Jury Hits Microsoft with Patent Infringement Verdict of $367 million

A San Diego, CA jury returned a verdict last Friday against Microsoft in its patent infringement suit with Alcatel-Lucent. The amount: $367 million. Check out my previous post on this case to get some more background. The patents at issue all involve video coding technology as well as patents related to a form entry system, algorithms for gesture recognition and commands to select video display modes. They are U.S. Patent Numbers 4,958,226; 4,383,272; 4,763,356; 5,347,295; and 4,439,759.

Todd Bishop's Microsoft blog correctly describes this as a partial victory for Microsoft. Alcatel-Lucent was seeking almost $2 billion in damages. Judge Huff had previously granted a motion by Microsoft, dismissing Alcatel-Lucent's claim for willful infringement. That claim, if left in the case, could have tripled the amount awarded by the jury.

So, as Judge Huff put it, "It's kind of a mixed verdict -- everybody wins,'' she said, according to a Bloomberg news report. "There's something for everybody.''

Translogic Requests Rehearing En Banc in its Appeal against Hitachi

Translogic, a Northwest innovator of logic circuits known as multiplexers, saw its $85M jury verdict for infringement of U.S. Patent No. 5,162,666 against Hitachi evaporate into thin air when the Federal Circuit affirmed a decision by the Board of Patent Appeals and Interferences (BPAI) upholding an Examiner's final rejection in a Reexam. The reexam and litigation (D. of Oregon) proceeded simultaneously along parallel tracks. After winning a jury verdict that certain claims of the '666 patent were not invalid, the Examiner issued a rejection in the reexam, finding those same claims invalid for obviousness. Translogic was unsuccessful in its appeal of the Examiner's rejection before the BPAI, and subsequently appealed to the CAFC. Meanwhile, Translogic had won a jury verdict of willful infringement and judgment of $85M which was appealed by Hitachi. Both cases reached the CAFC at about the same time and the CAFC issued two independent rulings. First, the Court affirmed the BPAI's decision in an opinion dripping with comparisons to the U.S. Supreme Court's decision in KSR v. Teleflex [PDF] and reasoning that the BPAI correctly determined that the claims of the '666 patent were invalid. [PDF] Second, the Court vacated the jury's verdict [PDF] based on its decision affirming the decision by the BPAI.

Today, Translogic requested rehearing by the CAFC en banc in a brief that raises some interesting arguments. Translogic challenges the Constitutional character and make up of the BPAI, with its lack of Article III judges. There is support for this argument in a recent article in the Patently O Law Journal.

Second, Translogic asserts a US Supreme Court case from 1861 arguing that the CAFC's decision violates the "antiretroactivity doctrine." Essentially, this doctrine does not permit the CAFC to eliminate a judgment based solely on a decision of the BPAI, where that decision came later in time than the jury's verdict. (i.e., "What the jury giveth, the BPAI cannot take away.") Of course, this argument would still require the CAFC to go back and evaluate the other issues on Hitachi's appeal of the underlying judgment.

I think both of these arguments have some legs. Rehearings en banc are always a long shot, but I hope the CAFC takes another look at this decision. If judgment on the Jury's verdict is flawed for some reason (like lack of sufficient evidence) that would be one thing, but if the verdict is supported by the evidence, it "beat" the Examiner's rejection, and it should be upheld no matter what the result of the reexamination was. I think this is important to preserve the sanctity of our judicial system which is based on the institution of the jury. When a jury sits to decide a case and renders a verdict, that verdict should be respected and upheld unless it is flawed for some reason under the Federal Rules. Jury Verdicts should not be open to collateral attack by independent agency decisions, applying different rules. What is to stop any party who loses in district court and is hit with damages for patent infringement from simply trying the case over again before the BPAI, in an attempt to invalidate claims that have already been held not invalid by a jury? This promotes duplicate proceedings and could lead to inconsistent results.