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Daniel B. Ravicher is a registered patent attorney who frequently consults with investment banks, hedge funds, and individual investors on legal issues that may materially affect the value of publicly traded companies. In addition to private consulting, Mr. Ravicher also regularly publishes... More
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  • Qualcomm Counterclaims In ParkerVision Patent Infringement Case Dismissed 3 comments
    Nov 27, 2012 4:13 PM | about stocks: QCOM, PRKR

    ParkerVision (NASDAQ:PRKR) is a player in the patent assertion world that I previously discussed may be up for sale. It's received scant coverage in the media compared to other patent assertion companies, like Vringo (VRNG) and VirnetX (NYSEMKT:VHC), perhaps because its patent infringement case against Qualcomm (NASDAQ:QCOM) is still in the early stages, with trial not slated until next summer.

    Last week, on Thanksgiving eve, the Judge overseeing the case issued an order dismissing certain counterclaims Qualcomm wanted to make against ParkerVision's outside law firm, Sterne Kessler Goldstein and Fox ("SKGF"), a very reputable patent law firm in Washington, D.C.. The Judge summarized Qualcomm's counterclaims against SKGF as follows:

    Qualcomm's factual allegations against SKGF, in pertinent part, are these: (1) SKGF worked concurrently for both ParkerVision and Qualcomm; (2) Robert Sterne, a partner at SKGF, is on the board of ParkerVision; and (3) ParkerVision's CEO made statements that its "legal counselors" helped ParkerVision to verify the alleged infringements at issue and that SKGF was "very involved in the creation and prosecution" of the patents-in-suit.

    In essence, Qualcomm was trying to malign ParkerVision's integrity by saying its patent infringement claims were crafted improperly with SKGF's Director's assistance. To me, this was a very weak argument, in no small part because it wasn't supported by specific direct evidence of Attorney Sterne giving ParkerVision any confidential information regarding Qualcomm products. On that point, the Court said:

    From these bare-bones assertions, Qualcomm asks this Court to draw an attenuated chain of inferences leading to the legal conclusion that SKGF breached its fiduciary and contractual duties to Qualcomm by assisting ParkerVision in procuring the
    instant suit. Essentially, Qualcomm argues that because SKGF prosecuted the patents at issue and Robert Sterne is associated with ParkerVision, SKGF must have helped prepare for this litigation and Robert Sterne must have participated in discussions with ParkerVision about initiating this litigation.

    I also thought Qualcomm's claims were weak because they threaten to impede on the attorney-client relationship. In my opinion, Qualcomm's attempt to come in between ParkerVision and its counsel with only bare-bones assertions of misconduct was abhorrent. The Judge was much more polite in his Order, saying:

    While Qualcomm's claims are perhaps conceivable, the factual underpinnings are simply not present to nudge such speculation into the realm of plausibility.

    However, I note that the Judge did proceed to warn Qualcomm that if it makes such claims again, he may find them frivolous and punish Qualcomm as a result. That part of the Order, which is the last sentence before the Conclusion, reads:

    [T]he Court reminds Qualcomm of its obligations under Federal Rule of Civil Procedure 11(b) and cautions it that the Court will carefully scrutinize any amended counterclaim for Rule 11 compliance.

    Non-lawyers may not recognize that Rule 11(b) is the rule that prohibits parties from making frivolous claims, which can be sanctioned under Rule 11(c). In my opinion, Qualcomm made a very big tactical mistake by attempting to bring these claims against ParkerVision's attorneys, as it likely impugns their reputation in the eyes of the judge. Now he may be more likely to be skeptical of any other arguments they make, remembering that they were the same party that made these speculative claims. It also wreaks of a bit of desperation, as if Qualcomm had better claims to actually make on the merits of ParkerVision's patents themselves, it would (or at least, in my opinion, should) do so.

    ParkerVision noticed a slight bump on the day the Order was issued, which seems reasonable to me. The parties are still waiting for the Judge to issue a decision defining ambiguous terms in the patents in suit. That decision, often referred to as Markman or Claim Construction, is perhaps the most important decision in any patent case, and is likely to have a substantial impact on this case as well.

    Disclosure: I am long PRKR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Stocks: QCOM, PRKR
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Comments (3)
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  • bonkthegrups
    , contributor
    Comments (243) | Send Message
    "I also thought Qualcomm's claims were weak because they threaten to impede on the attorney-client relationship. In my opinion, Qualcomm's attempt to come in between ParkerVision and its counsel with only bare-bones assertions of misconduct was abhorrent."


    Which attorney-client relationship is that? Wasn't Sterne Kessler Qualcomm's legal counsel also? Did they not represent Qualcomm in over 100 patent matters?


    IMHO it seems that Qualcomm simply argued that Sterne Kessler was also Qualcomm's long-time legal counsel (from 1998 to present) and potentially breached its duties to Qualcomm, as its legal counsel, particularly with Stern being on PRKR's board, and public comments by the CEO that he immediatley consulted the company's legal counsel upon learning of QCOM's infringement (presumably it's stated legal counsel Sterne Kessler).


    It seems the judge agreed that Qualcomm's claims were conceivable, but since QCOM couldn't provie it directly the judge dismissed it.


    This seems to be a minor factor in the case and IMHO your use of the word "abhorrent", defined by the dictionary as "Inspiring disgust and loathing; repugnant." is very curious and perplexingly harsh.


    It reminds me of your previous comment:


    "That's a complete red herring by Qualcomm, in a desperate attempt to try to malign the integrity of ParkerVision's patent counsel. It's a disgusting, pathetic, and - perhaps most importantly - impotent effort"


    It comes across as if you take any criticism of Sterne Kessler quite personally.
    27 Nov 2012, 05:36 PM Reply Like
  • Daniel B. Ravicher
    , contributor
    Comments (321) | Send Message
    Author’s reply » You're making the same allegation QCOM did, that because some lawyers at SKGF represented QCOM and one other lawyer at the firm represented PRKR, then that other lawyer must have both had access to QCOM confidential information and given it to PRKR. There was no evidence that Attorney Sterne, who was PRKR's attorney, was ever QCOM's attorney.


    You are completely wrong about whether the judge thought the claims QCOM made were plausible. He expressly said they were _not_ plausible.


    I do take attacks on the ethical behavior of attorneys very very seriously. Too many people throw them around loosely, and thus, based on mere accusation alone, the profession has had its reputation harmed. I find allegations of misconduct by attorneys to be extremely serious and false or baseless accusations equally offensive.
    27 Nov 2012, 07:03 PM Reply Like
  • Prescient Investment Analysis
    , contributor
    Comments (262) | Send Message
    Thanks for this new piece, it is a trial to follow.


    They have cited you in the Wall Street Journal regarding Cisco's attempt to charge Innovatio LLC with racketeering. It sounds like you are skeptical, even if expired patents have been used to assert claims against small proprietorships...


    For reference, this web site has required an acceptable user name and picture for me to publish articles, and has found several other titles inappropriate. So AnonynonymousMember is a thing of the past...
    28 Nov 2012, 12:52 AM Reply Like
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