Specific Threat Required for Reexamination Prosecution Bar against Patentee’s Litigation Counsel

Scott Daniels | December 10, 2012

In cases where a patent is simultaneously involved in litigation in District Court and reexamination at the Patent Office, it is common for the accused infringer to ask that the protective order bar the patentee’s litigation counsel from participating in the reexamination.  Trial judges, however, are often reluctant to grant such a reexamination prosecution bar, unless the accused infringer identifies specific threats that would justify the bar.  This reluctance was on display last week in Helferich Patent Licensing v. Phoenix Newspapers, 2012 U.S. Dist. LEXIS 172422 (D. Ariz.).

The case is a consolidation of four infringement actions, involving seven patents, each of which is now in reexamination.  The accused infringers noted that the patentee is “currently pursuing additional claims” in the reexaminations, and asked Judge Neil Wake to bar the patentee’s litigation counsel from participating in the prosecution of the reexaminations.  The accused infringers were evidently concerned that patentee’s litigation counsel might use confidential information, obtained under the protective order, to fashion new claims that would cover the accused infringer’s intended future products.

Judge Wake began his analysis by stating that a “party seeking a patent prosecution bar bears the burden to first show that there is an ‘unacceptable risk’ of inadvertent disclosure “of [the accused infringer’s] confidential information.”  Further, to “determine whether there is such an unacceptable risk, courts examine the extent to which counsel is involved in ‘competitive decision-making’ with its client.”  (Emphasis added).

Judge Wake then cited precedent defining competitive decision-making as “a counsel’s activities, association, and relationship with a client that are such as to involve counsel’s advice and participation in any or all of the client’s decisions (pricing, product design, etc.) made in light of similar or corresponding information about a competitor.”  The Judge added that many actions by a patent attorney during prosecution do not involve competitive decision-making.  These non-competitive decision-making activities include “administrative and oversight” tasks that pose a less significant risk of inadvertent disclosure.  These duties contrast with activities in which counsel play a “‘significant role in crafting the content of patent applications or advising clients on the direction to take their portfolios’ which poses a more significant risk.”

But even where there appears to be “unacceptable risk” of inadvertent use of confidential information by the patentee’s counsel to prosecute a reexamination, Judge Wake noted that the courts “balance that risk against the potential harm to the opposing party from being denied its choice of counsel.”  (Emphasis added).  The Judge continued that evaluation of this potential harm requires consideration of “factors such as the extent and duration of counsel’s past history in representing the [patentee] before the PTO, the degree of client’s reliance on that past history, and the potential difficulty the client might face if forced to rely on other counsel for the pending litigation or engage other counsel to represent it before the PTO.”

Further, the accused infringer must identify “the information said to trigger the bar, the scope of activities prohibited by the bar, the duration of the bar, and the subject matter covered by the bar all reasonably reflect the risk presented by disclosure.”  Finally, “to justify a prosecution bar … the moving party must identify ‘specific information that would cause it injury if disclosed.’”

Here, Judge Wake found that accused infringers “do not identify any specific confidential information that could be misused, apart from broad allegations of potential harms.”  Rather, their concerns as expressed were “vague and speculative.”  The Judge also noted that the patentee’s litigation counsel had worked on these patents for many years, so that a prohibition against that litigation counsel from participating in the reexamination would greatly harm the patentee.

Balancing the speculative nature of the accused infringer’s concerns and the clear harm to the patentee, Judge Wake concluded that the accused infringers had “not met their burden of showing good cause for the issuance of a prosecution bar.”

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