Philip Brooks' Patent Infringement Updates

The Long-Term Value of Opinions of Counsel

The above-titled presentation by Scott W. Breedlove of Vinson & Elkins (co-authored by David J. Tobin) was given at The University of Texas School of Law's 14th Annual Advanced Patent Law Institute on October 29–30, 2009 in Austin, TX.  The following is excerpted from the presentation:

Opinions of counsel are not cheap. Is their potential benefit for future patent litigation still worth the cost? In many circumstances, particularly where willfulness and inducement theories are likely to play an important role, the answer is yes.

When it comes to willful patent infringement and induced infringement, the stakes are high. If lost profits and reasonable royalties were not enough, courts have the discretion to increase damage awards to a patentee up to three times upon a finding of willful infringement. And through inducement, a defendant can be liable for infringement even if the defendant does not itself practice the claim. Inducement claims, like joint-infringement theories, seem to be increasing in importance as the computer systems of multiple parties interact more and more in the internet age.

Many of the issues leading to the obsession with opinions of counsel have been resolved, but these opinions can still be the critical rebuttal to a plaintiff’s willfulness allegations when the accused infringer had meaningful knowledge of the patent prior to the lawsuit. For those accused of inducing infringement, an opinion of counsel can also be persuasive evidence to help prove lack of the requisite intent. Indeed, last year’s Broadcom decision suggests it can be a mistake not to obtain an opinion when it comes to inducement theories.

This paper explores factors that inform the value of opinions in litigation, including in the inducement context as illuminated by Broadcom, and suggests practical steps for using opinions effectively.

See the full presentation here.

Microsoft Says i4i Victory Requires Time to Redesign Word Office

The following McLean Watson press release was published at PR Newswire on September 4, 2009:

In i4i vs. Microsoft, the Federal Circuit Court of Appeal has granted a stay of i4i's injunction against Microsoft Word pending appeal.

Loudon Owen, Chairman of i4i, Plaintiff, says, "Defendant-Appellant Microsoft claims it may have to stop distributing Word and Office in the U.S. market until it can redesign both products. Microsoft's scare tactics about the consequences of the injunction cannot shield it from the imminent review of the case by the Federal Circuit Court of Appeal on the September 23 appeal." Mr. Owen continues, "i4i is confident that the Final Judgment in favor of i4i, which included a finding of willful patent infringement by Microsoft and an injunction against Microsoft Word, was the correct decision and that i4i will prevail on the appeal."

Microsoft filed an Emergency Motion seeking more time to redesign Word and Office to comply with the Court Order. Mr. Owen adds, "To paraphrase the great heavyweight boxing champion Joe Louis, 'they can run, but they can't hide'. Microsoft's time will eventually run out."

i4i will file its responding brief with the Court on September 8, 2009.

Krippelz v. Ford Motor Co. Willful Infringement Damages Decision Due Shortly

Jake Krippelz, VP of US operations for Jakes Inc. says "the enhancement ruling...will be happening soon."

The following is excerpted from a December 24, 2008 Vcorp blog post:

Patent lawsuits sometimes take years to become resolved, however very few of them take a decade.  I just this [sic] come [sic] across the wire, A real-life David vs. Goliath story unfolded last week in Chicago when a Federal jury on Friday awarded a $23 million verdict to Jacob Krippelz, Sr. in a patent infringement lawsuit against Ford Motor Co. His patent, on an automotive lighting system used in exterior rear view mirrors, was issued in 1991.

The verdict came 10 years after Krippelz first sued Ford in the United States District Court for the Northern District of Illinois. Krippelz is the 77-year-old Chief Executive Officer of Jake’s, Inc., a machining and heavy equipment component manufacturing company in Aurora, Illinois.

...and this from a March 27, 2009 Law360 article by Sam Howard:

A federal judge has determined that Ford Motor Co. willfully infringed a patent for the car-door lights known as “puddle lamps” and is liable for damages greater than the $23 million previously awarded by a jury.

Judge James B. Zagel of the U.S. District Court for the Northern District of Illinois said Wednesday that for almost 10 years Ford willfully infringed the puddle lamp patent owned by inventor Jacob Krippelz Sr.

The court determined that Ford, which installed the puddle lamps on many of its best selling cars, willfully infringed U.S. Patent Number 5,017,903 from October 1998, shortly after Krippelz filed suit, to April 2007, according to the opinion.

“Ford had offered nothing that it could use in defense of the claim. All it had done was try to wriggle out of my Markman ruling by indirect methods. My ruling is not sacred writ and, if it is in error, the judgment against Ford likely will fall,” Judge Zagel said.

“But reasonable defenses are limited to those consistent with that ruling as long as the case is in this court, and that is not a limit that Ford honored. Much, if not all, of what it offered in its defense until April 2007 was impermissible, and what may not have been impermissible was clearly without merit,” Judge Zagel said.

While the trial resulted in a $23 million jury verdict for the plaintiff, the parties agreed in advance to address the issue of willful infringement in a separate phase before the court alone, where enhancement damages would be determined through written rather than live evidence, according to court filings.

The court will calculate the amount of the enhancement award after the plaintiff submits a draft of the findings for Ford‟s consideration, the opinion said.

Judge Zagel also has yet to consider the amount of prejudgment interest to award, and whether to award attorneys‟ fees.

The case is Krippelz v. Ford Motor Co., case number 1:98-cv-02361, in the U.S. District Court for the Northern District of Illinois.

Read the full article here.

Example of Special Master Assignment

By Order of the Court, Blank Law & Technology was appointed Special Master to interview both Plaintiffs and Defendants to determine whether Defendants’ destruction of file servers containing project data in a patent infringement case was willful and whether such destruction prejudiced Plaintiffs’ case.  Blank Law & Technology established willfulness through the recovery of instant messages concerning the destruction, and rebuilt the servers so that data could be retrieved, thus avoiding irreparable prejudice to plaintiffs. 

Approximate Cost = $250,000.  See more examples here.

fuelperks! Patent Infringement Suit Filed Against Safeway

The following is excerpted from a June 18, 2009 press release available at Business Wire:

Excentus Corporation announced today that it has filed a lawsuit against Safeway, Inc. and Safeway subsidiaries, including Blackhawk Network, Inc., Blackhawk Marketing, LLC., and Randalls/Tom Thumb in the United States District Court for the Northern District of Texas in Abilene, alleging willful and deliberate patent infringement and the misappropriation and theft of trade secrets, among other things. The lawsuit seeks injunctive and equitable relief along with unspecified damages.

During 2006 and 2007, Safeway, through its Blackhawk subsidiaries, attempted to acquire Excentus as well as the patents owned by Auto-Gas Systems, Inc. (which are now owned by Excentus). The suit alleges that after Blackhawk failed to complete a transaction with either party, Safeway wrongfully used the patents, trade secrets and confidential information belonging to Excentus to develop its fuel rewards program called PowerPump Rewards. Excentus’ complaint also asserts that Safeway’s PowerPump Rewards program is a willful and deliberate infringement of four patents owned by Excentus.

“We believe our patent-protected fuelperks!® rewards program is the most powerful customer loyalty program ever offered in the United States,” said Dickson Perry, President and CEO of Excentus. “We have made significant investments over the last ten years to develop our world-class technology, services and expertise and acquire the related trademarks and patents, all of which are valuable components of the fuelperks! program and assets of our Company. When faced with situations like this one with Safeway, we are prepared to take the necessary steps to assure our assets and interests are protected.”

Read the full release and complaint.

Toronto Firm Wins in Suit Against Microsoft

The following is excerpted from a May 20, 2009 article by Simon Avery appearing at the Globe and Mail:

A small technology company in Toronto has won a Texas jury verdict ordering Microsoft Corp. to pay it $200-million (U.S.) for willful patent infringement.

Privately-held i4i Inc. said that several years ago it approached the world's largest software company with a breakthrough product in data processing, only to be spurned and to see its technology show up later in versions of Microsoft Word.

“It's a big win in terms of vindication. The money's nice, but the vindication is more important,” said Bill Cox, a member of i4i's board of directors and former president of the company.

I4i sued Microsoft in March 2007, claiming the Redmond, Wash., company had infringed on a patent awarded in 1998 for manipulating complex data in electronic documents.

Douglas Cawley, a lawyer for i4i, said Wednesday that e-mails presented during the six-day trial showed that Microsoft was aware of the firm's technology and sought to make it obsolete by including it in its own word processing software.

I4i will now seek an injunction preventing Microsoft from selling those products, Microsoft Word 2003 and 2007. It will also ask the judge for enhanced damages, Mr. Cawley said.

Because the jury found Microsoft had willfully infringed the technology, the judge is allowed to increase a jury award by up to three times the value.

Read the full article here.

Acacia Research Subsidiary Creative Internet Advertising Corporation Receives $6.6 Million Jury Award in Patent Infringement Case

The following is excerpted from a May 18, 2009 press release at Business Wire:

The Simon Law Firm announces that on May 15, 2009, a federal jury awarded Acacia Research Corporation’s (Nasdaq: ACTG) subsidiary, Creative Internet Advertising Corporation, $6.6 million in a patent infringement trial with Yahoo! Inc.

The civil suit, Creative Internet Advertising Corporation v. Yahoo! Inc., et al., Cause No. 6:07cv534, pending in the U.S. District Court for the Eastern District of Texas, Tyler Division, alleged that Yahoo! Inc.’s messenger program with IMVironments infringed United States Patent Number 6,205,432 (the “‘432 patent”), both literally and under the Doctrine of Equivalents.

The jury awarded damages in the amount of $6,625,584. The jury also unanimously concluded that Yahoo! Inc.’s infringement of the ‘432 patent was willful.

Creative Internet Advertising Corporation was represented by Anthony G. Simon of The Simon Law Firm of St. Louis, MO, and The Albritton Law Firm of Longview, TX.

Read the full press release here.

Litigating Willful Infringement in the Post-Seagate World

Landslide™ is the ABA Intellectual Property Section's new magazine forum for discussion of intellectual property issues. It offers analysis, news, and commentary about the law of patents, trademarks, copyright, trade secrets, and related subjects. It also keeps readers current on ABA-IPL news and events.

I just received the third print issue in the mail.  The online version of the magazine is available to section members.  A subscription is available to others.  The cover article of each issue is available to all.  For example, in issue 2 - "Egyptian Goddess v. Swisa: Retooling Design Patent Infringement" by Darrell G. Mottley and in issue 1 - "Virtual Worlds, Real World Issues" By Sean F. Kane and Benjamin T. Duranske.

The cover issue for issue 3 (not yet available online) is titled, "Litigating Willful Infringement in the Post-SeagateWorld" by William L. LaFuze and Michael A. Valek. In their article they offer three observations:

1. Seagate Substantively Raised the Bar for Winning on Willfulness;

2. Opinions of Counsel Remain an Effective Defense Against Willful Infringement; and
3. It is Still Possible to Win on Willful Infringement, Even Where an Advice of Counsel Defense Has Been Raised.

The article will ultimately be available here.

Willful Infringement after Seagate

Sanford E. Warren Jr. and William Kennedy Jr. of Akin Gump Strauss Hauer & Feld LLP write that "[p]atent suits are particularly frightening for defendant companies because patent suits have the potential for astronomical damages."  The following is excerpted from their May 2008 article on the International Risk Management Institute, Inc.'s  website:

The Court of Appeals for the Federal Circuit recently redefined willful infringement. Patent cases are heard by federal district courts, and appeals to patent cases are heard by the Federal Circuit. As such, the Federal Circuit creates much of the controlling precedent for patent cases.

On August 20, 2007, the Federal Circuit ruled on willful infringement in its decision, In re Seagate Tech., LLC., 497 F.3d 1360 (Fed. Cir. 2007). In the decision, the Federal Circuit overruled its own precedent and held that "proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness." (Previously, regarding willfulness, an infringer was only under a duty of care to avoid infringement.)

They continue the article by discussing the following four cases:

• Black & Decker v. Bosch
• Innogenetics, N.V. v. Abbott Labs.
• TGIP v. AT&T
• Informatica v. Business Objects Data Integration

In Seagate, the Federal Circuit defined willful infringement as occurring when the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. In both Black & Decker and Innogenetics, the Federal Circuit demonstrated that it is not afraid to apply this new standard for willful infringement. In both cases, the court negatively treated the patentees' claims of willful infringement, which was predictable, given the court's decision to raise the bar for willfulness in Seagate. Similarly, the district courts have been reluctant to enhance damages based on the Seagate standard of willfulness.

Read the full article here.

Willfulness Post Seagate

A reader wrote to me asking if I had seen any more recent empirical statistics on willfulness post In re Seagate that updated Judge Kimberly A. Moore's study (see my earlier post).  Brian Wm. Higgins wrote the following in a February 2, 2008 post at his Maryland Intellectual Property Law Blog:

As promised in my earlier post regarding In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), below is a summary of cases citing the much talked about Federal Circuit opinion. This survey includes opinions published on or before January 31, 2008, but is not inclusive.

See his full post here for the summaries of 11 cases.  Please comment here if you have seen other relevant studies.  See also prior willfulness statistics post here.