`
`
`EXHIBIT 1017
`
`EXHIBIT 1017
`
`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 1
`
`Only the Westlaw citation is currently available.
`
`United States District Court,
`E.D. Texas,
`Marshall Division.
`VISTO CORPORATION
`v.
`SEVEN NETWORKS, INC.
`
`No. 2:03-CV-333-TJW.
`Dec. 19, 2006.
`
`Samuel Franklin Baxter, Attorney at Law, Mar-
`shall, TX, Gary Scott Kitchen, Theodore Stevenson,
`III, Kristi Jean Thomas, McKool Smith, Dallas, TX,
`Greg Travis Warder, Imran A. Khaliq, James Bruce
`McCubbrey, Michelle Gillette, Robert D. Becker,
`Ronald S. Katz, Shawn G. Hansen, Manatt Phelps
`& Phillips LLP, Palo Alto, CA, for Visto Corpora-
`tion.
`
`Henry Charles Bunsow, David L. Bilsker, Howrey
`Simon Arnold & White, Chris Kao, Kirkland & El-
`lis, Dean A. Morehous, Jr., Thelen Reid & Priest,
`Korula T. Cherian, Howrey LLP, Thomas C. Mav-
`rakakis, Winston & Strawn, San Francisco, CA,
`Sidney Calvin Capshaw, III, Elizabeth L. Derieux,
`Brown McCarroll, Longview, TX, Ahmed Kasem,
`Robert E. Camors, Jr., Robert E. Krebs, Thelen Re-
`id & Priest LLP, San Jose, CA, Andrew Y. Piatni-
`cia, James Charles Pistorino, Jason T. Anderson,
`Howrey LLP, East Palo Alto, CA, Christopher L.
`Kelley, Daniel T. Shvodian, James F. Valentine,
`Louis L. Campbell, Matthew E. Hocker, Howrey
`Simon Arnold & White, Menlo Park, CA, for Seven
`Networks, Inc.
`
`MEMORANDUM OPINION AND ORDER
`T. JOHN WARD, United States District Judge.
`1. Introduction.
`*1 Several post-trial motions are pending in
`this patent infringement case. For the reasons ex-
`pressed in this opinion, the court grants in part and
`
`denies in part Seven's renewed motion for judgment
`as a matter of law. In light of the finding of willful
`infringement, the court declares the case exception-
`al and awards enhanced damages. The court denies
`the motion for a new trial, rejects the allegations of
`inequitable conduct, and issues a permanent injunc-
`tion in favor of the plaintiff in this case. The court
`further finds that Visto's attorneys violated the Pro-
`tective Order in this case and then attempted to
`conceal
`those violations. Under
`these circum-
`stances, the court stays the injunction pending ap-
`peal.
`
`2. Background.
`The parties to this case are competitors in the
`mobile email market. After a hotly contested trial, a
`jury found Seven liable for willful patent infringe-
`ment of three United States patents related to data
`synchronization methods and systems. The jury
`awarded damages and rejected all of the defendant's
`claims of patent
`invalidity. Thereafter,
`the court
`conducted a bench trial on the allegations of in-
`equitable conduct, and the case is now before the
`court on post-trial motions. Each of these motions
`is discussed below.
`
`3. Seven's renewed motion for judgment as a
`matter of law/motion for new trial.
`After the verdict, Seven filed a renewed motion
`for judgment as a matter of law and a motion for
`new trial. That motion (# 385) is granted in part and
`denied in part. The court grants the motion insofar
`as it is related to claim 11 of the '192 patent. There
`is insufficient evidence to support a verdict that the
`accused
`products
`satisfy
`the
`limitation
`of
`“comprising one of an HTTP port and an SSL
`port.” In a supplemental claim construction order,
`the court construed the term “HTTP port and SSL
`port” to mean “any port that is used to transfer in-
`formation or communicate using Hyper Text Trans-
`fer Protocol (HTTP) and any port that is used to
`transfer information or communicate using Secure
`Sockets Layer (SSL) protocol .” See Order Dkt. #
`340. Despite Visto's arguments to the contrary, the
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 2
`
`evidence in this case is undisputed that the accused
`products do not use the HTTP or SSL protocols. In
`the words of Visto's expert,
`the term protocol
`means “the exact formatting, the syntax, and the se-
`mantics of the connection that's being made.” (Tr.
`Transcript April 25, 2006, at 29:14-30:3.). Visto's
`expert conceded that the accused products use Sev-
`en's own protocol, rather than HTTP or SSL. Claim
`11 requires a port that is used to transfer informa-
`tion or communicate using specific protocols.
`Viewing the evidence in the light most favorable to
`the jury's verdict, Visto has not met its burden to
`demonstrate infringement of claim 11 of the '192
`patent. Seven's motion for judgment as a matter of
`law on this point is granted.
`
`The court denies the balance of the motion for
`judgment as a matter of law. Under the court's
`claim construction, sufficient evidence exists to
`support the jury's finding of infringement of the
`“independently modifiable copy” limitation. The
`jury could have rationally found, given Visto's ex-
`pert's testimony, that a copy existed and only the
`format had changed. Testimony elicited on cross-
`examination from Seven's expert also supports the
`jury's verdict. In addition, ample evidence supports
`the jury's determination that the accused products
`contain workspace elements and use a global server
`under the court's claim constructions of those terms.
`The court accordingly rejects the defendant's re-
`maining arguments concerning non-infringement of
`the asserted claims.
`
`*2 Seven also moves for judgment as a matter
`of law that the patents are invalid. These arguments
`are centered on Lotus Notes. Seven has not shown
`that judgment as a matter of law is appropriate. The
`patents-in-suit are presumed valid, and Seven bore
`the burden of proof at trial to demonstrate anticipa-
`tion by clear and convincing evidence. To over-
`come the jury's verdict, Seven must establish that
`no reasonable jury could have failed to find invalid-
`ity. FED. R. CIV. P. 50. The court agrees with
`Visto that the jury could have failed to credit the
`fact and expert testimony concerning the capabilit-
`
`ies of Lotus Notes and the installations of that soft-
`ware. Moreover, the record includes conflicting ex-
`pert testimony concerning whether Lotus Notes met
`the translation limitation of the '708 patent,
`the
`global server limitation of the '221 patent, and, at a
`minimum, the smart phone limitation of the '192
`patent. The court resolves these conflicts in favor of
`the verdict and denies Seven's motion for judgment
`as a matter of law on these points.
`
`additional
`several
`Seven's motion asserts
`grounds for judgment as a matter of law and/or new
`trial. The court rejects all of these arguments. As to
`damages, the jury was properly instructed as to the
`Georgia-Pacific factors, and it had expert testimony
`from which it could have concluded that a very
`high royalty rate was appropriate in this case. On
`the question of willfulness, contrary to Seven's pre-
`trial stipulation, Mr. Nguyen testified that Seven
`did seek an opinion of counsel and was relying on it
`in this case. The court remains persuaded that the
`rulings it made at trial on this point were proper. A
`new trial and/or judgment as a matter of law is not
`required because of counsel's argument or any un-
`fair prejudice flowing from this testimony. The jury
`had sufficient evidence from which it could have
`found willful infringement.
`
`Finally, Seven filed two supplemental motions
`for judgment as a matter of law or new trial. These
`motions focus on the reexamination proceedings in-
`volving the patents-in-suit. The court has carefully
`reviewed these motions and denies Seven's renewed
`motion for judgment as a matter of law or, in the al-
`ternative, supplemental motion for new trial (#
`411). The court also denies Seven's second renewed
`motion for judgment as a matter of law, and for oth-
`er relief (# 418). The court is not persuaded that the
`USPTO's grant of a second reexamination for the
`'192 patent to consider the collective set of Lotus
`Notes references entitles Seven to judgment as a
`matter of law or a new trial. Likewise, the court is
`not persuaded that the USPTO's grant of a reexam-
`ination of the '221 patent entitles Seven to judgment
`as a matter of law or a new trial.
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 3
`
`4. Inequitable conduct.
`The court now turns to the question of inequit-
`able conduct. Seven contends that
`the inventors
`and/or the prosecuting attorneys failed to disclose
`material information concerning Lotus Notes to the
`USPTO. Inequitable conduct requires a breach of
`the duty of candor that is both material and commit-
`ted with an intent to deceive the USPTO. Li Second
`Family Ltd. P'ship v. Toshiba Corp., 231 F.3d
`1373, 1378 (Fed.Cir.2000). Breach of the duty of
`candor may include submission of false material in-
`formation or failure to disclose material informa-
`tion. Kingsdown Med. Consultants, Ltd. v. Hollister
`Inc., 863 F.2d 867, 872 (Fed.Cir.1988). As a gener-
`al rule, however, there is no duty to conduct a prior
`art search, and thus there is no duty to disclose art
`of which an applicant could have been aware. Fra-
`zier v. Roessel Cine Photo Tech, Inc., 417 F.3d
`1230, 1238 (Fed.Cir.2005); FMC Corp. v. Hennessy
`Indus., Inc., 836 F.2d 521, 526 n. 6 (Fed.Cir.1987).
`
`*3 The court rejects Seven's defense of inequit-
`able conduct. The court has considered the argu-
`ments made by Seven concerning whether the in-
`ventors committed inequitable conduct in the pro-
`secution of the original applications. Seven's argu-
`ment is essentially that the inventors should have
`been aware of potentially invalidating applications
`of Lotus Notes and should have disclosed those ap-
`plications to the USPTO at the time of the original
`prosecution. Seven has not persuaded the court that
`Visto's inventors knew about the materiality of the
`prior art or withheld any art with the intent to de-
`ceive the USPTO. A finding of inequitable conduct
`is not warranted.
`
`The court has also considered the arguments
`made with respect to the prosecution of the reexam-
`ination proceedings. Seven has not shown by clear
`and convincing evidence that the prosecuting attor-
`neys intended to deceive the USPTO during the
`reexamination proceedings. The primary references
`at issue are the Grous and Brown references. Grous
`is a magazine article that
`illustrates InterNotes.
`Brown is a reference manual that touts itself as the
`
`Official Guide to Lotus Notes. It is not disputed,
`however, that the USPTO was apprised of Lotus
`Notes during the reexamination and that Visto actu-
`ally disclosed a large number of materials published
`by Lotus Corporation to the USPTO. After consid-
`ering all of the evidence, and given the timing of
`the conclusion of the reexamination proceedings,
`the court cannot find, by clear and convincing evid-
`ence, that Visto's attorneys intended to deceive the
`USPTO by failing to disclose Grous or Brown, or
`any of the other cited pieces of art. The court ac-
`cordingly rejects Seven's defense of inequitable
`conduct. Visto's motion to strike the supplemental
`report of Dr. Goldberg and portions of the pre-
`hearing brief (# 423) is denied.
`
`5. Visto's motion for entry of judgment on the
`jury verdict and for enhanced damages.
`The court grants Visto's motion for entry of
`judgment on the jury verdict and for enhanced dam-
`ages (# 394). In light of the finding of willful in-
`fringement, the court declares the case exceptional
`and will enhance damages and award attorneys'
`fees. SRI Int'l., Inc. v. Advanced Technology Labs,
`Inc., 127 F.3d 1452, 1468 (Fed.Cir.1997). The
`court awards double damages and, in doing so, has
`considered the factors set forth in Read Corp. v.
`Portec, Inc., 970 F.2d 816 (Fed.Cir.1992). These
`factors include (1) whether there is evidence of
`copying; (2) whether there was a good-faith belief
`of non-infringement; (3) litigation behavior; (4) the
`defendant's size and financial condition; (5) the
`closeness of the case; (6) the duration of the mis-
`conduct; (7) the existence of remedial action; (8)
`the defendant's motivation; and (9) whether the de-
`fendant concealed its conduct. Id. at 827-28. Al-
`though the parties are competitors and the defend-
`ant had a motivation to succeed in the market at the
`expense of the plaintiff, the issues in this case were
`close and there is some evidence to support the de-
`fendant's belief of non-infringement. The asserted
`claims of the '192 patent did not even exist until
`shortly before trial, and the defendant's invalidity
`defense asserted against the other two patents was
`strong. The strength of this defense was confirmed
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 4
`
`by Visto's own expert, Mr. Beckhardt, who gave
`very damaging testimony concerning anticipation
`by Lotus Notes. In all, under the totality of the cir-
`cumstances, the court concludes that an enhance-
`ment of double damages is appropriate.
`
`6. Visto's motion for permanent injunction.
`*4 The court grants Visto's motion for perman-
`ent injunction (# 379). In eBay v. MercExchange,
`the Supreme Court held that the traditional four-
`factor test for permanent injunctive relief applies to
`patent cases. eBay Inc. v. MercExchange, LLC, 547
`U.S. 388, 126 S.Ct. 1837, 1839, 164 L.Ed.2d 641
`(2006). The Court recited the test as follows:
`
`According to well-established principles of
`equity, a plaintiff seeking a permanent injunction
`must satisfy a four-factor test before a court may
`grant such relief. A plaintiff must demonstrate:
`(1) that it has suffered an irreparable injury; (2)
`that remedies available at law, such as monetary
`damages, are inadequate to compensate for that
`injury; (3) that, considering the balance of hard-
`ships between the plaintiff and defendant, a rem-
`edy in equity is warranted; and (4) that the public
`interest would not be disserved by a permanent
`injunction.
`
`Id. Bearing these factors in mind, the court now
`turns to the facts of this case to assess the propriety
`of permanent injunctive relief.
`
`A. Irreparable injury.
`Visto has demonstrated irreparable injury. The
`parties to this case are direct competitors, and this
`fact weighs heavily in the court's analysis. Intellec-
`tual property enjoys its highest value when it is as-
`serted against a direct competitor in the plaintiff's
`market. In Tivo v. EchoStar Communications Corp.,
`446 F.Supp.2d 664, 669 (E.D.Tex.2006), Judge
`Folsom found irreparable harm because “[t]he
`availability of the infringing products leads to loss
`of market share for Plaintiff's products.” Seven's ar-
`guments to the contrary, focusing on the large mar-
`ket share of Research in Motion, are not persuasive.
`The court finds that Visto will suffer irreparable in-
`
`jury absent an injunction.
`
`B. Inadequacy of legal remedies.
`Visto has also demonstrated the inadequacy of
`legal remedies. It is true that the jury awarded a
`large damages verdict. Those damages, however,
`are designed to compensate Visto fairly and reason-
`ably for its past injury. Under the jury's verdict,
`Seven is willfully using its competitor's intellectual
`property and a threat of continued infringement ex-
`ists under this record. Although future damages
`may compensate Visto for an approximate loss, that
`does not make them adequate in the sense that they
`are a suitable proxy for injunctive relief. What
`makes legal remedies inadequate under the circum-
`stances of this case is the inability to calculate the
`plaintiff's future losses with precision. An injunc-
`tion against the continued use of the plaintiff's in-
`tellectual property is the proper remedy to prevent
`future infringement.
`
`C. Balancing of hardships.
`The court has considered the balance of hard-
`ships. The court agrees with Visto that if no per-
`manent injunction is entered, Visto will lose good-
`will, potential revenue, and the very right to ex-
`clude that is the essence of the intellectual property
`at issue. Although Seven will be harmed by an in-
`junction, the balance of hardships favors Visto in
`this case.
`
`D. Public interest.
`*5 The question presented by this factor is
`whether the public interest would be disserved by
`an injunction. There has been no persuasive show-
`ing that the public interest would be disserved by
`an injunction. In fact, the public interest would be
`served by issuing an injunction to protect the patent
`rights at issue.
`
`After considering the traditional equitable
`factors, the court concludes that a permanent in-
`junction is proper in this case. The plaintiff's mo-
`tion for entry of a permanent injunction (# 379) is
`therefore granted. Visto's motion to strike the Thex-
`ton declaration (# 440) is denied.
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 5
`
`7. Protective Order issues.
`Seven argues that Visto's attorneys violated the
`Protective Order in this case. Throughout this case
`and even after the bench trial on inequitable con-
`duct, Seven has urged the court to impose various
`remedies, from the dismissal of the lawsuit to the
`denial of any injunctive relief. The court has care-
`fully evaluated the evidence presented to it and
`finds that Visto's attorneys violated the court's Pro-
`tective Order and that a stay of the injunction
`pending appeal is the appropriate remedy.
`
`On April 2, 2004, the court issued a Protective
`Order in this case to guard against the improper use
`and dissemination of confidential information pro-
`duced in discovery. The Protective Order explicitly
`states:
`
`17. Limitations On Use and Disclosure. Except to
`the extent expressly authorized in this Order,
`Protected Information shall not be used or dis-
`closed for any purpose other than the prepara-
`tion and trial of this action and any appeal there-
`from....
`
`(emphasis added). The purpose for this provi-
`sion is plain-it is to allow discovery in the case to
`move forward and to prevent a party from using its
`opponent's confidential technical and financial in-
`formation for purposes other than the prosecution
`or defense of the lawsuit.
`
`Notwithstanding the general prohibition on use
`and disclosure of confidential
`information,
`the
`parties to this case recognized that certain activities
`present an unacceptable risk of the inadvertent use
`or disclosure of sensitive information. To this end,
`the Protective Order contains a prosecution bar.
`The relevant language provides:
`
`15. Individual attorneys who are outside counsel
`to whom information that is designated CONFID-
`ENTIAL-ATTORNEYS' EYES ONLY or CON-
`FIDENTIAL-ATTORNEYS'
`EYES
`ONLY-
`COMPUTER SOURCE CODE from any adverse
`party in this litigation has been disclosed, shall
`
`not draft, file, prosecute, or assist in the drafting,
`filing, or prosecution of any new or currently
`pending patent applications that bear a reason-
`able relationship to patents which are the subject
`matter of this litigation on behalf of any party to
`this litigation or any party affiliated with any
`party to this litigation until eighteen (18) months
`after the date of the last disclosure to such indi-
`vidual attorney of CONFIDENTIAL-ATTOR-
`NEYS'EYESONLYorCONFIDENTIAL-ATTOR-
`NEYS' EYES ONLY-COMPUTER SOURCE
`CODE from any adverse party in this litigation.
`
`*6 (emphasis added).
`
`During the prosecution of this case, Mr. Greg
`Warder (“Warder”), one of Visto's outside counsel,
`received information designated Attorneys' Eyes
`Only under the Protective Order. At the relevant
`times, Warder was employed by Manatt, Phelps &
`Phillips, LLP (“Manatt”). After he received Attor-
`neys' Eyes Only information, Warder participated
`in certain patent prosecution activities. Manatt as-
`signed him to prosecute a portion of the continu-
`ation application that matured into the '679 patent.
`FN1 When Seven learned of Warder's prosecution
`activities, it immediately notified Seven of its belief
`that a possible violation of the Protective Order had
`occurred. Visto did not dispute that Warder's pro-
`secution of the continuation application violated the
`Protective Order. Visto maintained, however, that
`Warder's participation in the prosecution of the
`continuation application was inadvertent.
`
`FN1. Visto did not assert the '679 patent in
`this case.
`
`Shortly thereafter, on May 11, 2005, Seven
`filed an Emergency Motion for Protective Order
`and Application for an Order to Show Cause arising
`out of Warder's prosecution of the continuation ap-
`plication. In that motion, Seven reiterated its posi-
`tion that Visto's outside counsel had violated the
`Protective Order because Warder had viewed Sev-
`en's Attorneys' Eyes Only information and had par-
`ticipated in the prosecution of the continuation ap-
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
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`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 6
`
`plication. The parties resolved Seven's motion by
`stipulating that “Mr. Greg Warder of the Manatt
`firm will not prosecute patents of the kind specified
`in the protective order for the period of time spe-
`cified in the protective order, and the provisions of
`the protective order remain in place.” See Dkt. #
`163, Agreed Motion to Withdraw Certain Discov-
`ery Motions, filed May 12, 2005.
`
`After the stipulation, Seven learned that Ward-
`er's activities before the USPTO extended beyond
`the prosecution of the continuation application. He
`had been participating in the ongoing reexamina-
`tion proceedings involving the '192 patent. Visto
`had not previously disclosed this to Seven. Seven
`learned this when Visto produced reexamination
`documents signed by Warder and tendered to the
`USPTO. All of
`these documents pre-dated the
`parties' stipulation. After the parties' stipulation,
`however, Warder stopped signing documents sub-
`mitted to the USPTO in the reexamination. The
`Manatt firm transferred responsibility for this task
`to Ms. Pamela Merkadeau (“Merkadeau”).
`
`Seven attempted to raise Warder's involvement
`in the reexamination proceedings with the court.
`This occurred in the context of another motion re-
`lated to the Protective Order.FN2 By way of back-
`ground, Seven learned through deposition testi-
`mony that a lawyer on Visto's trial team, Michelle
`Gillette, disclosed certain expert reports covered by
`the Protective Order to officers of Visto. These per-
`sons had not previously signed the required Protect-
`ive Order undertakings. As the briefing unfolded,
`the Manatt firm claimed the unilateral right to des-
`ignate and redact certain portions of the documents
`before showing them to its witnesses. Although the
`issue before the court primarily concerned the dis-
`closure of Seven's financial information, certain as-
`pects of the briefing specifically addressed Ward-
`er's prosecution of the '192 reexamination. In par-
`ticular, Seven objected to Warder's participation in
`the '192 patent reexamination proceedings.FN3 In a
`surreply brief, Visto responded that “Seven brings
`an allegation of an additional violation of the Pro-
`
`tective Order into this matter without justification.
`In fact, the parties resolved the referenced issue
`with a stipulation and order.” (emphasis added).
`FN4
`
`FN2. See Dkt. # 206, Seven's Motion for a
`Finding of Contempt, Application for an
`Order to Show Cause, and Request for
`Other Relief for Violation of the Protective
`Order.
`
`FN3. See Seven's Reply Memorandum in
`Support of its Motion for a Finding of
`Contempt, Application for an Order
`to
`Show Cause, and Request for Other Relief
`for Violation of the Protective Order, at 5.
`
`FN4. See Visto's Surreply to Seven Net-
`work's Motion for a Finding of Contempt,
`Application for an Order to Show Cause,
`and Request for Other Relief for Violation
`of the Protective Order, at 7.
`
`*7 During the bench trial on Seven's defense of
`inequitable conduct, it became clear that Warder
`had substantively participated in the prosecution of
`the reexamination even after the parties' May 12th
`stipulation. Warder's involvement was obscured,
`however, by Manatt's instructions to Merkadeau to
`sign documents submitted to the USPTO. Seven
`challenges Warder's conduct as a violation of the
`Protective Order issued in this case. The court
`agrees with Seven that the prosecution bar covers
`reexamination proceedings and that Visto's outside
`counsel violated the provisions of the Protective
`Order.
`
`Visto's primary argument is that a reexamina-
`tion proceeding is not a new or currently pending
`patent application and is therefore not covered by
`the prosecution bar. According to Visto, the prosec-
`ution bar would preclude an attorney's participation
`in new or continuation applications, but not reex-
`amination proceedings. This court has squarely re-
`jected arguments to the contrary, made in the con-
`text of a prosecution bar contained in a Protective
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
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`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 7
`
`Order. See Microunity Systems Engineering, Inc. v.
`Dell, Inc., 2:04-CV-120 (Order, Dkt.# 156) (“The
`Court finds that the Protective Order entered in this
`case is clear. The Protective Order includes a Pro-
`secution Bar that applies equally to reexaminations
`as it does to new applications filed with the
`USPTO.”).FN5
`
`the attorneys for
`FN5. Unlike this case,
`Microunity approached the court for guid-
`ance before becoming involved in the reex-
`amination.
`
`In the context of the prosecution bar, Visto's ar-
`gument that a reexamination proceeding is different
`from the prosecution of a new application is not
`persuasive. Throughout the reexamination proceed-
`ings, Visto and the examiner consistently referred
`to Visto as the applicant, within the plain language
`of
`the Protective Order. The Protective Order
`provides that outside counsel “shall not draft, file,
`prosecute, or assist in the drafting, filing, or prosec-
`ution of any new or currently pending patent ap-
`plications that bear a reasonable relationship to pat-
`ents which are the subject matter of this litigation
`...” Protective Order, ¶ 15 (emphasis added). In the
`court's view, under the language of the Protective
`Order, participation in the reexamination is the pro-
`secution of a patent application that is not only
`“reasonably related” to the patents-in-suit, it is a
`part of the prosecution history of the very patent as-
`serted in the case. The purpose of the prosecution
`bar is to prevent outside counsel from using, even
`inadvertently, confidential information obtained in
`the lawsuit for purposes outside the lawsuit (e.g.
`drafting claims during patent prosecution). This is
`true even if the result of the reexamination is nar-
`rower claim language. Accordingly, Warder viol-
`ated the Protective Order by participating in the
`reexamination of the '192 patent and by continuing
`to do so after the parties' stipulation. To make mat-
`ters worse, Manatt concealed that violation from
`Seven to evade detection of that conduct.
`
`The next question is one of remedy. The chal-
`lenged conduct does not rise to inequitable conduct
`
`before the USPTO, and the court will not declare
`the patent unenforceable. It must be remembered
`that the effect of the reexamination was to narrow
`certain claim language. The jury found that
`the
`claims as narrowed still covered the accused sys-
`tems and methods. A holding that the patent is un-
`enforceable would unnecessarily penalize the client
`for its attorneys' conduct.
`
`*8 Nevertheless, the violation of the Protective
`Order causes the court to exercise its equitable dis-
`cretion in a manner adverse to Visto. As a result, al-
`though the court has granted an injunction in
`Visto's favor,
`the court will stay that
`injunction
`pending the disposition of any appeal. Resolution
`of this issue renders it unnecessary to determine the
`merits of Seven's other requests for a stay of the in-
`junction.
`
`In addition to a stay of the injunction, the court
`will also bar Ms. Gillette and Mr. Warder from fur-
`ther receipt of confidential information in this case
`or any other case on the court's docket involving
`Visto Corporation. With respect to Ms. Gillette, the
`court finds that she unilaterally redacted documents
`that had been marked both Attorney's Eyes Only
`and Confidential pursuant to the Protective Order
`and showed those documents to Visto personnel, in-
`cluding Mr. Jean Tripier, Visto's Chief Operating
`Officer, and Mr. Tim Robbins, Visto's General
`Counsel. These disclosures were not in accordance
`with the terms of the Protective Order. The indi-
`viduals had not signed the required undertakings
`before receiving the confidential
`information. In
`addition, disclosure to Mr. Robbins was made
`without advance notice. To compound matters, after
`Seven objected to the disclosures, Visto produced
`undertakings signed by the witnesses, but the wit-
`nesses did not date their signatures. Although Visto
`urges that it operated in good faith to redact Seven's
`confidential information, a lawyer operating under
`the terms of a Protective Order issued by this court
`has no right to resort to self-help when he or she
`views the provisions of that order to be burdensome
`or onerous. The proper remedy is to approach the
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`

`

`Not Reported in F.Supp.2d, 2006 WL 3741891 (E.D.Tex.)
`(Cite as: 2006 WL 3741891 (E.D.Tex.))
`
`Page 8
`
`court. The court will therefore bar Ms. Gillette from
`receipt of any further information under the Pro-
`tective Order. With respect
`to Mr. Warder,
`the
`briefing suggests he is no longer with the Manatt
`firm; however, this prohibition will extend to him
`should he become involved in future litigation in
`this court on behalf of Visto. Further relief on Sev-
`en's motion for a finding of contempt, application
`for an order to show cause, and request for other re-
`lief (# 206) is denied. Likewise, further relief on
`Seven's emergency motion for protective order and
`to compel (# 442) is denied.
`
`E.D.Tex.,2006.
`Visto Corp. v. Seven Networks, Inc.
`Not Reported in F.Supp.2d, 2006 WL 3741891
`(E.D.Tex.)
`
`END OF DOCUMENT
`
`© 2013 Thomson Reuters. No Claim to Orig. US Gov. Works.
`
`