False Patent Press Release Leads to Sanctions

On November 17, 2008, I found a press release on Business Wire issued by AutoClear LLC discussing what allegedly transpired in a patent infringement lawsuit filed by American Science & Engineering, Inc. (ASE) against AutoClear in the United States District Court for the Eastern District of Virginia.  The trouble with this particular press release was that it was apparently completely false, and on December 16, 2008, United States District Judge Raymond Jackson issued an Order concluding:

Defendants issued the objectionable press release intentionally and in bad faith.  Furthermore, even if the misstatements were unintentional, the Court finds that the issuance of a patently misleading press release on a nationally available, widely-read internet site is completely irresponsible.

You see, the press release issued by AutoClear stated that the District Court had denied ASE’s motion for summary judgment and refused to grant preliminary injunctive relief.  The problem with these statements are that they were completely false, and in fact ASE had not even filed a motion for summary judgment yet.  To make things worse,  the press release also explained that the USPTO formally rejected all claims of AS&E’s core backscatter x-ray patent, which was also false.  But wait, there is more.  If you think all this is bad, wait until you hear the rest of the story.  It gets worse, much worse!

I came to find out about this fraudulent press release in an odd way really.  On December 8, 2008, I was contacted by AutoClear and told that I needed to remove the blog post published on November 17, 2008.  I am not sure how AutoClear was able to contact me on December 8, 2008, to inform me of the court’s Order issued 8 days later.  There was a hearing on December 4, 2008, so perhaps Judge Jackson issued his preliminary Order from the bench and then followed a week later with a written decision.  In any event, the message I received through my contact form informed me that there was a District Court mandate that I remove the blog post.  This not being my first rodeo, I smelled something fishy. 

The contact wreaked of grandiose overstatement and scare tactics, so I did not remove the post.  We all know overreaching statements in threat letters are a dime a dozen, so that is what I thought this was, nothing more.  Then earlier today AutoClear contacted me again.  I told them I didn’t believe there was any court Order against me because I was never notified and I didn’t appreciate the intimidation and harassment.  I also pointed out that if there really was an Order I would have been provided a copy.  Then I heard from AutoClear’s patent attorney, who did provide a copy of the Order.  All I can say is WOW!  AutoClear didn’t get the Order, it was requested by American Science & Engineering and AutoClear was ordered to do everything in their power to rectify the false and misleading press release.  So I am writing now to attempt to put the cat in the bag, or get the horses in the barn, if I can.  American Science & Engineering has been wronged, but still this isn’t half the story.

If you have some free time you might want to actually read Judge Jackson’s Order.  There is no new law there, nothing that you are likely to cite in a brief anytime soon, if ever, but it is a tale that will capture your attention for all 15 pages, I promise!  If I were a managing partner in a firm I would probably require every lawyer to read the decision, particularly those youngsters who still haven’t figured out that clients frequently lie and do stupid things, sometimes even more so than the opposing side.  Don’t get me wrong, AutoClear would be a great client to have so long as their retainer account is plentiful, but what AutoClear did in this case ought to go down right along side the criminal who left his wallet at the scene of the crime.

It seems that issuing intentionally false press releases is not the only way AutoClear is willing to lie, but rather they are also willing to lie in open court and directly to the District Court Judge hearing the patent infringement case they are defendants in.  ASE filed the complaint alleging patent infringement on September 13, 2007, sent the defendants a courtesy copy that day and then served them on October 3, 2007.  On October 26, 2007, the Clerk filed an entry of default against the defendants and ASE moved for default judgment on November 9, 2007.  On November 19, 2007, the defendants finally filed an Answer and Motion to Set Aside Entry of Default.  On May 1, 2008, the Court denied default because the defendants claimed that they did not have representation until after the default was entered, that the defendant’s CEO, Mr. Bradley Conway, was unsophisticated with respect to patent litigation and had never hired out-of-state litigation counsel and the defendants had trouble finding litigation counsel but did so immediately after default was entered.  The problem with the story is that none of it was true, specifically finding: “Mr. Conway is an attorney, AutoClear had been involved in patent litigation before, and Mr. Conway had retained litigation counsel.”  Yes, believe it or not, Conway retained litigation counsel on October 4, 2007, the day after AutoClear was formally served!

If you ask me AutoClear got off easy.  Sure, they were required to pay attorneys fees and all costs for the Sanctions Motions, and litigation defenses were struck, but Judge Jackson did not reinstate the default judgment, even though he specifically says in the Order that had he known the real facts at the time he withdrew default he would not have done so.  I don’t want to quibble with Judge Jackson’s decision, but suffice it to say that if I had been the District Court Judge, something I still dream about from time to time, I would have reinstated the default judgment.  In any event, I think it is not an overstatement to say that AutoClear is in for a rough ride for the remainder of this litigation.  How can anything they say be trusted?  In fact, any time AutoClear is a party in a lawsuit how can what they say be trusted?  If they know what is best for them they will do whatever it takes to settle this case and move on.

About the Author

Eugene R. Quinn, Jr.
President & Founder of IPWatchdog, Inc.
US Patent Attorney (Reg. No. 44,294)

B.S. in Electrical Engineering, Rutgers University
J.D., Franklin Pierce Law Center
L.L.M. in Intellectual Property, Franklin Pierce Law Center

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Gene is a US Patent Attorney, Law Professor and the founder of IPWatchdog.com. He teaches patent bar review courses and is a member of the Board of Directors of the United Inventors Association. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, CNN Money and various other newspapers and magazines worldwide


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2 comments so far.

  • [Avatar for Gene Quinn]
    Gene Quinn
    January 12, 2009 03:34 pm


    I would have to say that if it hasn’t settled already I would be shocked. I can’t imagine this lasting much longer. This type of activity has sabotaged any chance that the defendant may have had. There is just no mileage in raising the ire of a district court judge that is hearing your case.

    Open up the checkbook and get rid of this is what I say.


  • [Avatar for markmalek]
    January 12, 2009 10:17 am

    Any wagers on the over/under of when this will settle? With their defenses being struck, I believe this will be a long and very rough road. The only issue should be where to sign the settlement documents. Wow!