Read our latest coverage of patent law and intellectual property issues, from Silicon Valley to the U.S. Supreme Court.
“My case reflects a very large industry being involved in a series of problems, from price-fixing to patent infringement,” Stone said.
As of December, the U.S. Department of Justice had fined companies in the DRAM industry more than $732 million for price-fixing.
Hynix lawyer Daniel Furniss of the Palo Alto office of Townsend and Townsend and Crew agreed that DRAM’s “huge royalty base” played a role in the numbers.
“There’s DRAM in every computer in the world,” Furniss said. “Every computer has at least five and more likely 15 or 20. You have a large base.”
A global market and colossal sales of technology products are part of the story. A willingness to take disputes all the way through a trial is another factor, said Larry Laycock, a Workman Nydegger partner who led Finisar’s trial team.
Earlier in his career, Laycock saw many cases like Finisar settle before trial. “The rise in the number of large verdicts is due to the number of cases wending their way to trial,” he said.
Finisar, for example, decided several years ago to develop its patent portfolio to protect its technology development, and a court case is the next step in that process, said Maschoff. “The [case against] DirecTV is an example of seeing some advantage come out of Finisar’s effort,” he said. “They’re able to use the court system as a means to do that.”
A global market and colossal sales of technology products are part of the story. A willingness to take disputes all the way through a trial is another factor.
Litigation goes through cycles, said Ernie Brooks, president of Southfield, Mich.-based intellectual property boutique Brooks Kushman. Antitrust verdicts were common in the 1960s and 1970s, but today they’re rarely seen. These days, the culture is receptive to intellectual property litigation. “It’s a question of cultural or societal set of conditions and what legal barriers are in sync and supported by the culture,” he said.
Brooks’ team won a $115 million verdict against Microsoft Corp. of Redmond, Wash., and $18 million against San Rafael- based Autodesk Inc. for z4 Technologies Inc., an anti-piracy technology company. Microsoft’s verdict has since been enhanced by $25 million for willful infringement, and the Commerce Township, Mich.-based z4 reached a confidential settlement with Autodesk. z4 Technologies Inc. v. Microsoft Corp., 06-00142 (E.D. Texas).
Although verdicts of more than $10 million are increasingly common, Professor Paul Janicke at the University of Houston Law Center, who has tracked jury verdicts in the Eastern District of Texas, concluded that tales of runaway patent juries are “strictly anecdotal.” Janicke has seen plenty of verdicts below $3 million, including some below $1 million.
Janicke is studying intellectual property verdicts at such top jurisdictions as the Central and Northern districts of California and the Eastern District of Texas, along with Delaware, a lower-ranked but popular East Coast venue.
“My feeling is that [verdict averages are] a lot lower than the financial press has been suggesting,” Janicke said.
Because ending the infringement is often the chief objective, many companies file patent infringement cases soon after a violation begins. Quick filings produce small accumulated damages, he said. “For ongoing business entities, the injunction is what is mainly moving them,” Janicke said.
In Finisar’s case, the patent covering data transmission via satellite was invented during the company’s startup days, but the company never commercialized the technology. Finisar offered licenses to DirecTV’s predecessor company and then DirecTV when it learned of the infringement, Laycock said. Finisar has grown into a public company with $364.3 million in annual sales, and enforcing the patent through the courts was “the right thing to do for its shareholders,” Laycock said.
Using plain, everyday language is key, said one of Texas Instruments Inc.’s trial lawyers, Liza Walsh of Roseland, N.J.-based Connell Foley. In a case against GlobespanVirata Inc., the team for Dallas-based Texas Instruments used visuals that depicted digital subscriber line signals, which are used for high-speed Internet service, as trucks and cars passing each other in lanes.
The visuals helped Texas Instruments seal a $112 million infringement verdict against GlobespanVirata, which was acquired by Newport Beach-based Conexant Systems Inc. before the trial, said Walsh, who served as co-counsel on the case with Heller Ehrman attorneys. GlobespanVirata Inc. v. Texas Instruments, 03-02854 (D.N.J.).
“If I had any advice it would be make it simple, through plain speaking, plain language, and reduce the technology to something everyday men and women understand,” Walsh said.
Sherri Qualters is a reporter with The National Law Journal, a Recorder affiliate based in New York City.