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IP Trial Strategy: Buying Tivo's Bull
The Recorder
June 26, 2009
Happy Cows?
As the make-or-break patent trial between Tivo Inc. and EchoStar Corp. got under way in Marshall, Texas, Tivo's top brass had an idea: Let's buy a cow.
It was late March in 2006, and that meant it was time for Farm City Week in the home of America's most popular venue for patent litigation. Featuring the Harrison County Cattlemen's Ball and the 4-H Cake Show, the main event at Farm City Week is the livestock auction, where prize-winning steers, heifers, lambs, goats, broiler chickens and rabbits are sold by dedicated young farmers.
Samuel Baxter, perhaps the best-known lawyer in the Eastern District of Texas, was representing Tivo, along with Irell & Manella's Morgan Chu, the big-time, bow-tie-loving patent litigator. Baxter recalls now how execs at Tivo, an Alviso, Calif., company that makes set-top digital video recorders, told him, "Wouldn't it be great if we could go to the auction and buy a cow because the people have been so nice to us here."
The McKool Smith lawyer did that and more. Baxter bid on the Grand Champion Steer -- the most prized farm animal at the auction -- and bought it for what at the time was a record-breaking sum of around $10,000. The lucky steer-raiser was a high-school senior from Hallsville, who, like all the students selling animals, got to keep the money for herself to use for college. They named it Tivo.
Perhaps lacking sufficient grazing land in Alviso, Tivo offered to give its namesake back to his original owner, Baxter says, but she couldn't take their bull because she was headed off to college. "We turn 'em into steaks and burgers," he says.
Cynics might view it as a rich, out-of-town company trying to influence the jury pool in a small city of 25,000, where the grand champion is big news. But Baxter says it was just a symbolic gesture of kindness on the part of his client. "I thought it was great that the Tivo people were so nice and wanted to help out in the community like that," he says.
Two weeks later, on April 13, the Marshall jury found EchoStar (now known as DISH Network) guilty of infringing Tivo's "time warp" patent, used in technology that lets viewers record, fast-forward and rewind TV shows. And it awarded Tivo $74 million in damages.
Did buying Tivo the animal help Tivo the company win -- perhaps steer the jury in the right direction?
"It didn't affect the outcome of the case," Baxter says. "Lawyers and facts win cases, and not much else."
He notes that Tivo waited until after the trial to take out a big advertisement in the Marshall News Messenger to thank Marshall residents and trumpet the steer's purchase.
Tivo, caught up in the spirit of giving, bought the grand champion steer the next year, too. And Baxter says other companies facing patent trials in Marshall have followed in Tivo's hoof prints. Medtronic Inc. and Opti Inc., also clients of McKool Smith, have been buying cows at the auction, too.
CATTLE CALLBig companies from all over the world, and especially from Silicon Valley, look for every possible advantage when they head down to the small towns of the Eastern District of Texas, which is often. They hire local lawyers, try to tap into the underdog mentality of the jurors there, and tip big at local restaurants. But not everyone thinks friendly community gestures, like buying kids' cattle, are the best strategy.
"I think it's just a giant zero," says Michael Smith, a patent litigator with Siebman, Reynolds, Burg, Phillips & Smith who writes the popular EDTexweblog.
"But I think if [jurors] did notice, they could react either way," he says. "I would be more comfortable just trying to deal with the facts of the case, because if a juror thinks you're trying to manipulate them, they're going to react very strongly to that."
Doug Green, a jury consultant in the Eastern District of Texas, put it a little more succinctly.
"Buying a cow like that I think is bullshit," Green says. "I think it's insulting -- the idea that people are so simple that something like that will influence the case."
At least one frequent litigant has gone beyond bidding on livestock. Samsung, a consumer electronics company often sued for patent infringement in the Eastern District, is now the sponsor of just about every major festival in Marshall.
Stagecoach Days -- the May celebration of Marshall as a transportation hub featuring the "Little Mr. & Mrs. Stagecoach Pageant," a parade and car show -- is now known as Samsung Stagecoach Days. The Samsung Ice Skating Rink is one of the highlights of the city's Christmas time festivities, Marshall's Wonderland of Lights. The city is covered in lights, including 125,000 on the historic domed Old Harrison County Courthouse.
Keli Talbert, business development director for the Marshall Chamber of Commerce, says visitors come from all around to see the lights and skate on the rink. She calls the festival "a postcard moment."
"What it does for Samsung is put their name out there in a positive way," Talbert says. "I would hope that [jurors] would listen to the case and the facts and that that would not sway them in one way or the other."
Samsung didn't return an e-mail seeking comment on Stagecoach Days. And L.A.'s Chu, Tivo's other lawyer, at first said he'd found out about the purchase after the fact, then said he'd need to get permission from Tivo to comment publicly on the grand champion. Tivo didn't return a phone call seeking comment on their bull.
Going Public is a biweekly column on Silicon Valley's legal community by Recorder/CalLaw reporter Zusha Elinson.
