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sorry, I was going by the time listed on the post. I have no doubt you are correct.
posted just before 8 pm last night as a tentative
SUPREME COURT OF THE UNITED STATES
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No. 99—1848
BUCKHANNON BOARD AND CARE HOME, INC., et al., PETITIONERS v. WEST VIRGINIA DEPARTMENT OF HEALTH AND
HUMAN RESOURCES et al.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
[May 29, 2001]
Chief Justice Rehnquist delivered the opinion of the Court.
Numerous federal statutes allow courts to award attorney’s fees and costs to the “prevailing party.” The question presented here is whether this term includes a party that has failed to secure a judgment on the merits or a court-ordered consent decree, but has nonetheless achieved the desired result because the lawsuit brought about a voluntary change in the defendant’s conduct. We hold that it does not.
Buckhannon Board and Care Home, Inc., which operates care homes that provide assisted living to their residents, failed an inspection by the West Virginia Office of the State Fire Marshal because some of the residents were incapable of “self-preservation” as defined under state law. See W. Va. Code §§16—5H—1, 16—5H—2 (1998) (requiring that all residents of residential board and care homes be capable of “self-preservation,” or capable of moving themselves “from situations involving imminent danger, such as fire”); W. Va. Code of State Rules, tit. 87, ser. 1, §14.07(1) (1995) (same). On October 28, 1997, after receiving cease and desist orders requiring the closure of its residential care facilities within 30 days, Buckhannon Board and Care Home, Inc., on behalf of itself and other similarly situated homes and residents (hereinafter petitioners), brought suit in the United States District Court for the Northern District of West Virginia against the State of West Virginia, two of its agencies, and 18 individuals (hereinafter respondents), seeking declaratory and injunctive relief1 that the “self-preservation” requirement violated the Fair Housing Amendments Act of 1988 (FHAA), 102 Stat. 1619, 42 U.S.C. § 3601 et seq., and the Americans with Disabilities Act of 1990 (ADA), 104 Stat. 327, 42 U.S.C. § 12101 et seq.
Respondents agreed to stay enforcement of the cease and desist orders pending resolution of the case and the parties began discovery. In 1998, the West Virginia Legislature enacted two bills eliminating the “self-preservation” requirement, see H. R. 4200, I 1998 W. Va. Acts 983—986 (amending regulations); S. 627, II 1998 W. Va. Acts 1198—1199 (amending statute), and respondents moved to dismiss the case as moot. The District Court granted the motion, finding that the 1998 legislation had eliminated the allegedly offensive provisions and that there was no indication that the West Virginia Legislature would repeal the amendments.2
Petitioners requested attorney’s fees as the “prevailing party” under the FHAA, 42 U.S.C. § 3613(c)(2) (“[T]he court, in its discretion, may allow the prevailing party … a reasonable attorney’s fee and costs”), and ADA, 42 U.S.C. § 12205 (“[T]he court … , in its discretion, may allow the prevailing party … a reasonable attorney’s fee, including litigation expenses, and costs”). Petitioners argued that they were entitled to attorney’s fees under the “catalyst theory,” which posits that a plaintiff is a “prevailing party” if it achieves the desired result because the lawsuit brought about a voluntary change in the defendant’s conduct. Although most Courts of Appeals recognize the “catalyst theory,”3 the Court of Appeals for the Fourth Circuit rejected it in S—1 and S—2 v. State Bd. of Ed. of N. C., 21 F.3d 49, 51 (1994) (en banc) (“A person may not be a ‘prevailing party’ … except by virtue of having obtained an enforceable judgment, consent decree, or settlement giving some of the legal relief sought”). The District Court accordingly denied the motion and, for the same reason, the Court of Appeals affirmed in an unpublished, per curiam opinion. Judgt. order reported at 203 F.3d 819 (CA4 2000).
To resolve the disagreement amongst the Courts of Appeals, we granted certiorari, 530 U.S. 1304 (2000), and now affirm.
In the United States, parties are ordinarily required to bear their own attorney’s fees–the prevailing party is not entitled to collect from the loser. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247 (1975). Under this “American Rule,” we follow “a general practice of not awarding fees to a prevailing party absent explicit statutory authority.” Key Tronic Corp. v. United States, 511 U.S. 809, 819 (1994). Congress, however, has authorized the award of attorney’s fees to the “prevailing party” in numerous statutes in addition to those at issue here, such as the Civil Rights Act of 1964, 78 Stat. 259, 42 U.S.C. § 2000e—5(k), the Voting Rights Act Amendments of 1975, 89 Stat. 402, 42 U.S.C. § 1973l(e), and the Civil Rights Attorney’s Fees Awards Act of 1976, 90 Stat. 2641, 42 U.S.C. § 1988. See generally Marek v. Chesny, 473 U.S. 1, 43—51 (1985) (Appendix to opinion of Brennan, J., dissenting).4
In designating those parties eligible for an award of litigation costs, Congress employed the term “prevailing party,” a legal term of art. Black’s Law Dictionary 1145 (7th ed. 1999) defines “prevailing party” as “[a] party in whose favor a judgment is rendered, regardless of the amount of damages awarded . – Also termed successful party.” This view that a “prevailing party” is one who has been awarded some relief by the court can be distilled from our prior cases.5
In Hanrahan v. Hampton, 446 U.S. 754, 758 (1980) (per curiam), we reviewed the legislative history of §1988 and found that “Congress intended to permit the interim award of counsel fees only when a party has prevailed on the merits of at least some of his claims.” Our “[r]espect for ordinary language requires that a plaintiff receive at least some relief on the merits of his claim before he can be said to prevail.” Hewitt v. Helms, 482 U.S. 755, 760 (1987). We have held that even an award of nominal damages suffices under this test. See Farrar v. Hobby, 506 U.S. 103 (1992).6
In addition to judgments on the merits, we have held that settlement agreements enforced through a consent decree may serve as the basis for an award of attorney’s fees. See Maher v. Gagne, 448 U.S. 122 (1980). Although a consent decree does not always include an admission of liability by the defendant, see, e.g., id., at 126, n. 8, it nonetheless is a court-ordered “chang[e] [in] the legal relationship between [the plaintiff] and the defendant.” Texas State Teachers Assn. v. Garland Independent School Dist., 489 U.S. 782, 792 (1989) (citing Hewitt, supra, at 760—761, and Rhodes v. Stewart, 488 U.S. 1, 3—4 (1988) (per curiam)).7 These decisions, taken together, establish that enforceable judgments on the merits and court-ordered consent decrees create the “material alteration of the legal relationship of the parties” necessary to permit an award of attorney’s fees. 489 U.S., at 792—793; see also Hanrahan, supra, at 757 (“t seems clearly to have been the intent of Congress to permit . . . an interlocutory award only to a party who has established his entitlement to some relief on the merits of his claims, either in the trial court or on appeal” (emphasis added)).
We think, however, the “catalyst theory” falls on the other side of the line from these examples. It allows an award where there is no judicially sanctioned change in the legal relationship of the parties. Even under a limited form of the “catalyst theory,” a plaintiff could recover attorney’s fees if it established that the “complaint had sufficient merit to withstand a motion to dismiss for lack of jurisdiction or failure to state a claim on which relief may be granted.” Brief for United States as Amicus Curiae 27. This is not the type of legal merit that our prior decisions, based upon plain language and congressional intent, have found necessary. Indeed, we held in Hewitt that an interlocutory ruling that reverses a dismissal for failure to state a claim “is not the stuff of which legal victories are made.” 482 U.S., at 760. See also Hanrahan, supra, at 754 (reversal of a directed verdict for defendant does not make plaintiff a “prevailing party”). A defendant’s voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change. Our precedents thus counsel against holding that the term “prevailing party” authorizes an award of attorney’s fees without a corresponding alteration in the legal relationship of the parties.
The dissenters chide us for upsetting “long-prevailing Circuit precedent.” Post, at 1 (emphasis added). But, as Justice Scalia points out in his concurrence, several Courts of Appeals have relied upon dicta in our prior cases in approving the “catalyst theory.” See post, at 11—12; see also supra, at 4—5, n. 5. Now that the issue is squarely presented, it behooves us to reconcile the plain language of the statutes with our prior holdings. We have only awarded attorney’s fees where the plaintiff has received a judgment on the merits, see, e.g., Farrar, supra, at 112, or obtained a court-ordered consent decree, Maher, supra, at 129—130–we have not awarded attorney’s fees where the plaintiff has secured the reversal of a directed verdict, see Hanrahan, supra, at 759, or acquired a judicial pronouncement that the defendant has violated the Constitution unaccompanied by “judicial relief,” Hewitt, supra, at 760 (emphasis added). Never have we awarded attorney’s fees for a nonjudicial “alteration of actual circumstances.” Post, at 13. While urging an expansion of our precedents on this front, the dissenters would simultaneously abrogate the “merit” requirement of our prior cases and award attorney’s fees where the plaintiff’s claim “was at least colorable” and “not . . . groundless.” Post, at 7 (internal quotation marks and citation omitted). We cannot agree that the term “prevailing party” authorizes federal courts to award attorney’s fees to a plaintiff who, by simply filing a nonfrivolous but nonetheless potentially meritless
lawsuit (it will never be determined), has reached the “sought-after destination” without obtaining any judicial relief. Post, at 13 (internal quotation marks and citation omitted).8
Petitioners nonetheless argue that the legislative history of the Civil Rights Attorney’s Fees Awards Act supports a broad reading of “prevailing party” which includes the “catalyst theory.” We doubt that legislative history could overcome what we think is the rather clear meaning of “prevailing party”–the term actually used in the statute. Since we resorted to such history in Garland, 489 U.S., at 790, Maher, 448 U.S., at 129, and Hanrahan, 446 U.S., at 756—757, however, we do likewise here.
The House Report to §1988 states that “[t]he phrase ‘prevailing party’ is not intended to be limited to the victor only after entry of a final judgment following a full trial on the merits, ” H. R. Rep. No. 94—1558, p. 7 (1976), while the Senate Report explains that “parties may be considered to have prevailed when they vindicate rights through a consent judgment or without formally obtaining relief,” S. Rep. No. 94—1011, p. 5 (1976). Petitioners argue that these Reports and their reference to a 1970 decision from the Court of Appeals for the Eighth Circuit, Parham v. Southwestern Bell Telephone Co., 433 F.2d 421 (1970), indicate Congress’ intent to adopt the “catalyst theory.”9 We think the legislative history cited by petitioners is at best ambiguous as to the availability of the “catalyst theory” for awarding attorney’s fees. Particularly in view of the “American Rule” that attorney’s fees will not be awarded absent “explicit statutory authority,” such legislative history is clearly insufficient to alter the accepted meaning of the statutory term. Key Tronic, 511 U.S., at 819; see also Hanrahan, supra, at 758 (“[O]nly when a party has prevailed on the merits of at least some of his claims … has there been a determination of the ‘substantial rights of the parties,’ which Congress determined was a necessary foundation for departing from the usual rule in this country that each party is to bear the expense of his own attorney” (quoting H. R. Rep. No. 94—1558, at 8)).
Petitioners finally assert that the “catalyst theory” is necessary to prevent defendants from unilaterally mooting an action before judgment in an effort to avoid an award of attorney’s fees. They also claim that the rejection of the “catalyst theory” will deter plaintiffs with meritorious but expensive cases from bringing suit. We are skeptical of these assertions, which are entirely speculative and unsupported by any empirical evidence (e.g., whether the number of suits brought in the Fourth Circuit has declined, in relation to other Circuits, since the decision in S—1 and S—2).
Petitioners discount the disincentive that the “catalyst theory” may have upon a defendant’s decision to voluntarily change its conduct, conduct that may not be illegal. “The defendants’ potential liability for fees in this kind of litigation can be as significant as, and sometimes even more significant than, their potential liability on the merits,” Evans v. Jeff D., 475 U.S. 717, 734 (1986), and the possibility of being assessed attorney’s fees may well deter a defendant from altering its conduct.
And petitioners’ fear of mischievous defendants only materializes in claims for equitable relief, for so long as the plaintiff has a cause of action for damages, a defendant’s change in conduct will not moot the case.10 Even then, it is not clear how often courts will find a case mooted: “It is well settled that a defendant’s voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice” unless it is “absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.” Friends of Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 189 (2000) (internal quotation marks and citations omitted). If a case is not found to be moot, and the plaintiff later procures an enforceable judgment, the court may of course award attorney’s fees. Given this possibility, a defendant has a strong incentive to enter a settlement agreement, where it can negotiate attorney’s fees and costs. Cf. Marek v. Chesny, 473 U.S., at 7 (“[M]any a defendant would be unwilling to make a binding settlement offer on terms that left it exposed to liability for attorney’s fees in whatever amount the court might fix on motion of the plaintiff” (internal quotation marks and citation omitted)).
We have also stated that “[a] request for attorney’s fees should not result in a second major litigation,” Hensley v. Eckerhart, 461 U.S. 424, 437 (1983), and have accordingly avoided an interpretation of the fee-shifting statutes that would have “spawn[ed] a second litigation of significant dimension,” Garland, 489 U.S., at 791. Among other things, a “catalyst theory” hearing would require analysis of the defendant’s subjective motivations in changing its conduct, an analysis that “will likely depend on a highly factbound inquiry and may turn on reasonable inferences from the nature and timing of the defendant’s change in conduct.” Brief for United States as Amicus Curiae 28. Although we do not doubt the ability of district courts to perform the nuanced “three thresholds” test required by the “catalyst theory”–whether the claim was colorable rather than groundless; whether the lawsuit was a substantial rather than an insubstantial cause of the defendant’s change in conduct; whether the defendant’s change in conduct was motivated by the plaintiff’s threat of victory rather than threat of expense, see post, at 6—7–it is clearly not a formula for “ready administrability.” Burlington v. Dague, 505 U.S. 557, 566 (1992).
Given the clear meaning of “prevailing party” in the fee-shifting statutes, we need not determine which way these various policy arguments cut. In Alyeska, 421 U.S., at 260, we said that Congress had not “extended any roving authority to the Judiciary to allow counsel fees as costs or otherwise whenever the courts might deem them warranted.” To disregard the clear legislative language and the holdings of our prior cases on the basis of such policy arguments would be a similar assumption of a “roving authority.” For the reasons stated above, we hold that the “catalyst theory” is not a permissible basis for the award of attorney’s fees under the FHAA, 42 U.S.C. § 3613(c)(2), and ADA, 42 U.S.C. § 12205.
The judgment of the Court of Appeals is
Affirmed.
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Notes
1. The original complaint also sought money damages, but petitioners relinquished this claim on January 2, 1998. See App. to Pet. for Cert. A11.
2. The District Court sanctioned respondents under Federal Rule of Civil Procedure 11 for failing to timely provide notice of the legislative amendment. App. 147.
3. See, e.g., Stanton v. Southern Berkshire Regional School Dist., 197 F.3d 574, 577, n. 2 (CA1 1999); Marbley v. Bane, 57 F.3d 224, 234 (CA2 1995); Baumgartner v. Harrisburg Housing Authority, 21 F.3d 541, 546—550 (CA3 1994); Payne v. Board of Ed., 88 F.3d 392, 397 (CA6 1996); Zinn v. Shalala, 35 F.3d 273, 276 (CA7 1994); Little Rock School Dist. v. Pulaski Cty. School Dist., #1, 17 F.3d 260, 263, n. 2 (CA8 1994); Kilgour v. Pasadena, 53 F.3d 1007, 1010 (CA9 1995); Beard v. Teska, 31 F.3d 942, 951—952 (CA10 1994); Morris v. West Palm Beach, 194 F.3d 1203, 1207 (CA11 1999).
4. We have interpreted these fee-shifting provisions consistently, see Hensley v. Eckerhart, 461 U.S. 424, 433, n. 7 (1983), and so approach the nearly identical provisions at issue here.
5. We have never had occasion to decide whether the term “prevailing party” allows an award of fees under the “catalyst theory” described above. Dicta in Hewitt v. Helms, 482 U.S. 755, 760 (1987), alluded to the possibility of attorney’s fees where “voluntary action by the defendant … affords the plaintiff all or some of the relief … sought,” but we expressly reserved the question, see id., at 763 (“We need not decide the circumstances, if any, under which this ‘catalyst’ theory could justify a fee award”). And though the Court of Appeals for the Fourth Circuit relied upon our decision in Farrar v. Hobby, 506 U.S. 103 (1992), in rejecting the “catalyst theory,” Farrar “involved no catalytic effect.” Friends of Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 194 (2000). Thus, there is language in our cases supporting both petitioners and respondents, and last Term we observed that it was an open question here. See ibid.
6. However, in some circumstances such a “prevailing party” should still not receive an award of attorney’s fees. See Farrar v. Hobby, supra, at 115—116.
7. We have subsequently characterized the Maher opinion as also allowing for an award of attorney’s fees for private settlements. See Farrar v. Hobby, supra, at 111; Hewitt v. Helms, supra, at 760. But this dicta ignores that Maher only “held that fees may be assessed … after a case has been settled by the entry of a consent decree.” Evans v. Jeff D., 475 U.S. 717, 720 (1986). Private settlements do not entail the judicial approval and oversight involved in consent decrees. And federal jurisdiction to enforce a private contractual settlement will often be lacking unless the terms of the agreement are incorporated into the order of dismissal. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375 (1994).
8. Although the dissenters seek support from Mansfield, C. & L. M. R. Co. v. Swan, 111 U.S. 379 (1884), that case involved costs, not attorney’s fees. “y the long established practice and universally recognized rule of the common law . . . the prevailing party is entitled to recover a judgment for costs,” id., at 387, but “the rule ‘has long been that attorney’s fees are not ordinarily recoverable,’ ” Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 257 (1975) (quoting Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717 (1967)). Courts generally, and this Court in particular, then and now, have a presumptive rule for costs which the Court in its discretion may vary. See, e.g., this Court’s Rule 43.2 (“If the Court reverses or vacates a judgment, the respondent or appellee shall pay costs unless the Court otherwise orders”). In Mansfield, the defendants had successfully removed the case to federal court, successfully opposed the plaintiffs’ motion to remand the case to state court, lost on the merits of the case, and then reversed course and successfully argued in this Court that the lower federal court had no jurisdiction. The Court awarded costs to the plaintiffs, even though they had lost and the defendants won on the jurisdictional issue, which was the only question this Court decided. In no ordinary sense of the word can the plaintiffs have been said to be the prevailing party here–they lost and their opponents won on the only litigated issue–so the Court’s use of the term must be regarded as a figurative rather than a literal one, justifying the departure from the presumptive rule allowing costs to the prevailing party because of the obvious equities favoring the plaintiffs. The Court employed its discretion to recognize that the plaintiffs had been the victims of the defendants’ legally successful whipsawing tactics.
9. Although the Court of Appeals in Parham awarded attorney’s fees to the plaintiff because his “lawsuit acted as a catalyst which prompted the [defendant] to take action … seeking compliance with the requirements of Title VII,” 433 F.2d, at 429—430, it did so only after finding that the defendant had acted unlawfully, see id., at 426 (“We hold as a matter of law that [plaintiff’s evidence] established a violation of Title VII”). Thus, consistent with our holding in Farrar, Parham stands for the proposition that an enforceable judgment permits an award of attorney’s fees. And like the consent decree in Maher v. Gagne, 448 U.S. 122 (1980), the Court of Appeals in Parham ordered the District Court to “retain jurisdiction over the matter for a reasonable period of time to insure the continued implementation of the appellee’s policy of equal employment opportunities.” 433 F.2d, at 429. Clearly Parham does not support a theory of fee shifting untethered to a material alteration in the legal relationship of the parties as defined by our precedents.
10. Only States and state officers acting in their official capacity are immune from suits for damages in federal court. See, e.g., Edelman v. Jordan, 415 U.S. 651 (1974). Plaintiffs may bring suit for damages against all others, including municipalities and other political subdivisions of a State, see Mt. Healthy City Bd. of Ed. v. Doyle, 429 U.S. 274 (1977).
Molins PLC v. Textron, 48 F.3d 1172, 33 U.S.P.Q.2d (BNA) 1823 (Fed. Cir. 1995)
OPINIONBY: LOURIE
LOURIE, Circuit Judge.
Molins PLC and John Coventry Smith, Jr. appeal from a judgment of the United States District
Court for the District of Delaware holding U.S. Patents 4,369,563 and 4,621,410 unenforceable
due to inequitable conduct and awarding attorney fees, costs, and expenses against Molins and
Smith, jointly and severally. Molins PLC v. Textron, Inc., Civ. Nos. 86-446-JJF, 87-275-JJF, and
87-163-JJF (D. Del. Feb. 1, 1994) (amended final judgment). n1 We affirm-in-part, vacate-in-
part, and remand.
BACKGROUND
Molins is a United Kingdom limited liability corporation, having its principal office at Milton
Keynes, England. Between 1963 and 1973, Molins operated a machine tool division for the
design, manufacture, and sale of machine tools used in the high speed machining of light alloys.
In 1965, Molins' Research Director, Dr. David Williamson, developed a method
for improving batch machining involving a plurality of machine tools arranged to
accommodate the manual transport of pallet-mounted workpieces to and from the
machine tools (the "batch process"). Molins filed a British patent application for
the batch process in the fall of 1965 and filed counterpart applications in a number
of countries, including the United States.
In 1966, Williamson invented a fully automated machining system that allows several related
families of parts to be machined simultaneously (the "system 24"). Molins filed patent
applications for the system 24 in the United Kingdom, the United States, and in other countries
during 1966-67. In 1967, the U.S. batch process application was combined with the U.S. system
24 application in a continuation-in-part. The '563 patent later matured from a continuation-in-
part of the combined U.S. application. n2 Before the patent issued in January of 1983, however,
the batch process claims were cancelled and only claims drawn to the system 24 apparatus
issued. The '410 patent issued from a divisional application and is directed to the system 24
method of machining.
n2 The '563 patent issued on January 25, 1983. It matured from the following series of
applications: Serial No. 85,289, filed October 29, 1970, which is a continuation-in-part of
Serial No. 695,817, filed December 4, 1967, which is a continuation-in-part of Serial No.
578,318, filed September 9, 1966 and Serial No. 636,993, filed May 8, 1967. The '410 patent
issued on November 11, 1986 and is a division of Serial No. 85,289. Throughout the
prosecution of the series of patent applications that ultimately issued as the patents in suit,
foreign priority was claimed under 35 U.S.C. § 119 from the United Kingdom patent
applications filed during the years 1965-1967.
The '563 patent discloses a system of complementary, numerically-controlled
machine tools. Materials to be machined, or "workpieces," are subjected to selected
machining operations on selected machine tools in a selected order by the delivery
of common form pallets loaded with the workpieces. Transporters deliver pallets
between the machine tools, a storage rack, and work stations where the workpieces
are automatically delivered in bins from a bin store and are loaded on the pallets.
Tool magazines are delivered between a rack and the machine tools by a
transporter. A computer controls transport and machining operations, and receives
signals from monitors indicating the location of pallets, tool magazines, and bins.
Dennis Whitson began working for Molins in 1967 as one of several British chartered patent
agents working in Molins' in-house patent department. He managed Molins' patent department
from 1974 through 1981 and was responsible for the prosecution of all of Molins' patent
applications directed to the batch process and system 24 inventions. When Whitson retired in
1981, Ivan Hirsh, employed by Molins since 1968, assumed the responsibilities as manager of
Molins' patent department. After becoming manager, Hirsh assumed responsibility for
prosecuting the applications relating to the patents in suit and for conducting the litigation
involving Molins' patents.
Smith served as the primary United States counsel to Molins, representing Molins at the United
States Patent and Trademark Office ("PTO") from 1966 through the relevant time period in this
case. n3 Beginning in 1967, Smith prosecuted the patent applications leading to the issuance of
the '563 and '410 patents. In January of 1980, Molins assigned a one-half interest in the patent
applications to Smith in exchange for Smith's agreement to undertake further prosecution at his
own expense. In July of 1988, Smith reassigned his interest in the patents to Molins. Smith
remained entitled to one-half of all royalty income received by Molins from licenses under the
patents entered into prior to July 1, 1988.
n3 Smith was a member of the law firm Watson, Cole, Grindle and Watson, but left the firm,
taking several Molins matters with him, including the Williamson applications that
subsequently issued as the '563 and '410 patents.
Between the fall of 1967 and April 1968, while the relevant U.S. patent applications were
pending, Molins' patent department, and specifically Whitson, became aware of prior art referred
to here as the "Wagenseil reference." n4 Upon evaluating the Wagenseil reference, Whitson
concluded that it fully anticipated the "batch process" claims that Molins initially filed in the
United Kingdom and in many other countries including the United States. Accordingly, in 1968
and 1969, Whitson abandoned all the foreign patent applications to the batch process. However,
Whitson decided not to abandon the pending U.S. application because it contained both batch
process and system 24 claims.
n4 By "Wagenseil reference" or "Wagenseil," we refer to one or more of several articles,
written by William Wagenseil et al., published between 1958 and 1962, which, for purposes
of this case, disclose the same relevant subject matter. The articles disclose an automatic
manufacturing system used to make a number of parts using a delivery system under the
direction of a central control.
Prosecution of the U.S. and foreign system 24 applications continued. Wagenseil was cited to
and by several foreign patent offices, but was not cited by Molins to the PTO. In 1975, Whitson
told Smith that there were oppositions to the German system 24 patent application, but he did not
inform Smith of the art cited in Germany, which included the Wagenseil reference. Eventually,
Molins abandoned all foreign system 24 applications. In the United States, the '563 patent issued
in January of 1983, after Molins prevailed in an interference with two other parties.
Later in 1983, Hirsh reviewed the files of the foreign system 24 applications, all of which had
been abandoned in the late 1970s. Hirsh found the references that had been cited in the foreign
patent prosecution, but not the PTO, including the Wagenseil reference. Hirsh also found
Whitson's correspondence relating to the references and to their citation to and by foreign patent
offices. Hirsh then informed Smith of the foreign citations. Together, they consulted with outside
counsel and, on September 21, 1984, although the '563 patent had already issued, filed a lengthy
prior art statement under 37 C.F.R. § 1.501 (Rule 501) on behalf of Molins, listing the Wagenseil
reference together with all other prior art references that had been cited during the foreign
prosecution.
In October of 1984, Cross & Trecker, Incorporated, the parent corporation of defendant Kearney
& Trecker Corporation, filed a request for reexamination of the '563 patent in view of several
IBM references. Cross & Trecker filed a Form PTO-1449 listing Wagenseil, which was initialed
by the examiner as having been considered in June of 1985. During the reexamination, Molins
referred the examiner to the Rule 501 prior art statement previously filed in the '563 patent file.
The examiner indicated that, in order to make the prior art of record, Molins was required to
submit English language translations of the foreign language references. Accordingly, Molins
filed the translations and a brief statement of the relevance of the cited art. The examiner
initialed each reference Molins had listed, indicating that he had considered it. The examiner's
final office action in the reexamination stated that he had considered all of the cited references.
No claims were rejected based on Wagenseil during the reexamination. Re-Examination
Certificate B1 4,369,563 was issued on May 13, 1986.
Late in 1986, Molins and Smith filed suit against Textron, Incorporated, Kearney & Trecker,
and Avco Corporation (collectively "Textron"), n5 alleging infringement of the '563 and '410
patents. In February of 1989, after approximately three years of discovery, Textron filed a
summary judgment motion asserting that the patents were unenforceable due to inequitable
conduct in connection with the prosecution of the '563 patent, in particular, concealment of
Wagenseil and other information from the PTO. The motion was denied. After more discovery,
in June of 1990, Textron again moved for summary judgment, adding new allegations of
inequitable conduct relating to Smith's failure to disclose to the PTO allegedly material
information regarding a copending patent application in the name of Jerome Lemelson, whom
Smith also represented. Again, the court denied summary judgment. The court severed the issue
of inequitable conduct, and held a bench trial.
n5 Molins also sued Cincinnati Milacron, Incorporated and several West German companies.
Cincinnati Milacron settled after trial and was dismissed from the case. The German
companies voluntarily dismissed their appeal here.
On November 24, 1992, the court held that both patents were unenforceable due to inequitable
conduct. See supra note 1. The court found the case to be "exceptional" within the meaning of 35
U.S.C. § 285 and ordered further briefing on whether attorney fees should be awarded. On
December 30, 1993, the court held Molins and Smith jointly and severally liable for all the
defendants' attorney fees, costs, and expenses. Id. An amended final judgment was issued,
deferring the calculation of fees until after the disposition of Molins' and Smith's present appeals
from that judgment.
DISCUSSION
A. Inequitable Conduct
Applicants n6 for patents are required to prosecute patent applications in the PTO with candor,
good faith, and honesty. See Precision Instrument Mfg. Co. v. Automotive Maintenance Mach.
Co., 324 U.S. 806, 818, 89 L. Ed. 1381, 65 S. Ct. 993 (1945). This duty extends also to the
applicant's representatives. See FMC Corp. v. Manitowoc Co., 835 F.2d 1411, 1415 n.8, 5
U.S.P.Q.2D (BNA) 1112, 1115 n.8 (Fed. Cir. 1987) (the knowledge and actions of an applicant's
representative are chargeable to the applicant). A breach of this duty constitutes inequitable
conduct.
n6 Under PTO rules, the duty to disclose information material to patentability rests on the
inventor, on each attorney or agent who prepares or prosecutes an application and on every
other individual who is substantively involved in the preparation or prosecution of the
application and who is associated with the inventor, with the assignee, or with anyone to
whom there is an obligation to assign the application. See 37 C.F.R. § 1.56 (1983). For
convenience, we simply refer to "applicant" in this opinion.
Inequitable conduct includes affirmative misrepresentation of a material fact, failure to disclose
material information, or submission of false material information, coupled with an intent to
deceive. See J.P. Stevens & Co. v. Lex Tex, Ltd., 747 F.2d 1553, 1559, 223 U.S.P.Q. (BNA)
1089, 1092 (Fed. Cir. 1984), cert. denied, 474 U.S. 822 (1985). n7 One who alleges inequitable
conduct arising from a failure to disclose prior art must offer clear and convincing proof of the
materiality of the prior art, knowledge chargeable to the applicant of that prior art and of its
materiality, and the applicant's failure to disclose the prior art, coupled with an intent to mislead
the PTO. FMC, 835 F.2d at 1415, 5 U.S.P.Q.2D (BNA) at 1115.
n7 The standard of proper conduct in the PTO as summarized in J.P. Stevens was applicable
as early as 1973-74, see Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 551-52,
16 U.S.P.Q.2D (BNA) 1587, 1593 (Fed. Cir. 1990), which includes a significant portion of
the time period during which the patent applications leading to the '563 patent were pending.
The withholding of information must meet thresholds of both materiality and intent. Allen
Organ Co. v. Kimball Int'l, Inc., 839 F.2d 1556, 1567, 5 U.S.P.Q.2D (BNA) 1769, 1778 (Fed.
Cir.) ("Materiality does not presume intent, which is a separate and essential component of
inequitable conduct."), cert. denied, 488 U.S. 850 (1988). Once threshold findings of materiality
and intent are established, the court must weigh them to determine whether the equities warrant a
conclusion that inequitable conduct occurred. J.P. Stevens, 747 F.2d at 1559-60, 223 U.S.P.Q.
(BNA) at 1092. In light of all the circumstances, an equitable judgment must be made concerning
whether the applicant's conduct is so culpable that the patent should not be enforced. LaBounty
Mfg., Inc. v. International Trade Comm'n, 958 F.2d 1066, 1070, 22 U.S.P.Q.2D (BNA) 1025,
1028 (Fed. Cir. 1992).
The ultimate determination of inequitable conduct is committed to the trial judge's discretion
and is reviewed by this court under an abuse of discretion standard. Kingsdown Medical
Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 876, 9 U.S.P.Q.2D (BNA) 1384, 1392, (Fed.
Cir. 1988), cert. denied, 490 U.S. 1067 (1989). To overturn such a determination, the appellant
must establish that the ruling is based on clearly erroneous findings of fact or on a misapplication
or misinterpretation of applicable law, or evidences a clear error of judgment on the part of the
district court. Id. Findings of materiality and intent are subject to the clearly erroneous standard
of Federal Rule of Civil Procedure 52(a) and will not be disturbed on appeal unless this court has
a definite and firm conviction that a mistake has been committed. Id. at 872, 9 U.S.P.Q.2D
(BNA) at 1389.
1. Whitson's Nondisclosure of Wagenseil During Original Prosecution
Calling this case "the exceptional case among exceptional cases," the district court concluded
that Whitson, Molins' in-house patent agent, had engaged in inequitable conduct in the
procurement of the '563 patent because he failed to disclose Wagenseil to the PTO, even though
he knew it was highly material. The court stated that "although [Textron has] not produced direct
evidence of Whitson's intent to deceive, i.e. there are no 'smoking memos' implicating bad faith
on the part of Whitson, the overwhelming circumstantial evidence presented in this case leaves
little doubt that Whitson intentionally concealed the Wagenseil reference from the U.S. PTO
knowing that it was highly material to the U.S. applications."
Although Molins concedes that Wagenseil is highly material to the batch process invention,
Molins asserts that the court erred in finding that Wagenseil was material to the '563 patent
claims, which relate only to the system 24 invention. Molins points out that, although Wagenseil
was cited to and considered by the examiner during reexamination of the '563 patent and during
examination of the divisional '410 patent, Wagenseil was not relied upon by the examiner to
reject pending claims. According to Molins, Wagenseil was ipso facto not material.
Information is "material" when there is a substantial likelihood that a reasonable examiner
would have considered the information important in deciding whether to allow the application to
issue as a patent. In re Jerabek, 789 F.2d 886, 890, 229 U.S.P.Q. (BNA) 530, 533 (Fed. Cir.
1986). n8 If the information allegedly withheld is not as pertinent as that considered by the
examiner, or is merely cumulative to that considered by the examiner, such information is not
material. See Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565, 1582, 18
U.S.P.Q.2D (BNA) 1001, 1014-15 (Fed. Cir. 1991).
n8 The duty to disclose information material to patentability has been codified in 37 C.F.R. §
1.56 (Rule 56), which was promulgated pursuant to 35 U.S.C. §§ 6 and 131. From 1977 to
1992, Rule 56 defined information as "material" when "there is a substantial likelihood that a
reasonable examiner would consider it important in deciding whether to allow the application
to issue as a patent." We have adopted this standard as the threshold standard of materiality.
See LaBounty Mfg., Inc. v. United States Int'l Trade Comm'n, 958 F.2d 1066, 1074, 22
U.S.P.Q.2D (BNA) 1025, 1031 (Fed. Cir. 1992). In 1992, the PTO changed Rule 56 to
provide that
information is material to patentability when it is not cumulative to information already of
record or being made of record in the application, and (1) It establishes, by itself or in
combination with other information, a prima facie case of unpatentability of a claim; or (2) It
refutes, or is inconsistent with, a position the applicant takes in: (i) Opposing an argument of
unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.
37 C.F.R. § 1.56 (1992). "Administrative rules will not be construed to have retroactive
effect unless their language requires this result." Bowen v. Georgetown Univ. Hosp., 488 U.S.
204, 208, 102 L. Ed. 2d 493, 109 S. Ct. 468 (1988); see also 57 Fed. Reg. 2021 (Jan. 17,
1992) (PTO notice of final rulemaking stating that new Rule 56 will be applicable to all
applicants and reexamination proceedings pending or filed after March 16, 1992). We thus
make no comment regarding the meaning of new Rule 56.
We have held that the result of a PTO proceeding that assesses patentability in light of
information not originally disclosed can be of strong probative value in determining whether the
undisclosed information was material. See J.P. Stevens, 747 F.2d at 1562, 223 U.S.P.Q. (BNA)
at 1094 (reasonable rejection of claims in reliance on a reference during reissue proceeding
established materiality of that reference). However, the standard to be applied in determining
whether a reference is "material" is not whether the particular examiner of the application at
issue considered the reference to be important; rather, it is that of a "reasonable examiner."
Western Electric Co. v. Piezo Tech., Inc., 860 F.2d 428, 433, 8 U.S.P.Q.2D (BNA) 1853, 1857
(Fed. Cir. 1988). Nor is a reference immaterial simply because the claims are eventually deemed
by an examiner to be patentable thereover. Merck & Co. v. Danbury Pharmacal, Inc., 873 F.2d
1418, 1421, 10 U.S.P.Q.2D (BNA) 1682, 1686 (Fed. Cir. 1989) ("That the claimed invention
may have been superior . . . to both the cited and withheld prior art may be a basis for
patentability; it cannot serve automatically to render the withheld prior art either cumulative or
immaterial."); A.B. Dick Co. v. Burroughs Corp., 798 F.2d 1392, 1396, 230 U.S.P.Q. (BNA)
849, 854 (Fed. Cir. 1986) (that the claims may be patentable over the withheld prior art is not the
test for materiality). Thus, the fact that the examiner did not rely on Wagenseil to reject the
claims under reexamination or the '410 method claims is not conclusive concerning whether the
reference was material.
The court found that Wagenseil was material because, among other things, it showed a storage
and retrieval system in combination with a transfer system, a combination for which the
examiner had relied upon two, separate references to reject the '563 patent application claims.
See In re Jerabek, 789 F.2d at 890, 229 U.S.P.Q. (BNA) at 533 (withheld reference was highly
material when no single piece of cited prior art taught the combination present in the reference).
Moreover, the court found that Wagenseil disclosed relevant features beyond that shown in the
prior art; in particular, Wagenseil disclosed a capability for workpieces to recirculate into a
machining system and for workpieces to bypass certain machine tools within the system. None
of the other prior art systems taught the "recirculate" and "bypass" features taught by Wagenseil.
See LaBounty, 958 F.2d at 1075-76, 22 U.S.P.Q.2D (BNA) at 1032 (undisclosed prior art items
are material when they disclose more relevant features than cited items).
The court further based its finding of materiality on extensive evidence showing that Whitson
indicated during foreign prosecution that Wagenseil was the most relevant prior art to the
corresponding foreign system 24 applications of which he was aware. n9 Also, the evidence
showed that patent examiners in several foreign countries considered Wagenseil material to the
system 24 claims and that Whitson had amended and distinguished system 24 claims in foreign
patent offices over Wagenseil. In this regard, the court was mindful of the risk in relying on
foreign patent prosecution in light of differences in disclosure requirements, claim practice, form
of application, and standard of patentability. Cf. Heidelberger Druckmaschinen AG v. Hantscho
Commercial Prods., Inc., 21 F.3d 1068, 1072 n.2, 30 U.S.P.Q.2D (BNA) 1377, 1379 n.2 (Fed.
Cir. 1994) ("The theories and laws of patentability vary from country to country, as do
examination practices."); but see Manual of Patent Examining Procedure ("MPEP") n10 §
2001.06(a) (4th ed., rev. 8, Oct. 1981) ("Applicants . . . have a duty to bring to the attention of
the Office any material prior art or other information cited or brought to their attention in any
related foreign application. The inference that such prior art or other information is material is
especially strong where it is the only prior art cited or where it has been used in rejecting the
claims in the foreign application."). On the evidence presented, even that independent of the
admissions in the foreign prosecution, we cannot say that the court clearly erred in finding that a
reasonable examiner would have considered Wagenseil important in deciding the patentability of
the pending system 24 claims in the U.S. application.
n9 In a response to the German Patent Office, for example, Whitson cited a number of prior
art references, including others cited in the United States, and stated that, "in the opinion of
the applicant, the [Wagenseil reference] comes closest to the subject of the application."
n10 "The MPEP [is] commonly relied upon as a guide to patent attorneys and patent
examiners on procedural matters." Litton Sys., Inc. v. Whirlpool Corp., 728 F.2d 1423, 1439,
221 U.S.P.Q. (BNA) 97, 107 (Fed. Cir. 1984). While the MPEP does not have the force of
law, it is entitled to judicial notice as an official interpretation of statutes or regulations as
long as it is not in conflict therewith. Id. at 1439, 221 U.S.P.Q. (BNA) at 107.
Molins next argues that the court erred in finding that Whitson possessed the requisite intent to
deceive the PTO. "Intent" commonly means: "Design, resolve, or determination with which [a]
person acts[; a] state of mind in which a person seeks to accomplish a given result through a
course of action." Black's Law Dictionary at 810 (6th ed. 1990). Intent need not be proven by
direct evidence; it is most often proven by a showing of acts, the natural consequences of which
are presumably intended by the actor. Kansas Jack, Inc. v. Kuhn, 719 F.2d 1144, 1151, 219
U.S.P.Q. (BNA) 857, 861 (Fed. Cir. 1983). Generally, intent must be inferred from the facts and
circumstances surrounding the applicant's conduct. Paragon Podiatry Lab., Inc. v. KLM Lab.,
Inc., 984 F.2d 1182, 1189-90, 25 U.S.P.Q.2D (BNA) 1561, 1567 (Fed. Cir. 1993).
"The drawing of inferences, particularly in respect of an intent-implicating question . . . is
peculiarly within the province of the fact finder that observed the witnesses." Rolls-Royce Ltd. v.
GTE Valeron Corp., 800 F.2d 1101, 1110, 231 U.S.P.Q. (BNA) 185, 192 (Fed. Cir. 1986). Since
the fact-finder has personally heard the testimony and observed the demeanor of the witnesses,
we accord deference to the fact-finder's assessment of a witness's credibility and character. See
General Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405, 1411, 30 U.S.P.Q.2D (BNA)
1149, 1154 (Fed. Cir. 1994). However, "given the ease with which a relatively routine act of
patent prosecution can be portrayed as intended to mislead or deceive, clear and convincing
evidence of conduct sufficient to support an inference of culpable intent is required." Northern
Telecom, Inc. v. Datapoint Corp., 908 F.2d 931, 939, 15 U.S.P.Q.2D (BNA) 1321, 1327 (Fed.
Cir.), cert. denied, 498 U.S. 920 (1990). See also Tol-O-Matic, Inc. v. Proma Produkt-Und
Marketing Gesellschaft m.b. H., 945 F.2d 1546, 1554, 20 U.S.P.Q.2D (BNA) 1332, 1339 (Fed.
Cir. 1991) ("Forfeiture [of enforceability] is not favored as a remedy for actions not shown to be
culpable.").
Thus, the alleged conduct must not amount merely to the improper performance of, or
omission of, an act one ought to have performed. Rather, clear and convincing evidence must
prove that an applicant had the specific intent to accomplish an act that the applicant ought not to
have performed, viz., misleading or deceiving the PTO. In a case involving nondisclosure of
information, clear and convincing evidence must show that the applicant made a deliberate
decision to withhold a known material reference.
The court based its finding of intent on the following evidence. Whitson, a seasoned patent
practitioner, who was aware of the duty to disclose material information to the PTO, knew of a
highly material reference but did not cite it, or any other reference, to the PTO during the entire
13 years in which he was involved in prosecuting the U.S. patent applications that led to the '563
patent. During the time the applications were pending, Whitson represented to foreign patent
offices that Wagenseil was the closest prior art. Whitson was on several occasions reminded of
Wagenseil's materiality through its prominence in the prosecution of several foreign counterpart
applications with which Whitson was intimately involved. The court rejected Molins' argument
that Whitson had acted in good faith and simply overlooked Wagenseil, since he or his associates
had focused on that reference several times during more than ten years of foreign prosecution
and never cited Wagenseil during 13 years of prosecution. Under these circumstances, we cannot
say that the court improperly inferred that Whitson made a deliberate decision to withhold a
known, material reference. Failure to cite to the PTO a material reference cited elsewhere in the
world justifies a strong inference that the withholding was intentional.
Issues of inequitable conduct are most difficult both for trial courts and reviewing appellate
courts. One who has engaged in inequitable conduct has inflicted damage on the patent
examining system, obtaining a statutory period of exclusivity by improper means, and on the
public, which must face an unlawfully-granted patent. Loss of one's patent and damage to
reputation are justified penalties for such conduct. On the other hand, unjustified accusations of
inequitable conduct are offensive and unprofessional. They have been called a "plague" on the
patent system. See Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418, 1422, 7 U.S.P.Q.2D
(BNA) 1158, 1161 (Fed. Cir. 1988) ("The habit of charging inequitable conduct in almost every
major patent case has become an absolute plague."). Unjustified accusations may deprive
patentees of their earned property rights and impugn fellow professionals. They should be
condemned.
Separating one from the other is a difficult task assigned to trial courts, who have the
opportunity to find facts, hear witnesses, and judge credibility. Were we to have been in the trial
court's shoes in this case, we do not know how we would have come out. We are, however,
"only" the reviewing court, obligated to determine whether the court misapplied the law, made
clearly erroneous findings of fact, or abused its discretion. We do not believe it committed any of
these errors with regard to Whitson's failure to cite Wagenseil.
We are mindful of the complexities of conducting a worldwide patent prosecution in a crowded
art, attempting to represent one's client or company properly, and yet fulfill one's duty to various
patent offices. Things can "fall through the floorboards" and not arise from an intent to deceive.
We recognize that Wagenseil and other references from the foreign prosecution were cited
eventually to the PTO and that the examiner initialed them and passed the reexamination
application to issue thereafter. However, the references were not cited when they should have
been. There were findings that Wagenseil was known to be material, and the trial court heard
testimony and judged matters of credibility concerning intent. Those who are not "up front" with
the PTO run the risk that, years later, a fact-finder might conclude that they intended to deceive.
That is what appears to have happened here and we must affirm the trial court with respect to
Whitson's behavior.
Molins has not persuaded us that the trial court, which conducted a thorough and careful
analysis of the case, clearly erred in determining that Whitson knew of a material reference and
that he intentionally withheld it from the PTO. We therefore conclude that the court did not make
clear errors of fact and did not abuse its discretion in determining that Whitson's nondisclosure of
Wagenseil amounted to inequitable conduct. Having determined that inequitable conduct
occurred in the procurement of the '563 patent, all claims of that patent are accordingly
unenforceable. See Kingsdown, 863 F.2d at 877, 9 U.S.P.Q.2D (BNA) at 1392.
The court also concluded that the inequitable conduct in the prosecution of the '563 patent
extended to the '410 patent, since that patent "relied on the '563 patent." See Keystone Driller
Co. v. General Excavator Co., 290 U.S. 240, 245-47, 78 L. Ed. 293, 54 S. Ct. 146 (1933);
Driscoll v. Cebalo, 731 F.2d 878, 884-85, 221 U.S.P.Q. (BNA) 745, 750 (Fed. Cir. 1984). This
determination has not been challenged by appellants. Thus, the '410 patent is unenforceable as
well.
We next examine the remaining instances of involved conduct, not because they alter the
patents' unenforceability, but because of their impact on the court's finding of an exceptional case
and consequent award of damages.
2. Hirsh's and Smith's Post-Issuance Disclosure of Wagenseil
The court determined that Hirsh and Smith, once they discovered Wagenseil, "buried" it by
submitting it with a large group of other prior art and, in doing so, attempted to deceive the PTO.
Upon issuance of the '563 patent in January of 1983, Hirsh undertook a review of the
prosecution files from the corresponding foreign cases, all of which Molins had abandoned by
1976. When Hirsh reviewed the German, Dutch, and Japanese prosecution files, he became
aware of a number of prior art references, including Wagenseil, that had not been cited to the
PTO during the '563 patent prosecution. Hirsh notified Smith of his discovery. n12 Because the
prior art references cited in the foreign cases had not been cited to the PTO, Hirsh and Smith
were concerned about the validity and enforceability of the '563 patent and sought the advice of
outside counsel.
n12 Despite Smith's and Whitson's close working relationship, the court held that Textron
failed to show by clear and convincing evidence that Smith knew of or "cultivated ignorance"
regarding the existence of Wagenseil before he was informed of the reference by Hirsh.
Following this consultation, on September 21, 1984, Hirsh and Smith filed a document citing a
great deal of prior art under 37 C.F.R. § 1.501 n13 in the '563 patent file. The document was 11
pages in length and contained a listing of 23 U.S. patents, 27 foreign patents, and 44 U.S. and
foreign printed publications. The citation was not accompanied by any comment or discussion
concerning the relevancy of the patents and printed publications, nor were translations provided
for most of the foreign patents and publications.
n13 At the relevant time, 37 C.F.R. § 1.501(a) read:
§ 1.501 Citation of prior art in patent files.
(a) At any time during the period of enforceability of a patent, any person may cite to the
Patent and Trademark Office in writing prior art consisting of patents or printed publications
which that person states to be pertinent and applicable to the patent and believes to have a
bearing on the patentability of any claim of a particular patent. If the citation is made by the
patent owner, the explanation of pertinency and applicability may include an explanation of
how the claims differ from the prior art.
37 C.F.R. § 1.501 (1984).
After the '563 patent was accepted for reexamination, Hirsh and Smith submitted a response to
the first office action, requesting that the examiner consider and make of record all of the
documents contained in the Rule 501 prior art citation. Hirsh and Smith provided English
language equivalents or translations of the foreign documents and briefly commented as to the
content of the cited art. They also cited the same prior art during prosecution of the '410 patent.
The court concluded that, by "burying" Wagenseil in a multitude of other references, Hirsh and
Smith intentionally withheld it from the PTO because this manner of disclosure was tantamount
to a failure to disclose. Citing Penn Yan Boats, Inc. v. Sea Lark Boats, Inc., 359 F. Supp. 948,
175 U.S.P.Q. (BNA) 260 (S.D. Fla. 1972), aff'd, 479 F.2d 1328, 178 U.S.P.Q. (BNA) 577 (5th
Cir.), cert. denied, 414 U.S. 874 (1973), the court stated that Hirsh's and Smith's failure to
highlight Wagenseil in light of their knowledge of Whitson's actions in the foreign prosecutions
violated their duty of candor to the PTO. Citing our precedent, Textron asserts that Smith's and
Hirsh's conduct is "inexcusable, fraudulent, and cannot operate to cure Whitson's inequitable
conduct." See Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 220 U.S.P.Q. (BNA) 289
(Fed. Cir. 1983), cert. denied, 469 U.S. 851 (1984) (where intentional material
misrepresentations have been made, a "cure" through voluntary efforts during prosecution must
be demonstrated by clear, unequivocal, and convincing evidence).
Neither Molins nor Smith takes the position that the subsequent citation of Wagenseil during the
reexamination proceeding or the '410 patent prosecution cured the failure to cite the reference
during the original prosecution. See id.; Precision Instrument, 324 U.S. at 818. Rather, it is
Molins' position, which we have rejected above, that Whitson's failure to cite Wagenseil during
the '563 prosecution did not amount to inequitable conduct. We therefore address, not whether
the subsequent citation of Wagenseil cured the previous nondisclosure, but whether the court
erred in holding that the method of disclosure by Hirsh and Smith after the '563 patent issued
constituted inequitable conduct.
In Penn Yan, an applicant submitted a letter to the PTO regarding a patent application about to
issue, which stated: "Before the application was filed, applicant made a preliminary patentability
search, and discovered the following pertinent references . . . ." 175 U.S.P.Q. (BNA) at 271.
Following the statement, there appeared a list of thirteen references. The court held that
inequitable conduct had occurred because the thirteenth reference listed, a patent, was not in fact
discovered as a result of a pre-examination search, but had issued more than one year after the
filing date of the patent application at issue. Id. at 271-72. The court found that the purpose of
the misrepresentation was to "bury the [thirteenth reference] in a long list of allegedly old prior
art patents in the hope that the Patent Examiner, having already allowed the [claims at issue],
would ignore the list and permit the [patent] to issue." Id. at 272. Thus, in Penn Yan, the
reference was characterized in such a way as to mislead the PTO. Here, the reference was not
mischaracterized, but it was submitted along with a multitude of other references.
At the time of the Rule 501 prior art submission, it was desirable practice, but not required, to
particularly point out to the examiner the relevance of cited material prior art. Compare MPEP §
2002.03 (4th ed., rev. 2, Apr. 1980) (failure to comment on the relevance of prior art submitted
or failure to identify an especially relevant passage buried in an otherwise less or non-relevant
text may constitute a failure to comply with the duty of disclosure) with 37 C.F.R. § 1.98 (1992)
(no explanation of relevance necessary for information in the English language). Moreover,
"burying" a particularly material reference in a prior art statement containing a multiplicity of
other references can be probative of bad faith. Cf. MPEP § 2004, Item 13 (4th ed., rev. 5, Jan.
1981) ("Don't submit long lists of prior art if it can be avoided. Eliminate clearly irrelevant and
marginally pertinent cumulative prior art. If a long list is submitted, highlight those references
which may be of most significance."). However, "intent to deceive should be determined in light
of the realities of patent practice, and not as a matter of strict liability whatever the nature of the
action before the PTO." Northern Telecom, 908 F.2d at 939, 15 U.S.P.Q.2D (BNA) at 1327.
Hirsh and Smith discovered a multitude of uncited references in related foreign files after the
'563 patent issued. They disclosed the references within a relatively short time under Rule 501
and subsequently cited the references in the reexamination and '410 patent prosecution. Putting
aside for now Whitson's impropriety in not citing the prior art earlier, Hirsh and Smith did make
an attempt to repair the situation. The examiner initialed each reference, indicating his
consideration of the same, and stated that he had considered all of the cited prior art. Absent
proof to the contrary, we assume that the examiner did consider the references. Id., 15
U.S.P.Q.2D (BNA) at 1327 ("It is presumed that public officials do their assigned jobs."). n14
These circumstances therefore do not present clear and convincing evidence of intent on the part
of Hirsh or Smith to conceal Wagenseil from the PTO during the reexamination. Thus, the
court's finding in this regard is clearly erroneous, and the determination that the method of
disclosure constituted inequitable conduct cannot be sustained.
n14 Presumably, the examiner could have refused to consider the references if their
submission did not comport with proper PTO procedure.
3. Whitson's and Smith's Nondisclosure of the Lemelson Patents
During the prosecution of the claims that ultimately issued in the '563 patent, the principal
references cited by the examiner against certain of the claims included patents issued in the name
of Jerome Lemelson. These patents described an automatic storage system (U.S. Patent
3,049,247) and an automatic production apparatus (U.S. Patent 3,313,014 and its Reissue
26,770). The '014 patent was cited by the examiner in an office action in 1969. Subsequently, the
examiner cited the '770 and '247 patents. The court determined that Whitson and Smith engaged
in inequitable conduct because they knew of the Lemelson '247, '014, and '770 patents, which
were highly material, and they did not disclose those patents to the PTO. Molins and Smith assert
that the court erred when it concluded that Whitson and Smith engaged in inequitable conduct in
failing to cite the Lemelson patents because the patents were actually cited by the PTO and
considered during the '563 patent prosecution, were used to reject pending claims, and were
overcome prior to issuance of the '563 patent.
"When a reference was before the examiner, whether through the examiner's search or the
applicant's disclosure, it cannot be deemed to have been withheld from the examiner." Scripps,
927 F.2d at 1582, 18 U.S.P.Q.2D (BNA) at 1015; Orthopedic Equipment Co. v. All Orthopedic
Appliances, Inc., 707 F.2d 1376, 1383, 217 U.S.P.Q. (BNA) 1281, 1286 (Fed. Cir. 1983)
(nondisclosure not material because the examiner independently ascertained the existence of the
undisclosed prior art). The Lemelson patents were indeed of record in the '563 patent application.
We agree with Molins and Smith that the court's finding that the Lemelson patents were withheld
was clearly erroneous. Thus, the failure of Hirsh and Smith to cite these references to the PTO
did not constitute inequitable conduct.
4. Smith's Nondisclosure of the Lemelson Application
During the time that the '563 patent was being prosecuted, Smith was also prosecuting a
machine tool application, serial number 107,357, that named Lemelson as inventor. At trial,
Textron argued that Lemelson claim 11 and Williamson claim 160 defined the same patentable
invention, and that Smith violated his duty of candor by not disclosing the Lemelson application
to the patent examiner responsible for the Williamson application. See MPEP § 2001.06(b) (4th
ed., rev. 8, Oct. 1981) (duty to disclose material information includes "duty to bring to the
attention of the examiner . . . information within [applicant's] knowledge as to other co-pending
United States applications which are 'material to the examination' of the application in
question."). The court found that Smith's failure to disclose the copending application of
Lemelson constituted inequitable conduct because the court found that claim 11 of the Lemelson
application was material to the patentability of claim 160 of the '563 application, and because the
court inferred an intent to deceive the PTO from the fact of Smith's dual representation of Molins
and Lemelson. Smith asserts that the court erred in finding that information regarding the
Lemelson application would have been material to the examiner of the '563 patent and that Smith
intended to deceive the examiner by not disclosing such information.
The position in which Smith placed himself was one fraught with possible conflict of interest
because Smith's dual representation of two clients seeking patents in closely related technologies
created a risk of sacrificing the interest of one client for that of the other and of failing to
discharge his duty of candor to the PTO with respect to each client. Whether or not there was a
conflict of interest, however, is not before us, and we express no opinion thereon. Nor do we
express any opinion regarding the apparent conflict between an attorney's obligations to the PTO
and the attorney's obligation to clients.
However, regarding Smith's obligation to the PTO, which is before us, we agree with Smith that
Textron failed to establish by clear and convincing evidence that inequitable conduct occurred in
the nondisclosure of claim 11 of the Lemelson application. Lemelson claim 11 was not material
to the patentability of the '563 claims because it was cumulative to art already made of record
during prosecution of the '563 patent. A reference that is cumulative to other references of record
does not meet the threshold of materiality needed to prove inequitable conduct. See Scripps, 927
F.2d at 1582, 18 U.S.P.Q.2D (BNA) at 1015. Claim 11 was no more pertinent to Williamson
claim 160 than was claim 26 of the Lemelson '770 patent, which was already of record in the
'563 patent prosecution. Thus the court's finding that the Lemelson claim 11 was material was
clearly erroneous and the court's determination of inequitable conduct based on that finding was
an abuse of discretion.
Textron also asserts that Smith took inconsistent positions before the PTO in the course of his
dual representation. Although Textron does not assert that this in itself amounted to inequitable
conduct, Textron states that "the Williamson '563 examiner would have been very interested to
know that Smith had, in prosecuting the Lemelson applications, admitted that the [1954
grandparent] application disclosed the very combination which Smith had thrice argued [in the
Williamson applications] was neither suggested nor disclosed by [that] application, and which
Smith had argued was 'abandoned' by Lemelson." However, Smith did not in fact make that
admission. In prosecuting the Williamson application, he only asserted that neither the Lemelson
patents of record nor their grandparent suggested the combination of an automatic warehousing
system and an automatic production apparatus. During prosecution of the Lemelson
applications, on the other hand, Smith urged the patentability of claim 11, which recited a
production line in which a master control device controlled transfer devices and machine tools,
and argued that the Lemelson grandparent provided support for such a claim. These are different
assertions.
B. Exceptional Case
Molins and Smith assert that the district court erred in finding this to be an exceptional case
warranting an award of attorney fees under 35 U.S.C. § 285. We review the court's underlying
factual findings under the clearly erroneous standard and its underlying legal conclusions de
novo. Reactive Metals & Alloys Corp. v. ESM, Inc., 769 F.2d 1578, 1583, 226 U.S.P.Q. (BNA)
821, 824 (Fed. Cir. 1985). If these factual and legal underpinnings withstand scrutiny, we review
the award of attorney fees, i.e., whether the award was appropriate and the amount reasonable,
for abuse of discretion. On the other hand, if the underpinnings are partially reversed, we may
remand for further evaluation by the trial court.
The court partially based its finding that the case was exceptional on evidence of unfair
litigation conduct on the part of Molins. Specifically, the court found that Hirsh selectively
destroyed records pertaining to the prosecution of the system 24 invention after Molins had
begun contemplating litigation, precluding any potential defendant from conducting full and fair
discovery. The court also found that Smith acted in bad faith in obstructing discovery and in
testifying inconsistently.
Molins states that the records that were destroyed were abandoned foreign patent files, and that
any citations of references and relevant correspondence with the foreign patent offices were sent
to counsel in the United States for advice concerning the failure to cite these references to the
PTO. Companies are entitled to maintain file destruction programs without being found to have
improperly destroyed evidence. However, the district court judge is in the best position to
monitor parties' litigation conduct and can best determine whether any destruction was part of an
established and legitimate records disposal program. See Beckman Instruments, Inc. v. LKB
Produkter AB, 892 F.2d 1547, 1552, 13 U.S.P.Q.2D (BNA) 1301, 1305 (Fed. Cir. 1989).
Furthermore, the district court is "the most injured by misconduct at the pretrial and trial stages."
Rolls-Royce, 800 F.2d at 1111, 231 U.S.P.Q. (BNA) at 192. The court judged the parties' conduct
here, making findings adverse to Molins and Smith. Neither Molins nor Smith has convinced us
of clear error in the court's findings regarding their litigation conduct. However, because the
court also partly based its finding that the case was exceptional on the "pattern of repeated
instances of inequitable conduct on the part of Smith, Whitson, and Hirsh," in addition to Hirsh's
and Smith's litigation conduct, we remand for the court to reconsider its finding that the case is
exceptional and its award of attorney fees in light of our conclusions regarding the specific types
of conduct involved.
Such reconsideration should take into account the fact that we have affirmed the holding of
inequitable conduct in Whitson's failure to cite Wagenseil during the original prosecution of the
'563 patent, reversed the holding that Hirsh's and Smith's method of citing references post-
issuance constituted inequitable conduct, reversed the holding that Whitson's and Smith's
nondisclosure of the Lemelson patents constituted inequitable conduct, reversed the holding that
Smith's nondisclosure of the Lemelson application constituted inequitable conduct, and affirmed
the court's findings regarding the litigation misconduct of Hirsh and Smith. Thus, the holding
that Smith is jointly and severally liable cannot be based on Smith's having engaged in
inequitable conduct before the PTO.
CONCLUSION
The judgment of the district court holding U.S. Patents 4,369,563 and 4,621,410 unenforceable
due to inequitable conduct is affirmed on the basis that Molins' attorney Whitson intentionally
withheld a material reference from the PTO.
Dr. Amr Mohsen is the bad guy in this case
possible that's what Healy was referring to?
===========================
Unclean Hands in Litigation Does Not Invalidate Patent
[Reprinted from the "IP Litigator"]
A three judge panel of the U.S. Court of Appeals for the Federal Circuit recently affirmed that misconduct during litigation may be a basis for dismissing a particular suit for patent infringement but not for finding the patent unenforceable. Judge Rader wrote the opinion, Chief Judge Mayer agreed with dismissing the action, but would have gone further and barred all enforcement of the patent. Aptix Corp. v. Quickturn Design Systems, Inc., Fed. Cir., No. 00-1468, 60 USPQ2d 1705 (CA FC 2001).
Aptix licensed its U.S. Patent No. 5,544,069 ('069 patent) to Meta Systems, Inc. and Mentor Graphics Corporation. The founder, chairman and chief executive officer of Aptix Corp., Dr. Amr Mohsen, is the sole inventor of the '069 patent. The patent, directed to “field-programmable” circuit boards, was filed on September 20, 1989 and issued on August 6, 1996. Aptix and Meta jointly sued Quickturn Design Systems, Inc. for infringement of the '069 patent, and Quickturn added Mentor as a counterclaim defendant.
The Northern District of California's local rules require a patentee to disclose a date of conception for each asserted patent claim. N.D. Cal. Civ. L.R. 16-7(b)(3) (1998). Accordingly, Aptix first submitted to the court seventeen pages of an engineering notebook allegedly kept by Dr. Mohsen during 1989. Five days later, Dr. Mohsen advised Aptix's counsel that he had located another of his engineering notebooks, allegedly kept during 1988. The newly-discovered 1988 notebook established an earlier date of conception for the asserted claims than did the 1989 notebook. “Without this earlier notebook, Aptix later conceded, it would have a hard row to hoe to avoid invalidating prior art.” Id., at 1706 (citing Aptix Corp. v. Quickturn Design Sys., No. 98-00762, 2000 WL 852813, at 23 (N.D. Cal., June 14, 2000, internal quotations omitted). The version of the 1989 engineering notebook which Aptix first produced to the court included substantial and extensive additions which were not contained in a 1989 engineering notebook that Dr. Mohsen had provided to his patent counsel during prosecution of the '069 patent, a copy of which had been obtained by Quickturn during discovery. Dr. Mohsen conceded in his deposition that he had added material to the 1989 notebook after it had been signed. Aptix produced yet another version of the 1989 notebook that contained Dr. Mohsen's handwritten additions to photocopies of pages from an earlier version of the 1989 notebook. The trial court determined that this “Ink-On-Photocopy version” of the 1989 notebook was used as a copying template by Dr. Mohsen in fabricating the seventeen pages of the alleged 1989 engineering notebook that were produced to the trial court.
Thus, four different notebooks were submitted to the trial court: the seventeen originally-submitted pages from the purported 1989 notebook, a notebook allegedly started in 1988, an original copy of the 1989 notebook used to prosecute the '069 patent, and the “Ink-On-Photocopy” version of the 1989 notebook.
When the court compelled production of the original notebooks for forensic testing, Dr. Mohsen reported that the notebooks had been stolen from his car. Shortly before Aptix would have been required to demonstrate under Fed. R. Evid. 1004 that the original notebooks were not destroyed in bad faith, Dr. Mohsen purportedly received the notebooks in the mail. The trial court found that the circumstances of the “theft” and the return of the notebooks “strongly suggest that Amr Mohsen staged the incident.” Id., at 1707 (internal citations omitted). Further, the trial court concluded that the 1988 notebook was “a complete fraud . . . a notebook without a single genuine entry.” Id., (internal citations omitted). At an evidentiary hearing concerning the authenticity of the notebooks Dr. Mohsen asserted his Fifth Amendment privilege against self-incrimination. The trial court determined that Aptix had attempted to “defraud the Court and to strengthen its patent through a premeditated and sustained campaign of lies and forgery”. Id., (internal citations omitted). The trial court dismissed the complaint and held the '069 patent to be unenforceable, invoking the unclean hands doctrine as set forth in Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 19 USPQ 228 (1933), hereinafter referred to as Keystone I. On appeal, Aptix argued that the record did not support a finding of fraud and sought reversal of the court's application of the unclean hands doctrine. Moreover, Aptix and Meta challenged the determination that misconduct during the enforcement of a patent can render the patent unenforceable.
The Federal Circuit Court of Appeals found that “the record clearly and convincingly supports the district court's conclusion of extreme litigation misconduct.” The district court's finding of litigation misconduct “fully justified its decision to invoke the unclean hands doctrine and dismiss Aptix from suit.” Id., at 1708. However, the court held that “[l]itigation misconduct, while [properly] serving as a basis to dismiss the wrongful litigant, does not infect, or even affect, the original grant of the property right”. Id. “The doctrine of unclean hands does not reach out to extinguish a property right due to misconduct during litigation seeking to enforce that right.” Id. “The Supreme Court's decision in Keystone I, upon which the district court primarily relied, illustrates that litigation misconduct does not affect the viability of the property right itself.” Id. Thus, although properly invoking the doctrine of unclean hands to dismiss the complaint, the district court improperly applied the rationale of Keystone I in declaring the patent right itself unenforceable.
The remedy for litigation misconduct bars the party that committed the misconduct. The Supreme Court has repeatedly stressed that litigation misconduct bars the litigant yet leaves the patent right intact. (See, e.g., Keystone I, 290 U.S. at 244-45, and Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 61 USPQ 241 (1944)(overruled on other grounds)). In contrast, the doctrine of inequitable conduct renders the patent itself unenforceable. “Inequitable conduct in the process of procuring a patent taints the property right itself. Aptix Corp., 60 USPQ2d at 1709. “If inequitable conduct is shown during acquisition of the patent, courts declare the patent unenforceable because the property right is tainted ab initio.” Id. In his dissent Judge Mayer would have gone further and barred all future enforcement of the patent.
Thus, the remedies for litigation misconduct differ from the remedies for inequitable conduct. Inequitable conduct renders the patent itself unenforceable by any party, whereas the doctrine of unclean hands bars only the offending party from enforcing the patent in the present action. Although the doctrine of unclean hands bars recovery in the case at hand, it does not prejudice the offending party in subsequent actions. Since the record disclosed no misconduct in the acquisition of the '069 patent, the patent “remains a presumptively valid grant of personal property.” Id., at 1710. Although the district court's dismissal of the complaint was affirmed, the judgement of unenforceablity of the '069 patent was vacated
fwiw
=======
Re: JUST to be clear, the Jan 17 soiree
by: marigenty (48/M/Ohio)
Long-Term Sentiment: Buy 12/14/05 07:59 pm
Msg: 838957 of 838961
So, I am being dumb here. Does spoilation read on the DDR2 patents or is it an entirely
seperate issue?
Posted as a reply to: Msg 838953 by zonzgr8
-------------------------------------
Re: JUST to be clear, the Jan 17 soiree
by: zonzgr8 12/14/05 08:07 pm
Msg: 838959 of 838961
I will give you the easy answer, cuz I am not a patent lawyer and cannot parse it in greater detail re patent #s and dates:
spoliation is NOT an issue (i.e., it is not a defense) as to JEDEC documents as regards DDR2 (b/c Rambus had left JEDEC and so could not have "deceived" JEDEC with respect to the DDR2 patents)
BUT
spoliation IS an issue (i.e., a defense) as to prior art documents as regards DDR2
I'm sure a bright guy like TAX could parse it out for you --- NOT
Posted as a reply to: Msg 838957 by marigenty
Cal, We're not in synch.
I'm saying
1. the AT plea ultimately signed by MU will give them an argument to use the detrebling; however
2. the "requirements" provision in the detrebling statute says MU must have fessed up to Rambus in order to claim the detrebling benefit; so
3. IF NECESSARY (i.e., no settlement occurs), MU can - - at the last minute - - fess up to Rambus and still claim the detrebling benefit. How can they do that? The "requirements" provision in the detrebling statute has no temporal aspect.
NOTE: I think the detrebling statute is broad enuf in its language for MU to say "we were a successful leniency applicant in a criminal antitrust case involving the DRAM industry; this Rambus civil AT case IS ALSO 'an antitrust case involving the DRAM industry' SO WE ARE ENTITLED TO DETREBLING"
Cal - looks like "(b) Requirements" of
SEC. 213. LIMITATION ON RECOVERY*
has no temporal aspect, i.e., if the leniency applicant <MU> fesses up to the claimant <RMBS>, "(b)" is satisfied no matter when that happens.
Agree?
--------------------
*
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_bills&docid=f:h1086enr.txt.pd...
Bottom line: Assume de-trebling shields MU, but don't call it a "for-sure."
The court order itself is a public document and is not copyrighted. You could get the orders from the ct all day and publish them.
When the court order is formatted and published in a compilation book, the republication OF THAT is a no-no.
BTW - this is more complex than the above, but that's the gist.
Court reporter transcripts are a different story, and we can address if you want/need to.
=================
I'm still trying to comprehend how public documents could be copyrighted,
Interesting Q - I have not studied:
If MU is "in the program" for price fixing and their Plea Agreement would look like IFX's and Sammy's..................................
what is the effect of that on Rambus's ability to seek treble damages in a state antitrust suit for a diferent matter, i.e., collusion to prevent adoption of the RDRAM technology
(BTW the detrebling language says:
(a) IN GENERAL.—Subject to subsection (d), in any civil action
alleging a violation of section 1 or 3 of the Sherman Act, or alleging a violation of any similar State law, based on conduct covered by a currently effective antitrust leniency agreement, the amount of damages recovered by or on behalf of a claimant from an antitrust leniency applicant who satisfies the requirements of subsection (b), together with the amounts so recovered from cooperating individuals who satisfy such requirements, shall not exceed that portion of the actual damages sustained by such claimant which is attributable to the commerce done by the applicant in the goods or services affected by the violation.)
see McGuire's ID
===========
"Who are dBus's competitors?"
see # 1 & 2 below
===========================
===========================
# 1
see bottom of page 6
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_bills&docid=f:h1086enr.txt.pd...
===========================
===========================
# 2
Steve,
The Act only rewards the first conspirator in the door--the one who qualifies for amnesty. Everyone else remains subject to treble damages.
Connie
-----Original Message-----
From: smd1234@yahoo.com
Sent: Tuesday, July 06, 2004 5:31 PM
To: Robinson, Connie
Subject: Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (H.R. 1086)
I read your article on the Antitrust Criminal Penalty
Enhancement and Reform Act of 2004 (H.R. 1086).
Thanks very much.
Is the Act designed to de-treble for conspirators who
happen not to be 1st in the door at DOJ, i.e. the
conspirator who gains the leniency program's benefits?
Thanks,
Steve
great article:
BlackBerry patent fight spooks some customers
By Michelle Kessler, USA TODAYTue Dec 13, 7:02 AM ET
A patent lawsuit against the maker of the BlackBerry is starting to scare some customers away from the popular e-mail device.
• Land Equity Partners, a Park City, Utah, development firm, recently considered buying BlackBerrys for five partners. Then the company heard about the patent dispute between BlackBerry-maker Research in Motion and NTP, a tiny intellectual property firm. Faced with that uncertainty, Land Equity purchased $650 Treo e-mail devices from Palm instead. "I didn't need the headache," partner Tyler Aldous says.
• Founder Geoff Ables is evaluating e-mail devices for his staff at Customer Connect, a Davidson, N.C., tech consulting firm. But the BlackBerry is not on the list. Ables is also encouraging clients to steer clear. An alternate technology "is a much safer way to go," he says.
• Giant tech consultant Gartner is offering its clients similar advice. Last week, it sent a letter urging businesses to "stop or delay all mission-critical BlackBerry deployments and investments" until RIM's legal position is clarified.
RIM's patent fight has been going on for years, but NTP has won several key victories in recent weeks. That's pushing the legal wrangling into the spotlight - and has heightened the possibility that a court will force RIM to stop offering service in the USA until the case is settled.
That's a troublesome sign for RIM, which dominates the mobile e-mail market with about 3.7 million subscribers. RIM says it has developed a workaround that will keep BlackBerrys running if it loses the lawsuit. But that hasn't stopped shares of the Waterloo, Ontario, company from falling more than 20% since September. Shares closed Monday up $1.10 at $65.23.Things could get worse for RIM if more customers stay away.
Rivals are benefiting. "The phones have started to go crazy" at Good Technology, a Silicon Valley firm that makes mobile e-mail software for devices from Palm, Nokia and others, CEO Danny Shader says. Since Wednesday, Good has fielded more than 100 calls from companies that use large numbers of BlackBerrys, Shader says.
Still, many tech experts say a shutdown in BlackBerry service is unlikely. "There's too much at stake for (RIM and NTP) not to settle, says Shubha Ghosh, a law professor at the University of Buffalo and Southern Methodist University.
RIM risks alienating its U.S. customers, which account for about 70% of its revenue. And NTP wants RIM to do well - so it can get a slice of the profits under a licensing agreement.
That's enough to satisfy some RIM customers. Jeffrey Winton, CEO of Chicago lighting manufacturer Radionic Industries, says he's shopping for a BlackBerry because he's convinced RIM will make a deal.
I don't know what Payne THOUGHT he was doing by having the hearing on the 15th, since, the jurisdiction issue comes first, must come first.
THE ONLY possible thing that makes sense is he's going to dismiss based on the Rambus original filing on "no jurisdiction" and the Sammy response on that, i.e., he gave Rambus 'til 12/21 but never intended for them to have to file anything.
The jurisdiction issue must come first and he is wasting time with this 12/15 hearing unless he will rule from the bench to dismiss. (IE, if he intends NOT to dismiss on 12/15, then Sammy might reasonably ask for a chance to reargue after seeing the Rambus 12/21 filing)
The other possibility is he will confine the discussion on 12/15 to the atty fees questions and have a second hearing on jurisdiction after Rambus files on 12/21 -- this is very wasteful, as he should deal with jurisdiction before all else
On the 15th, this Thursday, his nibs will rule on Exceptioal case. Is this correct?there is a hearing on it, but Rambus has 'til the 21st to reply on the "no jurisdiction point" - see below
By the 14th Samsung will have to answer whether they agree to Rambus's rule 68 on attorney's fees? Is this correct?we know Sammy's answer based on the conf call the other dayLOL
By the 21st Rambus must answer Samsung's brief on prevailing party and attorney's fees. Is this correct?YES
see next post
==========
12/02/2005 95 ORDER that, by December 14, 2005, Samsung Electronics Co., Ltd. shall file its response to Rambus, Inc.'s contention that the Rule 68 offer of judgment, served on Samsung Electronics Co., Ltd. on November 29, 2005, divests the Court of subject matter jurisdiction. Rambus, Inc. shall file its reply by December 21, 2005. Signed by Judge Robert E. Payne on 12/02/05. (kste, )(copies mailed and faxed) (Entered: 12/05/2005)
Rambus wants Payne to "take judicial notice" of Whyte's 4/05 decision
Rambus believes that
= when Whyte REFUSED to give CE effect to Payne's statement from the bench in IFX, and REFUSED to dismiss the Rambus counterclaims against Hynix (4/05), that shows that Payne's order properly should not prevent the assertion of patent claims against a different mm
=Rambus was reasonable when it filed counterclaims in VA against Sammy
Rambus believes that
=if Payne will "take judicial notice" of Whyte's 4/05 decision it will bolster Rambus' claim to have acted reasonably and in good faith when it filed counterclaims in VA against Sammy, and
=Payne cannot find Rambus to have acted BASELESSLY when it filed counterclaims in VA against Sammy
You have my vote, now what's your proposal.
LOL
smd
I think it is fair to say the "chances that there will be ... a settlement (industry wide?)" are unknowable, and if it comes the timing is unpredictable.
The other possibility (i.e., "at least spoliation ruling on Rambus Vs Hynix") is, unfortunately, wrapped up with these mediations.
The hearing had been missing from the 12-15 schedule, I think, and if so, this just puts it there.
That really caught my eye too.
Can't claim to be able to put myself in the head of a real-world decisionmaker, but guess I'd hesitate to spend the $400 after reading that!
have a good one.
smd
Washington Post Co. is a diversified
by: zonzgr8 12/10/05 11:01 pm
Msg: 837287 of 837287
The Washington Post Company is a diversified media and education company whose principal operations include newspaper and magazine publishing, television broadcasting, cable television systems, electronic information services, and educational and career services.
The company owns The Washington Post, The Gazette Newspapers (Maryland), The Herald (Everett, Washington), Newsweek, television stations in Detroit, Houston, Miami, Orlando, San Antonio and Jacksonville, and cable systems serving subscribers in midwestern, western and southern states.
The company also owns Kaplan, Inc., a leading provider of educational and career services; Washingtonpost.Newsweek Interactive, a subsidiary that creates and manages electronic information services, principally on the Internet; and PostNewsweek Tech Media Group, which produces technology publications and trade shows primarily for government IT managers and contractors.
The company also has ownership interests in the Los Angeles Times-Washington Post News Service and BrassRing, Inc.
http://www.washpostco.com/company-profile.htm
Posted as a reply to: Msg 837285 by zonzgr8
Xbox 360 - Where's the 'Wow'?
(NOTICE THIS IS WASHINGTON POST)
==========================================
Where's the 'Wow'?
Xbox 360 Has a Better Design, but the Games Fall Short
By Tom Ham
Special to the Washington Post
Sunday, December 11, 2005; F01
Microsoft's big event last month -- the release of the much-anticipated Xbox 360 -- meant that gamers could finally get their hands on the "next big thing" in video-gaming and home technology.
And even though the company had the support of the big-name video game publishers -- Electronic Arts, Activision, Ubisoft and Sega, among others -- the Xbox 360 experience just hasn't been what it should be, given the hype, anticipation and price tag for one of the units.
Sure, it's exciting to play with a new system and see the new games -- but I expected a lot more from Microsoft's next big gamble.
Out of the box, the Xbox 360 looks more like a svelte PC with its smooth curved edges and rounded buttons. Its unobtrusive DVD media tray and USB inputs highlight its clean look and modern design. Without question, the 360's elegant lines make it a whole lot sleeker than the original Xbox.
The controller is especially worth noting. It feels good in-hand, providing easy access to both analog joysticks as well as the face and shoulder buttons. Microsoft took on a fair amount of criticism about the original Xbox controller and seems to have done a good job of making it better.
Under the hood, the Xbox 360 has plenty of power -- including an IBM PowerPC-based CPU, a custom graphics processor, a good amount of memory, wireless connectivity, and Ethernet and USB ports. Basically, it's a souped-up personal computer that delivers quite a bit: high-definition games with multi-channel sound processing that make video games more lifelike and the sound quality more distinct.
Still, all of this processing power and HD gaming don't come cheap in either of the versions of the Xbox 360. The $300 Core version comes with the console, one controller, a white faceplate and an audiovisual cable. For $100 more, the Premium edition also includes a headset, a remote control, membership to the Xbox Live Entertainment and Chat Network and a 20-gigabyte hard drive to store games, music and other content downloaded from Xbox Live. In addition, the Premium Edition has a wireless controller instead of the Core version's wired one. Both can play Xbox 360 games, DVDs and MP3s. And with the USB ports, the Xbox can also access devices such as digital cameras, an iPod and even Sony's PlayStation Portable.
The Premium edition -- because it has a hard drive -- can also play some (but not all) games made for the original Xbox, thanks to emulation software that the Xbox 360 downloads from Xbox Live to play those games. It's an inconvenient process that seems as if backward compatibility with games for the original Xbox was an afterthought.
In the video game industry, it really is all about the games, and that's why it was encouraging to hear that the Xbox 360 would launch with 18 titles available for play. Sure, that's a strong number, but broken down, it's not so encouraging after all. Of the 18, 11 are sports games -- football, basketball, hockey, soccer, golf and others. Of the other seven, four can be found on other platforms -- leaving three exclusive titles for the 360, a far cry from 18.
For the most part, the games showcase the high-resolution graphics and utilize the high-end sound processing just fine -- but nothing really had the "wow" factor that makes the Xbox 360 worth the $300 or $400 price tag.
There's nothing that's going to stop the hard-core gamers, the ones who spent the night outside stores to get their hands on one of the first units, from buying one. But casual players would be better off taking a pass on the Xbox 360 for now, at least until there is a better variety of games available.
© 2005 The Washington Post Company
infringeon2003 (yahoo id) reported on his own activities. You get anywhere near the judge's chambers and you'll get your butt kicked by a us marshall.
I don't know where he was doin' what he says he was doin'
smd
FWIW Infringeon (on yahoo) says he's been hanging out at Whyte's place (maybe in the minute clerk's office?) reading stuff and talking to clerks. Well, the stuff he is saying is suggestive that they are pulling his leg and he doesn't realize it.
So you all have this:
Re: Just got back from court
by: zonzgr8 12/09/05 08:33 pm
Msg: 837071 of 837071
you are dreaming
======================
Whyte has a staff of 10-15 attorneys working for him.
Posted as a reply to: Msg 837066 by infringeon2003
***************************************************
***************************************************
Re: Just got back from court
by: infringeon2003 12/09/05 08:10 pm
Msg: 837066 of 837072
I think the ruling can come anytime now.
I have seen the files and Whyte has already made some rulings on what evidence is admissable and what is not. Judeg Whyte has a staff of 10-15 attorneys working for him.
Once that is completed the decision is a lot easier.
Posted as a reply to: Msg 837064 by seat48onthebus
***************************************************
***************************************************
Just got back from court
by: infringeon2003 12/09/05 08:06 pm
Msg: 837063 of 837072
Yup! You are correct.
Payne is not really a problem anymore as far as Hynix is concerned.
I just got back from the Court and the Judge
Whyte's clerk was working on a batch of new work from Judge Whyte when I left at 4. So check back later and you should be able to see some new stuff
when the clerk gets finished. The clerk frequently works late.
One of Judge Whyte's staff brought them in while I was there. I asked her if RAMBUS was in there and she just smiled and went back to her office.
Payne is going to have to pull a rabbit out of his ass to rule on this "exceptional case" issue after RAMBUS filed the Offer of Judgment.
Payne has ben effectively neutered by the offer with his own leagl arguments.
Posted as a reply to: Msg 836988 by tomonthebus
"I asked also whether it would be possible to get a ruling out by Thursday at 1:00 western time"
hmmmm
yeah .... that seems like a good deadline to suggest --- IF CALIFORNIA WAS AHEADOF VIRGINIA RATHER THAN BEHIND!!
LOL
===========================
Status of Judge Whyte ruling
by: krf28472
Long-Term Sentiment: Buy 12/09/05 05:24 pm
Msg: 836965 of 836998
I called and spoke to the Clerk of the Court. I was told no ruling has been done yet. It is under submission. I then asked what does this mean. I asked does this mean Judge Whyte has not completed his ruling.
I was told no! It simply means no order has been issued by the Court. I then told the Clerk about the importance of getting a ruling issued out before December 15 (the date of Judge Payne's hang man hearing). I explained that we could end up having two different rulings from two different courts that are at odds with one another.
I then asked the Clerk would she talk to Judge Whyte about this. I was told she would. I explained that a ruling is necessary to bring this bogus spoilation mess the infringers have brought forth to an end!
I asked also whether it would be possible to get a ruling out by Thursday at 1:00 western time. Why? At around 9:00 am Payne's hearing begins! I was told the Court is working on a ruling and was aware of the deadline.
So, there we go. No ruling for certain issued tonight or Monday! More likely as not a ruling will be issued Thursday afternoon eastern time!
sorry, that was to "lolo"
lolo - can you visit for a double check on this report?
Is my summary correct?
Hynix case:
Parties shall appear on 12/16/05 for a hearig on the matter. ( Date Entered: 10/11/05) (cc: all counsel) [5:00-cv-20905]
<<spec'l master order revw by Whyte>>
Motion Hearing set for 12/21/2005 03:00 PM. before the Hon. Read Ambler, Special Master.(dhm, COURT STAFF) (Filed on 12/5/2005) <<MOTION to Compel regarding litigation hold documents and instructions not to answer at the deposition of D.S. Chung filed by Rambus, Inc.>>
expert discovery cutoff 2/17/06
Dispositive motions hearing 9:00 3/31/06
Pretrial conference set for 2:00 5/4/06
Jury trial will be held 1:30 5/15/06
All Hail the Moderators!
They keep us in line,
they research quite fine.
We know they are wise
and very nice guys!
LOL, congrats to our leaders!
I was reacting to your statement below.
I think what you did is fine.
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I don’t think this is a viable method for multi-page documents
can you check out this glide thing?
it should work well
smd
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docrew ---- in case you can suggest a way to have octavefiddler (his post is below) get the papers, scan & upload to something like, e.g., http://www.glidedigital.com/
docrew0 - would be great for oct fiddler (lolo) to get Whyte's order from SJ court (when issued) and post somehow. Ideas?
smd
That's b/c you are too busy reading the Civil Rights Act.
Too passive - not like a good fed'l judge.
He might phrase it like this:
"Do you know now if you'll be accepting the offer?"
Payne never comes back with the reasonable Q for a Judge:
<Sammy, having made it clear on the cc that they won't "accept" the offer>
So why doesn't he ask:
"Will you (Sammy) accept the rule 68 offer?"
Then Sammy can say "no (or hedge if they truly are unsure)"
He is just a terrible judge (in addition to the faults we've all come to know).
So he now has a 12/15 hearing set -- despite having given Rambus 'til 12/21 to file a response to Sammy's 12/14 filing.
grrrrrrrr
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I would think that the way to do this is for you
9 to go ahead and do it, file that pleading on
10 December 14, the day after your acceptance is due. For
11 if you choose to accept it and there's no further
12 matter to be decided, then nothing needs to be done.
13 If you choose to fight it or to say there's something
14 left, then you need to explain why.
15 In the meantime, Rambus should go ahead and
16 proceed and file its papers as per the November 8th
17 order. We will have the hearing on December the 15th.
18 Samsung will have to file its reply under the
19 November 8th order. Rambus will have a right of reply
20 to what you file on December the 14th, and it can file
21 its reply on December the 21st.
I am reasonably sure he gets hammered and goes to open mike night at the local comedy club.
Thanks for the insight. Will do
Whyte's ruling - why is this order different?
why is this order being circulated to the parties before being issued?
why is this order being timed by Whyte in relation to FRICKIN' Payne's schedule?
why is this order being held back?
why is this order being rushed out?
why is this order being targeted/timed in relation to the 12/12 mediation?
why is this order the most critical item on Whyte's docket?
why is this order different?
THE ANSWER IS THE SAME FOR ALL OF THE ABOVE
*** It's not! ***