Vringo, which had bought the two patents it asserted to help boost its video ring-tone business, is these days perceived primarily as a patent assertion entity (or disparaging as a patent troll), although it does still have a ring-tone business. The asserted patents and others it bought had originated at one of the early search engine companies—Lycos. The inventor behind them, Ken Lang, cofounded Lycos and was its chief technology officer. He is now Vringo's CTO. Vringo set up a company it called I/P Engine Inc. (a.k.a. Innovate/Protect) to acquire the patents. Then it filed its suit against Google, AOL, and others.
To be sure, the $30 million damages award was considerably less than the $493 million Vringo sought during trial. But AOL had earlier settled a portion of the suit for another $100,000, and after analyzing the verdict, the general consensus was that the company had indeed prevailed.
The Virginia jury found that Vringo's patents were valid, opening up the possibility of future lawsuits. In addition, the jury ruled that Google and each of its codefendants had infringed all 14 separate patent claims asserted by Vringo. More importantly, the jury determined that Vringo's royalty damages should be based on a running royalty, and adopted the 3.5 percent running royalty rate the company sought. Estimates put the value of those future royalties at between $500 million and $600 million until the patents expire in 2016.
. . . But Not All the Time
Amazon Inc., Yahoo! Inc., Google Inc., Adobe Systems, and a slew of other technology companies claimed a big victory in February when a federal jury in the Eastern District of Texas found that patent assertion entity Eolas Technologies Inc. and the University of California did not, as they had presumed, rule the Web.
Eolas, founded by former University of California biologist Michael Doyle, and the University of California, which owned the patents in question, went after the companies—a veritable "who's who" of Internet giants—for almost $1 billion, alleging they infringed their patents. They claimed their patents covered virtually every way of interacting with "objects" on websites, so that anytime someone opened mail in Yahoo, or clicked on an interactive ad, or used a product previewer to look at products on Amazon.com, for example, its patents were infringed. The inventor of the World Wide Web, Tim Berners-Lee, and other technology luminaries, flew down to East Texas to testify for the defense.
The victory was all the more significant, because the Eolas patents had been reexamined and reconfirmed by the Patent and Trademark Office, because the patents had been broadly licensed to sophisticated tech companies, and because Eolas previously had litigated against Microsoft and secured a $500 million verdict (which later was set aside on appeal).
Bringin' it All Back Home
The U.S. Supreme Court weighed in on a copyright case early in the year, with its decision in Golan v. Holder . That case, originally filed in 2001, challenged the constitutionality of a law that sought to equalize copyright protection on an international basis. In the United States, the law, which enacted a treaty called the Uruguay Round Agreements Act, restored copyright status to foreign works previously in the public domain. The 1994 law affected possibly millions of works published overseas mainly between 1923 and 1989 that had earlier not been eligible for copyright protection under American law. These included films by Alfred Hitchcock, books by C.S. Lewis and Virginia Woolf, symphonies by Prokofiev and Stravinsky, and paintings by Picasso.
The plaintiffs, who included teachers, orchestra conductors, and film archivists, said they relied on the free availability of these foreign works and argued that the law violated the copyright clause of the Constitution and their First Amendment rights.
But in a 6-to-2 decision (Justice Kagan did not participate in the case), the court rejected arguments based on the First Amendment and the Constitution's copyright clause. This means works that were once in the public domain are now protected by copyright, requiring someone wishing to use them to seek permission from the copyright holder.
Seeing Red
On the trademark front, no one ended up seeing red when the U.S. Court of Appeals for the Second Circuit issued its decision in Christian Louboutin SA v. Yves Saint Laurent America Inc. Both parties walked away claiming a win.
The court held that Christian Louboutin, maker of the famous high heels with the Chinese Red soles, had a valid and enforceable trademark for the use of those red outsoles. But the trademark protection would only hold when the rest of the shoe was a contrasting color, because this look is what gave the brand its "distinctiveness," the court said.
The ruling stemmed from a decision in which a federal district court judge in Manhattan refused to grant a preliminary injunction against Yves Saint Laurent for selling red high-heeled shoes that Louboutin claimed infringed its trademarked design. The YSL shoes at issue were entirely red, from the insole to the outsole, to the heel and the "upper" part of the shoe. U.S. District Judge Victor Marrero acknowledged the popularity of the Louboutin shoe but said under the law, a single color can never serve as a trademark in the fashion industry.
Not so, the appeals court said. It found that the district court judge misinterpreted the "doctrine of aesthetic functionality" and ruled that the Louboutin brand could trademark its red sole. It also ruled, however, that Yves Saint Laurent would not be infringing if it sold its monochrome red shoes, which allowed both sides to walk away kicking up their red high heels.
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