Stephen Korniczky, Sheppard Mullin partner ()
SAN FRANCISCO — When he first read the email, Stephen Korniczky says, he nearly fell out of his chair.
Last fall, the Sheppard Mullin Richter & Hampton partner persuaded the U.S. Court of Appeals for the Federal Circuit that the supposed inventor of wireless picture displays had submitted false declarations to the U.S. Patent and Trade Office. Then in January, Korniczky obtained an email from the inventor’s patent prosecution attorney that validated his theory—in surprisingly candid terms.
“I want to address what I perceive is a potentially lethal blow to the integrity and validity of my patent portfolio from the incorrect declaration faxed to the PTO on Friday,” inventor Daniel Henderson wrote on Feb. 10, 2007, to Boston patent attorney Robert Tendler.
What really jumped out at Korniczky came a few sentences later: “I fully expect that it will also introduce serious concerns for my litigation counsel,” Henderson wrote, instructing Tendler to “contact Cliff Kraft at Niro’s office to see what their take is on this development.”
“Niro’s office” is Niro, Haller & Niro, the immensely successful plaintiffs IP firm that inspired the label “patent troll.” And the unearthing of the email has the potential to cause some very serious problems for the famous firm.
Last week, U.S. District Judge William Hart of the Northern District of Illinois granted Korniczky’s request to reopen discovery, ordering the Niro firm to turn over phone records, emails and other communications between its attorneys, Henderson and Tendler. The firm has hired Chicago legal ethics expert Robert Cummins, and on Tuesday Niro Haller moved to withdraw as counsel to Henderson’s company, Intellect Wireless.
“I’ve read a lot of this palaver,” Cummins said in an interview. “The evidence is going to show that the Niro lawyers were not involved as alleged.”
Niro Haller helped Intellect Wireless, negotiate at least $10 million in licenses from companies like Apple, Samsung, Verizon and Kyocera—along the way slamming anyone who dared to question Henderson’s veracity.
That run of success ended in October after Korniczky and HTC Corp. persuaded an Illinois federal judge and then the Federal Circuit to invalidate Henderson’s patent due to inequitable conduct at the PTO. Now Korniczky is trying to pin the blame—and the attorney fee bill—on the Niro firm.
“What’s remarkable is we spent the last three years litigating this issue, and this email was sitting out there all this time,” Korniczky says. “And what it shows is the attorneys knew this case was frivolous.”
Raymond Niro and his co-counsel at Niro Haller say they had nothing to do with the prosecution of Henderson’s patents, and that none of them saw Henderson’s email until this month. “It was never provided to the Niro firm for review and production despite the Niro firm’s requests to Mr. Tendler to provide such materials,” Niro partner Paul Vickrey wrote in a Jan. 29 filing.Clifford Kraft, the attorney referenced in Henderson’s email, filed a declaration stating that he has “no recollection of any communications on any topic with Daniel Henderson or Robert Tendler in 2007.”
Intellect Wireless is a company formed by Henderson to monetize his patents on picture and video messaging. During years of litigation, the Niro firm touted Henderson as a visionary whose prototype “picturephone” is on permanent display at the Smithsonian. Many of the suits were successful, with at least two surviving summary judgment.
The Niro firm stated in a recent filing that it settled six actions for $1.6 million or more. Korniczky estimates overall settlements at more than $25 million.
As more companies were targeted, allegations about Henderson’s conduct intensified. Sprint tried to prove inequitable conduct, then withdrew the claim, causing Niro partner Vickrey to accuse the company of having “cavalierly smeared the reputation of Dan Henderson, an esteemed inventor.” When Forbes published a critical article, Vickrey responded that it “painted a grossly inaccurate picture of my clients and contained several falsehoods, including the incendiary statement that Mr. Henderson purportedly ‘admitted he lied to the Patent and Trademark Office.’”
The suspicion centered around the timing of the patent. To overcome prior art, Henderson had filed a Rule 131 declaration with the PTO stating that he had reduced his picturephone to actual practice in 1993, demonstrating it to fellow inventor Kazuo Hashimoto. But Henderson’s trial testimony was shaky—he admitted that the wireless network used in the demonstration was “simulated.” Judge Hart concluded that no image could have been transmitted to the device in 1993.
The Niro firm had argued that while Henderson might have been confused about the wording of the declaration, he did not act in bad faith. “Significantly, Mr. Henderson believed the initial declaration was true and accurate,” former Niro partner Paul Gibbons had written in a pretrial filing.
But the 2007 email to Tendler all but eviscerates that contention. Henderson wrote: “It will come out in litigation that the Intellect device shown to Hashimoto in July 1993 had NO WAY of displaying a picture on a two line alphanumeric display, contrary to my recent inaccurate declaration,” Henderson wrote.He added that Tendler had rushed him to approve the declaration. “My concern is that the incorrect declaration will create a weak flank for attack by even marginally competent litigation counsel on the other side,” he wrote.
The PTO suspended Tendler, of Boston’s Law Offices of Robert K. Tendler, for four years on Jan. 8 because of his failure to alert the office about the inaccurate declaration. Tendler produced the Henderson email to Korniczky two days after reaching a settlement with the PTO.
Tendler did not respond to an email seeking comment.
Korniczky originally brought a motion under Section 285 of the Patent Act for a finding that the case is “exceptional,” which would trigger fee shifting. His more recent motions have focused instead on the court’s power to sanction attorneys under 28 U.S.C. Section 1927. Given the concerns Henderson raised with Tendler, “it’s inconceivable Tendler and Henderson wouldn’t have run it by their litigation counsel,” he contends.
Asked why he hasn’t sought an answer from Tendler or Henderson, Korniczky says it’s because discovery has closed. “Maybe it is something we can pursue later, but for now, we have to take it a step at a time,” he said.
The Niro firm disputes Korniczky’s claims on several fronts. The email from Henderson contains only a suggestion that Tendler contact the Niro firm. It “does not confirm that such a conversation ever occurred,” Vickrey wrote in his Jan. 29 filing. Seeking discovery from the Niro firm after a trial, an appeal and a fully briefed fee motion is unprecedented, he argued.
Hart issued a brief order the following day directing the Niro firm to turn over the discovery sought by Korniczky by Feb. 13. A status hearing was set for Feb. 20.
Cummins emphasized that all Korniczky has at this point are allegations. “It’s up to these folks to try to prove what they’re saying,” he said. “They’ve alleged some matters that are simply not provable.”
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