Reuters Posted online: Tuesday, March 29, 2005 at 1231 hours IST
New York, March 29: Recent courtroom wins against Sony and Toshiba demonstrate how some relatively obscure names in technology have found renewed success using the power of US judges and juries to strike back at companies too big for them to conquer in the marketplace.
While high technology has long been marked by disputes over intellectual property, a combination of factors has come together to give the patent claims of small high-tech companies a more thorough, and perhaps more favorable, hearing, lawyers say.
The factors include a growing interest among technology executives in turning stacks of patents into a source of profits, and the incentive that one big courtroom victory gives to other patent holders.
Courts are also more adept than ever at processing patent claims, and high-tech patent litigation is even becoming a local industry of sorts in parts of Texas and Virginia.
"It's a perfect storm situation," said Ron Laurie, an intellectual property lawyer in Silicon Valley and managing director of patent strategy consultant Inflexion Point Strategy.
Last week proved auspicious for high-tech patent plaintiffs. On Thursday, a US court ordered a unit of Sony Corp to pay a $90.7 million infringement award to Immersion Corp, a San Jose, California-based company with four times as many patents (550), both pending and final, as employees (139).
The same day, a punitive damages award brought to $465 million the sum that Toshiba Corp was ordered to pay Lexar Media Inc in a case about the alleged theft of digital memory card technology.
A series of closely watched, undecided cases could reinforce the perception that plaintiffs are having a field day.
In Illinois, a federal court will retry a case against Microsoft Corp filed by Eolas Technologies Inc and the University of California over an Internet patent, after an appeals court overturned a $521 million verdict.
In Virginia, a small company called MercExchange Inc is asking a federal judge to impose an injunction against auctioneer eBay Inc in a case focused on a patent said to cover 'buy-it-now' auctions.
And after settling a case against Germany's Infineon Technologies AG that had been heard in Virginia, Rambus Inc, seeking patent royalties on its memory technology, has its sights set on chip makers Micron Technology Inc and Hynix Semiconductor Inc.
PATENTS AS PROFITS
More lawyers are taking patent cases on a contingency basis, getting paid only when clients win, said Jonathan Retsky, a former head of patent preparation at Motorola Inc who now practices patent law for Brinks Hofer Gilson & Lione in Chicago.
"With the prospect of very, very large damages, lawyers are willing to be co-partners, so to speak, with their clients and go after a large entity," he said.
The more thorough history of cases has also helped attorneys become more adept at sorting through the best patent claims to bring to court, and then venue-shopping to find the most sympathetic courtrooms, said David Witcoff, an intellectual property lawyer with the firm Jones Day.
"I think the plaintiffs' patent bar has been better at finding the patents that they believe will give them a better chance of prevailing before a jury," Witcoff said, pointing to high activity in the eastern districts of Texas and Virginia, and the northern district of California.
"Each of these forums has advantages and disadvantages to both plaintiffs and defendants," he said.
Laurie, the managing director of Inflexion Point Strategies, said the recent rulings in favor of the little guy are only the most visible of a broader trend toward patent deals, whether they be auctions of intellectual property (IP), cross-licenses or out-of-court settlements.
"The other stuff doesn't get as much attention," he said. "Business," he added, "is being driven by IP".
