i4i Prevails on Appeal

Today, the CAFC decided the i4i appeal in what appears to be a sweeping victory for i4i. "We affirm the issuance of the permanent injunction, though we modify its effective date to accord with the evidence. In all other respects, we affirm for the reasons set forth below."

My previous posts on this case are found here. There will certainly be more to say about this opinion, but one thing that jumps out at me immediately is the sharp criticisms of certain decisions made by trial counsel not to seek per-verdict JMOL on the amount of damages.  Failing to seek pre-verdict JMOL is unfortunately a common error, but in this case, the decision appears to have been a deliberate one for strategy reasons.  What strategy, I'm not sure; there is little doubt, however, that Microsoft has some of the most high-powered and talent lawyers, so I'm sure there are reasons.  This is from the opinion:

"Although Microsoft now objects to the size of the damages award, we cannot reach that question because Microsoft did not file a pre-verdict JMOL on damages. ... Had Microsoft filed a pre-verdict JMOL, it is true that the outcome might have been different. Given the opportunity to review the sufficiency of the evidence, we could have considered whether the $200 million damages award was 'grossly excessive or monstrous' in light of Word’s retail price and the licensing fees Microsoft paid for other patents. Cf. Lucent, 580 F.3d at 1325-32.  As this court did in Lucent, we could have analyzed the evidentiary basis for the Georgia-Pacific factors, and whether the benchmark (XMetaL) was sufficiently comparable. Id."

Implicit Networks Accuses Windows Seven of Infringement

If it wasn't any good, no one would be accusing it of infringement, right?  Unwelcome flattery of this nature was thrust upon Microsoft and its successful Windows Seven product last week when a patent infringement case was brought by local patent licensing company, Implicit Networks.

Implicit owns US 6,629,163, Method and System for Demultiplexing a First Sequence of Packet Components to Identify Specific Components Wherein Subsequent Components are Processed without Re-Identifying Components.  According to the complaint, this technology is used in Microsoft's Windows Seven "Filtering Platform."

Ancora Settles Litigation with Microsoft

I posted back in April about a lawsuit that was transfered to Seattle. The lawsuit was between Ancora Technologies and Microsoft.  Recently, Ancora sent out the following press release.

Seattle, WA (PRWEB) November 13, 2009 -- Ancora Technologies today announced that a settlement has been reached in the litigation between Ancora, Miki Mullor, and Microsoft, both in respect of the patent infringement claim and Microsoft's claims against Mullor, Ancora's founder and a former Microsoft employee.

In the litigation and in reaching this settlement, all parties denied any and all liability. While the terms of the settlement are confidential, the parties have released each other from all claims of the litigation.
Miki Mullor, Ancora's founder and a former Microsoft employee said, "I am pleased with this resolution and wish my friends at Microsoft's Windows division nothing but success with Windows 7 launch."
This settlement resolves all claims between these parties.

Microsoft Denied Declaratory Judgment Jurisdiction a Second Time

Microsoft was unable to sustain a declaratory action brought against WebXchange to invalidate three patents covering network services.  The patents-in-suit are U.S. Patent Numbers 5,778,178; 6,212,556; and 7,340,506. According to IP 360, the USPTO has agreed to re-examine the '178 and '556 patents and has canceled the claims of the '506 patent.

On Friday U.S. District Judge Farnan sitting in Delaware, ruled that Microsoft lacked subject matter jurisdiction to bring the declaratory action, reasoning that Microsoft could not prove that the suits WebXchange filed against Microsoft customers over Microsoft's Virtual Earth Web Services and MapPoint Web Services software established an actual "case or controversy" with the software's maker.

Apparently this is the second time Microsoft has been unable to make allegations of declaratory judgment jurisdiction stick.  Back in April, the U.S. District Court for the Northern District of California in April dismissed a similar suit Microsoft filed against WebXchange.

Oral argument audio available in i4i v. Microsoft

Audio files of today's merits argument in the i4i v. Microsoft appeal are available at the CAFC's website by following this link and this link.

Microsoft Files Reply in i4i Case

Microsoft filed its reply today to i4i's Brief in opposition to Microsoft's appeal. This brief does a good job trying to refocus attention to Microsoft's most winnable issues: (1) claim construction, (2) jury instructions, and (3) damages. The brief (correctly in my opinion) retreats from (abandons?) the "gatekeeper" theme that was so prevalent in Microsoft's opening brief.

From the brief:

i4i labors mightily to paint Microsoft pejoratively, portraying it as a once-close “business partner” that supposedly stabbed i4i in the back and “usurped” i4i’s patented invention. Yet that breathless tale is belied by i4i’s own allegations: i4i admitted there was no evidence Microsoft copied its technology and explicitly disclaimed making any such contention, and i4i never accused Microsoft of breach of contract, misappropriation, or other claims that are typical of a dispute between business “partners.” Rather, this suit reveals a different reality—it was filed not by the supposed “victim,” but by litigation investors, and then fully four years after i4i congratulated Microsoft on the release of its supposedly infringing product.


Unfortunately for i4i, the truth is both comparatively mundane and innocent: After a handful of unfruitful meetings, i4i and Microsoft went their separate ways and Microsoft later released the custom XML functionality for Word that it had told i4i it was developing. And when Microsoft released its custom XML functionality, i4i congratulated Microsoft because Microsoft’s custom XML development platform would increase the opportunities for i4i’s own products, which, to that point, had sold poorly.

But both stories, the truth and i4i’s creative retelling, are ultimately irrelevant to the proper disposition of this appeal. That is because the central issues before this Court are questions of law reviewed de novo.

This brief also dos a nice job of capitalizing on Microsoft's big win against Lucent last week, in a decision that represented a clear reject of that case's application of the total market value rule in patent infringement damages.

From the brief:

Wagner used an outlandishly unrealistic benchmark. As this Court has explained, for a “benchmark” to have any bearing on estimating the value of a patent, the expert must show how it “relates” to the patented technology—i.e., “whether the patented technology is essential to the [benchmark], or whether the patented invention is only a small component or feature of the [benchmark].” Lucent, 2009 WL 2902044, at *23.




i4iMSFTReplySept14.pdf

CAFC: Jury's $360 M Damages Award Against Microsoft, In Favor of Lucent, Not Supported by Evidence

In a decision affirming the jury's finding of Microsoft's liability for infringement of Lucent's U.S. Patent No. 4,763,356, the Court of Appeals for the Federal Circuit ("CAFC") reversed and remanded the damages award, which the jury had calculated to the penny, in the amount of $357,693,056.18. This decision represents a rejection of the the "entire market value" approach to patent damages, but not in the way that some might have hoped. Particularly, the opinion leaves the rule viable for application in other cases. Here is some relevant language from the opinion, authored by Chief Judge Michel:

Microsoft argues that the damages award must be reversed because the jury erroneously applied the entire market value rule. Despite the jury’s indication on the verdict form that it was awarding a lump-sum reasonable royalty, Microsoft believes that the only way the jury could have calculated a figure of $357,693,056.18 was by applying a royalty percentage to a total sales figure of the infringing software products. Indeed, it is difficult to understand how the jury could have chosen its lump-sum figure down to the penny unless it used a running royalty calculation.

***

Assuming that the jury did apply the entire market value rule, such application would amount to legal error for two reasons.

***

For the entire market value rule to apply, the patentee must prove that “the patent-related feature is the ‘basis for customer demand.’” Rite-Hite, 56 F.3d at 1549 (quoting State Indus., 883 F.2d at 1580); see also Bose Corp v. JBL, Inc., 274 F.3d 1354, 1361 (Fed. Cir. 2001); TWM Mfg., 789 F.2d at 901 (“The entire market value rule allows for the recovery of damages based on the value of an entire apparatus containing several features, when the feature patented constitutes the basis for customer demand.”).

***

Notwithstanding this obstacle, the objective of the Court’s concern has been two-fold: determining the correct (or at least approximately correct) value of the patented invention, when it is but one part or feature among many, and ascertaining what the parties would have agreed to in the context of a patent license negotiation.

***

The first flaw with any application of the entire market value rule in the present case is the lack of evidence demonstrating the patented method of the Day patent as the basis—or even a substantial basis—of the consumer demand for Outlook.

***

The second flaw with any application of the entire market value rule in this case lies in the approach adopted by Lucent’s licensing expert. He had first tried to apply the entire market value rule to the sale of the “infringing” computers loaded with the software, opining that Microsoft and Lucent would have agreed to a 1% royalty based on the entire price of the computer containing Outlook.

***

At trial,Lucent’s expert changed his opinion, contending that the royalty base should be the price of the software (and not the entire computer) but also that the royalty rate should be increased to 8% (from 1%). This opinion contrasted starkly to the rates he proposed for the other patents in suit, which were in the 1% range. In choosing 8%, he reasoned that, “in a typical situation, if one applied a royalty to a smaller patented portion in a computer as opposed to the entire computer using typically infringed patents, 8-percent . . . of the fair market value of the patented portion would equate to 1-percent of the fair market value of the entire computer.

MSFTLucentCAFC.pdf

i4i Files Response Brief at CAFC

Software maker and recently successful patent enforcer, i4i, filed its responsive brief yesterday in the appeal filed by Microsoft. In this high profile patent infringement case, Microsoft was found by a Texas jury to have infringed US Patent No. 5,787,449 on a method for reading XML, and ordered to pay over $280 M in damages for willful infringement. Microsoft was also ordered to stop selling its popular WORD product by October 10, 2009. Recently, the CAFC stayed enforcement of this injunction while the parties continue to battle it out on appeal.

i4i is represented by seasoned appellate counsel, Don Dunner, as well as a host of other very good lawyers from Finnegan Henderson. This brief is very well done. It does an especially good job of restating the [way too] many issues raised by Microsoft's opening appeal brief.

In a very smart tactical move, Finnegan's counter statement of the issues breaks up Microsoft's brief into several sub issues, essentially stating that the Software Giant claims that no fewer than 13 substantive errors were made by a very experienced and respected district court judge; an unlikely story and one that is used skillfully by Dunner and his team to erode the Appellant's credibility. In reality, there are probably an additional two or three more issues raised by Microsoft's appeal that weren't called out in Finnegan's counter statement.

Here is a snippet from Finnegan's preliminary statement:

Microsoft repeatedly attacks the district court’s performance as a
“gatekeeper.” But Judge Davis has a substantial track-record in patent cases, and
Microsoft’s criticism of him as unable (or unwilling) to fulfill his duties is nothing less than an unfair attempt to divert attention from what really happened. When it suited its purposes, Microsoft touted i4i as a “Microsoft Partner” able to provide software that Microsoft could not. But behind i4i’s back, Microsoft usurped i4i’s invention, destroying i4i’s ability to compete in the market that it had created.

i4iResponseBriefCAFCSept9.pdf

i4i v. Microsoft: Injunction Stayed

Hal Wegner just reported that the CAFC will stay an injunction entered last month by Judge Leonard Davis of the ED of Texas. The injunction was to take effect October 10, 2009 and it was to apply against all copies of MS WORD currently being sold. The stay will be in place during the CAFC's consideration of Microsoft's appeal. No reasons were given for the stay, other than that "the court determines based upon the motion papers submitted that Microsoft has met its burden to obtain a stay of the injunction." The order also says that it is being entered "[w]ithout prejudicing the ultimate determination of this case by the merits panel," indicating that the motion to stay was not decided by the panel, which is typical, but given the significance of this motion, I thought this motion might have been decided by the merits panel. i4iOrderSeptember3.pdf

Microsoft Submits Opening Brief in i4i Appeal

Microsoft submitted its opening appeal brief on Tuesday and the CAFC set oral argument on its motion to stay Judge Davis' order enjoining further distribution of infringing copies of Microsoft's multi-Billion dollar WORD product. Oral argument on Microsoft's motion to stay and on Microsoft's motion for an expedited consideration of the appeal is set for September 23, 2009.

An East Texas jury found that WORD infringed i4i's patents covering the use of XML technology, Judge Davis granted i4i's motion for an injunction, stopping any further distribution of infringing copies of WORD. That order will take effect sometime in October unless the CAFC steps in to stay the injunction.

Microsoft's arguments on appeal are summarized by the below preliminary statement taken from its opening appeal brief. I only got through part of the preliminary statement. The rest will be saved for another post. One of the problems I have with this brief is that the preliminary statement is too long and the brief raises too many issues. But I know that writing an appeal brief is a lot harder than critiquing one. This brief would have been especially hard to write with so many lawyers weighing in.

"In patent cases, even more than most, the trial judge’s role as a gatekeeper is
crucial. As gatekeeper, the judge must define the metes and bounds of a patent
through claim construction and then ensure that the evidence presented by the
parties’ numerous experts is both reliable and rooted in the facts of the case at
hand. And after the jury has rendered its verdict, it is the judge who . . . must ensure that the verdict is adequately supported by the evidence and supportable under the law. ... [this] is especially important in patent cases because of the
delicate balance struck by patent law to achieve its objective of promoting, rather than stifling, innovation. That balance can be lost if the district court does not protect the process, and patent litigation then becomes a tax on innovation rather than its guardian."

This sounds like a "patent law is special" argument, which is particularly out of style right now. And if you don't believe me, just read that last four or five Supreme Court opinions. The better argument is the good old-fashioned "junk science" argument, that the verdict cannot be supported by expert testimony that is fundamentally flawed at its premise, and that in view of shaky, but arguably admissible expert testimony, the judge's role to scrutinize the evidence allegedly supporting the verdict is critically important.


"This case stands as a stark example of what can happen in a patent case
when a judge abdicates those gatekeeping functions."

The "gatekeeping function" language sounds like an evidentiary challenge. An uphill battle because the standard of review is abuse of discretion. I suggest leading with an argument where the reviewing court is not so constrained in their ability to find error.

"The district court’s errors in this case began when it accorded a critical claim
term no meaning whatsoever, effectively erasing it from the patent. That
impermissible claim construction, in turn, enabled the plaintiffs to present to the
jury a theory of infringement that contradicted not just the asserted patent’s
specification, but also its prosecution history, and, indeed, its very title."

OK, now we are getting somewhere. A claim construction argument. CAFC has plenary review. This should be front and center. Get rid of this "gatekeeping" stuff.

"The court’s failure to act as a gatekeeper extended to Microsoft’s validity
defenses as well. After Microsoft invoked the on-sale bar with the inventor’s prelitigation statements that showed his invention to have been “implemented” and
sold before the critical date, the inventor insisted that he had lied to investors about his pre-sale invention date and that the invention really came later, and that
Microsoft could not prove otherwise because he had “discarded” the source code
of that product. In the absence of corroboration, an inventor’s manifestly self interested testimony should be insufficient as a matter of law to save his patent. But the district court demurred and sent the question to the jury."

Even this slanted account raises a number of factual questions in my mind. This statement does not convince me that there was an absence of evidence supporting plaintiff's theory. Especially in view of Microsoft's elevated burden of proof to prove invalidity by clear and convincing evidence.

"By the time the plaintiffs presented their damages case, the district court had
abandoned even the semblance (really?) of gatekeeping. Plaintiffs sought to quantify instances of indirect infringement—their royalty base—through a survey of 988 businesses. That survey garnered just 46 individual respondents, who then were paid to guess how many other persons in their place of employment used Microsoft Word in a manner similar to the alleged infringing implementation. Of those 46 respondents, 19—less than half—were aware of any such use of Word. And even they supplied inconsistent or confused responses, so plaintiff’s expert simply changed the data—all according to so-called principles of “data imputation,” of course. When his manipulations were done, he testified that the 19 responses to his survey proved that 1.85 million Word users infringed plaintiffs’ patent—nearly 100,000 for every usable response."

Was i4i supposed to put all 1.85 million users on the stand? There has to be some recognition that a survey can be a reasonable way to quantify the level of inducement, especially in view of what I'm sure were piles of statements in instruction manuals and "help menus" from Microsoft explaining just how WORD can be used to infringe the patent.

"Plaintiffs then extrapolated that the 1.85 million infringing uses supposedly demonstrated by the survey had grown to 2.1 million in the six months before trial. When Microsoft challenged the survey as inherently unreliable, the district court offered the clearly erroneous response that fundamental admissibility considerations such as whether a survey respondent has personal knowledge of facts surveyed and whether the results were manipulated went only to the weight of the evidence."

Sounds like great cross examination. But the jury didn't buy it.

"If this survey passes muster, there are no limits to what “evidence” can be presented to lead juries astray, and patent law suffers."

Again, if Microsoft is right here, all law suffers, there is nothing special about patent law when it comes to the application of the FRE, or at least the Supreme Court is inclined to say that there is nothing special about patent law.

"A similar fate befell Microsoft’s challenge to plaintiffs’ Georgia-Pacific
analysis. Plaintiffs’ expert concluded that, in a hypothetical negotiation, Microsoft would have agreed to a royalty rate of $98—more than half of the current retail price of Word 2007. Wagner reached this conclusion by applying the much maligned “25 percent rule of thumb” to the hypothetical profit one might have
received if Microsoft’s profit margin applied to an unrelated third-party’s radically dissimilar product .... But the district court ... permitted the expert to testify that a “reasonable royalty” was $200,000,000."

Again, great cross material, but the appellate court is constrained by the standard of review. Also, Mike Wagner's testimony has been admitted in probably more than one hundred IP cases. Maybe he went wrong in this case, I don't know, but it would be a rare event to exclude his testimony.

OK, I'm getting tired here, and will deal with the rest of the preliminary statement in another post


i4imicrosoftappealbrief.pdf

Judge Davis Orders Microsoft to Stop Selling Word

As many of you undoubtedly already know, Judge Leonard Davis granted plaintiff i4i's motion for a permanent injunction following a jury verdict in the case for infringement of US Patent No. 5,787,499, which covers software controlling document architecture and content and enables individuals to manipulate electronic documents without using manually embedded command codes (i.e., A/K/A "XML"). (see my previous posts here)

I've read the order, and it does a pretty good job of setting forth factors justifying an injunction according to the Supreme Court's new standard in Ebay. This certainly sounds like the sort of case where an injunction is appropriate. Let's hear it for Judge Davis for putting some teeth back in our patent system! I don't think it is realistic to think that Microsoft will actually pull Word. Further, there are some things that Microsoft can do at the appellate court level to try and get the injunction lifted, they are no doubt in the process of filing papers with the CAFC seeking to stay enforcement of the injunction pending appeal. My money, however, is on settlement.

The order is attached below, and here is are some snippets:

"First, i4i has overwhelmingly shown that it has been irreparably injured by Microsoft’s continuing infringement of the ‘449 patent and could not be compensated with monetary damages. The fact that there is direct competition in a markplace [sic] weighs heavily in favor of a finding of irreparable injury."

"i4i’s damages expert also testified that Microsoft’s entry into the custom XML marketplace rendered i4i’s products obsolete in 80% of that market."

"In response to i4i’s claims of direct competition, Microsoft presents evidence that i4i’s current products are designed to be compatible with Microsoft’s infringing WORD products and that Microsoft’s entry into the market allowed such “add-on” products to succeed. . . . This argument entirely misses the point. The fact that i4i is capable of existing in a marketplace where Microsoft is infringing does not negate the injury incurred as a result of Microsoft’s infringement."

"The evidence shows that i4i lost a, perhaps irretrievable, opportunity in the early days of the custom XML market. See PX 172. This continuing loss of market share and brand recognition is the type of injury that is both incalculable and irreparable."i4iOrdergrtnginjuntion.pdf

ADC v. Nintendo, Microsoft, and Sony Stayed Pending Reexamination

ADC Technology Inc, a Japanese corporation that owns several gaming patents related generally to music/karaoke-style video games, filed suit last October in Seattle against Nintendo, Microsoft, and Sony. The patents in suit include:

U.S. Patent 5,775,995, titled "Interactive Communication System for
Communicating Video” filed May 3, 1996 and issued July 7, 1998; U.S. Patent 6,193,520, titled “Interactive Communication System for Communicating Video Game and Karaoke Software” filed July 2, 1998 and issued February 27, 2001; U.S. Patent 6,488,508, titled “Interactive Communication System for Communicating Video Game and Karaoke Software” filed December 8, 2000 and issued December 3, 2002; U.S. Patent 6,702,585, titled “Interactive Communication System for Communicating Video Game and Karaoke Software” filed December 2, 2002 and issued March 9, 2004 (copy attached as Exhibit D); U.S. Patent 6,875,021, titled “Interactive Communication System for Communicating Video Game and Karaoke Software” filed November 14, 2003 and issued April 5, 2005.

ADC alleged that Nintendo's Wii, Sony's PS3, and Microsoft's Xbox 360 infringed one or more of the above-listed patents.

Led primarily by Nintendo, all three defendants came out swinging in their answer alleging invalidity, non infringement and inequitable conduct. Nintendo's pleading was particularly noteworthy, over 145 pages of allegations describing invalidity and inequitable conduct.

Last week, Judge Martinez agreed to stay the litigation in view of several petitions for reexamination in various staged of pendency before the USPTO. The parties stipulated to the stay.

Microsoft Seeks JMOL in i4i Patent Case

From Bloomberg.com

"[T]he world’s largest software maker asked a U.S. judge to throw out a $200 million verdict after a jury found that the company’s Word products violated a patented way to process electronic documents.

Microsoft is also seeking a ruling that it didn’t use a patent owned by closely held i4i LP. U.S. Judge Leonard Davis in Tyler, Texas, didn’t rule on the motion today.

'There is no evidence that Microsoft looked at the patent or knew about the content of the patent,' Matthew Powers, a Microsoft attorney, told Davis.

Microsoft yesterday asked a judge in Providence, Rhode Island, to throw out a separate $388 million verdict in favor of a Singapore company that accused Microsoft of infringing a patented invention used to deter software piracy. No ruling was made and the hearing is expected to continue next week.

The Tyler jury’s May verdict said Microsoft’s infringement was willful, allowing i4i to seek to have award increased. An attorney for i4i suggested $25 million would be a reasonable punishment for willfulness.

'The evidence amply supports the jury’s finding of willfulness,' said Douglas Cawley, an attorney representing i4i, told the court today. 'Microsoft knew of the patent, and chose to ignore it.'

Four of the top 10 biggest patent verdicts in U.S. history have gone against Microsoft, totaling more than $2.78 billion. The total includes a February 2007 verdict where the Redmond, Washington-based company was told to pay $1.5 billion to Alcatel-Lucent. The award was later thrown out."

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?

Seattle Patent Litigation Update: May 2009

What recession? Seattle patent cases exploded during the months of February, March and April 2009 (list included in this post). Note that I've done something a little different for this post, I've included the patent number and the name of the plaintiff's lawyer and law firm.

While the number of cases increased over the last few months, most of these cases remain idle, without even an appearance by counsel for the Defendant(s).

One case that you've all no doubt heard about, was Microsoft's filing against TomTom over navigation devices and software. I posted something about that case when it was first filed. That case settled quickly under mostly confidential terms, putting to rest a year's worth of squabbling between the two companies. Both companies had sued the other, claiming patent infringement. Under the terms of a five-year agreement, Microsoft said in a public statement that TomTom will pay it for use of the eight car navigation and file management system patents asserted in its ITC and Seattle case, while Microsoft will be able to use the four patents included in the TomTom countersuit without any payment to TomTom.

Another interesting case on this list, is Ancora Technologies Inc v. Toshiba America Information Systems Inc et al., Cause No., 2:2009cv00270. Pending before Judge Pechman, this case involves claims asserting U.S. Patent No. 6,411,941, for a "method of restricting software operation with a license limitation." Did I hear someone say In re Bilski? We'll be watching this one closely. It was transferred from the Central District of California. Very capable lawyers on both sides, so this will be a fun one to follow.

An interesting side story to this case is that Ancora initially filed against Dell Inc., Hewlett-Packard Co. and Toshiba Corp.’s Toshiba America Information Systems unit, asserting claims that all defendants' use of Microsoft’s technology infringed the '941 patent. Microsoft filed to intervene as a defendant in the case in September. And this started accusations that Ancora's Chief Executive Officer, Miki Mullor, landed a job with Microsoft under false pretenses and gained access to confidential data. Apparently, Mullor applied for a job at Microsoft in October 2005, saying he was a former Ancora employee and that the company had gone out of business, according to a complaint filed Jan. 22 in state court in Seattle. According to Microsoft, Mullor concealed that Sammamish, Washington-based Ancora had accused Microsoft in June of infringing a 2002 patent.

Ancora responded through its attorney, Mark Cantor, saying "[t]his is simply a retaliatory lawsuit by Microsoft to get the patent case transferred to Seattle."

Retaliatory or not, it apparently worked, and the case is now here in Seattle.

Here is the list of cases filed between February 1 and April 30, 2009.

April 17, 2009

Warm Brothers Inc v. North East Hardwood Flooring Inc et al., Cause No. 3:09-cv-05223 (WA Western/Tacoma) Judge Leighton, U.S. Patent No. 6,533,185, hydronic radiant heating devices (Lawyer for patentee, Richard L. Goff)

April 16, 2009

Alpha Technologies Inc v. Ekstrom Industries Inc., Cause No. 2:2009cv00515 (WA Western/Seattle) Judge Pechman, U.S. Patent Nos. 6,428,350 and 6,443,761, (Lawyers for declaratory judgment plaintiff, Jerry Riedinger et. al., Perkins Coie).

April 10, 2009

Direct Route LLC v. Spirevision Inc et al., Cause No. 2:2009cv00486 (WA Western/Seattle) Judge Jones, U.S. Patent No. 7,467,229, method and apparatus for routing of network addresses, (Patentee’s lawyer, Duncan C. Turner, et. al., Badgley Mullins)

Ergo LLC et al v. Pacific Cycle Inc., Cause No. 2:2009cv00488 (WA Western/Seattle) Judge Robart , U.S. Patent No. 6,158,806, bicycle seat (Patentee’s attorney, Lee Burdett)

March 31, 2009

Gamakatsu USA Inc v. Matzuo America Inc., Cause No. 2:2009cv00423 (WA Western/Seattle) Judge Lasnik, U.S. Patent No., 6,691,449, Fishing Hook (Lawyers for declaratory judgment plaintiff, Ross Boundy et al., Davis Wright Tremaine)

March 30, 2009

Broadband Graphics LLC v. TIBCO Software Inc., Cause No. 2:2009cv00418 (WA Western/Seattle) Judge Lasnik, U.S. Patent No. 7,013,432; 7,313,765; 7,013,431, display container cell modification in a cell based EUI (patentee’s lawyer, Paul Beattie, et al. Schwabe)

March 26, 2009

Hicks v. Riddell Inc., Cause No. 2:2009cv00400 (WA Western/Seattle) Judge Tsuchida, U.S. Patent No. 5,661,849, protective face guard for softball (patentee’s lawyers Chase Alvord, Jody Gross)

March 24, 2009

NewTech Touch-Up Systems Inc v. Front Line Ready GA LLC et al., Cause No. 3:2009cv05158 (WA Western/Tacoma) Judge Leighton, U.S Patent No. 7,320,811, method and system for paint matching and re-touching, (patentee’s lawyer, Owen Dukelow, Kolisch Hartwell).

March 23, 2009

G. Vincent Ltd. v. Dux Area Inc., Cause No. 2:2009cv00383, U.S. Patent Nos. 7,004,404, 7,234,649, (WA Western/Seattle) Judge Theiler , spray guns for paint (plaintiff’s lawyer, Amanda Beane, Perkins Coie).

March 19, 2009

Broadband Graphics LLC v. TLM Inc., Cause No. 2:2009cv00355, (WA Western/Seattle) Judge Jones, U.S. Patent No. 7,013,432; 7,313,765, display container cell modification in a cell based EUI (patentee’s lawyer, Paul Beattie, et al. Schwabe).

March 13, 2009

Randy's Ring & Pinion Service Inc v. Regal-Beloit Corporation et al., 2:2009cv00329 (WA Western/Seattle) Judge Jones, U.S. Patent Nos. 5,413,015, differential (declaratory judgment plaintiff’s lawyer, Larry Graham et al., Black Lowe & Graham).

March 11, 2009

Progressive International Corporation v. Jaxco Industries Inc., Cause No. 2:2009cv00317 (WA Western/Seattle) Judge Lasnik, U.S. Patent Nos. D548,022, food chopper blade tray, D548,025, chopper, 7,191,691, food chopper, (patentee’s lawyer, Larry Graham, et al., Black Lowe & Graham).

March 5, 2009

The Active Network Inc v. Arena Group Inc et al., Cause No. 2:2009cv00289, (WA Western/Seattle) Judge Pechman, U.S. Patent No. 6,289,348, electronic processing of membership information in an organization (patentee’s lawyer, Sarah Turner, Gordon & Rees)

February 27, 2009

Ancora Technologies Inc v. Toshiba America Information Systems Inc et al., Cause No., 2:2009cv00270 (WA Western/Seattle) Judge Pechman, U.S. Patent No. 6,411,941, Method of restricting software operation with a license limitation, (transferred from CD of Calif., Patentee’s lawyers, Brooks Kushman)

February 25, 2009

Microsoft Corporation v. TomTom NV et al., 2:2009cv00247, (WA Western/Seattle) Judge Jones, U.S. Patent Nos, 6,175,789; 7,054,745; 6,704,032; 7,117,286; 6,202,008; 5,579,517; 5,758,352; and 6,256,642, portable navigation devices and software (lawyers for patentee Adam Wichman et. al., Klarquist Sparkman and Sidley)

February 24, 2009

Knudtzon et al v. Intuit Inc., Cause No. 2:2009cv00240, (WA Western/Seattle), Judge Martinez, U.S. Patent No. 7,120,597, Computerized Accounting Systems and Methods (Lawyer for patentee, Ed Goldstein, Houston TX, local counsel, James Rogers)

February 17, 2009

Bow Jax Inc v. Sims Vibration Laboratory Inc et al., Cause No., 2:2009cv00047 (WA Eastern/Spokane) Judge Whaley, U.S. Patent No, 5,362,046; 6,684,874, bow limb dampaners (Declaratory judgment plaintiff’s lawyers, John S. Reid).

Alcatel-Lucent v. Microsoft: A Reason to Delay Congressional Patent Reform?

The damages issue has been hotly debated among those supportive of congressional patent reform, including so-called "damages apportionment" and damages keyed to the "whole market value" of a device.

According to noted patent commentator, Hal Wegner, the case brought by Alcatel-Lucent against Microsoft embodies these damages "reform" issues and provides an opportunity for the Federal Circuit (and perhaps even the Supreme Court) to judicially consider these issues. Says Hal, "[b]ecause the matter will be pending for quite some time, this case will be perhaps more important as the EE/IT coalition’s poster child for arguments on Capitol Hill for damages reforms, making this perhaps the most important pending patent appeal."

Indeed, on March 3, 2009, Senator Spector wrote to Chairman Leahy of the Judiciary Committee asking for a postponement of patent reform hearings "until late May [2009] after the [ ] Federal Circuit has the opportunity to hear argument in Lucent Technologies, Inc. v. Gateway, Inc. The court may consider issues related to the damages debate; specifically the scope of the ‘entire market value’ rule when assessing damages."

Hal responded to Senator Spectors comments, explaining "[t]he prediction by Senator Spector is odd: The Federal Circuit has now posted its argument calendar through the end of May and does not list this case. Unless the case is taken out of turn, it is expected that the argument will be scheduled for the time frame June-August 2009."

For those unfamiliar with the history of this case, it has been called one of the most important legal battles of the modern era.

The early patent dispute involved audio coding patents. Alcatel-Lucent claimed that Microsoft's Windows Media Player infringed these patents by virtue of its MP3 capabilities. On February 22, 2007, a San Diego jury found for Alcatel-Lucent and against Microsoft. Alcatel-Lucent was awarded a record-breaking $1.52 billion in damages. On August 6, 2007, U.S. District Judge Rudi Brewster, granted Microsoft's motions for Judgment and for new trial, saying that the jury's decision was not supported by the evidence. The Judge's Order found that there was insufficient evidence both for Microsoft's liability and for the damages model used by Alcatel-Lucent. Alcatel-Lucent appealed and the Court of Appeals for the Federal Circuit heard oral arguments in July 2007. On September 25, 2008, upholding the dismissal of the case by Judge Brewster on two grounds, the CAFC that there was a joint developer and thus co-owner of one patent, which made Lucent lack standing to sue. The other patent was not infringed because Lucent failed to show that the accused algorithm was ever used.

A week after the first jury verdict, on March 2, Judge Brewster ruled in the second part of the case that Microsoft had not violated Alcatel-Lucent's patents relating to speech recognition and the case was therefore dismissed before going to trial. Alcatel-Lucent stated that it intends to appeal.

The trial in the third part of the San Diego case involved four patents. In April 2008, US jury awarded Alcatel-Lucent $367.4 million in damages after finding that Microsoft had violated two patents related to the user interface in its software. In June 2008, the trial judge upheld the jury's verdict and increased the damage award against Microsoft to $512 million to account for interest.

Microsoft Goes on the Offensive Against TomTom

Ben Romano from the Seattle Times reported today that Microsoft filed a patent infringement lawsuit in Seattle and the International Trade Commission against TomTom, the Amsterdam-based maker of portable GPS systems for in-car navigation, after more than a year of trying to reach a licensing arrangement. According to a company spokesperson, the patents cover "inventions that enable a vehicle computer system to run multiple applications, provide more natural driving directions, integrate other devices, and access the Internet." Microsoft's chief patent lawyer, Horacio Gutierrez, reportedly said in a statement: "We have an established intellectual property licensing program, and the patents involved in this case, relating to innovations in car navigation technology and other computing functionality, have been licensed by many others. In situations such as this, when a reasonable business agreement cannot be reached, we have no choice but to pursue legal action to protect our innovations and our partners who license them."

Apparently eight patents are involved, three pertaining to "technology that makes file management more efficient" and two covering "FAT Long File Name (LFN) patents that enable efficient naming, organizing, storing and accessing of file data." Other infringed patent reportedly allow file systems to work better with flash memory.

No patent numbers were immediately available. I'll post more information as it becomes available.

UPDATE: The patents involved are US 6,175,789; 7,054,745, 5,579,517, 5,758,352, and 6,256,642. A copy of the ITC action, filed by Sidley, is attached. tomtomitc.pdf

UPDATE: I also attach a copy of the USDC complaint, filed today in Seattle.tomtomComplaint.pdf

Seattle Patent Litigation Update January 2009

The Western District saw just one patent case filed last month, Chen v. Unisen, Inc. (2:2009cv00128, assigned to Judge Lasnik). Unisen does business under the name Star Trac. According to the Star Trac web site, Star Trac is "proud to be an international leader in commercial quality fitness equipment. But [it is] far from satisfied." The patent at issue is U.S. 6,745,873 covering a braking device for an exercise cycle.

One patent case file in January 2009 is in stark contrast to the 10 cases that were filed in Washington Federal Courts in January 2008.

In other Seattle patent litigation news, Microsoft settled a dispute over encryption technologies with Maz Technologies. MAZ lodged the suit in the U.S. District Court for the Eastern District of Texas in July, alleging that the Redmond, Wash.-based software giant’s Encrypting File System software, which is part of Microsoft’s Windows operating system products, infringed two patents, U.S. Patent Number 7,096,358, (an encrypting file system issued in August 2006) and U.S. Patent Number 6,185,681 (a method of transparent encryption and decryption for an electronic document management system). The ’681 patent was issued in February 2001, and the U.S. Patent and Trademark Office issued a re-examination certificate for it in May 2006.

In other news, Nintendo moved quickly last month on the heels of the Federal Circuit's grant of mandamus in the In re TS Tech case, a case finding that the district court in Marshall, Texas abused its discretion in refusing to transfer a case under 28 U.S.C. 1404. On January 26, Nintendo filed a motion seeking to transfer a case brought by Motiva LLC, an entity described by Nintendo in its motion as "a vehicle created for the purpose of this litigation, as it was incorporated less than a year after the patent at issue in this action, U.S. Patent No. 7,292,151 (“the ‛151 patent”) issued and shortly before this case was commenced." Nintendo is seeking to have the case transferred to Seattle.

Finally, Microsoft is set to begin trial shortly in East Texas in a patent case brought by online chat company Paltalk Holdings Inc. alleging that the technology giant's Xbox Live online gaming service infringes two Paltalk patents. On Monday, Judge David Folsom of the U.S. District Court for the Eastern District of Texas denied Microsoft's motion for partial summary judgment after finding that the company had not met its burden of showing that the two patents were anticipated by clear and convincing evidence. Paltalk Holdings is being represented by Seattle's Brooke Taylor, a partner in the Seattle office of Susman Godfrey. The patents-in-suit are U.S. Patent Numbers 5,822,523 and 6,266,686.

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.

Seattle Patent Law Community Mourns the Passing of Lee Johnson

Friends, family, and local patent practitioners met yesterday to mourn the loss of Lee Johnson, a talented engineer and patent lawyer who spent over 35 years as named partner of one of Seattle's oldest IP boutiques, Christensen O'Connor Johnson Kindness (commonly referred to by the acronym COJK). Lee was an excellent lawyer and friend. Funeral services were held in Seattle's historic Plymouth Congregational Church and it was standing room only.

I had the pleasure of working with Lee for seven years at COJK and I try to emulate his dedication to this profession and his focus on client service. Lee was the ideal mentor for a young lawyer, bringing the same dedication and focus to this role as he did his legal practice. He introduced me to Seattle Rotary and led by exemplifying the Rotary motto of "service of above self." At age 65, he left us too soon after struggling with cancer for the last year.


Lee was born October 4, 1942 in Ames, Iowa and was raised in the small idyllic farming community of Avoca, Iowa. He graduated from Iowa State University in 1964 with a degree in chemical engineering and was accepted into the patent training program at The DuPont Company in Washington D.C. where he worked during the day and studied law in the evening at Georgetown University. In 1971, after working briefly for a law firm in Dallas, Lee accepted a job in Seattle with the small IP boutique Christensen & Sanborn. It was here that Lee joined Bruce O'Connor, a fellow Georgetown graduate. O'Connor and Johnson were later joined by Gary Kindness, and partnership of COJK was formed in 1976.

Over the years, COJK represented some of the Northwest's finest companies, including Microsoft, Boeing, Amazon, Nintendo, and Weyerhaeuser. Lee was instrumental in firm leadership, helping to grow the firm from 4 lawyers in the 1970s to over 50 attorneys in 2001-2, most with engineering or technical degrees.

Lee was an avid boater. He and partner Gary Kindness owned a 46 foot Grand Banks cruiser that they kept in the San Juan Islands. Named by combining their two last names Johnson and Kindness, "the Jokin" was an omnipresent guiding vessel for the annual COJK boat trip in the San Juans. The boat was always spotless too. Lee was aboard the Jokin, enjoying a vacation with his family in Desolation Sound just weeks ago.

Lee will be missed but not forgotten. He's left an important mark on my professional career, and lawyers will do well always if they only try and be more like Lee Johnson.