Patent Business: Litigation, Deals & Licenses – October 2013

Every month I stumble across a number of items that catch my attention, so we have started publishing a monthly News & Notes column that incorporates various items of possible interest, a Pharma & Biotech Update and also a rundown of litigation, deals and licenses. Obviously, these are not intended to be an exhaustive summary, but rather interesting items that might be worth knowing in order to keep your finger on the pulse of the industry.

Without further ado, here is Patent Business: Litigation, Deals & Licenses for October 2013. Please also see News & Notes for October 2013 and Pharma & Biotech Update: News for October 2013.

1. Unwired Planet Sues to Enforce Cloud Patents
2. DuPont and Heraeus Announce Settlement of Pending Patent Litigation
3. Acacia Settles with AstraZeneca on Metered Dose Inhalers (plus more)
4. AK Steel Prevails in Patent Litigation, Does Not Infringe
5. Tessera and Sony Settle Litigation
6. Taxi Soft Drink Dispenser Sued for Misappropriation of Young Inventor’s Innovation
7. CoolTek and Nuance Conclude Patent Infringement Case
8. Type 2 Diabetes Royalties Acquired by PDL BioPharma For $240.5 Million
9. VIZIO Prevails in Patent Case Against Oplus Technologies
10. Diebold Settles Patent Lawsuit with NuSource over ATM Patent Infringement
11. $29 Million Award and a Finding of Willful Infringement
12.  Activision Sues Worlds Online Over Patent Infringement
13. Silicon Labs and MaxLinear Settle with Cross Licenses
14. Patriot Wins Patent Infringement Suit Against HTC Corporation
15. Claim Construction Leads to Dismissal with Prejudice
16. Patentee Wins Claim Construction in Wireless Smart Electric Meter Patent Lawsuits

1. Unwired Planet Sues to Enforce Cloud Patents

On October 21, 2013, Unwired Planet, Inc. (NASDAQ: UPIP), through its Nevada-based subsidiary, Unwired Planet LLC, announced it has filed a patent infringement complaint against Square, Inc. in the U.S. District Court for the District of Nevada. The suit was filed, according to the company, to protect the Cloud & Services portion of its intellectual property (IP) licensing business. In the complaint filed in Reno, Nevada, Unwired Planet charges Square with infringing three of its patents related to location-based services and mobile payments.

The patents asserted against Square in this matter are:

1. United States Patent No. 7,711,100, entitled “System and Method for Controlling Financial Transactions Over a Wireless Network,” asserted against Square Wallet. This patent generally relates to location-based, financial transactions made by wireless devices.
2. United States Patent No. 7,376,433, entitled “Subscriber Delivered Location-Based Services,” asserted against Square Wallet. This patent generally relates to location-based merchant selection and transactions made by wireless devices.
3. United States Patent No. 8,275,359, entitled “Wireless User Based Notification System,” asserted against Square Wallet and Square Register. This patent generally relates to location-based mobile device notifications.

“Square generates substantial revenues from mobile payment technology that relies on the intellectual property that Unwired Planet developed and patented many years ago. We are seeking reasonable compensation for continued use of this technology. While our first choice is to reach a licensing arrangement without litigation, we have determined that enforcement is necessary in this instance,” said Phil Vachon, chairman of Unwired Planet.

Unwired Planet has partnered with Morgan Lewis under an alternative fee arrangement. The arrangement involves a combination of fixed and success payments which begin the first quarter of the company’s fiscal year 2015.

[Patent-Litigation]
2. DuPont and Heraeus Announce Settlement of Pending Patent Litigation

DuPont and Heraeus Precious Metals North America Conshohocken LLC (“Heraeus”) announced on October 29, 2013, that they have settled all pending lawsuits between them regarding the photovoltaic paste business, including Civil Action No. 1:11-cv-00773-SLR-CJB at the United States District Court for the District of Delaware, regarding infringement of U.S. Patent No. 7,767,254, and Civil Action No. 3:12-cv-01104-HU at the United States District Court for the District of Oregon, regarding infringement of U.S. Patent No. 8,158,504.  Neither DuPont nor Heraeus has made any admission of liability with respect to such lawsuits, and Heraeus is licensed under the patents at issue in such suits.  Other terms of the settlement between the parties are confidential.

Heraeus Precious Metals North America Conshohocken LLC is an affiliate of the worldwide Heraeus Group, the precious metals and technology group headquartered in Hanau, Germany.   Heraeus is a global, private company with more than 160 years of tradition. Our fields of competence include precious metals, materials and technologies, photovoltaics, sensors, biomaterials and medical products, quartz glass, and specialty light sources. In the financial year 2012 Heraeus generated product revenues of €4.2 billion and precious metal trading revenues of €16 billion. With more than 12,200 employees in over 100 subsidiaries worldwide, Heraeus holds a leading position in its global markets.

DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802.  The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment.

3. Acacia Settles with AstraZeneca on Metered Dose Inhalers (plus more)

On October 21, 2013, Acacia Research Corporation (NASDAQ:ACTG) announced that its Accuhale LLC subsidiary has entered into a settlement agreement regarding pressurized metered dose inhalers with AstraZeneca LP, AstraZeneca Pharmaceuticals LP, AstraZeneca Dunkerque Production SCS and AstraZeneca AB. The agreement resolves litigation that was pending in the United States District Court for the Eastern District of Texas.

Acacia also recently announced that its Brilliant Optical Solutions LLC subsidiary has entered into a settlement and patent license agreement with Zayo Group, LLC that resolves the dispute between the parties currently pending in the United States District Court for the District of Colorado.

Acacia also announced this month that its GameTek LLC subsidiary has entered into a patent license and settlement agreement with Rockyou, Inc. This agreement resolves patent litigation that was pending in the United States District Court for the Northern District of California.

Furthermore, on October 11, 2013, Acacia announced that its Brilliant Optical Solutions LLC subsidiary has entered into a settlement and patent license agreement with XO Holdings, XO Communications, LLC and XO Communications Services, LLC that resolves the dispute between the parties currently pending in the United States District Court for the Eastern District of Missouri.

Finally, on October 3, 2013, Acacia also announced  that its Brandywine Communications Technologies LLC subsidiary entered into a patent license and settlement agreement with Zultys, Inc. This agreement resolves patent litigation that was pending in the United States District Court for the District of Delaware.

4. AK Steel Prevails in Patent Litigation, Does Not Infringe

AK Steel (NYSE: AKS) recently announced that the United States District Court for the District of Delaware ruled that the company’s ULTRALUME® advanced high-strength steel product does not infringe upon ArcelorMittal’s patent.  The Court granted summary judgment in favor of AK Steel on October 25, 2013.

The Court further concluded that ArcelorMittal’s patent was invalid because the patent was impermissibly broadened through reissue more than two years from the grant of the initial patent.

5. Tessera and Sony Settle Litigation 

Tessera Technologies, Inc. (NASDAQ:TSRA) (“Tessera” or the “Company”) today announced that its Tessera, Inc. subsidiary has reached a settlement with Sony Corporation (NYSE: SNE) in its breach of contract action against Sony in the United States District Court for the Northern District of California. The terms of the settlement were identified by the court as confidential. The Company intends to provide additional details of the terms of the settlement after the parties enter into a definitive settlement agreement, subject to the terms of such agreement.

6. Taxi Soft Drink Dispenser Sued for Misappropriation of Young Inventor’s Innovation

While not technically a patent dispute yet, the company that developed the patent pending taxi vending machine, is suing a would be competitor for unauthorized use and theft of trade secrets. A complaint was filed Monday, October 28, 2013, in the United States District Court for the Southern District of New York by Yellow Cab SLS Jet Management and U.S.A. Vendicab, Corp. against defendants In Vehicle Vending Systems, LLC. The defendants are alleged to have violated non-disclosure agreements, infringed trademarks, attempted to trade on U.S.A. Vendicab’s trade secrets and otherwise committed unfair competition under Federal and state fair trade practices law. The plaintiffs are seeking compensatory and punitive damages.

The vending machine in question has been in development since 2007, and was the idea of then 14 year-old Shaun Garber, whose father; Simon Garber, who is one of New York City’s largest individual taxi owners and operators.

7. CoolTek and Nuance Conclude Patent Infringement Case

Shanghai HanXiang Information Technology Co., Ltd. (CooTek) announced on October 25, 2013, that it has reached a resolution with Nuance regarding multiple patent infringement lawsuits involving patents covering Nuance’s text input products, Swype and XT9.

As a result of the agreement, CooTek may maintain its US presence with product designs that the parties have agreed to. The redesigned keyboards include those pre-installed by device makers as well as CooTek’s TouchPal keyboard available through the Google Play and the Apple App Store.

This settlement ends litigation pending between the companies in multiple venues, including the U.S. International Trade Commission, the U.S. Federal District Court of Delaware, and a court in Shanghai.

8. Type 2 Diabetes Royalties Acquired by PDL BioPharma For $240.5 Million

On October 21, 2013, Depomed, Inc. (NASDAQ: DEPO) announced that it has sold its interests in royalty and milestone payments under its license agreements in the Type 2 diabetes therapeutic area to PDL BioPharma, Inc. for $240.5 million. Depomed intends to use the sale proceeds to acquire products that will drive long-term growth and build on the company’s commercial expertise in pain and neurology.

The interests sold include royalty and milestone payments accruing from and after October 1, 2013: (a) from Santarus with respect to sales of Glumetza^® (metformin HCL extended-release tablets) in the United States; (b) from Merck with respect to sales of Janumet XR^® (sitagliptin and metformin HCL extended-release); (c) from Janssen with respect to potential future development milestones and sales of its investigational fixed-dose combination of Invokana^® (canagliflozin) and extended-release metformin; (d) from Boehringer Ingelheim with respect to potential future development milestones and sales of the investigational fixed-dose combinations of drugs and extended-release metformin subject to Depomed’s license agreement with Boehringer Ingelheim; and (e) from LG and Valeant for sales of extended-release metformin in Korea and Canada, respectively.

Depomed did, however, retain all rights in any recoveries from its ongoing patent infringement litigation against Purdue Pharma and ENDO Health Solutions.

9. VIZIO Prevails in Patent Case Against Oplus Technologies

On October 3, 2013, the Hon. Mariana R. Pfaelzer of the U.S. District Court for the Central District of California granted summary judgment of invalidity and non-infringement on two patents held by Oplus Technologies, Ltd. in favor of VIZIO. The case had originally been filed in the Northern District of Illinois, but was transferred to the Central District of California in June 2012. 

In this case, filed in December 2011, Oplus alleged that certain VIZIO televisions infringed 10 patent claims from two patents related to methods of video signal processing, particularly deinterlacing and error correction. The patents in question were United States Patent No. 6,239,842 entitled “Method of De-Interlacing Video Signals Using a Mixed Mode Spatial and Temporal Approximation Technique,” and United States Patent No. 7,271,840 entitled “Method for Determining Entropy of a Pixel of a Real Time Streaming Digital Video Image Signal, and Applications Thereof.” See Original Complaint.

Video processing in the accused televisions is performed by chipsets contained in VIZIO televisions, and the methods and algorithms used therein are trade secrets of the third-party manufacturers of the chipsets. The Court found, as argued by VIZIO, that there was a complete absence of evidence to support either direct or indirect infringement by VIZIO.  The Court also found that certain claims were also invalid.

Lee Tran Liang & Wang LLP represented VIZIO. Niro, Haller & Niro represented Oplus Technologies.

10. Diebold Settles Patent Lawsuit with NuSource over ATM Patent Infringement

Diebold, Incorporated (NYSE: DBD) announced on October 23, 2013, that it has settled a lawsuit it filed in February 2013 in the U.S. District Court for the Northern District of Ohio against NuSource Financial, Inc. of Eden Prairie, Minn.  In its complaint, Diebold alleged, amongst other claims, that NuSource infringed Diebold’s U.S. Patent No. 6,672,505, as well as various Diebold copyrights, by selling refurbished Diebold automated teller machines (ATMs) installed with unauthorized copies of Diebold ATM software.  NuSource denied Diebold’s allegations and any liability to Diebold.  Terms of the settlement were not disclosed.

11. $29 Million Award and a Finding of Willful Infringement

KFx Medical Corporation announced that a jury in the United States District Court for the Southern District of California awarded KFx $29 million in its patent infringement case against Arthrex. The jury found that Arthrex willfully infringed the KFx patents by promoting its SutureBridge and SpeedBridge rotator-cuff repair procedures. The jury also upheld the validity of KFx’s patents.

KFx filed a complaint against Arthrex on August 1, 2011, alleging claims of induced and contributory infringement of United States Patent Number 7,585,311 (“the ‘311 Patent”), and later amended the complaint to add related patents.

On August 13, 2013, KFx announced that it had entered into an agreement licensing the ‘311 and related patents, which are used in knotless double row rotator cuff repair. Hundreds of thousands of arthroscopic rotator cuff repairs in the United States utilize the technique to achieve an anatomic reattachment of tendon to bone.

12. Activision Sues Worlds Online Over Patent Infringement

Activision Publishing, Inc., a subsidiary of Activision Blizzard, Inc. (NASDAQ: ATVI), today announced that it has filed a patent infringement lawsuit against Worlds Inc. and Worlds Online Inc., in the U.S. District Court for the Central District of California.

In the suit, Activision claims that Worlds has infringed, and continues to infringe, U.S. Patent No. 6,014,145 entitled Navigation with optimum viewpoints in three-dimensional workspace interactive displays having three-dimensional objects with collision barriers and U.S. Patent No. 5,883,628 entitled Climability: property for objects in 3-D virtual environments. The contested product is software distributed by Worlds called “Worlds Player.”

Worlds Inc. filed a patent infringement lawsuit against Activision Blizzard, Inc., Blizzard Entertainment, Inc. and Activision Publishing, Inc. on March 30, 2012. That lawsuit is pending in the U.S. District Court for the District of Massachusetts.

13. Silicon Labs and MaxLinear Settle with Cross Licenses

Silicon Labs (NASDAQ: SLAB) and MaxLinear Inc. (NYSE: MXL) announced a satisfactory settlement of all litigation between the two companies. MaxLinear has granted Silicon Labs a license to its patent portfolio for the accused Silicon Labs products. Similarly, Silicon Labs has granted MaxLinear a license to its portfolio of patents for the accused MaxLinear products. As part of the settlement, the two companies have also agreed to enter into a three-year covenant not to sue. The companies will dismiss all pending cases as the result of this settlement.

14. Patriot Wins Patent Infringement Suit Against HTC Corporation

On October 3, 2013, Patriot Scientific Corporation (OTC: PTSC) announced that it has won its patent infringement lawsuit against HTC Corporation.  In litigation before the United States District Court for the Northern District of California, HTC was found to infringe multiple claims within Patriot’s US 5,809,336 patent.  The ‘336 patent is one of several patents that are part of a larger portfolio held by Patriot, known as the Moore Microprocessor Patent (MMP) Portfolio™.

“This represents an extraordinary victory and vindication for the ‘336 patent and sends a strong signal to the marketplace that infringers of the MMP portfolio will be held accountable for their actions,” stated Cliff Flowers, Patriot’s Interim Chief Executive Officer.  “In addition to our victory over HTC in U.S. District Court, the MMP portfolio has survived 17 re-examination challenges before the USPTO.  The MMP portfolio has near universal applicability in microprocessor design and companies utilizing this technology should take note of our successes at the USPTO and in court.”

“We are gratified that the jury correctly decided that HTC’s accused products infringe the ‘336 patent,” stated lead trial attorneyJim Otteson of Agility IP Law, LLP.  “We know that microprocessor technology can be daunting for lay people to understand, but the jury obviously worked hard to come to the right decision.  And we also know that many other companies’ products (and many other HTC products not at issue in this case) work the same way as HTC’s infringing products.  So that should give everyone something to think about.”

Patriot’s win against HTC comes after a protracted legal battle that was initiated in 2008.  There are additional proceedings in U.S. District Court, currently stayed, alleging infringement of the ‘749, ‘890 and ‘336 patents against Barnes & Noble Inc., Garmin Ltd., Huawei Technologies Co. Ltd., LG Electronics, Nintendo Co. Ltd., Novatel Wireless Inc., Samsung Electronics Co. Ltd., and ZTE Corporation.

15. Claim Construction Leads to Dismissal with Prejudice

Tax-Right, LLC (“Tax-Right”) has dismissed with prejudice its September 2012 patent infringement action against SICPA in the United States District Court for the Eastern District of Virginia (Tax-Right v. SICPA, Civ. No. 3:12-CV-657). The lawsuit alleged that SICPA’s products and/or services for confirming MSA compliance infringe U.S. Patent No. 6,704,614, which is titled Verification system for value added indicia applicators.

The District Court’s claim construction ruling interpreted the ‘614 patent to apply to “customer order” verification systems. Under the terms of the parties’ agreement, Tax-Right acknowledges that SICPA’s products and/or services do not infringe the ‘614 patent, and has granted SICPA a covenant not to sue SICPA under the ‘614 patent or not to promote the ‘614 patent as applying to MSA compliance.

16. Patentee Wins Claim Construction in Wireless Smart Electric Meter Patent Lawsuits

TransData, Inc., a manufacturer of advanced solid-state power and energy metering products, recently announced that an Oklahoma federal judge issued a significant and favorable ruling in its ongoing patent infringement litigation against a group of the nation’s largest electric utilities over wireless smart electric meter technology developed by the Company.

The exceptionally brief Order, issued October 1, 2013, by Judge Robin Cauthron of the U.S. District Court for the Western District of Oklahoma, construed the disputed claim terms of TransData’s U.S. Patent Nos. 6,181,294; 6,462,713; and 6,903,699 in a manner consistent with the constructions offered by TransData.  More specifically, the Court rejected all of the defendants’ proposed constructions in an Order that was only a few lines longer than 3 pages double spaced. In those 3 pages the Court also also rejected defendants’ argument that TransData’s Patents were invalid as indefinite under 35 U.S.C. 112.

For more on this case please see: Markman Order Favors Patentee over Power Companies.