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.

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.''

Microsoft's Data Base Patent Invalidated in Suit with Veritas

As predicted in my earlier post on this case, Judge Coughenhour accepted findings by the special master and invalidated Microsoft's U.S Patent No. 5,558,147. The case is not over by any means. Microsoft is positioned quite well for the upcoming May 2008 trial with total damages on the contract claims capped at $4,000,000. Microsoft finds that kind of money in the cushions of its executive lounge couch. More coverage on this order is available from IP360 if you have a subscription.
VeritasMSJ147.pdf

Summary Judgment Granted For Microsoft on Patent Claims brought by Veritas

Judge Coughenhour adopted findings by the special master and granted Microsoft's motion for partial summary judgment on Veritas' claim for infringement of US Patent No. 5,469,573. Here is a summary of the decision from Jurisnotes and a link to the order's text:

Veritas sued Microsoft for patent infringement and related claims; the court adopted the report of the special master recommending that the court grant Microsoft's motion for summary judgment on Veritas's claim of infringement of the '573 patent. The '573 patent claims a data backup procedure and apparatus for backing up and restoring a fully configured operating system to the high capacity storage device of a computer workstation from standard system backup media without the need to reload and reconfigure the operating system from its original distribution media. Veritas alleges that certain operating system software sold by Microsoft have built-in backup and restore capabilities that can be used to infringe the '573 patent. Microsoft asserts that Veritas has not shown that any specific customer has used the accused software in a way that practices each step of any claim. Because the accused products had undisputed substantial non-infringing uses, Veritas could not show that use of the accused products necessarily infringed. As a result, Veritas had to point to a specific instance of direct infringement in order to avoid summary judgment on its charge of indirect infringement. Veritas had to show that deployment or restoration by a customer was accomplished using a method recited in the claims. The court noted that some of the claimed method steps were inherently ordered and indicated that Veritas had to prove that Microsoft's customers performed those steps in the order set forth in the claims. Veritas's evidence of direct infringement fell into three categories: 1) user manuals and other documents that instructed Microsoft customers on how to use the accused products; 2) testimony by Microsoft witnesses concerning use of the accused products; and 3) emails and other documents concerning use of the accused products.
It was clear that Veritas's reliance on various user manuals and related documents to show that a user actually performed the claimed method was too speculative to raise a genuine issue of material fact in that regard. The court noted that certain of these documents disclosed deployment scenarios that a customer could utilize without infringing the asserted claims. Moreover, Veritas's expert had to cobble together various parts of each document to show that they taught the claimed methods. But these parts were not disclosed together or in the claimed order. Nothing in the evidence indicated that Microsoft's customers had actually used the accused products in the manner suggested by Veritas. In addition, some of the documents did not even point to a sufficiently specific method such that a reasonable jury could identify an infringing method, much less conclude that a Microsoft customer had actually used the accused products to perform a claimed method.

Veritas still has claims for breach of contract and alleged misuse of confidential information. Those claims are set for trial in may 2008, but Vertas' damages are capped at $4,000,000.

Reports by Special Master in Veritas v. Microsoft Patent Litigation May Narrow Issues for May 2008 Trial

Reports by special master Gale R. Peterson were recently unsealed by the Court in the aging dispute between Microsoft and Veritas Software (now owned by Symantec Corp.) concerning the parties' decade-old joint development of storage management software. The ill-fated business relationship between Microsoft and Veritas began in 1996, when they entered into a development and licensing agreement "whereby Veritas promised to provide Microsoft with the source code for its volume management technology, called Logical Disk Manager (LDM), to be embedded in the next version of the Windows NT operating system, Windows NT 5.0, later renamed Windows 2000." According to a recent order in the case "Veritas’ express objective in entering the Agreement with Microsoft was 'to build a Windows NT Add-on products business[.]'" In other words, "Veritas planned to develop and market to Windows customers certain volume management-related features, or increased capabilities, that were not included in the base LDM to be embedded in Windows 2000."

Well, things apparently did not go as planned, and suit was filed by Veritas in May 2006 alleging breach of the joint development agreement by theft of confidential information, and infringement of U.S. Patent No. 5,469,573. Microsoft fired back in the form of counterclaims, seeking invalidity of the '573 patent, and its own claims for breach of the agreement, as well as infringement of its own patent, U.S Patent No. 5,588,147.



Trial is set for May 2008, and both parties filed for Summary Judgment on a variety of contract and patent claims. The special master's reports (more than 300 pages in length, and in several parts, attached below) recommends that the Court grant Microsoft's motion for invalidity of the '573 patent, and that there is no evidence of direct infringement of that patent by Microsoft's customers. The reports also recommend that the court enter summary judgment of no infringement by Veritas of Microsoft's '147 patent as to certain claims and that certain other claims are invalid for anticipation.



Motions for summary judgment on the contract claims were also pending and recently decided by Judge Coughenhour. In two separate orders, Judge Coughenhour held that Veritas' contract claims survive summary judgment, but that damages will be capped at $4,000,000. Microsoft's claims for breach were dismissed in view of a forum selection clause in the agreement.




In summary, this looks to be a pretty big victory for Microsoft, having damages on the contract claims capped and what looks like a pretty strong recommendation from the special master that there should be no liability for patent infringement. Microsoft may lose its '147 patent to a ruling of invaldidity, but something tells me this won't hurt Microsoft too badly. Of course, the parties have an opportunity to object to the special master's report and recommendations. The Judge is in no way bound to agree with these findings. Realistically, I think the parties will have a hard time convincing the Court to make a ruling in conflict with the special master's recommendation.



As an aside, this is apparently not the first time the W.D. of Wash. has used Gale R. Peterson as a special master in a patent case. Mr. Peterson's bio states that he served as special master in a patent case, Precor v. Life Fitness (W.D. of Wash.), the majority of which was pending before Judge Coughenhour (95-cv-00066, 97-cv-00250, 94-cv-01586, 98-cv-00694).

VeritasReport%20by%20SepcialMaster.pdf
veristasreportbbyspecialmasterpart2.pdf
VertiasReportspecialmaster%20on%20invalidity573.pdf
veritasreportyspecialmasteron147claimpart1.pdf
vertiasReport%20by%20SepcialMaster147part2.pdf
VeritasOrderSealedMPSJ.pdf
veritasOrderonMPSJ.pdf

Peer To Patent Project Is Catching On

In a previous post, I argued for the continued patentability of software. I recognize the existence of "bad" software patents or patents on software that were improvidently granted. I also recognize the economic inefficiencies created by legal patent monopolies for software methods and systems that are old or obvious. Notwithstanding these problems, I still believe that getting rid of all software patents would be bad for the economy and bad for the industry. Instead of restricting the scope of patentable subject matter to exclude certain classes of technology, we (patent lawyers, software engineers, and anyone interested in technology as an industry) should endeavor to increase the quality of patent examination, especially in terms of searching for prior art.

The USPTO recognizes this and in June of this year it started a pilot project in coordination with New York Law School's Do Tank, with the stated mission "to prove that organized public participation can improve the quality of issued patents." The project is called the "Peer to Patent Project" and it involves "1) review and discussion of posted patent applications, 2) research to locate prior art references 3) uploading prior art references relevant to the claims, 4) annotating and evaluating submitted prior art, and 5) top ten references, along with commentary, forwarded to the USPTO."

According to a recent post on the Peer-to-Patent Blog the project has had 186,043 page views from 32,457 unique viewers in 126 different countries/territories. Currently, 1737 people have signed up to be reviewers and have cited 106 instances of prior art on 22 applications.
There are currently 17 active patent applications for review.

1) Honey monkey network exploration
2) Dynamic readjustment and interpolation of progress method and system
3) Methods of enhancing media content narrative
4) Systems and methods for clinical decisions crawler agent
5) System and method for managing storage system performance as a resource
6) Method and apparatus for selectively executing different executable code versions which are optimized in different ways
7) Crossbar arithmetic processor
8) Smart drag-and-drop
9) Methods and apparatus to implement annotations based thunking
10) Method of obtaining data samples from a data stream and of estimating the sortedness of the data stream based on the samples
11) Security systems for protecting an asset
12) Method for configuring a windfarm network
13) Technique to modify a timer
14) Cross-cutting detection of event patterns
15) User interface paradigm for manufacturing applications
16) Computer compliance system and method
17) Vector length tracking mechanism
18) Relocating page tables

This project is particularly noteworthy for its ability to bring together the industry's Hatfields and McCoys. Project Sponsors include Intellectual Ventures, IBM, Microsoft, and Computer Associates, HP, GE, and Red Hat. The project is also obtaining broad grass-roots support from the likes of the Electronic Frontier Foundation. This post from the EFF calls for participation in gathering prior art for one published patent application, the Smart Drag and Drop application owned by Yahoo!.

Microsoft Lawyers Disqualified for Violations of Ethics Rules

This blog is beginning to morph into a Microsoft patent litigation blog. I apologize for that, but there is just too much to talk about when it comes to Microsoft and patent law. The latest news comes from the District of Delaware, where the Redmond-based software behemoth finds itself in an unusual role: patent infringement plaintiff. The Microsoft-owned patents-in-suit are 6421439, 6430289, 6263064, 6728357. The '439 patent is entitled "System and Method for User Affiliation in a Telephone Network." In the most basic summary, this technology combines telephone and internet technology to establish user lists for use in making rules for managing incoming phone calls, enhancing caller ID functions. I heard about this case from the very good Delaware IP Law Blog, where co-author, Chad Stover, reports about a recent Order granting Alcatel-Lucent's motion in part to sanction and disqualify certain Microsoft lawyers for violating state ethics rules relating to professional conduct. According to the Order, these lawyers purchased, on the open market, an Alcatel Communications System that contained certain features at issue in the patent litigation. The system was installed at the attorneys’ Washington D.C. offices, and one of the technicians working on the installation identified himself as an employee of Alcatel-Lucent, one of the originally-named defendants in the case. The employee helped install the system, trained the attorneys on how to use the system, and engaged in ongoing conversations with the attorneys about the administration, use, and configuration of the system. The Court noted that the employee was one of only a limited number of engineers at Alcatel with the experience and training to install the system. The Order concludes that this conduct violated Rule 4.2 which prohibits direct attorney communication with a party represented by counsel. The court finds that "[i]n the case of a corporation such as Alcatel, an employee is "represented" if, for example, his or her statement may bind the organization regarding the subject of the litigation, or where the employee is capable of making an admission on behalf of the corporation."

As a sanction, the Court ordered that the specific attorneys involved could not be involved in the litigation, and that the evidence gathered could not be used in the case, including the expert testimony from Microsoft's expert, because he apparently relied on the "fruits of [the lawyer's] conduct." The order is attached below.


MicrosoftRule4FRDQ.pdf

Does Microsoft innovate or imitate? Ask Bill Gates.

Todd Bishop of the Seattle PI writes a blog about Microsoft. In a recent post, he addresses Microsoft's rep as an imitator. Here is a quote from Bill Gates in response to this criticism:

"We can't change it. If you think we just imitate, then that's -- you just can't change it.

"Did we do personal computing? Who did that damn personal computing thing? When I bought that 8008 for $360 down ... what was that?

"Anyway, tablet computers, is there somebody else out there doing tablet computers? IPTV, is there somebody else out there doing -- by definition what we do is the baseline. Everything Microsoft does is the baseline, and what we don't do, that's what's innovative I guess. (Laughter.) And by that definition the other guys do all the innovative things.

"I remember Google invented Web search. No one did it before they did. It's very interesting how they did that. (Laughter.)

"In the computer industry the person who does something first and the person who does it successfully, they are rarely the same, but the memory is -- I mean, people think Apple Computer was an early personal computer company. Well, let's see, I had licensed 17 people to do personal computer basics before I did the Applesoft BASIC, before I went out with Steve Wozniak and did the version that worked with a cassette tape, because they didn't have the disk yet. But Apple invented personal computing.

"So, let history be rewritten at all times. But there's no way to get it straight, I guess. Go look at what Microsoft Research is doing, and then decide who are imitating and let me know."

On Line Music Store Technology Targeted by Patent Licensing Company

Amazon joined Microsoft and RealNetworks in a fight for the right to maintain digital play lists. Two separate patent suits accuse about two-dozen technology giants, including Yahoo! and Motorola, of patent infringement. The plaintiff is technology licensing company Premier International Associates, LLC. Premier sued Apple Computer on these same patents last September, but that case has settled. The patents are U.S. Pat No. 6,243,725 and 6,763,345. I've attached them, along with the Amended complaint naming Amazon below.

premier%20amended%20complaint.pdf
US6243725.pdf
US6763345.pdf

Trial set for February in Microsoft/Dell/Gateway case against Alcatel-Lucent

Judge Marilyn L. Huff of the Southern District of California refused to stay an upcoming trial set for February 20, 2008. The case involved allegations of patent infringement made by Alcatel-Lucent against Microsoft, Gateway, and Dell. Plaintiff Alcatel-Lucent is represented by Kirkland & Ellis LLP, while Microsoft is represented by Fish and Richardson. Gateway is represented by Howery, Dewey & Lebouf and Setlzer Caplan McMahjon Vitek. Dell is represented by Arnold & PorterLLP. Now that is a lot of lawyers. Overall, I counted 56 separate attorney appearances in this case. Should make for an interesting trial.

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.

Microsoft was successful in dismissing Alcatel's claims for willful infringement of these patents, relying on the new standard for willful infringement enunciated by the Federal Circuit in Seagate.

IP 360 reports that "Lucent, which merged with Alcatel in 2006, originally sued Gateway and Dell over 12 different patents in 2003, but Microsoft stepped into the case on their behalf to file a motion for declaratory action. Lucent claimed that many of the computers made by Gateway and Dell infringed on its patents by using Microsoft programs such as Outlook and Quicken, and by applying certain types of digital display and interfacing technologies."

I'm attaching the Judge's order granting Microsoft's motion for partial summary judgment on the issue of willfulness because I think it is a good example of the current application of the new Seagate standard.
AlcatelOrderMPSJNoWillful.htm

Microsoft and Nintendo Battle Game Controller Patents In ED of Texas

A recent claim construction ruling in a case involving both Nintendo and Microsoft set the stage for a Spring 2008 jury trial on a number of patents involving game controller technology owned by Plaintiff Anascape Ltd. Both Microsoft and Nintendo sought unsuccessfully to stay the entire litigation in view of an on-going reexamination of several patents-in-suit. Judge Ron Clark stayed the litigation as to some but not all of the patents. In his claims construction order, entered November 30, 2007, Judge Carter construed seven terms that relate to four patents, Patent Nos. 5,999,084, 6,102,802, 6,135,886, and 6,343,991. These patents all relate to the switches and buttons on controllers used for video games. The Order (link below PDF), awarded Anascape its definition for “pressure-sensitive variable conductance material,” finding that Microsoft's construction improperly tried to limit the definition of the disputed claim term by excluding a preferred embodiment of the term. He also agreed with Anascape's contention that no construction was necessary for terms related to individual button pressing. Anascape lost any literal infringement arguments concerning the terms “pressure-sensitive variable conductance material” and “means for creating an analog [output proportional to][signal representing] varying applied physical pressure.” According to Judge Carter, the jury will have to pass on these limitations under a theory of infringement by the Doctrine of Equivalents.

In large part, the claims construction order seemed to give Anascape what it wanted, however, Anascape just asked the Court to continue its trial date because of certain scheduling conflicts of its lead trial lawyers, McKool Smith.
AnscapeClaimsConstruction.pdf
AnscapevMSFTNoticeofClaimrejections.pdf
AnscapevMSFTPTOOrderReexam.htm
AnascapevMSFTNoticeofreexam.htm

Microsoft Loses Post Verdict Rulings in CAC Patent Infringement Case

I reported here about Microsoft's victory (by way of a favorable jury verdict finding two claims not infringed and invalid) in the Eastern District of Texas over Computer Acceleration Corp. (CAC). That case involved alleged infringement of US Pat. No. 5,933,630, entitled "Program Launch Acceleration Using Ram Cache," which is a patent held by CAC, a subsidiary of patent licensing giant, Acacia. Well, the Judge apparently just made some post-verdict rulings on some outstanding issues (1) Microsoft's claim for a declaratory judgment for invalidity based on indefiniteness; (2) Microsoft's claim for a declaratory judgment counterclaim for unenforceability based on inequitable conduct; and (3) Microsoft’s request for attorneys’ fees under 35 U.S.C. § 285. All three were denied as reported by Mike Smith of McKool Smith. Check out Mike's blog for more details on the rulings. A published order is forthcoming and I will post that as soon as we have it.

Federal Circuit Affirms $160M Verdict Against Microsoft

The Federal Circuit Court of Appeals affirmed [pdf] a $160M verdict against Microsoft and Autodesk, Inc., for infringement of US Patent Nos. 6,044,471 and 6,785,825. The '825 patent is for a "method and apparatus for securing software to decrease software piracy," and it relates specifically to using unauthorized code to enable software while the '471 patent covers a "method and apparatus for securing software to reduce unauthorized use," and it relates to passwords used for the operation and access to data through software. Both patents were acquired by plaintiff, Z4 Technologies.

The appeal came from -- you guessed it -- the Eastern District of Texas, where Judge Leonard Davis had denied post-verdict motions for JMOL and granted Z4 its attorneys fees ( $1,978,000 from Microsoft and $322,000, for a total fee of $2.3M, a bargain if you ask me) and directed Microsoft only to pay enhanced damages of $25M.

On appeal, Microsoft asserted through its attorneys, Fish and Richardson, that the patents were invalid as a matter of law. The federal Circuit treated the jury's verdict of no invalidity with the usual deference, and the appeal was lost due to the existence of "substantial evidence" of validity.

Microsoft also argued that the jury was not properly instructed on the issue of invalidity, saying that it was error for the court to refuse to tell the jury that the burden to prove invalidity was "more easily carried when a reference on which the assertion is based was not directly considered by the Examiner during prosecution." Citing the possibility for jury confusion from such an instruction, the Federal Circuit decided that remand was not necessary.

A permanent injunction was denied by Judge Davis against Microsoft. The injunction, in granted, could have halted sales of Windows XP and other Office products some of which had been sold since 2000. Autodesk stipulated to entry of an injunction, agreeing to implement a design around these patents.

Overall, this was a huge victory for Z4 and their lawyers, Brooks Kushman.

Download patents here [pdfs].

US6044471%5B1%5D.pdf
US6785825%5B1%5D.pdf

Microsoft Wins One in the ED of Texas

I used to think that juries in East Texas never met a patent they didn't like. All of that changed last Friday when word of Microsoft's victory over Computer Acceleration Corp. ("CAC") spread across the blogosphere. CAC is a subsidiary of Acacia Research Corp., which is owned by one of the largest patent licensing companies in existence. A recent SEC filing shows that Acacia subsidiaries are involved in 33 pending patent infringement cases for a variety of technologies, including vehicle magnetic brakes, user-activated Internet advertising, digital media transmission and credit card fraud protection.

The patent-in-suit in Microsoft's case, US Pat. No. 5,933,630, entitled "Program Launch Acceleration Using Ram Cache." (patent here in pdf US5933630%5B1%5D.pdf)

Interestingly enough, the inventors are both Washingtonians, Clinton L. Ballard (a registered member of the Suquamish tribe) and Timothy W. Smith, both reportedly residents of Seattle Washington.

The Jury found the claims of the '630 patent invalid. Some commentators on this case are saying the ED of Texas is not as plaintiff-friendly as some think. Mike Smith of McKool Smith reports that the win rate in the ED of Texas for this year is below the national average by almost 2/3 or 67%.

Microsoft Subsidiary Tries to Keep Invalidity Defense At Issue in Local Patent Dispute

In a case set for trial in Seattle on October 16, 2007 (C05-1013), Microsoft subsidiary Proclarity, Inc. hopes to keep evidence of obviousness in the case despite an earlier ruling that the defense fails as a matter of law. The maker of business intelligence software is accused of violating five patents owned by Timeline, Inc. The patents at issue cover an invention that "automatically obtain[s] information about the logical organization of a data source without the need for a human user to examine and analyze that data source." ProClarity argued that the invention was obvious in view of prior art, including Microsoft's own software products in use and on sale before the earliest possible priority date. U.S. District Judge James L. Robart disagreed, granting summary judgment in favor of Timeline. Claiming the defense has continued relevance notwithstanding Judge Robart's summary judgment order, ProClarity cites the Federal Circuit's recent en banc decision In re Seagate Technology, 2007 U.S. App. LEXIS 19768 (Fed. Cir. August 20, 2007) and argues that the evidence establishes an "objectively reasonable defense" to infringement. As a consequence, ProClarty claims that evidence relating to obviousness should be considered by the jury in response to Timeline's willful infringement allegations. To be sure, the argument is a novel one but not entirely without merit. The Federal Circuit's Seagate decision fundamentally changed the law of willful infringement by requiring an objective inquiry into the conduct of the accused infringer, asking whether the patentee can show by clear and convincing evidence that the infringer "acted despite an objectively high likelihood that its action constituted infringement of a valid patent." The problem ProClarity faces in its efforts to keep obviousness in this case appears to be one of timing. According to Timeline, ProClarity never developed an obviousness defense prior to initiation of the litigation. This fact, according to Timeline, makes the defense of obviousness irrelevant because "the starting point of any wilfullness analysis is what the infringer actually did when confronted with the patents." Timeline appears correct in its identification of the relevant "starting point" for assessing whether someone's infringement is willful, however, this begs the question of when (if ever) is it appropriate to examine new defenses that arise after the initiation of litigation. Because infringement is often an on-going, continuous injury, would not evidence showing a reasonable defense post-complaint be relevant to any claim of willful infringement arising after the complaint was filed?