Conflicts in Patent Prosecution:Avoiding the Ethical PitfallsMinimizing Risks of Malpractice Liability and Ethics Sanctions

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TUESDAY, JULY 12, 2016

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Jacob R. Osborn, Esq., Goodwin Procter, Washington, D.C.

Dr. Sandra P. Thompson, Of Counsel, Slater Hersey & Lieberman, Irvine, Calif.

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Hidden Traps:Subject MatterConflict of Interest inPatent Law

Hidden Traps:Subject MatterConflict of Interest inPatent LawSandra Thompson, PhD, JD

Slater Hersey & Lieberman, LLP

Conflict of Interest

A conflict of interest is a situationin which someone in a position oftrust, such as a lawyer, hascompeting professional orpersonal interests. Suchcompeting interests can make itdifficult to fulfill his or her dutiesimpartially.

A conflict of interest is a situationin which someone in a position oftrust, such as a lawyer, hascompeting professional orpersonal interests. Suchcompeting interests can make itdifficult to fulfill his or her dutiesimpartially.

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Conflict of Interest

A conflict of interest exists even ifno unethical or improper actresults from it. A conflict ofinterest can create anappearance of impropriety thatcan undermine confidence inthe person, profession, or courtsystem.

A conflict of interest exists even ifno unethical or improper actresults from it. A conflict ofinterest can create anappearance of impropriety thatcan undermine confidence inthe person, profession, or courtsystem.

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USPTO Rules

§ 11.108 Conflict of interest; Currentclients; Specific rules.

(b) A practitioner shall not use informationrelating to representation of a client to thedisadvantage of the client unless the client givesinformed consent, except as permitted orrequired by the USPTO Rules of ProfessionalConduct.

(k) While practitioners are associated in a firm, aprohibition in paragraphs (a) through (i) of thissection that applies to any one of them shallapply to all of them.

§ 11.108 Conflict of interest; Currentclients; Specific rules.

(b) A practitioner shall not use informationrelating to representation of a client to thedisadvantage of the client unless the client givesinformed consent, except as permitted orrequired by the USPTO Rules of ProfessionalConduct.

(k) While practitioners are associated in a firm, aprohibition in paragraphs (a) through (i) of thissection that applies to any one of them shallapply to all of them.

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USPTO Rules§ 11.109 Duties to former clients. (a) A practitioner who has formerly represented a client in a matter

shall not thereafter represent another person in the same or asubstantially related matter in which that person’s interests arematerially adverse to the interests of the former client unless theformer client gives informed consent, confirmed in writing.

(b) A practitioner shall not knowingly represent a person in the sameor a substantially related matter in which a firm with which thepractitioner formerly was associated had previously represented aclient:

(1) Whose interests are materially adverse to that person; and

(2) About whom the practitioner had acquired informationprotected by Sections 11.106 and 11.109(c) that is material tothe matter; unless the former client gives informed consent,confirmed in writing.

(c) A practitioner who has formerly represented a client in a matteror whose present or former firm has formerly represented a client in amatter shall not thereafter:

(1) Use information relating to the representation to thedisadvantage of the former client except as the USPTO Rules ofProfessional Conduct would permit or require with respect to aclient, or when the information has become generally known; or

(2) Reveal information relating to the representation except asthe USPTO Rules of Professional Conduct would permit orrequire with respect to a client.

§ 11.109 Duties to former clients. (a) A practitioner who has formerly represented a client in a matter

shall not thereafter represent another person in the same or asubstantially related matter in which that person’s interests arematerially adverse to the interests of the former client unless theformer client gives informed consent, confirmed in writing.

(b) A practitioner shall not knowingly represent a person in the sameor a substantially related matter in which a firm with which thepractitioner formerly was associated had previously represented aclient:

(1) Whose interests are materially adverse to that person; and

(2) About whom the practitioner had acquired informationprotected by Sections 11.106 and 11.109(c) that is material tothe matter; unless the former client gives informed consent,confirmed in writing.

(c) A practitioner who has formerly represented a client in a matteror whose present or former firm has formerly represented a client in amatter shall not thereafter:

(1) Use information relating to the representation to thedisadvantage of the former client except as the USPTO Rules ofProfessional Conduct would permit or require with respect to aclient, or when the information has become generally known; or

(2) Reveal information relating to the representation except asthe USPTO Rules of Professional Conduct would permit orrequire with respect to a client.

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USPTO Rules§ 11.118 Duties to prospective client. (a) A person who discusses with a practitioner the possibility of forming

a client-practitioner relationship with respect to a matter is aprospective client.

(b) Even when no client-practitioner relationship ensues, a practitionerwho has had discussions with the prospective client shall not use orreveal information learned in the consultation, except as 11.109 wouldpermit with respect to information of a former client.

(c) A practitioner subject to paragraph (b) of this section shall notrepresent a client with interests materially adverse to those of aprospective client in the same or a substantially related matter if theypractitioner received information from the prospective client that couldbe significantly harmful tot hat person in the matter, except as providedin paragraph (d) of this section. If a practitioner is disqualified fromrepresentation under this paragraph, no practitioner in a firm with whichthat practitioner is associated may knowingly undertake or continuerepresentation in such a matter, except as provided in paragraph (d) ofthis section.

(d) When the practitioner has received disqualifying information asdefined in paragraph (c) of this section, representation is permissible If:(1) both the affected client and the prospective client have giveninformed consent, confirmed in writing; or (2) the practitioner whoreceived the information took reasonable measures to avoid exposureto more disqualifying information than was reasonably necessary todetermine whether to represent the prospective client; and (i) thedisqualified practitioner is timely screened from any participation in thematter and is apportioned no part of the fee therefrom; and (ii) writtennotice is promptly given to the prospective client.

§ 11.118 Duties to prospective client. (a) A person who discusses with a practitioner the possibility of forming

a client-practitioner relationship with respect to a matter is aprospective client.

(b) Even when no client-practitioner relationship ensues, a practitionerwho has had discussions with the prospective client shall not use orreveal information learned in the consultation, except as 11.109 wouldpermit with respect to information of a former client.

(c) A practitioner subject to paragraph (b) of this section shall notrepresent a client with interests materially adverse to those of aprospective client in the same or a substantially related matter if theypractitioner received information from the prospective client that couldbe significantly harmful tot hat person in the matter, except as providedin paragraph (d) of this section. If a practitioner is disqualified fromrepresentation under this paragraph, no practitioner in a firm with whichthat practitioner is associated may knowingly undertake or continuerepresentation in such a matter, except as provided in paragraph (d) ofthis section.

(d) When the practitioner has received disqualifying information asdefined in paragraph (c) of this section, representation is permissible If:(1) both the affected client and the prospective client have giveninformed consent, confirmed in writing; or (2) the practitioner whoreceived the information took reasonable measures to avoid exposureto more disqualifying information than was reasonably necessary todetermine whether to represent the prospective client; and (i) thedisqualified practitioner is timely screened from any participation in thematter and is apportioned no part of the fee therefrom; and (ii) writtennotice is promptly given to the prospective client.

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Model Rules of Prof.Conduct

Client-Lawyer Relationship: Rule 1.7 Conflict Of Interest: Current Clients

(a) Except as provided in paragraph (b), a lawyer shall not represent aclient if the representation involves a concurrent conflict of interest. Aconcurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to anotherclient; or

(2) there is a significant risk that the representation of one or more clients willbe materially limited by the lawyer's responsibilities to another client, aformer client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest underparagraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to providecompetent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by oneclient against another client represented by the lawyer in the samelitigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

Client-Lawyer Relationship: Rule 1.7 Conflict Of Interest: Current Clients

(a) Except as provided in paragraph (b), a lawyer shall not represent aclient if the representation involves a concurrent conflict of interest. Aconcurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to anotherclient; or

(2) there is a significant risk that the representation of one or more clients willbe materially limited by the lawyer's responsibilities to another client, aformer client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest underparagraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to providecompetent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by oneclient against another client represented by the lawyer in the samelitigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

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Model Rules of Prof.ConductClient-Lawyer Relationship: Rule 1.10 Imputation Of Conflicts Of Interest:

General Rule

(a) While lawyers are associated in a firm, none of them shall knowinglyrepresent a client when any one of them practicing alone would be prohibitedfrom doing so by Rules 1.7 or 1.9, unless

(1) the prohibition is based on a personal interest of the disqualified lawyer anddoes not present a significant risk of materially limiting the representation of theclient by the remaining lawyers in the firm; or

(2) the prohibition is based upon Rule 1.9(a) or (b) and arises out of thedisqualified lawyer’s association with a prior firm, and

(i) the disqualified lawyer is timely screened from any participation in the matterand is apportioned no part of the fee therefrom;

(ii) written notice is promptly given to any affected former client to enable theformer client to ascertain compliance with the provisions of this Rule, which shallinclude a description of the screening procedures employed; a statement of thefirm's and of the screened lawyer's compliance with these Rules; a statementthat review may be available before a tribunal; and an agreement by the firmto respond promptly to any written inquiries or objections by the former clientabout the screening procedures; and

(iii) certifications of compliance with these Rules and with the screeningprocedures are provided to the former client by the screened lawyer and by apartner of the firm, at reasonable intervals upon the former client's writtenrequest and upon termination of the screening procedures.

Client-Lawyer Relationship: Rule 1.10 Imputation Of Conflicts Of Interest:General Rule

(a) While lawyers are associated in a firm, none of them shall knowinglyrepresent a client when any one of them practicing alone would be prohibitedfrom doing so by Rules 1.7 or 1.9, unless

(1) the prohibition is based on a personal interest of the disqualified lawyer anddoes not present a significant risk of materially limiting the representation of theclient by the remaining lawyers in the firm; or

(2) the prohibition is based upon Rule 1.9(a) or (b) and arises out of thedisqualified lawyer’s association with a prior firm, and

(i) the disqualified lawyer is timely screened from any participation in the matterand is apportioned no part of the fee therefrom;

(ii) written notice is promptly given to any affected former client to enable theformer client to ascertain compliance with the provisions of this Rule, which shallinclude a description of the screening procedures employed; a statement of thefirm's and of the screened lawyer's compliance with these Rules; a statementthat review may be available before a tribunal; and an agreement by the firmto respond promptly to any written inquiries or objections by the former clientabout the screening procedures; and

(iii) certifications of compliance with these Rules and with the screeningprocedures are provided to the former client by the screened lawyer and by apartner of the firm, at reasonable intervals upon the former client's writtenrequest and upon termination of the screening procedures.

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Removing a Conflict

Don’t take the client/matter.Conflict waivers from both sides.“Firewall” at firm – does this actually

work?

Don’t take the client/matter.Conflict waivers from both sides.“Firewall” at firm – does this actually

work?

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The Tougher Question

What about Subject Matter Conflicts?Are you able to “represent zealously”

both clients on the same subjectmatter?

Are you able to segregate argumentsrelated to each client’s patentapplication?

What is the perception that your clientshave about your representation?

What about Subject Matter Conflicts?Are you able to “represent zealously”

both clients on the same subjectmatter?

Are you able to segregate argumentsrelated to each client’s patentapplication?

What is the perception that your clientshave about your representation?

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Key Questions

Who is the client?inventor, parent company, subsidiary,trust

What field of intellectual property?Patents – inventors, assignees, jointownershipTrademarks – source of the goods

What is the subject matter?Has everyone been counseled in advance

of the representation?

Who is the client?inventor, parent company, subsidiary,trust

What field of intellectual property?Patents – inventors, assignees, jointownershipTrademarks – source of the goods

What is the subject matter?Has everyone been counseled in advance

of the representation?

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Subject Matter Conflicts

Need to Look for:

Similar/related subject matterCompetitors in the marketplace Inventor who worked for one of

your clients is out on his own at anew company.

Need to Look for:

Similar/related subject matterCompetitors in the marketplace Inventor who worked for one of

your clients is out on his own at anew company.

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What’s The Big Deal?

How do we learn chemistry? How do we build our knowledge

base? Can we actually turn that

knowledge off? Do you have “stock language” or

“good definitions” that you includein certain patent applications? Howdo you decide when to use thatstock language? (Tethys Bioscience v. Mintz Levin &

the Confidentiality of PatentApplications)

How do we learn chemistry? How do we build our knowledge

base? Can we actually turn that

knowledge off? Do you have “stock language” or

“good definitions” that you includein certain patent applications? Howdo you decide when to use thatstock language? (Tethys Bioscience v. Mintz Levin &

the Confidentiality of PatentApplications)

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Examples

Attorney at Big Law representsMicrosoft in litigation against Apple.

Apple executive contacts a friend atBig Law to set up an estate plan.

Conflict?

Attorney at Big Law representsMicrosoft in litigation against Apple.

Apple executive contacts a friend atBig Law to set up an estate plan.

Conflict?

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Examples

Attorney at Big Law representsMicrosoft in patent litigationagainst Apple.

Apple executive contacts a friendat Big Law to work on patentportfolio.

Conflict?

Attorney at Big Law representsMicrosoft in patent litigationagainst Apple.

Apple executive contacts a friendat Big Law to work on patentportfolio.

Conflict?

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Examples Attorney represents Conagra for

patents on prepared foods andmethods/additives that allow themto be “shelf stable”.

Attorney networks at Food ScienceConvention and meets someone atCheesecake Factory who wants todiscuss new patent application onmethod of treating cream cheeseso that it is tolerant of temperatureranges.

Conflict? Problem under USPTO newrules?

Attorney represents Conagra forpatents on prepared foods andmethods/additives that allow themto be “shelf stable”.

Attorney networks at Food ScienceConvention and meets someone atCheesecake Factory who wants todiscuss new patent application onmethod of treating cream cheeseso that it is tolerant of temperatureranges.

Conflict? Problem under USPTO newrules?

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A Case Study

Large Firm in Northern Californiarepresents Applied Materials andIntel

Large Firm files patentapplications for both companiesaround semiconductor materials.

One patent family for eachcompany discloses and claimsinorganic porous dielectricmaterials.

Large Firm in Northern Californiarepresents Applied Materials andIntel

Large Firm files patentapplications for both companiesaround semiconductor materials.

One patent family for eachcompany discloses and claimsinorganic porous dielectricmaterials.

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A Case Study (cont’d)

Office actions issue in both patentapplications. One office actioncites patents from Applied Materialsagainst Intel patent application.

How do you act as an effectiveadvocate for Intel without attackingApplied Materials patents?

Office actions issue in both patentapplications. One office actioncites patents from Applied Materialsagainst Intel patent application.

How do you act as an effectiveadvocate for Intel without attackingApplied Materials patents?

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A Case Study (cont’d)

Declarations (regarding prior artreferences)

Background Sections of PatentApplications

Information DisclosureStatements

New Expediting Process(distinguishing client’s claims frompublic references)

How do you handle thesesituations as practitioners?

Declarations (regarding prior artreferences)

Background Sections of PatentApplications

Information DisclosureStatements

New Expediting Process(distinguishing client’s claims frompublic references)

How do you handle thesesituations as practitioners?

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How Do We Fix It?

Small Firm/Small IP Group Mid-Size Firm/1-2 Patent Prosecutors Large Firm/Large Prosecution Group How do you choose who takes

which client? Attorneys who leave firm? Appearance of improprietyMassive Awards Against Law

Firms/Increasing Price ofMalpractice Insurance

Small Firm/Small IP Group Mid-Size Firm/1-2 Patent Prosecutors Large Firm/Large Prosecution Group How do you choose who takes

which client? Attorneys who leave firm? Appearance of improprietyMassive Awards Against Law

Firms/Increasing Price ofMalpractice Insurance

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Adequate System forChecking? E-mail everyone in the group? Key Word Search/Update

Conflicts Checking SystemUse series of “Business Code

Identifiers”Specify intelligent key words List all inventors and in-house

counsel List common competitors

E-mail everyone in the group? Key Word Search/Update

Conflicts Checking SystemUse series of “Business Code

Identifiers”Specify intelligent key words List all inventors and in-house

counsel List common competitors

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Thank you!

Dr. Sandra ThompsonSlater Hersey & Lieberman, LLPsthompson@slaterhersey.comDirect: 949-398-7507Mobile: 949-702-4448

Thank you!

Dr. Sandra ThompsonSlater Hersey & Lieberman, LLPsthompson@slaterhersey.comDirect: 949-398-7507Mobile: 949-702-4448

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Malpractice Litigation:Ethical Issues and ConflictsArising in Patent Prosecution

Malpractice Litigation:Ethical Issues and ConflictsArising in Patent Prosecution

Jacob R. Osborn

July 12, 2016

©2011 Goodwin Procter LLP

Introduction

• “IP attorneys are on more dangerous turf. . . We areseeing new areas of suits seeking to hold attorneysresponsible for clients’ discovery misdeeds and for whatattorneys say to investors. These are often scarysituations with no easy solutions.”

Paul Janicke, Professor at University of Houston Law Center (quote published inLaw360 article, October 5, 2105)

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• “IP attorneys are on more dangerous turf. . . We areseeing new areas of suits seeking to hold attorneysresponsible for clients’ discovery misdeeds and for whatattorneys say to investors. These are often scarysituations with no easy solutions.”

Paul Janicke, Professor at University of Houston Law Center (quote published inLaw360 article, October 5, 2105)

The Past Year In Review

• Sample of IP Law360 articles from the past 6 months:

• “Boston IP Firm Settles With GPNE In $100M Malpractice Suit,” May 4, 2016

• “Shiboleth Hit With $10M Suit Over Claims of Shoddy IP Work,” April 29, 2016

• “Legal Malpractice Insurer Says Cap Applies in Antonelli Row,” April 18, 2016

• “Dentons Faces Malpractice Suit For Gap DQ At ITC,” April 12, 2016

• “Inventor Urges DC Circ. To Revive Legal Malpractice Row,” April 11, 2016

• “Finnegan Cleared in High-Stakes Patent Malpractice Case,” December 23, 2015

• “Boston IP Firm Wants GPNE’s $100M Malpractice Suit Axed,” November 3, 2015

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• Sample of IP Law360 articles from the past 6 months:

• “Boston IP Firm Settles With GPNE In $100M Malpractice Suit,” May 4, 2016

• “Shiboleth Hit With $10M Suit Over Claims of Shoddy IP Work,” April 29, 2016

• “Legal Malpractice Insurer Says Cap Applies in Antonelli Row,” April 18, 2016

• “Dentons Faces Malpractice Suit For Gap DQ At ITC,” April 12, 2016

• “Inventor Urges DC Circ. To Revive Legal Malpractice Row,” April 11, 2016

• “Finnegan Cleared in High-Stakes Patent Malpractice Case,” December 23, 2015

• “Boston IP Firm Wants GPNE’s $100M Malpractice Suit Axed,” November 3, 2015

OutlineI. Causes of Action Typically Brought Against IP Attorneys?

II. Where Are These Cases Brought (Jurisdiction)?

III. Case-Within-A-Case Doctrine

IV. Avoid Becoming A Cautionary Tale

A. Inventor/Assignee Conflicts

B. Subject Matter Conflicts

C. Client Conflicts

D. Executing and Recording Assignments

E. Last Minute Filings

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I. Causes of Action Typically Brought Against IP Attorneys?

II. Where Are These Cases Brought (Jurisdiction)?

III. Case-Within-A-Case Doctrine

IV. Avoid Becoming A Cautionary Tale

A. Inventor/Assignee Conflicts

B. Subject Matter Conflicts

C. Client Conflicts

D. Executing and Recording Assignments

E. Last Minute Filings

I. What Causes of Action AreTypically Brought Against IPAttorneys?

I. What Causes of Action AreTypically Brought Against IPAttorneys?

Typical Causes of Action Professional Negligence

Missed filing deadlines

Mistaken interpretation of complicated patent prosecution rules

Failure to take certain important discovery

Breach of the Duty of Candor Fraudulent misrepresentation

Breach of Fiduciary Duty Conflict of Interest

Breach of the Duty of Loyalty

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Professional Negligence Missed filing deadlines

Mistaken interpretation of complicated patent prosecution rules

Failure to take certain important discovery

Breach of the Duty of Candor Fraudulent misrepresentation

Breach of Fiduciary Duty Conflict of Interest

Breach of the Duty of Loyalty

II. Where Are These CasesTypically Brought(Jurisdiction)?

II. Where Are These CasesTypically Brought(Jurisdiction)?

A: State Court Gunn v. Minton, 113 S.Ct. 1059 (2013). Question Presented: Whether a state law claim alleging

legal malpractice in the handling of a patent case mustbe brought in federal court?

Answer: No. State legal malpractice claims based onunderlying patent matters will rarely, if ever, arise underfederal patent law for purposes of federal questionjurisdiction.

Although those cases may raise disputed questions ofpatent law, the answer will have no broader effects andwill not stand as binding precedent for future patentclaims.

Diversity jurisdiction? The citizenship of a partnership is the citizenship of its partners.

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Gunn v. Minton, 113 S.Ct. 1059 (2013). Question Presented: Whether a state law claim alleging

legal malpractice in the handling of a patent case mustbe brought in federal court?

Answer: No. State legal malpractice claims based onunderlying patent matters will rarely, if ever, arise underfederal patent law for purposes of federal questionjurisdiction.

Although those cases may raise disputed questions ofpatent law, the answer will have no broader effects andwill not stand as binding precedent for future patentclaims.

Diversity jurisdiction? The citizenship of a partnership is the citizenship of its partners.

III. Case-Within-The-CaseDoctrineIII. Case-Within-The-CaseDoctrine

Case-Within-The-Case Doctrine

Generally a vehicle of state law Requires the plaintiff to prove it would

have been successful in the underlyingmatter “but for” the alleged malpractice Question of “injury” and “damages”

required for any cause of actiongrounded in negligence

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Generally a vehicle of state law Requires the plaintiff to prove it would

have been successful in the underlyingmatter “but for” the alleged malpractice Question of “injury” and “damages”

required for any cause of actiongrounded in negligence

Case-Within-The-Case (Example)

Davis v. Brouse Mcdowell, LPA, 596 F.3d1355 (Fed. Cir. 2010)

Case-Within-The-Case (Example)

Davis v. Brouse Mcdowell, LPA, 596 F.3d1355 (Fed. Cir. 2010)

Davis v. Brouse Mcdowell– Pre-Gunn v. Minton case, so Fed. Cir. Reviewed N.D. OH malpractice

case where patent law was a necessary element of one of the claims

– Plaintiff invented social networking platform for IP enthusiasts; hireddefendant law firm to draft domestic and foreign patent applications

– Undisputed that law firm missed filing dates and filed a poorly draftedspecification and claims (although intending to repair at a later time)

– Patent applications were ultimately abandoned: client claimed thatbecause invention lacked protection the investors withdrew funding,leaving her unable to operate

– Client brought malpractice suit against defendants.

– Parties disputed whether Ohio case-within-a-case doctrine applied

– D. Ct. granted summary judgment in favor of defendant: case-within-a-case doctrine does apply, and plaintiff failed to establish a genuine issueof material fact as to patentability of her inventions

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– Pre-Gunn v. Minton case, so Fed. Cir. Reviewed N.D. OH malpracticecase where patent law was a necessary element of one of the claims

– Plaintiff invented social networking platform for IP enthusiasts; hireddefendant law firm to draft domestic and foreign patent applications

– Undisputed that law firm missed filing dates and filed a poorly draftedspecification and claims (although intending to repair at a later time)

– Patent applications were ultimately abandoned: client claimed thatbecause invention lacked protection the investors withdrew funding,leaving her unable to operate

– Client brought malpractice suit against defendants.

– Parties disputed whether Ohio case-within-a-case doctrine applied

– D. Ct. granted summary judgment in favor of defendant: case-within-a-case doctrine does apply, and plaintiff failed to establish a genuine issueof material fact as to patentability of her inventions

Davis v. Brouse Mcdowell– Fed. Cir. affirmed that case-within-a-case doctrine applied to

this case under Ohio law, and determined that plaintiff had notmet her burden of showing that she would have obtained apatent because:

• Plaintiff’s expert report contained no affirmative analysissupporting the opinion of patentability

• Expert did not perform a prior art search

• Expert did not identify particular claims that could be madefor the invention

• Expert did not address patentability of the invention underforeign patent law

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– Fed. Cir. affirmed that case-within-a-case doctrine applied tothis case under Ohio law, and determined that plaintiff had notmet her burden of showing that she would have obtained apatent because:

• Plaintiff’s expert report contained no affirmative analysissupporting the opinion of patentability

• Expert did not perform a prior art search

• Expert did not identify particular claims that could be madefor the invention

• Expert did not address patentability of the invention underforeign patent law

Case-Within-The-Case Doctrine Based on plaintiff showing “injury” and demanding

hypothetical damages Contrast with demand for disgorgement of fees

Ohio Supreme Court has rejected that the causationelement of the legal malpractice standard should bereplaced by a categorical application of the case-within-the-case Particularly where plaintiffs sustained damage or loss

regardless of the fact that they may be unable to prove thatthey would have been successful in the underlyingmatter(s) in question

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Based on plaintiff showing “injury” and demandinghypothetical damages Contrast with demand for disgorgement of fees

Ohio Supreme Court has rejected that the causationelement of the legal malpractice standard should bereplaced by a categorical application of the case-within-the-case Particularly where plaintiffs sustained damage or loss

regardless of the fact that they may be unable to prove thatthey would have been successful in the underlyingmatter(s) in question

IV. Avoid Becoming ACautionary TaleIV. Avoid Becoming ACautionary Tale

A. Inventor/Assignee Conflicts

Inventor/Assignee Conflicts• Who does the patent attorney represent, the inventor or the assignee?

Does it matter who pays the bill?– When an employee makes an invention subject to obligation of assignment, the lawyer

representing the assignee will generally not have an attorney-client relationship with theinventor. Sun Studs v. Applied Theory Associates, 772 F.2d 1557 (Fed. Cir. 1985).

– But what about the inventor declaration and power of attorney?

• One who grants a power of attorney for benefit of a third person does notautomatically create attorney-client relationship between the grantor and theattorney. Restatement (Second) of Agency § 14H (1958).

• “While the power of attorney may have some impact on our analysis of whether animplied attorney-client relationship was formed, it is certain that such a limited powerof attorney did not create an express attorney-client relationship.” Int'l StrategiesGroup, Ltd. v. Greenberg Traurig, LLP, 482 F.3d 1 (1st Cir. Mass. 2007).

– Avoid uncertainty about who is the client by informing inventors and documenting.

– Advise client on assignment obligations and make sure proper documentation is in order.

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• Who does the patent attorney represent, the inventor or the assignee?Does it matter who pays the bill?

– When an employee makes an invention subject to obligation of assignment, the lawyerrepresenting the assignee will generally not have an attorney-client relationship with theinventor. Sun Studs v. Applied Theory Associates, 772 F.2d 1557 (Fed. Cir. 1985).

– But what about the inventor declaration and power of attorney?

• One who grants a power of attorney for benefit of a third person does notautomatically create attorney-client relationship between the grantor and theattorney. Restatement (Second) of Agency § 14H (1958).

• “While the power of attorney may have some impact on our analysis of whether animplied attorney-client relationship was formed, it is certain that such a limited powerof attorney did not create an express attorney-client relationship.” Int'l StrategiesGroup, Ltd. v. Greenberg Traurig, LLP, 482 F.3d 1 (1st Cir. Mass. 2007).

– Avoid uncertainty about who is the client by informing inventors and documenting.

– Advise client on assignment obligations and make sure proper documentation is in order.

Inventor/Assignee Conflicts– Several courts have held that patent attorney does not have attorney-client

relationship with the inventor.See Sun Studs v. Applied Theory, 772 F.2d 1557 (Fed.Cir. 1985); Univ. of W. Va. Bd. of Trustees v.Van Voorhies, 33 F.Supp.2d 519 (N.D. W. Va. 1998), aff’d 278 F.3d 1288 (Fed.Cir. 2002); Shannon v.Gordon, 670 N.Y.S.2d 887 (App. Div. 1998), appeal denied, 92 N.Y.2d 819 (1999).

– Factors to consider:

• Was the lawyer was hired by the assignee?

• Was the attorney-client retention agreement with the assignee?

• Was legal advice rendered to the inventor?

– In some states, facts may support argument that inventor has the subjectivebelief that attorney-client relationship existed.See Henry Filters v. Peabody Barnes, 611 N.E.2d 873 (Ohio Ct. App. 1992).

• Risk reduction: Inform inventors and document it.

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– Several courts have held that patent attorney does not have attorney-clientrelationship with the inventor.See Sun Studs v. Applied Theory, 772 F.2d 1557 (Fed.Cir. 1985); Univ. of W. Va. Bd. of Trustees v.Van Voorhies, 33 F.Supp.2d 519 (N.D. W. Va. 1998), aff’d 278 F.3d 1288 (Fed.Cir. 2002); Shannon v.Gordon, 670 N.Y.S.2d 887 (App. Div. 1998), appeal denied, 92 N.Y.2d 819 (1999).

– Factors to consider:

• Was the lawyer was hired by the assignee?

• Was the attorney-client retention agreement with the assignee?

• Was legal advice rendered to the inventor?

– In some states, facts may support argument that inventor has the subjectivebelief that attorney-client relationship existed.See Henry Filters v. Peabody Barnes, 611 N.E.2d 873 (Ohio Ct. App. 1992).

• Risk reduction: Inform inventors and document it.

Inventor/Assignee Conflicts• Even with “proper” documentation, patent attorney should be wary to

avoid inadvertent creation of attorney-client relationship with the inventor.

– Example: Max-Planck-Sgesellschaft zur Foerderung der Wissenschaften e.V.v. Wolf, Greenfield & Sacks, P.C., 736 F.Supp.2d 353 (D. Mass. 2010).

• Attorney sent email communication to inventor stating “note that we representWhitehead Institute in the above-identified matter. It is our understanding that you, likethe other co-owners, are represented in this matter by independent counsel.”

• Despite this communication, Court found attorney-client relationship existed betweenpatent attorney and inventor because:

• Inventor sought legal advice from Wolf (advice on prosecution questions andassistance with submission of IDS);

• The advice pertained to patent matters within Wolf’s professional competence(patent matters); and

• Wolf provided the inventor the desired advice.

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• Even with “proper” documentation, patent attorney should be wary toavoid inadvertent creation of attorney-client relationship with the inventor.

– Example: Max-Planck-Sgesellschaft zur Foerderung der Wissenschaften e.V.v. Wolf, Greenfield & Sacks, P.C., 736 F.Supp.2d 353 (D. Mass. 2010).

• Attorney sent email communication to inventor stating “note that we representWhitehead Institute in the above-identified matter. It is our understanding that you, likethe other co-owners, are represented in this matter by independent counsel.”

• Despite this communication, Court found attorney-client relationship existed betweenpatent attorney and inventor because:

• Inventor sought legal advice from Wolf (advice on prosecution questions andassistance with submission of IDS);

• The advice pertained to patent matters within Wolf’s professional competence(patent matters); and

• Wolf provided the inventor the desired advice.

The Engagement Letter

– According to the legal malpractice insurer CNA FinancialCorp., in 65 percent of malpractice disputes reviewed, anengagement letter was never even drafted.

– Of the remaining 35 percent, only 15 percent involved a solidengagement letter that effectively limited the firm’s liability.

– Also according to CNA, disengagement letters may also beuseful, especially in pro bono or small matters.

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– According to the legal malpractice insurer CNA FinancialCorp., in 65 percent of malpractice disputes reviewed, anengagement letter was never even drafted.

– Of the remaining 35 percent, only 15 percent involved a solidengagement letter that effectively limited the firm’s liability.

– Also according to CNA, disengagement letters may also beuseful, especially in pro bono or small matters.

Patent Practitioner Tips• Define the parties and the relationships Client(s) and all related parties

Engagement letters and waivers, as necessary

• Establish and maintain clear protocols Duties owed to the entities

Communications with the entities

• Plan for adversity Actual or potential conflicts between the entities

Revocation of POA

Withdrawal

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• Define the parties and the relationships Client(s) and all related parties

Engagement letters and waivers, as necessary

• Establish and maintain clear protocols Duties owed to the entities

Communications with the entities

• Plan for adversity Actual or potential conflicts between the entities

Revocation of POA

Withdrawal

B. Subject Matter Conflicts

Subject Matter Conflicts (Example)

Maling v. Finnegan, 473 Mass. 336 (Mass.2015)

Subject Matter Conflicts (Example)

Maling v. Finnegan, 473 Mass. 336 (Mass.2015)

Maling v. Finnegan– Question presented: Does an actionable conflict of interest arise

when attorneys in different offices of the same law firm simultaneouslyrepresent business competitors in prosecuting patents on similarinventions, without informing them or obtaining their consent to thesimultaneous representation?

• Answer: No, this is not a per se violation

– Finnegan (Boston office) represented plaintiff Maling in the preparationand filing of patent applications which led to 4 patents for screwlesseyeglasses

– Finnegan (DC office) represented Japanese competitor in seekingpatents for screwless eyeglass technology

– Maling claimed that because Finnegan declined to provide him with alegal opinion addressing similarities between the other clients’ patentsand his own patents, he was unable to obtain funding for his invention

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– Question presented: Does an actionable conflict of interest arisewhen attorneys in different offices of the same law firm simultaneouslyrepresent business competitors in prosecuting patents on similarinventions, without informing them or obtaining their consent to thesimultaneous representation?

• Answer: No, this is not a per se violation

– Finnegan (Boston office) represented plaintiff Maling in the preparationand filing of patent applications which led to 4 patents for screwlesseyeglasses

– Finnegan (DC office) represented Japanese competitor in seekingpatents for screwless eyeglass technology

– Maling claimed that because Finnegan declined to provide him with alegal opinion addressing similarities between the other clients’ patentsand his own patents, he was unable to obtain funding for his invention

Maling v. Finnegan– Maling alleged negligence (delay in filing the patents; similarity to the

Japanese competitors’ patents)

– Maling alleged breach of Fiduciary Duty

• Rule 1.7 of the Massachusetts Rules of Professional Conduct: a lawyershall not represent a client if the representation is “directly adverse” toanother client, or where “there is a significant risk that therepresentation of one or more clients will be materially limited by thelawyer’s responsibilities to another client, a former client or third personor by a personal interest of the lawyer.”

– Court found no direct adversity even if both companies were competing for thesame patent

– Court found that this inquiry is very fact dependent: here, no conflict becausethe companies were competing for different patents for similar devices andFinnegan was able to obtain patents for both clients; under different factualcircumstances, such as where the claims are identical or obvious variants, or ifthere were an interference proceeding, or if a reasonable patent attorneybelieved such a proceeding was likely, there would have been a conflict

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– Maling alleged negligence (delay in filing the patents; similarity to theJapanese competitors’ patents)

– Maling alleged breach of Fiduciary Duty

• Rule 1.7 of the Massachusetts Rules of Professional Conduct: a lawyershall not represent a client if the representation is “directly adverse” toanother client, or where “there is a significant risk that therepresentation of one or more clients will be materially limited by thelawyer’s responsibilities to another client, a former client or third personor by a personal interest of the lawyer.”

– Court found no direct adversity even if both companies were competing for thesame patent

– Court found that this inquiry is very fact dependent: here, no conflict becausethe companies were competing for different patents for similar devices andFinnegan was able to obtain patents for both clients; under different factualcircumstances, such as where the claims are identical or obvious variants, or ifthere were an interference proceeding, or if a reasonable patent attorneybelieved such a proceeding was likely, there would have been a conflict

Maling v. Finnegan– Court found that Finnegan’s representation of the Japanese firm did not

“materially limit” its representation of Maling

• No allegation of “claim shaving”

• No allegation of how claims were narrowed

• No allegation that client confidences were disclosed or used in any wayto the other client’s advantage

• No allegation that Finnegan had agreed to provide an opinion letter,only that Finnegan had agreed to file and prosecute a patent forMaling’s inventions

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– Court found that Finnegan’s representation of the Japanese firm did not“materially limit” its representation of Maling

• No allegation of “claim shaving”

• No allegation of how claims were narrowed

• No allegation that client confidences were disclosed or used in any wayto the other client’s advantage

• No allegation that Finnegan had agreed to provide an opinion letter,only that Finnegan had agreed to file and prosecute a patent forMaling’s inventions

Subject Matter Conflicts (Example 2)

Access International, Inc. v. Baker Botts,(Texas State Court 2016)

Subject Matter Conflicts (Example 2)

Access International, Inc. v. Baker Botts,(Texas State Court 2016)

Axcess International Inc. v. BakerBotts LLP

– Baker Botts represented two companies vying for similar patents at thesame time related to radio frequency identification tracking technology

– Plaintiff Axcess argued that Baker Botts sought to cover up the dualrepresentation

– Texas state jury found Baker Botts liable for $40.5M in losses thatAxcess claimed it suffered because it would have earned that much fromlicensing and royalty deals if it had “conflict-free” counsel

– Baker Botts was successful, however, in a motion for judgment thatAxcess should have know of the injury in 2007, because its executivesreviewed competitors’ patents listing Baker Botts as counsel at that time

– Lawsuit was thus untimely under the two-year statute of limitations

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– Baker Botts represented two companies vying for similar patents at thesame time related to radio frequency identification tracking technology

– Plaintiff Axcess argued that Baker Botts sought to cover up the dualrepresentation

– Texas state jury found Baker Botts liable for $40.5M in losses thatAxcess claimed it suffered because it would have earned that much fromlicensing and royalty deals if it had “conflict-free” counsel

– Baker Botts was successful, however, in a motion for judgment thatAxcess should have know of the injury in 2007, because its executivesreviewed competitors’ patents listing Baker Botts as counsel at that time

– Lawsuit was thus untimely under the two-year statute of limitations

Axcess International Inc. v. BakerBotts LLP

– Texas appeals court affirmed

– Axcess’ expert witness’ testimony hinged on what he believed theUSPTO would have done, had an interference been initiated, and whatthe other company would have done, had Axcess initiated aninterference and expanded its patent claims

– The court found that “Axcess had to prove—not just suggest or theorize,but prove with competent, non-speculative evidence—that the thirdparties would have actually taken such action.”

– Objective vs. subjective case-within-the-case

*Injury and damages are difficult to prove in these cases

*Statute of limitations are often important

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– Texas appeals court affirmed

– Axcess’ expert witness’ testimony hinged on what he believed theUSPTO would have done, had an interference been initiated, and whatthe other company would have done, had Axcess initiated aninterference and expanded its patent claims

– The court found that “Axcess had to prove—not just suggest or theorize,but prove with competent, non-speculative evidence—that the thirdparties would have actually taken such action.”

– Objective vs. subjective case-within-the-case

*Injury and damages are difficult to prove in these cases

*Statute of limitations are often important

C. Client Conflicts

Client Conflicts (Example)

Revolaze, LLC v. Dentons US, LLP et al.,CV-16-861410 (Cuyahoga County, Ohio)removed to N.D. Ohio

Client Conflicts (Example)

Revolaze, LLC v. Dentons US, LLP et al.,CV-16-861410 (Cuyahoga County, Ohio)removed to N.D. Ohio

Revolaze v. Dentons– Case originally filed in Ohio state court but removed to N.D. Ohio

– Complaint alleges that Dentons lawyers ignored a client conflict andsought to represent Revolaze in ITC patent litigation against Dentons’client Gap Inc.

– Dentons Canada vs. Dentons U.S.

– According to Gap, Dentons represents it on 14 open mattersthroughout the world

– The ITC ultimately disqualified Dentons from representing Revolaze inthe ITC litigation, focusing on Dentons’ “one firm everywhere”marketing

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– Case originally filed in Ohio state court but removed to N.D. Ohio

– Complaint alleges that Dentons lawyers ignored a client conflict andsought to represent Revolaze in ITC patent litigation against Dentons’client Gap Inc.

– Dentons Canada vs. Dentons U.S.

– According to Gap, Dentons represents it on 14 open mattersthroughout the world

– The ITC ultimately disqualified Dentons from representing Revolaze inthe ITC litigation, focusing on Dentons’ “one firm everywhere”marketing

Revolaze v. Dentons– Complaint also alleges negligence in failing to take discovery and seeks

$6.5M in paid and unpaid fees to Dentons, the cost of alternate counsel,lost value in a renegotiated funding agreement, and lost value of patentenforcement rights between $51.9-$160M

– Dentons has appealed the ITC disqualification

– Dentons claims that the Canadian and European firms are different firms,what is called a verein structure, so no conflict existed

*Important case to follow as it may threaten the verein structure of law firms

*Marketing matters

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– Complaint also alleges negligence in failing to take discovery and seeks$6.5M in paid and unpaid fees to Dentons, the cost of alternate counsel,lost value in a renegotiated funding agreement, and lost value of patentenforcement rights between $51.9-$160M

– Dentons has appealed the ITC disqualification

– Dentons claims that the Canadian and European firms are different firms,what is called a verein structure, so no conflict existed

*Important case to follow as it may threaten the verein structure of law firms

*Marketing matters

D. Executing andRecording Assignments

Assignments (Example)

Stanford v. Roche, (N.D. Cal.)

Stanford v. Roche

– Stanford scientists, in partnership with Cetus, developeda method of using polymerase chain reaction (PCR) tomeasure HIV virus blood concentration

– Roche subsequently bought Cetus’s PCR business

– Stanford offered to license Roche, but the licensenegotiations stalled

– Stanford sued under patents it believed it owned

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– Stanford scientists, in partnership with Cetus, developeda method of using polymerase chain reaction (PCR) tomeasure HIV virus blood concentration

– Roche subsequently bought Cetus’s PCR business

– Stanford offered to license Roche, but the licensenegotiations stalled

– Stanford sued under patents it believed it owned

Stanford v. Roche– Agreements involved:

• Inventor had promised to assign instead of executing apresent assignment to Stanford

• Stanford’s inventions rights policy allowed “all rights toremain with the inventor if possible”

• Inventor assigned all rights to inventions to Cetus

• Inventor then later assigned the invention rights to Stanford

– Patent ownership can be transferred without recordation atPTO, but when two entities claim ownership, second assigneecan have title only if it records first with PTO. 35 U.S.C. § 261.

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– Agreements involved:

• Inventor had promised to assign instead of executing apresent assignment to Stanford

• Stanford’s inventions rights policy allowed “all rights toremain with the inventor if possible”

• Inventor assigned all rights to inventions to Cetus

• Inventor then later assigned the invention rights to Stanford

– Patent ownership can be transferred without recordation atPTO, but when two entities claim ownership, second assigneecan have title only if it records first with PTO. 35 U.S.C. § 261.

Stanford v. Roche– Cetus never recorded the first effective assignment with the PTO

– Ultimately, Roche’s claim to patent was barred by the statute oflimitations for contract disputes under California law (4 years from thedate Roche became aware of the breach)

– But Roche was able to raise a standing defense against Stanford basedon Stanford’s lack of ownership of the patent

• Since Stanford had not acquired rights in the patent, it did not havestanding to bring suit against Roche—case was dismissed

• Stanford would have won if it had written its employee agreementto automatically transfer rights upon creation of the invention

* Execute and record proper patent assignments in a timely manner.

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– Cetus never recorded the first effective assignment with the PTO

– Ultimately, Roche’s claim to patent was barred by the statute oflimitations for contract disputes under California law (4 years from thedate Roche became aware of the breach)

– But Roche was able to raise a standing defense against Stanford basedon Stanford’s lack of ownership of the patent

• Since Stanford had not acquired rights in the patent, it did not havestanding to bring suit against Roche—case was dismissed

• Stanford would have won if it had written its employee agreementto automatically transfer rights upon creation of the invention

* Execute and record proper patent assignments in a timely manner.

E. Last Minute Filings

Last Minute Filings (Example)

Two-Way Media LLC v. AT&T, 473 Mass.336 (W.D. Tex. 2013; Fed. Cir. 2015)

Last Minute Filings (Example)

Two-Way Media LLC v. AT&T, 473 Mass.336 (W.D. Tex. 2013; Fed. Cir. 2015)

Two-Way Media LLC v. AT&T Inc.– Patent-infringement case in Western District of Texas filed by Two-Way Media LLC

against AT&T Inc.

– Jury trial in 2013 and verdict entered for plaintiff for $27.5 M on March 20, 2013

– AT&T filed motions for JMOL and a new trial on damages and non-infringement inOctober 2013

– AT&T requested that its post-trial briefing be filed under seal, and attached thesubstantive JMOL motions to the “Motion[s] for Leave to File Sealed Document[s]”

– On November 25, 2013, AT&T’s attorneys received Court notices through PACERcaptioned “ORDER GRANTING [596] Motion for Leave to File Sealed Documents”that were signed on November 22, 2013

– Despite the caption, the Orders did more than just grant the motion to file sealeddocuments, they also ruled on the substantive post-trial briefing

– Attorneys for AT&T (Sidley Austin) apparently never read the Orders because theythought the Orders only addressed the ministerial requests to file under sealbecause of the ECF caption

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– Patent-infringement case in Western District of Texas filed by Two-Way Media LLCagainst AT&T Inc.

– Jury trial in 2013 and verdict entered for plaintiff for $27.5 M on March 20, 2013

– AT&T filed motions for JMOL and a new trial on damages and non-infringement inOctober 2013

– AT&T requested that its post-trial briefing be filed under seal, and attached thesubstantive JMOL motions to the “Motion[s] for Leave to File Sealed Document[s]”

– On November 25, 2013, AT&T’s attorneys received Court notices through PACERcaptioned “ORDER GRANTING [596] Motion for Leave to File Sealed Documents”that were signed on November 22, 2013

– Despite the caption, the Orders did more than just grant the motion to file sealeddocuments, they also ruled on the substantive post-trial briefing

– Attorneys for AT&T (Sidley Austin) apparently never read the Orders because theythought the Orders only addressed the ministerial requests to file under sealbecause of the ECF caption

Two-Way Media LLC v. AT&T Inc.– The Court later amended the ECF caption of the documents to also add “DENYING 617

SEALED MOTION,” but the Court’s ECF system did not generate or send new emails tothe attorneys when the Court amended the ECF caption

– AT&T’s attorneys thus believed the JMOL motions were still pending

– Under the Federal Rules of Appellate Procedure 4(a), the deadline to file an appeal was30 days from November 22, 2013 (i.e., December 22, 2013)

– On January 15, 2014, a lawyer from Sidley was searching through the docket anddiscovered the previous motions had been denied

– Sidley thus sought an extension to deadline, arguing that the ECF notices did not provideadequate notice that the JMOL motions had been resolved

– The Western District of Texas denied Sidley’s extension request, relying on FRCP77(d)(2) which states “[l]ack of notice of the entry [of an order or judgment] does notaffect the time for appeal or relieve—or authorized the court to relieve—a party for failingto appeal within the time allowed, except as allowed by Federal Rule of AppellateProcedure (4)(a)”

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– The Court later amended the ECF caption of the documents to also add “DENYING 617SEALED MOTION,” but the Court’s ECF system did not generate or send new emails tothe attorneys when the Court amended the ECF caption

– AT&T’s attorneys thus believed the JMOL motions were still pending

– Under the Federal Rules of Appellate Procedure 4(a), the deadline to file an appeal was30 days from November 22, 2013 (i.e., December 22, 2013)

– On January 15, 2014, a lawyer from Sidley was searching through the docket anddiscovered the previous motions had been denied

– Sidley thus sought an extension to deadline, arguing that the ECF notices did not provideadequate notice that the JMOL motions had been resolved

– The Western District of Texas denied Sidley’s extension request, relying on FRCP77(d)(2) which states “[l]ack of notice of the entry [of an order or judgment] does notaffect the time for appeal or relieve—or authorized the court to relieve—a party for failingto appeal within the time allowed, except as allowed by Federal Rule of AppellateProcedure (4)(a)”

Two-Way Media LLC v. AT&T Inc.

– Federal Circuit affirmed the district court decision

– LESSONS

– Ensure that someone is responsible for reviewing all docket entriesand filed documents, and calendaring important deadlines such asappeal deadlines

– Seemingly small/ministerial tasks such as proper docketing canhave a profound impact on the outcome of a case and can lead togreat exposure if neglected

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– Federal Circuit affirmed the district court decision

– LESSONS

– Ensure that someone is responsible for reviewing all docket entriesand filed documents, and calendaring important deadlines such asappeal deadlines

– Seemingly small/ministerial tasks such as proper docketing canhave a profound impact on the outcome of a case and can lead togreat exposure if neglected

Thank You

Jacob R. OsbornGoodwin Procter LLP

901 New York Ave., NWWashington, DC 20001

202.346.4133josborn@goodwinprocter.com