Telebrands loses $12.3 million verdict for willful patent infringement of Bunch O Balloons

By Steve Brachmann
December 8, 2017

On November 21st, a jury verdict entered in the Eastern District of Texas awarded $12.3 million in damages to Tinnus Enterprises and ZURU Ltd. in a patent infringement case against major U.S. telemarketing firms Telebrands and its subsidiary Bulbhead.com. The verdict, which also carries a finding of willful infringement of the patents-in-suit, further upheld the validity of patents owned by Tinnus in stark contrast to findings which have issued by the Patent Trial and Appeal Board (PTAB) on those patents.

The damages award laid out in the jury verdict includes $10.25 million for lost profits, $2 million for reasonable royalty and $67,000 for additional infringement by retailer defendants. The jury found that Telebrands had willfully infringed on two patents:

  • U.S. Patent No. 9315282, titled System and Method for Filling Containers with Fluids. It covers an apparatus having a housing comprising an inlet and a plurality of outlets to which a plurality of hollow tubes are attached for filling a substantial amount of inflatable containers in a short period of time.
  • U.S. Patent No. 9242749, same title as the ‘282 patent. Claim 1 of this patent, which was upheld as valid in the jury verdict, covers generally the same apparatus and housing with a plurality of hollow tubes extending through a common face of the housing.

A press release issued by ZURU to announce the successful jury verdict quotes Anna Mowbray, ZURU’s Chief Operating Officer, as saying, “We are committed to continuously fighting what we believe are knock-off companies like Telebrands who try to undercut inventors and claim innovations as their own.” She added that the company was looking forward to an award of enhanced damages based on Telebrands’ willfully infringing conduct. “The jury served justice today. Telebrands is infringing on our intellectual property and has received a strong message that this conduct will not be tolerated,” said Greg Smith, ZURU’s General Counsel. ZURU’s counsel was also aided by attorneys from Dunlap Bennett & Ludwig of Virginia as well as Findlay Craft of Texas.

As the owner of the patents-in-suit, Tinnus Enterprises still faces further challenges with the specter of patent validity trials for which Telebrands has petitioned at the PTAB. “[Our federal court win] means nothing unless the Supreme Court disbands the unconstitutional PTAB,” said Josh Malone, the inventor of the Bunch O Balloons toy covered by the Tinnus patents. The U.S. Supreme Court has the chance to do just that when it decides Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, a case in which it just heard oral arguments on November 27th. Malone, Tinnus and ZURU have spent millions of dollars to protect the validity of patents which have been upheld in district court yet challenged on similar grounds and arguments at the PTAB leading to invalidity at that Article I tribunal.

In a phone interview regarding the jury verdict in Eastern Texas, Malone talked about a whirlwind of legal activities regarding the Tinnus patents occurring around the Thanksgiving holiday, including hearings on PTAB validity trials petitioned by Telebrands. “I was at the PTAB just one week after the jury verdict came out,” Malone said. “It was the same two patents and the same attorneys and arguments for Telebrands. It’s apparent to me that the district court is the proper place to decide patent disputes and the PTAB serves no legitimate purpose.” Malone’s experiences both in Article III federal courts and before the Article I PTAB tribunal have led him to believe that the PTAB proceedings short circuit due process protections available in the federal court where juries “are more than competent at determining the credibility of witnesses, seeing through attorney word games, weighing evidence, and delivering justice.”

Before the Eastern Texas jury verdict came out, Malone was concerned over the impacts of what he felt was a misrepresentation of patent law presented by Telebrands to the jury. Near the end of the case, Telebrands repeated invalidity challenges it had brought before, presenting three references and claiming that they disclosed the four structural components of Malone’s invention. “The worry is that the jury won’t understand that that’s not the law on obviousness,” he said, but after receiving instructions from the federal judge prior to their deliberations, Malone said that the jury, which he called “very engaged” throughout the trial, applied the law properly.

Conversely, Malone felt that the Executive Branch employees serving as APJs at the PTAB “did everything they could do to not find the invention” covered by the patents. “They have no business interceding in multi-million dollar intellectual property disputes,” he said. The true experts at the U.S. Patent and Trademark Office, in Malone’s eyes, are the examiners issuing patents in the first place. “The examiners are actually skilled in the art, they’re actually looking close to the time of invention, they’re actually an expert in a relevant, narrow field,” Malone said, noting that these weren’t necessarily traits shared by the APJs at the PTAB.

Malone noted that the conventional wisdom surrounding the appeal in Oil States, before it was eventually granted writ by the Supreme Court, was that SCOTUS wasn’t likely to take up the case given the high stakes of the argument being made about the PTAB’s constitutionality. The 57 amicus briefs filed in the case is one of the highest levels of briefing activity for any single case in front of SCOTUS going back over the past decade. Arriving at 6:00 AM Monday morning, Malone secured a seat in the gallery to listen to the Oil States oral arguments while his inventor colleagues protested outside of the Supreme Court and he noted that all Supreme Court justices had “challenging critiques of the PTAB.” Malone felt that Oil States counsel, Allyson Ho of Morgan Lewis, did a good job in presenting PTAB activities as disputes between two private parties and not an agency correction of an erroneous action.

Interestingly, Malone spoke of evidence that recent PTAB activities may be turning the tide back in favor of patent owners, a change presaged by VoIP-Pal’s recent victory in seven separate inter partes review (IPR) proceedings at the PTAB, victories which were found on the merits of VoIP-Pal’s case. On November 30th, the PTAB denied institution of a post-grant review (PGR) proceeding on another Tinnus patent. Part of the reasoning for denying the PGR involved the fact that the original patent examiner had already considered the same prior art and similar arguments based on that art. This finding comes despite Telebrands’ argument that the testimony of the petitioner’s expert witness was not in front of the examiner during the patent prosecution process. Interestingly, this was a new finding by the same panel of APJs which had sat on previous PGR proceedings against the Tinnus patents.

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 17 Comments comments. Join the discussion.

  1. Joachim Martillo December 8, 2017 6:58 am

    I updated the endnote of Reaching the End – Destroy or Preserve US Patent System? after reading more of the documents associated with the Tinnus cases. They can only enrage the reader.

    The inanity of the issue of conception in NFC Tech. LLC v. Matal is comparable to the ridiculous claim of indefiniteness with respect to the phrase “substantially filled”. Filling water balloons is roughly analogous to the civil engineering (an analogous art) requirement of substantially filling cavities, containers (sometimes elastic), depressions, or trenches with materials that may or not be sabulous solid, liquid, or semiliquid as one can realize by reading US patent 1,946,517 (SAND ROCK ASPHALT PAVEMENT). Even if one has never played with a water balloon, who hasn’t seen a sidewalk being paved?

    The PTAB tries to claim that “filled” is indefinite because the balloon is elastic. Arnold Sommerfeld, who taught more future Nobel Prize winning physicists than all but Thompson, could have provided a mathematically rigorous formulation, which only mathematical physicists would understand. Would anyone consider such a formulation to satisfy 35 U.S. Code § 112 (a)?

    In General.—

    The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.

    I never play with water balloons. While I hate them, I have seen them. I can formulate the self-evident POSA definition of “filled” with respect to water balloon.

    A water balloon is filled relative to the water input means when the smallest amount of water that the water input means can input into the balloon would cause it to explode.

    I have to write it, “Duh!”

    The PGR (Post-Grant Review) final written decision is moronic.

    Not only does the CAFC appeal challenge this stupid stupid decision, but for icing on the cake it challenges the Constitutionality of PGR.

    I would be embarrassed to have my name associated with the Intervenor Brief. I don’t understand how Matal can live with himself.

  2. angry dude December 8, 2017 10:03 am

    Hopefully that damage award will cover the legal expenses of plaintiff (IF it can be collected now which I strongly doubt)
    maybe even a few bucks left to celebrate at local bar

  3. Bemused December 8, 2017 10:46 am

    Congrats to Josh Malone on getting a great result from this jury and kudos to him for expending an enormous amount of time and money to vindicate his inventions against rip-off company Telebrands. I hope that Josh will pen an article (preferably on IPW) detailing some of the history about Telebrands and their “business model” of knocking off patented products (some of this story is available in the briefs filed in this case).

  4. PAUSEBREAK December 8, 2017 3:24 pm

    Joachim, If that is how “filled” was actually construed, then there would be no infringement.

    “Filled” in this case actually means “heavy enough that it falls off when sufficiently shaken, but light enough that it doesnt fall off when not shaken.”

    Sufficiently shaken means “shaken hard enough to cause a filled water balloon to fall off.”

    These two definitions taken together are circular, which is the problem.

    Congrats to Josh, hard to feel bad for Telebrands, but the indefiniteness issue here is certainly real.

  5. Gene Quinn December 8, 2017 3:44 pm

    Pausebreak-

    The Federal Circuit did not see the indefiniteness issue as real. See:

    http://www.ipwatchdog.com/wp-content/uploads/2017/02/16-1410.Opinion.1-19-2017.11.pdf

    -Gene

  6. PAUSEBREAK December 8, 2017 4:03 pm

    Gene:

    But the PTAB did see it as real.

    -Pausebreak.

  7. Joachim Martillo December 8, 2017 4:17 pm

    PAUSEBREAK@4,

    PGR does not decide infringement.

    I only find one paragraph in the spec, which even uses a paronym of “shake.”

    In another example embodiment, the connecting force holding filled containers 18 to tubes 16 may be overcome by an upward acceleration on tubes 16, for example, when they are shaken. Thus, filled containers 18 may be detached by shaking housing 12 (or tubes 16) sufficiently vigorously to cause containers 18 to fall off from tubes 16. In some embodiments, the connecting force holding filled container to its corresponding tube is not less than the weight of the filled container; in a specific embodiment, the connecting force holding each container to its corresponding tube is exactly equal to the weight of the filled container. The connecting force may be provided by a combination of constricting forces and friction forces from elastic valves 20.

    Where is the circularity?

    The PTAB’s finding of indefiniteness is ridiculous, inane, and vacuous on the basis of BRI.

    The PTAB decision is pure casuistry and discredits the PTAB. If I saw a comparably ridiculous purchasing decision at a tech company, I would suspect spiffing.

    Where are the FBI and the SEC when they should be crawling all over the USPTO?

  8. PAUSEBREAK December 8, 2017 4:25 pm

    Joachim, Its right there in the claim of 9051066 (which is the patent I assume you are talking about, since thats the one that PTAB found indefinite).

    “such that shaking the hollow tubes [‘sufficiently vigorously’] in a state in which the containers are substantially filled with water overcomes the connecting force and causes the containers to detach from the hollow tubes thereby causing the elastic fasteners to automatically seal the containers.”

    Filled = doesnt fall off when not shaken sufficiently vigorously, does fall off when shaken sufficiently vigorously.

    like I said, telebrands would be ecstatic with your construction of “filled” from your first post. If that is what you think “filled” means, then there is no case here either way. Do you think thats what filled means, or do you want to try again?

    Pausebreak

  9. Joachim Martillo December 8, 2017 4:54 pm

    PAUSEBREAK@8,

    Are you a shill for Telebrands or for the PTAB?

    Tell me what type of claim construction tries to define terminology in the claim by cherry-picking words in the claim.

    I don’t see any attempt to define the phrase “sufficiently filled” from the terms in the claim. (It could be done. One could always add definitions to a claim by means of a series of nominative absolutes at the end. No claim writer ever does it as far as I know. BTW, I did not give a definition of “sufficiently filled” either. The critical phrase is “sufficiently filled” and not “filled.”)

    Any POSA, who has worked in civil engineering, understands what “sufficiently filled” means for a flexible container. The spec addresses flexible containers for blood or urine. I suppose a POSA, who has worked in a med lab, understands “sufficiently filled” as well.

    I don’t understand this fixation with infringement, which is not part of PGR. If you are telling us that the PTAB crafted a decision specifically so that Telebrands would escape a judgment of infringement, the PTAB would have done something highly improper and possibly illegal.

    I would suggest that you trot over to the FBI and inform a special agent about any federal crimes of which you have knowledge.

  10. pausebreak December 8, 2017 5:08 pm

    “I don’t understand this fixation with infringement, which is not part of PGR. If you are telling us that the PTAB crafted a decision specifically so that Telebrands would escape a judgment of infringement, the PTAB would have done something highly improper and possibly illegal.”

    No, I am saying that your construction of “filled” was explicitly rejected by the PATENT OWNER, and that if it were adopted, Telebrands would be ecstatic because it would get the case dismissed immediately.

    “Tell me what type of claim construction tries to define terminology in the claim by cherry-picking words in the claim.”

    Christ I hope you are not a lawyer. Tell you who construes claims based on words in the claim? Is this a joke?

    I am not saying the claims are indefinite, I am saying it is a serious consideration in this case.

  11. pausebreak December 8, 2017 6:00 pm

    By the way, here’s how the Patent Owner proposed “substantially filled” be construed:

    “A POSA reading the claim language above would readily understand that whether a container is substantially filled with water is directly related to the ability to shake and detach that container.The amount of water used to fill the containers is not objectively boundless. Based on the plain reading of the claim, a POSA would understand that there was a definitive point at which there would be too much water such that the containers would detach without shaking, thereby not practicing the claim.”

  12. Joachim Martillo December 8, 2017 7:56 pm

    pausebreak@10,

    First off, IANAL, but I am a patent agent, which is more important in a proceeding before the USPTO especially when pre-grant examination procedure is being followed (or not as in this case).

    Are you an IP lawyer, a patent agent, or an examiner?

    Establishing the definition of terms in a claim is part of claim construction that goes well beyond the wording of the claims whether one is before the USPTO where claim construction is BRI or one is before an Article III Court where claim construction follows Phillips v. AWH Corp., 415 F.3d 1303, 1316 (Fed. Cir. 2005) (en banc).

    Please read MPEP 2111 Claim Interpretation; Broadest Reasonable Interpretation [R-07.2015] and MPEP 2173 Claims Must Particularly Point Out and Distinctly Claim the Invention [R-11.2013].

    I have reread the MPEP sections, which discuss the term “substantially” in some detail. I have also read the Tinnus patent (US 9,051,066 B1), and the cited court cases along with the patents that were the subjects of the cases.

    By the MPEP there is absolutely nothing wrong with the spec or the claims, but I find a tremendous amount of gobbledygook in the PGR final decision.

  13. Joachim Martillo December 9, 2017 3:45 am

    At this point we should dismiss the patent troll as mostly a mythic marketing monster created by un-American patent claim jumpers and IP poachers, who are trying to steal other people’s property and who are part of a dark anti-American attempt to transform the USA into a closed society with neither economic nor political inclusiveness.

  14. PAUSEBREAK December 9, 2017 8:24 am

    Joachim:

    Here is how PATENT OWNER construed substantially filled: “A POSA reading the claim language above would readily understand that whether a container is substantially filled with water is directly related to the ability to shake and detach that container.The amount of water used to fill the containers is not objectively boundless. Based on the plain reading of the claim, a POSA would understand that there was a definitive point at which there would be too much water such that the containers would detach without shaking, thereby not practicing the claim.”

    Here is how FEDERAL CIRCUITconstrued filled: And the claims themselves teach that shaking causes the containers to detach from the hollow tubes when they are “substantially filled” with water, ’066 patent col. , meaning that shaking will not detach the containers if they are not “substantially filled.” To put a finer point on it, if the balloons detach after shaking, then they are “substantially filled.”

    Here is how I construed filled: ““Filled” in this case actually means “heavy enough that it falls off when sufficiently shaken, but light enough that it doesnt fall off when not shaken.””

    Here is how you construed filled: A water balloon is filled relative to the water input means when the smallest amount of water that the water input means can input into the balloon would cause it to explode.

    One of these is not like the others. It’s yours. And the Patent Owner EXPLICITLY rejected your constrsuction.

    But yes, please teach me more about claim construction.

  15. Confused Pharmacist December 9, 2017 1:37 pm

    The title of this post is confusing: “Telebrands loses $12.3 million verdict”

    Telebrands “lost” the trial, but it didn’t “lose” a verdict. It was the plaintiff that “won” the verdict. Please change the title so that it isn’t confusing or misleading.

  16. Confused Pharmacist December 9, 2017 1:38 pm

    Ironically the title of this post is “indefinite” lol.

  17. Joachim Martillo December 13, 2017 1:44 am

    PAUSEBREAK@14,

    I rethought my previous comment after reading the PTAB, CAFC, and DCEDTX documents more carefully.

    I have been reviewing the the final written decision of the PTAB as well as the appeal of this decision to the PTAB.

    I have not finished, but I believe that there are several more errors as a matter of law that need to be addressed.

    Here is one.

    A water balloon is filled (in the sense of “filled up” or “filled full”) relative to the water input means when the smallest amount of water that the water input means can input into the balloon would cause it to explode. Yet it still makes complete sense to the person filling or throwing a water balloon to say that a water balloon is half-filled, 3/4s filled, substantially filled, or sufficiently filled.

    A human language is not a formal deterministic computer language. Because it is impossible to define a deterministic formal grammar (by the standards of mathematical logic) for informal (human) language, computational methods of natural language parsing tend to have a statistical component, and computerized natural language parsers still have tremendous problems in constructing ontologies.

    For this reason a correct review of a written description does not look for a deterministic parsing of the text but looks

    1. for enablement of an invention from the standpoint of a POSA as well as

    2. for clearness and conciseness from the standpoint of the public.

    Reviewing a written specification for deterministic meaning as the PTAB did in the case of the Bunch O Balloons is inherently dishonest.

    In addition, a claim is defined by its metes and bounds, which are terms of a surveyor and not terms of deterministic parsing of a formal (computer) language.

    Not only is it

    1. well outside of the requirements of 35 U.S. Code § 112,

    2. a violation of the presumption of validity of 35 U.S. Code § 282, and

    3. arbitrary and capricious under the APA

    for the PTAB to demand such deterministic parsing of a Bunch O Balloons Patent claim, but it also represents extreme gaming of the law by means of highly technical linguistic pettifoggery.

    Because grammar including parsing, which formerly was the focus of grammar instruction in anglophone school systems, is a matter of law

    1. according to Flora v. United States, 362 U.S. 145, 150 (1960) as well as

    2. according to United States v. Wilson, 503 U.S. 329, 333 (1992) and

    because of the violation of 35 U.S. Code § 282, the decision of the PTAB should be vacated and either reversed or remanded.

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