This month, the U.S. Supreme Court issued two decisions that will impact many patent owners and litigants. First, the Court lowered the standard for patent owners to obtain treble damages when their patents are willfully infringed. Then, the Court confirmed the relatively easy standard that is applied in administrative proceedings to invalidate patents, as opposed to the more stringent standard of litigation, and held that such administrative rulings are essential non-appealable. Continue reading
Practical Implications of the New U.S. Trade Secret Act
Last week President Obama signed into law the Defend Trade Secrets Act (“DTSA”) of 2016, creating the first-ever U.S. federal law providing civil remedies for misappropriation of trade secrets. The law became effective immediately, with serious implications for domestic and foreign companies selling goods or services in the United States.
In the U.S., trade secret theft was already prohibited by civil laws in every state and by federal criminal law in the Economic Espionage Act (“EEA”) of 1996. However, proponents of the DTSA had argued a federal law was needed to bring greater uniformity to civil trade secret actions and provide new tools to combat the growing threat posed by the theft of trade secrets. Continue reading
Why Bother with Corporate Compliance?
Last month, Dutch telecom company, VimpelCom Limited, agreed to pay $795 million in penalties to U.S. and Dutch authorities for bribing government officials in Uzbekistan, in violation of the U.S. Foreign Corrupt Practices Act (“FCPA”) and Dutch law. VimpelCom’s CEO is facing criminal charges, government forfeiture actions were launched to recover hundreds of millions of dollars, and an independent monitor was appointed to supervise the company for at least three years.
While that case sounds egregious, massive penalties for corporate bribery are common. In recent years, Siemens AG was fined $800 million in the U.S. and $800 million in Germany for paying bribes in Argentina; Alston SA was fined $774 million for bribery in several countries; a Chinese court fined GlaxoSmithKline $500 million for bribing doctors in China; BAE settled bribery charges for $400 million; Alcoa for $380 million and Hewlett-Packard for $108 million. Continue reading
U.S. Patent Liability Based on Foreign Manufacturing or Sales
Can a Taiwan company be held liable for damages under the U.S. Patent Act based on goods it manufactured in China and delivered in Hong Kong, even if it never imports anything to or sells anything in the U.S.?
Yes, despite the fundamental principle that patents are enforceable only within the countries where they are granted, there are circumstances in which U.S. law authorizes liability, either as a direct or indirect infringer, for what appears to be foreign conduct. While proper evaluation of any legal scenario requires consultation with a qualified attorney, this article will briefly summarize a few basic points concerning the extraterritorial reach of U.S. patent law. Continue reading
How to Dispose of Patent Demands without Licensing, Litigation or Outside Counsel
The Wall Street Journal generated controversy last week when it published an article titled, “The Best Way to Fight a Patent Demand May be to Do Nothing.” The author surveyed 223 tech startups and found more than one-fifth resolved patent demands not by fighting or settling, but by “doing nothing.” She explained that patent owners often lack the resources or desire to litigate and suggested “doing nothing” might be a rational, cost-saving response.
Readers pounced, accusing the author of advocating reckless strategy and immoral disregard for the rights of inventors, but apparently most missed the point. Admittedly, the author expressed her point poorly, because she didn’t mean to suggest actually doing nothing. Instead, she explained that “doing nothing” means “looking at the claim, determining a license isn’t needed – and then filing the letter away rather than responding.”
I would go a step further. As former Legal Director at a $7 billion tech manufacturer, I received over 100 licensing demands and disposed of almost all without licensing, litigation or outside counsel, so I agree with the general sentiment. Most licensing demands can be evaluated and disposed of at no cost. However, the evaluation should be far less cursory than the above article suggests and one should almost always respond to the demand. Below is a rough outline of the types of matters that should be considered. Continue reading
Best Practices for Non-Disclosure Agreements
It is widely accepted that the value of most companies today lies primarily in their confidential business and technical information and other intangible assets and when such assets are stolen it is almost always by employees and business partners, not unknown third parties. Yet, many companies continue to make minimal efforts to protect such assets through proper non-disclosure agreements (“NDAs”), disclosing secrets without requiring a signed NDA, relying on the same poorly-drafted NDA in all cases, or failing to follow through to ensure agreements are properly signed and filed.
Admittedly, NDAs can’t provide perfect protection. Litigation is costly, burdensome and uncertain, and companies often prefer to remain silent about embarrassing leaks of trade secrets. Consequently, the first line of defense should always be sound security precautions, such as locked doors, limited access, logbooks, security cameras, encryption, monitoring, and the like. However, in the event of a leak, the company that regularly requires signed, well-drafted NDAs is far more likely to achieve a favorable outcome than one that does not.
Wearable-device maker, Jawbone, learned that last month when the San Francisco Superior Court granted its request for an injunction against several former employees accused of loading thousands of confidential files onto thumb drives and e-mailing them to personal e-mails, before quitting their employment and going to work for Fitbit, Jawbone’s competitor. The court found the employees breached the confidentiality provisions in their employment contracts and ordered them to return all of the files. So far at least 18,000 files have been returned. The case is typical and is probably far from over, but certainly Jawbone is far better off due to the contractual obligations it imposed on its employers.
To ensure good results like that, below are some best practices to keep in mind when drafting NDAs. Continue reading
How I Dragged a $5.4 Million Patent Suit out of U.S. District Court and into Taiwan
The first time I testified in court in Taiwan, I spoke English and the judge translated simultaneously for the attorneys and clerks. After fifteen years here, I speak enough Chinese to direct taxi drivers, but not enough to discuss complex licensing negotiations. Fortunately, our judge earned her law degree in the U.S., is fluent in English and was kind enough to help out.
The second time was different. The judge gave no indication that he spoke English, so the opposing witness and I each brought an interpreter. My interpreter regularly handles Taiwan legal proceedings and rode the subway twenty minutes to get to the hearing, as did I, while our adversary flew a lawyer, translator and witness from London, with the corresponding costs of airfare, hotel, meals and time.
Of course, that was why we sued them in Taiwan. Well, that and the fact that our adversary would be forced to try the case in Chinese, struggling with jet lag, unfamiliar procedures and potential bias, while my client would be comfortably on home turf, using native language, avoiding the hassles and costs of U.S. litigation. But I suppose I should start at the beginning. Continue reading
Best Practices for Taking Depositions in Asia
Global commerce often leads to litigation and the need to obtain evidence from foreign parties and witnesses. However, in most Asian (and other civil law) countries, discovery is conducted by judges, not attorneys, depositions and other formal discovery procedures do not exist, and attempts by foreign litigants to gather evidence contrary to local laws may be seen as violations of national sovereignty, for which criminal sanctions may be assessed.
Fortunately, lawful methods exist for U.S. litigants to depose parties and non-parties in most countries. Primarily, the Federal Rules of Civil Procedure (“FRCP”) and corresponding state laws authorize the taking of foreign depositions pursuant to (a) treaty or convention, (b) letters of request or letters rogatory, (c) deposition notice, or (d) before a consular officer; and the Hague Convention on Taking of Evidence Abroad authorizes depositions before a consular officer or pursuant to letters rogatory.
However, each of those options has flaws. Singapore and South Korea are parties to the Hague Convention, but Japan, Taiwan, Thailand, Malaysia and the Philippines are not. China is a party to the Convention, but strictly prohibits depositions. The letters rogatory process takes many months and results in not a real deposition, but only the submission of written questions for a judge to convey to the deponent. A deposition notice is useless against a non-party witness who refuses to comply. And taking depositions before a consular officer is troublesome, as reservations must be made long in advance and one cannot bring cell-phones and laptops into embassies or consular offices.
In short, plenty of depositions take place in Asia, but there are myriad legal and practical complications, so it is critical that U.S. counsel plan well in advance, informing the presiding judge of the plans, consulting with foreign counsel, and carefully observing best practices concerning the following matters, to ensure that the process will succeed and testimony will be admissible in court. Continue reading
Managing Outside Counsel for Best Results and Lowest Cost
As Legal Director at a multi-billion dollar tech company, I spent several years retaining and managing outside counsel to assist with global litigation, transactions and other matters, striving to satisfy the seemingly insatiable demands of upper-management. Cost-reduction was our corporate mantra, with every matter closely scrutinized and every fee seen as too high.
While I was fortunate to work with many outstanding attorneys from around the world, I found that counsel often excel in a particular area of expertise, but fail to look after the best interests of their client. Sound management of counsel is therefore critical. Below are ten lessons that I learned. Continue reading
Forbes Interview on Price-Fixing and Collusion in Taiwan
Recently, I was honored to be interviewed by Forbes Magazine concerning illegal price-fixing and collusion in Taiwan. In case you missed it, here’s the full interview: Continue reading