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CAFC Weekly: June 18, 2010

by Orlando Lopez

One of the two precedential opinions of this week reminds us of the importance of keeping the chain of priority intact. The second opinion relates to the shielding, by the corporate structure, of employees and officers of a corporation from liability.

In Encyclopaedia Britannica v. Alpine, the importance of keeping the integrity of the chain of priority in a string or applications is underscored.  Britannica sued a number of companies for infringement of two patents filed on June 13, 2005, which were continuations of a string of applications going back to 1989. The filing of an intermediate application in the string, an application filed in 1993, had a number of missteps. These missteps included filing the application without the first page. The USPTO would have granted the filing date as the date when the first page was subsequently submitted; however, Britannica filed a petition for granting the filing date as the date of filing, but did not have a declaration by the inventors that the first page was unnecessary to understand the subject matter, which caused the petition to be not granted without prejudice. A request for reconsideration was never filed. The application was abandoned on March 23, 1995. The abandonment of the 1993 application broke the chain of priority, since the next application in the string filed in 1994, was not filed while the preceding application was still pending. Consequently, the applications filed on June 13, 2005 could only claim priority back to 1994. Britannica’s own international-PCT application, published on May 16, 1991, could be used as a reference against the 2005 applications. Since the international application had the same disclosure as the 2005 applications, the international application was used to invalidate the two patents filed in 2005.

In Wordtech Systems v. Integrated Network Solutions, Wordtech sued Integrated Network Solutions (INSC) and two of INSC’s employees, Khatemi and Assadian, for infringement of several of Wordtech’s patents. At the District Court, the jury found that all defendants had willfully induced and contributed to infringement. If Wordtech had a valid corporate status, Khatemi and Assadian would be shielded from liability unless the shield had to be lifted to prevent fraud, criminal liability, or similar illegality or injustice. The jury was not instructed as to issues regarding corporate status, or removing the corporate shield, referred to as “piercing the corporate veil.” Since the jury had not been properly instructed, the CAFC reversed the liability verdict against Khatemi and Assadian, and remanded for consideration as to whether a new trial was warranted.

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