Patent Case Against Adobe Goes to Oakland Jury

Patent Case Against Adobe Goes to Oakland Jury Jason Doiy Sonal Mehta, Weil Gotshal partner

SAN FRANCISCO — A small patent assertion entity told an Oakland jury Thursday that Adobe Systems Inc. should pay $15 million for infringing its digital rights management technology.

“Adobe protects its own property with stolen property,” Jay Ellwanger of DiNovo Price Ellwanger & Hardy told a seven-man, two-woman jury on behalf of Digital Reg of Texas.

Adobe’s attorneys at Weil, Gotshal & Manges denied any infringement, and accused Digital Reg and its owners of wildly inflating the value of a technology that hardly anybody uses.

“I don’t use it,” Weil partner Edward Reines said. “I don’t know if any of you had heard of it before this case.”

The main product at issue is Adobe LiveCycle, a technology for regulating and tracking access to digital content that is bundled with Adobe’s popular Acrobat Pro. Digital Reg says it owns patents on the technology dating to the early 2000s, and has negotiated licenses with such companies as Microsoft Corp. and Intuit Inc. But Adobe has ignored its attempts to reach out, Ellwanger said Thursday.

“It’s as if Adobe’s telling you that the only time Adobe pays attention is when somebody sues them,” Ellwanger told jurors. He repeatedly urged them to focus on “the documents, the code and the claims” in reaching their verdict.

Weil partner Sonal Mehta said Adobe agrees with that approach. “The question is whether the code and those documents actually map to the claims,” she said. She challenged Ellwanger to cite “any testimony to that effect” on rebuttal, but Ellwanger stuck mostly to documentary evidence.

Two of U.S. District Judge Claudia Wilken’s pretrial rulings lurked in the background of Thursday’s closings.

Wilken had forbidden Adobe from using the words “troll” or “bounty hunter.” Instead, Adobe’s lawyers framed the case as a big, successful company being targeted by a smaller company, Ellwanger said. “There is no law that says a big company is treated differently than a small company,” he told jurors.

Mehta said it wasn’t a matter of big vs. small, but of who actually innovates. “Aside from the settlements you’ve seen over the course of the case, they haven’t made anything,” she said.

Wilken also had granted Adobe’s Daubert motion challenging Digital Reg’s damages methodology. Expert witness Russell Parr revised his analysis, cutting his estimated royalty base by 70 percent based on “industry standards,” as Ellwanger put it Thursday, yielding the $15 million number.

Reines argued to the jury that that number was still way off base, pointing out that Digital Reg negotiated settlements ranging from $50,000 to $487,000 with companies such as Blockbuster LLC, Zynga Inc. and Microsoft. And Parr’s royalty base took into account all 10 million copies of Acrobat Pro, Reines contended, even though Adobe witnesses estimated “as best they could” that only 200 users have enabled the LiveCycle feature.

Reines even noted that Digital Reg executive Michael Farley testified that he was motivated in part by greed, an emotion he said is common among people. “We don’t have to live in a world with a patent culture where everyone has greed as an emotion,” Reines told the jury.

Ellwanger said the other settlement numbers were being taken out of context because they were negotiated without findings of validity and infringement. And LiveCycle is sufficiently popular that it’s used by Hulu, Inc. and the U.S. military, he asserted. An internal Adobe document described it as “such an important feature it’s installed by default on the toolbar, where only the most commonly used tools appear,” he said.

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