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Conflicts, Splash Zones and a 'Wild Ride': A Look Back on the Quirkiest Patent Battles of 2016

It was a big year for patent law. It was also a big year for weird patent law.

Balloon Bonanza advertisement. (Credit: YouTube)

2016 was a big year for patent law. Five patent cases were argued at the U.S. Supreme Court. Gilead Sciences Inc. got hit with a $200 million infringement verdict in March, and though it was quickly overturned, the figure turned out to be small potatoes compared to the $2.5 billion verdict Gilead sustained just this month.

But instead of focusing on the biggest cases, we hereby present five of the quirkiest patent cases that crossed the U.S. Court of Appeals for the Federal Circuit’s docket this year.

1. Good morning your honors, you have a conflict. Lawyers for Microsoft Corp. and Impulse Technology Ltd. spotted a problem when they arrived at the Federal Circuit for argument Nov. 4: Judge Kimberly Moore was seated on their panel. Moore routinely recuses herself from cases in which her husband’s law firm, Latham & Watkins, represents one of the parties. But in this case Latham lawyers had appeared for Microsoft at the trial court level only, and the conflict slipped through the cracks.

After counsel notified the court, Moore stepped aside and Judges Pauline Newman and Alan Lourie heard the case on their own. “Our appreciation and thanks to counsel for bringing this conflict to our attention now, rather than later,” Newman said.

2. May it please the court, duck if you want to stay dry! The Federal Circuit routinely hears patent disputes about cutting-edge electronics, miraculous medical devices and life-saving medicines. On Nov. 2, Boies, Schiller & Flexner partner David Underhill strode into the Federal Circuit seeking to invalidate a patent on … water balloons.

Underhill argued that the patent on a pipe that can accommodate multiple balloons until each is “substantially filled with water” was invalid for indefiniteness. Therefore, the Federal Circuit should unwind an injunction that could block Telebrands and Bed, Bath & Beyond from marketing their “Balloon Bonanza” product.

Underhill’s opponent, Thomas Dunlap of Dunlap Bennett & Ludwig, came armed with demonstratives of his client’s infringed Bunch O Balloons product. “Did you bring three? Because, I mean, don’t make us fight over them,” Moore joked, adding, “I get the orange one.” Dunlap argued that he didn’t need an engineer who’s skilled in the art. “My 9-year-old son knows when these balloons are substantially filled.”

3. Here’s our appeal, please dismiss it. For a brief time in 2015, Apple Inc. had been facing the possibility of a $533 million patent infringement verdict over its iTunes process for managing digital payments. But with some encouragement from the Federal Circuit, U.S. District Judge Rodney Gilstrap in Texas set aside the damages award before Apple appealed liability.

That process made Apple uncomfortable, because Smartflash LLC’s motion for an injunction also remained pending. “This appeal should be dismissed for lack of appellate jurisdiction,” Gibson, Dunn & Crutcher partner Mark Perry wrote in Apple’s own opening brief on appeal, before then making the case that Smartflash’s patents are invalid.

The Federal Circuit dismissed Apple’s appeal, ordered Gilstrap to dismiss all nondamages relief, and permitted Apple to take a new appeal based on its existing briefs. A decision is expected next year.

4. Here’s another appeal, please dismiss it. Acacia Research Corp. suffered a black eye in 2014 when a Texas judge disqualified all of its in-house counsel from suing oil-services company Schlumberger Ltd. The reason was that Acacia had created a conflict of interest by hiring Schlumberger’s intellectual property chief as it ramped up the litigation.

Acacia promptly appealed to the Federal Circuit. Then it seemed to get a case of cold feet. Acacia cautioned it would have a conflict with oral argument during parts of February, March, April, May, June and July of this year. After the Federal Circuit picked July 5—one of the days Acacia had not blacked out—Acacia moved for postponement because its appellate attorney was planning to celebrate his father’s birthday in Texas the previous day.

The Federal Circuit rescheduled for August, but this time Acacia moved to dismiss the appeal, saying the case had settled. Schlumberger said there was no settlement, forcing Acacia to proceed with its own appeal. The Federal Circuit ruled against Acacia.

5. And our hands-down winner for the most quirky case of 2016. Everybody’s familiar with Apple v. Samsung, the trial that resulted in a $930 million verdict for Apple Inc. in 2012 but since has been getting chipped away by Federal Circuit and U.S. Supreme Court decisions. Apple also won $119 million in a subsequent trial against Samsung Electronics Co. over different smartphone patents.

A three-judge Federal Circuit panel threw out that second verdict in February, saying one of the patents wasn’t infringed and the other two were obvious. Then the case fell off the radar for awhile until—four days before the Supreme Court heard arguments in the first Apple-Samsung case—the Federal Circuit suddenly, without full briefing or argument, announced that it was reinstating the $119 million verdict by an 8-3 vote.

Moore wrote an en banc opinion saying the three-judge panel had improperly considered arguments and material that were outside the court record. Dissenting Judge Jimmie Reyna said the court simply didn’t like the result the panel had reached. Dissenting Judge Timothy Dyk was more cryptic. Extra-record evidence “could hardly be the reason the majority has granted en banc review,” he wrote, because the three-judge panel had offered to eliminate it from its opinion.

The timing of the decision and absence of briefing fanned the flames of conspiracy theories: Was the court sending some kind of message to the Supreme Court ahead of its hearing? Did the court skip briefing to prevent Samsung from recusing unwanted judges? Were some of the judges from the en banc majority trying to settle accounts with colleagues or weaken Chief Judge Sharon Prost?

Wilmer Cutler Pickering Hale and Dorr partner William Lee, who has what for now is the winning argument, compared the twists and turns in the case to the Disneyland adventure Mr. Toad’s Wild Ride. The case could be headed for one last trip to Toad Hall if Samsung petitions for Supreme Court review next year.

Contact the reporter at sgraham@alm.com.

Contributing Author

Scott Graham

Scott Graham is a journalist who writes for The Recorder and The National Law Journal.

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