This week's editorial covers several items that have been in the news but which individually did not warrant a dedicated editorial. The first section deals with legal issues which all too often play a significant role in the EDA industry. Some of the cases involve companies outside EDA but nevertheless have relevance for our community.
In a previous editorial I covered the Magma-Synopsys Litigation. Synopsys sued Magma for patent infringement based upon activities of Dr. Lukas van Ginneken, a former Magma employee. Magma subsequently counter sued that Synopsys was engaged in monopolistic practices.
On May 25 a U.S. District Judge Gregory Sleet in Delaware denied two motions filed by Synopsys the case against Magma and granted a third motion filed by Magma. In the ruling the Judge denied Synopsys's motion to dismiss certain claims by Magma. Magma's claims said that Synopsys maintains monopolies in logic synthesis and scan chain insertion markets through anti-competitive conduct, according to court documents. According to Magma, Synopsys maintains a 91 percent share in both relevant markets and is acting anti-competitively by using the patent system and exclusive-dealing contracts to run Magma out of business.
In addition, the court denied another Synopsys motion requesting that the antitrust and patent infringement claims in the case be considered separately.
Research In Motion (RIM) de je vu
In a previous editorial Please Don't Take My Blackberry Away- RIM Vs NTP - February 27, 2006 I recounted the patent infringement suit between RIM, the makers of the Blackberry, and NTP, a patent holding company. NTP sued RIM in November 2001. The matter went to trial in 2002 in the United States District Court for the Eastern District of Virginia and the jury issued a verdict in favor of NTP on November 21, 2002. On August 5, 2003, the District Court ruled on NTP's request for an injunction with respect to RIM continuing to sell BlackBerry handhelds, software and service in the United States and entered judgment with respect to several previously announced monetary awards issued in favor of NTP. The District Court granted NTP the injunction requested; however, the District Court then immediately granted RIM's request to stay the injunction sought by NTP pending the completion of RIM's appeal. An agreement for RIM to pay NTP $450 million fell apart. The U.S. Patent and Trademark Office (USPTO) made several preliminary rulings that NTP's patents were not valid. Such rulings are subject to appeals from NTR. The judge made it clear that he would not wait for the PTO to finalize its decisions. In light of this and facing possible injunction against further sales of the BlackBerry RIM agreed to pay $612.5 million to settle all claims. In return, RIM gets a perpetual license to NTP's technology.
On May 1, 2006 a second firm, Visto, filed suit against RIM for patent infringement in the federal court for the Eastern District of Texas, a court know to be favorable to patent holders. In fact this action comes on the heels of a successful suit in that district by Visto against Seven Networks. There the jury found that Seven Network not only infringed but did so willfully. The jury awarded Visto damages at a royalty rate equivalent to 19.75% of Seven's infringing products' revenue, or about $3.6 million. The court is expected to hold a hearing concerning an injunction against Seven Networks that would prohibit the further use of their infringing system. In this new case Visto is seeking monetary damages as well as a permanent injunction that would prevent RIM from producing and selling its BlackBerry service in the US.
Visto has previously filed patent lawsuits against Microsoft (December 2005) and Good Technology (February 2006) and also against Smartner and Sproqit. In a press release RIM said “RIM believes Visto's patents are invalid. Further, Visto's patent claims as directed against Seven Networks refer to a different type of system than RIM's technology. RIM believes it does not infringe Visto's patents and will file its legal response in due course. In addition to challenging validity and infringement, RIM will now also consider asserting its own patents against Visto.” Jim Balsillie, RIM's co-chief executive, said the company wants the trial moved to the Dallas area where RIM's U.S. headquarters are located, for practical reasons
Unlike NTP, a patent holding company, Visto offers products and services to end users. Visto is a ventured back company established in 1995. The company delivers a global platform for mobile operators to provide wireless push email to the broadest set of mobile devices. Visto's open solution enables email for the mass market, targeting large enterprises, small businesses, mobile professionals and consumers. Visto's customized, brandable solutions are available through mobile operators worldwide including Cingular, Elisa, KPN, Rogers Wireless, SmarTone, SFR, Sprint Nextel, TELUS Mobility and the Vodafone Group. Visto's products are used by over 200,000 mobile professionals globally. Enterprise customers include GE, Sara Lee, USA Credit Union, and Xerox.
Interestingly, Visto and NTO signed a licensing deal in December 2005 granting Visto access to NTP's patented methods for sending and receiving wireless data. In addition NTP gained.
On a different front RIM is facing new competition from Motorola's Q smartphone. Among Q's features are 1.3 megapixel camera, video capture and playback, dual stero-quality speakers, removable minSD cards, 52MB memory, Bluetooth and EV-DO high speed data. Moto Q also supports push email solution that synchronizes calendar, contacts, tasks and notes with enterprise email systems via MS Exchange, Goodlink, and Intellisync. Q is available from Verizon as part of a $199 bundle with a two year contract commitment
Motorola has been very successful with its RAZR and SLVR line of cell phones. Morolar expects to ship the 50,000,000th RAZR in this quarter. Cumulative SLVR sales are outpacing RAZR as measured from date of launch. Motorola has its own name licensing issues with Razor USA who has rights to the name. Motorola has filed suit so that it may use Motorazr after the current name licensing agreement ends in October.
eBay and the issue of injunction relief
In May 2003 a U.S. district Court jury sided with MercExchange of Great Falls, Va., which accused eBay in 2001 of infringing on three patents held by MercExchange founder Tom Woolston, an electrical engineer formerly of the NSA and CIA. Note that the two firms had active negotiation before the infringement began. GoTo.com since acquired by Yahoo! Agreed to license his technology after he sued. The verdict determined that eBay and its Half.com subsidiary willfully infringed on two of those patents with their "Buy It Now" feature for fixed-price sales. Merc was awarded $35 million for patent infringement. They requested an injunction which was denied by the District Court. They appealed that decision. On March 16, 2005 the US Court of Appeals reversed the District Court stating that was a "general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances." The federal circuit did, however, grant eBay a stay of that decision while the company petitioned the Supreme Court.
On May 15, 2006 the U.S. Supreme Court unanimously reversed, in EBay v. MercExchange, and sent the case back to the district court to reconsider injunctive relief under the standard four-part test for an injunction.
The test requires a plaintiff to demonstrate; (1) that is has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. The decision to grant or deny such relief is an act of equitable discretion by the district court, review able on appeal for abuse of discretion.
Historically courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases. Large high tech companies supported eBay saying that they are under siege from small patent owners who use the threat of injunction to extract significant licensing fees.
In a separate concurring opinion Justice Kennedy wrote:
|“An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. For these firms, an injunction .. can be employed as a bargaining tool to charge exorbitant fees When the patented invention is but a small component of the product the companies seek to produce and the threat of an injunction is employed simply for undue leverage in negotiations, legal damages may well be sufficient for the infringement and an injunction may not serve the public interest. In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test”|