Whirlpool files lawsuit in Eastern Texas alleging infringement of 10 million series patent

U.S. Patent No. 10,000,000 just issued June 19, 2018, and within a matter of days a patent in the 10 million series was already being enforced. On July 3, 2018, the day the patent issued, Whirlpool Corporation filed a patent infringement lawsuit in the United States Federal District Court for the Eastern District of Texas.

Despite those who claim that only patent trolls file lawsuits in the Eastern District of Texas, it is Whirlpool Corporation that has brought a patent infringement lawsuit seeking to enforce U.S. Patent No. 10,010,820, which relates to a water filtration system, against defendant, Space Flex International, LLC. There are some who have always believed that operating companies simply never sue in the Eastern District of Texas, but those widely held beliefs are simply incorrect. Indeed, those familiar with Whirlpool’s enforcement strategy know well that the company regularly utilizes the Eastern District of Texas.

In this case, Whirlpool also alleges that the defendant, Space Flex International, a Rancho Cucamonga, CA corporation that has consented to jurisdiction and venue in the Eastern Distirct of Texas, is infringing U.S. Patent Nos. 7,00,894, 8,591,736, and 9,937,451. The complaint filed explains that both the ‘894 and ‘763 patents have withstood numerous validity and enforceability challenges. The ‘451 patent, as well as the ‘820 patent, as you would expect from their relatively young age, have not been challenged yet and will see their first action on behalf of Whirlpool in this case.

Whirlpool is seeking a preliminary and permanent injunction preventing Space Flex from engaging in infringing activities, a judgment that infringement has been willful, and a finding that the case is exceptional. Whirlpool is also seeking attorneys’ fees, as well as pre- and post-judgment interest in the event they prevail. A jury trial has been demanded.

Supreme Court rules patent owners can recover lost foreign profits

At the end of the recent Supreme Court term, the Court  issued a decision in WesternGeco LLC v. ION Geophysical Corp., which in a 7-2 decision ruled that a patent owner may recover lost foreign profits for infringement under 35 U. S. C. 271(f)(2).  The question decided, as set forth in the opinion by Justice Thomas, writing for the majority, was: “The question in this case is whether these statutes allow the patent owner to recover for lost foreign profits.” Thomas simply answered the question in the opening paragraph saying: “We hold that they do.”

The dispute between WesternGeco, a company that develops technology for surveying the ocean floor, and ION Geophysical Corporation, a competitor, dates back to late 2007. In late 2007, ION began manufacturing components for its competing surveying system and shipping them to companies abroad. Those companies combined the components to create the surveying system that was indistinguishable from WesternGeco’s patented systems.

WesternGeco sued for patent infringement under §§271(f)(1) and (f)(2). At trial, WesternGeco proved that it had lost 10 specific survey contracts due to ION’s infringement. The jury found ION liable and awarded WesternGeco damages of $12.5 million in royalties and $93.4 million in lost profits. ION filed a post-trial motion to set aside the verdict, arguing that WesternGeco could not recover damages for lost profits because §271(f) does not apply extraterritorially. The District Court denied the motion. 953 F. Supp. 2d 731, 755–756 (SD Tex. 2013).

On appeal, the Federal Circuit found ION liable for infringement under §271(f)(1) but reversed the award of lost-profits damages under §271(f)(2). WesternGeco LLC v. ION Geophysical Corp., 791 F. 3d 1340 (2015). The Federal Circuit had previously held that §271(a), the general infringement provision, does not allow patent owners to recover for lost foreign sales. See Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F. 3d 1348 (Fed. Cir. 2013). The Federal Circuit reasoned that Section 271(f) should be interpreted the same way.

While the Supreme Court acknowledged that courts ordinarily presume that statutes apply only within the territorial jurisdiction of the United States, quoting Foley Bros. v. Filardo, 336 U.S. 281, 285 (1949), Justice Thomas explained there is an established two-step framework to decide questions of extraterritoriality. RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090 (2016). While ordinarily courts address the first step first, in this case the Supreme Court exercised its discretion to forgo the first step and address the second prong of the test. They did this, no doubt, because they concluded that the conduct relevant to the statutory focus was domestic.

Justice Thomas explained:

Section 271(f)(2) focuses on domestic conduct. It provides that a company “shall be liable as an infringer” if it “supplies” certain components of a patented invention “in or from the United States” with the intent that they “will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.” The conduct that §271(f)(2) regulates—i.e., its focus—is the domestic act of “suppl[ying] in or from the United States.” As this Court has acknowledged, §271(f) vindicates domestic interests: It “was a direct response to a gap in our patent law,” Microsoft Corp., 550 U. S., at 457, and “reach[es] components that are manufactured in the United States but assembled overseas,” Life Technologies, 580 U. S., at ___ (slip op., at 11). As the Federal Circuit explained, §271(f)(2) protects against “domestic entities who export components . . . from the United States.” 791 F. 3d, at 1351.

Thomas would go on to rather emphatically state: “The conduct in this case that is relevant to that focus clearly occurred in the United States, as it was ION’s domestic act of supplying the components that infringed WesternGeco’s patents.”

Apple, Samsung Settle Patent Litigation

On June 27, 2018, Apple and Samsung settled their patent dispute.

A dismissal filed in Delaware ended a small chapter of the Apple/Samsung patent war. The docket in that case included only 18 items and the case had been stayed since August 2011 after Samsung brought patent infringement claims against Apple to the U.S. International Trade Commission. The dismissal terminating the Northern California case ended the much more contentious portion of the patent battle between these two companies. The dismissal is the penultimate filing in that case which involved a total of 3,956 docket entries filed with the district court alone.

The Northern California dismissal had the result of denying as moot various motions filed by either Samsung or Apple which were still pending at the time that the parties entered into the settlement. These included a motion filed by Apple for supplemental damages, pre-judgment interest and post-judgment interest, which was filed only on June 7th. This motion followed the district court’s previous ruling that an award of supplemental damages was necessary to compensate Apple for infringing sales not considered by the jury. The calculation of the supplemental damages award took August 25th, 2012, as the date from which to begin the calculation; this date was the day after the first jury verdict was entered in the case. Apple’s entitlement to supplemental damages was reiterated by the district court after a damages retrial that occurred in 2013. Apple argued in its motion that Samsung had waived any right to challenge Apple’s entitlement to compensation for additional infringing sales and that Samsung had admitted to continuing to sell six infringing models after the August 2012 jury verdict.


USAA Asserts Mobile Check Deposit Patents Against Wells Fargo

On June 7th, San Antonio, TX-based reciprocal inter-insurance exchange United Services Automobile Association (USAA) filed a lawsuit alleging claims of patent infringement against San Francisco, CA-based financial services multinational Wells Fargo. The complaint, filed in the Eastern District of Texas, involves the assertion of patents in the field of mobile financial services which, at first glance, appear as though they may face some rigorous validity challenges thanks to precedent set by the U.S. Supreme Court in its 2014 decision in Alice Corp. v. CLS Bank International.


The Decline in Patent Contingency Litigation

There has been a steady decline in the number of contingency litigation law firms, attorneys, and even cases filed. This continues to greatly impact the intellectual property industry.

According to Paul Storm, a partner in Gardere’s Intellectual Property Practice, the decline in contingency representation over the last few years can be explained by weakened patents making success on the merits less likely. Even if the patent owner does prevail, what will they win? After a win at trial, the law of damages has made large damages less likely to achieve in the first place, and keep even if awarded. (more…)