Apple Inc. is hardly shying away from patent jury trials this year. After defeating an infringement case brought by Wi-LAN Inc. just last week, Apple and its lawyers at Milbank, Tweed, Hadley & McCloy are heading to trial against an inventor who says he first conceived of the modern-day smartphone. Milbank has capped the inventor’s potential recovery through pretrial rulings, but millions of dollars of Apple’s revenues from the iPhone 4 and iPhone 5 are still at stake.
The latest case, NetAirus Technologies v. Apple, is set for trial beginning Nov. 5 before U.S. District Judge John Kronstadt in Los Angeles. NetAirus is owned by a California-based inventor named Richard Ditzik, who holds a patent describing a wireless handset communication system with multimedia capabilities. Ditzik sued Apple in 2010, alleging that the iPhone infringes the patent. Six months ago, Ditzik retained Raymond Niro Sr. of Niro Haller & Niro, a famed patent litigator who represents small plaintiffs.
“The judge isn’t letting Apple call [Ditzik] a troll, or an NPE. He’s an inventor,” Niro told us in an interview. “Ten years before the iPhone was invented, this fellow conceived of the smartphone. He married a computer and phone … and he conceptualized using both cellular and Wi-Fi and switching between them.”
Apple doesn’t see Ditzik as a visionary, of course. In its motion for summary judgment, Milbank argued that “Apple and others marketed products that could practice the claimed methods as early as 1995, nearly two full years before the filing date of the application that became [NetAirus'] patent.”
Apple has managed to chip away at NetAirus’s case before trial. When NetAirus first brought suit, it alleged that pretty much every incarnation of the iPhone infringed its patent, putting Apple on the hook for hundreds of millions of dollars in potential damages. As part of a reexamination proceeding initiated by Apple, the U.S. Patent and Trademark Office rejected most of the NetAirus’ patent claims, but allowed NetAirus to amend them. Kronstadt then ruled that NetAirus could only seek damages that accrued after October 2012, the date of the PTO ruling, reasoning that the reexamination procedure had totally changed the nature of the case.
Ditzik’s dreams of a big payday haven’t been dashed though. Earlier this year, he brought an identical patent case against Apple that focuses just on its new phone models, the iPhone 4s and iPhone 5. Niro told us that he expects the damages to be “sizable multiples” larger in that case, and that a jury verdict for NetAirus next month would have collateral estoppel effect on the later case, barring Apple from escaping liability.
Milbank’s Mark Scarsi is leading Apple’s defense. Last week we named Scarsi Litigator of the Week for persuading an East Texas jury that the iPhone and iPad don’t infringe patents owned by Wi-LAN, a large patent licensing company.