Texas Jury Stings Microsoft for $200M

I guess the third trial's the charm for patent holders looking to collect big money from Microsoft for patent infringement. After winning one case on summary judgment on the eve of trial, and settling another one mid-way through, Microsoft decided to gamble on the jury yesterday and lost. Here is a snippet of today's article from IP 360:

"A federal jury on Wednesday found that Microsoft Corp. willfully infringed i4i Inc.’s patent covering document-formatting software and handed down a verdict awarding the small Canadian company $200 million.

Concluding an eight-day trial in the U.S. District Court for the Eastern District of Texas, a federal jury supported i4i’s claims that Microsoft incorporated its patented technology in a range of operating system products, including Word 2003 and Word 2007

The $200 million award includes compensation for lost profits and royalties.

Microsoft infringed U.S. Patent Number 5,787,499, which covers software controlling document architecture and content and enables individuals to manipulate electronic documents without using manually embedded command codes."

Microsoft had apparently defended the charges on inequitable conduct grounds. Arguing, the plaintiffs were "aware of the structure, storage, manipulation, creation, modification and maintenance of a document in versions of Microsoft Word that existed prior to the filing of the application leading to the ‘499 patent."

Them's fightin' words in Texas. Perhaps a more conciliatory approach would have shaved 8 or even 9 figures off of that damages number?

Amazon.com Strikes Back at Discovery Communications

Amazon.com asserted three patents against Discovery Communications, owner of the well known cable TV brand, the Discovery Channel, as well as other goods and services sold under the Discovery name and mark. The patents-in-suit are U.S. Nos. 6,006,225 ("Refining Search Queries by Suggestion of Correlated Terms from prior Searches"); 6,169,986 ("System and method for Refining Search Queries"); 6,266,649 ("Collaborative Recommendations Using Item-to-Item Similarity Mappings"); and 6,317,722 ("Use of Electronic Shopping Carts to Generate Personal Recommendations") All patents are asserted against Discovery through its use of the Discovery Store website.

In March, Amazon was sued by Discovery Communications in the District of Delaware under U.S. Patent No. 7,298,851 ("Electronic Book Security and Copyright Protection System"), a patent that, according to Discovery, covers Amazon's popular Kindle e-book product.

In a statement, Joseph A. LaSala, Jr., General Counsel of Discovery Communications, said: "The Kindle and Kindle 2 are important and popular content delivery systems. We believe they infringe our intellectual property rights, and that we are entitled to fair compensation. Legal action is not something Discovery takes lightly. Our tradition as an inventive company has produced considerable intellectual property assets for our shareholders, and today's infringement litigation is part of our effort to protect and defend those assets."

Amazon%20Compl%20%28WDWA%20Disc%20Comm%29.pdfAmazon%20%28Disc%20Comm%20Complt%2C%20DE%29.pdf

Claim Construction Sticks in Bamboo Flooring Case

Judge Leighton resolved a motion for reconsideration of an order construing the terms "random orientation" as used in U.S. Patent No. 5,543,197, in an order that was issued over four months ago (previous posts here and here). The primary bone of contention was that the Court had construed these terms to require not only random orientation of the individual bamboo strands, but also random, "not uniform," lengths.

In refusing to reconsider its interpretation of the term "random orientation," Judge Leighton reasoned as follows:

"Teragren argues that the ‘197 patent describes a beam that contains bamboo segments randomly oriented vertically, horizontally, and rotationally, but that are not necessarily lapped or staggered, and are not necessarily of random (or non-uniform) lengths. Teragren effectively argues that the beams described in the patent could be like a box of uncooked spaghetti; the individual segments are randomly placed, but are of uniform length and are not staggered."

Relying primarily on statements in the prosecution history arguing patentability over a specific prior art reference, and arguing "The advantage is that the randomness of this process assures a uniform and length-wise staggered stacking of the bamboo segments, allowing the length of the beams to exceed the length of the bamboo segments themselves and negating any weaknesses of the discontinuity of the annular rings."

That was enough for the Court to conclude that the claims should limit the term "random orientation" to require random, non-uniform lengths.

On another issue, the Court granted reconsideration, clarifying its Markman ruling as follows:

"The Court’s Markman Ruling was not intended to address whether an embodiment which adds a layer or lamination to an otherwise infringing product necessarily is or is not an infringement. Nothing in the Court’s prior Ruling should be construed as a determination of that issue. If and to the extent this clarifies the Court’s prior Ruling, the Motion for reconsideration on this issue is GRANTED."

teragrenMRecon.pdf

Surgical Trainer Patent Case Headed for Trial in October

Simulab Corp. will get a jury this fall to decide claims for infringement of U.S. Patent No. 6,780,016, a patent for a "Human Surgical Trainer and Methods for Training." Infringement claims are being asserted against Synbone AG, a Swiss company. My previous posts here and here, discussed Judge Zilly's summary judgment rulings, expressing skepticism that "Simulab can demonstrate the requisite layer properties and relationships" claimed in the patent.

Simulab was asked to present an offer of proof setting forth how it intended to prove infringement. Simulab's offer of proof was supported by the 15 page declaration of the inventor, Christopher C. Toly (PDF link below). Evaluating Simulab's offer and the declaration of Mr. Toly, Judge Zilly initially ruled as follows:

"The Court is not satisfied that Mr. Toly’s most recent declaration addresses in any meaningful way the fundamental question whether the adhesive layers of Sites 4 and 5 and the film layer of Site 7 are more difficult to dissect that the simulated skin layers at those sites of the SYNMAN. Mr. Toly, however, has provided the relevant density figures, tending to show the density relationships required by Claim 43 of the ’016 Patent, and the Court is persuaded that any further briefing from defendant would simply demonstrate an issue of material fact precluding summary judgment. Thus, the Court will set a trial date concerning the sole remaining allegation that Sites 4, 5, and 7 of the SYNMAN infringe Claim 43 of the ’016 Patent."

Defendants moved to reconsider, citing as error, the Court's conclusion that "further briefing from defendant would simply demonstrate an issue of material fact precluding summary judgment"

After requesting a response to the motion to reconsider, the Court denied the motion, and set trial for October 26, 2009. Judge Zilly's order states as follows:


"Although the Court remains skeptical that plaintiff will be able to establish the relative ease or difficulty of dissection relationships required in connection with Claim 43 of the ’016 Patent, see Minute Order at ¶ 2 (docket no. 43); Order at 12 n.5 (docket no. 40), the Court is reluctant to rule as a matter of law on the merits of plaintiff’s remaining claim of infringement. In its offer of proof, plaintiff presented evidence of density relationships consistent with the language of Claim 43. For pretrial purposes, defendant does not dispute plaintiff’s density figures. See Motion for Reconsideration at 2 (docket no. 44). Instead, in its motion for reconsideration, defendant for the first time asserts that density bears no consistent relationship with the relative ease or difficulty of dissection. Id. Defendant, however, has offered no expert or other testimony to support this proposition, and has not suggested any alternative means of quantifying the relative ease or difficulty of dissection of the materials at issue."

An interesting side comment from the Court in this order says "In reaching its conclusions, the Court has also considered the timing of defendant’s motion for summary judgment, which was filed more than two months before the close of discovery, and which was the basis for the Court’s subsequent stay of discovery."

To me, this is an indication that Defendant should have waited until discovery closed to file its motion, or it should have made a case why early SJ was appropriate.

Waiting is hard (and expensive) for any litigant, but it is especially hard for defendants who think a plaintiff's case lacks merit. One practice tip for SJ motions filed before the close of discovery, especially in Judge Zilly's court and I speak from experience, is to explain (preferably in your opening brief) why further discovery will not lead to a genuine issue of material fact. Arguments as to why early SJ is in the interest of justice and judicial efficiency are also a good thing to include.

In other words, don't just file your motion early because Rule 56 says you can. (saying motions for SJ can be filed "after 20 days have passed from commencement of the action"). Rather, explain why the timing is appropriate. This way, you might have a shot at obtaining an early, more cost-effective victory for your client

simulabtollydeclaration.pdf

Fees Denied to K2 in Short Fat Ski Case

The case is Paul N. Nelson v. K2 Inc., Cause No. C07-1660RSL. My previous posts, explain that plaintiff Nelson lost his priority date claimed in U.S. Patent No. 5,603,522 on written description grounds, and then lost summary judgment on his invalidity defense based on allegedly "experimental sales." K2 moved for attorneys fees. In an order denying fees, Judge Lasnik reasoned as follows:

"Prior to commencing this litigation, plaintiff was under no obligation to accept defendant’s (or Volant’s) opinion regarding the validity of United States Patent No. 5,603,522 (the ‘522 patent). Plaintiff had successfully marketed and licensed the invention to a number of sophisticated entities, including K2, and had always maintained that the ‘522 patent was entitled to its earliest claimed priority date. Determining the correct priority date required the Court to evaluate the range and "blaze mark" cases and to consider the policy implications of requiring too much or too little specificity from an inventor. Plaintiff was entitled to a judicial determination of this important issue and was not required to abandon the ‘522 patent simply because his competitors challenged its validity. Because the lawsuit was not baseless or frivolous at its inception, plaintiff’s prosecution of his claims does not justify an award of attorney’s fees under 35 U.S.C. § 285."

Judge Lasnik went on to explain that "the closer question" was whether the prosecution of the case since the first SJ order on written description grounds, October 15, 2008, should be characterized as "exceptional." This issue arose because at oral argument, plaintiff’s counsel apparently stated "we’re out of here . . . we lose" if the Court granted K2's first SJ motion.

Attempting to explain these statements, plaintiffs presented evidence regarding settlement negotiations between the parties, arguing that the fees defendants incurred after the Court’s priority date ruling resulted from K2's own "strategic choices." This evidence was called into question by declarations submitted by K2.

Explaining that "[f]ee disputes should not devolve into mini-trials," Judge Lasnik denied K2's motion, noting that "[i]t is clear from either version of events that plaintiff took significant, albeit unsuccessful, steps to resolve this case in an appropriate and timely manner."

Indeed, plaintiff offered a "walk-away" settlement within days of receiving the Court’s priority date ruling. This was rejected by K2 because they believed the settlement should come with a payment of attorneys fees.

Noting further that plaintiff's experimental use defense was "not well supported," Judge Lasnik said that the weak defense could not serve as basis for fees where "defendants opted to continue the litigation" following the "walk away" proposal.

This is a reminder that continuing litigation purely for the recovery of attorneys fees is almost always a bad idea. The better route is to simply accept your hard-fought victory and move on. After all, this is America, where the default rule is that each party should bear their own attorneys fees, win, lose, or draw.nelsonK2FeeOrder.pdf