© 2015 The Texas Lawbook.
By Jeff Bounds
(March 22) – Since the Eastern District of Texas became one of the nation’s leading venues for bringing patent disputes in the 1990s, it has gained a reputation for empaneling juries that are plaintiff-friendly.
Someone forgot to tell that to the four women and two men who, in mid-March, heard the second phase of a patent war between two rival makers of telecom equipment, London-based Metaswitch Networks and Plano’s Genband US.
Following a four-day trial that started March 11, the jury in U.S. District Judge Rodney Gilstrap’s courtroom last Thursday awarded goose eggs to everybody.
The panel on March 17 found no infringement of six Metaswitch patents, awarded Metaswitch nothing in damages – the company had asked for $59 million — and even decided that a total of six claims across three of that company’s patents were invalid to boot.
Genband, which in this phase of the dispute was the defendant, fared no better as a counter-claimant.
The jury found no infringement of four Genband patents, handed the company zip for damages (it had asked for $3 million) and decided that a total of three claims across three Genband patents were invalid.
“The bottom line is that the (Eastern District) juries aren’t plaintiff friendly, and they never have been,” said Michael Smith, a Marshall-based partner at Siebman Burg Phillips & Smith who isn’t associated with the case.
“The party that knows how to try a case does well, but lately that’s been the defense more than the plaintiff,” Smith added. “Ten years ago, the opposite was true, and that’s where the reputation came from.”
Indeed, last week’s jury handed out defense wins all around, and even tossed out some of both sides patent claims, which define what a given patent covers and doesn’t cover.
“I think it was a combination of really boiling the technology down to a way that it can be understood, while also helping them understand the value that the companies place on this technology,” said Kurt Pankratz, a Dallas-based partner at Baker Botts who led Genband’s legal team at last week’s trial.
While neither side was likely happy to see the jury toss out claims on three of their respective patents, the panel’s findings are not necessarily the end of the world for either business, either.
Invalidating one or more claims on a given patent is different than invalidating the entire patent, Pankratz noted. So while the jury tossed out some patent claims, those patents as a whole are still valid under the panel’s findings.
Both sides also have the option of seeking to get the jury’s invalidity rulings on their patents set aside, whether in post-trial motions or on appeal.
“Genband is considering its options” on that score, Pankratz said.
Charles Verhoeven, a partner in the San Francisco office of Quinn Emanuel Urquhart & Sullivan, led Metaswitch’s legal charge at last week’s trial.
“We have great respect for the jury system, and believe that by rejecting both parties’ claims, the jury sent a message that competition should stay in the marketplace, not the courtroom,” said Martin Lund, Metaswitch’s chief executive officer, in a statement.
More to Come
Notwithstanding the face slaps that the jury administered to each side last week, Genband is still ahead in the broader litigation war with Metaswitch.
In January, a separate eight-person jury in Marshall awarded Genband a total of $8.16 million in damages, after finding that Metaswitch had infringed on seven Genband patents.
That panel also rejected Metaswitch’s claims that all or parts of those Genband patents were invalid.
That case, which Genband launched in January 2014, will be the subject of a March 29 bench trial before Judge Gilstrap.
Among other things, Gilstrap will consider what could be the really nasty stuff in the case: a Genband request for a permanent injunction, which would bar Metaswitch from infringing on those seven patents and, by extension, potentially taking some of Metaswitch’s technology off the market.
Gilstrap will also hear Metaswitch’s arguments about why a permanent injunction is not appropriate and why he should disregard the jury’s findings in that first trial.
Doug Kubehl, a Dallas-based partner at Baker Botts who led Genband’s legal team in the January trial, is slated to lead the company’s charge at that March 29 bench trial.
Gilstrap in January issued a final judgment that largely embodied the jury’s findings. But he later withdrew it so he could first hear Metaswitch’s arguments against the judgment.
Originally, Gilstrap had planned to hold two bench trials on March 29, one in the morning about the first case, the second that afternoon about the second case, which Metaswitch filed in July 2014.
But the second jury’s March 17 verdict largely resolved the issues that the second bench trial was supposed to tackle, Pankratz said.
Gilstrap has stayed, or halted, a third element to the companies’ dispute, centering on allegations Metaswitch brought against Genband in December 2014 in a patent licensing squabble.
Genband has denied wrongdoing against Metaswitch’s assertions that the Plano company engaged in unfair competition, among other things, court records show.
Gilstrap intends to take that matter up in a third case at a later point, Pankratz said.
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