Philip Brooks' Patent Infringement Updates

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.

Texas Court Issues Markman Ruling in Candela's Suit Against Palomar

The following is excerpted from an August 7, 2008 Candela press release available at Business Wire:

Candela Corporation (NASDAQ: CLZR), a global leader in the development and commercialization of advanced aesthetic laser and light-based systems, announced today that the United States District Court for the Eastern District of Texas, Lufkin Division issued the Markman ruling on August 6, 2008 in Candela’s patent lawsuit against Palomar Medical Technologies, Inc. (NASDAQ: PMTI).

In a Markman ruling, a district court hearing a patent infringement case interprets and rules on the scope and meaning of disputed patent claim language regarding the patents in suit. A Markman decision is often a significant factor in the progress and outcome of patent infringement litigation.

In the recently issued Markman Order, the Court adopted interpretations that Candela believes are favorable to Candela on all claim terms that were in dispute in the litigation.

On December 19, 2006, Candela filed a patent infringement complaint against Palomar Medical Technologies, Inc. (NASDAQ: PMTI) in the United States District Court for the Eastern District of Texas, Lufkin Division, asserting that Palomar’s Lux 1540™, Lux DeepIR™, Lux IR™, Lux G™, and Lux Y™ handpieces willfully infringe upon one or more of United States patents: 5,810,801, 6,659,999 and 6,120,497.

Read the full press release here.

Exemplary Damages/Willful Infringement – A German Perspective

The following is excerpted from a November 4, 2005 presentation by Dr. Frank-Erich Hufnagel, LLM of Freshfields Bruckhaus Deringer:

Damage Calculation in German Law

• No subjective element in damage calculation: A willful infringer does not pay more damages

• Damages as difference calculation, includes lost profit (§ 252 BGB)

• “Simple” Equation:

                        Damages =  Hypothetical wealth without infringement
                                       - Actual Wealth with infringement

• Problem: Hypothesis is complicated and burdensome

 -Hypothetical damage where patent holder was never willing to license?
 -Non-financial or unquantifiable damage (e.g. to business/goods reputation)?
 -No damage because patent could have been circumvented?
 -Burden of proof upon patentee (need to disclose own profit)

   -> Not an attractive option for patentee in practice

See the full presentation here.

WordLogic Corporation Files Patent Infringement Against Mercedes-Benz

The following is excerpted from a WordLogic press release that appeared today, July 8, 2008, at Business Wire:

WordLogic Corporation (OTCBB:WLGC) announces that a patent infringement lawsuit has been filled against Mercedes-Benz USA by our attorneys in US District Court, District of Oregon.

The company through its wholly owned subsidiary 602531 British Columbia Ltd., which holds the Company’s patent and patent pending portfolio, will be seeking damages for patent infringement for use of their car navigation system in certain 2007, 2008, and 2009 Mercedes-Benz models under US Patent No. 7293231 titled “DATA ENTRY FOR PERSONAL COMPUTING DEVICES”. WordLogic believes that this infringement was willful.

The Company will seek industry standard 8.6% royalties of the sales of the infringing product that sells for approximately $3,000.00 to $5,000.00 per car. These royalties will be calculated back 2 years along with damages. Also in light of the undisputable fact that the infringer was well aware of the Company, its product, and its patents from 2005, WordLogic will seek treble damages. The Company will also seek injunctive relief to prevent further infringement.

“Needless to say this is a precedent setting case that may impact other companies. Our patent pending portfolio consists of 9 patents pending, of which 4 are in active office action with United States Patent and Trademark Office. The information on our patents and patents pending can be accessed from the link on our web site,” said Frank Evanshen, WordLogic's President and CEO.

See the full release here.