Four years ago, Eolas Technologies Inc. and McKool Smith lost a high-profile patent trial against Amazon, Google and others over fundamental e-commerce technologies.
Before the trial ended, Eolas had returned to the U.S. Patent and Trademark Office to refine its “distributed hypermedia” patent. But U.S. District Judge Leonard Davis of the Eastern District of Texas ruled that McKool could not help them with patent prosecution for one year “following the entry of a final non-appealable judgment.”
Such “prosecution bars” are commonly included in protective orders when trial counsel gets access to confidential information that could be useful for tailoring a new patent to an infringement theory.
Now the parties are back in court—this time before U.S. District Judge Jon Tigar of the Northern District of California—arguing over Eolas’ new patent and whether McKool Smith jumped the gun on the expiration of the patent bar. Tigar ruled earlier this month that the prosecution bar ran until October 2014, three months longer than McKool Smith believes.
McKool and Eolas are pleading with Tigar for reconsideration. Much of the briefing is under seal, but a joint motion filed Thursday suggests Amazon, Google and Wal-Mart are asking Tigar to hold Eolas’ patents unenforceable as a sanction.
That would be a costly outcome for a company that once sought a reported $600 million at the Texas trial.
Michael McCabe of McCabe IP Ethics Law said that when judges find violations of a prosecution bar, the remedies can range from monetary or evidentiary sanctions to entry of judgment in serious cases. Holding the patents unenforceable would be a severe sanction, he said, one that’s not likely to be imposed without a strong showing of deliberately deceitful conduct.
The tech companies have an army of lawyers on their side .Amazon is represented by Latham & Watkins, Haltom & Doan and Perkins Coie. Wal-Mart is represented by White & Case and Winston & Strawn. Google is represented by Quinn Emanuel Urquhart & Sullivan.
The parties asked Tigar on Thursday to put proceedings on hold for two weeks while they hash out the prosecution bar issue. In the meantime Eolas is requesting a chance to present oral argument to Tigar.
“Eolas respectfully suggests that the court’s order reflects a manifest failure by the court to consider material facts and dispositive legal arguments,” McKool partner Kevin Burgess wrote in McKool’s Sept. 14 motion for reconsideration.
McKool argues that the prosecution bar began running July 22, 2013, the day the U.S. Court of Appeals for the Federal Circuit entered judgment on appeal of the Texas trial. In an opinion unsealed Sept. 11, Tigar ruled that the judgment didn’t become final and nonappealable until after the additional 90-day period during which Eolas could have petitioned the Supreme Court for certiorari. “If the key were ‘entry’ of judgment alone, then there would be no need for the qualifying words ‘final non-appealable,’” Tigar wrote.
That means McKool was barred from prosecuting the new patent, No. 9,195,507, until October 2014—not July 2014.
Those few months matter because Eolas was under some time pressure to move its ’507 patent through the PTO. The ’507 is part of a family that date back to a 1994 application, so it was set to expire in October 2014. The PTO ultimately granted a 1,042-day extension. Amazon has challenged that extension as “beyond the permissible limits of our patent laws.”
Eolas argues that Amazon itself has interpreted the prosecution bar the same way it does. In opposing a summary judgment motion last year, Amazon stated, “That bar expired approximately one year after the Federal Circuit’s Rule 36 affirmance, in about July 2014.”
That argument hasn’t persuaded Tigar, at least so far. “Eolas fails to explain why those statements bind Amazon or the court under the doctrine of judicial estoppel,” the judge wrote in his order.