Philip Brooks' Patent Infringement Updates

The Patent Troll Threat CLE

Strafford Publications is holding a 90-minute teleconference on May 18, 2006 entitled, "The Patent Troll Threat - Responding to Patent Assertions - Beyond the Basics." The program will address:

Aggressive patent assertion entities are one of the biggest threats facing companies whose revenues rely on innovative products or processes.

Many believe "trolls" manipulate the legal system with threats of significant litigation expense and potential damages to garner a settlement. Others see the patent acquisitions as a good investment--the assertion of which is a legitimate exercise of property rights.

This advanced-level teleconference will address the patent troll issue, its impact on today’s patent environment, and how companies and their counsel can strategically plan for and defend against patent assertion claims.

• What are the characteristics of a troll to consider in responding to a patent assertion claim?
• How does current patent law support assertion entities -- and aid the alleged infringers?
• What defenses are available to companies facing patent troll claims?
• What strategies can companies implement to minimize the impact of patent assertions?

More information is available here.

Illinois Tool Works and Tying CLE

American Bar Association is holding a 90-minute teleconference and live audio webcast on May 19, 2006 entitled, "Illinois Tool Works and Tying: Impact and Implications." The program will address:

The pressing question following the Supreme Court's decision in Illinois Tool Works Inc. v. Independent Ink, Inc. is whether the decision foreshadows a fundamental change in the antitrust treatment of tying. In rejecting any presumption of market power from a patent, the Court emphasized that a plaintiff has to prove defendant's market power in the tying product. The Court also recognized that tying arrangements often have competitive benefits.

The subject of our program is whether the need to prove market power is simply a restatement of settled law or a holding with broader significance, including elimination of the per se rule in tying analysis. Our expert panelists will not only analyze the Court's holding but will also consider its economic basis and its practical commercial effects on sale and licensing of intellectual property rights and on sale of goods and services generally.

See previous posts on Illinois Tool Works here, here and here.

OPTi Pleased With Markman Hearing Ruling in Patent Infringement Action Against nVidia Corporation

Business Wire reported yesterday (April 25, 2006):

...the United States District Court for the Western District of Texas issued a ruling Monday, April 24, 2006 in the ongoing patent infringement action between OPTi Inc ("OPTi") and nVidia Corporation ("nVidia"). The ruling arises from a special proceeding required under U.S. patent law called a "Markman hearing," where both sides present their arguments to the court as to how they believe certain claims at issue in the lawsuit should be interpreted.

In the ruling, the Court largely adopted OPTi Inc's proposed construction on at least 13 of the 15 claims at issue. The Company believes that the ruling represents a major step in OPTi's efforts to enforce its patent portfolio and licensing efforts. If OPTi prevails at trial, the Company is requesting a reward for damages on the infringement of its technology and for reimbursement of its litigation expenses

On October 19, 2004, the Company announced that it has filed a complaint against nVidia Corporation ("nVidia"), in the Eastern District of Texas, for infringement of five U.S. patents. The five patents at issue in the lawsuit are U.S. patent No. 5,710,906, U.S. patent No. 5,813,036, U.S. patent No. 6,405,291, all entitled "Predictive Snooping of Cache Memory for Master-Initiated Acesses," U.S. patent No. 5,944,807 and U.S. patent No. 6,098,141, both entitled "Compact ISA-Bus Interface." The complaint alleges that nVidia infringes the patents by making, selling, and offering for sale products based on and incorporating Predictive Snooping technology and the Low Pin Count Interface Specification in various of its products and inducing and contributing to the infringement of the patents by others. The Company in its case against nVidia is seeking damages or other monetary relief, including pre-judgment interest and awarding OPTi's attorney fees. The nVidia action itself is an important part of the Company's strategy for pursuing its patent infringement claims relating to its Predictive Snooping technology.

Rambus Wins Chip Infringement Victory Worth Almost Twice Its 2005 Sales

Chris Kraeuter of Forbes reported yesterday (April 24, 2006):

Chip designer Rambus scored another victory Monday in its ongoing legal battle against the world's microchip manufacturers, winning $307 million in a patent dispute with Hynix Semiconductor.

Rambus shares, which had been halted prior to the announcement from the jury in the U.S. District Court in San Jose, Calif., have shot up 15% to $44. The company had asked the court for damages between $217 million and $868 million from Hynix, the world's second-largest DRAM manufacturer. Rambus had argued that Hynix infringed on ten of the company's patents while selling $4.4 billion in chips over the past five years.

The verdict follows a negotiated settlement for $150 million struck a year ago with Infineon Technology. Rambus has other cases pending involving Micron Technology, Samsung Electronics, Inotera Memories, and Nanya Technology. Together, these companies account for almost all of the world's production of DRAM. Rambus also has a price-fixing case pending against the same companies, arguing that they conspired to drive Rambus out of business.

DRAM chips accounted for $24.8 billion in sales last year, with Samsung, Hynix and Micron garnering 60% of that, according to chip researcher iSuppli. Infineon represents another 13% of the DRAM market.

Read the full article here.

Inventor's Assistant to Pay $26 Million

On Thursday (April 20, 2006) the print edition of the Pittsburgh Post-Gazette reported:

A Pittsburgh businessman who purports to help inventors obtain patents and receive royalties has been ordered to pay $26 million in restitution.  U.S. District Judge Gary L. Lancaster ordered Davison Design and Development Inc. and an associated company, Manufacturer's Support Services Inc., also to include a 10-point disclosure statement in future business dealings.  In its complaint, the Federal Trade Commission alleged that the businesses charged inventors fees between $800 and $12,000 to market their ideas but that fewer than 1 percent of those inventors made enough money in royalties to make up their fees.  The case, primarily against George M. Davison, was first filed in 1997.

Philips Charges Kodak Infringed Imaging Patent

Reuters reported on April 19, 2006:

Dutch company Philips Electronics on Wednesday said it sued Eastman Kodak Co., claiming several of Kodak's cameras infringe on a patent related to the compression of digital images.

A Kodak spokesman said the Rochester, New York-based company would defend itself "vigorously" in the suit, which was filed in the U.S. District Court in Delaware. Representatives from both companies declined to discuss financial details of the litigation.

Philips said the patent was issued in 1990, and that it has contributed significantly to the compression technology used in products such as DVD players, medical scanners and digital still cameras, spokesman Andre Manning said.

The patent is related to technology used to compress the large amount of information needed for digital images into JPEG, one of the most widely-used image file formats in computing, he added. Philips had already licensed its technology to most players in the digital still camera market, such as Sony Corp. and Canon Inc. and many mobile phone makers.

"Philips unsuccessfully tried to negotiate and enter into licenses with Kodak for a long time. As a last resort, Philips decided to sue Kodak for patent infringement," Manning said.

Willfulness Found in Patent Infringement Case Against Microsoft and Autodesk

The Marshall News Messenger reported this morning (April 20, 2006):

On the heels of an $79 million patent infringement award by a jury in Marshall's federal district court, a Tyler jury on Wednesday made an even larger one.

After deliberations which lasted through the night, the Tyler panel gave $133 million in patent infringement damages to z4 Technologies Inc.

Patent attorney Michael Smith of Marshall said the verdict “is the largest amount of damages awarded by a jury in a patent case” in U. S. District Court for the Eastern District.

Jurors in U.S. District Judge Leonard Davis' courtroom found Microsoft and Autodesk infringed on two patents owned by z4 Technologies, Inc., a press release said.

Parties in the Tyler lawsuit had agreed that two patents, one identified as the ‘471 patent and the other the ‘825 patent, were assigned to z4 Technologies by David S. Colvin, the inventor and owner of z4 Technologies.

The patents involve methods of limiting the unauthorized use of computer software, according to the press release.

The jury found that Microsoft and Autodesk infringed both patents and that Microsoft's infringement was willful. The jury also found that neither Microsoft nor Autodesk proved by clear and convincing evidence that any of the listed claims of the patents in the lawsuit were invalid.  Jurors awarded $115 million in damages against Microsoft and $18 million against Autodesk. Because of the finding of willfulness against Microsoft, its damages could be trebled by the court.

Read the full article here and Michael Smith's blog.

Is Burst a Patent Troll?

BusinessWeek writes:

Richard Lang comes across as a mellow Californian. The youthful-looking 52-year-old lives on an 11-acre estate among apple trees in the hippy town of Sebastopol, north of San Francisco, where he plays guitar in local bands and his wife runs an "equine experiential learning institute" that helps clients get in touch with themselves by riding horses. But there's nothing laid-back about his strategy at Burst.com, the Santa Rosa (Calif.) company he co-founded 18 years ago. With just two employees, Burst holds 10 U.S. patents, and its focus is on asking big companies to license its technology -- and suing them if they don't.

In March, 2005, Burst won a $60 million settlement from Microsoft Corp. (MSFT ). The next target, Lang says, is Apple Computer Inc. (AAPL ), which he says infringes on Burst's patents covering superfast transmission of content, such as songs and video, over networks. He's seeking a chunk of the tech giant's burgeoning music revenues, and says he plans to sue in mid-April if no settlement is reached.

That makes Burst, in many people's eyes, a "patent troll." In recent months tech giants such as Microsoft, Intel (INTC ), and Yahoo! (YHOO ) have vilified the trolls -- tiny companies that don't make anything but simply hold a portfolio of patents. Their business plan consists of cashing in on this intellectual property by suing traditional corporations, the types that produce real products. That infuriates the targets of these suits, who claim that the legal risk forces them into exorbitant settlements, and that the ensuing payoffs increase costs for consumers. For many, the poster child for trolls is NTP Inc., the tiny company that extracted $612 million from Research In Motion Ltd. (RIMM ), the maker of the BlackBerry wireless e-mail device.

While Lang won't discuss his hopes for the Apple claim, his lawyer cites as a point of reference other cases in which plaintiffs were rewarded more than 2% of infringing revenues. That would be about $200 million so far for Apple.

Read the full article here.

U.S.-China Joint Commission on Commerce and Trade Intellectual Property Rights Announcement

Bill Heinze of the IP-Updates blog wrote today (April 18, 2006):

On April 11, 2006, U.S. Secretary of Commerce Carlos Gutierrez, United States Trade Ambassador Rob Portman and U.S. Secretary of Agriculture Mike Johanns met with Vice Premier Wu Yi for the 17th annual senior-level meeting of the Joint Commission on Commerce and Trade (JCCT).

The JCCT published an announcement the same day outlining China's agreement to take action in response to U.S. requests in the following areas:

• Pirated Optical Disks.
• Requirements to Install Legitimate Software.
• Ensuring Use of Legal Software in Government and Enterprises.
• Rid Consumer Markets of Infringing Goods.
• Individual Cases.
• Action Plan.

Read more here.

TiVo Wins Patent Infringement Verdict Against EchoStar

Variety carried an Associated Press report on Thursday (April 13, 2006) that TiVo won a $74 million jury verdict in its patent infringement case against EchoStar Commumications.  They report:

A federal jury awarded TiVo Inc. nearly $74 million in damages Thursday in a swift ending to a patent-infringement lawsuit against EchoStar Communications Corp., the parent of the Dish satellite television provider.

TiVo got most of the $87 million in damages it sought in a case that one of its lawyers called "life or death" for the company that was among the first to sell devices to pause and rewind live television.

The case in U.S. District Court in Marshall was closely watched on Wall Street, with some analysts even dropping in during the two-week trial. They said a victory would help TiVo win other royalty deals involving digital video recorders (DVRs).

News of the verdict sent TiVo shares soaring nearly 20 percent, or $1.60, to $9.65 in late-session electronic trading. EchoStar shares dropped 27 cents.

The $87 million request was based on a financial consultant's estimate of how much TiVo would have earned if EchoStar had not sold more than 4 million of its own recorders using TiVo technology. "This is life or death for them," Baxter said of TiVo.

The jury awarded $73.99 million instead of $87 million because it was not convinced TiVo had done everything it could to promote its patent, which was approved in 2001, according to the jury forewoman. As a result, jurors based damages starting in January 2004, when TiVo filed the lawsuit.

Read the full article here.