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.

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%.