Google and the Sherman Act or: How I Learned to Stop Worrying and Love Civil Procedure

Posted on November 29, 2011 by Damion Jurrens under The Bolt

Overview

Google’s market dominance has attracted the attention of the press, competitors, and now the federal government. Recent articles, cases, and hearings seem to point toward an inevitable collision between the industry giant and the Sherman Act, the federal statute governing antitrust issues. Complaints from competitors have thus far yielded little, but what happens if the government decides to turn its discussion into litigation? Recent history might provide some clues as to what lies ahead.

A Tale of Two Venues

Two recent courtroom victories for Google highlight the importance of proper pleading, especially when leveling antitrust accusations against one of the most recognized brands on the web. In the first case, TradeComet v. Google, the Second Circuit affirmed the Southern District of New York’s grant of Google’s motion for summary judgment based on a forum selection clause in Google’s contract with the operator of a business-to-business search engine. Citing Rules 12(b)(1) and 12(b)(3) of the Federal Rules of Civil Procedure, Google argued that a clause in the contract specifying that all lawsuits between the parties must be brought in Santa Clara County called for dismissal of the case. After considering the option of transferring the case to California, the Southern District of New York granted Google’s motion and dismissed the case.

The Court of Appeals held that the trial court was not required to convert a Rule 12(b) motion to dismiss into a § 1404(a) motion to transfer, and upheld dismissal of the complaint. This meant that Google was never forced to address the merits of the case itself, which alleged that Google AdWords violated the Sherman Act through its monopolistic business practices. In this instance, poor venue choice by the plaintiff and solid lawyering by Google further validated a forum selection clause aimed at avoiding a proliferation of suits in multiple fora.

The second case, Google v. MyTriggers, saw Google venture outside of its home court in California to sue a client for nonpayment, only to be waylaid by antitrust counterclaims. Continue reading →

Tagged , , , , , 1 Comment

GPS Tracking: United States v. Jones

Posted on November 28, 2011 by Jesse Koehler under The Bolt

Overview

On November 8, 2011, the United States Supreme Court heard oral arguments in United States v. Jones, a case involving the warrantless placement of a GPS device on Antoine Jones’ vehicle by law enforcement and the subsequent tracking of Jones’ movements in his vehicle. While the Court has not yet delivered a ruling, the arguments brought up both by counsel and the justices provide insight into the critical issues of privacy at stake. These issues include the fear of giving law enforcement too much leniency in their tracking procedures and the question of whether GPS reveals any information that is not normally exposed to the public.

United States v. Maynard (United States v. Jones): D.C. Circuit Decision

The case currently before the Supreme Court arose out the D.C. Circuit’s decision in United States v. Maynard, 615 F.3d 544 (D.C. Cir. 2010) cert. denied, 131 S. Ct. 671, 178 L. Ed. 2d 500 (U.S. 2010) and cert. granted, 131 S. Ct. 3064 (U.S. 2011). Maynard addressed the appeal of Antoine Jones and Lawrence Maynard regarding their convictions for conspiracy to distribute cocaine, and possession with intent to distribute. Id. The D.C. Circuit held that the lower court had erred in admitting evidence obtained by law enforcement agents through the use of a GPS device placed on Jones’s vehicle and thus reversed Jones’s conviction while separately affirming Maynard’s conviction. Id. at 568.

In its analysis of whether or not to admit the evidence obtained from the GPS device, the D.C. Circuit set the stage for the case currently before the Supreme Court. Jones argued that the police had violated the Fourth Amendment’s prohibition of “unreasonable searches” when they installed a GPS device on his vehicle without a valid warrant and tracked his movements for four full weeks. Id. at 555. Specifically the court questioned (1) whether the use of GPS indeed constituted a search against Jones’s “reasonable expectation of privacy,” (2) whether Jones’s locations recorded by the GPS constituted private information, and (3) whether Jones could have properly held a reasonable expectation of privacy for his movements in the four weeks police tracked him. Id. at 555-565. Continue reading →

Tagged , , , , , , , , 1 Comment

United States v. American Society of Composers, Authors and Publishers; in re RealNetworks, Inc., Yahoo!, Inc.,

Posted on November 7, 2011 by Jesse Koehler under The Bolt

Overview

The Supreme Court’s recent declination to hear an appeal from the American Society of Composers, Authors and Publishers (“ASCAP”) regarding the Second Circuit’s decision in United States v. American Society of Composers, Authors and Publishers, 627 F.3d 64 (2d Cir. 2010), has provided the digital music industry with a steadfast digital adaption to the definition of what constitutes a “public performance” — a definition within which song downloads to do not fall. Moreover, the Second Circuit’s decision, untouched by the Supreme Court, provides some guidance for how the district court should properly calculate the royalties that ASCAP should receive from companies that stream music from ASCAP’s musical repertory.

Licensing Music and Public Performance

ASCAP protects the rights of its over 420,000 members by controlling the licensing of the use of its members’ copyright-protected music and helping to collect and distribute the appropriate royalties for public performances of the music. Potential licensees can either license the use of specific musical works or they can negotiate a blanket license fee for the use of ASCAP’s full musical repertory, as was the situation in the instant case. Under copyright law, ASCAP and its largest competitor Broadcast Music, Inc. (“BMI”) have the exclusive right to play their members’ music publicly and to permit others to do the same.

Traditionally, a public performance of a musical work meant a performance for “a substantial number of persons outside of a normal circle of a family and its social acquaintances.” 17 U.S.C. §101. In the present age of technology, a public performance is understood to mean the transmittance or communication of a musical work “to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.” Id. Thus, the broadcast of ASCAP or BMI copyright-protected music on a television show, over the radio, or streaming online requires the broadcaster to construct a licensing agreement with the respective organization. In the instant case, ASCAP argued that digital downloads should fall within the second definition of a public performance that generally covers electronic broadcasting. Continue reading →

Tagged , , , , , Leave a comment

U.S. v. Aleynikov: Source Code as a Stolen “Good” in a Case of Interstate Economic Espionage

Posted on October 24, 2011 by Damion Jurrens under The Bolt

On March 16, 2011, the Southern District of New York denied former Goldman Sachs programmer Sergey Aleynikov’s motion to dismiss his conviction for theft of trade secrets under the Economic Espionage Act (“EEA”). The court held that the evidence was sufficient to show that Aleynikov had stolen trade secrets and transported them across state lines, and further held that the stolen source code from Goldman Sachs’ high frequency stock trading system was a “good, ware or merchandise” under the National Stolen Property Act (“NSPA”). Aleynikov’s trial was one of two recent cases involving theft of source code for high frequency trading systems, both of which were tried in New York’s Southern District under the Economic Espionage Act.

 

High Frequency Trading

High frequency trading involves the use of computerized algorithms and highly sophisticated programs to trade securities. Firms that engage in such trading hold onto positions for seconds at a time, and generally end a trading day with no net positions. Decisions are made through high-speed mathematical analysis of market data, taking advantage of trading opportunities that open up for fractions of a second. The field is technologically complex, highly competitive, and very lucrative. High frequency trading systems require significant time and resources to develop and maintain. Court documents in the Aleynikov case estimate that it would cost roughly $10 million and two years to build a high frequency trading system from scratch.

 

Aleynikov – Theft, Subversion, and Espionage

Goldman Sachs employed Sergey Aleynikov as a programmer from May of 2007 to June of 2009, when he accepted an offer from a Chicago-based startup called Teza. About two months prior to his last day at Goldman Sachs, Aleynikov began uploading proprietary data to a subversion site on a German server. He went out of his way to avoid detection, deleting his encryption key and attempting to clear his bash history. The files he stole included, in the court’s words, components “connecting to the various securities exchanges; reading the incoming price data; pricing algorithms; trading strategies; the infrastructure for routing the trading decisions back to the exchanges; and applications for monitoring the performance of all of these intricate parts of the trading system.” Continue reading →

Tagged , , , , 1 Comment

Stent Wars: Cordis Corp v. Boston Scientific Corp., Fed. Cir. (2011)

Posted on October 20, 2011 by Gary Juskowiak under The Bolt

The Stent Wars

The Court of Appeals for the Federal Circuit (“CAFC”) decision in Cordis Corp v. Boston Scientific Corp., 2011 (“Cordis”), is the latest episode in the ongoing Stent Wars, and provides an example of CAFC review of JMOL verdicts and review of the intent prong of inequitable conduct under the new standard in Therasense.

The Stent Wars involve four major players: Abbott Labs, Boston Scientific, Medtronic, and Johnson & Johnson.  These manufacturers have been engaged in bitter patent lawsuits against each other since the mid 1990s. A stent is a small tubular expanding scaffold that is inserted into a blocked artery during balloon angioplasty surgery.  The stent expands with the balloon and then prevents the artery from collapsing after the surgery is complete. However, many question the medical efficacy of stents in relation to their high cost.  The most recent development in the Stent Wars is that J&J’s stent-manufacturing subsidiary, Cordis, announced it will exit the stent market by the end of this year.

Cordis is the latest ruling in a 14 year lawsuit of Cordis Corp. (“Cordis”) against Boston Scientific Corp and Boston Scientific Scimed, Inc (“BSC”).  In Cordis, the CAFC held that, first, the BSC NIR stent did not literally infringe claim 25 of the Cordis ‘370 patent, and, second, that the Cordis U.S. Patent No. 5,879,370 (‘370) was not unenforceable due to inequitable conduct.

Continue reading →

Tagged , , , Leave a comment

Patent Trolls Under the Patent Reform Act

Posted on October 15, 2011 by Karan Dhadialla under The Bolt

On September 16th, 2011, President Obama signed the (Leahy-Smith) America Invents Act.  The official White House Press Release and countless blogs describe the Act as “the most significant reform of the Patent Act since 1952.”  One of the stated objectives of the Act is to let American companies and inventors focus on innovation and job creation rather than costly, and sometimes unnecessary, litigation.  The Act attempts to achieve this goal through several changes to the patent system, most notably including a transition from a first-to-invent to a first-to-file patent regime.

There is much debate as to whether the various components of the Act will accomplish this goal.  One way to approach this question is by examining the impact it will have on patent troll behavior.  Some conceive of patent trolling as a “tax on innovation” through the brandishing of invalid patents.  A Boston University study claims patent trolls “have cost innovators $500 billion in lost wealth from 1990 through 2010.”  Many assert that the new Act does nothing to hinder patent troll litigation; however, that remains unclear.  A deeper analysis of this question will also elucidate some of the salient features of the Act.

Continue reading →

Tagged , , , Leave a comment

In re Google Inc. Street View Electronic Communications Litigation: Radio Communications and Privacy by Convention

Posted on July 4, 2011 by Andrew Fong under The Bolt

N.D. Cal.’s Chief Judge Ware has permitted the Wiretap Act claims against Google to go ahead in the consolidated litigation over the collection of Wi-Fi data by Google’s Street View vehicles. Google attempted to argue that it could not be held liable under the Wiretap Act because the collected data was “readily accessible to the general public.” Judge Ware disagreed in a holding that could have implications for how courts understand privacy and security.

Background

Google maintains a fleet of Street View vehicles used primarily to take photographs of public roads. Google also used these vehicles to collect Wi-Fi data, most likely to map out the locations of Wi-Fi networks for use in triangulating the location of mobile devices. Google claimed it was interested only in the public SSIDs (names) of the Wi-Fi networks, but that in collecting this data, it inadvertently captured sensitive private information such as e-mails and passwords.

Several Wi-Fi network owners subsequently brought suit for violations of the Wiretap Act, as amended by the Electronic Communications Privacy Act (ECPA), and related state law claims. Google moved to dismiss on the ground that ECPA did not protect communications on a Wi-Fi network configured such that communications were “readily accessible to the general public.”

Continue reading →

Tagged , , , 2 Comments

Therasense, Inc. v. Becton, Dickinson and Co.: A Radical Change in the Legal Standard of Inequitable Conduct

Posted on June 22, 2011 by Mike Sobolev under The Bolt

Overview

On May 25, 2011, the Federal Circuit issued its en banc opinion in Therasense, Inc. v. Becton, Dickinson and Co., radically changing the legal landscape of the inequitable conduct doctrine.  In creating these new standards, the Therasense majority aimed to balance the competing goals of encouraging honesty of applicants before the United States Patent & Trademark Office (“PTO”) and setting a logistically appropriate standard for determining whether inequitable conduct occurred. The majority stressed that the “low standards for intent and materiality” set in its previous opinions coupled with the harsh consequences of inequitable conduct have resulted in “unintended consequences.” Specifically, under the old standards, “allegations of inequitable conduct are routinely brought on the slenderest grounds” and “patent prosecutors regularly bury PTO examiners with a deluge of prior art references, most of which have marginal value.” To address these concerns, the majority tightened the requirements for findings of both materiality and intent to deceive.

Changes in Legal Standard

Under the old standard, in order to invalidate a patent, the party alleging inequitable conduct had to show “clear and convincing evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information [to the PTO], and (2) intended to deceive the [PTO].” Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363-64 (Fed. Cir. 2007).

The Therasense majority first tightened the intent requirement by reaffirming previous cases stressing the need for clear and convincing evidence of specific intent to deceive. Thus, proof of negligence and gross negligence is not sufficient, and in cases of nondisclosure, the evidence must show that the “applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.”  As before, deceptive intent may inferred from indirect and circumstantial evidence. However, the specific intent to deceive must be “the single most reasonable inference able to be drawn from the evidence.” Furthermore, the patentee need not offer a good faith explanation unless the accused infringer first proves a threshold level of intent to deceive by clear and convincing evidence. Continue reading →

Tagged , 1 Comment

Lewton v. Divingnzzo: Hidden Audio Recorder in Teddy Bear Violates Federal Privacy Law

Posted on March 29, 2011 by Gary Juskowiak under The Bolt

Overview of Lewton

Parents who are concerned about their child’s well being might use hidden electronic monitoring devices such as hidden audio recording devices and nanny cams.  Unfortunately, parents who use these devices may unwittingly violate federal and state law.  In Lewton v. Divingnzzo (PDF), a mother was convicted of violating the Wiretap Act of The Electronic Communications Privacy Act (ECPA) 18 U.S.C. §§ 2510-2522 after she concealed an audio recording device in her daughter’s teddy bear (“Little Bear”) for the purpose of gathering evidence to sabotage the child custody rights of her ex-husband.  Over five months she downloaded the recorded conversations from the audio recording device to her computer, burned CDs of the conversations, and ultimately had transcripts made of the conversations.

Application of the Wiretap Act in Lewton

The Lewton Court held that the mother violated the Wiretap Act of ECPA, §§ 2511(1)(a) and (b) by “intercepting the oral communications of all plaintiffs using the device planted in Little Bear”; and §§ 2511(c) and (d) by “intentionally using and disclosing the plaintiffs’ oral communications in conjunction with the state court Custody Case.”  An “oral communication” under the Wiretap Act is “any oral communication uttered by a person exhibiting an expectation that such communication is not subject to interception under circumstances justifying such expectations…” § 2510(2).  The Court found that the Plaintiffs had a justified expectation that their conversations were not being intercepted.

Continue reading →

Tagged , 1 Comment

Centocor v. Abbott Labs: Enforcing the Written Description Requirement in the Unpredictable Arts

Posted on March 29, 2011 by Jessica Martinez under The Bolt

In the recent Centocor Ortho Biotech, Inc. v. Abbott Laboratories (PDF), the Federal Circuit found that Defendant Abbott was not liable for patent infringement, on the basis of written description insufficiency. The Federal Circuit emphasized the patent statute’s requirement that an application must contain not only claims that define the invention, but also a written description that sufficiently discloses and conveys “possession” of the claimed invention.

About Centocor v. Abbott

The patent at issue concerns a human antibody that binds to the protein tumor necrosis factor-alpha (TNF-alpha). Overproduction of TNF-alpha has been implicated in a number of auto-immune diseases, including Alzheimer’s Disease and arthritis. The antibody, which both Centocor and Abbott claim, binds to TNF-alpha in order to regulate overproduction and reduce incidence of such auto-immune diseases. Although Centocor and Abbott have patents that claim a form of the TNF-alpha antibody, the two parties took different approaches and this resulted in antibodies with a similar “constant” region, but different “variable” regions. Centocor started by identifying a mouse form of the antibody and then modified it to create a “chimeric” protein (contains a human constant region and a mouse variable region). In contrast, Abbott pursued a fully human form, containing both a human constant region and a human variable region, from the beginning of its research.

Continue reading →

Tagged , , Leave a comment