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IP, Patent

Judge Rader Tosses Juniper Lawsuit Against Inventor

Peter Shipley (inventor of US Patent Nos. 6,304,975 and 6,119,236 related to network security) created and then assigned his patents Enhanced Security Solutions, LLC.  His company, in turn, has sought to license Shipley’s patents to the likes of Cisco, IBM, and Juniper, among others.  Like many others, Shipley’s efforts were stymied as the operating companies opted to collaborate and drag Shipley’s patents back before the patent office in an inter partes re-examination.

Juniper, not satisfied with just the re-examination effort, has previously gone on record as saying that it files lawsuits to gain leverage and drive up the cost of litigation for third parties attempting to license their patents.  Upon learning that the working model of Shipley’s invention (a firewall) ceased functioning on his website in 1999, Juniper immediately sued him for false marking.  (In case you aren’t aware of the recent upswing in false marking cases, Gray on Claims has been tracking them since last year).

Essentially, Juniper claimed that visitors to Shipley’s website would have been misled into believing that the firewall was functioning to protect the website, which constitutes a violation of 35 USC 292 (“Whoever marks upon … any unpatented article the word “patent” … for the purpose of deceiving the public … [s]hall be fined not more than $500 for every such offense.”) So, in order to gain leverage and drive up Mr. Shipley’s costs, Juniper sued Shipley in Northern California, citing this law.

How can I claim to know Juniper’s motivation for suing Mr. Shipley?  Well, as Chief Judge Rader noted during a hearing over Juniper’s appeal:

There’s a reference to Mr. Coonan, who is the Director of Licensing for Juniper, and he says in a conference, “The only cases in which we are actually plaintiffs are cases that were filed to gain leverage against parties. You want to exert pressure. You want to try to drive up those costs as much as possible.”

Judge Rader interpreted these comments as tacitly admitting that Juniper’s false marking lawsuit (one in which Juniper is the plaintiff) was only filed to “gain leverage,” “exert pressure,” and “drive up [litigation] costs as much as possible” against Mr. Shipley.  Interestingly enough, when lawsuits are filed, the lawyers involved are required to represent that the suit is “not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” (Federal Rule of Civil Procedure 11(b)(1)) (emphasis added).

Naturally, Judge Rader had a question for Juniper’s lawyer (which, incidentally, went  more or less unanswered):

Why isn’t the district court entirely justified in cutting off as early as possible a case which is only brought to gain leverage to drive up costs as much as possible?

Regardless of why or why not, Judge Rader, along with circuit Judges Newman and Linn, agreed that the district court was correct to dismiss Juniper’s lawsuit, and (perhaps not with a hint of justice) ordered Juniper to pay Mr. Shipley’s costs for the appeal (pg 14).

As always, you can hear the oral argument from the CAFC website, or jump directly to Judge Rader’s quote, courtesy of 717MadisonPlace.com.

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