June 17, 2013

Cube

I received an email from an Israeli Patent Attorney last week with the rather inflammatory heading “is the Rasham [Israel Registrar of Patents and Trademarks MF] an idiot or was he bribed?”

Somewhat intrigued, as the patent attorney in question is one of the most intelligent people I know, I opened the email to see what was bothering him.  The email contained a link to an article in the business newsletter “Calcalist” to the effect that a company called Seven Towns had received trademark protection for the Rubik’s Cube, and an Israel IP law firm was sending out Cease & Desist letters to various toy shops with requests for damages. The article in question is to be found here.

From Wikipedia:

Rubik’s_Cube is a 3-D combination puzzle invented in 1974[1] by Hungarian sculptor andprofessor of architecture Ernő Rubik. Originally called the “Magic Cube”,[2] the puzzle was licensed by Rubik to be sold by Ideal Toy Corp. in 1980[3] via German businessman Tibor Laczi and Seven Towns founder Tom Kremer,[4] and won the German Game of the Yearspecial award for Best Puzzle that year. As of January 2009, 350 million cubes had been sold worldwide[5][6] making it the world’s top-selling puzzle game.[7][8] It is widely considered to be the world’s best-selling toy.[9]

Reading the article, and reading between the lines, it appears that the patent attorney in question (i) believed that the Israel Registrar had granted a three dimensional trademark for Rubik’s Cube, and (ii) considered this ridiculous.

In an earlier article I discussed a recent decision by the patent office to grant a three dimensional trademark for the Crocs  beach clog, and so could see how my colleague was envisioning a product that had not been patented or registered as a design back in  when it was invented, could somehow, after decades of being considered in the public domain, become private property, enabling a trademark registrant to sue third parties. (The Interlego decision makes it clear that 3D Lego bricks are not protectable by copyright, so we can assume that Rubik’s Cube isn’t either).

However, before assuming that the Israel Trademark Office had got it wrong, I checked the database. There are actually two trademark entries owned by Seven Towns, both covering the same mark, but in different classes. The mark in question  IL 228232 is reproduced below.

IL 228232

The mark covers three dimensional puzzles in class 28, but is not a three dimensional mark. It is a 2D visual representation of a cube. Of course, to be drawn on paper it has to be, but there are accepted ways of showing three dimensional designs on a flat piece of paper. One can show top, bottom, left, right, front and back elevations, with a perspective view. That is how design applications are filed. That was not done here. More importantly, there is no indication in the certificate that the trademark is for a three dimensional object.

We note however, that the mark issued under Section 16 on the basis of a foreign registration (European Community Trade Mark No. 162784), which arguably is for a three dimensional cube. That mark is under cancellation proceedings.

If the mark, whether 3 dimensional or flat, is used as an indication of origin, it may be what could be considered as trademark infringement.

According to the Calcalist the lawyers who are going after toy vendors include Adv. Noe Shalev Slyomovics, (pronounced Noach Shmulovits, and usually spelled that way in this blog, but I have copied his preferred Hungarian spelling from his business card).

Noe Shalev Slyomovics is the former Israel Deputy Commissioner of Patents & Trademarks. He returned to private practice after Adv. Assa Kling replaced Dr Meir Noam as Commissioner.

I sent Adv. Noe Slyomovics an email, and it transpires that he was able to convince the trademark office that making cubical shaped “Rubik’s Cubes” is arbitrary, since there are a number of other options that use the same mechanism and achieve the same result. Some examples of alternative “Rubik’s Cubes”, courtesy of Adv. Slyomovics are depicted below:

dsc02227 (1)dsc02349

There are also a number of similar sliding puzzles that are not actually 3×3 cubes, but use different mechanisms.

Adv. Slyomovics considers Rubik’s 3×3 cube choice as arbitrary and equivalent to the others, and successfully argued that like the Toffiffee candy or the Ferrero Roche praline, Rubik’s cube was entitled to trademark protection, and there are legitimate grounds to badger other toy manufacturers.

I disagree. I consider the fact that all the equivalent puzzles are generically referred to as spherical cubes and similar oxymora, is indicative that the cube is the natural shape and the variations are inferior. As with Crocs-  , I believe that the puzzle should be in the public domain as it was not protected.

Apropos, I also have problems reconciling Gronis’ Toffiffee decision with the Apropo-(bugles)  decision.


Best Practices in Intellectual Property 2013

May 30, 2013

KIMI spent a nice day yesterday  at the Tel Aviv Sheraton Hotel, attending a conference entitled “Best Practices in Intellectual Property 2013″.

I sat next to Blogmeister, Professor Jeremy Phillips, who was busy tapping away at his laptop, blogging the event in real time. Rather than duplicate his sterling work, I have decided to link to his posts, but to make my usual inane comments and insights.

The event was well organized by Kim Lindy of IPR. It attracted about 170 participants, albeit including a fair number that were speakers/ sponsors. I didn’t gain a lot of new insights, but it was a good opportunity to see old friends and make new ones.

The first Professor Phillips Review is here: Best Practices in IP 2013: a conference report 1

In the first session, chained by Einav Zilber of Applied Materials, various representatives of large corporations presented on managing a valuable IP portfolio. See Professor Phillips’ comments here. I noted that Luc Savage of France Telecom / Orange was slides with an appropriate colour scheme. Andrew Browne, who is an IP manager for Shell spoke well. It occurred to me, that he was selling Shell on the sea shore.  Last time I saw Andrew, he was working for the Royal Mail and tried to convince me that Postman Pat was an IP right that they had lost. It reminded me of a similar battle fought and lost by the Metropolitan Police against the BBC concerning rights to the TARDIS.

Dr Daniella Azmony  moderated the session on geographic focus, see here regarding filing around the world. She started by pointing out the well known dualism of filing in markets and where competitors are. I would tweak this a little, by noting that a patent may be renewed for up to 20 (or in cases of pharmaceuticals, 25) years from filing, so the real strategy is probable future markets and where competitors may be located.

Looking at where China was 5-10 years ago, makes me suspect that clients should consider filing in India more seriously, as the costs involved are minimal, and India has a population of a billion and a fairly large number of educated engineers.

There were US, German and Chinese patent attorneys making their sales pitches. US attorney Gregory Scott Smith spoke well, but his strategy involving provisional applications, filing a US application a year later without paying the fee and then filing a CIP a further year later, was aimed at cash strapped individuals and start ups, whereas the audience generally consisted of better healed in-house counsel. More worryingly, Gregory presented a somewhat blinkered approach that ignored rights in the rest of the world, i.e. outside of the US. This is not an uncommon perspective from US practitioners (and Examiners), but is, nevertheless, somewhat worrying.

Dynamic DF MP Duo, Drs Rainer and Greiner, did give some insights into what was happening in Europe. Aharon Hurvitz gave a Chinese perspective. Brenda Mtanga, a Zimbabwean patent attorney made a case for filing in Africa, where there is another billion people. Brenda is an old friend of mine. I ran across her in Munich a couple of years ago and in Washington at INTA last year. There are two regional groupings, the ARIPO (English) and OAPI (Fracophone).  One of the countries in the ARIPO group is the Seychelles, and it suddenly struck me that Brenda plugging filing in the Seychelles from the Tel Aviv Sheraton beach front hotel can be summarized as “She sells Seychelles on the Sea Shore!

The afternoon keynote address, Current trends in Patent Enforcement, Licensing and Monetization, by Jonathan Taub of Acacia, was a fairly blatant self promotion, as was the following session on monetization, whose speakers, from their websites, seemed to be incestuously interrelated. See Professor Phillips’ comment here: here.   An amusing point came when one of the panelists suggested that a questioner asking about patent sales, consider going to the LES. The questioner, Hananel Kvatinsky, is the current chairperson of the Israel chapter of that organization!

The final session was on enforcement. Chaired by Zeev Pearl, the panel was challenged to respond to various scenarios, with advice regarding how to deal with threats and opportunities concerning competitors.  We were satisfied to note that Pearl Cohen Zedek Latzer litigator and partner Guy Yonay didn’t advocate litigating under all circumstances, and warned potential complainants to think carefully and noted there was an invalidation risk. Because of this, we find the Source Origin vs. Hydrapak fiasco here  where the judge fined him and/or PCZL a couple of hundred thousand dollars for filing a lawsuit that lacked any arguable basis in fact. all the more worrying.

The breakfast was delicious with fresh coffee and Danish pastries, and during the morning break there was a buffet designed for chocaholics. The lunch was less tasty however, with a choice between a meat and mushroom stew, a lemony chicken breast dish and a fish option, with parev deserts.

Our hostess, Kim Lindy was wearing a black cloak that was sort of like a cut off graduation gown. I suspect she was dressed for quidditch, but there was no broom in evidence.


Unipharm Doing an At Risk Launch of Generic Viagra

May 26, 2013

pfizer-viagra-aAccording to Itzhak Dannon writing in Jewish Business News, the American company Pfizer, the world’s largest pharmaceutical company, recently filed a civil suit in Tel Aviv District Court, seeking  monetary relief to the tune of NIS10 million (over $2,700,000) as well as extensive equitable relief in the forms of a permanent injunction, a writ of mandamus and accounting, against the pharmaceutical company Unipharm of Tel Aviv and Trima Israel Pharmaceutical Products  of Ma’abarot. For more details, see here

 

The lawsuit claims that Pfizer developed and refined the active ingredient of Viagra, sildenafil.  It further claims that earlier this year defendant Unipharm turned to Pfizer and proposed that in return for a financial settlement it would avoid launching a preparation containing sildenafil, to be used to treat erectile dysfunction. The complaint alleges that Pfizer rejected the attempt at extortion and would not even consider such a “business proposal.”  Pfizer avers that it made it clear to Unipharm that any launch of such a product, before its patent expires, will immediately result in legal action it would take against the intended infringer.

According to Pfizer, the defendants could not resist the temptation to make “a quick buck” before the expiration of the patent protecting Viagra and launched a preparation containing sildenafil for treatment of impotency, marketed by them under the name Tarim.

COMMENTS

‘Tarim’ is the second person singular (masculine) of to raise or erect. Not a bad name, I suppose.

I suspect that Unipharm feel that in light of a recent Canadian judgement they can withstand a law suit and Pfizer will have their patent voided – presumably for lack of enabling disclosure and perhaps lack of novelty of the key ingredient. Unipharm has a good track record at having patents for pharmaceuticals voided.  No doubt this case will attract a lot of attention.

 


Israel Supreme Court Overturns Doggy DNA Ruling

May 24, 2013

pooperscooper

Back in February 2011, Judge Stumer of the Petach Tikveh District Court ruled that the implementation of an idea to collect DNA of dogs to enable prosecution of their owners who have fallen foul of the law by their pets fouling pavements (sidewalks) was copyright infringement. My original posting on the decision, together with an analysis of what was wrong with it, may be found here.

Judge Noam Solberg has no issue with the factual finding of the District Court that the idea originated with Zisso, the original plaintiff and defendant on appeal, but on a matter of Law confirms that implementation of an idea is not copyright infringement.  the implementation of the idea, if protectable at all, might be protectable by a patent if considered novel, inventive and useful, but as Zisso didn’t file a patent application, the issue is moot and the idea is now in the public domain. Attempting to claim that there is unjust enrichment or an assumed contract is an illegitimate attempt to widen the charges on appeal. Similarly, attempts to claim infringement of the original PowerPoint presentation by the Petach Tikveh Municipality using a similar presentation is widening the original claim.

Judges Naor and Jubran concurred with Solberg. The Petach Tikveh Municipility was awarded NIS 25000 in legal costs.

The Case: Civil Appeal 2682/11 Petach Tikveh municipality vs. Harry? Hairy? Hurry? Zisso

COMMENT

Readers will be pleased to learn that the Israel Supreme Court has reversed what may be the worst IP related decision that an Israel Court has ever issued.

Neil Wilcoff has recently been blogging about various courts getting patent law wrong. It seems that Judge Stumer isn’t the only Judge to make an embarrassing mistake.  Nevertheless, one wonders if there isn’t a case to be made for specialist IP courts?


Camtek vs Orbotech, the Latest Developments

May 7, 2013

tweedle dee and tweedle dum

In the ongoing patent saga between Camtek and Orbotech, two Israeli manufacturers of optical imaging systems for quality control of semiconductor substrates, Camtek, represented by Adv. Adi Levit, petitioned to correct the statement of case concerning their opposition to Orbotech’s patent no. 179995 titled “SYSTEM AND METHOD FOR INSPECTING PATTERNED DEVICES HAVING MICROSCOPIC CONDUCTORS”

Evidence has already been presented, but some of Camtek’s evidence was struck as irrelevant. This attempt to correct the statement of case was, according to Orbotech, represented by Adv. Reuven Borchowsky, an attempt to bring into discussion material that has already been ruled as irrelevant and subsequently appealed and upheld.

The case was allowed on the 30 October 2011 and the appeal was filed (as is customary to delay allowance for as long as possible), on 31 January 2012. the attempt to correct the statement of case was filed on 19 March 2013, only just over a month before a hearing due for 22 April  2013

Adv. Levit argued that the correction was required because of the public interest of maintaining the ‘purity of the register’. In other words, if Orbtech don’t deserve a patent for lack of novelty, inventive step, and / or utility, civil procedure should be waived in the interest of making sure that they don’t get one.   The issue seems to be about the angle of the azimuth being claimed but not properly supported. Orbotech disagreed with a change in direction late in the proceedings.

The arbitrator (not signed so not sure who), seems to be accusing Camtek of time-wasting shenanigans, and rejected the request, ruling that the purity of the register was not a be all and end all blanket legitimacy for everything, and hinting at inequitable behavior. She also ruled NIS 3000 of costs to the applicant.

COMMENTS

We suspect that both parties are motivated by a mixture of commercial interests and bad feelings, and the purity or otherwise of the register is not a significant consideration here. It is legitimate for the opposer’s counsel to file responses on the last day, as it is his client’s interest to stop the patent issuing for as long as possible. Additional delays, especially when not based on newly discovered evidence, is intolerable.  the ruling is a reasonable one, if a little formalistic and dry.  To be honest, I’ve lost interest in the little skirmishes and await a final ruling on the validity of the patent. On the other hand, a heavy case load could be responsible for not filing request to amend the statement of case a little earlier. We note that most Paris Convention filings seem to wait until the last day. It is not inequitable behavior, just procrastination.


Genentech Withdraws Israel Patent

May 6, 2013

genentech

Genentech filed and received allowance of Israel Patent Number 175885 titled “ANTIBODY, A FRAGMENT THEREOF, A METHOD OF PREPARING THE SAME AND A USE OF THE ANTIBODY”. the patent issued on 29 May 2011 and was next due to be renewed on 17 December 2014.

On  24 April 2013, Genentech requested to withdraw the patent. Actually, the claim this was their second attempt to withdraw the patent, having first asked to do so on 21 March 2013.

Patentees are able to request that a valid patent be withdrawn, and the effect of so doing is as if the patent had never issued. The request has published for opposition purposes.

COMMENT

I wonder what is going on here?


Opposition Withdrawn and Patent Allowed

May 6, 2013

stencil

In Febrary 2007, Israel patent Number 171865 to Speedline technologies, titled METHOD AND APPARATUS FOR SIMULTANEOUS INSPECTION AND CLEANING OF A STENCIL published for opposition purposes, and an opposition was filed in may 2007.  It has now, six years later been  withdrawn. In a brief statement, Ms Yaara Shoshani Caspi has ruled that she does not see any reason to continue the opposition as an in partes procedure with the patent office taking an inquisitional position. The application will therefore be allowed.

COMMENTS

This announcement tells nothing of the reasons for opposition or why Ms Shoshani caspi ruled that there was no public interest justification to prevent the application for issuing. This information is also not on the IPO website. If someone reviews the file and submits a request for cancellation, no doubt we will be wiser.


Reviving Lapsed Israel Patents – Human Error Preferable to Financial Problems

May 5, 2013

meter lapsed

Eli Tiar allowed his patent number 148847 titled “EARTH SCREW ANCHOR ASSEMBLY” to go abandoned. The patent was filed in March 2002, and granted in February 2011. The first and second renewals, for years 1-6 and 7-10 were timely paid, but the third renewal, due March 2012, was not paid, due to lack of funds and commercial interest.

The Deputy Commissioner, Ms Jaqueline Bracha, did not consider this excuse as a legitimate reason to allow the abandoned patent to publish for reinstatement, since the law requires the patentee to take immediate steps on becoming aware that the patent lapsed. In this case, the patentee was aware that the patent would and then had lapsed, but made a financial decision to allow this to happen. This cannot be considered unintentional. The request to revive was therefore rejected.

On the other hand, Israel Patent 151594 to Biomar Israel LTD. for a FUNGICIDE COMPOSITION CONTAINING TEA TREE OIL was supposed to be renewed on 4 September 2012, and lapsed six months later on 4 May 2013, after the grace period passed. However, as evidenced by an affidavit, the agent responsible for maintenance was changed, from Dr Eyal Bressler to Daniel Faigelson, and a human error was made in entering the renewal data.  The applicant never intended the application to lapse, and so Ms Jaqueline Bracha ordered that its reinstatement was allowed to publish for opposition purposes.

Israel patent number 161941 titled SHELF-STABLE VEGETABLE COMPOSITION AND METHOD OF MAKING to the Societe des Produits Nestle SA lapsed since the patentee misinformed a renewal service, informing them that the next renewal was due in 2012, but in fact it was due in 2008. The mistake was spotted in 2013,  and the company took immediate action to rectify the situation. Ms Jaqueline Bracha ordered that its reinstatement was allowed to publish for opposition purposes. She also has set up an inquiry to determine why a notice of the patent becoming abandoned wasn’t sent out earlier, although notes that this service is not obligatory on the patent office, and cannot, itself be blamed for patents lapsing.

Israel Patent Number 158611 to IBM titledMETHOD FOR INTEROPERATION BETWEEN LEGACY SOFTWARE AND SCREEN READER PROGRAMS” lapsed as from 11 March 2012, due to non-payment of the third renewal, due with extension period by 11 September 2012. IBM’s attorneys did not provide a sufficiently detailed affidavit explaining the reason for the patent lapsing and were given an opportunity to rectify this. It turns out that the renewal company they use gave insufficient information to their local agents who handle the renewals in Israel. This was considered adequate to allow a  notice of reinstatement to publish.

The relevant law is sections 57 and 60 of the Israel Patent Law.


Israel Patent Office Adopts New standards of obviousness for pharmaceutical patents

May 3, 2013

Morris Dancers and MaypoleCialis

IL 147642 to ICOS Corp. is a patent application for a treatment of erectile dysfunction that is marketed under the trade-name Cialis®. The treatment is based on the pharmaceutical active ingredient Tadalafil, where the distinguishing feature of the claimed invention concerns the size distribution of the particles of active ingredient.  A size distribution where 90% of particles are less than 40 micron diameter is claimed, with a preferred distribution being 90% of particles having a diameter between 10 micron and 25 micron.

In a decision of 24 October 2012, the Deputy Commissioner, Ms Yaara Shoshani Caspi, upheld an examiner’s decision to reject the application. The applicant, represented by Reinhold Cohen, filed a request for an oral hearing, the date of which was set for 1 May 2013.

In preparation for the hearing, ICOS submitted a reasoned statement showing the difference between the claimed invention and the prior art. On reading the decision, Ms Shoshani Caspi was persuaded that the claimed invention was not described in any of the citations and was therefore novel and fulfilled the requirements of Section 4 of the Israel Patent Law. Furthermore, although reducing the size of the active ingredient clearly increased the surface area thereof, aiding and facilitating dissolving and uptake of a fairly insoluble material, and increasing its effect, Ms Bracha considered that the priority date there were other techniques that might be considered, such as wetting the active ingredient.  She ruled that decreasing the particle size was not the only candidate for a technique that would be tried first, suggesting that persons of the art might try co-precipitation, for example. Indeed, there were various known disadvantages with decreasing the particle size, that although would not rule out this approach a priori, would, nevertheless, make it a less favorable choice.

Applicants argued that although β-carboline was made more instantly available by shrinking the particle size, persons of the art might not make the required analogy. Ms Shoshani Caspi found applicants arguments convincing and allowed the application to continue to publication rendering the hearing moot.

COMMENTS

In a recent attempted appeal to the Israel Supreme Court concerning  Merck’s treatment Fosamax®, Judge Handel of the Israel Supreme Court upheld the District Court and former Commissioner  of Patents, Dr Meir Noam’s ruling that the standard for rejecting a pharmaceutical invention as having inventive step or non-obviousness, is ‘obvious to try’.  Ms Bracha is specifically ruling that obvious to try is not enough to render a pharmaceutical patent to be considered non-inventive, demanding a higher standard – that of ‘obvious to try first‘ or ‘obvious to succeed’.

Since Handel rejected the request for an appeal, I am not sure that his ruling can be considered a binding precedent of the Israel Supreme Court. Nevertheless, it is clear that Ms Shoshani Caspi is adopting a more lenient standard than that required by Dr Noam. Time will tell if this indicates a change in policy by the Israel Patent Office. What seems most likely is that Unipharm and / or Teva will challenge the validity of this patent at least on the grounds of it being based on an invention that was obvious to try so at some stage, we will receive more clear guidance as to whether this is sufficient to render a claimed invention obvious.

I understand that May Day as the choice of date for the hearing has nothing to do with the impotence of International Workers or with Maypoles being a clear example of a phallic symbol.  The rather English image of Morris Dancers around a Maypole has nothing to do with the rather English Israel Patent Attorney, Michael Morris,  - a licensed practitioner that I trained some years ago. Indeed, I have no idea if he knows Morris Dancing.


US Court Fines Pearl Cohen Zedek Latzer LLP (PCZL) and its litigators $200,054 for filing and prosecuting a frivolous patent infringement law suit

April 26, 2013

shluker

Source Vagabond and Hydrapak are both companies that make hydration packs. These are what are known in Israel as ‘shlukers’ – flexible water bladders with shoulder straps that may be carried on the back by hikers.

Source Vagabond is an Israeli company that has several patents in the United States. One of these patents is US 7,648,276 is titled “Sealing device for flexible liquid container”.

In August 2011, Source Vagabond, represented by Pearl Cohen-Zedek Latzer (PCZL) sued Hydrapak for patent infringement, contending that the top closure system used in Hydrapak’s Reversible Reservoir II infringed upon Source Vagabond’s patent.

Even before the suit was dismissed last April, Hydrapak was awarded its own patents: US 8,043,005 and US 8,186,881 both titled “Reservoir Closure System And Method” for their novel closure method – which is a fair indication that their system is patently distinct from Source Vagabond’s and inventive thereover.

In April 2012, Hydrapak, represented by Morrison & Foerster’s patent litigation team, won a summary judgment of non-infringement for in the New York Federal Court. Not only was the case was thrown out, but the defendants won Rule 11 sanctions against the prosecuting counsel. Later that year, Source Vagabond appealed the ruling of non-infringement to the Court of Appeals for the Federal Circuit (the CAFC), where, following oral arguments, the court affirmed the District Court’s decision of non-infringement.

Following the appeal, Source Vagabond then filed for a motion for reconsideration:

Judge Colleen McMahon wrote in her decision:

Plaintiff’s proposed construction violates nearly every tenet of claim construction and amounts to a wholesale judicial rewriting of the claim.” In granting the award of sanctions, Judge McMahon noted that while “I and so many of my colleagues bridle at the flood of Rule 11 motions that arrive on our doorsteps,” in this case sanctions were warranted because “this case is simply not close on the merits.”

On February 21, 2013, Judge Colleen McMahon ruled that the law suit brought by Pearl Cohen Zedek Latzer on behalf of Vagabond was wholly without merit and ordered PCZL to pay $200,054 in costs to Hydrapak and their lawyers.

The decision was given following a motion for reconsideration, and that motion was itself considered frivolous. The court concluded that this case was not close on the merits and lacked any arguable basis in fact. That is the standard for imposing sanctions. Nothing in the papers filed in support of plaintiff’s motion for reconsideration cast the slightest doubt on that conclusion.

A particularly strong paragraph was the following:

In particular, nothing said by Judge Bryson (the Court of Appeal, Federal Circuit CAFC judge that heard the appeal MF), during oral argument on appeal even remotely suggests that he disagreed with this court’s conclusion that Source’s claim construction violated every relevant rule of claim construction. Hydrapak’s counsel’s statement during oral argument that it violated “every precedent” of both the Federal Circuit and the United States Supreme Court was obvious hyperbole, but the fact is that Judge Bryson, like every other judge who looked at this case on the merits, rejected Source’s claim construction and endorsed this court’s conclusions. Source is grasping at non-existent straws here. (parenthesis added)

What this means is that the arguments proposed by PCZL as being the meaning and scope of the claims being asserted were rejected completely. Hydrapak simply was not infringing Source Vagabond’s claims.

Accordingly, for the reasons set forth in Magistrate Judge Cott’s Report, the court awards sanctions of $187,308.65, plus an additional $12,745.35 in sanctions incurred in connection with the motion for reconsideration, for a total award of $200,054. The sanctions are imposed jointly and severally against Pearl Cohen Zedek Latzer LLP and the prosecuting attorneys Guy Yonay and Clyde Shuman.

The Case:  Source Vagabond Systems v. Hydrapak, 11 Civ. 5379 (SDNY, Decided February 21, 2013) ruling by Judge Colleen McMahon, Decided: February 21, 2013

The decision is found here. There is a fuller review of the case on Law.com – see here 

COMMENTS

This case raises a significant number of legal and ethical issues – enough for a series of articles.  In this first article we will look at the decision of sanctions on the complainant’s counsel.  Does PCZL and its lawyers have to pay the fine themselves, or can they roll these costs onto their client?

It would appear that under New York State law, all arguments and counter-arguments must be made at the submission of initial trial briefs.  Failure to timely object to a magistrate’s report and recommendation operates as a waiver of further judicial review of that decision. Consequently, Since PCZL did not challenge the contention that PCZL, Guy and Clyde are (jointly and separately) the only liable parties, and since they failed to argue that some of the culpability lies with their client Source Vagabond, the district court did not address the issue. Accordingly, should PCZL try to further appeal the court’s decision, we presume that it can only do so on the issue of the sum and the culpability and not on the issue of whether the “blame” and therefore the sanction should have been assessed against the client as well.

We can’t tell whether Source Vagabond pressed Pearl Cohen Zedek Latzer to file the case. We can’t tell if Source Vagabond asked PCZL for a legal opinion as to whether to file the initial complaint or the later filed motion for reconsideration. Indeed, we can’t tell if PCZL encouraged their client to sue, or even originated the idea. Such information is privileged between the attorney and client. It wouldn’t even have come out in discovery were this case to have been considered meritorious enough to continue to trial.  Because of this, we can only hypothesize regarding the background to PCZL’s decision in file a case considered by the judge as one that lacked any arguable basis in fact. However, since PCZL did not contest the culpability issue, the issue appears to be moot. Effectively they have assumed, if not admitted, sole responsibility. This could have ramifications if the client files a malpractice suit.

That as may be, it would appear that Source Vagabond got off lightly here, as the costs involved in fighting a case through the US courts can run into millions of dollars. Morrison & Foerster is a leading US law firm and their services no doubt don’t come cheap. Discovery laws make suing in the US a very expensive business, and one that is extremely time-consuming. Thus if the case had dragged on and been lost at a later stage – which seems likely as ‘every judge who has looked at the case on the merits, rejected Source’s claim construction’,  it would presumably have resulted in Source Vagabond having to pay very much larger expenses.


Follow

Get every new post delivered to your Inbox.

Join 200 other followers