Leader's lawyers dismantle Facebook’s "schizophrenic” response brief

OPINION: One blogger's perspective

Oral arguments will now be scheduled in front of a 3-judge panel at the Federal Circuit Court of Appeals

In a recondite rebuff of Facebook's legal arguments, Leader lawyers take Facebook to the proverbial woodshed. The stage is now set for a showdown on legal matters that will affect American innovation and jurisprudence for many years, if not decades. If Leader prevails it will support the American inventor and entrepreneurial spirit. If Facebook prevails it will encourage big infringers/counterfeiters to steal inventions and use their ill-gotten gain from the inventions to fend off their day of reckoning.

November 28, 2011 — Leader Technologies today filed its reply brief (Fig. 3, below) following Facebook's response brief (Fig. 2, below) to Leader's opening appeal brief (Fig. 1, below) in Leader Technologies, Inc. v. Facebook, Inc., 08-CV-862-JJF-LPS (D.Del. 2008). Fed. Cir. Case No. 2011-1366. This was the final brief before oral arguments. The U.S. District Court trial resulted in a split verdict. Leader won the meat of the trial: Leader won on "literal infringement" of 11 of 11 patent claims and no published prior art regarding Leader's U.S. Patent No. 7,139,761. In other words, the engine running Facebook is Leader's invention. Facebook won on an esoteric law called "on sale bar and public disclosure." On appeal to the Federal Circuit Court of Appeals in Washington D.C., Leader argues that Facebook had no evidence of sale/public disclosure and confused the jury with court room theatrics. Facebook says their evidence was "substantial." The evidence appears to be fatal to Facebook.

Fig. 1 - Leader OPENING White Brief, Jul. 25, 2011, Fed. Cir. Case No. 2011-1366.	Fig. 2 - Facebook RESPONSE Red Brief, Oct. 24, 2011. Fed. Cir. Case No. 2011-1366.	Fig. 3 - Leader REPLY Gray Brief, Nov. 28, 2011. Fed. Cir. Case No. 2011-1366.

Leader shows that Facebook's response is riddled with inconsistencies, misrepresentations, misdirection, weak or non-existent legal argument and pointless invectives. Among the highlights are these:

1. "Sole question for the jury" sidelined: After making inventor Michael McKibben's credibility the "sole question for the jury" at trial, Facebook now sidelines this argument in favor of new arguments that were not presented to the jury or in post-trial motions, sort of. (Perhaps because Facebook knows that appeals judges, unlike a jury, are not misled by trial theater.)
   
   
2. "Muckracking:" While sidelining McKibben's credibility as their main argument, Facebook schizophrenically trash-talks McKibben on no fewer than 17 pages of its brief (e.g., "McKibben lied," "McKibben's lies," "McKibben's guilty knowledge," "McKibben's falsehoods"). See Fig. 2.1.
   
   

   

   Fig. 2.1 - Vitriolic references to Leader inventor Michael McKibben in Facebook's Oct. 24, 2011 Red Brief in Leader's appeal to the Federal Circuit Court of Appeals of Leader Technologies, Inc. v. Facebook, Inc., 08-862-JJF-LPS (D.Del. 2008); Fed. Cir. Case No. 2011-1366.

3. Attacking inventors to create opposite-evidence: After relying on the idea that disbelief of an inventor's testimony is affirmative evidence of the opposite, Facebook feebly defended this "general principle;" as if they don't really believe it themselves. Leader's lawyers pointed out (and Facebook ignored) that the federal circuit is split on this issue. The "general principle" may apply in cases where the scales of evidence are otherwise weighted more or less evenly. However, in this case, there is no other evidence on either scale. Getting the jury to disbelieve McKibben's testimony was Facebook's entire on sale/public disclosure case. No source code. No engineering drawings. No third party testimony. No expert testimony. No technical information at all. The implications of this argument, if it prevails, are profound on all law since it will open the door for the guilty to encourage their victims to testify truthfully, then use "dark arts" tactics to encourage the jury to disbelieve that testimony. This was Facebook's evident tactic at this trial.
   
   
4. Ignored Legal Argument: Facebook ignored (failed to "differentiate") most of the legal arguments Leader made in its opening White Brief. Such conduct signals a lack of belief in one’s key lower court arguments. More damaging to Facebook, by not arguing the law, they waive their defenses under those laws.
   
   Some examples: (a) Facebook failed to argue why they are permitted to ignore the jury's instructions to perform an element-by-element comparison of the claims against the alleged sale/public disclosures. (b) Instead, they just repeat the mantra that McKibben lied and that the jury's disbelief cannot be questioned. However, such circumstances are why the appeals process exists—to correct misapplications of the law. (c) Facebook then failed to argue why they are permitted to ignore the district court's opinion focusing the question of law on Interrogatory No. 9 as the "sole question" for the jury. (d) Following that, Facebook ignored Leader's argument that a 2009 present tense answer to an interrogatory about the components of Leader2Leader® in 2009, by the plain English, cannot apply to the components in 2002. (e) Then, Facebook argued that the courts are not permitted to take judicial notice of registered trademark dates at the U.S. Patent Office for the combined marks Leader2Leader® and Digital Leaderboard®—the prima facie combination of which puts Interrogatory No. 9 outside the critical date. (f) Facebook's argument focused instead on the Leader2Leader® mark and ignored completely the Digital Leaderboard® mark award date of Dec. 16, 2003—another elephant in the room that is fatal to Facebook.
   
   Without bogging down this article with too many legal citations, the following relate to the subject matter of the previous paragraph: Scaltech Inc. v. Retec/Tetra, L.L.C. (Fed. Cir. 1999) ("first determination" in any on sale bar "analysis must be whether the subject of the barring activity met each and every limitation of the claim, and thus was an embodiment of the claimed invention"); Carr v. United States (U.S. 2010) (use of present tense in statute does not include past actions); Helifix Ltd. v. Blok-Lok, Ltd. (Fed. Cir. 2000) (mere mention of the "DryFix" brand name in a trade show brochure and other letters failed to show a tool that met all the limitations; "there were many tools that had been called 'DryFix tools'"); Federal Rules of Evidence 201 (b)(2) ("The court may judicially notice a fact that is not subject to reasonable dispute because it: . . . (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned).
   
   
5. New "Phantom NDA" Debunked: In a myopic interlude, Facebook consumes an entire page of its Red Brief accusing McKibben of lying about an April 2, 2001 NDA—calling it a "phantom NDA" (non-disclosure agreement). Facebook's new argument (not made to the jury) is that the first Wright-Patterson Air Force Base ("WPAFB") NDA did not occur until Apr. 10, 2001. Ostensibly, Facebook claims that this proves: (1) McKibben is a liar with "guilty knowledge" and the jury was right to disbelieve him, and (2) the invention was publicly disclosed. Facebook repeated the phrase "guilty knowledge" seven times.
   
   Facebook's "McKibben lies" epithets turn on an internal Apr. 3, 2001 email from Leader engineer Steve Hanna to Leader's developers in which he mentions a presentation on Apr. 2, 2001 attended by an unnamed person who was "the number one ranking civilian at WPAFB - Executive Director of Aeronautical Systems Center." See Fig. 5.1.
   
   

   

   Fig. 5.1 – Internal Apr. 3, 2001 Leader email (composite graphic) written by engineer Steve Hanna confirming attendance by a WPAFB participant at a University of Dayton presentation on Apr. 2, 2001. This evidence was actually submitted by Facebook as DTX-1348, Trial Doc. No. 675-25.

   
   Facebook's new argument is that McKibben lied when he testified at trial that "Vincent Russo" was the WPAFB person at that meeting. Facebook Red Br. 40, 44; Trial Tr. 10805:24-10806:3. Facebook now floats the story that the first WPAFB NDA did not occur until the Douglas W. Fleser NDA on Apr. 10, 2001. This new argument was never presented to the jury or in post-trial motions. McKibben's testimony is the only evidence on point. See Fig. 5.2.
   
   Facebook appears to be attempting to expand its "opposite of testimony" theory to new facts never before contested. In other words, McKibben testified that the WPAFB person on Apr. 2, 2011 was Vincent Russo. But, if Facebook can convince the court that the jury did not believe him (and absent any other proof of Russo's association with WPAFB), then maybe they could prevail on the "opposites" theory that Russo was not associated with WPAFB, and therefore, an unidentified third party from WPAFB was the recipient of the allegedly invalidating public disclosure; notwithstanding an entire body of patent and trade secret law in Leader's favor as well.
   
   

   

   Fig. 5.2 – WPAFB fax cover page header, and Leader NDA signature block (composite graphic) signed by Douglas W. Fleser on Apr. 10, 2001. PTX-1058, Trial Doc. 628-9.

   
   The Russo NDA (signature block shown below) did not explicitly identify his association with WPAFB. So, Facebook evidently decided to disbelieve McKibben's testimony about the association (with no proof to the contrary). See Fig. 5.3; Leader Reply 13.
   
   

   

   Fig. 5.3 – Signature block from the Leader NDA signed by (Dr.) Vincent J. Russo on Apr. 2, 2001. This document was submitted into evidence by Facebook. Excerpt of DTX-725, Trial Doc. No. 627-19.

   
   However, a quick Google search of the Congressional Record proves fatal to Facebook. It confirms that "Dr. Vincent J. Russo" was, indeed, the top civilian at Wright-Patterson Air Force Base between at least 1999 and 2003, which would include Apr. 2, 2001, just like both Hanna and McKibben said.  See Fig. 5.4. 
   
   

   

   Fig. 5.4 – S. Hrg. 108-100 - AN OVERLOOKED ASSET: THE DEFENSE CIVILIAN WORKFORCE, 108th Cong. III, SuDoc. Cl. No. Y 4.G 74/9, p. 11 (2003) (testimony of Dr. Vincent J. Russo), GPO ABSTRACT,  PDF version (6 MB), TXT version (174KB). GPO Authenticity Certificate. Dr. Russo's testimony places him at WPAFB on Apr. 2, 2001. Graphic: composite.

   
   McKibben testified at trial (See Trial Tr. 10805:24-10806:3):

   Q. The meeting you had on April 2nd, 2001, was it with Mr. Fleser?
   A. No. I had not met him yet.
   Q. Okay. Who was at that meeting?
   A. The person at that meeting was invited by the senior people from the University of Dayton to attend. And was the top civilian at Wright Patterson Air Force Base. His name was Vincent Russo.
   Q. Did you obtain an NDA from Mr. Russo?
   A. I did.

   

   Fig. 5.5 – Correlation of evidence which proves incontestably that Michael McKibben's testimony about the Apr. 2, 2001 presentation at the University of Dayton was truthful.

   
   Therefore, (a) the Congressional Record provides irrefutable proof that Dr. Vincent J. Russo was associated with WPAFB on Apr. 2, 2001, (b) McKibben's testimony was accurate, (c) any jury disbelief of McKibben in this matter was legal error, and (d) Facebook’s new "phantom NDA" accusation is wrong—and knowingly so. Model Rules of Professional Conduct 3.3, Candor Toward The Tribunal ("(a) A lawyer shall not knowingly: (1) make a false statement of fact or law to a tribunal").
   
   
6. Both cannot be true: Facebook used Leader's provisional patent source code to successfully invalidate Leader’s earlier provisional patent priority date—based on the testimony of Facebook's expert witness Dr. Saul Greenberg. Dr. Greenberg testified that the invention was not present in the source code.
   
   However, Facebook then argued the polar opposite when trying to prove on sale/public disclosure. For on sale/public disclosure bar, Facebook ignored Dr. Greenberg's testimony, and argued that days earlier the full invention was present, was disclosed and was offered for sale. Facebook's problem here is that while they were able to produce Leader source code to disprove the presence of the invention in the provisional patent, they did not produce Leader source code to prove on sale/public disclosure bar. Both claims cannot be true. The absence of Leader source code proof in their on sale/public disclosure bar argument is fatal. See Fig. 6.1; See also Expert witness practices "dark arts."
   
   

   

   Fig. 6.1 - Excerpts from the testimony of Facebook expert witness Dr. Saul Greenberg regarding the only Leader source code placed into evidence in the trial. This source code was contained in the provisional patent application. Dr. Greenberg testified that this source code did not disclosure the '761 invention. However, regarding the on sale/public disclosure claim, Facebook argued that the entire invention was ready for patenting (without showing any additional source code). Trial Doc. No. 623. Tr. 10903-10908.

   
   Note that Dr. Greenberg was not an expert witness for on sale/public disclosure bar, but rather for prior art and enablement of the provisional patent. Facebook did not proffer an expert for on sale/public disclosure bar. Therefore, the only Facebook expert testimony at trial on the subject of Leader's source code is Dr. Greenberg's which is fatal to Facebook.
   
   
7. Ignoring the "clear and convincing standard" legal argument; re-arguing trial evidence instead: Facebook spends 11 pages re-arguing its trial evidence. Leader's appeal argument is on the "clear and convincing evidence" legal standard. Facebook largely ignored that question of law and merely re-argued its trial case. This could prove fatal since hard evidence of the kind that only source code could provide was glaringly missing.
   
   
8. Smoking Gun: In fact, the trial record reveals a Facebook "smoking gun." Even Facebook's own attorney argued to the trial court that the only way they could tell if Leader2Leader practiced the invention was to study the source code.
   
   See Facebook Cooley Godward LLP attorney Mark Weinstein's letter to Judge Stark citing his Jan. 27, 2010 letter to Leader attorney James Hannah 6 months before trial: "in order to analyze whether or not it practices the '761 patent... Facebook would require... the source code for Leader2Leader." See Fig. 8.1.
   
   

   

   Fig. 8.1 – Facebook's attorney, Cooley Godward LLP Attorney Mark Weinstein's Feb. 27, 2010 statement to Judge Leonard Stark that Facebook needed access to the Leader2Leader source code in order to prove whether or not the back end components practiced the '761 invention (six months before trial). Trial Doc. No.283, Ex. 3, PDF p. 11..

   
   The judge was persuaded and gave Facebook access, but tellingly, none of the source code was produced at trial to prove sale/public disclosure. Since the source code is the only sure way for Facebook to have shown the inner workings of software patents, one can only presume they did not find evidence to prove on sale bar and public disclosure—so they did not use any of it at trial. This absence of source code proof should be fatal (although one can excuse a lay jury's lack of appreciation for this clearly intentional Facebook omission). Facebook's trial conduct here is reminiscent of the "Pay no attention to that man behind the curtain" scene from the Wizard of Oz.
   
   Facebook's argument that they provided "substantial" evidence to meet their "clear and convincing" burden of proof is disingenuous. It contradicts Mark Weinstein's earlier statements to the district court. Reason, common sense and the law all say this should be fatal.
   
   
9. New arguments: Facebook's brief argued "alternative grounds for affirmance." This means that Facebook made new arguments to the court on appeal that it did not make in the lower court. Such tactics signal lack of belief in the strength of one’s case, and appeals courts rarely give such "Hail Mary" arguments much weight, if any.
   
   
10. No expert testimony: Facebook makes brand new arguments about Leader’s patent claims that they did not argue to the jury, nor did they argue in post-trial motions. The arguments are too technical for discussion here since they address esoteric areas of patent law like "infringement theories," "limitations," "claim construction," "indefiniteness" and "presumption of validity." These new Facebook arguments are likely out-of-order since they are normally the subject of extensive pre-trial expert witness reports and testimony that are dictated by well-settled law called the Markman Hearing and Daubert Motions. The expert testimony from both sides would have been presented to the jury. None of this happened with these new arguments.
    
    
11. Haughtiness in the face of "literal infringement:" Facebook's flippancy gets even more strange when—in the face of a "literal infringement" verdict against them on 11 of 11 Leader claims and no published prior art—they state in their first footnote on page 4 that they don't think that the technology that Leader invented is anything special (and by inference neither is their technology). Such haughty statements may come back to haunt them.

    Facebook does not believe that the '761 patent reflects a significant advance or solves any significant problem. The terms "inventor" and "invention" are used merely for convenience." Facebook Red Brief, fn. 1.

    

    Fig. 11.1 - Facebook's footnote 1 in its appeal reply brief. This comment belies the verdict against them of "literal infringement" of 11 of 11 claims in Leader Technologies, Inc. v. Facebook, Inc., 08-862-JJF-LPS (D.Del. 2008). In other words, the engine running the Facebook website is Leader's invention. See U.S. Patent No. 7,139,761; Fed. Cir. Case No. 2011-1366.

    This is surreal comment given the frenzy with which Mark Zuckerberg is being listed as inventor on inventions around the planet—54 at last count—using Leader's patent as the foundation. All this Facebook activity to protect its intellectual property contradicts their self-confessed hacker culture and their disrespect for the privacy and property rights of others—as exposed by the recent Federal Trade Commission sanction of Facebook for deceptive privacy practices and Mark Zuckerberg's vacuous mea culpa. See Achohido, Byron. "Facebook settles with FTC over deception charges," USA Today, Dec. 2, 2011. Last accessed Dec. 3, 2011.
    

    Mark Zuckerberg: "one good hacker can be as good as 10 or 20 engineers." Wired, Apr. 19, 2010; Hollywood Reporter, Jun. 28, 2011.

    Impressive patent activity for a hacker. Facebook sends an ambiguous message regarding intellectual property. On the one hand, they admit hacking ideas at a feverish pace, and on the other, they are filing patent applications with abandon. See U.S. Patent Nos. 7,669,123; 7,725,492; 7,788,260; 7,797,256; 7,809,805; 7,827,208; 7,827,265; 7,890,501; 7,933,810; 7,945,653; 7,970,657; 8,010,458; 8,027,943; 8,037,093; U.S. Patent App. Nos. US 2011/0264736 A1; US 2011/0231747 A1; US 2011/0225481 A1; US 2011/0202531 A1; US 2011/0202822 A1; US 2011/0087526 A1; US 2011/0029388 A1; US 2011/0004831 A1; US 2010/0199192 A1; US 2010/0146443 A1; US 2009/0182589 A1; US 2009/0119167 A1; US 2009/0037277 A1; US 2008/0091723 A1; US 2008/0046976 A1; US 2008/0040474 A1; US 2008/0040673 A1; US 2008/0033739 A1; US 2007/0214141 A1; US 2007/0192299 A1; US 2004/0230672 A1; PRC 101849229 A; PRC 101495991; PRC 101366029;  EP 2210185 A1; EP 1971911 A2; EP 1964003 A2; EP 1682089 A2; CA 2704680 A1; CA 2703851 A1; CA 2660539 A1; CA 2660459 A1; CA 2634961 A1; CA 2634928 A1; CA 2633512 A1; CN 101495991; CN 101366029; CN 101849229 A. See "Mark Zuckerberg's Patents," ip.com. Last accessed Dec. 3, 2011; See also Inequitable Conduct.

More review of this Federal Circuit appeal will be forthcoming now that all the legal arguments are in.

Reckless Modus Operandi

The elephant-in-the-room question for Facebook is their motivation for not settling this case. The engine running their site is Leader's invention. Facebook "literally infringes" Leader U.S. Patent No. 7,139,761—that is now proven and will most likely be affirmed on appeal.

Facebook and Lawfare

Given a pending damages-willfulness-injunction trial in this case, one cannot imagine Facebook going public with this risk disclosure embedded in a prospectus. Another theory endorsed by some pundits familiar with this case is that Facebook has adopted a "lawfare" posture against all those from whom they have stolen intellectual property. PhD candidate, Christi Scott Bartman, recently wrote on this subject. Facebook's convoluted arguments in this case consume enormous amounts of limited judicial resources, their privacy deceptions triggering FTC investigations consume limited regulatory resources, and Mr. Zuckerberg's flurry of patent applications worldwide consume even more limited regulatory resources.

Whatever the motivation for continuing to press convoluted arguments, American inventor-ship is on trial here. Will it back the innovation horses, or the leg-less horsemen? Time will tell.

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