presents

Conflicts in Patent Prosecution: Avoiding the Ethical Pitfalls

presents

Ethical PitfallsMinimizing Risks of Malpractice Liability and Ethics Sanctions

A Live 90-Minute Teleconference/Webinar with Interactive Q&A

Today's panel features:Dr. Sandra P. Thompson, Shareholder, Buchalter Nemer, Irvine, Calif.

Stephen T. Schreiner, Partner, Goodwin Procter, Washington, D.C.

Q&

p , , , g ,

Wednesday, June 23, 2010

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Hidden Traps: Subject Matter Conflict of Interest in Patent Law

Sandra Thompson, PhD, JDp , ,Buchalter Nemer

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Conflict of InterestConflict of InterestA conflict of interest is a situation in which someone in a position of trust such as a lawyersomeone in a position of trust, such as a lawyer, has competing professional or personal interests. Such competing interests can make it difficult to fulfill his or her duties impartially.

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Conflict of InterestConflict of InterestA conflict of interest exists even if no unethical or i t lt f it A fli t f i t timproper act results from it. A conflict of interest can create an appearance of impropriety that can undermine confidence in the person, profession, p , p ,or court system.

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USPTO RulesUSPTO Rules§ 10.66 Refusing to accept or continue employment if the interests of another client may

impair the independent professional judgment of the practitioner.

(a) A practitioner shall decline proffered employment if the exercise of the practitioner's independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the practitioner in representing differing interests, except to the extent permitted under paragraph (c) of this section.(b) A titi h ll t ti lti l l t if th i f th titi ' (b) A practitioner shall not continue multiple employment if the exercise of the practitioner's independent professional judgment in behalf of a client will be or is likely to be adversely affected by the practitioner's representation of another client, or if it would be likely to involve the practitioner in representing differing interests, except to the extent permitted under paragraph (c) of this section.

(c) In the situations covered by paragraphs (a) and (b) of this section a practitioner may(c) In the situations covered by paragraphs (a) and (b) of this section, a practitioner may represent multiple clients if it is obvious that the practitioner can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of the practitioner's independent professional judgment on behalf of each.

(d) If a practitioner is required to decline employment or to withdraw from employment under a Di i li R l t i t th titi ffili t d ith th

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Disciplinary Rule, no partner, or associate, or any other practitioner affiliated with the practitioner or the practitioner's firm, may accept or continue such employment unless otherwise ordered by the Director or Commissioner.

USPTO RulesUSPTO Rules§ 10.84 Representing a client zealously.

(a) A practitioner shall not intentionally: (1) Fail to seek the lawful objectives of a client through reasonable available means permitted by

law and the Disciplinary Rules, except as provided by paragraph (b) of this section. A practitioner does not violate the provisions of this section, however, by acceding to reasonable requests of opposing counsel which do not prejudice the rights of the client, by being punctual in fulfilling all professional commitments by avoiding offensive tactics or by treating with courtesyfulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process.

(2) Fail to carry out a contract of employment entered into with a client for professional services, but a practitioner may withdraw as permitted under §§ 10.40, 10.63, and 10.66.

(3) Prejudice or damage a client during the course of a professional relationship, except as required under this partrequired under this part.

(b) In representation of a client, a practitioner may: (1) Where permissible, exercise professional judgment to waive or fail to assert a right or

position of the client. (2) Refuse to aid or participate in conduct that the practitioner believes to be unlawful even

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(2) Refuse to aid or participate in conduct that the practitioner believes to be unlawful, even though there is some support for an argument that the conduct is legal.

Model Rules of Prof ConductModel Rules of Prof. ConductClient-Lawyer Relationship: Rule 1.7 Conflict Of Interest: Current Clients

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

(1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially

limited by the lawyer's responsibilities to another client, a former client or a third person or by a y y p , p ypersonal interest of the lawyer.

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

(1) the lawyer reasonably believes that the lawyer will be able to provide competent 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 one client against another

client represented by the lawyer in the same litigation 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 ConductModel Rules of Prof. ConductClient-Lawyer Relationship: Rule 1.10 Imputation Of Conflicts Of Interest: General Rule

( ) Whil l i t d i fi f th h ll k i l t li t h (a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless

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

(2) the prohibition is based upon Rule 1 9(a) or (b) and arises out of the disqualified lawyer’s (2) the prohibition is based upon Rule 1.9(a) or (b) and arises out of the disqualified lawyer s association with a prior firm, and

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

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

(iii) certifications of compliance with these Rules and with the screening procedures are id d t th f li t b th d l d b t f th fi t bl

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provided to the former client by the screened lawyer and by a partner of the firm, at reasonable intervals upon the former client's written request and upon termination of the screening procedures.

Key QuestionsKey QuestionsWho is the client?

inventor, parent company, subsidiary, trustWhat field of intellectual property?

Patents – inventors, assignees, joint ownershipTrademarks – source of the goods

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

representation?

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p

Removing a ConflictRemoving a ConflictDon’t take the client/matter.Conflict waivers from both sides.“Firewall” at firm – does this actually work?

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The Tougher QuestionThe Tougher QuestionWhat about Subject Matter Conflicts?Are you able to “represent zealously” both clients on

the same subject matter?A bl t t t l t d t hAre you able to segregate arguments related to each

client’s patent application?What is the perception that your clients have aboutWhat is the perception that your clients have about

your representation?

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ExamplesExamplesAttorney at Big Law represents Microsoft in litigation

against Apple.

A l ti t t f i d t Bi L t tApple executive contacts a friend at Big Law to set up an estate plan.

Conflict?

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ExamplesExamplesAttorney at Big Law represents Microsoft in patent

litigation against Apple.

A l ti t t f i d t Bi L t kApple executive contacts a friend at Big Law to work on patent portfolio.

Conflict?

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ExamplesExamples Attorney represents Conagra for patents on prepared foods

d th d / dditi th t ll th t b “ h lf t bl ”and methods/additives that allow them to be “shelf stable”. Attorney networks at Food Science Convention and meets

someone at Cheesecake Factory who wants to discuss new t t li ti th d f t ti hpatent application on method of treating cream cheese so

that it is tolerant of temperature ranges.

Conflict?

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Another ExampleAnother Example Attorney represents Microsoft and their entire patent

tf liportfolio. Attorney contacted by friend at Apple who wants to transfer

all of Apple’s patents to law firm to handle and prosecute, b Att h th t ti th b t ftbecause Attorney has the reputation as the best software attorney in the biz.

Conflict?

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Subject Matter ConflictsSubject Matter Conflicts Need to Look for:

– Similar/related subject matter– Competitors in the marketplace– Inventor who worked for one of your clients is out on his own at

a new company.

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What’s The Big Deal?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 y g g g y

include in certain patent applications? How do you decide when to use that stock language?

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So What Are We Looking At?So, What Are We Looking At?

MechanicalMechanical Software Biochemical/Pharma

Ch i l Chemical

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A Case StudyA Case Study

Large Firm in Northern California represents AppliedLarge Firm in Northern California represents Applied Materials and Intel

Large Firm files patent applications for both companies around semiconductor materials.around semiconductor materials.

One patent family for each company discloses and claims inorganic porous dielectric materials.

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A Case Study (cont’d)A Case Study (cont d)

Office actions issue in both patent applications. One officeOffice actions issue in both patent applications. One office action cites patents from Applied Materials against Intel patent application.

How do you act as an effective advocate for Intel withoutHow do you act as an effective advocate for Intel without attacking Applied Materials patents?

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A Case Study (cont’d)A Case Study (cont d)

DeclarationsDeclarations Background Sections of Patent Applications Information Disclosure Statements

N E diti P New Expediting Process

How do you handle these situations as practitioners?

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How Do We Fix It?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?y– Attorneys who leave firm?– Appearance of impropriety– Massive Awards Against Law Firms/Increasing Price of g g

Malpractice Insurance

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Adequate System for Checking?Adequate System for Checking? E-mail everyone in the group? Key Word Search/Update Conflicts Checking System

– Use series of “Business Code Identifiers”– Specify intelligent key words– List all inventors and in-house counsel– List common competitors

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Th k !!Thank you!! Sandra Thompson, PhD, Esq. Buchalter Nemer sthompson@buchalter.com (949)224-6282 (direct) (949)224-6203 (fax)

www Buchalter com www.Buchalter.com

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Ethical Issues and Conflicts Arising in Patent Prosecution

St h T S h iStephen T. Schreiner

June 23, 2010

©2010 Goodwin Procter LLP

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Summary Outline– Inventor/Assignee Conflicts

• Whom does the patent attorney represent, the inventor or the assignee?

– Patent prosecution bars– Patent prosecution bars

– Conflicts Between Lawyers’ and Clients’ interests

– How to Avoid Becoming a Patent Prosecution Cautionary Tale

• Preparing applications for two clients on similar inventions (Vaxiion Therapeutics v. Foley & Lardner)

• Material from one client’s application placed in another client’s application (Tethys Bioscience v. Mintz, Levin)pp ( y , )

• Executing and recording assignments on time (Stanford v. Roche; Enovsys v. Sprint Nextel).

• Duty to disclose not just prior art, but any relevant event between l t d li ti (M K B id M di l Th

y j p yrelated applications (McKesson v. Bridge Medical; Therasence v. Bechon Dickinson).

• Err on the side of disclosure where relevance is a close call (Avid Identification Systems v. Crystal Import Corp.)

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• Remember the duty of loyalty to former clients (Odom v. Microsoft)

Inventor/Assignee Conflicts

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Inventor/Assignee Conflicts– Whom does the patent attorney represent, the inventor or the assignee?

Does it matter who pays the bill?

When an emplo ee makes an in ention s bject to an obligation of an• When an employee makes an invention subject to an obligation of an assignment, the lawyer representing the assignee will generally not have an attorney-client relationship with the inventor. 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 the benefit of a third d t t tt li t l ti hi b tperson does not create an attorney-client relationship between

the grantor and the attorney. Restatement (Second) of Agency §14H (1958).

A id t i t b t h i th li t b i f i• Avoid uncertainty about who is the client by informing inventors and documenting the fact.

• Advise the client on assignment obligations and make sure

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

Inventor/Assignee Conflicts– Several courts have held that a patent attorney does not have an

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 Div1288 (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?

– However, in some states, factual differences and questions may give rise to the argument that the inventor has the subjective belief that the tt li t l ti hi i t d S H Filt I P b dattorney-client relationship existed. See Henry Filters, Inc. v. Peabody

Barnes, Inc., 611 N.E.2d 873, 876-77 (Ohio Ct. App. 1992).

• In these states, be careful to limit this question by informing inventors and documenting the process.

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inventors and documenting the process.

A Word About Patent Prosecution BarsProsecution Bars

When might a patent prosecutor be barred from representing a– When might a patent prosecutor be barred from representing a client because of his role as litigation counsel?

– The answer to the question depends largely on the court’s q p g ydetermination of the tension between the attorney’s role as litigation counsel and prosecution counsel for the client.

• Lack of uniformity among district courts See David Hrick How• Lack of uniformity among district courts. See David Hrick, How Things Snowball: The Ethical Responsibilities and Liability Risks Arising from Representing a Single Client in Multiple Patent-Related Representations, 18 Geo. J. Legal Ethics 421, 442 (2005)442 (2005).

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A Word About Patent Prosecution BarsProsecution Bars

The Federal Circuit weighs in:

Whether an unacceptable opportunity for inadvertent disclosure exists must be determined by the facts of the case on a counsel-by-counsel basis. U.S. Steel Corp. v. United States, 730 F.2d 1465, 1468 (Fed Cir 1984)1468 (Fed.Cir. 1984).

The court must balance the risk of inadvertent disclosure and competitive use against the potential harm to the opposing party from restrictions imposed on that party’s right to have the benefit offrom restrictions imposed on that party s right to have the benefit of counsel of its choice. In Re Deutsche Bank Trust Company Americas and Total Bank Solutions, LLC, Order on Petition for Writ of Mandamus, (Fed.Cir. 2010).

Strategically consider which matters to undertake based on possible future conflicts, and always be sure to shield yourself from conflicts when they arise.

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C fli t B t L ’ Conflicts Between Lawyers’ and Clients’ Interests

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Conflicts Between Lawyers’ and Clients’ Interestsand Clients Interests

– Does the PTO Code permit a lawyer to take an interest in an li ti h i ti ?application he is prosecuting?

• The PTO Code specifically allows a patent practitioner to take an interest in the “patent.” 37 C.F.R. § 10.64(a)(3) (2002)(2002).

• Some reasonably conclude that “patent” also means “application,” but this is unclear as PTO uses “patent” and “ li ti ” diff tl l h“application” very differently elsewhere.

• Careful contract drafting might avoid this uncertainty.

• Must be reasonably expected to have a close relationship to the fee earned. See 37 C.F.R. § 10.36(a) (2002) (fees must not be excessive).

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Choice of Rules

– When there appears to be a conflict between PTO code and state law, does the PTO Code preempt state law?

• In some cases, probably yes.

– Any state law contrary to allowing practitioners to take ownership interest in a patent in exchange for fees is likely preempted by federal patent laws. See Buechel v. Bain, 766 N.E.2d 914 (N.Y. 2001).

• In other cases, probably no.

– Some states prohibit a lawyer from enforcing a patent in which he has an interest in federal court when he also has an interest in representing the client. Thus, preemption in the litigation context is not always certain. See James E. Moliterno, Broad Prohibition, Thin Rationale: The “Acquisition of an Interest and Financial Assistance in Litigation” Rules, 16 Geo. J. Legal Ethics 223 (2003)

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Ethics 223 (2003).

How to Avoid Becoming a How to Avoid Becoming a Patent Prosecution

Cautionary TaleCautionary Tale

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Vaxiion Therapeutics v. Foley & Lardner

(S th Di t i t f C lif i )(Southern District of California)

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Vaxiion Therapeutics v. Foley & Lardner

– Subject matter conflict was alleged based on patent attorneys in the firm’s San Diego and D.C. offices filing applications for separate companies both claiming “minicell” technologiesseparate companies, both claiming minicell technologies.

• Counsel did not notify plaintiff of representation of EnGenelC.

• Plaintiff alleged breach of fiduciary duty.

– San Diego attorneys represented Vaxxiion, and D.C. attorneys represented Vaxiion’s competitor EnGenelCrepresented Vaxiion s competitor EnGenelC.

• PCT application for Vaxiion’s invention was filed four days late, thereby affecting the priority date.

– In addition, attempts were made to swear behind the Vaxxiion disclosure for EnGenelC’s invention.

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Vaxiion Therapeutics v. Foley & Lardner

C t h ld th t th f ti i th C lif i b h– Court held that the proper cause of action is the California breach of fiduciary duty, and that in California, it is unnecessary to show that attorneys in the San Diego office had communicated client confidences to their colleagues in the D.C. office.

– Which rules of professional conduct apply?

• California rules D C rules or the PTO Code of ProfessionalCalifornia rules, D.C. rules, or the PTO Code of Professional Responsibility?

– Different rules may have different implications…

• For instance, California rules are based on that of an objective observer, or what subjectively an attorney understood (e.g., 3-310(c)(2)), while PTO rules are based on representation of

“ ff ” ( 3 C 10 66( ))clients with “different interests” (e.g., 37 C.F.R. 10.66(b)), and D.C. rules are based on a “concurrent conflict” that risks the representation being “materially limited” (e.g., RPC 1.7(a)).

• Different rules may affect a wide range of evidence and expert

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• Different rules may affect a wide range of evidence and expert opinion allowed to be offered.

Tethys Bioscience v. Mintz LevinTethys Bioscience v. Mintz Levin

(Northern District of California)(Northern District of California)

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Tethys Bioscience v. Mintz, Levin

– Mintz Levin prosecuted a patent application for Tethys, used similar stock language in a patent application for its other client ATTC Similar technologiesATTC. Similar technologies . . .

• Tethy’s application is directed towards a method that identifies biological markers that indicate whether a person i lik l t d l di b tis likely to develop diabetes.

• ATCC’s application is directed towards a method that identifies the probability that a person will develop diabetes.p y p p

– Tethys claimed that Mintz Levin disclosed its confidential intellectual property to another client.

• Tethys alleges breach of the duties of loyalty and confidentiality.

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Tethys Bioscience v. Mintz, Levin

– Mintz Levin did not disclose to Tethys the representation of ATTC, arguably seeking patents for “competing intellectual property.”

• Mintz argues that the inventions are fundamentally different.

– Remember: Patent application information is generally confidential pp g yuntil published.

• Open Issue: Is high-level background information in an unpublished patent application confidential?p p pp

• Open Issue: What are the risks using of template language in drafting a patent application (e.g., background section, detailed description, etc.)p , )

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Tethys Bioscience v. Mintz, Levin

– Make sure to receive informed written consent from each client where a potential conflict may exist.

Be wary of the effects of State law– Be wary of the effects of State law.

• The California Court held that the California tort of conversion does not extend to the copying of patent applications.

– Although damages remain a question in this case, Tethys also seeks punitive damages based on the breach of fiduciary duty and fraud, which thus far has survived a motion to dismiss.

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The Importance ofThe Importance ofExecuting and Recording

AssignmentsAssignments

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Stanford v. Roche

(Northern District of California)

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Stanford v. Roche

Stanford scientists in partnership with Cetus developed a– Stanford scientists, in partnership with Cetus, developed a method of using PCR to measure HIV virus blood concentration.

– Roche subsequently bought Cetus’s PCR business.

– Stanford offered to license the rights to Roche, but the license negotiations stalled Stanford sued under patents itlicense negotiations stalled. Stanford sued under patents it believed it owned.

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Stanford v. Roche– Agreements involved:

Inventor had promised to assign rather executed than a• Inventor had promised to assign, rather executed than a present assignment to Stanford.

• Stanford’s applicable inventions rights policy allowed “allStanford s applicable inventions rights policy allowed all rights to remain with the inventor if possible.”

• Inventor did in fact assign to Cetus all rights to his inventionsinventions.

• Inventor then later assigned the invention rights to Stanford.S a o d

– Patent ownership can be transferred without recordation with PTO, but when two entities claim ownership, the second assignee can actually hold title only if it records first with

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g y yPTO. 35 U.S.C. § 261.

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

– Ultimately Roche’s claim for ownership of the patent was barred by theUltimately, Roche s claim for ownership of the patent was barred by the statute of limitations for contract disputes under California law (4 years form the date that Roche became aware of the breach of contract at issue).

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

• Since Stanford had not acquired rights in the patent it did not have• Since Stanford had not acquired rights in the patent, it did not have standing to bring the current suit against Roche and the case was dismissed.

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

– Remember: Execute and record patent assignments in a timely manner.

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Enovsys v. NextelEnovsys v. Nextel

(Central District of California) (Central District of California)

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Enovsys v. Nextel– Plaintiff, a joint inventor, was married at the time of patent

issuance.

L t di d i C lif i hi h h l idi th t– Later divorced in California, which has a law providing that all unadjudicated community property is held by the couple as tenants in common following dissolution of their marriage. Lewis v. Superior Court, 77 Cal. App. 3d 844, 852 (Cal. Ct. A 1978)App. 1978).

• California law has suggested that patent rights are likely such communal property Lorraine v Lorraine 8 Calsuch communal property. Lorraine v. Lorraine, 8 Cal. App. 2d 687, 701 (Cal. Dist. Ct. App. 1935) (holding patent rights obtained during marriage were community property); In re Marriage of Worth, 195 Cal. App. 3d 768, 773-74 (Cal Ct App 1987) (recognizing intellectual773 74 (Cal. Ct. App. 1987) (recognizing intellectual property rights created during marriage are community property).

– Ex-wife of the inventor assigns her rights (50% of the joint

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Ex wife of the inventor assigns her rights (50% of the joint inventor’s rights) to defendant Sprint/Nextel.

Enovsys v. Nextel– After the divorce, the co-inventor assigns his rights to Enovsys.

– Sprint/Nextel argues that the co-inventor cannot assign his ex-wife’s rights and that Sprint/Nextel cannot infringe a patent which has ¼rights, and that Sprint/Nextel cannot infringe a patent which has ¼ rights assigned to them by the ex-wife.

– The case has been briefed before the Federal Circuit.

– Possible implications:

• Are companies in California required to obtain assignments from b th i t d th i ?both inventors and their spouses?

• Are all patents issued to divorced inventors now subject to this attack, or only patents issued to divorced inventors who did not

i h ?assign them?

• Can using “present assignment” language avoid the issue?

B f th i t ti f t t l d t t l

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– Be wary of the intersection of patent laws and state laws.

The Duty to Disclose

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McKesson Information Solutions v. B id M di lBridge Medical

(Fed. Cir. 2007).

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McKesson v. Bridge Medical

– During the prosecution of a continuation application, a separate continuation-in-part application (from the same parent) was allowed.

– Applications were before different examiners.

– Counsel disclosed the existence of the pending application but failedCounsel disclosed the existence of the pending application, but failed to point out a specific rejection (based on the same limitation and the same prior art) and failed to disclose a reference (Baker) used by the examiner in the continuation-in-part application.

– The Federal Circuit affirmed the district court’s finding of inequitable conduct for failure to disclose 1) the specific rejection, 2) the Baker reference, and 3) the allowance of claims in the continuation-in-part application.

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McKesson v. Bridge Medical– Existence of related applications was disclosed, but:

• Federal Circuit determined that this did not outweigh pattern of i t t t d i b ithh ldi th ifi ti tintent to deceive by withholding the specific prosecution events.

• Reliance on Dayco v. Total Containment, Inc., 329 F.3d 1358 (Fed.Cir. 2003), which ironically reversed finding of inequitable

d i il fconduct on similar fact pattern.

– Consider a system for tracking events in related patent applications to trigger cross-filing IDS’s.

– Open issue: How far does McKesson duty go?

• Only applications “related” under 35 U S C § 120?• Only applications related under 35 U.S.C. § 120?• Applications related by subject matter, same client?• Applications related by subject matter, different clients?

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Avid Identification Systems v. C t l I t Crystal Import

(Fed. Cir. 2010).

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Avid v. Crystal ImportAvid v. Crystal Import

• Avid is a small start-up company founded by Dr. Stoddard for producing micro chips to lodge in pets for pet location purposesproducing micro-chips to lodge in pets for pet location purposes.

• Dr. Stoddard (not a named inventor, did not prepare/prosecute patent application) demonstrated some of Avid’s technology at p pp ) gytrade show in April 1990.

• Avid filed a patent application in August 1991.

• Upon assertion of the patent, the defendant alleged inequitable conduct for Avid’s failure to disclose the trade show demonstrations to the PTO.

• Was there a duty to inform the PTO of the trade show demonstrations under PTO Rule 56?

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PTO Rule 56Who owes the duty of candor?

Individuals associated with the filing or prosecution of aIndividuals associated with the filing or prosecution of a patent application as (1) each named inventor, (2) each attorney or agent that prepares or prosecutes the application, and (3) every other person who is substantively involved in the preparation orsubstantively involved in the preparation or prosecution of the application and who is associated with the inventor and assignee. 37 C.F.R. § 1.56(c).

Did Dr. Stoddard owe a duty of candor?

Dr. Stoddard was not an inventor or attorney or agent who prepared the applicationwho prepared the application.

Was he “substantively involved in the preparation or prosecution of the application”?

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p pp

Avid v. Crystal Import

– Court ultimately held that because Dr. Stoddard was president of the company because he communicated withpresident of the company, because he communicated with the inventors, and because the functionality of the product was his idea, he therefore has a duty of disclosure under Rule 56.

• Remember to adequately advise clients of the duty of disclosure under Rule 56. Err on side of disclosure.

– Judge Linn’s dissent argued that Dr. Stoddard was not “substantively” involved.

– Open Issue: Will the Federal Circuit put the brakes on the inequitable conduct train in Therasence v. Becton Dickenson when dealing with the requisite intent to deceive?

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Th D t f L lt The Duty of Loyalty to Former Clients

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Gary Odom v. Microsoft C tiCorporation

(District of Oregon)

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Odom v. Microsoft

• Gary Odom was a notable blogger, patent attorney, and worked for a consulting company.

• His consulting company represented Microsoft in various patent disputes from 2001 to 2004.

Ironically, Odom was retained to aid Microsoft in defending patent lawsuits.

• Odom had previously signed a Confidentiality and NDA with his consulting company.

• Odom is also the sole inventor of U.S. Patent No. 7,363,592 with a priority date in November of 2000.

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Odom v. Microsoft– Odom brought suit against Microsoft alleging infringement of

his patent.

Mi f i d h d f f l h d d i bl– Microsoft raised the defenses of unclean hands and equitable estoppel.

– Case raises questions regarding the duties of loyalty andCase raises questions regarding the duties of loyalty and confidentiality, as well as the duty to former clients.

• Odom had given Microsoft patent-defense advice di MS Offi 2007 th d t th t h iregarding MS Office 2007, the product that he is now

alleging infringes his patent.

– The case is currently pending in OregonThe case is currently pending in Oregon.

• Consider the duty of loyalty to former clients under the Model Rules of Professional Conduct.

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Thank You

Stephen T. SchreinerGoodwin Procter LLP,

901 New York Avenue, NWWashington, DC 20001

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