Patent Litigation Weekly: Juniper’s Novel Defense Tactic Attracts Unlikely Allies

Peter Shipley is a Bay Area hacker and patent-holder who sues technology companies under the corporate name Enhanced Security Research, LLC. In 2007, ESR sued Juniper Networks in district court in California for patent infringement. Juniper struck back in February with a novel false-marking lawsuit, which The Prior Art reported on in June.

Juniper's argument, readers may recall, is that every time a browser loads Shipley's web page, an “offense” is committed because his mention of two patents he holds, Nos. 6,119,236 and 6,304,975, constitutes false marking. False marking occurs when a product is marked with the number of a patent that doesn't really cover it.

Shipley's attorneys at Townsend and Townsend and Crew and Robins, Kaplan, Miller & Ciresi argue that their client is simply posting his patent numbers as part of an online resume, not as a way of trying to sell or market a product. For that reason, they say, he can’t be accused of false marking.

Juniper’s line of attack against Shipley has now attracted an ally: the Public Patent Foundation, which has asked for permission to file an amicus brief on Juniper’s behalf.

PubPat's bid to jump into the case coincides with its ambitious plans for a false-marking litigation campaign, assisted by David Garrod, public interest lawyer by day and patent enforcer by night. (Garrod owns a patent and has sent East Texas love letters to a large chunk of the Internet, and two smaller companies. Garrod and PubPat founder Dan Ravicher are co-authors on the brief.)

PubPat’s amicus brief, which has not yet been accepted by the judge, emphasizes that Juniper’s "page view = offense" argument shouldn't be dismissed as a simple attempt to win extortionate damages. The $500-per-offense penalty allowed by the false-marking statute, Garrod explained in an interview, is a maximum figure, and that a court could assign damages at a much lower level.

"The court doesn’t have to, and should not, adopt an unconstructive interpretation of something like [what constitutes] 'offenses,’” Garrod says. “The court could say, fine, you get a millionth of a cent for every offense. Why not let that be the means [of limiting damages], rather than adopt a statutory interpretation which has the effect of taking the teeth out of any future action against an egregious mismarker?"

In its brief [PDF], PubPat argues, as it has previously in this space, that false marking is bad for competition and the public interest, and should be prosecuted.

Shipley's lawyers aren’t anxious to see PubPat's brief entered into the record. They write that the foundation "is not an impartial 'friend of the court' but rather is itself a plaintiff in three recently-filed false marking cases.” Beyond that, the lawyers write, PubPat, like Juniper, seeks "windfall damages based on a skewed interpretation of 35 U.S.C. § 292 that has been rejected by every Court that has ever addressed the issue.”

As for Juniper’s false-marking claim, Shipley's lawyers portray it as a tactic aimed at gaining leverage in the patent infringement suit by driving up the cost of that litigation. Their brief indicates that a Shipley lawyer heard Scott Coonan, Juniper's director of IP litigation, discuss the maneuver in a June 17 online seminar. (Disclosure: That seminar was organized by Incisive Media, the parent company of IP Law & Business.) According to the brief, Coonan said:

“The only cases in which we are actually plaintiffs are cases that were filed to gain leverage against parties. You want to exert pressure, especially if you’re dealing with a plaintiff who is paying, who has his, its firm on a contingency basis. ... You want to try to drive those costs up as much as possible. ... We do have an issue with one party that we are adverse to in one matter ... where ...  we filed a patent mis-marking claim. You need to be creative. Your lawyers need to be creative and they need to be looking for opportunities that both keep the opponent off balance and also drive up their costs.”

Shipley Reply Brief, [PDF]

(In the interest of even fuller disclosure: TPA was involved in the seminar, but is absolutely not responsible for participants being quoted in litigation briefs.) 

Contacted by TPA, Coonan said this about the false marking suit: "I think it's important to note who the original aggressor in this case was. Mr. Shipley chose, through ESR, to sue Juniper. It's really not relevant what our litigation strategy is, other than to say that we defend cases vigorously that we believe have no merit, and we assert causes of action that we believe have merit." When patent lawsuits are filed against Juniper "simply for shakedown purposes, we don't pay those claims," says Coonan. "In this case, we conducted a full analysis, and we don't believe we need a license."

Another welcome development for Juniper: the U.S. government may weigh in on the case, if Shipley's defense is seen as challenging the false marking statute on constitutional grounds. On August 5, the U.S. attorney's office for Northern California filed a brief informing the court that the federal government may seek to intervene in the matter, as it previously did in the Stauffer v. Brooks Brothers false marking action in New York. In that case, government lawyers argued that the judge shouldn't have thrown out the suit just because Stauffer suffered no damages personally. They have asked for 60 days to decide whether a similar argument should be put on the record in the Shipley suit.

In additional papers filed this month [PDF], Juniper's lawyers at Irell & Manella seem to welcome PubPat and the government into their camp. The lawyers argue that even when false marking doesn't cause any "proprietary injury,” it still has a negative effect on the United States, "which suffers injury to its sovereignty arising from violation of its laws." It’s an argument that mirrors one offered by the feds in the Stauffer v. Brooks Brothers case. 

Meanwhile, Juniper continues an aggressive multi-front defense against ESR’s infringement claim. The company has filed reexam petitions on both patents at the PTO, has initiated arbitration proceedings in California against Shipley personally, and has asked Judge John Ward to stay the E.D. Tex lawsuit until the other matters wrap up. The basis of the arbitration is Juniper’s contention that Shipley is prohibited from suing the company because of an agreement he signed that released his former employer, OneSecure, from all patent claims. OneSecure ultimately would up as a Juniper subsidiary thanks to a pair of mergers, which is why Juniper now says it is insulated against any suits filed by Shipley.

Juniper has also moved to transfer the case, and to dismiss for lack of standing. Those motions are both sealed in their entirety. ESR, which is represented solely by Robins, Kaplan in the infringement case, opposes all the motions. Judge Ward has yet to rule.

 Photo: flickr / Roadsidepictures

 

Comments

[IDBIIP]

When talking about hackers and such, using ESR as shorthand for that company can be confusing.

I keep trying to read it as "Eric S Raymond" rather than "Enhanced Security Research, LLC." even though I know you're talking about a company, not a person.

[Jackie Hutter]

Thanks for the very detailed explanation of this complicated fact pattern. The measured description does nothing to make me feel that the parties are acting like spoiled children, however. At first review, this seems like attorneys run amok--on both sides. They are playing litigation games that will invariably make for bad law that will negatively effect the patenting community. Someone needs to sit these people down and say "snap out of it." (Maybe this would be a good job for Juniper's shareholders?)

I care nothing about how much money is being wasted by the sides--that is their perogative and the lawyers are clearly getting rich on this case. What I do care about is that these types of irrational suits make it difficult for patent counselors to provide solid risk assessments to their clients. One cannot measure risk if there is an irrational litigation environment.

As for the false marking issue--it is a statute that people need to pay attention to. Congress put it there for a reason. Unfortunately, those who have brought the suits lately appear to be "bottom feeders" to the judges who don't want to give them a payday. As a result, the cases have been thrown out for lack of standing. As someone who has counseled clients to mark their products many times over the years, I understand that at most companies it is almost impossible to get that message to make it from the legal department to the far flung plants where the product is made. False marking is probably never intentional, but instead is a function of corporate organizational inefficiency and inattention. A couple of lawsuits where a company has to pay for false marking or doesn't get damages because it failed to mark, would be a good result to make it clear to companies that marking is something they need to pay attention to as an organization. But I wish the facts of these suits to date were not that a lawyer wanting a payday.