November 2011

November 16, 2011, by Mandour & Associates, APC

San Diego – A federal judge in a San Diego district court recently held that a jury award in a patent infringement action against Microsoft totaling $70 million was excessive and not supported by substantial evidence. District court judge Marilyn Huff has ordered either that the damage award be reduced or that Microsoft opt to re-try the case.

The action was filed by French telecommunications leader Alcatel-Lucent alleging that Microsoft’s Outlook software, sold as part of the Microsoft Office suite, infringed on a patent covering a touch screen method of data entry. Alcatel argued that Outlook’s calendaring software used its method patent to allow users to enter data into their calendars.

The jury issued a verdict for Alcatel, finding that Microsoft had committed patent infringement and ordering Microsoft to pay a royalty of $70 million, apparently based on the number of infringing Microsoft Office licenses sold. The $70 million figure ordered by the jury was based on the 109 million licenses of Office issued by Microsoft during the period of infringement. However, that figure amounts to a per unit cost of $67 for the Microsoft Outlook product alone.

Upon Microsoft’s motion for a new trial, Judge Huff ruled that the jury’s verdict was excessive, as no reasonable jury could conclude that Microsoft Outlook by itself was worth $67 of the price of the entire Microsoft Office suite which also includes Word, Excel, and PowerPoint. A valuation of $67 for Outlook would leave Excel, Word, and PowerPoint with a combined value of only $31. Instead, the court concluded that the highest value supported by substantial evidence for Microsoft Outlook was $24.55. This would cut the highest possible award to $26.3 million.

Finding that the award was excessive, the court will allow Microsoft to elect to re-try the case. Microsoft may also pay the reduced damages award of $26.3 million to avoid re-litigating the matter.

November 10, 2011, by Mandour & Associates, APC

San Diego – Internet software company BASCOM Global Internet Services, Inc. recently received a favorable jury verdict finding that AOL infringed patents owned by BASCOM. The case was brought by plaintiff BASCOM concerning allegedly infringing use of BASCOM’s patents involving internet filtering technology by defendant AOL. After a weeklong trial, the jury awarded $10,000,000 to BASCOM as a royalty for AOL’s past infringement.

BASCOM provides internet filtering programs and technology to schools and educational bodies designed to block adult entertainment, pornographic, and other content. BASCOM alleged that AOL used BASCOM’s patented filtering technology as a part of AOL’s own internet service. BASCOM’s president, Peter Cirasole claimed during his trial testimony that AOL and other leading companies refused to negotiate with BASCOM, believing that such a small company could not secure enforcement of its patents against competing industry giants.

When a patent is registered, the owner has the exclusive right to make, sell, use, or import the patented article or process. Patent infringement occurs when another party makes, sells, uses, or imports the patented invention or a product manufactured using the patented process. Upon a finding of liability for patent infringement, the plaintiff may be awarded a royalty for use of the patent, an injunction barring further use, damages, and attorney’s fees.

In this case, the weeklong jury trial came to an end with the jury upholding the BASCOM patent as valid and enforceable. The jury also found that AOL had infringed the internet content filtering patent registered with the USPTO. Based on its finding of liability, the jury ordered that AOL pay $10,000,000 in royalties for its infringing use of the BASCOM patent.

AOL, previously America Online, is an internet media company and was one of the world’s largest internet services providers of dial-up internet. At one time, AOL provided internet services to more than 30 million users.

November 4, 2011, by Mandour & Associates, APC

San Diego – Human Genome Sciences, Inc., a biopharmaceutical company that uses human DNA sequences to develop protein and antibody drugs, recently received a ruling in its favor by the British Supreme Court in a patent dispute with Eli Lilly & Co. The dispute concerned the validity of a European patent for a gene sequence for use in developing treatments for individuals with immune diseases. Indiana based Eli Lilly and Co. initially contested the European patent owned by Human Genome on the grounds that the patent was too vague in describing its potential uses and that, if upheld, the patent would stifle research in the area of gene sequencing.

The Human Genome patent at issue was granted by the European Patent Office. The European Patent Office grants patents to inventors in 38 member countries. Patents issued by the Office are not European Union wide and must be defended in each member country.

Here, Maryland based Human Genome initially received a European patent in 2005 for a gene sequence to create a neutrokine alpha protein. The protein is a cytokine known as a Tumor Necrosis Factor protein. These proteins are involved in initiating systemic inflammation and facilitating an increase or decrease in plasma concentration in reaction to such inflammation. Human Genome, partnered with GlaxoSmithKline, planned to use the patented gene sequence to develop its Lupus drug Benlysta.

However, the Human Genome patent had been found invalid by a lower British court. Upon motion by Eli Lilly, a previous ruling in the case had invalidated the patent based on arguments from Eli Lilly that the claimed uses of the synthesized protein were too vague. A crucial element of a European patent is a designated industrial use, similar to a patent claim in the U.S. Eli Lilly alleged that rather than designating a specific industrial use, the Human Genome patent had merely listed potential uses for the gene sequence.

Upon review by the Supreme Court, judges reversed the ruling and upheld the validity of the Human Genome patent. Supreme Court Judge Robert Walker claimed that the ruling, reinstating the Human Genome patent, would prevent a chilling effect on biopharmaceutical research in the U.K. and Europe.

November 2, 2011, by Mandour & Associates, APC

San Diego – Smartphone manufacturer Motorola Mobility, who was recently purchased by Google, has received a total of $228 million in cash and licensing fees from an unnamed company for use of certain patents. Analysts are speculating that the company in question is Blackberry-maker Research in Motion (RIM.)

In a recent SEC filing, Motorola announced that in June of this year, it had entered into a settlement and licensing agreement with a company to resolve all outstanding legal disputes between them. Records indicate that in January 2010, Motorola filed a complaint with the United States International Trade Commission accusing Research in Motion of engaging in unfair trade practices by the importation and sale of RIM products that allegedly infringe on five Motorola patents.

A spokesperson for Motorola Mobility declined to share any information on the identity of the mystery company, however both Motorola and RIM announced in June that they had entered into a similar agreement. The agreement states that the two companies will share license rights to a number of unnamed patents that covered aspects of 2G, 3G, 4G, 802.11, and wireless email technology.

“The agreement includes provisions for an upfront payment of $175 million from the other company to [Motorola Mobility], future royalties to be paid by the other company to [Motorola Mobility] for the license of certain intellectual property, and the transfer of certain patents between the companies,” said the SEC statement.

The legal settlement announced in June between Motorola and Research in Motion came nearly two months before Google made public its plans to purchase Motorola Mobility, a subject also covered in the SEC filing. Motorola indicated that the Merger with Google might have a “negative impact” due to “intensifying litigation or increasing new legal claims from competitors and other third parties, particularly as companies vigorously pursue and protect their intellectual property rights with patent litigation.”

Motorola Mobility also claimed that the merger may be hampered due to uncertainty of the outcome from employees and customers alike.

November 2, 2011, by Mandour & Associates, APC

San Diego – Twitter received a jury verdict in its favor on Monday October 31, 2011 in a patent infringement trial held in the Eastern District of Virginia.

The action (VS Technologies v. Twitter Inc., 11cv43) was originally brought by Virginia patent attorney Dinesh Agarwal who claimed he had invented an interactive web program that had allegedly been implemented by Twitter to create its popular social networking site.

Dinesh Agarwal and his closely held VS Technologies LLC owned U.S. Patent No. 6,408,309 issued in 2002 for an interactive web program “creating an interactive community of famous people.” Agarwal claimed to have invented and patented technology used by Twitter to create its “Browse Interests” feature. Agarwal designed this feature to allow users to keep up with their favorite celebrities, such as musicians and actors, or to discover other users having similar interests. Agarwal and VS Technologies alleged in the suit against Twitter that the social networking giant had infringed the 2002 patent owned by VS. In the action, Agarwal sought over eight million dollars in damages.

To prevail in an action for patent infringement, the plaintiff must first own a valid patent. To comprise a valid patent, the patented article must be novel, non-obvious, and useful. The novelty requirements dictates that the patent cannot exist in the so called “prior art.” In other words, others cannot be using the patented article or process at the time of “invention” by the patent holder.

In this case, Twitter argued that the VS Technologies patent was invalid as it existed in the prior art and did not meet the requirements of a valid process patent. Urging the jury to find in its favor, Twitter attorneys cited Bilski v. Kappos and alleged that the VS patent was invalid as it did not meet the Supreme Court’s requirements for a business method or process patent, namely that the patent failed the machine-or-transformation test. Twitter also argued that its social networking system, which includes over 100 million international users, had not used infringing technology but had implemented its own distinct interactive web programs.

Though Twitter is used heavily by the celebrity community, the Norfolk, Virginia jury found in favor of Twitter. Twitter is the world’s largest “microblogging” site and allows users to post “Tweets” of up to 140 characters.