U.S. PATENT LITIGATION

Responsive Strategies & Requirements

By

Gary RinkermanDrinker, Biddle & Reath LLP

Washington, D.C. 202-230-5178

Gary.Rinkerman@DBR.com

© 2008 Gary Rinkerman. All Rights Reserved.Note: The images in this presentation are solely for use in the teaching context in which they are offered. Please do

not assume that you can further reproduce, distribute, alter or otherwise use any of the images.

2

The Chief U.S. Forums

U.S. Federal Judiciary 11 + 2 Circuits 94 District Courts

U.S. International Trade Commission U.S. Patent & Trademark

OfficeState Courts

Each Forum Has Different Procedural Requirements, Timelines, Substantive Requirements (In Some Cases), Etc.

Contract And Ownership

Issues FTC DOJ

3

First Reactions: Part I - APreservation Obligations (Or What Do We Have, Who Has It, Where Is

It?)

Lord, Here Comes The Flood Peter Gabriel

Investigation To Prepare AnswerInitial DisclosuresParty Discovery - SubpoenasInterrogatoriesDocument RequestsRequests For InspectionRequests For AdmissionsDepositions

Protective Order:In-House Access?Outside Counsel Only?Experts?

Witness List:Employees, Owners, Etc.InventorsExpertsThird Parties – e.g., Ex-Employees, Contractors

Preservation Of EvidenceItems, Documents (Hard Copy & Electronic), Voice Mail, Etc.

Attorney Opinion?

Blocking Statutes?The Hague?Comity?

Insurance?Indemnification?

4

First Reactions: Part I - B

Preservation Obligations (Or What Do We Have, Who Has It, Where Is It?)

When It Becomes Clear That A Claim May Be AssertedRecord Retention Issues Arise

After A Formal Claim Has Been Made, Pertinent RecordsMust Be Retained

5

First Reactions: Part I - C Preservation Obligations (Or What Do We Have, Who Has It, Where Is

It?)

While preparing Qualcomm witness Viji Raveendran to testify at trial, attorney Adam Bier discovered an August 6, 2002 email to viji@qualcomm.com welcoming her to the avc_ce mailing list. . . . Several days later, Bier and Raveendran searched her laptop computer using the search term “avc_ce” and discovered 21 separate emails, none of which Qualcomm had produced in discovery. . . . The email chains bore several dates in November 2002 and the authors discussed various issues relating to the H.264 standard. . . While Raveendran was not a named author or recipient, the emails were sent to all members of two JVT email groups (jvt-experts and avc_ce) and Raveendran maintained them on her computer for more than four years. . . . The Qualcomm trial team decided not to produce these newly discovered emails to Broadcom, claiming they were not responsive to Broadcom's discovery requests. . . . The attorneys ignored the fact that the presence of the emails on Raveendran's computer undercut Qualcomm's premier argument that it had not participated in the JVT in 2002. . . . The Qualcomm trial team failed to conduct any investigation to determine whether there were more emails that also had not been produced.

Qualcomm, Inc. v. Broadcom Corp., 2008 WL 66932 (S.D.Cal. Jan. 7, 2008).

Ancillary Question: Is It More Cost-Effective To Conduct Document Searches Using Only In-House Personnel?

6

First Reactions – Part II Jurisdiction & Venue

Why We Care (Maybe)

It’s Not Scientific – But It’s The Best We Have (?)

1990 – 2003 Overall Patentee Win Rate 60% (1221 Cases; 1964 Patents)

District Ranking No. of Patents Patentee Wins Resolution Speed (2000-06)

D.N.J. 6 38 83% NA

E.D. Mich. 9 57 73% NA

S.D.Fla. 10 51 71% NA

N.D. Cal. 2 92 71% NA

E.D.Va. 21 84 71% Second Fastest

E.D. Tex 28 20 70% NA

C.D. Cal. 1 98 68% Fifth Fastest

D. Minn. 7 64 61% NA

S.D.N.Y. 5 58 57% NA

N.D.Ill. 3 106 56% NA

D.Del. 4 258 48% Third Slowest

D.Mass. 8 65 47% Fourth Slowest

Numbers Are Very General. From Moore, et. al., Patent Litigation And Strategy (3rd Ed. 2008) Thompson-West.

7

First Reactions – Part II Jurisdiction & Venue

(Living In The Real World)

Extent Of Alleged Damage In The Community – Is It Personal?

Economic Factors & Community Business Environment

The “Explosive Situation” Example Community Culture

West Virginia Motor

Plant Pitman New Jersey CD PlantRoche – Nutley, New Jersey

8

The Defendants – “It Might Be Personal”

Round Up The Usual Suspects – Claude Reins (Capt. Lewis Renault) Casablanca

For corporate officers to be personally liable for direct infringement there must be evidence to justify piercing the “corporate veil.” A.Stucki Co. v. Worthington Indus., Inc., 849 F.2d 593 (Fed. Cir. 1988)

Officers of an allegedly infringing company can be held personally liable for actively inducing infringement . . . if they knew or should have known that their actions would induce actual infringement. Micro Chem., Inc. v. Great Plains Chem. Co., 194 F3d 1250

(Fed. Cir. 1999) Prompt consultation with counsel could be evidence against piercing corporate veil or otherwise holding corporate officer personally liable. See Hoover Group v. Custom Metalcraft, 84 F.3d 1408 (Fed.Cir.

1999).

9

Did We Get An Opinion?

“In order to find willful infringement, [a] district court ‘[is] required to find by clear and convincing evidence in view of the totality of the circumstances that [the infringer] acted in disregard of the [patentee's] patent and lacked a reasonable basis for believing it had a right to do what it did.” ’ WMS Gaming, Inc. v. International Game Tech., 184 F.3d 1339, 1354 (Fed.Cir.1999), quoting Amsted Indus., Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 181 (Fed.Cir.1994). Although “[i]t is well settled that an important factor in determining whether willful infringement has been shown is whether or not the infringer obtained the opinion of counsel,” Comark Communications, Inc. v. Harris Corp., 156 F.3d 1182, 1191 (Fed.Cir.1998), the mere fact that an infringer has received the advice of counsel is not the end of the analysis. Kori Corp. v. Wilco Marsh Buggies & Draglines, Inc., 761 F.2d 649, 656-57 (Fed.Cir.1985). The fact finder must still assess the reasonableness of an accused infringer's reliance on the advice of counsel. Stryker Corp. v. Davol Inc., 234 F.3d 1252, 1259 (Fed.Cir.2000); Graco, Inc. v. Binks Mfg. Co., 60 F.3d 785, 793 (Fed.Cir.1995).

Evaluation of the reasonableness of an infringer's reliance can involve the subject matter of the patent. Home Elevators, Inc. v. Millar Elevator Serv. Co., 933 F.Supp. 1090, 1092 (N.D.Ga.1996); THK America, Inc. v. NSK Co., 151 F.R.D. 625, 629-30 (N.D.Ill.1993). For example, the infringer's failure to disclose all material information, or the “best information,” to counsel can vitiate the advice-of-counsel defense. Comark Communications, Inc. v. Harris Corp., supra, 156 F.3d at 1191. Resolving what information is material or constitutes the “best information” necessarily implicates the subject matter of the patent because it is impossible to determine what information is material or constitutes the “best information” without understanding the subject matter of the patent. See generally Amsted Indus. Inc., 24 F.3d at 183 (affirming jury's rejection of advice-of-counsel defense where there was evidence that counsel did not fully understand the invention). Novartis Pharmaceuticals Corp. v. Apotex Corp., 2004 WL 1396257 (S.D.N.Y. 2004)(Unpublished).

10

To Bifurcate Or Not To Bifurcate?Part I – The Decision

Bifurcation is governed by Rule 42(b) of the Federal Rules of Civil Procedure which provides as follows:

The court, in furtherance of convenience or to avoid prejudice, or when separate trails will be conducive to expedition and economy, may order a separate trial of any claim, cross-claim, counterclaims, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues, always preserving inviolate the right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States.

“[W]hether to bifurcate a trial ... is a matter within the sound discretion of the trial court.” Getty Petroleum Corp. v. Island Transp. Corp., 862 F.2d 10, 15 (2d Cir.1988). “To determine whether bifurcation is warranted, courts generally consider the following three factors: (1) whether significant resources would be saved by bifurcation, (2) whether bifurcation will increase juror comprehension, and (3) whether bifurcation will lead to repeat presentations of the same evidence and witnesses.’ ” WeddingChannel.Com Inc. v. The Knot, Inc., 2004 WL 2984305 *1 (S.D.N.Y.2004) (quoting Gaus v. Conair Corp., 2000 WL 1277365, *3 (S.D.N.Y. Sept.7, 2000)). The moving party bears the burden of establishing that bifurcation is warranted. Id. (citing Dallas v. Goldberg, 143 F.Supp.2d 312, 315 (S.D.N.Y.2001)). In all cases, including patent cases, bifurcation is the exception, not the rule. See, e.g., Kos Pharms, Inc. v. Barr Labs., Inc., 218 F.R.D. 387, 390-91 (S.D.N.Y.2003); William Reber LLC v. Samsung Elect. Amer. Inc., 220 F.R.D. 533, 536 (N.D.Ill.2004), vacated in part on other grounds, 2004 WL 2535074 (N.D.Ill. Sept.27, 2004); Real v. Bunn-O-Matic Corp., 195 F.R.D. 618, 620 (N.D.Ill.2000).

Computer Associates Intern., Inc. v. Simple.com, Inc., 247 F.R.D. 63 (E.D.N.Y. 2007).

11

To Bifurcate Or Not To Bifurcate?Part II The Basis – Equitable Defenses

Plaintiffs petition the Court to bifurcate the jury trial on infringement from the equitable trial on Defendants' defenses of inequitable conduct and unclean hands. . . .

The Federal Circuit has made clear that bifurcation may be appropriate where the claims of inequitable conduct and invalidity “are distinct and without commonality either as claims or in a relation to the underlying fact issues.” Old Town Canoe Co. v. Confluence Holdings Corp., 448 F.3d 1309, 1322 (Fed.Cir.2006). Furthermore, “[b]ecause it is an equitable issue, the ultimate determination of inequitable conduct is committed to the discretion of the trial court.” Id. (internal citation omitted); see also PerSpective Biosystems, Inc. v. Pharmacia Biotech, Inc., 225 F.3d 1315, 1318 (Fed.Cir.2000) (“The defense of inequitable conduct is entirely equitable in nature, and thus not an issue for a jury to decide.”). “[A] judge retains the discretion to conduct a bench trial on the equitable issues of unenforceability in the same case where invalidity is to be tried to a jury.” Agfa Corp. v. Creo Products, Inc., 451 F.3d 1366, 1375 (Fed.Cir.2006).

The Court agrees with the arguments set forth by Plaintiff, and in accordance with the discretion vested in the trial court, through the federal rules as well as Federal Circuit precedent, finds that bifurcation is appropriate in the present case. There is no need to burden the jury with evidence of equitable misconduct that is to be decided by the Court. Both of Defendants' equitable defenses, unclean hands and inequitable conduct, are equitable defenses; the Court, not the jury, is obligated to decide these issues. See Mylan Pharmaceuticals, Inc. v. Thompson, 268 F.3d 1323, 1331 (Fed.Cir.2001) (“The equitable defenses include unclean hands, unenforceability of the patent for fraud and inequitable conduct, misuse, and delay in filing suit resulting in laches or estoppel.”).

Dekalb Genetics Corp. v. Syngenta Seeds, Inc., 2008 WL 382385 (E.D.Mo. 2008)(Unpublished).

12

To Bifurcate Or Not To Bifurcate?Part III – Willfulness

[T]he issues of liability and willfulness overlap in this case. Therefore, bifurcation would result in unnecessary expense, inconvenience, and delay. See, e.g., Calmar, Inc. v. Emson Research, Inc., 850 F.Supp. 861, 866 (C.D.Cal.1994). Furthermore, with bifurcation, disputes would inevitably arise about whether a particular interrogatory, deposition question, or document request is relevant to infringement, validity, willfulness, or all of those issues, further complicating and protracting the discovery process. This factor militates against the Knot's motion to bifurcate and stay. See, e.g., Willemijn Houdstermaatschaapij BV v. Apollo Computer, 707 F.Supp. 1429, 1435 (D.Del.1989) (“[I]t appears inevitable that, if the motion to bifurcate were granted, both the discovery process and the liability trial would be repeatedly delayed by disputes regarding the discoverability or admissibility of evidence.”).

Wedding Channel.Com, Inc. v. The Knot, Inc., 2004 WL 2984305 (S.D.N.Y. 2004).

13

To Bifurcate Or Not To Bifurcate?Part IV – Damages

In patent cases, bifurcation of liability and damages is not uncommon, especially when the damages issues are complicated and extensive evidence would be necessary. See Princeton Biochemicals, Inc. v. Beckman Instruments, Inc., 180 F.R.D. 254, 256-57, 259 (D.N.J.1997) (citing Amgen, Inc. v. Chugai Pharmaceutical Co. Ltd., 13 U.S.P.Q.2d (BNA) 1737, 1741 (D.Mass.1989); American Standard Inc. v. Pfizer, Inc., 722 F.Supp. 86, 90 (D.Del.1989); E.I. Dupont De Nemours & Co. V. Phillips Petroleum Company, 656 F.Supp. 1343, 1346 (D.Del.1987)). The United States District Court for the District of Delaware noted that “[i]n the context of patent cases, ‘experienced judges use bifurcation and trifurcation both to simplify the issues in patent cases and to maintain manageability of the volume and complexity of the evidence presented to a jury.’ “ Ciena Corp. v. Corvis Corp., 210 F.R.D. 519, 521 (D.Del.2002) (citing Thomas L. Creel & Robert Taylor, Bifurcation, Trifurcation, Opinions of Counsel, Privilege and Prejudice, 424 PLI/Pat 823, 826 (1995)).

In the present matter, the issues of damages and willfulness are most appropriately bifurcated from liability but heard by the same jury following the liability trial. Unlike the technological information necessary to prove liability and the related defense of obviousness, financial and economic evidence will be used to prove and defend the issue of damages. Evidence in the liability trial will focus on disclosure and claims of the patent and “the state of the relevant art as represented by prior art products, patents and technical literature.” . . . Evidence in the damages phase of the litigation, on the other hand, might include the following factors: (1) market demand for relevant products; (2) Plaintiff's marketing and manufacturing capacity; (3) the existence of noninfringing alternative products available through other vendors; (4) the extent to which Plaintiff, as opposed to competitors, would have captured sales of the generic

products; and (5) the profits that Plaintiff would have realized on these additional sales.

Medpointe Healthcare Inc. v. Hi-Tech Pharmacal Co., Inc., 2007 WL 188285 (D.N.J. 2007).

14

The Irony SlideOr “Sometimes Life Is Not Wrinkle-

Free” 2005: Major Chinese

shirtmaker uses portfolio of “pucker-free seam” patents in attempt to “build a wall” around a segment of the “upscale” mens’ shirt market in the U.S.

The accused “infringer” is another major Chinese shirtmaker: the U.S. International Trade Commission is the intitial host forum for this Chinese war over “U.S. turf.”

Best Mode and Duty Of Candor (Inequitable Conduct Analysis).

US Patent No: 5,590,615

Brooks Brothers Shirt JC Penny Shirt

15

Finding The Right Expert

CONSULTING OR TESTIFYING EXPERT?

[A]n expert witness with “scientific, technical, or other specialized knowledge” may testify in the form of an opinion “if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.”  Fed.R.Evid. 702. Micro Chemical, Inc. v. Lextron, Inc., 317 F.3d 1387 (Fed. Cir. 2003).

The Court determines that when a party names its attorney as an expert witness, the witness must produce all documents considered by him or her in the process of formulating the expert opinion, including documents containing opinions. Mushroom Associates v. Monterey Mushrooms, Inc., 25 U.S.P.Q.2d 1304, 1992 WL 442914 (N.D.Cal.1902) (party named its attorney as the expert witness in patent litigation). Vaughn Furniture Co. v. Featureline Mfg. Co., 156 F.R.D. 123 (M.D.N.C. 1994).

Where attorney participated in drafting expert’s report, the credibility of report may be undermined New York v. Anheuser-Busch, 811 F.Supp. 684 (E.D.N.Y. 1993).

THE KAYTON PRINCIPLE: REVIEW EXPERT’S RECORD AND JUDICIAL OPINIONS MENTIONING HIM OR HER!

16

Rule 26(b)(1) of the Federal Rules of Civil Procedure permits discovery of “any matter, not privileged, that is relevant to a claim or defense of any party . . . Relevant information need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

Rule 34: Documents and things that may be discovered include “data compilations.”

Judicial Limits: “[T]he burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues. See Fed. R. Civ. P. 26-36.

International Concerns Affecting Availability of Discovery:

Comity Blocking StatutesSecrecy Laws

Privilege Privacy Concerns Specific Procedures

U.S. APPROACH TO INTERNATIONAL DISCOVERY

Appropriately Permissive or Unduly Burdensome (Depending on Your Point-of-View)

I Know You’ve Deceived Me, Now Here’s A Surprise . . . I Can See For Miles . . .And Miles . . .And Miles

Pete Townshend - The Who - I Can See For Miles (1967)

17

BALANCING INTERNATIONAL CONCERNS

Morality, like art, means drawing a line someplace Oscar Wilde (1854-1900)

Restatement (Third) of Foreign Relations Law Section 422(2)(a)

If disclosure of information located outside of the United States is prohibited by law, regulation, order of court or other authority of the state in which the information or prospective witness is located, or of the state of which the prospective witness is a national:

Burden on Possessor of Information:

Demonstrate restriction on disclosure – and:

A court or agency in the United States may require the person to whom the order is directed to make a good faith effort to secure permission from the foreign authorities to make the information available.

A court or agency should not normally impose sanctions of contempt, dismissal, or default on a party that has failed to comply with the order for production, except in cases of deliberate concealment or removal of information or a failure to make a good faith effort to comply with the requirement to secure permission to disclose.

18

BLOCKING STATUTES & THE HAGUE CONVENTION

The secret to creativity is knowing how to hide your sources. Albert Einstein

(1879-1955) Spray Coating Apparatus: U.S. Patent 3,834,052

U.S. patent holder sought information as to development and design of SKM (French defendant) technology as well as sales information. SKM refused, based on a French blocking statute and the Hague Convention.

The French blocking statute generally prohibited: The communication of economic, commercial, industrial, financial, or technical information in connection with foreign judicial proceedings.

Court’s Position: The Blocking Statute is not [plaintiff] Graco's problem, and it is not the court's problem; it is SKM's problem. In enacting the Blocking Statute France imposed a serious disability on its nationals. If SKM is unable to comply with the court's order, it runs a real risk of suffering a default judgment or other severe sanctions. Even if SKM can avoid the most severe sanctions, by demonstrating good faith, it still may suffer from findings of fact adverse to it. Opinion at 527.

According to SKM, application of the Hague Convention to requests for discovery in U.S. judicial proceedings is mandatory.

Court’s Position: Whether the Convention was intended to limit intrusive unauthorized discovery proceedings by prohibiting them, or merely by offering an attractive alternative, the court cannot agree that the Convention was intended to protect foreign parties, over whom an American court properly has jurisdiction, from the normal range of pre-trial discovery available under the Federal Rules of Civil Procedure. Opinion at 521.

19

HAGUE CONVENTION APPLICABILITY AS A SUPPLEMENT TO FEDERAL PROCEDURES –

PART II get by with a little help from my friends . . . Lennon-McCartney - Beatles

Valois of America, Corp. v. Risdon Corp., 183 F.R.D. 344 (D. Conn. 1997). Pump Assembly: U.S. Patent 4,773,553

Defendant Moved For Protective Order- Sought Application of Hague Convention Court’s Analysis:

Burden: A party that seeks the application of the Hague Convention procedures rather than the Federal Rules bears the burden of persuading the trial court that resort to the Hague Convention is appropriate. Note: NY law is opposite. Three-Prong Balancing Test Required: (1) the particular facts of the case and the relevance of the discovery requested; (2) the sovereign interests in issue; and (3) the likelihood that the Hague Convention procedures will prove effective, e.g., in requiring longer time and expense.

Conclusion: Discovery Requests Should First Be Narrowed; Then Defendant Can Renew Motion.

20

HAGUE CONVENTION APPLICABILITY AS A SUPPLEMENT TO FEDERAL PROCEDURES –

PART II I’m gonna try with a little help from my friends . . . Lennon-

McCartney - Beatles

Tulip Computers International, B.V. v. Dell Computer Corp., 254 F.Supp. 2d 469 (D. Del. 2003).

Motherboard: U.S. Patent 5,594,621

Tulip, a Dutch corporation with its principle place of business in the Netherlands, brought a U.S. patent infringement action against Dell. Dell sought issuance of Letters of Request (“letters rogatory”) for the testimony of two former Tulip employees residing in the Netherlands. The employees, respectively, worked in pertinent R&D activities and patent procurement efforts. Tulip argued that the court should consider the “higher” and preclusive discovery procedures in the Netherlands and refuse to issue the letters, i.e., the court should not apply U.S. discovery standards in deciding whether to issue letters rogatory under the Hague Convention.

The Court determined to issue the letters because the potential witnesses: were not parties to the litigation, resided in the Netherlands, did not voluntarily submit to discovery, and were not otherwise subject to the jurisdiction of the Court.

KEY: Any privilege or other immunity should be considered in the enforcement of the letters, not in their issuance.

21

BALANCING RELEVANCE, GOOD FAITH AND BURDENS

PART I

You Can’t Always …Get What You Want . . . Jagger, Richard – Rolling Stones Cochran Consulting, Inc. v. Uwatec USA, Inc., 102 F.3d 1224 (Fed.Cir.

1996).

Scuba Dive Parameter Indicator Device: U.S. Patent 4,999,606 (“the ‘606 patent”) U.S. Patent infringement action; defendants include Uwatech AG, a Swiss CompanyTrial Court Orders Licensee Swiss Company To Produce Printed Copy of Third-

Party Licensor(Dynatron, Inc.) Computer Code – Imposes Sanctions For Failure To Produce

Appeal Court’s Analysis: Balancing Test Used To Reverse Lower Court

The Need For The Information: The ‘606 Patent did not specify the use of any particular code – it required only certain functions.

The Good Faith Efforts Of The Accused: (1) Uwatec had no right under license with Dynatron to copy and produce code; and (2) Uwatec brought an unsuccessful judicial action in Switzerland to compel production of code print-out from Dynatron, i.e., made a good faith effort to comply with discovery request.

The Potential Liability Of The Accused For Compliance: Swiss Court Held Uwatec Would Violate Swiss Criminal Law If Uwatec Disclosed Dynatron’s Trade Secret Code.

22

BALANCING RELEVANCE, GOOD FAITH AND BURDENSPART II

No, You Can’t Always Get What You Want . . . Electro Design Manufacturing, Inc. v. Texas Instruments, Inc., 1990 WL 21105

(E.D.N.Y. 1990) (UNREPORTED).

Anti-Tank Missile Guidance: U.S. Patents 4,406,429 & 4,666,103

Declaratory Judgment Action by EDM, a U.S. Company: Invalidity, Unenforceability & Non-Infringement

TI Lost Bid To Supply Anti-Tank Missile Technology To West German Government

TI Seeks EDM’s Agreement With West German Government to Supply Anti-Tank Missile Technology;

Contract Includes Drawings and Details of Technology Supplied By EDM

Court’s Analysis: Balancing Test Used To Deny Discovery

The Need For The Information: TI alleged that the agreement contains unique information not obtainable by other means.

The Good Faith Efforts Of The Accused: (1) EDM acted on advice of German Counsel; and (2) the West German government made it clear that it would not agree to disclosure of the agreement.

The Potential Liability Of The Accused For Compliance: EDM’s disclosure would be illegal under West German law and would subject EDM to criminal liability for revealing a state secret.

23

FACILITIES INSPECTIONS: “THE UNIVITED GUEST”

So put me on a highway, and show me a sign - and take it to the limit one more time.

Meisner, Henley - The Eagles – Take It To The Limit

Minnesota Mining & Manufacturing, Inc. v. Nippon Carbide Industries Co., Inc., 171 F.R.D. 246 (D. Minn. 1997).

Alleged Breach of Settlement by Nippon: Manufacture of Reflective Sheeting in Japan That Allegedly Infringed 3M Japanese Patents

Key Introductory Point: U.S. Court had jurisdiction over settlement agreement dispute.

Issue: Could U.S. Court order facility/process inspection under Rule 34(a)(2) of the Federal Rules of Civil Procedure?

Resolution: Yes: International comity does not preclude order of inspection; even though Japanese law and procedure may not parallel American discovery practices, Nippon was subject to the jurisdiction of the U.S. Court and also had the benefit of U.S. discovery procedures, i.e., there was no reason to prevent the full development of the record in a U.S. proceeding via use of U.S. law and procedures.

Note: Nippon’s concern about trade secret matters were addressed by U.S. Court’s Protective Order.

24

SANCTIONS FOR BAD FAITH USE OF BLOCKING STATUTE

However beautiful the strategy, you should occasionally look at the results. Sir

Winston Churchill Remington Products, Inc. v. North American Philips Corp. 107 F.R.D. 642 (D.Conn. 1985).

Antitrust Action Including Dispute Over Ownership of “Schick” Trademark

Sanctions Based on Co-Defendant Dutch Company’s Initial Refusal To Provide Any Discovery; Reliance on Dutch “Blocking Statute” Found To Be In Bad Faith: $178,162.37

N.V. Philips Gloeilampenfabrieken (“PG”) refused to provide certain discovery responses in the U.S. proceeding. PG claimed that: (1) Article 39 of the Dutch Competition Code precluded compliance with any of the discovery requests; and (2) Dutch government denied PG’s request for a waiver of the Article 39 restriction.

Court noted: (1) PG does business in the U.S. and avails itself of U.S. trademark and patent law; and (2) aim of Dutch statute was to allow Dutch companies to avoid discovery orders under U.S. law; and (3) finally, as PG admitted after much international maneuvering, it was free to voluntarily comply with U.S. discovery. Sanction: Remington’s costs of seeking and obtaining the discovery must be reimbursed by PG.

  

25

PRIVILEGE & BORDERS – “TOUCHING BASE” RECOGNIZING FOREIGN PRIVILEGE AND IMMUNITY

PART I

Sometimes when we touch, the honesty’s too much. Dan Hill, Barry Manilow, Rod Stewart, et. al.

VLT Corp. v. Unitrode Corp., 194 F.R.D. 8 (D. Mass. 2000).

Privilege with regard to “[a]ny communication touching base with the United States will be governed by the federal discovery rules while any matters solely involving [a foreign country] will be provided by the applicable foreign statute. . . Communications by a foreign client with foreign patent agents ‘relating to assistance in prosecuting patent applications in the United States’ are governed by American privilege law whereas communications ‘relating to assistance in prosecuting patent applications in their own foreign country’ or ‘rendering legal advice . . . on the patent law of their own country’ are, as a matter of comity, governed by the privilege ‘law of the foreign country in which the patent application is filed,’ even if the client is a party to an American lawsuit.”

KEY: Reference to a U.S. patent that is incidental in Japanese attorney’s opinion on Japanese patent matter – therefore, mention of a U.S. patent does not cause U.S. privilege law to “trump” Japanese privilege law.

26

PRIVILEGE & BORDERS – “TOUCHING BASE” RECOGNIZING FOREIGN PRIVILEGE AND IMMUNITY – PART II

Astra Aktiebolag v. Andrx Pharmaceuticals, Inc., 208 F.R.D. 92 (S.D.N.Y. 2002).

Where “alleged privileged communications took place in a foreign country or involved foreign attorneys or proceedings, this court defers to the law of the country that has the “predominant” or “the most direct and compelling interest” in whether those communications should remain confidential, unless that foreign law is contrary to the public policy of this forum.” Therefore:

Applying Foreign Privilege: As German law recognizes attorney-client privilege, communications between a German attorney and his client will be recognized as privileged, absent a showing of conflict with the U.S. forum’s public policy.

Applying U.S. Law In Absence Of Specific Non-U.S. Privilege Law: The lack of a specific Korean privilege code must be viewed in light of the fact that the limited discovery allowed in Korean proceedings likely does not necessitate such a code; U.S. privilege law would, therefore, be applied to avoid any wholesale, inappropriate disclosure – “even though the communications do not ‘touch base’ with the United States.”

27

PRIVILEGE & BORDERS – “TOUCHING BASE” RECOGNIZING FOREIGN PRIVILEGE AND IMMUNITY – PART III

Odone v. Croda International, PLC., 950 F.Supp. 10 (D.D.C. 1997).

U.S. citizen sought discovery of communications between British company and its British patent agent as to whether the U.S. citizen should be named as a co-inventor in British company’s British patent application. British company argued that British privilege applied and precluded disclosure as all events and communications related to the British patent application, i.e., they did not “touch base” with the United States.

The communications “touch base” with the U.S. and U.S. privilege law appliesbecause:

1. The communications relate to whether a U.S. citizen should be named as a co- inventor in the British patent application: AND

2. The British patent is, under the International Patent Cooperation Treaty, relied upon for priority in the U.S. patent also at issue in the suit, i.e., the British patentee relied on the subject British patent to secure the U.S. counterpart.

28

DISCOVERY FOR USE IN NON-U.S. FORUMS

“STAGE SETTING” DIGRESSION – INTRODUCTORY QUOTE

When the foreign tribunal would readily accept relevant information discovered in the United States, application of a foreign-discoverability rule would be senseless. The rule in that situation would serve only to thwart § 1782(a)'s objective to assist foreign tribunals in obtaining relevant information that the tribunals may find useful but, for reasons having no bearing on international comity, they cannot obtain under their own laws.

Justice GinsburgUnited States Supreme CourtIntel Corp v. Advanced Micro Devices, Inc. (2004)

29

A POTENTIAL U.S. INFORMATION “GOLD RUSH”? – PART I

Get your facts first, and then you can distort them as much as you please.

Mark Twain Intel Corp. v. Advanced Micro Devices, 542 U.S. 241 (2004).

28 U.S.C. § 1782(a) (“Section 1782”) provides that a federal district court may order a person residing or found in the district to give testimony or produce documents “for use in a proceeding in a foreign or international tribunal . . . upon the application of any interested person.”

AMD filed an antitrust complaint against Intel with the Directorate-General for Competition of the Commission of the European Communities (”the DG”) and unsuccessfully requested the DG to seek documents produced in Alabama antitrust litigation involving Intel. AMD then sought to directly use Section 1782 to obtain the documents.

KEY ISSUE: Does Section 1782 categorically bar a district court from ordering production of documents when the foreign tribunal or “interested person” would not be able to obtain the documents if they were located in the foreign jurisdiction?

CONCLUSION: No. The discovery may be provided if authorized under U.S. Federal Rules of Civil Procedure, even if the foreign jurisdiction did not have or permit analogous discovery. However, privilege and other safeguards would still apply.

30

A POTENTIAL U.S. INFORMATION “GOLD RUSH”? – PART II

PARALLEL U.S. AND NON-U.S. PROCEEDINGSIn re Jenoptik, 109 F.3d 721 (Fed. Cir. 1997). Therma-Wave, Inc. sued Jenoptik AG in California for infringement of a U.S. patent and also brought an action in Germany under a German counterpart of one of the patents at issue in the California proceeding. Therma-Wave sought to present to the German court deposition testimony from the California proceeding that, in Therma-Wave’s view, contradicted Jenoptik’s representations to the German court.

Submission allowed.

KEY POINT: There was no circumvention of German procedural rules: The fact that such testimony could not have been obtained under German procedural rules did not preclude its submission to the German court when the testimony was legitimately taken in the U.S. proceeding.

Note: Therma-Wave represented that it would still treat the information in accordance with the California court’s confidentiality restrictions (i.e., “attorney’s eyes only”).

31

The USITC & Section 337

Section 337 investigations conducted by the U.S. International Trade Commission most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods. Both utility and design patents, as well as registered and common law trademarks, may be asserted in these investigations. Other forms of unfair competition involving imported products, such as infringement of registered copyrights, mask works or boat hull designs, misappropriation of trade secrets or trade dress, passing off, and false advertising, may also be asserted. Additionally, antitrust claims relating to imported goods may be asserted. The primary remedy available in Section 337 investigations is an exclusion order that directs Customs to stop infringing imports from entering the United States. In addition, the Commission may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337. Expedited relief in the form of temporary exclusion orders and temporary cease and desist orders may also be available in certain exceptional circumstances. Section 337 investigations, which are conducted pursuant to 19 U.S.C. § 1337 and the Administrative Procedure Act, include trial proceedings before administrative law judges and review by the Commission.

Six CommissionersChairman: Shara L. Aranoff (D); Vice Chairman: Daniel Pearson (R).

Five Administrative Law Judges

32

Section 337 Investigations

And Now For Something Completely Different Monty Python

In Rem Jurisdiction – “Against The Thing” – Triggered By Importation Or Imminent Importation Of Accused Products

“Lightning” Schedule - Typical “Target Date” For Completion Is 15 Months After Institution Of An Investigation – Any Longer Schedule Is Subject To Commission Review (Hearing Is Usually Within 8-9 Months Of Institution; Response To ComplaintDomestic Industry Requirement - There Must Be A Domestic Industry (Existing Or Attempting To Establish Itself) That Exploits The Asserted Patent Right General Exclusion Orders –Against All Products Of The Kind Found To Infringe Irrespective Of The Source (Participation In Investigation Is Not A Factor)Presidential Review – Can Disapprove Or Modify Commission Order

More Than Notice Pleading – Includes Substantiating Data; Possibly Claim Charts, Etc. (Non-Public and Public Versions)

Institution Of Investigation – Typically Commission Votes Within 30 DaysOf The Filing Of The Complaint Investigative Attorney – OUII – Full Party Status (Develops The Record, Etc.)