© 2016 The Texas Lawbook.
By Mark Curriden
(Sept. 19) – A federal jury in Tyler ruled Thursday that Apple illegally used source code owned by a Plano-based patent holding company on several models of its iPhones and iPads.
The eight-person jury awarded $22.1 million in damages to Cellular Communications Equipment, which the jury said owns a valid patent on unique source code that combines hardware components and specifically designed software instructions to allow advanced buffering technology on smart phones and handheld devices.
Lawyers for CCE presented evidence that technicians at Nokia Systems in Japan created the code source five years ago and obtained a valid patent for it in 2011. The trial revealed that Nokia sold the patents to Acacia, a publicly traded patent holding company based in California. Acacia then transferred the patent portfolio to its CCE subsidiary.
Apple did not dispute the importance or effectiveness of the source code on its devices, according to lawyers involved in the litigation, but they argued that the code was invented in Germany.
The key witness in the trial, according to CCE lead lawyer Ed Nelson, was the actual source code inventor who still works for Nokia in Japan.
“This case came down to which witness was more credible and they decided it was ours,” says Nelson, a partner at Fort Worth-based law firm Nelson Bumgardner and an expert in patent infringement litigation.
Both sides also called competing expert witnesses to testify about the source code and its importance in technology communications.
The jury deliberated three and one-half hours before returning its verdict Thursday that CCE’s patent was valid and that Apple intentionally and willingly infringed on that patent.
Lawyers for Apple, who are expected to appeal the verdict, did not respond to inquiries.
CCE also sued the communication carriers – AT&T, Verizon, Sprint and T-Mobile – but those cases have been separated from the case against Apple. The defendants also challenged the validity of the patents before the Patent Trial and Appeal Board, but the PTAB upheld CCE’s patent claims.
CCE and Acacia are known in the patent world as “non-practicing entities,” which means their revenues come from licensing patent portfolios and litigation over infringement of those patents. The companies do not manufacturer products.
However, Acacia and CCE do not technically qualify as “patent trolls,” which acquire questionably valid patents and then sue deep-pocket corporations in hopes of getting them to settle the lawsuits prior to trial at a significantly reduced amount.
Lawyers for Acacia and CCE say they purchase only legitimate patent portfolios from technology companies such as Nokia and Siemens and they are willing to take each case to trial.
The plaintiff is represented by Nelson, Brad Caldwell and Wes Hill.
Apple is represented by two lawyers from Latham & Watkins’ Silicon Valley office – Doug Lumish and Jeff Homrig – and Eric Findley of Findlay Craft in Tyler.
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