Category: Civil Procedure

PTO to Patent Examiners: Make Interpretation of Means-Plus-Function Claims Clear in the Record

On March 18, 2024, the US Patent & Trademark Office (PTO) issued a memorandum to patent examiners addressing means-plus-function and step-plus-function claim limitations and how to clearly articulate, in the prosecution record, the PTO’s interpretation of such claim limitations. The goal of the memorandum is to ensure consistency in connection with the examination of such limitations, provide both the applicant and the public with notice regarding the claim interpretation used by the patent examiner, and provide the applicant an opportunity to advance a different claim interpretation early in the prosecution.

As stated in 35 U.S.C. §112(f), “[a]n element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.” The memorandum does not suggest any changes in interpretation of the statute.

One aspect of the memorandum is to remind examiners of the resources and guidance available when examining means-plus-function and step-plus-function claim limitations, specifically MPEP §§ 2181-2187 and refresh training. In accordance with the guidance, the primary steps when examining such claim elements include:

  • Determining whether a claim limitation invokes § 112(f)
  • Ensuring the record is clear with respect to invoking § 112(f)
  • Evaluating the description necessary to support a § 112(f) claim limitation under §§ 112(a) and (b).

To determine whether a claim limitation invokes §112(f), the guidance instructs examiners to employ the three-prong analysis set forth in MPEP § 2181, subsection I. Using this analysis, recitation of the terms “means” or “step” in association with functional language, rather than structure, material or acts for performing that function, should be interpreted as claim limitations invoking § 112(f). However, where these terms are accompanied by structure, materials or acts for performing the function, § 112(f) is not invoked. On the other hand, a limitation reciting functional language along with a generic placeholder term instead of “means,” which fails to recite sufficiently definite structure for performing the function, would nonetheless invoke § 112(f), according to a proper analysis. Examples of such generic placeholders include “mechanism for,” “module for,” “device for,” “unit for,” “component for,” “element for,” “member for,” “apparatus for,” “machine for” and “system for.”

An important caveat in the memorandum states that “[e]stablishing the interpretation of § 112(f) limitations in writing during prosecution is critical in supporting the agency goal of establishing a clear prosecution record.” The guidance advises examiners that form paragraphs are available in support of meeting this objective, which serve to inform “the applicant, the public, and the courts . . . as to the claim construction the examiner used during prosecution. This further informs the applicant, the public, and the courts (and the PTO for any post-grant review procedures) as to how the examiner searched and applied prior art based on the examiner’s interpretation of the claim.”

The memorandum further emphasizes the need to evaluate whether claims under §112(f) meet the written description and enablement requirements of § 112(a) and the definiteness requirement of § 112(b). Regarding the latter, the specification must clearly disclose a structure that is clearly linked to or associated with the function, which would be understood by one skilled in the art to perform the entire recited function. Further, “[f]or computer-implemented § 112(f) claim limitations, the specification must disclose an algorithm for performing the claimed specific computer function . . . [and] sufficiency of the disclosure of the algorithm must be determined in light of the level of ordinary skill in the art.”

The memorandum further states that an indefinite § 112(f) claim limitation “based on failure of the specification to disclose corresponding structure that performs the entire claimed function will also lack adequate written description and may not be sufficiently enabled to support the full scope of the claim under § 112(a).” Thus, in any § 112(f) analysis, an examiner must determine whether the specification establishes possession of the claimed invention and whether sufficient information is provided to enable one skilled in the pertinent art to make and use the claimed invention.

For further details, see the memorandum here and the Federal Register notice here.

© 2024 McDermott Will & Emery
For more on Means-Plus-Function, visit the NLR Intellectual Property section.

The Increasing Role of Cybersecurity Experts in Complex Legal Disputes

The testimonies and guidance of expert witnesses have been known to play a significant role in high-stakes legal matters, whether it be the opinion of a clinical psychiatrist in a homicide case or that of a career IP analyst in a patent infringement trial. However, in today’s highly digital world—where cybercrimes like data breaches and theft of intellectual property are increasingly commonplace—cybersecurity professionals have become some of the most sought-after experts for a broadening range of legal disputes.

Below, we will explore the growing importance of cybersecurity experts to the litigation industry in more depth, including how their insights contribute to case strategies, the challenges of presenting technical and cybersecurity-related arguments in court, the specific qualifications that make an effective expert witness in the field of cybersecurity, and the best method for securing that expertise for your case.

How Cybersecurity Experts Help Shape Legal Strategies

Disputes involving highly complex cybercrimes typically require more technical expertise than most trial teams have on hand, and the contributions of a qualified cybersecurity expert can often be transformative to your ability to better understand the case, uncover critical evidence, and ultimately shape your overall strategy.

For example, in the case of a criminal data breach, defense counsel might seek an expert witness to analyze and evaluate the plaintiff’s existing cybersecurity policies and protective mechanisms at the time of the attack to determine their effectiveness and/or compliance with industry regulations or best practices. Similarly, an expert with in-depth knowledge of evolving data laws, standards, and disclosure requirements will be well-suited to determining a party’s liability in virtually any matter involving the unauthorized access of protected information. Cybersecurity experts are also beneficial during the discovery phase when their experience working with certain systems can assist in potentially uncovering evidence related to a specific attack or breach that may have been initially overlooked.

We have already seen many instances in which the testimony and involvement of cybersecurity experts have impacted the overall direction of a legal dispute. Consider the Coalition for Good Governance, for example, that recently rested its case(Opens an external site in a new window) as the plaintiffs in a six-year battle with the state of Georgia over the security of touchscreen voting machines. Throughout the process, the organization relied heavily on the testimony of multiple cybersecurity experts who claimed they identified vulnerabilities in the state’s voting technology. If these testimonies prove effective, it will not only sway the ruling in the favor of the plaintiffs but also lead to entirely new policies and impact the very way in which Georgia voters cast their ballots as early as this year.

The Challenges of Explaining Cybersecurity in the Courtroom

While there is no denying the growing importance of cybersecurity experts in modern-day disputes, it is also important to note that many challenges still exist in presenting highly technical arguments and/or evidence in a court of law.

Perhaps most notably, there remains a significant gap in both legal and technological language, as well as in the knowledge and understanding of cybersecurity professionals and judges, lawyers, and the juries tasked with parsing particularly dense information. In other words, today’s trial teams need to work carefully with cybersecurity experts to develop communication strategies that adequately illustrate their arguments but do not result in unnecessary confusion or a misunderstanding of the evidence being presented. Visuals are a particularly useful tool in helping both litigators and experts explain complex topics while also engaging decision-makers.

Depending on the nature of the data breach or cybercrime in question, you may be tasked with replicating a digital event to support your specific argument. In many cases, this can be incredibly challenging due to the evolving and multifaceted nature of modern cyberattacks, and it may require extensive resources within the time constraints of a given matter. Thus, it is wise to use every tool at your disposal to boost the power of your team—including custom expert witness sourcing and visual advocacy consultants.

What You Should Look for in a Cybersecurity Expert

Determining the qualifications of a cybersecurity expert is highly dependent on the details of each individual case, making it critical to identify an expert whose experience reflects your precise needs. For example, a digital forensics specialist will offer an entirely different skill set than someone with a background in data privacy regulations and compliance.

Making sure an expert has the relevant professional experience to assess your specific cybersecurity case is only one factor to consider. In addition to verifying education and professional history, you must also assess the expert’s experience in the courtroom and familiarity with relevant legal processes. Similarly, expert witnesses should be evaluated based on their individual personality and communication skills, as they will be tasked with conveying highly technical arguments to an audience that will likely have a difficult time understanding all relevant concepts in the absence of clear, simplified explanations.

Where to Find the Most Qualified Cybersecurity Experts

Safeguarding the success of your client or firm in the digital age starts with the right expertise. You need to be sure your cybersecurity expert is uniquely suited to your case and primed to share critical insights when the stakes are high.

© Copyright 2002-2024 IMS Legal Strategies, All Rights Reserved.
For more news on Cybersecurity Experts, visit the NLR Civil Procedure section.

Three Individuals Sentenced for $3.5 Million COVID-19 Relief Fraud Scheme

Three Individuals Sentenced for $3.5 Million COVID-19 Relief Fraud Scheme

On February 6, three individuals were sentenced for fraudulently obtaining and misusing Paycheck Protection Program (PPP) loans that the US Small Business Administration (SBA) guaranteed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

According to court documents and evidence presented at trial, in 2020 and 2021, defendants Khadijah X. Chapman, Daniel C. Labrum, and Eric J.O’Neil submitted falsified documents to financial institutions for fictitious businesses to fraudulently obtain $3.5 million in PPP loans intended for small businesses struggling with the economic impact of COVID-19. Chapman was convicted in November 2023 of bank fraud. Labrum and O’Neil pleaded guilty in 2023 to bank fraud. Following their convictions, Chapman was sentenced to three years and 10 months in prison, Labrum was sentenced to two years in prison, and O’Neil was sentenced to two years and three months in prison.

Read the US Department of Justice’s (DOJ) press release here.

False Claims Act Complaint Filed Against Former President and Co-Owner of Mobile Cardiac PET Scan Provider

The DOJ filed a complaint in the US District Court for the Southern District of Texas under the False Claims Act (FCA) against Rick Nassenstein, former president, chief financial officer, and co-owner of Illinois-based Cardiac Imaging Inc. (CII), which provides mobile cardiac positron emission tomography (PET) scans.

The complaint alleges that Nassenstein caused CII to pay excessive, above-market fees to doctors who referred patients to CII for cardiac PET scans. The government alleges that the compensation arrangements violated the Stark Law, which prohibits health care providers from billing Medicare for services referred by a physician with whom the provider has a compensation arrangement unless the arrangement meets certain statutory and regulatory requirements. Claims knowingly submitted to Medicare in violation of the Stark Law also violate the federal FCA.

The complaint alleges that CII provided cardiac PET scans on a mobile basis and paid the referring physicians, usually cardiologists, to provide physician supervision as required by Medicare rules. From at least 2017 through June 2023, Nassenstein allegedly caused CII to enter into compensation arrangements with referring cardiologists that provided for payment to the cardiologists as if they were fully occupied supervising CII’s scans, even though they were actually providing care to other patients in their offices or patients who were not even on site. CII’s fees also allegedly compensated the cardiologists for additional services the physicians did not actually provide. The complaint alleges that CII paid over $40 million in unlawful fees to physicians and submitted over 75,000 false claims to Medicare for services provided pursuant to referrals that violated the Stark Law.

The lawsuit was originally a qui tam complaint filed by a former billing manager at CII, and the United States, through the DOJ, filed a complaint in partial intervention to participate in the lawsuit.

The case, captioned US ex rel. Pinto v. Nassenstein, No. 18-cv-2674 (S.D. Tex.), follows an $85.5 million settlement in October 2023 by CII and its current owner, Sam Kancherlapalli, for claims arising from this conduct.

Read the DOJ’s press release here.

San Diego Restaurant Owner Charged with Tax and COVID-19 Relief Fraud Schemes

On February 2, a federal grand jury in San Diego returned a superseding indictment charging a California restaurant owner with wire fraud, conspiracy to commit wire fraud, tax evasion, filing false tax returns, conspiracy to defraud the United States, conspiracy to commit money laundering, and failing to file tax returns.

According to the indictment, Leronce Suel, the majority owner of Rockstar Dough LLC and Chicken Feed LLC, conspired with a business partner to underreport over $1.7 million in gross receipts on Rockstar Dough LLC’s 2020 federal corporate tax return. From March 2020 to June 2022, Suel and the business partner then allegedly used this fraudulent return to qualify for COVID-19-related loans pursuant to the PPP and Restaurant Revitalization Funding program. In connection with those loans, Suel also allegedly certified falsely that he used the loan money for payroll purposes only. The indictment alleges that Suel and his business partner laundered the fraudulently obtained funds through cash withdrawals from their business bank accounts and stashed more than $2.4 million in cash in their home.

The indictment further charges that Suel failed to report millions of dollars received in cash and personal expenses paid for by his businesses as income, in addition to reporting false depreciable assets and business losses.

If convicted, Suel faces prison sentences up to 30 years for each count of wire fraud and conspiracy to commit wire fraud, 10 years for each count of conspiracy to commit money laundering, five years for tax evasion and conspiracy to defraud the United States, three years for each count of filing false tax returns, and one year for each count of failing to file tax returns.

Read the DOJ’s press release here.

© 2024 ArentFox Schiff LLP
For more on Regulated Industries, visit the NLR Biotech, Food, Drug section.

PFAS MDL Settlements: Red Herrings For Downstream Companies

Leading up to the aqueous film-forming foam (AFFF) MDL litigation bellwether trial in June 2023, questions circulated regularly about the end game for the water utilities that had filed lawsuits alleging PFAS contamination to drinking water. With several hundred utilities with pending lawsuits seeking the costs for technology needed to filter PFAS from drinking water, monitoring wells, testing equipment, disposal costs, etc., and potentially thousands of other water utilities with similar potential lawsuits, the damages seemed astronomical. So, too, did the amount of time it would take to litigate each case to get the water utilities monetary relief. These two competing forces, plus the pressure of an actual trial date looming, led Dupont and 3M to announce PFAS MDL settlements in June 2023. At $1.185 billion by Dupont and between $10.3 billion and $12.5 billion by 3M, with the intention of both settlement funds to resolve all pending and potential water utility claims in the United States, it seemed to many that a resolution had been achieved that would address PFAS in drinking water systems without burdening utility customers or the utilities themselves.

The issue, though, is that over 9,000 water utilities were estimated to be in need of treatment technology to meet the EPA’s newly proposed drinking water standards. The American Water Works Association (AMWA) reminded everyone that their own estimates of the costs of compliance to the EPA’s level would cost utilities over $3.2 billion annually. Even buying into the old joke that lawyers are horrible at math, it does not take long for one to realize the significant gap in the proposed settlement amounts and AMWA’s estimates. Water utilities accepting money under the Dupont and 3M settlement funds are not all going to receive 100% of the necessary funding for remediation. How then will this deficit be resolved?

Water utilities will be reluctant to pass on all of the costs to customers, although pricing increases could provide a stopgap measure for water utilities on top of the MDL settlement funds. State or even federal funding may be available under grant, loan or other programs that can also assist. However, when the dust settles, it is likely that water utilities are going to look to a particular group of parties to pursue damages from – companies that discharged PFAS into waterways that fed into the water utility facilities. Lawsuits already abound nationally filed by private citizens against such companies for property damage, bodily injury and medical monitoring. Why then would water utilities finding themselves in need of significant money to properly treat drinking water not take similar legal action? Couple this with pressure water utilities are starting to receive in the form of finding themselves sued in class action lawsuits by private citizens, and the legal notion of contribution begins to ring very true for water utilities looking to minimize their own damages in such lawsuits and find sources of funding for remediation technology.

Companies that have historically discharged effluent into waterways that feed drinking water supplies must therefore keep all of the above in mind and not be lulled into a false sense of complacency that the Dupont and 3M settlements in the MDL are going to mean the end of PFAS drinking water litigation. I predict quite the opposite.

It is of the utmost importance that businesses along the whole commerce chain that have or believe that they might have used PFAS in certain processes take steps now to understand their PFAS risk. Public health and environmental groups urge legislators to regulate PFAS at an ever-increasing pace. Similarly, state level EPA enforcement action is increasing at a several-fold rate every year. Companies that did not manufacture PFAS, but merely utilized PFAS in their manufacturing processes, are becoming targets of costly enforcement actions at rates that continue to multiply year over year. Lawsuits are also filed monthly by citizens or municipalities against companies that are increasingly not PFAS chemical manufacturers. The only way to manage future risk is to fully understand what that risk picture looks like, and companies would be well-advised to invest in proper diligence for the PFAS risk question.

©2024 CMBG3 Law, LLC. All rights reserved.
For more on PFAS, visit the NLR Environmental, Energy & Resources section.

Giving Thanks for Thanksgiving

Until President Abraham Lincoln proclaimed a national day of thanksgiving during the Civil War, thanksgiving holidays were a matter of state and local concern.   California mentions Thanksgiving Day in 18 separate statutes, including those in the Code of Civil Procedure, Civil Code, and even the Fish & Game Code.  The last statute, however, has nothing to do with turkeys.  Rather, Fish & Game Code Section 5523 concerns the timing of the opening of the Dungeness crab season.

California may have more than one day of thanksgiving.  Government Code Section 19853 provides that all state employees are entitled to various specified holidays, including  every day appointed by the Governor of this state for a public fast, thanksgiving, or holiday.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP

By  Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP

For more news on California Holidays for Employees, visit the NLR Labor & Employment section.

Blunt Rejection of Attorney Fees in Stipulated Dismissal

The US Court of Appeals for the Federal Circuit affirmed the rejection of attorney fees, finding that neither inequitable conduct nor a conflict of interest rendered the case exceptional given the limited factual record following a stipulated dismissal in a patent case. United Cannabis Corp. v. Pure Hemp Collective Inc., Case No. 22-1363 (Fed. Cir. May 8, 2023) (Lourie, Cunningham, Stark, JJ.).

United Cannabis Corporation (UCANN) sued Pure Hemp for patent infringement. After the litigation was stayed pending bankruptcy proceedings, the parties stipulated to the dismissal. Pure Hemp then sought attorney fees based on alleged inequitable conduct by UCANN during prosecution of the asserted patent due to nondisclosure of a prior art reference used in the patent’s specification and based on a purported conflict of interest by UCANN’s litigation counsel. The district court denied Pure Hemp’s request, finding that the case was not exceptional. Pure Hemp appealed.

Pure Hemp argued that the district court erred by (1) failing to find Pure Hemp to be the prevailing party in the litigation, (2) not concluding that the undisputed facts established inequitable conduct and (3) not recognizing that UCANN’s attorneys had a conflict of interest.

The Federal Circuit found that although the district court erred in not finding Pure Hemp to be the prevailing party, this was a harmless error. The Court explained that by fending off UCANN’s lawsuit with a stipulation dismissing UCANN’s claims with prejudice, Pure Hemp is a prevailing party under § 285. However, the Court concluded that this error was harmless because the district court ultimately concluded that this case was unexceptional.

The Federal Circuit found Pure Hemp’s arguments on inequitable conduct without merit. The Court explained that it had no findings to review because Pure Hemp voluntarily dismissed its inequitable conduct counterclaim and did not seek any post-dismissal inequitable conduct proceedings. Although Pure Hemp argued that it could prevail based on the undisputed facts in the record, the Court disagreed. It explained that even the limited record demonstrated at least a genuine dispute as to both the materiality and intent prongs of inequitable conduct and, therefore, the district court properly determined that Pure Hemp did not demonstrate that this case was exceptional.

The Federal Circuit also rejected Pure Hemp’s argument that copying and pasting portions from the prior art in the patent’s specification (but not disclosing the same prior art references) was inequitable conduct. The Court explained that unlike the nonbinding cases Pure Hemp relied on, the district court here did not find that the copied prior art was material, and the record gave no reason to disbelieve the explanation provided by UCANN’s prosecution counsel. The Court was also unpersuaded by Pure Hemp’s arguments to support inequitable conduct, explaining that the Court was not free to make its own findings on intent to deceive and materiality and, further, the district court was not required to provide its reasoning for its decision in attorney fee cases.

As to Pure Hemp’s argument that the case was exceptional because UCANN’s attorneys suffered from a conflict of interest, the Federal Circuit found that this argument was waived and, in any event, lacked merit because Pure Hemp presented no evidence to support the alleged conflict.

Finally, having sua sponte raised the issue of whether this was a frivolous appeal. The Federal Circuit determined that although it was “not pleased with how Pure Hemp has argued this appeal,” the appeal was nonetheless not frivolous because [Pure Hemp] properly argued that it was the prevailing party.

© 2023 McDermott Will & Emery
For more Intellectual Property Legal News, click here to visit the National Law Review.

New York Adult Survivors Act

New York’s Adult Survivors Act[1] (“ASA” or “the Act”) (S.66A/A.648A) became effective on November 24, 2022. The Act provides a one-year lookback window for people to seek civil remedies for sexual abuse they experienced after they turned 18, regardless of what year the abuse occurred. This law adds critical energy to the ongoing momentum of the #MeToo movement, allowing survivors to file suit against both their abusers and the institutions that enabled them.

The one-year lookback window lasts until November 23, 2023, so as of today, survivors have just over ten months to take advantage of the law. The following guide provides context and recommendations for understanding and using New York’s Adult Survivors Act.

What does the ASA do?

The ASA creates a one-year lookback window for sexual assault survivors to pursue civil claims in court for abuse that may have occurred years earlier, as long as they were over 18 at the time. Previously, a person who experienced sexual abuse only had a few years to file a lawsuit in New York before their claim would be time-barred. This meant that survivors had little time in which to come to terms with the abuse they experienced, find an attorney, prepare a case, and file an action. For those who missed that small window, the ASA reopens the courthouse doors. So until November 23, 2023, whether you experienced abuse in 2015, 2000, or 1985, you can file a claim in court and seek recovery for what happened to you.

What does the law cover?

Sexual offenses covered by the ASA span a wide range of behaviors, including but not limited to forcible touching, rape, sexual assault, sexual misconduct, and other forms of sexual abuse. Not every sexual offense is covered under the ASA,[2] and an attorney can help assess whether your claim falls within its provisions.

Who can you sue?

Another powerful provision of the law is who it allows to be named as a defendant. Survivors are not limited to suing their abusers—they can also hold accountable the institutions that insulated those abusers from justice. These institutions can include entities that had responsibility to keep the survivor safe and to control the actions of the abuser. Claims against the institutions can involve both intentional and negligent acts. If your abuser was part of a larger organization that contributed to or failed to prevent, notice, or stop the abuse, the ASA empowers you to go after that organization.

This provision comes directly from New York’s 2019 Child Victims Act (“CVA”).[3] Over 10,000 people have used the CVA to sue institutions that had a role to play in their abuse, including churches, hospitals, overnight and day camps, and schools. For example, a large number of CVA cases name the Roman Catholic Church and the Boy Scouts of America as institutional defendants. The ASA provides a similar recourse to justice: oftentimes, survivors are subject to abuse by people who hold power over them. For minors, these people could be coaches, religious leaders, teachers, mentors, or other caregivers. For people over 18, those in power may be employers, professors, or community leaders. The ASA enables adult survivors to sue the institutions that gave their abusers power and protected those abusers from answering for their actions.

The institutional defendant provision of the ASA opens significantly larger opportunities for recovery, as institutions oftentimes have deeper pockets than individual abusers. Examples of institutions that could face liability under the ASA include employers, colleges and universities, social organizations such as fraternities and sororities, medical practices, and facilities that house people with disabilities. Any entity that knew about or should have known about and stopped the abuse could be on the hook.

Who is it for?

The ASA opens the courts to people who were over the age of 18 when they experienced sexual abuse but are otherwise unable to file due to missing the statute of limitations. You can use the ASA even if you have previously tried to file but had your suit dismissed as untimely.[4]

It is important to note that if you have resolved or released your claims through a settlement process, you may not file under the ASA. For example, the nearly 150 women who received payment from a settlement with Columbia University Irving Medical Center and New York Presbyterian Hospital based on sexual abuse by Dr. Robert Hadden cannot use the ASA to file new suits as their claims have been fully resolved.

Why do we need this?

The Adult Survivors Act is a game-changer for people who were previously unable to file claims for sexual abuse due to a short statute of limitations. In 2019, New York extended the statute of limitations for certain civil lawsuits related to sex crimes from five to 20 years. But that law did not apply retroactively, so survivors who experienced abuse just a few years prior were still barred from seeking justice.

The ASA honors the lived reality of sexual abuse. Like the CVA before it, the ASA recognizes sexual abuse can take years to process, and those years often extend far beyond the short filing windows New York historically placed on these types of claims.

Survivors have many reasons for waiting to come forward with claims of sexual abuse. Some face retaliation by their abusers, some fear the risk of community backlash, and others lack the resources to seek legal representation. Finally, “[t]rauma takes time,” as New York State Senator and ASA champion Brad Hoylman said when promoting the then-bill. Many sexual assault and sexual abuse survivors need years to process what they endured. This can be particularly true when an abuser uses power, manipulation, or threats to coerce submission to sexual contact, a common tactic of notorious abusers Harvey Weinstein, Kevin Spacey, and Dr. Robert Hadden. Understanding the event as sexual abuse, reconciling yourself with your experience, and deciding how to move forward can take decades. The ASA is an effort to respect this process and empower survivors to hold their abusers accountable.

Why would I file a lawsuit about what happened to me?

For many people, surviving sexual abuse is not something that can be “fixed” by any kind of legal action. But the remedies available through civil suits can serve as a proxy for some measure of justice, and that proxy can enable survivors to move forward.

Successful ASA plaintiffs can recover economic, compensatory, and punitive damages from both the individual abuser and the institution. Many survivors suffer financial loss in addition to the mental, emotional, and physical harm of the abuse itself. If your boss sexually harasses you and then terminates you when you protest, you may find yourself without an income. If a classmate assaults you, you may forfeit tuition money after deciding to leave campus for your safety. Civil courts can make you financially whole and further compensate you for the pain of the experience and the efforts you must make to heal. Courts can also provide other remedies, requiring the people who perpetrated or allowed abuse to do or stop certain behaviors, thereby protecting other potential future targets of abuse and assault.

How do I use the ASA?

The first thing you should do is consult an attorney. These cases can be complicated, and plaintiffs still maintain the burden of proof, so you want the expertise of an experienced lawyer. There are several firms that regularly bring these kinds of actions, and many will provide you with a free consultation. If you decide to move forward with your case after a consultation, your attorney will work with you to determine the best strategy. This strategy may include going to court, or it may involve seeking a resolution that works for you outside of court.

As you go through the process of finding an attorney, please know that you deserve counsel that is compassionate, knowledgeable, and focused on your needs and interests as a client. This is about what happened to you, and your attorney is there to guide you. You should feel heard, understood, and respected.

When do I need to file?

You must file your claim by November 23, 2023.

While the ASA is a powerful effort by New York to support the rights of sexual abuse survivors, it is time-limited. November 23, 2023 is the cutoff date for filing a claim, but if you are interested in seeking recovery under the Act, you should take action now. It may take time to find the right attorney for you, and your lawyer will need additional time to put together your case. If you and your lawyer decide to pursue a resolution without going to court, that process could take even longer.

Ten months sounds like a long time, but in the legal world, it can move very quickly. Start considering whether you want to take advantage of the ASA and reach out to an attorney as soon as possible.

What happens after I file?

This will come down to conversations you have with your attorney. Filing is the first major step in the process. Following that process through might include discovery, more court filings, and hearings before a judge or a jury.

What else should I consider?

Take care of yourself as you think about your next steps. Reach out to trusted loved ones and mental health professionals. It is critical that you ground yourself in what is best for you.

FOOTNOTES

[1] New York Governor Kathy Hochul signed the ASA into law on May 24, 2022. The ASA passed the New York Assembly by a majority vote of 140 in favor to 3 against after receiving unanimous support in the state Senate one month prior.

[2] Article 130 of the New York Penal Law lists offenses covered under the ASA.

[3] The CVA came into effect in 2019, providing a two-year lookback window for people who experienced abuse as minors. The CVA amends N.Y. C.P.L.R. § 208 (2019) and allows victims to initiate civil action against their abusers and enabling institutions. As to victims where civil actions were barred before the CVA took effect, N.Y. C.P.L.R. 214-g (2020) creates a lookback period to file a claim. Since 2019, over 10,000 people have filed lawsuits in New York against abusers and the institutions that protected them.

[4] The ASA can revive your claim only if it was dismissed for failure to file by the statutory deadline. If your claim was dismissed for other reasons, this law cannot fix that.

For more labor and employment news, click here to visit the National Law Review. 

Katz Banks Kumin LLP Copyright ©

Patent Infringement Verdict Nixed over Judge’s Stock Ownership

The US Court of Appeals for the Federal Circuit reversed a district court’s opinions and orders and remanded the case for further proceedings before a different district court judge because the original judge had failed to divest all financial interests in the case. Centripetal Networks, Inc. v. Cisco Systems, Inc., Case No. 21-1888 (Fed. Cir. June 23, 2022) (Dyk, Taranto, Cunningham, JJ.)

Centripetal sued Cisco for patent infringement. The original district court judge presided over a 22-day bench trial, which included a more than 3,500-page record, 26 witnesses and more than 300 exhibits. The court heard final arguments on June 25, 2020. While the case was still pending before the district court, the judge learned that his wife owned Cisco stock, valued at $4,687.99. The district court judge notified the parties on August 12, 2020, that he had discovered that his wife owned 100 shares of Cisco stock. He stated that his wife purchased the stock in October 2019 and had no independent recollection of the purchase. He explained that at the time he learned of the stock, he had already drafted a 130-page draft of his opinion on the bench trial, and virtually every issue had been decided. He further stated that the stock did not—and could not have—influenced his opinion on any of the issues in the case. Instead of selling the stock, which might have implied insider trading given his knowledge of the forthcoming order, the judge placed it in a blind trust. Under the terms of the trust, the judge was to be notified when the trust assets had been completely disposed of or when their value became less than $1,000.

Centripetal had no objections. Cisco, however, filed a motion for recusal under 28 U.S.C. § 455(a) and (b)(4). The judge ordered Centripetal to file a response. On October 2, 2020, the court denied Cisco’s motion for recusal. On October 5, 2020, the court issued a 167-page opinion and order containing the judge’s findings that Cisco willfully infringed the asserted claims of the patents-at-issue and awarded Centripetal damages of more than $755 million, pre-judgment interest of more than $13 million and a running royalty of 10%. Cisco moved for amended findings and judgment under Rule 52(b) or a new trial under Rule 59(a)(2). The court denied both motions. Cisco appealed the district court’s findings and asserted that the judge was required to recuse himself under 28 U.S.C. § 455(b) absent divestiture under § 455(f) (the only exception to the bright line rule that a federal judge is disqualified based on a known financial interest in a party).

On appeal, the Federal Circuit addressed two issues: whether the district court judge was relieved of his duty to recuse under § 455(b)(4) because his wife had divested herself of her interest in Cisco under § 455(f), and, if the requirements of § 455(f) were not satisfied, a determination as to the proper remedy.

The Federal Circuit analyzed whether placement of the stock in a blind trust satisfied the divesture requirement of § 455(f). The Court explained that a blind trust is “an arrangement whereby a person, in an effort to avoid conflicts of interest, places certain personal assets under the control of an independent trustee with the provision that the person is to have no knowledge of how those assets are managed.” Centripetal admitted that there are no cases holding that placement of stock in a blind trust constitutes divestment. The Court next turned to the intent of Congress when it drafted the statute. The Court reasoned that to “divest” was understood at the time to mean “dispossess or deprive,” which is only possible when an interest is sold or given away. The Court also noted that Congress used the present tense—that a judge should not sit when he or she has a financial interest in a party. The Court concluded that while placing the stock in a blind trust removed the judge’s wife from control over the stock, it did not eliminate her beneficial interest in Cisco. The Court also found that the Judicial Conference’s Committee on Codes of Conduct had previously ruled that a judge’s use of a blind trust does not obviate the judge’s recusal obligations. Accordingly, the Court found that placing assets in a blind trust is not divestment under § 455(f) and, thus, the district court judge was disqualified from further proceedings in the case.

As for the appropriate remedy, the Federal Circuit considered whether rulings made after August 11, 2020, when the district court judge became aware of his wife’s financial interest in Cisco, should be vacated as a remedy for his failure to recuse. The Court determined that the risk of injustice to the parties weighed against a finding of harmless error and in favor of vacatur. The Court reversed the district court’s opinion and order denying Cisco’s motion for recusal; vacated the opinion and order regarding infringement, damages and post-judgment motions and remanded for further proceedings before a new judge.

Article By Jodi Benassi of McDermott Will & Emery

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© 2022 McDermott Will & Emery

A Rule 37 Refresher – As Applied to a Ransomware Attack

Federal Rule of Civil Procedure 37(e) (“Rule 37”) was completely rewritten in the 2015 amendments.  Before the 2015 amendments, the standard was that a party could not generally be sanctioned for data loss as a result of the routine, good faith operation of its system. That rule didn’t really capture the reality of all of the potential scenarios related to data issues nor did it provide the requisite guidance to attorneys and parties.

The new rule added a dimension of reasonableness to preservation and a roadmap for analysis.  The first guidepost is whether the information should have been preserved. This rule is based upon the common law duty to preserve when litigation is likely. The next guidepost is whether the data loss resulted from a failure to take reasonable steps to preserve. The final guidepost is whether or not the lost data can be restored or replaced through additional discovery.  If there is data that should have been preserved, that was lost because of failure to preserve, and that can’t be replicated, then the court has two additional decisions to make: (1) was there prejudice to another party from the loss OR (2) was there an intent to deprive another party of the information.  If the former, the court may only impose measures “no greater than necessary” to cure the prejudice.  If the latter, the court may take a variety of extreme measures, including dismissal of the action. An important distinction was created in the rule between negligence and intention.

So how does a ransomware attack fit into the new analytical framework? A Special Master in MasterObjects, Inc. v. Amazon.com (U.S. Dist. Court, Northern District of California, March 13, 2022) analyzed Rule 37 in the context of a ransomware attack. MasterObjects was the victim of a well-documented ransomware attack, which precluded the companies access to data prior to 2016. The Special Master considered the declaration from MasterObjects which explained that, despite using state of the art cybersecurity protections, the firm was attacked by hackers in December 2020.  The hack rendered all the files/mailboxes inaccessible without a recovery key set by the attackers.  The hackers demanded a ransom and the company contacted the FBI.  Both the FBI and insurer advised them not to pay the ransom. Despite spending hundreds of hours attempting to restore the data, everything prior to 2016 was inaccessible.

Applying Rule 37, the Special Master stated that, at the outset, there is no evidence that any electronically stored information was “lost.”  The data still exists and, while access has been blocked, it can be accessed in the future if a key is provided or a technological work-around is discovered.

Even if a denial of access is construed to be a “loss,” the Special Master found no evidence in this record that the loss occurred because MasterObjects failed to take reasonable steps to preserve it. This step of the analysis, “failure to take reasonable steps to preserve,” is a “critical, basic element” to prove spoliation.

On the issue of prejudice, Amazon argued that “we can’t know what we don’t know” (related to missing documents).  The Special Master did not find Amazon’s argument persuasive. The Special Master concluded that Amazon’s argument cannot survive the adoption of Rule 37(e). “The rule requires affirmative proof of prejudice in the specific destruction at issue.”

Takeaways:

  1. If you are in a spoliation dispute, make sure you have the experts and evidence to prove or defend your case.

  2. When you are trying to prove spoliation, know the new test and apply it in your analysis (the Special Master noted that Amazon did not reference Rule 37 in its briefing).

  3. As a business owner, when it comes to cybersecurity, you must take reasonable and defensible efforts to protect your data.

Article By Gretchen E. Moore of Strassburger McKenna Gutnick & Gefsky

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©2022 Strassburger McKenna Gutnick & Gefsky

Are You Being Served? Court Authorizes Service of Process Via Airdrop

In what may be the first of its kind, a New York state court has authorized service via token airdrop in a case regarding allegedly stolen cryptocurrency assets. This form of alternative service is novel but could become a more routine practice in an industry where the identities of potential parties to litigation may be difficult to ascertain using blockchain data alone.

Background on the Dispute

According to the Complaint in the case, the plaintiff LCX AG (“LCX”) is a Liechtenstein based virtual currency exchange. As alleged in the Complaint, on or about January 8, 2022, the unknown defendants (named in the Complaint as John Does 1-25) illegitimately gained access to LCX’s cryptocurrency wallet and transferred $7.94 million worth of digital assets out of LCX’s control. Cryptocurrency wallets are similar in many ways to bank accounts, in that they can be used to hold and transfer assets. In the same way a thief can transfer funds from a bank account if they gain access to that account, thieves can also transfer cryptocurrency assets if they gain access to the keys to the wallet holding digital assets.

Following the alleged theft, LCX and its third-party consulting firm determined that the suspected thieves used “Tornado Cash,” which is a “mixing” service designed to hide transactions on an otherwise publicly available blockchain ledger by using complicated transfers between unrelated wallets. While Tornado Cash and other mixing services have legal purposes such as preserving the anonymity of parties to legitimate transactions, they are also utilized by criminals to launder digital funds in an illicit manner.

Even the use of these mixing services, however, can often also be unwound. This is especially true in transactions of large amounts of cryptocurrency, similar to how transactions utilizing complex money laundering schemes in the international banking system can be unwound. According to the blockchain data platform Chainalysis, although Illicit crypto transactions reached an all-time high of $14 billion in 2021, these suspected nefarious transactions accounted for 0.15% of crypto volume last year, down from 0.62% in 2020.

While the Complaint alleges the suspected thieves used Tornado Cash, LCX believes its hired consultants were able to unwind those mixing services to identify a wallet which is alleged to still hold $1.274 million of the allegedly stolen assets.

Unlike bank accounts which have associated identifying information, there are often no registered addresses or other identifying information connected to digital wallets. This makes it difficult to provide the actual proof of service required to institute an action or obtain a judgement against an individual where the only known information is their digital wallet addresses. Service via token airdrop into those wallet addresses solves that issue.

Service Via Airdrop

Service of lawsuits is traditionally made on the defendant personally at a home or business address via special process servers. In cases where service on the individual is not possible for some reason, many states authorize alternative means of service if the plaintiff can show that the alternative means of service likely to provide actual notice of the litigation to the defendant. For example, courts have historically allowed notice via newspaper publication as an alternative means of service where the defendant cannot be serviced personally.

Here, the Court permitted service via “airdrop” in which a digital token is placed in a specific cryptocurrency wallet, similar to how a direct deposit can place funds in a traditional bank account. This particular token contained a hyperlink to the associated court filings in the case, and a mechanism which allowed the data of any individual who clicked on the hyperlink to be tracked. While this is a novel way to serve notice of a lawsuit, similar airdrops have been used to communicate with the owners of otherwise anonymous cryptocurrency wallet owners. Such was the case recently when actor Seth Green had his Bored Ape non-fungible token (“NFT”) stolen and the unknowing buyer of the stolen NFT was otherwise difficult to locate.

While this type of digital service is new, it could be implemented in many disputes in the future regarding digital assets. Similar to the authorization of service that was seen recently in the Facebook Biometric Information Privacy Act litigation (where notice was served on potential class members via email and directly on the Facebook platform), service via airdrop may be the most efficient way to inform potential lawsuit participants of the pending dispute and how they can protect their rights in that dispute.

This type of airdropped service is not without issues, though. First, transactions on the blockchain are largely publicly available, meaning any individual with the wallet address would also be able to see service of the lawsuit notice. Additionally, many users are hesitant to click on unknown links (such as the one in the airdropped LCX) due to legitimate cybersecurity concerns.

While service via airdropped token is unlikely to replace traditional methods of service, it may be a useful means of serving process on unknown persons where there is a digital wallet linked to the acts which the applicable lawsuit relates.

Article By Bryan M. Westhoff, Daniel L. McAvoy, and Jonathan E. Schmalfeld of Polsinelli PC

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© Polsinelli PC, Polsinelli LLP in California