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Life During Wartime: The “Pre-Markman” Hearing March 28, 2014

Posted by Brian Schar in USPTO.
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Imagine it is February 2015 and the attributable ownership rules, as currently proposed, have gone into effect.  Also imagine that the Green Bay Packers are playing in yet another Super Bowl, although that may be a topic for a different blog.

A fast-track application filed after the rules went into effect issued in January, and the owner is now suing on that patent in district court.  It’s the case scheduling conference.  Let’s listen in!

Experienced Judge: Let’s set the Markman hearing for June.

Plaintiff’s Attorney: That’s fine with us.

Defendant’s Attorney: Hold on a minute, your honor.  Before we have a Markman hearing, we need to find out if the patent is even valid.

J: The validity phase is after discovery closes.  How long have you been at this?

D: Long enough to pay attention to the rules.  The patent goes abandoned if the owner did not make the proper submissions under the attributable ownership rules.

P: Which we did, at great expense and time.  The file history shows multiple 100-page submissions that chase down an impossible number of people.

D: But we don’t know if it’s complete.  Or accurate.  We need to verify that you didn’t commit inequitable conduct, or even a simple error.  Before there’s even any thought of a Markman hearing, we need to get discovery on those submissions.

J: What kind of discovery?

D: We need the shareholder list at the time of filing the patent application, and records of every share transfer since then, including option grants.  I’m going to need every lease to real property and every financing agreement, to see if the plaintiff pledged its patent to anyone as collateral, and if it reported that.  I’m going to need the name of every spouse of every shareholder, the names of their children, and the shareholders’ wills.

P: All of that stuff is in our filings.  (Note to the reader – this would never happen because it is impossible.  Please bear with the hypothetical.)

D: But we don’t know that for sure.  While I’m at it, I will need every document and email in your possession relating to any financing agreement and any IPO preparation documents.

J: Are you insane?

At this point in our hypothetical glimpse into the future, I suspect that the judge’s head would explode.  Judges hate discovery.  But the new rules dump another giant truckload of discovery into each and every patent case – cases that already are overburdened with colossal amounts of date.  Judges also hate delay.  The Markman hearing has become a mainstay of patent litigation, and judges like to get those out of the way early to encourage settlement – indeed, the Markman ruling as to claim construction is often dispositive of the case.  However, the defendants of the future will rightly (and in my view legally correctly) challenge the patent’s validity itself, pre-Markman, to (1) throw all of the early discovery costs onto the plaintiff, and (2) knock out the patent early.

Will judges push back on this?  Almost certainly.  I suspect the reality is that very early in the life of these rules, if they were to be adopted in their present form, a judge would invite briefing as to whether the rules should be invalidated, or interpreted narrowly, and that judge would rule in a way to reduce the new burden dropped in his/her lap.

Next week, I’ll look at the likely response by the startup community to these rules, once it becomes understood they are a machine for destroying private company IP.

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