Patently-O Bits and Bytes No. 22

  • PatentLawPic231Question on Patent Issuance: I know that I have read this before — Is there a standard time that patents issue?  E.g., is it proper to file a patent infringement case at 12:01 am on the day that the patent is scheduled to issue? What if the PTO’s website is delayed in its update? What about filing at 12:00:01 am?
  • Ward v. Troll Tracker – Now its a Federal Case: As an interesting litigation strategy, John Ward Jr. has also sued Frenkel & Cisco in Federal Court in the Western District of Arkansas (Texarkana). [Complaint] This filing has a hand-stamped date and hand-written time. (Filed March 13, 2008 at 10:45 am.) [Thanks to Ozark Patent Lawyer Brent Capehart for the tip]
  • More on Ward v. PTT: E.D.Tex. blogger and patent litigator Michael C. Smith provides his comments on the case.
  • Patent Reform: I’m working on a comprehensive patent reform post. However, Zura has some news on amendments to the Senate bill. [LINK]

43 thoughts on “Patently-O Bits and Bytes No. 22

  1. 43

    I think the issues of civil rights/privacy is a separate one from patent licenses, but worthy of debate. Regarding the matter of Congress passing laws that would restrict the ability of patent holders to earn profits from their patents should Congress deem the national interest at stake — my point wasn’t really one of supporting it or not supporting but simply that Congress has done this before, and it’s been upheld by the Courts, and Congress has expressed its intention to do so in this case. If that’s true, who pays is not really a relevant question. Who loses might be the better question.

  2. 42

    Thought of a better analogy: the 80’s movie “No Way Out”. Though it is tough to ask this question without somewhat spoiling, was Gene Hackman justified in his pursuit of Kevin Costner? Did your answer to that question change at the end of the movie?

  3. 41

    Derek:

    What is your support for the idea that national security will trump the Takings Clause (besides recent attempts to use national security to trump a fair portion of the Bill of Rights)?

  4. 40

    The arguments about whether “The People” will pay or The Banks will pay for the damages of the Data Treasury lawsuit ignore the fact that such damages will not likely be allowed. Senators on both sides of the aisle in the Senate Judiciary Committee voted unanimously to prohibit Data Treasury from putting its profits ahead of national security. There is precedence for such congressional action.

  5. 39

    Sure, but Ted Bundy was only tried AFTER people knew he was the killer. To extend your analogy (which is not as bad as you think), suppose charges were brought against Bundy without a shred of evidence, and only later was it discovered that, gosh darn it, it turned out he really was a killer. Would you still feel okay that the charges were initially brought? Or would the due process side of you feel something was not quite right?

    Perhaps you can clarify exactly what it is you feel is Frenkel’s “impropriety”. I’m guessing it was not just his “conspiracy” posting by itself, and that it is the additional fact of his Cisco connection that is problematic for you. But you can tell me I’m wrong.

  6. 38

    Sorry Elfin I’m missing the “Magic.” Let me paraphrase what you asked. If something apparently improper had not happened would we be upset? I think I can speak for my colleagues and say unhesitatingly no.

    For an absurd comparison (no bearing on Frenkel’s alleged improprieties) I think most commenters here would agree that Ted Bundy’s biggest problem was that whole “killing all those people” thing.

  7. 37

    I think most comments here agree that the ‘biggest’ problem here was that Frenkel worked for Cisco when he made his remarks about the ESN case, and that this fact may turn out to have a dispositive role the issue. But does it matter that the two attorneys filed their original suits BEFORE Frenkel’s identity was revealed? In other words, if it had turned out that the PTT was really just some completely removed third party, would JAOI, Gauntlet, CaveMan, etc. feel the same way? I suspect not. Too bad that wasn’t the case, since now the plaintiffs’ whining looks, with hindsight only, to be somewhat justified.

    em

  8. 36

    Not sure if the “he needed defamin'” defense will hold water, but in view of the language of the complaint, which emphasized on page 3 thereof “…or what Defendant Frenkel refers to as the “Bananna Republic of East Texas”…” I am more than certain that the “Don’t Mess with Texas” enhanced a$$ whoopin provisions will be applied…

  9. 35

    Gauntlet, please read Michael Smith’s explanation in the EDTX blog (see the link above) regarding the electronic filing practice at EDTX. Apparently it is customary to prepare an electronic shell for an anticipated filing in advance of the filing. The Electronic filing itself was properly submitted on the 16th fully supported by the requisite documentation. The shell creation date and time were updated to reflect the actual filing date and time as is customary. There appears to be nothing unusual about the Ward filing. Apparently, truth will not be a defense.

  10. 34

    JAOI,

    I think you’re referring to the parts where Ward, an opposing party, alleges that Cisco knew of and consented to PTT’s blog. On page 4, Ward also alleges that PTT publicly admitted that Cisco knew and consented.

    Please remember that these are allegations, which have not yet been proven (i.e., they are “alleged). For my part, I remember reading the post where PTT outed himself. While I recall that in that post, he stated that he was Cisco’s director of IP, I do not recall where he stated that Cisco was aware of his blogging. It seems clear, to me, that Cisco’s liability is premised on this fact being true.

    Also, truth is an absolute defense to defamation. That should be fun for Frenkel, getting to do discovery to see if in fact there was a conspiracy to change the dates.

    Frenkel may be in trouble, but I don’t know if Cisco is. I have to say, his commenting on a case his company was involved in was not very intelligent. He should have known better than that. That is poor risk management on his part.

  11. 33

    Dear Blogger et al.,

    On line 3 of the second bulleted item in Professor Crouch’s article at the top of this thread [i.e., Ward v. Troll Tracker – Now its a Federal Case] you will find an underlined word [Complaint]. Please click on it and read the 3rd page, which is the essence of the Complaint alleged v Mr. Frenkel, Esq.

    It appears many commenters are unaware of these troubling allegations.

  12. 32

    I am guessing, and this is pure speculation, that Johnny Ward filed his federal case in the Western District of Arkansas because he was concerned that Cisco/Frenkel would remove his Texas state court case to the Eastern District of Texas, on diversity grounds. Figuring that he would prefer a federal case in Arkansas instead of the EDTX, Ward therefore filed in Arkansas. I could speculate why he would feel that way, but not in this comment.

    Regarding some of litig8or’s other comments: (1) It would seem that the same, if not worse, personal jurisdiction problems would apply to Arkansas as compared to Texas — if there is no jurisdiction over Cisco or Frenkel in Texas (where the underlying suit at least took place) there would less likely be jurisdiction in Arkansas. Ward’s complaint has an allegation of general jurisdiction over Cisco — I don’t know what the basis for that is — but no specific facts for jurisdiction over Frenkel.

    (2) Also, if Ward’s case wound up in the EDTX, it would automatically **not** be assigned to Judge Ward, his father, so that would not be a concern.

  13. 31

    Can Mr. Frenkel claim some sort of immunity like your traditional newspaper reporter could? Although blogging is now somewhat mainstream, it didn’t used to be, and perhaps decisions granting immunity (full or partial) to a reporter, and here applying similarly to a writer submitting an opinion piece in a newspaper, should apply in his case.

  14. 30

    Years ago in a venue dispute I was involved in I found a case that I believe was reported at 105 F. Supp. 886 and I believe it said that patents issued at noon on Tuesday.

  15. 29

    Can anyone point to even one source which indicates that patents have an “issue time” rather than merely an issue date?

    MPEP 201.11 II.B

    ‘If the prior application issues as a patent, it is sufficient for the later-filed application to be copending with it if the later-filed application is filed on the same date, or before the date that the patent issues on the prior application.’

    MPEP 711.02(c)

    ‘As there stated [in 35 USC 120], a second application is considered to be copending with an earlier application if it is filed before

    (A) the patenting,

    (B) the abandonment of, or

    (C) termination of proceedings on the earlier application.

    “Before” has consistently been interpreted, in this context, to mean “not later than.”‘

    Apparently, using logical reasoning, the PTO believes there are issue dates and not issue times, since if we considered fractional-second issue times, there would be no difference between “before” and “not later than” and the distinction would accordingly be meaningless.

  16. 28

    Dennis,

    I was taught (but have no printed source) that patents are considered to have issued at 11:59 pm, and patent applications are considered to have been filed at 12:01 am, so when you file a continuation on issue day, it really is co-pending. Filing a complaint at 12:01 am is a bit of a risk anyway – it is good to check that the PTO really DID issue your patent (I’ve had cases pulled after receiving the issue notification)

  17. 27

    Having never been to Texarkana, the very few things I know about it are the things that come to mind when someone says Texarkana…

    Like this awesome postcard of the courthouse:
    link to howappealing.law.com
    link to cardcow.com

    From this post: link to howappealing.law.com

    Also, this link notes some interesting jurisdictional overlap between the E.D. Texas and the W.D. Ark…. link to uscourts.gov It appears to be as close as one can get to refiling in the same district.

  18. 25

    On a case filed in Denver at 10:01 PM on Monday night, the patent HAS actually already issued at 12:01 AM on Tuesday in the time zone of the USPTO.

    Why, as a plaintiff, should I be prejudiced as to forum possibility if I live in Hawaii or Alaska….???

    Shouldn’t a LOCAL Federal court ACCEPT my filing as TIMELY, i.e., accept that such a filing IS after ISSUE of the US Patent ?

    If the FILING DATE of a patent is controlled by US EASTERN TIME when done electronically, why isn’t the relevant date for initial existence of a US patent controlled by US EASTERN TIME, especially if the infringement action is filed electronically ?

  19. 24

    P.S. In 1998, there was a period of several weeks (beginning on June 9th) when most patents were not becoming publicly available (either in paper or in on-line images) the Tuesday they should have been issued/published. For example, the PTO notified the public on June 8, 1998 that only a “little over 1,000 patents of the 3,600 in the June 9th issue were delivered to be filed…. This trend is likely to continue several issues before returning to the usual 98% availability week of issue…. Unfortunately there is no full document source to suggest as an alternative….”

    It is my understanding that the delayed availability of issued patents does not effect the issue date in any way whatsoever.

  20. 23

    Actually according to 35 USC 154, the “time” (to quote Dennis) the patent issues on the Tuesday it issues is apparently meaningless. 35 USC 154 does not say, “a term beginning at the time the patent issues”, but rather “a term beginning on the date on which the patent issues”. My understanding is the term begins the picosecond after midnight on the date the patent issues, and ends the first picosecond after the day the patent expires (i.e. the last day is a full day too).

  21. 22

    Paul, Leopold et al.

    I was similarly concerned about the DataTreasury amendment. I found it very effective to call my Senator’s office, contact the aide responsible for S 1145 and send a short note correcting some of the timeline distortions in the Judiciary report. The Judiciary report creates the impression that a bunch of inventors rushed off to the patent office after the government essentially developed the imaging process. In fact, Claudio Ballard (DataTreasury inventor) made his inventions and reduced them to practice well before any government action was taken. This is laid out in the Declaration that he submitted during litigation and cited in the reexams.

    I don’t know if it will sway the Senators’ votes, but the aides appreciated the factual input.

  22. 21

    Interesting suit… seems to me CISCO can claim litigation privilege. Perhaps resulting in disciplinary actions but not grounds for the law suit.

  23. 20

    “Plus, isn’t it jumping the gun a little to label them “defamatory”? First, we are not even yet 100% sure they were untrue. And even if they were untrue, Frenkel has a pretty good argument that they were not recklessly untrue, which would be a defense to defamation under NY Times v. Sullivan.”

    Just to remind you:

    Frenkel was in charge of this particular litigation against his company.
    It was his responsibility to know all of the details.
    It is absurd to even mention NY Times v. Sullivan in the context of this particular case.

  24. 19

    Mr. Jaglowski, while I too agree litigation will ensue, I don’t see this as much different from a beneficial breach of contract. My assumption is that if the banking industry is made to pay, that license fee will be simply and quickly passed on to banking customers. One way or the other, We The People pay. If that is true, then one imagines the goal to be obtaining the best possible bargain. (Ignoring our personal feelings regarding derogation of patent rights, etc.)

    Anon, perhaps an option for Ward would be a bar complaint filed in CA?

  25. 18

    Huh? Lawyers make false comments about opposing counsel all the time. That is why we have a doctrine of litigation privilege. Doesn’t apply here because they were made out of court; but the comment is still pretty absurd.

    Plus, isn’t it jumping the gun a little to label them “defamatory”? First, we are not even yet 100% sure they were untrue. And even if they were untrue, Frenkel has a pretty good argument that they were not recklessly untrue, which would be a defense to defamation under NY Times v. Sullivan.

  26. 17

    My (legally uneducated) guess is that Frenkel should be disbarred immediately, as well as his corporate boss Mark Chandler.

    A corporate lawyer involved in an ongoing litigation shoud NEVER EVER make any defamatory or false comments about an opposing party’s legal councel. Period.

  27. 14

    The funny thing to me is that Ward opens himself up to much more “ridicule” for filing a the current law suit – his own actions are making him a laughing stock, not anything posted by Frenkel. His own complaint makes him look like a cry baby, but maybe that’s just me….

  28. 13

    Slappy – best guess is that:
    1. Texas state case had serious jurisdictional problems with a CA defendant – even if he could tag Cisco, he likely couldn’t get Frenkel.
    2. Ward would be in a better jurisdictional postion in federal court.
    3. He would have problems if he pulled his dad on the case – judges are assigned by random pull in federal district courts.
    4. By filing in Arkansas, he can assert diversity jurisdiction, stream of commerce (internet), and not risk actual or apparent conflict with his dad sitting on the EDTX court.

    There are still major jurisdictional questions to be resolved, whether its miminum contacts or purposeful availment. It will be an interesting case to watch. As the previous poster said, I’m waiting on the 12(b)(2) motion, too.

  29. 12

    Ward didnt only file his case in Arkansas, he dismissed his Texas state court case. Why run away from Texas?

  30. 11

    “E.g., is it proper to file a patent infringement case at 12:01 am on the day that the patent is scheduled to issue?”

    I doubt that the exact timing for accessibility on the PTO’s website has any bearing on the question of whether the patent is in force on a given day. But, doesn’t a complaint typically assert that infringement HAS occurred? I’m sure it might vary, depending on the patent claim at issue, but might not that assertion be premature, if the complaint is filed at 12:00:01 AM on the first day of the patent term? Might not this raise standing issues? Or Rule 11 issues?

    Just curious…

  31. 8

    “If a $1 billion “taking” is less than the aggregate license revenue over the remaining term of the DataTreasury patents … then shouldn’t we be in favor of the ‘taking’?”

    No.

    First, it ignores the argument made in the point that you’ve quoted, which is that those who are use the technology should be the ones who bear the economic cost. It’s the classic debate between internalized and externalized costs of business.

    Second, in theory there should be no discrepancy. Courts generally hold that “just compensation” is determined by the fair market value of the asset, which would be the present value of the royalty stream. If “We the People” save money by only paying $1 billion, then there is arguably only partial compensation, not “just compensation.” Litigation ensues.

    Litigation probably ensues regardless, but if the government determines that it is saving money by paying $X billion, you can bet that the documents in that assessment will be cited as evidence that the government must pay more.

  32. 7

    “What would it cost We The People if all the banks take licenses? Those licensee fees similarly would be passed on. If a $1 billion ‘taking’ is less than the aggregate license revenue over the remaining term of the DataTreasury patents … then shouldn’t we be in favor of the ‘taking’?”

    If the compensation for the taking is reasonable, then the cost should be exactly the same. But, who would you rather have determining the reasonable royalty rate, Congress (with the aid of lobbyists who have much to gain and almost nothing to lose) or negotiators for the banks and the patentee, dealing at arms length (perhaps with the aid of the courts)?

    Whether this individual case is cost-effective or not, do we really want to go down the road where Congress decides, on a case-by-case basis, which patents should be enforceable and which shouldn’t?

  33. 6

    Is it true now that any blogger is automatically subject to personal jurisdiction in any forum? Sounds pretty expansive to me, (wouldn’t they need to show some kind of purposeful availment, or at least knowledge that Arkansas readers were looking at the blog?) but I guess that’s got to be the argument to have the Frenkel case heard in Arkansas. Hmm. I’ll watch for the 12(b)(2) motion.

  34. 5

    “4. Immunity would be secured through government compensation to DataTreasury, which would in effect force taxpayers to finance the cost of patent infringement on behalf of banks, to the tune of approximately $1 billion +, according to the Congressional Budget Office. Scarcely any plausible justification has been given.”

    What would it cost We The People if all the banks take licenses? Those licensee fees similarly would be passed on. If a $1 billion “taking” is less than the aggregate license revenue over the remaining term of the DataTreasury patents … then shouldn’t we be in favor of the “taking”?

  35. 4

    Dennis,

    I would say after 12 midnight Monday (or every Tuesday) Eastern Time. Patents issue automatically every Tuesday (even when its a federal holiday) and it’s the day that matters, not the time. I know the PTO web site has the updated patent issuance info in it’s database loaded before the normal work day begins. The fact that the PTO web site is delayed shouldn’t matter, unless issuance of the patent is pulled.

  36. 3

    “… some of the more responsible banks have admitted the validity of the patents by licensing them…”

    Paul, I actually agree with your overall conclusion, but this kind of distortion really undercuts your argument (and really ticks me off every time I see it). Licensing a patent does NOT consitute an admission of validity or infringment. I suspect you know that quite well. This is the kind of disingenuous assertion that makes people latch onto perjoratives like “troll.”

    “a license for infringers to steal” is another nicely loaded term. Of course, you know as well as I do that infringement is infringement, not stealing, just as trespass is not stealing. But “stealing” sure sounds better, doesn’t it?

  37. 2

    RE: S1145 (Patent Reform)
    As a small inventor I might concur that our patent system is in need of some reform, but I am very concerned that the bill in its present form picks winners and losers among industries with different business models in a way that has never before been attempted in patent law or practice.

    Sen. Jeff Sessions (R-Ala.) has sponsored an unusual provision at the urging of the nation’s banks granting them immunity against an active patent lawsuit, potentially saving them billions of dollars. The amendment would prevent a small Texas company called DataTreasury from collecting damages from banks for infringing on its patented method for digitally scanning, sending and archiving checks. The provision introduced by Sessions did not name DataTreasury but was carefully tailored to apply to that company and its “check collection” system. The patents were upheld last summer by the U.S. Patent and Trademark Office after they were thoroughly challenged.
    Justification of the Sessions Amendment seems to be that the Check 21 Act forced the banks to adopt new check processing procedures with the innocent banks (who were merely complying with government regulation) thereby finding themselves opportunistically and indiscriminately sued for infringement by a“patent troll.” This view, however, fails to recognize that:
    1). The (Data Treasury) patents in question were filed years before the Check 21 Act.
    The Data Treasury patents have withstood the best legal challenges the banks could buy, and that some of the more responsible banks have admitted the validity of the patents by licensing them. And every entity that has been sued almost surely had opportunity to negotiate a license before being sued.
    2). The Check 21 Act legalized “Check Imaging” and does not force Banks to comply with its usage. Banks remain free to process checks the old way or themselves invent a non-infringing new way or license use of the Data Treasury roadmap for a modest portion of the savings it offers. Nothing in the Check 21 Act requires banks infringe the Data Treasury patents.
    3). Check 21 made it possible for the banks to dramatically reduce check clearance costs, relative to then current processes. Check 21 was opportunity, not burden!!
    4). Immunity would be secured through government compensation to DataTreasury, which would in effect force taxpayers to finance the cost of patent infringement on behalf of banks, to the tune of approximately $1 billion +, according to the Congressional Budget Office. Scarcely any plausible justification has been given.
    Any idea that the Sessions Amendment is justified as “relief” is simply preposterous. It is no more or less than the financial lobby buying a “Get out of Jail Free” card from congress and appears to be far less like meaningful reform and much more like a license for infringers to steal.
    Overall, this bill with this Amendment is a great disservice to the small technology companies and independent inventors that drive American innovation. Reforms are needed. But this Bill, with or without Sessions, should go back to committee in a Congress with an enlightened heart.

  38. 1

    write your senators … reject s. 1145 patent reform act … it is truly a wonder how far this is pushed without regards to more public discourse … amendments? based on what? bear stearns needs a buy-out, the dollar at new lows (since 1995?), gold over $1000, but Senator Leahy insists this is THE time to Act.

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