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FROM THE EDITOR
New Year, Emerging Trends Although we are in the middle of the bar year, turning the calendar page from December 31 to January 1 inevitably comes with a sense of optimism and hope. Late in the calendar year, a common refrain is, “I can’t wait for this year to be over.” Maybe it is all of those old-fashioned images of “Baby New Year” showing up at midnight on the 31st, but January somehow provides a clean slate, a chance for a new beginning, full of possibilities. The articles in this issue of The Houston Lawyer also are forward-looking in many ways: • Sarbanes-Oxley Whistleblower Claims: In their article entitled “Unlocking the Mysteries of SOX Whistleblower Claims,” authors Eden Sholeen and Rebecca Baker provide a comprehensive overview of the statutory whistleblower protections given by the Sarbanes-Oxley Act and the procedural issues involved in pursuing and defending such claims. This private whistleblower cause of action still is in its relative infancy, and the evolution and development of these types of claims will be interesting to watch. • Alternative Fuels: Authors Aaron Ball and Don Looper discuss the timely issue of alternative fuels in their article, “Feel the Heat: Biofuels are a Hot Investment – but Don’t Get Burned.” They provide a fascinating glimpse into this rapidly evolving industry, including its history and explosive growth in recent years. • Technology at the Courthouse: W. Perry Zivley, Jr.’s article, “Understanding and Using the Courtroom Technology in the New Harris County Civil Courthouse,” shows us that the future is now in terms of lawyers’ ability to communicate to the court and juries using various media. Lawyers and jurors alike should appreciate the thoughtful advances in the use of technology that has been integrated into this new facility. • Sovereign Immunity: Our final article addresses recent decisions regarding the issue of sovereign immunity from suit. In their article entitled “Reata, Tooke, & The Changing Landscape of Sovereign Immunity from Suit,” authorsCasey Wallace and Michael Chu discuss the current state of sovereign immunity following two significant decisions from the Texas Supreme Court. Be sure to read this issue’s Committee Spotlight on Night Court, whose members raise significant funds for local charities while showcasing their considerable talent. Brad Allen (last year’s THL Editor in Chief) is profiled in the Off the Record column. Brad has turned his recreational activity of skeet and trap shooting into a successful fundraiser for Special Olympics. As always, we have several interesting Media Reviews, and our Keeping Up With section highlights selected recent court decisions. As I think about all of my personal resolutions (cut down on multitasking), hopes (Rice Owls winning the College World Series), and plans (get organized) for 2007, I feel that same sense of a “fresh start” that I feel every year. Why the midnight stroke and the new calendar trigger such feelings is a mystery, but one that I embrace and welcome every January. Happy New Year!
Letter to the Editor Thomas Casagrande’s discussion of eBay Inc. v. MercExchange L.L.C. (The Houston Lawyer, November-December 2006) fails to address the real significance of the case – the shift in the balance of power in favor of corporations and against the individual inventor, particularly those individuals who are not well-funded enough to compete directly in the marketplace against the infringer. While it is true that the opinion of the Court was relatively short, it effectively overturned the long-held general understanding that irreparable harm was presumed from infringement, and that injunctive relief would lie to prevent ongoing infringement. That this had been the general understanding in the IP community, including the Federal Circuit, is not surprising, in view of the language of Article I, section 8 of the Constitution: “Congress shall have Power to … Promote the Progress of Science and useful Arts, by securing for Limited Times to Authors and Inventors the Exclusive Right to their respective Writings and Discoveries (emphasis supplied). And while Justice Thomas’ opinion for the Court was relatively short, it is critical to note that four justices – Kennedy, Stevens, Souter and Breyer – revealed their hostility to so-called patent trolls in their concurrence: An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. See FTC, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy, ch. 3, pp. 38-39 (Oct. 2003), available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf (as visited May 11, 2006, and available in Clerk of Court’s case file). For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that seek to buy licenses to practice the patent. See ibid. When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient to compensate for the infringement and an injunction may not serve the public interest. In addition, injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test. eBay Inc. vs. MercExchange, L.L.C., 126 S.Ct. at 1842. Loaded words such as “exorbitant fees” and “undue leverage,” as well as “potential vagueness and suspect validity of some of these patents” cannot be construed as anything other than hostility to patent owners who do not themselves manufacture a competing product, and reflect the Justices’ desire to overturn the current balance of power in negotiations between patent owner and potential licensee to favor the latter. The fact that the inventor may have sold the patent to a better-funded group that has the staying power to engage in patent litigation merely reflects the efficient operation of the free enterprise system. Even though patent rights are strictly limited in time, the Supreme Court has moved to circumscribe those rights, and has taken away a key weapon that every patent owner once had in dealing with the infringer. Now, a defendant that has infringed a patent owned by a non-competitor can sit back and wait to see the outcome of litigation, secure in the knowledge that it won’t be enjoined. As can be seen from the quoted language above, the real problem that the Supreme Court is attempting to address – the wrong way – is that the Patent Office occasionally allows vague and suspect claims to issue in patents. eBay is actually a revolutionary case, and anyone taking on a patent case today should warn the client that the long-understood, constitutionally-based right to exclude is very uncertain if the patent owner has not entered into direct competition with the infringer. Lee L. Kaplan
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