Archive for January, 2015

Law Firm Disqualified in Li-ion Battery Patent Suit

January 27th, 2015

Previous posts (here and here) discussed some of the patent enforcement activity by Celgard, a North Carolina company that manufactures specialty membranes and separators for lithium ion batteries.

Celgard has filed several lawsuits alleging infringement of U.S. Patent No. 6,432,586 (’586 Patent), including one against LG Chem.  The ’586 Patent is entitled “Separator for a high energy rechargeable lithium battery” and directed to a separator including a ceramic composite layer and a polyolefinic microporous layer.  The ceramic layer has a matrix material and is adapted to block dendrite growth and prevent electronic shorting.

Last month, the Court of Appeals for the Federal Circuit disqualified the Jones Day law firm from representing Celgard in the litigation due to a conflict of interest.  Jones Day was concurrently representing Apple in other matters when it entered the case on behalf of Celgard against LG Chem.

The problem was LG Chem is Apple’s Li-ion battery supplier.  The district court granted Celgard’s motion for a preliminary injunction against LG Chem, the case was appealed, and Apple intervened seeking to disqualify Jones Day.

In a 5-page opinion, the Federal Circuit ruled for Apple, finding that the duty of loyalty protects Apple from Jones Day continuing to represent Celgard.  This despite the fact that Apple was not a named party in the case:

This conclusion is not altered by the fact that Apple is not named as a defendant in this action.  The rules . . . make clear it is the total context, and not whether a party is named in a lawsuit, that controls whether the adversity is sufficient to warrant disqualification.

Here, the total context, which included both Apple’s potential problem with LG Chem as a supplier and Celgard as a putative licensor or supplier, compelled a conclusion that Jones Day’s representation of Celgard was adverse to Apple:

Apple faces not only the possibility of finding a new battery supplier, but also additional targeting by Celgard in an attempt to use the injunction issue as leverage in negotiating a business relationship.  Thus, in every relevant sense, Jones Day’s representation of Celgard is adverse to Apple’s interests.

The Patently-O blog discusses this case here and notes the danger this opinion may raise for law firms involved in patent infringement litigation.

In view of this decision, some of those firms might attempt to extend the scope of their already unenforceable advance conflict waivers, which I previously wrote about here.

The Top Green IP Stories of 2014

January 20th, 2015

Before we get into the new news, let’s take a quick look back at the top green IP stories of 2014.

 

5.  GE Wins Ownership of Key Wind Patent*

In what was something of a sideshow, but with major implications for the main event, the Court of Appeals for the Federal Circuit effectively ended a dispute between GE and a former employee, Thomas Wilkins, over ownership of one of the patents involved in larger litigation with Mitsubishi.

After Wilkins brought a lawsuit to correct inventorship of U.S. Patent No. 6,921,985 (’985 Patent), Mitsubishi intervened in the suit.   The Federal Circuit ultimately ruled for GE because the document Wilkins argued demonstrated his conception of the invention did not disclose any elements of the claimed invention.

In fact, the court held, the document in question “does not even depict the key feature Wilkins claims to have invented, i.e., a UPS powering the wind turbine’s three controllers.”

*Mr. Wilkins disputes the accuracy of this post.

 

4.  Tesla’s Chinese Trademark Troubles

Tesla’s eco-mark issues in China were resolved, renewed, and resolved again in 2014.  Early in the year, Tesla said it had obtained a court decision granting it the right to use the TESLA mark in China over a cybersquatter and prior registrant of the TESLA mark named Zhan Baosheng.

A few months later, Mr. Zhan sued Tesla for trademark infringement in China, demanding the American electric car maker stop all sales and marketing activities in China, shut down showrooms and charging facilities, and pay him 23.9 million yuan ($3.85 million) in compensation.

Shortly thereafter, Zhan apparently got his pay day when Tesla resolved the dispute – this time via a direct settlement rather than relying on the Chinese court system. Zhan agreed to settle the dispute “completely and amicably” including consenting to cancellation of his Tesla trademark registrations and applications.   He also agreed to transfer his domain names, including tesla.cn and teslamotors.cn to Tesla.

 

3.  GreenShift Loses Big in Ethanol Patent Case

2014 saw a major decision in the patent infringement litigation between GreenShift (with its New York subsidiary, GS Cleantech) and a host of ethanol producers across the midwestern United States over patented ethanol production processes.

After multiple actions were consolidated in the Southern District of Indiana and the claims of the key patent family were construed and re-construed, the court issued a sweeping 233-page decision ruling on all of the pending motions for summary judgment brought by the original parties to the suit.

GreenShift lost big, with the court making several rulings on infringement, all for defendants.  Worse yet for GreenShift, the court held three of the four patents in the key patent family invalid because of the company’s commercial offer to sell the technology more than a year before the August 17, 2004 filing date of the initial provisional patent application that led to the other applications in the family.

 

2.  Record Settlement Under Clean Air Act for Alleged Greenwashing

After their reputations took a beating in 2012 under a barrage of consumer class actions alleging false or misleading fuel efficiency claims, last year the Korean automakers entered into a record settlement with the U.S. government amid additional allegations of greenwashing.

The Environment and Natural Resources Division of the U.S. Department of Justice (DOJ) and the California Air Resources Board (CARB) sued Hyundai and Kia, alleging they sold over a million vehicles that did not meet the requirements of the Clean Air Act because the automakers used improper testing procedures and analysis and submitted faulty fuel economy data to the U.S. Environmental Protection Agency.

Hyundai and Kia quickly settled with the DOJ and CARB.  Under the settlement, the automakers did not have to admit the truth of the allegations but agreed to pay about $100 million, about $93.6 million to the DOJ and about $6.4 million to the CARB.  This is the largest penalty ever imposed under the Clean Air Act.

The car companies also forfeited 4.75 million greenhouse emission credits – earned for building vehicle emissions under the legal limit – which they had previously claimed and are estimated to be worth over $200 million.

 

1.  The Tesla-Patent Commons

The biggest green IP story of 2014 was Elon Musk’s announcement that Tesla would “donate” its entire patent portfolio.  Specifically, Musk’s post on the company blog said “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”

In the wake of the announcement, more details emerged about Tesla’s patents and the technologies covered.  Reaction to the move was mixed, with some arguing it was a public relations stunt that would ultimately hurt Tesla.

In my post on the announcement, I wondered whether the temptation of exploiting Tesla’s technology would outweigh exclusivity concerns:

Ultimately, the impact of Musk’s decision may turn on to what extent other such players will be motivated to invest in manufacturing vehicles, batteries, etc. using Tesla’s patented and patent-pending technology with the obvious upside being the proven innovation that technology brings and the down side being no exclusivity, instead of investing in their own R&D and patent protection where the upside may be exclusivity and the down side may be inferior or unproven technologies.

Only time will tell what, if any, impact Tesla-Patent Commons will have on the electric vehicle market.