When Massachusetts Institute of Technology, an institution synonymous with innovation, sued several leading hard drive manufacturers for patent infringement, all but one of them played it safe and settled.
The lone holdout was Hitachi Global Storage Technologies, which argued MIT’s patent was overbroad and not all that innovative in the first place. An appeals court has now validated Hitachi’s gamble — and invalidated MIT’s lucrative patent.
In a unanimous opinion Tuesday, the U.S. Court of Appeals for the Federal Circuit affirmed an earlier ruling that MIT’s hard drive patent is invalid. The decision is obviously good news for Hitachi, and according to one of the company’s lawyers, it could bolster the rarely successful “lack of enablement” defense against patent infringement claims.
MIT and its licensee MagSil Corp. sued Hitachi in U.S. District Court in Wilmington, Delaware, back in 2008. The complaint filed by McKool Smith also named several other companies, including Western Digital, Samsung Electronics Co. Ltd., Toshiba America Inc. and Hitachi’s downstream customer, Shenzen ExcelStor Technologies Ltd.
One by one, the defendants agreed to license MIT’s patent, which relates to sensors for computer hard disk drive storage systems. Hitachi and Shenzen ExcelStor decided to press on, however, even though MIT and MagSil’s expert were pegging damages in excess of $100 million.
As a trial date neared, Hitachi and Shenzen replaced their counsel at K&L Gates with a team from Kasowitz Benson Friedman & Torres.
The Kasowitz team, led by Silicon Valley partner Doug Lumish, ended up not going to trial after all. In February 2011, Hitachi won a ruling from U.S. District Judge Harvey Bartle III that MIT’s patent application doesn’t teach others to make and use the claimed invention,in violation of the enablement requirement of Section 112 of the Patent Act.
MIT’s patent covered a method of using an electrode junction device to produce an “at least 10 percent” change in electric resistance. The specification to MIT’s patent, however, only disclosed a process for producing a maximum resistive change of 11.8 percent. In Bartle’s view, MIT’s patent sought to cover a method of producing “resistive changes of 20 percent, 2,000 percent and up to infinity” without explaining how to actually do it.
Lack of enablement is something of a ‘Hail Mary’ defense because it must be proven by clear and convincing evidence. Knowing this, MIT’s lawyers at McKool hoped to get Bartle reversed on appeal.
Instead, the Federal Circuit forcefully sided with Hitachi, which brought on Edward Reines of Weil Gotshal & Manges to argue the appeal.
“The specification containing these broad claims … does not contain sufficient disclosure to present even a remote possibility that an ordinarily skilled artisan could have achieved the modern dimensions of this art,” Chief Judge Randall Rader wrote for the three-judge panel. “The specification enabled a marginal advance over the prior art but did not enable at the time of filing a tunnel junction of resistive changes reaching even up to 20 percent, let alone the more recent achievements above 600 percent.”
Reines said Wednesday that the ruling could inspire other patent defendants to look more closely at the enablement defense. “Enablement is under-utilized,” he said. “This decision could really reinvigorate it.” Reines also said Hitachi deserved credit for “staying the course” and refusing to settle.
Reines’ co-counsel, Kasowitz Benson’s Lumish, declined to comment.
McKool’s Steven Pollinger, who represented MagSil and MIT, had no comment by deadline.