LYING IS STILL BAD – Tesco V. Weatherford

Case: Tesco Corporation
 Weatherford International, Inc. et al, 4:08-02531 (S.D. Tx. Aug. 8, 2014)

Patent Infringement / Court’s Inherent Authority To Sanction

After a long (6 year) drawn out battle related to patent infringement in the oil drilling industry, it all goes away because of a lie.   In the Southern District of Texas, Judge Ellison has thrown out all claims by plaintiff Tesco in a rare application of the inherent powers of the court.

In short, Tesco claimed it had a patent on a piece of oil drilling equipment and sued Weatherford (and others) for infringement. One of the key issues related to an old brochure. There was some question as to whether or not the document contained an image of the patented invention and therefore invalidated the patent. (Publication of the invention more than one year before filing invalidates a patent.) To get through the point, Tesco’s attorney told the court:

The animators that actually did the brochure and that actually did the rendering are prepared to swear and testify that this is not [the] invention; and in fact, there is no doubt it’s not [the] invention.

. . .

[T]hat is what [the illustrator is] going to say; and he’s going to say unequivocally that this is not it. And so is [the other illustrator] who also worked on the rendering. Two individuals, same rendering, both will say that.

However there were irregularities with the case and even after the jury found in favor of Tesco, at least in part, the judge allowed post-trial discovery to look into certain matters, including some possible misconduct by Tesco’s attorneys. In the post-trial proceedings it was revealed that Tesco’s counsel blatantly misrepresented notable facts related to the brochure and the illustrators had no idea whether or not the invention was depicted in the brochure.

While facing nine (9) separate motions, Judge Ellison cut to the heart of the case and decided that all pending motions were moot and decided that due to the blatant fraud on the court by Tesco’s counsel Tesco’s claims were dismissed with prejudice.  At the time of the court’s ruling, no pending motion on the docket appears to have been seeking this specific relief.

After first acknowledging the Supreme Court has warned that “[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion,” Judge Ellison went on to make clear:

 …the Court has an independent obligation to safeguard its own integrity and those of the proceedings before it…the Court reluctantly concludes that Tesco’s representations amount to an abuse of the judicial system; they are most certainly “acts which degrade the judicial system.” citing Amsted Indus. Inc. v. Buckeye Steel Castings Co., 23 F.3d 374, 379 (Fed. Cir. 1994)

…not every lawyer who lies to a court will be caught, so when such deliberate and advantage-seeking untruthful conduct is uncovered, the penalty must be severe enough to act as a deterrent. Awarding attorney’s fees – even if they were to be paid by Tesco’s counsel alone – is insufficient. citing Hull v. Municipality of San Juan, 356 F.3d 98, 102 (1st Cir. 2004)

Just as with witnesses testifying truthfully under oath, the proper administration of justice depends upon counsel being completely forthright with the Court.

Judge Ellison has invited defendants to submit motions for attorney fees, and as he has already made clear that the sanction of dismissal is warranted because an award of fees would not be enough, it is anticipated that there will be a notable award of fees.

The simple lesson is that if you lie about what you have and how you got it, then odds are you do not have anything. While this case was about patents, similar rules apply to copyrights and trademarks.

In the law, as with most things, lying, cheating and stealing are (still) bad.

For the full text of the opinion: Tesco Corporation 
 Weatherford International, Inc. et al, 4:08-02531 (S.D. Tx. Aug. 8, 2014)


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