(May 10, 2014)—Ohio innovator Leader Technologies released a letter sent this week to the U.S. Patent Office. Leader’s CEO Michael McKibben asked the Patent Office to rescind the latest decision of a secret “patent reexamination” court. This administrative court was convened by former director, David J. Kappos, using a rare statute that pundits say has never been used in their memory.
On Jul. 27, 2010, Facebook was found guilty in federal court of infringing Leader’s patent for social networking on 11 of 11 counts. Even so, this Kappos administrative court decided on May 6th in secret deliberations to kill Leader’s entire patent. Leader filed for the patent in 2002; was awarded the patent in 2006; and, proved Facebook was infringing the patent in 2010.
Dirty little secret: a crony lawyer underground runs the USPTO
Few inventors realize that being awarded a patent is only the beginning. Patent reexaminations can create as much or more expense and time to protect the patent from predators as it took to get it.
One veteran inventor interviewed—a holder of over a dozen technology patents—is facing nine reexaminations right now, on just one patent. This inventor believes that reexaminations have become the new tool that big infringers use to “kick the can down the road” until the inventor runs out of money. In this way, the “America Invents Act” has been nothing more than a license for big infringers to harass and steal from smaller inventors.
Patent administrative “reexaminations” are the dirty little power secret of the crony lawyer underground in Washington, D.C. If you lose in open court, then you can still kill the patentee in secret using “administrative actions” by cronies inside the Patent Office. After all, the people staffing the Patent Office usually worked at the law firms who file patent applications, and they look for employment at those same firms later. The revolving door of conflicting influences is evident, and it is slowly choking American innovators. The Leader v. Facebook matter, though, has gone well beyond everyday corruption.
On Apr. 19, 2013, the secret Kappos court decided that supposed new prior art evidence had compelled them to reverse en masse 12 years of their previous decisions affirming Leader’s patent claims. However, Kappos cited no evidence whatsoever for this claim. Instead, the court merely regurgitated Facebook’s earlier spurious arguments, arguments that were defeated already at trial and in two previous reexaminations. The examiner, Deandra M. Hughes, appears to have bowed to the pressure from the Kappos' kangaroo court.
In their failed arguments, Facebook repeatedly cited Microsoft and Xerox documents. This is an important fact in this story.
The new evidence must be “compelling” and the use of this power “rare”
According to patent law (specifically, 37 CFR 1.520 of the Code of Federal Regulations regarding patent reexaminations), reexaminations are intended to occur if “compelling” new evidence of prior art comes to light that could bring a patent’s validity into question. The powers are to be used only in a “rare” circumstance where a gross injustice would otherwise occur. Reexams were a big topic in the America Invents Act. The Act was heavily promoted by two key players in this story, Director David J. Kappos, and PTO Counsel Pinchus M. Laufer.
Former IBMer suspects foul play
Kappos initiated this reexam order against Leader on his own initiative. Curiously, three weeks earlier, on Mar. 22, 2010, IBM sold Facebook 750 patents. This sale was puzzling to one former IBMer interviewed for this story. He said, “This sale never made sense to me. IBM takes great pride in its patent portfolio. In fact, as recently as January 14th of this year, IBM issued a press release announcing its 21st straight year of patent leadership. Selling away patents is against IBM’s core mission. License, for sure, but sell outright, never. The moment I heard that news, I suspected foul play.”
Leader CEO Michael McKibben said, “When our lawyers received the order they were dumbfounded. They had never in their careers seen a Patent Officer Director use this ‘rare’ privilege. ”
AFI investigators, too, have puzzled over Facebook’s relationship to IBM, ever since Facebook purchased the 750 IBM patents. That was two months before Facebook went public on May 18, 2012.
Mar. 22, 2012 (IBM Patents Sold) - Apr. 17 (former IBMer Kappos Reexam Order) - May 18 (Facebook IPO)
Sandwiched in between the 750 patent sale and the Facebook IPO, on Apr. 17, 2012, Director Kappos invoked his “rare” statutory privilege against Leader. The fog is finally clearing as to his motive.
AFI investigators have researched the backgrounds of USPTO personnel involved in this kangaroo court. The first glaring fact is that IBMer Kappos staffed the court with former IBM devotees, and in doing so, “stacked the deck” against Leader.
The IBMer we interviewed quipped: “once an IBMer, always an IBMer, it becomes part of our DNA. We took great pride in metaphorically bleeding ‘IBM blue.’”
The Patent Office invoked Executive Privilege to block FOIA disclosure in Leader v. Facebook
Here’s a summary of the patents these former examiners have issued to IBM, Microsoft and Xerox (a.k.a. Palo Alto Research Center - PARC). We’ve included check marks (X) for known relationships also. Since the Patent Office FOIA officer, Kathryn W. Siehndel, has stonewalled release of the judicial and employee conflicts logs (except for William J. Stoffel), we have marked the other relationships as “concealed.” Note that FOIA officer Siehndel invoked executive privilege to block release of information. We can only presume that President Obama was protecting his political interest in Facebook.
David J. Kappos' secret kangaroo court
|Kappos' Kangaroo Court, Patent Trial and Appeal Board (PTAB)*||Title||IBM Patents Issued||Microsoft Patents Issued||Xerox Patents Issued*||Vanguard Fund Relationship||Fidelity
|White & Case LLP Relationship|
|U.S. Department of Commerce
(Kappos' & PTAB bosses)
|Penny S. Pritzker||Sec'ty||X||X||X||X||X||X|
|Rebecca M. Blank||Sec'ty||X||X||X||X||X||X|
|Cameron F. Kerry||Counsel||X||X||X||X||X||X|
|U.S. Patent Office|
|David J. Kappos||Director||X||X||X||X||Concealed||Concealed|
|Stephen C. Siu*||Judge||X||X||Concealed||Concealed||Concealed||Concealed|
|Allen R. MacDonald*||Judge||127||8||12||Concealed||Concealed||Concealed|
|Meredith J. Petravick*||Judge||Concealed||Concealed||Concealed||Concealed||Concealed||Concealed|
|Pinchus M. Laufer*||Counsel||9||3||2||Concealed||Concealed||Concealed|
|William J. Stoffel*||Counsel||x||Concealed||Concealed||X||X||Concealed|
|Kathryn W. Siehndel||FOIA||X||X||Concealed||Concealed||Concealed||X|
This kangaroo court has collectively issued 212 patents to IBM, Microsoft and Xerox (a.k.a. Palo Alto Research Center - PARC). William J. Stoffel specifically disclosed conflicts with IBM, Vanguard and Fidelity—all beneficiaries of Facebook interests. FOIA Officer Kathryn W. Siehndel worked for Facebook’s attorney in this case, White & Case LLP. Everyone else has stonewalled disclosure of their conflicts logs. White & Case LLP also represents IBM and Microsoft.
Still being investigated are connections between these IBMers and Leader’s first patent attorney, Professor James P. Chandler. At the very least, these individuals should have disclosed their prior associations with Professor Chandler and recused themselves. Professor Chandler’s work as one of IBM’s chief outside counsels is public knowledge in the Washington, D.C. legal community.
Former FBI Director Louis Freeh made special mention of Professor Chandler and IBM in his now famous Feb. 28, 1996 Senate testimony on the proposed Economic Espionage Act.
Facebook – IBM Common Interest Discovered
Until now, the Facebook-IBM connection has been baffling―since IBM represents the Establishment, and Facebook the Wild West. However, the thing they have in common at the Patent Office is their lack of disclosure of Leader’s patent in their applications.
“Inequitable Conduct” is patent legal-speak for fraud. When you file for a patent, you are obligated by law to tell the patent examiner about other inventions, patents, technical journals, etc. that should be considered in deciding whether or not your invention is novel and unique. Failure to disclose material prior art references will usually get your patent invalidated.
Donna Kline, former Bloomberg TV investigative reporter, first reported this story on Mar. 29, 2012 – “Proof Fenwick & West LLP did not disclose Leader as prior art to Facebook.” Kline proved that Palo Alto-based Fenwick & West LLP, Facebook’s attorney (after being Leader’s attorney), did not disclose Leader’s patent in the prior art references for later Facebook patent applications. This was after they did disclose the Leader patent in earlier work for Marc Andreessen, now a Facebook director.
Patent Office Scandal – feed crony venture capitalists with a stream of new ideas from which to steal, then stonewall through regulatory obstruction
Facebook DID NOT disclose Leader’s patent when Fenwick & West LLP clearly knew about it since: (1) they had been Leader’s attorney, and (2) they had already disclosed their knowledge of it in three Andreessen patents in 2005, well before they started representing Facebook at the Patent Office.
Now we discover that three major firms, IBM, Microsoft and Xerox (aka Palo Alto Research Center), also DID NOT disclose Leader’s prior art. Not a single patent already issued to IBM, Microsoft or Xerox by the members of the kangaroo court who were examiners disclosed Leader’s patent in any of their work. See for yourself: Daniel Ryman, Kimberly Jordan, Allen R. MacDonald and Pinchus M. Laufer.
Inequitable Conduct Facts:
At the center of this scandal now are two attorneys/firms that Leader hired in 2002 regarding Leader’s own patents, intellectual property and securities:
- Professor James P. Chandler, Washington, D.C.
- Fenwick & West LLP, Palo Alto, CA
In later years and hundreds if not thousands of patent filings for Facebook, IBM, Microsoft, and Xerox later, not a single one of these filings disclosed Leader’s U.S. Pat. No. 7,139,761 as a prior art reference―even though their lawyers worked on developing the Leader innovations and clearly knew about it. The fact is, even if the current invalidation were to stick (which it cannot given the fraud), they had an equitable conduct obligation to have disclosed it anyway.
What is appearing more evident each day is that Michael McKibben and Leader Technologies trumped the great and mighty IBM, Microsoft and Xerox patent mills regarding the new Internet. It appears that these organizations are now trying to rewrite history to keep from invalidating thousands of their patents that withheld knowledge of the Leader innovations from dozens of patent examiners, judges (and ultimately their bosses—the American people).
The Patent Office proof of this knowledge came from Fenwick’s filings for Marc Andreessen on Feb. 8, 2010.
Inequitable conduct made strange bedfellows among Facebook, IBM, Microsoft and Xerox
Inequitable conduct regarding Leader’s patent is what these companies have in common. Their misconduct is exposed by the very existence of Leader’s patent.
Their solution appears to be to wipe Leader’s patent off the books in the secret Kappos kangaroo court and hope nobody notices.
Avoid impropriety and the appearance of impropriety
Judges and public officials have a well-known ethical rule: avoid impropriety and the appearance of impropriety.
These officials not only abused this rule, they obliterated it.
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