In a case alleging that 26 major banks and businesses infringed on patented cellphone application technology allowing for the transfer of money, a federal judge has ruled that the defendants didn’t meet their burden to impose a prosecution bar on the patent holder’s lawyers.
The banks and businesses, including Capital One, Expedia and Starbucks, deny the allegations that they infringed on apps for the iPhone, Android and BlackBerry, and moved to impose a ban that would keep lawyers for Maxim Integrated Products from prosecuting patent claims on behalf of Maxim for the next two years if they receive sensitive discovery materials from the defendants.
U.S. District Judge Nora Barry Fischer of the Western District of Pennsylvania, however, held that they hadn’t met the standard for the ban, but she allowed them until November 15 to file a "properly supported motion."
As of now, she said in In re Maxim Integrated Products, "no party has provided enough evidence for this court to order such a ban on Mr. [Michael] North (or any other counsel involved in the case or exceptions to such a ban.)"
North’s firm, North Weber & Baugh in Palo Alto, Calif., has worked with Maxim since 2005, having had 53 patents assigned to the company since then, according to the opinion.
Fischer noted that the decision regarding a prosecution bar must be weighed on a "’counsel-by-counsel’ basis," according to the U.S. Court of Appeals for the Federal Circuit’s dictate.
Because sensitive information can be disclosed during the course of a case, regardless of how closely confidentiality rules are observed, some parties seek prosecution bars on the attorneys involved on the receiving end of the information.
"The risk of inadvertent disclosure is determined by the facts on a ‘counsel-by-counsel’ basis that turns on the extent that counsel is involved in ‘competitive decision-making,’" Fischer said, quoting from the Federal Circuit’s 1984 opinion in U.S. Steel v. United States.
That opinion laid out the standard, holding that not all attorneys who do patent work for their clients are necessarily involved in "competitive decision-making," which could trigger the bar.
"Even if it is satisfied that such a risk exists, this court is granted broad discretion to decide what degree of protection is required, and ‘must balance this risk against the potential harm to the opposing party from restrictions imposed on that party’s right to have the benefit of counsel of its choice,’" Fischer said, quoting from the U.S. Steel opinion.
Courts are supposed to consider the history that an attorney has with the client, the degree to which the client depends on that history, and the amount of difficulty that the client would be likely to face if it couldn’t rely on the attorney, Fischer said.
Fischer had received little information from either side, according to the opinion.
Each bar includes restrictions specific to the case, and, Fischer said, "other factors the court shall consider include the scope of the activities prohibited by the bar, the duration of the bar, and the definition of the subject matter covered by the bar."
Here, the banks and businesses asked that any attorney representing the plaintiff who sees or has access to another party’s information that is marked as "confidential attorney eyes only information — source code" cannot participate in patent prosecution on behalf of Maxim for two years after the case closes, according to the opinion.
"Maxim opposes a blanket prosecution ban and more specifically opposes an order that would make Mr. Michael North subject to such a ban," Fischer said.
North "is an integral part" of Maxim’s legal team, the company argued, and he has been "deeply involved in the infringement analysis," according to the opinion.
Maxim argued that if the ban were to apply to it, the same ban should apply to opposing counsel.
Ultimately, Fischer decided that she needed more information before issuing a final opinion on the bar.
Looking to the Federal Circuit’s opinion in In re Deutsche Bank Trust, Fischer said, "Given that analysis of the disclosure risk, balancing of risks, and the assessment of the propriety of any exemption must be based on ‘all relevant facts’ by a ‘counsel-by-counsel basis,’ the court finds that the present record lacks sufficient evidence to impose a prosecution ban on any counsel at this time."
The cases, filed in various courts around the country, were transferred to Fischer’s court in June by the Judicial Panel on Multidistrict Litigation because the Western District "enjoys a favorable caseload" and is geographically convenient for the parties as well as being part of the national Patent Pilot Program, among other things, according to the transfer order.
"All actions concern factual questions surrounding the interpretation, validity and enforceability of five inter-related patents owned by Maxim and relating to secured transactions made with various mobile applications using similar devices that communicate via the Transport Layer Security (TLS) protocol," according to the order.
In its order, the panel noted that the defendants opposed centralization, but held that centralizing the cases at this early stage, since they were all filed earlier this year, would "eliminate duplicative discovery, prevent inconsistent pretrial rulings … and conserve the resources of the parties, their counsel and the judiciary," it said.
Fischer, in accordance with the America Invents Act, may well determine that the cases should be remanded to the transferor court for trial, the panel said.
North declined to comment on the case and referred questions to Matthew Powers of Tensegrity Law Group in Redwood Shores, Calif., who couldn’t be reached for comment.
Alysa Youngson of Finnegan, Henderson, Farabow, Garrett & Dunner in Reston, Va., represented several of the defendants, including Pennsylvania’s PNC Financial Services, and couldn’t be reached for comment.
(Copies of the seven-page opinion in In re Maxim Integrated Products, PICS No. 12-2101, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •