ) After Medtronic lost its patent case, the judge wrote (earlier this year):

Upon reflection, this Court finds and concludes that the rulings on the claims construction issues adjudicated the fairly debatable issues in this case and that the manner in which plaintiffs’ counsel continued the prosecution of the claims through trial was in disregard of their obligations as officers of the court. The fairness of the adversary system of adjudication depends upon the assumption that trial lawyers will temper zealous advocacy of their client’s cause with an objective assessment of its merit and be candid in presenting it to the court and to opposing counsel. When that assumption has been contradicted by a trial record of conduct reflecting a winning is all that is important approach to the trial process, the court has a duty to redress this resulting harm to the opposing party.

The court continued:

Rather than accept that the claims construction rulings stripped the merits from this case, counsel chose to pursue a strategy of distorting those rulings, misdirecting the jury to a different reading of the claim language, and blatantly presenting the jury with a product to product comparison contrary to established law and the Court’s cautionary instructions. . . . Capping all of this was a closing argument that misdirected the jury’s attention from the focus of the case, carefully crafted to avoid the Court’s instructions. That argument distorted both the evidence and the law, misleading the jury . . . .

Concluding, he stated:

Throughout these proceedings Medtronic and [its] lawyers have demonstrated that when they are faced with adverse court rulings, they proceed undeterred, with only superficial observance of the court’s determinations. Such conduct supports the conclusion that after the Markman rulings, Medtronic’s primary objective in pursuing this litigation was to put economic pressure on its competitor in the market.

Medtronic is likely to appeal the sanction. However, its predicament is complicated by the fact that in addition to “advocacy abuse” during trial the judge found Medtronic’s case to be frivolous, and he awarded sanctions on independent statutory grounds.

What is puzzling about this case is how Medtronic was able to get away with its in-court behavior. One would expect defense counsel to object strenuously to plaintiff’s attempt to ignore the Markman ruling during trial. If Medronic’s counsel persisted, the trial judge should have taken them into his chambers (the place that everyone else calls an office) and read them the riot act, even going so far as to threaten to hold them in contempt if they violated his order. Why that didn’t happen here, and why this problem was allowed to progress as far as it did, is something of a mystery to those who weren’t present in the courtroom during trial.

The judge’s choice of the phrase “advocacy abuse” is also interesting. If you asked around you’d find that very few lawyers are familiar with this phrase. In fact, a Westlaw search shows that the phrase has been used on only a handful of occasions in U.S. case law.

While the court did find this to have been an “exceptional case” justifying an award of fees against Medtronic under 35 U.S.C. Section 285, and against its attorneys under 28 U.S.C. Section 1927 for “unreasonably and vexatiously” multiplying the proceedings, in the alternative it awarded fees against both Medtronic and its attorneys under the court’s “inherent authority,” a judge-made concept that provides that the courts may sanction litigations and attorneys for conduct tantamount to “bad faith.” One may be left wondering whether abuse of advocacy rises to the level of bad faith. Undoubtedly, an answer to this question will be provided on appeal.

Read the full decision here.

. . . the Supreme Court can only decide a couple of patent cases even in a banner year. And, many important patent issues may be so obscure as to discourage its generalist judges from addressing them. The rest, necessarily, are left to us. We have the expertise and the will to resolve doctrinal problems. What we lack is mainly the opportunity. Why for example did it take a full decade to revisit State Street? Because no one asked us to until recently. The same can be said of the central issue decided in KSR. It was never simply presented to us in a petition for en banc treatment. Oddly, we receive over a hundred a year. Yet few raise such fundamental issues as eligible subject matter under §101, or the Teaching-Suggestion-Motivation test, or the proper methodology for assessing requests for the permanent injunction, or barring them, future damages.

Speaking at the Harvard Law School Conference On Intellectual Property Law, September 9, 2008.

Click here for full text of speech.