|Re: Law.com article
||October 04, 2004 01:42 pm|
|Faked Evidence Turns Patent Case Ugly -- Really Ugly
By Susan Beck
October 4, 2004
On June 13, Amr Mohsen met with a fellow inmate at the Santa Rita jail in the East Bay city of Dublin. As the other inmate took notes, Mohsen spelled out a name: "A-L-S-U-P." Mohsen described Northern District Judge William Alsup. He wanted him dead.
The men discussed various means of murder. "Which is the least traceable?" Mohsen asked.
A gas leak, the inmate suggested. Mohsen expressed concern that others might be killed.
The inmate said killing a federal judge was a big deal and would cost $25,000.
"That's very high," Mohsen replied. "I heard it's more like 10."
Mohsen told the other inmate to have someone find out where Alsup lived and "what are his patterns."
Fortunately for Judge Alsup, a 59-year-old former Morrison & Foerster partner, the FBI was taping this conversation. Mohsen's supposed accomplice (whose identity remains a secret) was a jailhouse informant wearing a recording device. The FBI was also videotaping the two. On July 27 a federal grand jury in San Francisco indicted Mohsen for solicitation to commit murder and 22 other criminal counts. (The details of Mohsen's conversation come from the government's court filings.)
Mohsen is not a drug lord, a Mafia don or a gang leader. Until this spring he was the founder, chairman and chief executive officer of a San Jose company called Aptix Corp. Considered a brilliant engineer and inventor, the 57-year-old executive owned a home in the exclusive town of Los Gatos and was reported to be worth $10 million.
Mohsen's connection to Judge Alsup began several years ago with a patent infringement suit that at first seemed little different from the thousands filed annually. Mohsen was backed in that suit by an A-team of lawyers from two of the country's best litigation firms: Latham & Watkins and Howrey Simon Arnold & White. None of them could have predicted the ways in which this case would progress into one of the most bizarre and disturbing patent disputes, complete with forensic ink dating tests, mysteriously disappearing documents and a dramatic last-minute withdrawal by counsel. Within this amazing case is also a tale of hard-nosed, combative advocacy blinding lawyers to the consequences of their client's actions.
Although it appears that the Howrey and Latham lawyers never had an inkling that Mohsen might consider murdering a judge, they repeatedly dismissed evidence of other crimes he was committing. Latham's client, Mentor Graphics Corp., which was bankrolling this patent litigation, could have walked away when Mohsen's duplicity became obvious, but didn't. The Latham and Howrey lawyers could have given more credence to the allegations of Mohsen's misconduct, but didn't.
It all started with an act of drudgery in the summer of 1998. Carlene Arnold, then a paralegal in the San Jose office of intellectual property boutique Lyon & Lyon, was doing what paralegals do -- the unheralded task of sifting through stacks of documents. Lyon & Lyon represented Quickturn Design Systems Inc., a Mountain View-based company that made something called a hardware logic emulation system. Computer chip makers use these systems to design and test chips. In February 1998 Quickturn had been jointly sued for patent infringement by Mohsen's company, Aptix, and a Mentor Graphics subsidiary. Mentor and the subsidiary, Meta Systems Inc., were represented by Latham partner David York; Aptix was represented by Howrey partner Robert Taylor. Both worked out of their firms' Menlo Park offices.
As she looked at two documents in front of her, Arnold was puzzled. Here was a copy of pages from a 1989 notebook that Amr Mohsen had produced to show work he had done on the patent before it was filed with the Patent and Trademark Office. Mohsen had received his patent for a "field programmable circuit board" in 1996. Like Quickturn's products, this invention was also a hardware logic emulation device, although it had different uses. It tested existing chips; Quickturn's products were used to design chips that hadn't yet been built.
In that 1989 notebook, Mohsen had written notes in longhand and sketched designs of his invention. But Arnold also had in front of her copies of that same notebook, which had been turned over by the lawyers who had filed Mohsen's patent application (from the now-defunct San Jose firm Skjerven, Morrill, MacPherson, Franklin & Friel). The two copies -- of the same notebook -- should have been the same. But they weren't. The version submitted by Mohsen was much more detailed than that turned over by the Skjerven lawyers; it contained additional notations and drawings that had been dated to appear as if they were written at the same time as the rest of the entries.
The Lyon & Lyon team, led by partner James Brooks, immediately suspected Mohsen of altering the notebook to bolster the strength of his patent. The earlier that Mohsen could establish he invented his system, the better his case would be. Under U.S. law, a patent is effective back to the "date of conception." Other evidence fueled Brooks' suspicions.
Brooks decided to confront Mohsen with these discrepancies at his deposition. The parties met in a Lyon & Lyon conference room the following August, with Howrey's Taylor representing Mohsen and Latham's York present for Mentor. Mohsen didn't act alarmed when he was shown the two versions of the notebook. The engineer calmly described that after he had filed his patent application, he had added "clarifying" entries to the notebooks when he used them to explain his invention to potential investors, without properly dating them. He insisted he made these changes long before the lawsuit was filed and that he wasn't trying to deceive anyone.
Howrey's Taylor and Latham's York say they weren't too concerned when they first learned of the discrepancies. Taylor explains that the changes Mohsen had made "didn't show good judgment," but he didn't think they demonstrated anything culpable.
In the following months, however, as Taylor examined the documents more closely, he began to have doubts. "It was a hard story to accept," he says. "It was not a terribly powerful explanation." Still, says Taylor, "at that time I didn't have enough basis to disbelieve." Nonetheless, Taylor says he took steps to assure himself he was doing the right thing. "I was very careful to review each decision I made with the firm's ethics partner," he says.
Ethics rules leave lawyers a lot of discretion when they suspect, but do not know, that a client may be presenting false evidence. John Steele, a lecturer in legal ethics at Boalt Hall School of Law, says a lawyer may never offer evidence that he or she knows is false. But when the lawyer suspects, without knowing, that evidence is false, he or she can choose whether to offer it, under the American Bar Association's Model Rules of Professional Conduct. In fact, lawyers should resolve doubts in favor of their client, under these rules.
The Lyon & Lyon lawyers had no doubts. They didn't believe Mohsen. They wanted forensic ink experts to test the notebooks and attempt to date when the suspicious entries had been written. For months the two sides squabbled over this testing. Brooks was frustrated that Mentor refused to retreat in the face of what he thought was obvious evidence of fabrication.
In the fall of 1998, Brooks decided to get Mentor's attention by filing an "abuse of process" counterclaim that demanded $10 million. (Alsup would later dismiss this.) Brooks says that in a phone conversation with York about this counterclaim, the Latham partner told him that if false evidence had been submitted, Latham would withdraw. On Oct. 7, 1998, Brooks followed up with a letter to York: "You should counsel Mentor to give serious consideration to withdrawing from this lawsuit and letting Aptix face the consequences of its own conduct," Brooks wrote. York never responded, according to Brooks.
York says he doesn't recall this phone conversation with Brooks, nor does he recall if he responded to Brooks' letter. He does remember the letter, however, which he dismissed as mere posturing.
Brooks had directed his letter to Mentor's lawyer because it was Mentor, not Mohsen and Aptix, that was driving this litigation. Mentor, based in Wilsonville, Ore., makes software emulators and desperately wanted to be a player in the hardware logic emulation business. But tiny Quickturn, the market leader in the small yet promising niche, held the key patents. In addition, in 1997 Quickturn had won an International Trade Commission action that barred Mentor's French subsidiary Meta from importing its hardware emulator to the United States. Mentor, which was roughly three times the size of Quickturn, struck back by filing three patent infringement suits against Quickturn in different courts, each challenging a separate patent. The company also embarked on a hostile takeover bid for Quickturn.
Mentor viewed Amr Mohsen and his patent as a useful tool in this fight. Mentor approached Mohsen with the following deal: Mentor would pay Aptix $1 million and loan it $3 million (which Aptix could repay with its stock); in return, Aptix would license the patent to Mentor's subsidiary, Meta, so that Meta could sue Quickturn. As the patent holder, Aptix would likely have to be a party to this litigation, and Mentor promised to pay Aptix's legal bills. Aptix would share in any recovery, after the reimbursement of legal fees. The infusion of cash, modest as it may seem, was too tempting for Mohsen's small, privately held company to turn down.
What's not clear is why Mohsen would subsequently go to extreme lengths to try to win this lawsuit. Howrey's Taylor claims his former client didn't have much to gain, since his potential recovery would have been small if the challenge succeeded. So perhaps it was an inventor's fierce pride, and not money, that led Mohsen astray. And far astray he did go -- whatever the motivation.
By the end of 1998, Amr Mohsen's story started to transform from strange to incredible. In December of that year, Lyon & Lyon associate Jeffrey Miller, who was overseeing the forensic testing for Quickturn, was preparing for a hearing in which the court would hear Quickturn's motion to compel the testing of the suspect notebooks. At the day's end, Miller headed to a restaurant for the firm's Christmas party. There, Miller got a call from Howrey's Robert Taylor. The Aptix lawyer told him the notebooks could not be turned over for testing. They had been stolen off the floor of Mohsen's Mercedes. Miller was incredulous.
At this point Judge Alsup was not yet involved in the case. He took over in the summer of 1999 after the judge overseeing the litigation left the bench. The suspicious facts surrounding the documents quickly caught Judge Alsup's attention. At Quickturn's request, he ordered the parties to brief him on whether he should dismiss the entire case because of this "spoliation" of evidence.
A month before the hearing, Mohsen claimed that a mysterious stranger had mailed him an envelope containing scraps from the stolen notebooks. "These were discovered lately in our backyard," read an anonymous note in the envelope. "These look like important documents for you."
In February 2000, the morning before the hearing, Brooks was asleep in the Park Hyatt San Francisco. The Lyon & Lyon team had set up its trial center at the hotel for the upcoming hearing on whether Alsup should grant the terminating sanctions and dismiss the case. Brooks was awakened at 6 a.m. by a phone call from Taylor at Howrey. Taylor said he could no longer represent Aptix because of a conflict between the company and Mohsen.
"When I put all the evidence together and tried to figure out how to present it most persuasively to the court, I came to the conclusion the notebooks could not be admitted," Taylor says.
Taylor continued to represent Aptix, but not its CEO; Mohsen hired white-collar specialist Daniel Bookin of O'Melveny & Myers' San Francisco office. Taylor says he had an obligation to continue to represent his client, the company.
Taylor conceded to Judge Alsup there were "tremendous irregularities" between the notebooks, but he argued they didn't show Mohsen acted with a "culpable state of mind." Latham's York maintained that even if Mohsen had lied, dismissal wasn't justified because the notebooks had become irrelevant. The plaintiffs were staking the validity of Mohsen's patent on the date that Mohsen applied for it, not the date of its conception. If the plaintiffs were dropping their reliance on the notebooks as evidence, York contended, the case couldn't be dismissed.
This line of reasoning didn't sit well with Judge Alsup. "Let's just say, this is purely hypothetical, let's say that an inventor just phonies up records to beat the band," said Alsup to York. "He tries, but he doesn't get away with it. Â
Could a judge impose a terminating sanction?"
"If [the phony records are] not material to the outcome of the case and could not have affected the outcome of the case, then you do not impose terminating sanctions," York answered.
"Even though Â
" Alsup started.
"Even though he lied," York finished.
"Even though he lied, and he thought he was lying about something that would help him win the case?" the judge asked.
"That's right. Because it's not -- it didn't cause the court Â
"I can't believe that's the law," an incredulous Alsup shot back. "I can't believe that you can try to cheat the court, and then when you get caught you say, 'Well, it didn't matter. I got caught. So, therefore, it's not material.'"
The next month Judge Alsup released his opinion. He wrote that Mohsen had been "caught red-handed" fabricating the entire 1988 notebook, which he called "a complete fraud from bark to core."
"Egregious" and "reprehensible" was how Alsup described the CEO's conduct. The judge declared the Aptix patent unenforceable. On the question of whether Mentor and its subsidiary, Meta, had acted in bad faith, the judge said he was making no findings. But he would not allow Mentor to profit from its alliance with Mohsen by enforcing the patent. He awarded Quickturn $4.6 million in fees and $850,000 in costs, to be paid by Aptix.
Having no more use for Aptix and Mohsen, Mentor turned against its former ally. In November 2001 it sued Aptix to get $2 million of its loan repaid. Mentor won a judgment, and the parties settled.
In September 2003 -- after eight years of litigation -- a truce was announced by Mentor and Cadence Design Systems Inc. (which had bought Quickturn in 1999, thwarting Mentor's takeover attempt). They agreed to settle all suits relating to emulation systems, and promised not to bring any such claims against each other for seven years.
As the Lyon & Lyon lawyers were winning the Quickturn battle, their firm, like many small intellectual property boutiques, was going under. When it dissolved in early 2002, Brooks and Miller joined Orrick, Herrington & Sutcliffe.
Meanwhile Mohsen's problems were escalating. In November 2001 Judge Alsup wrote to federal prosecutors in San Francisco suggesting they investigate the Mohsen brothers for perjury and falsification of evidence. In March 2003 a federal grand jury indicted Amr Mohsen for obstruction of justice, citing the falsification of the notebooks, the staged theft and the mysteriously reappearing fragments. Both Amr and his brother Aly were charged with perjury based on statements made in their depositions. Trial was set for March 2004, with Judge Alsup presiding. The Mohsen brothers asked Alsup to recuse himself, arguing that he was biased. Alsup refused.
On March 27, 2004, three days before the criminal trial was scheduled to start, the FBI arrested Amr Mohsen as a flight risk. Apprehended outside his mother's apartment complex in Campbell, he was carrying a newly issued Egyptian passport, in violation of his bail agreement, and $20,000 in cash. He was detained without bail in the Santa Rita jail. It's there that Mohsen allegedly began hatching his scheme to have Judge Alsup killed.
At press time Mohsen was being kept in solitary confinement in jail. At a preliminary hearing in August, Mohsen wore a red jumpsuit and repeatedly looked over to his wife. She sat near Mohsen's brother and co-defendant, Aly, who is free on bail. On April 28, Aptix filed for bankruptcy.
The entire San Francisco bench has recused itself from Mohsen's case. At press time it was being handled by federal district judge William Shubb from Sacramento. Mohsen's current lawyer, John Williams of San Jose's Manchester, Williams & Seibert, declined comment.