Federal Circuit Appeal Hearing confirms this blog's analysis that Facebook relies on smoke and mirrors

Facebook's "coffee stain" defense

Facebook: "Leader did not give us a 'pristine' copy of their source code."

Judge Moore: "What do you mean, 'pristine' – does it have a coffee stain on it? . . . You're up here on appeal complaining that you didn't have a pristine copy. I have no clue what you even mean by that. And, that somehow justifies why you didn't include it as any of the evidence?"

Washington D.C. (March 5, 2012)—Leader and Facebook attorneys squared off in front of a three-judge Federal Circuit panel to present oral arguments in Leader Tech v. Facebook, Case No. 2011-1366 (Fed. Cir.). The judges were: (1) Alan A. Lourie (presiding), (2) Kimberly A. Moore, and (3) Evan J. Wallach (Click here for biographies of the three-judge Federal Circuit panel in the Leader v. Facebook).

Fig 1. - The United States Court of Appeals for the Federal Circuit Judges who heard oral argument in Leader Tech v. Facebook, 2011-1366 (Fed. Cir.) on Mar. 5, 2012. (Left to Right) Kimberly A. Moore, Alan A. Lourie (presiding), and Evan J. Wallach. This is the order in which they were sitting (as seen from the gallery) during oral arguments by Leader and Facebook attorneys.

Click here to listen to an MP3 recording of the hearing (35 min. 28 sec.).[1]

Click here to read a PDF transcript of the hearing (33 pgs.).



Financial Blogger and former Bloomberg TV Reporter Donna Kline attended the hearing and provides a comprehensive overview of the proceedings at http://www.donnaklinenow.com.

Fig. 2 - Donna Kline is a reporter for The Pittsburgh Business Report and a former reporter for Bloomberg New York.

Facebook abandoned any attempt to overturn the verdict of infringement on 11 of 11 Leader patent claims, or to put forward published prior art. Instead, they focused their entire argument on convincing the justices that they had met their "clear and convincing" burden of proof that inventor McKibben lied about when the invention was ready for patenting.

Judge Wallach asked Leader's attorney why Leader had not introduced its source code to refute Facebook's on sale bar accusation. Leader said that Facebook had the burden of proof, not Leader. In addition, Leader pointed out that technical subjects like computer source code can only be introduced to a jury through expert witnesses. And, since Facebook added the "on sale bar" claim after discovery had closed, Facebook did not present any expert testimony, so, there was no procedural opportunity for Leader to introduce such evidence. In short, Facebook shot themselves in the foot on this issue (hence, they're relying on "smoke and mirrors" now).

Facebook cancelled every opportunity to gather real evidence during discovery

Leader pointed out that Facebook had initially given notice for depositions and evidence from the alleged recipients of the offers, but cancelled all of them. Facebook also petitioned the court and was granted the right to review Leader2Leader source code. Despite having Leader's source code, Facebook did not produce any of this hard evidence at trial. When asked why they didn't show such proofs, Facebook's attorney said the source code they received was not "pristine."

Facebook's "coffee stain" defense

Judge Moore blasted Facebook's lack of "pristine" source code argument, asking if the source code had a "coffee stain" on it, and pointing out that Facebook had the obligation to get the discovery they wanted. Facebook only defense for not having a better argument on the source code issue was the limited time available in the hearing for arguing his priority points.

Facebook's Thomas Hungar to Facebook Attorney Jeffrey Norberg: "I'm sorry"

Immediately following the oral arguments, as they prepared to leave the courtroom, Financial blogger Donna Kline overheard Facebook's appeal attorney Thomas Hungar say to Facebook's Cooley Godward LLP attorney Jeffrey Norberg "I'm sorry." Mr. Norberg responded "Don't apologize." Ms. Kline took the exchange to mean that Mr. Hungar did not believe the hearing had gone well for Facebook. Ms. Kline recorded a video from the courthouse of her first impressions immediately following the hearing:

Fig. 3 - Former Bloomberg TV Reporter Donna Kline reports from the Federal Circuit courthouse in Washington D.C. immediately following the oral arguments in Leader Tech v. Facebook, Case No. 2011-1366. Source: Donna Kline Now!

Bizarre Facebook Appeal Brief footnote contradicts their "on sale bar" argument . . . yet more flip-flopping . . . even in the second highest court in the land

Facebook appeal brief contains a footnote that contradicts their entire "on sale bar" argument. They stated:

"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 Brief, fn. 1.

Fig. 4 - Facebook Red Brief Footnote 1, pg. 4 — Leader v. Facebook appeal before the United States Court of Appeals for the Federal Circuit.

So let's get this straight. Facebook hung their entire Federal Circuit appeal on discrediting inventor McKibben's testimony; alleging that Leader2Leader contained the invention before Dec. 11, 2002. This is after claiming just the opposite up to three months before trial—that Leader2Leader never contained anything novel or unique. Now, in their appeal brief, they make BOTH arguments . . . in the same brief! This footnote says that Leader2Leader has never contained an invention and that Leader invented nothing. Hello, the "on sale bar" defense requires that an invention exists and that an attempt was made to sell it too soon. Hopefully the Federal Circuit judges will not reward this blatant duplicity.

Fenwick & West LLP failed to disclose its prior association with Leader Technologies in 2002, and failed to disclose Leader's inventions as prior art in Facebook's patent filings from 2008.

"Inequitable conduct" means you have withheld material information from the Patent Office regarding patentability; such lack of disclosure invalidates a patent application

This blog was the first to highlight anomalies in Facebook's intellectual property strategy, namely that the self-confessed hacker Mark Zuckerberg had suddenly become one of the most prolific filer of patents on the planet since 2008. See Section 11 of "Leader's Lawyers Dismantle Facebook's 'Schizophrenic' Appeal Brief." Since that time, Facebook issued its S-1 notice of intent to go public. The S-1 disclosed over 700 patent filings owned by Facebook which were largely filed by the law firm Fenwick & West LLP. Remarkably, Fenwick was Leader Technologies' corporate law firm in 2002 and was privy to all Leader business and technical information, including its patent activity. Also remarkably, Fenwick did not disclose Leader's U.S. Patent No. 7,139,761 in ANY of Facebook's patent filings as prior art. This revelation, and the fact that Fenwick (also Facebook S-1 counsel) are disclosure failures that may prove damaging if not fatal to Facebook. Stay tuned for more on these developments. Click here to read what Donna Kline writes about this "inequitable conduct" in her blog.

CBS, NBC, CNBC, Law360, Western Free Press and numerous bloggers are now following Leader v. Facebook

The blogosphere has finally awakened to the facts in this case and news organizations including CBS (KPIX), CBS (WBNS), NBC (Bay Area), NBC (WCMH), CNBC, Law360, Western Free Press as well as numerous blogs and bloggers are now following this case. Donna Kline's blog includes links to this video coverage. CBS-TV (KPIX) San Francisco's Julie Watts interview with Leader's Michael McKibben is embedded below (not viewable on iPad and iPhone), sorry. Viewable on all browsers except Safari. This KPIX video starts with a short advertisement.

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Footnotes:

[1] Leader Tech v. Facebook, Case No. 2011-1366. Hearing of the United States Court of Appeals for the Federal Circuit, Mar. 5, 2012. Sound Recording. Washington D.C. Federal Circuit website. MP3. Accessed Mar. 6, 2012. <http://www.cafc.uscourts.gov/oral-argument-recordings/search/audio.html>.