Two Judges in Same Federal District Split on “Patent Marking” Law’s Constitutionality

Guest Commentary

John Kendrick, Summer Fellow, Washington Legal Foundation*

Eastern District of Pennsylvania

Look at the bottom of your mouse; there should be several patent numbers on it. Then do a 5-minute online search to see if those patents expired before you bought it. If they did, you’ve hit the jackpot! Under the False Marketing Statute (which is a section of the larger U.S. patent law) you could sue the producer of the mouse (or any other product) and potentially get a hefty financial windfall.

The statute penalizes anyone who marks a product with a patent label if it is not actually patented or the patent has expired. The potential penalty for breaking this law is $500 per individual unit. So a suit over a single mislabeled patent could result in millions of dollars in penalties if many units of the product were made. Further, as was alluded to earlier, these lawsuits are qui tam, any individual can file. Plaintiffs do not need to have suffered any injury to have legal standing according to the statute. Continue reading “Two Judges in Same Federal District Split on “Patent Marking” Law’s Constitutionality”

Smartphone Patent War Outcome at International Trade Commission: Impact and Implications

Guest Commentary

Robert T. Cruzen and John D. Vandenberg, Klarquist Sparkman, LLP

On July 15, 2011, an administrative law judge at the International Trade Commission (ITC) issued a preliminary ruling finding that eight claims of two Apple patents were valid and infringed by HTC smartphones utilizing the Android operating system.  One of the allegedly infringed patents, U.S. Patent No. 5,946,647, includes broad claims directed at recognizing pre-defined data patterns, such as email addresses or phone numbers, and linking those structures to actions that enable users to activate them.  Thus, Apple contends that HTC infringes that patent when, for example, the smartphone software provides a link to a phone number, on which a user can click in order to complete a telephone call.  The other patent, U.S. Patent No. 6,343,263, is directed to real-time application programming interfaces.  The consensus is that the asserted claims of both patents are quite broad: an HTC design-around seems unlikely.

The administrative law judge’s opinion is preliminary.  HTC has indicated that it will appeal the ruling to the six ITC commissioners for review.  The commissioners will issue a final decision by December 6, 2011.  Interestingly, the ITC’s preliminary staff recommendation was that none of the claims in the ten patents originally asserted by Apple against HTC was both valid and infringed.  If the commissioners agree with the administrative law judge, they will issue an order banning the importation of the accused HTC smartphones.  HTC would then appeal the ruling to the Federal Circuit Court of Appeals and seek a stay of the importation ban pending appeal. Continue reading “Smartphone Patent War Outcome at International Trade Commission: Impact and Implications”

Criminalization of Free Enterprise Spotlighted in Two Major Newspapers Over Weekend

The federal government’s pursuit of criminal sanctions against businesses and their managers and employees received high-profile coverage this weekend in two large-circulation daily newspapers.

Reporters Gary Fields and John Emshwiller authored a front-page story in the Weekend Edition of The Wall Street Journal, As Criminal Laws Proliferate, More Are Ensnared (subscription required). Their story focused on the general rise in the number of statutes and regulations which can be enforced criminally, and federal prosecutors’ and agencies’ increased proclivity to eschew civil or administrative remedies in favor of the criminal law. They prominently featured the plight of Krister Evertson, whose appeal Washington Legal Foundation took to the U.S. Supreme Court in 2009.  The Court denied certiorari in the case.

The title of David Hilzenrath’s Washington Post article on the Foreign Corrupt Practices Act (FCPA), Quandary for U.S. Companies: Whom to Bribe reflects the tone and tenor of the piece. It focuses on efforts to clarify certain aspects of the federal anti-bribery law, including who qualifies as a “foreign official.” The article labors to minimize the relevance of who is and is not a foreign official, painting a picture of business actions which don’t pass the “straight face test” regardless of what the law is. It seems to embrace this absurd statement by the Justice Department’s Greg Andres (quoted in the story):

If companies aren’t paying bribes, they have nothing to fear with respect to enforcement.”

For more on the rising criminalization of free enterprise, read the second edition of WLF’s Special Report: Federal Erosion of Business Civil Liberties.

Finger on the Pulse: From Our Blogroll and Beyond

  • Chinese intellectual piracy hits a new high (low?): a replica Apple Store which sells Apple knockoffs (Yahoo)
  • Maine backtracks on burdening drug companies with repeal of marketing costs disclosure law (FDA Law Blog)
  • Class action lawsuit targets cloud computing provider for data security breach (Privacy and Information Security Blog)
  • A circuit split develops over whether corporations are subject to Alien Tort Statute lawsuits (Product Liability Monitor)
  • Don’t let that minor matter of the federal debt distract you: U.S. House debates use of certain coffee cups and light bulbs on Capitol Hill (The Hill’s E2 Wire Blog)
  • We’re not making this up: ObamaCare requires hospitals to make Medicare patients happy; hospitals turn to Disney Corp. to learn how (Kaiser Health News via The Hill’s Healthwatch)
  • Convinced by junk science studies, San Francisco looks to require cellphone radiation warnings (Hillicon Valley)
  • Canadian competition law officials decline opportunity to review $4.5 billion purchase of bankrupt Nortel Networks’ patents (Business Week)

SEC to Join HHS in Effort to Drop the Claw of Strict Liability on Business Managers

Oooo, the Claw

Cross-posted by at On the Docket and the WLF contributor page

The Washington Post reported this morning that the Securities and Exchange Commission had rejected a recommendation by the agency’s enforcement division to settle a case SEC had filed against former CSK Auto CEO Maynard Jenkins. This confirms that SEC has joined the federal government’s misguided drive to impose strict vicarious liability on business leaders for the unauthorized, unknown actions of others in their companies.

SEC Clawback. Several CSK officers had been engaged in accounting fraud, violations which an internal audit ordered by Jenkins had discovered. SEC’s case against the officials and the company acknowledged that Jenkins was himself a victim of the fraud, as the perpetrators had actively hidden the illegal activity from him. He was never accused of securities fraud or of even being negligent in his management of the company. Nevertheless, the SEC’s enforcers decided to pursue “reimbursement” of Jenkins’ bonuses under the so-called clawback provision of the Sarbanes-Oxley Act (SOX). Section 304 of the Act allows for this in situations where the company was harmed “as a result of misconduct” by the executive whose bonus return is being sought. Continue reading “SEC to Join HHS in Effort to Drop the Claw of Strict Liability on Business Managers”

2011 Freedom and Justice Legal Writing Competition

Now that summer is more than half way over (disappointing I know), it’s time for a second reminder for Washington Legal Foundation’s 2011 Freedom and Justice Legal Writing Competition.

This year’s prompt is the following:

Under the Park Doctrine, responsible corporate officers may be held criminally liable for the actions of their subordinates, even if the corporate officer neither participated in nor knew of the wrongdoing, and even if the subordinate was acting in violation of company policy. See United States v. Park, 421 U.S. 658 (1975). The Supreme Court has upheld the Park Doctrine in limited cases where the penalties are small and there is no grave damage to the defendant’s reputation. See, e.g., Morissette v. United States, 342 U.S. 246 (1952); United States v. Dotterweich, 320 U.S. 246 (1952). Given this framework, to what extent does the Constitution limit the severity of the civil punishment that may be imposed on those convicted of a misdemeanor under the Park Doctrine?

So start your engines (if you haven’t already)!  Submissions are due on August 26, 2011.  For more details on the contest, visit this webpage.



Update: Federal Judge Sets Deadline for New Proposed Settlement of Google Book Scanning Suit

“They are very complicated, complex issues, requiring us to delve into them in the dog days of summer,” a lawyer for Google Inc. reportedly said to U.S. Judge Denny Chin in a hearing today on the status of settlement talks between Google and author and publisher plaintiffs.

It’s been four months since Judge Chin rejected the litigants’ first attempt to settle charges that Google violated copyrights in the process of scanning books for its digital library. As we opined in March, addressing all of Judge Chin’s concerns would be a monumental task. No doubt the parties’ gaggle of lawyers have been piling up billable hours seeking an approvable solution, but Judge Chin is frustrated by the lack of progress.  He was quoted as saying, “I’m a little bit concerned. This is a six-year-old case.” He wants them to spend even more focused time in their air-conditioned offices and conference rooms.

So to cajole things forward, the judge set a September 15 deadline.  If the case isn’t “resolved or close to resolved in principle” by then, Judge Chin will set “a relatively tight schedule for discovery.”  Perhaps other than being forced to use the Bing search engine on their computers and smartphones, the last thing Google executives likely want to do is litigate this case. The plaintiffs similarly have numerous incentives to settle, but after so many authors and publishers objected to the original settlement, the plaintiffs’ lawyers may have changed their opinion on what is equitable since March.

What do you think?

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