IP News

Eolas Pursues Injunction on Microsoft Explorer

In a follow-up move from its $521 million infringement award, Eolas Technologies has moved to prevent Microsoft from selling any version of its Windows operating system with the infringing Internet Explorer (IE) browser. In August, a jury found that the IE browser infringed a patent licensed to Eolas from the University of California because of the way the browser opened and accessed external applications known as “plug-ins.” Microsoft filed motions to set aside the verdict and grant a new trial based on the unusual size of the award and its inability to present evidence of earlier invention to the jury. Microsoft has also created a new version of the IE browser, which it claims does not infringe the patent. Microsoft indicated that the new version may require an extra click or two, but would not fundamentally change the browser. Eolas has stated that it would set aside the jury verdict in exchange for a paid up license with interest, but Microsoft has continued its work-around strategy with the new designs and its appeals. Other companies, such as Apple Computer, Sun Microsystems, and Macromedia have offered to help Microsoft appeal the verdict.

Supreme Court Denies Certiorari on Rambus Case

In the heavily watched case of Rambus Inc. v. Infineon Techs. AG, 72 U.S.L.W. 3240 (2003), the Supreme Court declined to hear arguments to overturn the Federal Circuit's decision favoring Rambus and sending the case back to the district court for a new trial. The Supreme Court's decision allows Rambus to proceed with its infringement lawsuits on patents that could affect 85% to 90% of the computer memory chip market. The Federal Circuit reversed a jury decision that found Rambus guilty of fraud in obtaining patents on chip designs being developed by the Joint Electron Device Engineering Council (JEDEC), a standards setting group. The Federal Circuit also gave Rambus' patents a much broader claim construction than the district court, and remanded the case back to the district court for a new trial.

In January of 2000, Rambus began suing chip manufacturers for infringement of its memory chip patents. While some companies, such as Hitachi, Toshiba and Samsung, entered into licenses with Rambus, Infineon challenged the patents' validity. The Supreme Court's refusal to grant certiorari allows Rambus to proceed with its infringement suit against Infineon.

However, not all of Rambus' troubles are over. In June 2002 the Federal Trade Commission (FTC) filed an antitrust lawsuit against Rambus. The FTC accuses Rambus of committing fraud while participating in the JEDEC, for not revealing its patents on technology that was adopted as the group's industry standard, and is seeking to have Rambus' patents ruled unenforceable. While the cases are similar, the FTC allowed the closing arguments to continue despite the Supreme Court's ruling. The case is currently pending before an administrative judge.

Promise of Promotions and Bonuses Not Adequate Consideration for a License

The Fifth Circuit ruled that the promise of bonuses and promotions contingent on at-will employment is not consideration for an employer's irrevocable license to an employee's copyright. Carson v. Dynegy, 67 U.S.P.Q.2d 1932 (5th Cir. 2003). In Carson, William Carson developed a spreadsheet during his off-hours that would be useful in his employer's industry. He brought the spreadsheet to work, allowing co-workers to use and modify the spreadsheet. Due to the success of the spreadsheet, Carson was nominated for an award, and promised a promotion and a bonus. However, he received neither because he was terminated for an unrelated reason. When Dynegy continued to use the spreadsheet after Carson's termination, he filed suit alleging copyright infringement and conversion. The district court ruled that: 1) Dynegy had an irrevocable license to the spreadsheet, 2) that the promise of bonus and promotion served as adequate consideration for the license, and 3) that Carson was estopped from asserting infringement.

The Fifth Circuit reversed, holding that the promise of promotions and bonuses contingent upon continued at-will employment were illusory promises under Texas law. As such, these promises could not serve as adequate consideration and any license that Carson could have possibly granted would be revocable. Since Carson did in fact revoke the license, the court did not consider whether a license was created or the scope of such a license. However, the appellate court did affirm the district court's ruling on infringement estoppel, stating that estoppel exists when an employee allows the employer to use his creation “to adapt existing procedures or systems.”

Cisco Stays Litigation Against Huawei

Cisco Systems agreed to suspend its infringement suit against its competitor Huawei Technologies and its American subsidiaries, Future Wei and Huawei America. Last January Cisco sued Huawei for copyright infringement, misappropriation and patent infringement in relation to Huawei's routers, user manuals and source code. The District Court for the Eastern District of Texas granted Cisco a preliminary injunction against Huawei's routers after Huawei admitted to copying a small portion of Cisco's code. Cisco Systems, Inc. v. Huawei Technologies, Co., 266 F.Supp.2d 551 (E.D.Tex. 2003). While the injunction remains in effect, Huawei has agreed to make changes to its source code, command interfaces and some of its user manuals. Both parties will reevaluate the lawsuit after an independent outside expert reviews Huawei's changes, and both parties have asked the court for a stay of 6 months.

Federal Circuit Reaffirms that a Claim is Not Limited to Examples in the Specification

The Federal Circuit reversed a lower court's claim construction that restricted the grade of a claimed element to the one given in the specification. Glaxo Wellcome, Inc. v. Andrx Pharm., Inc., 344 F.3d 1226 (Fed. Cir. 2003). In Glaxo, Andrx filed an ANDA to produce a drug used as an antidepressant and a cigarette smoking cessation aid. The district court construed the claims at issue to only include the “preferred” grade listed in the specification. The Federal Circuit reversed, stating that while amendments concerning the claim had been made, the examiner did not require a particular grade in order for the claims to issue. The court reiterated that the claims of a patent are not limited to the preferred embodiment or the examples in the specification. Further, the court noted that when a claim term has an accepted scientific meaning, it is not generally restricted to the examples in the specification.

Federal Circuit Calls for Amicus Briefs on Willful Infringement

In Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corp., 344 F.3d 1336 (Fed. Cir. 2003), the Federal Circuit issued an order to review en banc its precedents concerning drawing adverse inferences from a party withholding legal advice from discovery with respect to willful infringement. The case involved patents concerning air disc brake technology. While one defendant did not obtain a legal opinion at all, the other did seek the advice of counsel about the scope of plaintiff's patents, but did not disclose the opinion during discovery. Since the defendant declined to disclose the opinion, the district court concluded that the opinion was unfavorable and ruled that the defendants had willfully infringed the patents. The defendants appealed the ruling to the Federal Circuit.

The court asked the parties to brief four questions and invited amicus briefs on the first two. The questions are:

1) When the attorney-client privilege and/or work product privilege are invoked by a defendant in an infringement suit, is it appropriate for the trier of fact to draw an adverse inference of willful infringement?

2) When the defendant has not obtained legal advice, is it appropriate to draw an adverse inference of willful infringement?

3) If the court concludes that the law should be changed, and the adverse inference withdrawn as applied to this case, what are the consequences for this case?

4) Should the existence of a substantial defense to infringement be sufficient to defeat liability for willful infringement even if no legal advice was secured by the defendant?

Eolas Pursues Injunction on Microsoft Explorer

In a follow-up move from its $521 million infringement award, Eolas Technologies has moved to prevent Microsoft from selling any version of its Windows operating system with the infringing Internet Explorer (IE) browser. In August, a jury found that the IE browser infringed a patent licensed to Eolas from the University of California because of the way the browser opened and accessed external applications known as “plug-ins.” Microsoft filed motions to set aside the verdict and grant a new trial based on the unusual size of the award and its inability to present evidence of earlier invention to the jury. Microsoft has also created a new version of the IE browser, which it claims does not infringe the patent. Microsoft indicated that the new version may require an extra click or two, but would not fundamentally change the browser. Eolas has stated that it would set aside the jury verdict in exchange for a paid up license with interest, but Microsoft has continued its work-around strategy with the new designs and its appeals. Other companies, such as Apple Computer, Sun Microsystems, and Macromedia have offered to help Microsoft appeal the verdict.

Supreme Court Denies Certiorari on Rambus Case

In the heavily watched case of Rambus Inc. v. Infineon Techs. AG , 72 U.S.L.W. 3240 (2003), the Supreme Court declined to hear arguments to overturn the Federal Circuit's decision favoring Rambus and sending the case back to the district court for a new trial. The Supreme Court's decision allows Rambus to proceed with its infringement lawsuits on patents that could affect 85% to 90% of the computer memory chip market. The Federal Circuit reversed a jury decision that found Rambus guilty of fraud in obtaining patents on chip designs being developed by the Joint Electron Device Engineering Council (JEDEC), a standards setting group. The Federal Circuit also gave Rambus' patents a much broader claim construction than the district court, and remanded the case back to the district court for a new trial.

In January of 2000, Rambus began suing chip manufacturers for infringement of its memory chip patents. While some companies, such as Hitachi, Toshiba and Samsung, entered into licenses with Rambus, Infineon challenged the patents' validity. The Supreme Court's refusal to grant certiorari allows Rambus to proceed with its infringement suit against Infineon.

However, not all of Rambus' troubles are over. In June 2002 the Federal Trade Commission (FTC) filed an antitrust lawsuit against Rambus. The FTC accuses Rambus of committing fraud while participating in the JEDEC, for not revealing its patents on technology that was adopted as the group's industry standard, and is seeking to have Rambus' patents ruled unenforceable. While the cases are similar, the FTC allowed the closing arguments to continue despite the Supreme Court's ruling. The case is currently pending before an administrative judge.

Promise of Promotions and Bonuses Not Adequate Consideration for a License

The Fifth Circuit ruled that the promise of bonuses and promotions contingent on at-will employment is not consideration for an employer's irrevocable license to an employee's copyright. Carson v. Dynegy , 67 U.S.P.Q.2d 1932 (5th Cir. 2003). In Carson, William Carson developed a spreadsheet during his off-hours that would be useful in his employer's industry. He brought the spreadsheet to work, allowing co-workers to use and modify the spreadsheet. Due to the success of the spreadsheet, Carson was nominated for an award, and promised a promotion and a bonus. However, he received neither because he was terminated for an unrelated reason. When Dynegy continued to use the spreadsheet after Carson's termination, he filed suit alleging copyright infringement and conversion. The district court ruled that: 1) Dynegy had an irrevocable license to the spreadsheet, 2) that the promise of bonus and promotion served as adequate consideration for the license, and 3) that Carson was estopped from asserting infringement.

The Fifth Circuit reversed, holding that the promise of promotions and bonuses contingent upon continued at-will employment were illusory promises under Texas law. As such, these promises could not serve as adequate consideration and any license that Carson could have possibly granted would be revocable. Since Carson did in fact revoke the license, the court did not consider whether a license was created or the scope of such a license. However, the appellate court did affirm the district court's ruling on infringement estoppel, stating that estoppel exists when an employee allows the employer to use his creation “to adapt existing procedures or systems.”

Cisco Stays Litigation Against Huawei

Cisco Systems agreed to suspend its infringement suit against its competitor Huawei Technologies and its American subsidiaries, Future Wei and Huawei America. Last January Cisco sued Huawei for copyright infringement, misappropriation and patent infringement in relation to Huawei's routers, user manuals and source code. The District Court for the Eastern District of Texas granted Cisco a preliminary injunction against Huawei's routers after Huawei admitted to copying a small portion of Cisco's code. Cisco Systems, Inc. v. Huawei Technologies, Co. , 266 F.Supp.2d 551 (E.D.Tex. 2003). While the injunction remains in effect, Huawei has agreed to make changes to its source code, command interfaces and some of its user manuals. Both parties will reevaluate the lawsuit after an independent outside expert reviews Huawei's changes, and both parties have asked the court for a stay of 6 months.

Federal Circuit Reaffirms that a Claim is Not Limited to Examples in the Specification

The Federal Circuit reversed a lower court's claim construction that restricted the grade of a claimed element to the one given in the specification. Glaxo Wellcome, Inc. v. Andrx Pharm., Inc. , 344 F.3d 1226 (Fed. Cir. 2003). In Glaxo, Andrx filed an ANDA to produce a drug used as an antidepressant and a cigarette smoking cessation aid. The district court construed the claims at issue to only include the “preferred” grade listed in the specification. The Federal Circuit reversed, stating that while amendments concerning the claim had been made, the examiner did not require a particular grade in order for the claims to issue. The court reiterated that the claims of a patent are not limited to the preferred embodiment or the examples in the specification. Further, the court noted that when a claim term has an accepted scientific meaning, it is not generally restricted to the examples in the specification.

Federal Circuit Calls for Amicus Briefs on Willful Infringement

In Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corp., 344 F.3d 1336 (Fed. Cir. 2003), the Federal Circuit issued an order to review en banc its precedents concerning drawing adverse inferences from a party withholding legal advice from discovery with respect to willful infringement. The case involved patents concerning air disc brake technology. While one defendant did not obtain a legal opinion at all, the other did seek the advice of counsel about the scope of plaintiff's patents, but did not disclose the opinion during discovery. Since the defendant declined to disclose the opinion, the district court concluded that the opinion was unfavorable and ruled that the defendants had willfully infringed the patents. The defendants appealed the ruling to the Federal Circuit.

The court asked the parties to brief four questions and invited amicus briefs on the first two. The questions are:

1) When the attorney-client privilege and/or work product privilege are invoked by a defendant in an infringement suit, is it appropriate for the trier of fact to draw an adverse inference of willful infringement?

2) When the defendant has not obtained legal advice, is it appropriate to draw an adverse inference of willful infringement?

3) If the court concludes that the law should be changed, and the adverse inference withdrawn as applied to this case, what are the consequences for this case?

4) Should the existence of a substantial defense to infringement be sufficient to defeat liability for willful infringement even if no legal advice was secured by the defendant?