Infringement Damages Increased After CEO Complains About Patent System | Hacker News Reader

Infringement Damages Increased After CEO Complains About Patent System

techdirt.com

57 pointsmartingordon25 comments

Techdirt's near perfect record of misreporting on legal issues remains unblemished by this article.

The article makes it sound like the court decided damages should be 0.75%, then found out about the CEO's statements, and doubled the damages to 1.5%. That is not so.

What they overlook is that there are TWO damage awards--one for the infringement before the verdict, and one for future infringement.

The jury found that the infringement was willful, which allows the judge to enhance the damages. However, the judge ruled that there was not enough evidence to support a finding of willfulness and so overturned that part of the jury verdict. The damages for past infringement were then set based on non-willful infringement. That is the 0.75%.

InnoLux can stop infringing, and then all they owe will be that 0.75% royalty on their past sales.

The second damage award is for future infringement if InnoLux does not cease infringing. The court has decided that this infringement is likely to be willful, partly based on the company's attitude as evidenced partly by the CEO's statements. Hence, enhanced damages are appropriate, and the court doubled the rate to 1.5% (I believe the law authorizes up to triple damages for willful infringement).

So overall the judge has been quite fair to InnoLux. The jury said the past infringement was willful. The company's attitude, as evidenced by the CEO's statements, indicates that the jury was likely right about that. Nevertheless, the judge tossed out the finding of willfulness because the jury didn't have the information on the company's attitude, and so gave InnoLux the lower rate for past infringement.

The court DOES have the information that the jury did not, so is not giving them a break on continuing infringement.

The Court said that the CEO's statement that patent infringement is "being taken too seriously sometimes" was "an affront to the U.S. patent system" (a direct quote). The rest of those details about the two damage awards aren't particularly relevant.

It's reminds me of that time when, in grade school, a seriously disturbed kid attacked me for no reason. We were both then punished for "fighting" in spite of the fact that I never hit back and just tried to block. What I mean by that story is that you appear to be telling us that they got off easy here when I don't see why they should be punished for a comment like that at all.

Sometimes, being "fair" isn't.

So basically you just described a convoluted legal black box that works like this:

CEO statement -> Black box -> bigger damage award

Finally, Techdirt got the gist of it.

If that's all you got out of it, I suggest you reread. The CEO provided new evidence, which is indeed a valid input, that showed that future infringement would be willful. This is simple reasoning.

  > The CEO provided new evidence, ...

Okay ... but part of what isn't clear is whether the "new evidence" was presented in court by counsel or found and entered by the judge.

Yes, it would be good to have clarity on that. Though I remember reading in a different article that it was possible for a judge to call their own witness so perhaps the rules aren't the same as what courtroom drama shows.

The CEO said that in America, people are a little lawsuit-happy. I don't blame him. It's not really possible to protect yourself from patent lawsuits, especially software patent lawsuits.

Note that this happened in the Eastern District of Texas, which should come as no surprise to those following the activities of certain NPEs (AKA "patent trolls"). From the article's conclusion:

"Judge Ward, of course, is the judge who put Eastern Texas on the map as the place to go for patent lawsuits, so it's no surprise that he seems to think saying something bad about the US patent system opens you up to greater damages. But it seems like a pretty serious First Amendment issue when the judge is, quite clearly, punishing someone for their speech."

What is the point of this comment just duplicating information in the article?

I think it's telling.

Often, people excuse the EDT saying that it's merely one of a few "rocket dockets" where cases speed through the system. Yes, it is also that, but there's a reason why so many lawyers have set up shop there and I think this story illustrates that nicely.

Would this provide reason to appeal and potentially have the ruling thrown out? I have no idea what the legalities behind something like this are, but it seems like a pretty clear attempt to quash first amendment rights.

Be that as it may, appeals are quite expensive and I suspect that whatever decision they'll make on that will have more to do with finances than free speech.

That said, in an appeal, you generally list any and every complaint about the lower court's errors that has any chance of success. I don't know enough about the relevant laws to say whether or not this was an abuse of the court's discretion (even though I feel that it was an abuse), though.

As an aside, I really wonder how he happened to find out about a comment in a Chinese newspaper, which would presumably be in Chinese? I have to assume that the plaintiff dug that up, because learning enough hanzi to read one is pretty difficult.

As I read it, the judge found the defendant's remark to be a sign of wilfulness and systematic disregard for patent rules. The article suggests that the judge isn't authorized to tack on damages for this, but I question whether this is entirely correct. Kind of like flipping off the judge at sentencing is a good way to test the limits of judicial discretion.

On the other hand, do you wonder why CEOs of tech companies are afraid of lobbying against patents?

Imagine if you had told the press "Patents are bullshit. Nobody reads them except lawyers. Our engineers are told not to read them, because then we would pay more damages. We are probably infringing on dozens of patents every time we flush a toilet, let alone release a new product, but so is everyone else. We just pay the lawyers to keep other lawyers off our tail, and hope for the best. Business still goes on, but the same is true in North Korea - it's in spite of government regulations, not because of them".

Imagine then, you get sued by a competitor for infringing on their patent. In response, you threaten to sue them back, for some of their inevitable infringements on your patents. You can bet that your statement will be paraded around in front of the judge in both cases, as evidence that your patent is bullshit, and evidence that you were willfully infringing.

I'm not saying all patents are bad. Drugs need patents, so they can pay for the huge costs of testing them to comply with the FDA, and you need this process to stop companies selling dangerous quack medicine (or just stuff that hasn't been tested properly). OK, there are some elements of the drug approval process that are a little broken, but you don't need to throw the baby out with the bathwater. When it comes to software patents, what you have floating in the tub is not, figuratively speaking, a baby.

I similar version to that would not show willfulness in infringement, just not active investigation of whether one was or not. The criticisms of the system would not in themselves create evidence of willfulness. Given I haven't read the CEO's statements to see whether they are similar to this or not. If they are then this is definitely a problem. If he says something like, "No one reads them, not even the lawyers" then it would still be damning.

You don't have to wonder what this guy said. Per the article, the CEO said that patent infringement is "being taken too seriously sometimes."

That certainly seems to indicate willfulness to me. For judges, you can't take the law "too seriously".

The patent rules are unfair. You can't really protect yourself from infringement claims. Using that comment as a reason for enhanced damages was quite harsh, given that all he said was that in the US, people sue a lot.

Let's review how you're supposed to avoid infringing on anyone's patents. Maybe then it will be clear that you're damned if you do and damned if you don't. If you read patents, any infringement is willful (you should've known). If you don't read patents, you don't know what was out there and somebody will sue you with one of those method of doing business online type patents (they're not quite that generic, but they're damned close). If you reinvent an idea that someone patented first, that doesn't qualify as proof of obviousness. And there are groups of people buying up patents for the sole purpose of suing over them.

So even if you do your best to do nothing wrong, you can still get sued. Big companies used to have a deterrent: keep a huge portfolio and promise mutual destruction to any other large company that sues you. Now, with the NPE model, it's turned into a free-for-all and billions of dollars are being wasted in lawsuits.

Also, I am baffled by the strong anti-patent bias in the comments--as if folks assume every suit is a troll at work.

The patent in question is hardware and it might be legitimate.

However, those who use patents for legitimate reasons should have done something to the trolls. Not the victims - other, good patent holders. Now if their dear patent system would be get thrown away (and it is already massively discouraged), who is responsible? They are, but they never did anything.

I won't go so far as to say "anti-patent", but both Techdirt and it's userbase are...extremely jaded towards most patent disputes. Additionally, the focus of the site is almost exclusively on the damage and retardation that results from attempting to apply non-tech rules in a tech-dominated society. In essence, pointing out every instance of the buggy-whip salesmen attempting to outlaw and regulate the car industry.

So yeah. Techdirt is great, but considering how infrequently appropriate trademark/copyright suits are posted on there, the bias is very liberal and should be taken with a grain of salt. (Personally, I read Techdirt, but I almost invariably come away feeling depressed at all of the backwards rulings and inherently trollish lawsuits, like that whole timezone thing from this morning.)

Every suit filed by companies from outside Eastern Texas in that court (or by companies who set up shop there for the sole purpose of being in that district) is definitely a troll at work.

That's massively wrong. Did you do any research at all before making that claim?

edit: could the down voters explain why, please? All you have to do is look at a list of cases from EDT to see that ak217's claim that there is no non-troll patent suits filed by companies outside the district is idiotic.

You're right. There are plenty who aren't NPEs who are just forum shopping.

It will be interesting to see how the AIA changes things, given that you won't just be able to sue dozens of people for infringing the same patent and consolidate the cases. But they probably still will be able to set up shop in Marshall, TX.

It's not about fact, it's about disagreement. You disagreed, and no one likes you disagreeing about that. Down Vote!

It's a nice replication of U.S style democracy, empower the people who agree with you, and disenfranchise those that don't.

Thanks pg for such an awesome replication!

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