Seattle Patent Litigation Update: August, 2008

While August was a relatively slow month for new cases in Seattle (only one, Laughing Rabbit Inc. v. OpticsPlanet, Inc (08-01176 JLR), area technology companies were busy elsewhere dealing with a variety of patent issues. Notably, Microsoft settled its dispute with Immersion Corp, obtaining a one-time payment of $20.75 M. The settlement resolves a contract dispute stemming from patent litigation Immersion won against Sony Corp over game controllers with so-called "rumble" or "haptic" technology (vibrating controllers, set to move in response to on-screen gaming events, like an explosion or car crash). Immersion sued Sony in 2004 in the ND of California. The suit targeted Sony's Playstation and Playstation 2, as well as Microsoft's X-Box controllers. In 2005, Microsoft and Immersion entered into a sublicense agreement as part of a $26 M settlement, where Microsoft paid Immersion $20 M to obtain licensing rights to the technology and $6 M to buy a 10% stake in the company. Microsoft's 10% stake became pretty valuable when Sony agreed to pay Immersion more than $150 M to settle remaining claims for infringement. Last month's payment resolved any remaining interest Microsoft had in proceeds from this patent litigation. Overall, one might say that Microsoft settled this dispute for $6M (but I have no idea whether Microsoft expects any more return on its 10% "investment" in Immersion ... Regardless, this is definitely some creative lawyering at work. ... Hats off to lawyers for MSFT).

In other Microsoft patent news from last month, Portland-based patent law blogger, Gary "Patent Hawk" Odom, author of The Patent Prospector, sued Microsoft in East Texas, alleging Infringement of his patent for "Tool Group Manipulations," US Pat. No. 7,363,592. (Complaint available here) Patent Hawk is represented by Susman Godfrey, among three other law firms and no fewer than 10 lawyers, including the Susman firm's Seattle-based patent litigators, Brooke Taylor and Genevieve Vose. The suit was filed in Tyler, TX, but it is not likely to get to trial very quickly there. The Texas Rocket Dockets (even Tyler's) are not as speedy as they once were.

Nintendo was also busy last month. It was dealt a one-two punch: (1) ITC investigation and (2) Federal Court patent litigation in USDC, Northern District of Maryland, both stemming from allegations that the Wii infringes certain patents owned by Hillcrest Laboratories, Inc. Hillcrest owns US Patent Nos. 7,158,118; 7,262,760; and 7,414,611, which allegedly cover a technology used on TV sets for user access to digital content like photographs, web sites, and games. The software typically uses a main menu that prompts users to choose which program they want to use. Hmmm, sounds like my Apple TV. Hillcrest also asserts infringement of US Patent No. 7,139,983, a patent alleged to cover hand-held three dimensional pointing devices that (unlike a traditional mouse) allow a user to translate or rotate the pointing tool in space instead of merely detecting movement relative to a flat surface.

Hillcrest is a different sort of plaintiff than Nintendo is perhaps used to (at least during the "modern age" of patent litigation, i.e., since about 2004). Hillcrest makes products and is relying on US trade law to seek a general exclusion order barring importation of any product infringing its US patents; this would apply to any importer of such products, so this case has implications beyond the immediate parties. Nintendo can stay litigation in Maryland district court or decide to proceed along parallel tracks in both US District court and the ITC. Things will move fast in the ITC, not as fast as they used to, but considerably faster than they will move in USDC in Maryland. It will be interesting from a strategy perspective to see which route Nintendo chooses to go. So far, no filings have been made by Nintendo in the district court litigation.

Finally, I was catching up on some of the cases that I've written about, and I noticed that in July, Judge Jones agreed to consolidate three cases brought by Unigen Pharmaceuticals over US Patent No. 7,192,611, a patent covering methods for treating osteoarthritis. Unigen sued Walgreens and others for selling an herbal supplement that is a blend of flavans from Acacia catechu and flavanoids from Chinese Skullcap (Scutellaria Baicalensis). Unigen markets this herbal supplement under the mark Univestin. Walgreens filed a motion for summary judgment seeking to invalidate the '611 patent in view of US Patent No. 5,650,433. Judge Jones has a standing order explaining that he normally does not entertain summary judgment motions that implicate claims construction issues until after Markman briefing and (if necessary) a Markman hearing and decision on claim construction. In view of this order, Judge Jones asked for a claims construction "proffer" from Unigen, saying that it would be accepted as true for purposes of summary judgment and limited only by counsel's obligations to have a good faith basis for the construction, consistent with Rule 11. My earlier post explains this in better detail.
Well, Unigen submitted its proffer, and this was accepted by Judge Jones and held sufficient to create a genuine issue of material fact, and hence, order denying summary judgment (at least for now). From Judge Jones' Order:

[T]he court notes that the parties’ evidence shows that osteoarthritis itself is a degradation of joint cartilage.The symptoms of osteoarthritis, or the effects of that degradation, include inflammation and pain. COX-2 is the shorthand name of an enzyme that promotes inflammation. Treatments that target COX-2 seek to inhibit its production to produce an
anti-inflammatory effect.

For each of the independent claims, Unigen proposes a construction that not only
makes each preamble a claim limitation, it makes each preamble a claim limitation with
meaning beyond its plain language. See Philips v. AWH Corp., 415 F.3d 1303, 1313
(Fed. Cir. 2005) (noting that claim terms must be construed according to their “ordinary
and customary meaning” to a person of skill in the art). The “method for treating
osteoarthritis” of claims 1 and 8 becomes a “method for alleviating those symptoms of
osteoarthritis that result from COX-2 mediated inflammation.” The “method for
improving impairments . . . in a living host having arthritis” of claim 15 becomes a
“method for improving impairments . . . that result from COX-2 mediated inflammation
in a living host having osteoarthritis.” The “effective amount” and “host in need thereof”
limitations that follow the preambles of the independent claims are similarly imbued with
meanings that limit them to targeting COX-2 mediated inflammation.

Accepting this claim construction, there is no clear and convincing evidence that
the ‘433 Patent anticipates the ‘611 Patent. The ‘433 Patent is targeted at protecting
cartilage (“chondroprotection”), not at COX-2 mediated inflammation. Indeed, the ‘433
Patent teaches away from anti-inflammatory treatment, noting that “conventional
analgesic and anti-inflammatory agents . . . were not effective against the destruction of
the articular cartilage, and in fact sometimes exhibited adverse effect . . . .” ‘433 Patent
at 1:36-40. If Unigen correctly construes the ‘611 Patent to require a method that targets
COX-2 mediated inflammation, then Walgreen has not provided uncontroverted clear and
convincing evidence that the ‘433 Patent is anticipatory prior art.1
It appears, then, that Unigen’s construction of the independent claims of the ‘611
Patent as limited to targeting COX-2 mediated inflammation is critical to sustaining the
validity of the patent. Expeditiously resolving that dispute may be key in efficiently
resolving these consolidated actions.

That's all for now.