|Fig. 1 – Big trouble ahead for the Facebook IPO? Donna Kline reports for Pittsburgh Business Report and is a former reporter for Bloomberg.|
I just received word that Facebook has succeeded in pushing through a rarely-if-ever used USPTO Director Order to have Leader’s U.S. Pat. No. 7,139,761 remanded for further reexamination—even though the Reexam Board was already processing Facebook’s request according to well-used procedures. The order was issued before a petition requesting such an order was filed!
Fig. 2 – USPTO Director’s Apr. 17, 2012 order remanding U.S. Pat. No. 7, 139,761 to a second reexamination. This order inexplicably and without proper petition shortcuts the appeal process already underway via the Board of Patent Appeals and Interferences (BPAI).
Why is this news?
Timing. It comes just days after my Instagram-scam blog post raising serious concerns about the fiduciary (in)actions of the Facebook directors in Facebook’s $1 billion purchase of Instagram. The Wall Street Journal and other national media picked up the story yesterday. Facebook is clearly in damage control mode.
Merit. Facebook lost their first request for reexamination on Jan. 6, 2011 (see timeline below). They had re-argued the same prior art that they lost on at trial on Jul. 27, 2010, so their arguments have grown stale.
Likely No Authority to Intervene. The USPTO Director David Kappos was appointed by President Obama on August 13, 2009 (click here for USPTO press release). He appears to be acting sort of based on rule “1.181 Petition to the Director.” HOWEVER, the rule states that such a petition cannot be used for “issues committed by statute to a panel.” Facebook had filed an appeal for a second reexamination on Feb. 4, 2011 to the Board of Patent Appeals and Interferences (BPAI). That BPAI panel process was proceeding according to the MPEP rules (Manual of Patent Examining Procedure). This is what “issues committed by statute to a panel” means. Therefore, the rule “1.181 Petition to the Director” should NOT be eligible for enactment. Is David Kappos violating the rules of his own USPTO?
Improperly-formed Order. Orders for remand are common. This one is unprecedented because it gives no instructions to the Examiner. This is like someone filing a generic lawsuit against you without stating any claims—just saying “You’re sued.”
The way this order is formatted is telling.
The unusual elements from ALL other similar orders that I have reviewed are:
- It lists Leader v. Facebook. Normally it just lists the Appellant, not the target.
- It identifies the Leader “7,139,761″ patent number on every page. Never done. Only the Appeal No. and Rexam App. No. are listed.
- It identifies no causes of action, namely what the Examiner is supposed to do.
- It says this is on behalf of the Director; never done where there is an open appealable process, as there is here—that was being followed with the BPAI.
- It lists the “First Named Inventor” as “7,139,761″ rather than “Michael McKibben.” That’s weird for an organization that’s a stickler for protocol, procedure and proper form, especially when emanating from the Director’s Office!
Without inherent knowledge of the patent process, these differences would likely go unnoticed. Makes this muppet wonder for whom this document is intended. Not patent lawyers, that is for sure.
Maybe a blanket production for the SEC????
This Order Just Appeared Out Of Thin Air—No Petition Was Filed First. This order just appeared without warning or proper notice. The law says that “Any such petition must contain a statement of the facts involved and the point or points to be reviewed and the action requested. Briefs or memoranda, if any, in support thereof should accompany or be embodied in the petition; and where facts are to be proven, the proof in the form of affidavits or declarations (and exhibits, if any) must accompany the petition.”
PLUS, Michael McKibben as first named inventor is missing. Instead of listing Michael McKibben, the USPTO identifies the patent number “7,139,761″ as the “First Named Inventor.” Huh? All other such orders I have reviewed have the inventor’s name. ODD.
Politically Motivated? Why would Director Kappos take such risky action in a high profile case such as Leader v. Facebook, especially on the heels of the growing $1 billion Instagram scandal? President Obama’s ties to Facebook are no secret, he has hosted Mark Zuckerberg on several occasions and has over 26 million “Likes” on Facebook. (Mitt Romney only has 1.6 million, BTW.) Politicians certainly rely on – if not mortally – Facebook as their primary marketing tool. What happens to one’s political campaign if direct connection to over 26 million voters is lost in an injunction or scandal? Hm.
What is Facebook’s End Game? What does Facebook hope to achieve by this bizarre action? Is this the action of a suddenly desperate company working to save its IPO? Patent experts say this order achieves nothing since the remand process was already in motion with the BPAI. The mind wanders as to what Facebook is up to. Are they trying to justify why they have not disclosed Leader v. Facebook in their S-1? Are they attempting to create new stalling tactics to throw in the road after the Federal Circuit justices hammer down on their laughable “coffee stains” defense? One thing is certain, these bad boys like tricks and live in the gray areas of jurisprudence.
There are more questions than answers at this point.
Reminiscent of NTP v. RIM. During reexaminations of the NTP patents requested by RIM, NTP caught RIM trying to influence patent Examiners. Like Leader’s pending injunction, NTP had been awarded an injunction and RIM was using the reexamination process to delay the injunction. Is Facebook attempting to use political influence to forestall a looming Leader injunction against Facebook’s operations?
Fig. 3 – Oddities in USPTO Director’s Apr. 17, 2012 order remanding U.S. Pat. No. 7, 139,761 to a second reexamination. This order inexplicably and without proper petition shortcuts the appeal process already underway via the Board of Patent Appeals and Interferences (BPAI).
Here’s what a normal remand order looks like:
Fig. 4 – Customary USPTO Order Remanding Appeal to Examiner example. App. No. 10/362,669. Note the differences between this normal order and the oddites of the Leader order App. Nos. 95/001,261 and 90/010,591. See Figs. 1 and 2 above.
Of note in a normal remand notice are: (a) the FIRST NAMED INVENTOR (p. 1) is always the inventor’s name and never a patent number; (b) only the appellant is listed (p. 2) and never the target of the complaint; (c) the appeal and applications numbers (pgs. 2, 3) are included but never the patent number that is the target of the complaint; (d) the remand always comes from the Board of Patent Appeals and Interferences (BPAI) – the rare times when it comes from the Director is after all appeal options are exhausted; and (e) specific instructions to the Examiner (for what to do to address the subject matter of the complaint) are always provided (p. 3).
Here are the dates of proceedings as from Facebook’s first request for patent reexamination through April 17th, 2012 (as found in the public record):
Nov. 13, 2009 Facebook files for reexamination of US Pat. No. 7,139,761
Jan. 6, 2011 Leader wins on all claims. (Note: Facebook argued essentially the same prior art that it lost on in the Leader v. Facebook trial)
Feb. 4, 2011 Facebook appeals the Reexam decision citing “Examiner’s failure”
May 4, 2011 Leader files response to the appeal (“Respondent Brief Owner”)
Sep. 28, 2011 Examiner’s Answer (Deandra M. Hughes) “confirming the [Leader] claims”
Oct. 28, 2011 Facebook files rebuttal (Rebuttal Brief) (Note: Facebook argues essentially the same prior art that it lost on both at trial and reexam
Nov. 4, 2011 USPTO notices parties that proceeding has been forwarded to the Board of Patent Appeals and Interferences (BPAI) for decision on the appeal (whether an appeal will be accepted or not)
Apr. 17, 2012 The Director of the USPTO via the Group Director of Technology Center 3900 (Central Reexamination Unit – CRU) remands the patent for reexamination. The oddities here are (see also Fig. 3): (a) the order was generated by an administrator at the BPAI but nowhere states that the BPAI is remanding pursuant to the Rules (MPEP, Sec. 2682 Action Following Decision), (b) the CRU Group Director has no authority to remand, and (c) no reasons for the re-exam are given, therefore there is no basis for a response by the Examiner. It’s like telling your employee to fix the report he just wrote, but you didn’t tell him what needed fixing.
Since this type of order is rare and typically reserved for “news-making” cases such as NTP v RIM, the patent litigation world is now paying attention. In my view, it is a sign that Facebook attorneys are in a mad scramble to avoid an injunction. FACEBOOK IS FINALLY TAKING LEADER TECHNOLOGIES SERIOUSLY! We can only speculate what advantage Facebook thinks they can achieve by pulling strings at the USPTO, especially since they have already lost twice on what have become stale prior art arguments.
I wonder if they will call me up after this post and give me the intimate details of their actions like they ostensibly did two days ago for select mainstream media reporters?” Ha ha.
USPTO Public Portal
You can access all the USPTO documents yourself at http://portal.uspto.gov/external/portal/pair. After getting past CAPTCHA, the system is defaulted to “Application Number” and you type “95/001,261” (without the quotes) in the text field. Choose the “Search” button. Click the “Image File Wrapper” tab and you’re there! You see everything filed in the reexamination, including this latest bizarre USPTO Director order.
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- Donna Kline/PBR Interview with Michael McKibben of Leader Technologies. Donna Kline Now! Accessed Apr. 19, 2012.
- USPTO Documents. Scribd. Public Domain. Accessed Apr. 19, 2012.
- Magician graphic. Illusion Warehouse. Accessed Apr. 19, 2012.
- Baby photo. Visual photos.com. Accessed Apr. 19, 2012.
- USPTO Director David Kappos photo. USPTO. Accessed Apr. 19, 2012.
- USPTO emblem. USPTO. Accessed Apr. 19, 2012.