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Red Hat & Novell Beat IP Innovation and in Marshall, Texas, too - Updated 2Xs
Friday, April 30 2010 @ 10:33 PM EDT

Do you remember the patent infringement case IP Innovation filed against Red Hat and Novell in 2007? We looked for prior art, if you recall.

Well, I'm very happy to tell you that Red Hat and Novell have prevailed in the litigation:

Red Hat, Inc. (NYSE: RHT), the world's leading provider of open source solutions, announced that today a jury in federal court in Marshall, Texas, returned a verdict in favor of Red Hat, Inc. and Novell, Inc. in a case alleging patent infringement brought by IP Innovation LLC, a subsidiary of Acacia Research Corporation and Technology Licensing Corporation.

The patents at issue were found to be invalid and worthless.

"This is the result we expected and we are gratified that the jury recognized the tremendous innovative value of open source software. The jury knocked out three invalid patents that were masquerading as a new and important inventions, when they were not," said Michael Cunningham, Executive Vice President at Red Hat. "We appreciate the jury's wisdom and remain committed to providing value to our customers, including through our Open Source Assurance program. We also remain stalwart in resisting bogus shakedown tactics."

Here's the final judgment [PDF].

The News & Observer tells us a bit more:
IP Innovation sought royalties on all sales of Linux-based products.
Say, that's what SCO wanted, and Microsoft. Everyone wants to use IP bogo lawsuits to get money from Linux, it seems.

Here are the Jury Instructions [PDF], which lays out for the jurors the position of the parties, so it will give you the best overview.

Dear U.S. Supreme Court,

Please will you address the software patent madness? In Re Bilski gives you an opportunity. .

Update: Back in March, the Patent Prospector provided some insight into the case, particularly with respect to plaintiff's efforts to inflate the value of the patent damages, and the reaction from the newly assigned judge, Judge Randall R. Rader, who excluded evidence from the plaintiff's expert in part. From the Order [PDF]:

A reliable reasonable royalty calculation depends on trustworthy evidence of both the royalty base and the royalty rate. Mr. Gemini invoked the "entire market value rule" in identifying the royalty base in this case. Under the entire market value rule, damages are recoverable only "if the patented apparatus was of such paramount importance that it substantially created the value of the component parts." Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1549 (Fed. Cir. 1995) (citation omitted). Therefore, "the patentee must prove that the patent-related feature is the basis for customer demand." Lucent Techs., 580 F.3d at 1336.

In this case, IPI has accused Red Hat's and Novell's Linux-based operating systems of infringing the patents-in-suit, including the Enterprise Linux Desktop and Server products. IPI alleges that the operating systems' multiple virtual workspaces and workspace switching features infringe the patents-in-suit. In invoking the "entire market value rule," Mr. Gemini included 100% of Red Hat's and Novell's total revenues from sales of subscriptions to the accused operating systems in his proposed royalty base. Mr. Gemini's methodology however does not show a sound economic connection between the claimed invention and this broad proffered royalty base.

The claimed invention is but one relatively small component of the accused operating systems. The evidence shows that the workspace switching feature represents only one of over a thousand components included in the accused products. Mr. Gemini relies on an online user forum for a third-party product to show that some users tout a desktop switching feature as essential. However, selected users' statements in isolation and without a relationship to the actual claimed technology do not show an accurate economic measurement of total market demand for the switching feature, let alone its contribution to the demand for the entire product asserted as the royalty base. The workspace switching feature's small role in the overall product is further confirmed when one considers the relative importance of certain other features such as security, interoperability, and virtualization. Moreover this proffered evidence has no economic foundation.

Contrary to the proffer of Mr. Gemini, the record---even at this pretrial stage after discovery-suggests that users do not buy the accused operating systems for their workspace switching feature. Most of Red Hat's and Novell's accused sales come from their Server products, the majority of which are not connected to a display and thus do not take advantage of the workspace switching feature. Mr. Gemini made no effort to factor out of his proffered royalty base these products which do not even feature the claimed invention. Once again, this blatant oversight shows that Mr. Gemini did not use the type of reliable economic principles and methods required by Rule 702 for an economic damages expert. Also, the record shows that some accused operating systems are sold to the public with a default setting that does not enable the workspace switching feature. Mr. Gemini made no effort to factor out of his proffered royalty base those operating systems in which the user never affirmatively enables the claimed switching feature. In fact, he made no effort to even discern the percentage of users who would never enable or use the claimed feature. This aspect of his questionable methodology also shows inattention to the economic and factual data necessary for a reliable assessment of a compensatory royalty. Overall, Mr. Gemini never accounts for the record evidence that most users of the accused operating systems do not seem to use the workspace switching feature at all. Accordingly, the record cannot support the unfounded conclusion that the often-unused feature drives demand for a royalty base of 100% of the operating systems as a whole. In sum, this stunning methodological oversight makes it very difficult for this court to give any credibility to Mr. Gemini's assertion that the claimed feature is the "basis for customer demand." See Lucent Techs., 580 F.3d at 1336....

Accordingly, Mr. Gemini's current expert report improperly inflates both the royalty base and the royalty rate by relying on irrelevant or unreliable evidence and by failing to account for the economic realities of this claimed component as part of a larger system. This court hereby precludes Mr. Gemini from testifying at the trial ofthis case or otherwise presenting his opinions on the issue of damages based on his current expert report... The parties are reminded that expert testimony on the topic of damages will not be allowed absent a firm basis in accepted economic principles with an eye to the facts of this record.

Patent Prospector calls this attempted royalty inflation simple greed. Calculating damages is a hot issue in patent law -- and why wouldn't it be? -- and Patently O has an article on the latest, including the patent reform bill meandering through the back roads and hills and dales of Congress. Everyone knows it's a problem, but how to fix it, when the patent lobby loves its money?

Judge Rader is, of course, a judge in the special patent appeals court, the Federal Circuit Court of Appeals, but sometimes he takes patent cases at the district court level. This was one such happy event, when he took over in late 2009 the Red Hat/Novell patent case from Judge Leonard Davis in the Marshall Division of the Eastern District of Texas. It was in March that he reminded plaintiffs they have to have solid evidence to support a broad damages theory and that the type of theory the plaintiffs had chosen, the "entire market value rule" can only be used when the feature that is patented is the "basis for customer demand" meaning that is why they buy the product. The law firm Morgan Lewis puts out a newsletter on IP news, and here's their take on Rader's role in this litigation [PDF]:

Judge Randall Rader of the Federal Circuit Court of Appeals periodically takes a break from his appellate duties to preside over trials of patent cases at the district court level. In one such case, IP Innovation, LLC v. Red Hat, Inc. , Case No. 2:07-cv-447, Judge Rader on March 2, 2010, issued a decision reminding lawyers, litigants, and expert witnesses that plaintiffs must have a firm evidentiary foundation before submitting a broad damages theory to the jury.

In late 2009, the parties in IP Innovation were preparing to try their case before Judge Leonard Davis in the Marshall Division of the Eastern District of Texas when they got a surprise—Judge Rader, sitting by designation, would be presiding over the trial. In March, Judge Rader made his presence felt when he issued an order completely excluding the proposed testimony of the plaintiffs’ damages expert.

The asserted patents in this case involved a method for allowing computer users to switch around among multiple different workspaces. The plaintiffs and their expert accused the defendants’ Linux-based operating systems of infringement, and sought to recover a royalty for each system in question based on the value of the entire operating system. The plaintiffs’ damages model was based on the theory known as the “entire market value rule,” which can allow a patentee to collect damages based on the entire market value of an accused instrumentality, even if the patented invention is only one component of a larger apparatus. Under the facts of this case, Judge Rader emphatically rejected the plaintiffs’ approach.

Judge Rader began by noting that the entire market value rule may only be invoked where the patented feature forms “the basis for customer demand” for the larger accused device. In this case, he found that “[t]he claimed invention is but one relatively small component of the accused operating systems. The evidence shows that the workplace switching feature represents only one of over a thousand components included in the accused products.” Although the plaintiffs’ expert pointed to some isolated statements about the popularity of workplace switching in general, the court held that such evidence had no “relationship to the actual claimed technology.”

Judge Rader went further and noted that the record in the case “suggests that users do not buy the accused operating systems for their workspace switching feature.” He noted that some accused products did not even include the allegedly infringing feature, others did not have the feature enabled, and, even in those products where it was included and enabled, many consumers still did not use the feature.

In the decision, Judge Rader noted that the plaintiffs had tried to “shift the burden” to the defendants by arguing that they had failed to produce evidence sufficient for the plaintiffs’ expert to perform the kind of analysis the court required. The court was unmoved, noting that it was the plaintiffs’ burden to prove damages and that they “must show some plausible economic connection between the invented feature and the accused operating systems before using the market value of the entire product as the royalty base.”

Clearly his role was significant, and so was the jury's. Once again I say, give me a jury any day, but a sensible and courageous judge is the cherry on top.

Update 2: There is a statement from Novell now also:

Novell announced that on Friday a jury in federal court in Marshall, Texas, returned a verdict in favor of Novell, Inc. and Red Hat, in a case alleging patent infringement brought by IP Innovation LLC. IP Innovation argued that the Linux operating system infringed three patents related to the display of multiple desktops and other desktop effects. All the patents at issue were found to be invalid by the jury.

“We are very pleased that the jury reached a verdict in favor of Linux and of open source,” said Jim Lundberg, Vice President, Legal. “We hope this verdict sends a strong and unequivocal message to others that Novell and the open source community will vigorously defend any unsupported attacks on Linux and on open source innovation. ”

Amen to that.

  


Red Hat & Novell Beat IP Innovation and in Marshall, Texas, too - Updated 2Xs | 272 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Thread
Authored by: artp on Friday, April 30 2010 @ 10:58 PM EDT
For corrections of fact, not opinion.

Title should give a clue to change: eror -> error

---
Userfriendly on WGA server outage:
When you're chained to an oar you don't think you should go down when the galley
sinks ?

[ Reply to This | # ]

Off Topic Thread
Authored by: artp on Friday, April 30 2010 @ 11:03 PM EDT
Anything not germane goes here.

No On topic, of topic, topical or otherwise relevant to whatever this article is
about. Violators may need topical anaesthetics. Or alternatively, they may be
forced to read drafts of tSCOg legal briefs, which are not brief, until their
brain is scrambled.....

---
Userfriendly on WGA server outage:
When you're chained to an oar you don't think you should go down when the galley
sinks ?

[ Reply to This | # ]

Newspicks Thread
Authored by: artp on Friday, April 30 2010 @ 11:06 PM EDT
Comments on articles in the sidebar. Note that the article will scroll off the
side soon, so include the title, and hopefully a URL.

Thank you.

---
Userfriendly on WGA server outage:
When you're chained to an oar you don't think you should go down when the galley
sinks ?

[ Reply to This | # ]

I'm too lazy/stupid to read the thing...
Authored by: YurtGuppy on Friday, April 30 2010 @ 11:24 PM EDT

Did any of the examples of prior art provided by Groklaw readers make it into
the case?



---

just swimming round and round

[ Reply to This | # ]

The Patent Troll Business Model is Subprime
Authored by: NZheretic on Friday, April 30 2010 @ 11:25 PM EDT
The 2000-2010 "Intellectual Property" boom is about to go the
way of the "Subprime" Mortgage, Dot-Com vapor startup, Junk
bond and Dutch Tulip futures. The Patent Troll Business Model
is inherently flawed, and just like the aforementioned
others, add nothing to a nations REAL economy.

[ Reply to This | # ]

"Everyone wants to use IP bogo lawsuits to get money from Linux, it seems"
Authored by: Yossarian on Saturday, May 01 2010 @ 12:21 AM EDT
Linux is a pretty valuable asset, and there are two ways to
get money out of it:
1) Follow GPL to the letter.
2) Sue till everybody pays.

It seems like #2 is the easy way - the code is open so you
can find all the proof you need without any discovery and
strike when you are *ready*.

But look can be deceiving...

[ Reply to This | # ]

This is only a temporary victory
Authored by: Anonymous on Saturday, May 01 2010 @ 02:06 AM EDT

Something similar is going to come up again in the future. And again, and again, with different plaintiffs and different patents.

Eventually, because there's a random element in jury decisions, one of them will win big. Winning a jury verdict when you deserve to lose is a bit like throwing a double 6 with dice. The odds are against you, but if you keep trying, it will eventually come up.

If you understand that, then you will also understand that in the long run, a victory for one of these patent trolls is certain. Long term, there is no solution as long as software can be patented.

[ Reply to This | # ]

Another case of Intellectual Poverty ...
Authored by: Anonymous on Saturday, May 01 2010 @ 03:42 AM EDT
... getting identified as what it really is: not poverty, but intellectual
poverty.

[ Reply to This | # ]

Red Hat & Novell Beat IP Innovation and in Marshall, Texas, too
Authored by: Steve Martin on Saturday, May 01 2010 @ 06:24 AM EDT
And this happened in the Eastern Division of Texas?? Patent Troll Mecca?

I'm stunned.


---
"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

Red Hat & Novell Beat IP Innovation and in Marshall, Texas, too
Authored by: Steve Martin on Saturday, May 01 2010 @ 06:34 AM EDT

From the jury instructions:

The ‘412, ‘521, and ‘183 patents generally describe a computer based graphical user interface that spans across multiple workspaces. Within a workspace is a collection of display objects, called “tools,” that have visually distinguishable features (e.g., icons or windows). The display objects can be shared between workspaces. When a user switches between workspaces to perform different tasks, the display objects or tools that are common among the workspaces are displayed in the new workspace and are perceptible as the same.
This is an exact description of Windows desktop icons that appear for all users. I wonder why these guys didn't go after Microsoft rather than Novell and Red Hat.

---
"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

Jonathan Cohen was a big "Acacia Research" investor
Authored by: Anonymous on Saturday, May 01 2010 @ 10:32 AM EDT
A SCO related tangent in this issue was the investment by Royce Technology Fund in Acacia in the same time frame (2003-8) that the fund also put substantial money into SCOX.

The mutual fund was the province of Jonathan Cohen. He was on the air promoting his investment in early summer 2003, and featured it prominently in his annual report.

The fund closed down with substantial losses, and Cohen in no longer employed by Royce.

[ Reply to This | # ]

  • Prior art - Authored by: Anonymous on Saturday, May 01 2010 @ 12:34 PM EDT
Now what?
Authored by: kattemann on Saturday, May 01 2010 @ 12:32 PM EDT
The claims referred in the complaint are:
"at least claim 1 of the '412 patent",
"at least claim 3 of the '183 patent"
"at least claim 1 of the '521 patent".

So does this mean that only these claims and their dependent claims are
invalidated, or does it affect the rest of the claims as well?

[ Reply to This | # ]

  • Now what? - Authored by: Anonymous on Saturday, May 01 2010 @ 01:08 PM EDT
    Everyone wants money from Linux
    Authored by: DannyB on Saturday, May 01 2010 @ 01:36 PM EDT
    Why? Because anyone with vision can see that Linux will be in everything before long.

    Try this experiment. Indulge me.
    1. Follow this link to Sony's Open Source Code Distribution Service.
    2. Click on Television. < li>Stop and catch breath. Wow, that's a lot of television models that have Linux since 2003. And that's just Sony brand televisions.
    3. Pick a television model. For instance, let's pick the model KDL-37M400 0. Click it. That takes you to where you can download the Linux source code for that model of television set.

    Why Linux in a television set?

    Remember: if it has a screen, if it has an on screen menu, if it has an ethernet jack, WiFi, SD card support for multiple filesystems, if it has a web based interface or control panel, if it has USB, etc., then it probably already has Linux inside, and has had for years.

    But now, Sony TV's will soon be running Android. Maybe Samsung TV's also. Maybe others too (1, 2, 3, 4 ).
    But Linux is in everything else.

    • Set top boxes
      • TiVo
      • Moxy (used by many local cable company DVR's)
      • Roku
      • Commercial devices running open source Boxee
        • D-Link's BoxeeBox
        • PopBox
    • Phones
      • Android (currently 65 phones made by 18 manufacturers)
      • Palm's WebOS
      • LiMo
      • Moto MAGX
      • MeeGo
      • Maemo (Nokia)
      • Moblin
    • Personal Media Players (some of them even run Android, not just "linux")
    • eBook readers
      • Amazon Kindle runs Linux
      • Barnes & Noble's Nook runs Android (which is Linux)
    • GPS Navigation Units (eg, Tom Tom, Garmin, etc all run Linux)
    • Television Sets
    • DVD players (can you say "on screen menu")
    • VCR's (can you say "on screen menu")
    • Digital cameras (can you say "on screen menu")
    • Digital Photo Frames (can you say SD card support, Internet, WiFi, BlueTooth, etc)
    • Almost all of the top-500 list of biggest supercomputers
    • Linux has breathed new life into the Mainframe market (just ask IBM) to consolidate modern workloads
    • Internet tablets (A whole bunch of Android powered tablets coming in 2nd half 2010 to threaten the iPad)
    • Netbooks
    • Smartbooks (eg, non x86 processors)
    • Home office routers and WiFi routers
      • Linksys (Cisco) a list of models so long it would make your head spin
      • D-Link
      • Netgear
      • Asus
      • dozens (yes dozens) of other brands (check the DD-WRT website)
    • Almost anything with an "embedded" web server
      • example: printers with a web-based setup interface. (Just what do you think is running that web server inside that printer or fax machine?)
    I said a bunch of tablets coming that run Android, here are some links: There are more current links than I've provided here. (See Phandroid.com)

    Is anyone wondering why all the lazy vultures who don't actually build products or innovate are lining up to get a cut of every Linux "sale" ? They want a Linux "tax". That's what SCO originally wanted. They see something big. (And it's even bigger than I'm suggesting here. Just to give you a clue the mobile device market will be much bigger than "desktop computers". Nevermind everything else, and stuff I have not mentioned.)

    Maybe Android will become the standard user interface for appliances in your home. (see Appliances last January at CES 2010)

    The leeches want to suck money from those who work and build actual products. They see Linux as the way to leech their "fair share".

    ---
    The price of freedom is eternal litigation.

    [ Reply to This | # ]

    So nice to have been able to help kill those....
    Authored by: Anonymous on Saturday, May 01 2010 @ 04:13 PM EDT
    It is so nice, having spent time groveling through my
    records, to know it was worthwhile (I was consulted due to
    having worked in this area, on the prior art directly). It
    may be nice to get money to do such boring work, but I can
    tell you I much prefer to invent new technology than to
    deal with stupid patents.

    The interesting thing is that the patents at issue in the
    case were being twisted: the trolls were trying to twist the
    the patents to apply to almost everything; including such
    things as simple login session management.

    Knocking them out is a relief. My thanks to Red Hat for
    fighting the fight.

    Unfortunately there are other horrific patents being trolled
    I am aware of (in a different area where I have also worked)
    much worse and more insidious that have not been so far. So
    long as the patent system is so broken, we will be in
    constant danger.

    [ Reply to This | # ]

    Dear U.S. Supreme Court,
    Authored by: Anonymous on Saturday, May 01 2010 @ 07:01 PM EDT
    Please will you address the software patent madness?
    In Re Bilski gives you an opportunity. .
    ---
    appears in the above story in <blockquote>
    Where did the quote come from?
    Or is it just PJ formalising our communal prayer?

    [ Reply to This | # ]

    Red Hat & Novell Beat IP Innovation and in Marshall, Texas, too - Updated
    Authored by: Anonymous on Sunday, May 02 2010 @ 02:57 AM EDT
    It's a shame Judge Randall Rader isn't hearing the SCO/Novel/IBM stuff as it
    sounds like he really doesn't tolerate any BS from anybody.. the judge we have
    now seem intent on giving SCO everything they as for regardless of how many
    times others have shot them down. I would not be surprised if he didn't give
    the copyrights to SCO now despite Kimbel and the jury. I hope that is a false
    impression, I really do.

    [ Reply to This | # ]

    This header contains no copyrightable information
    Authored by: Anonymous on Sunday, May 02 2010 @ 04:53 AM EDT
    Someone is really having its fair share of fun: found in Linux header files, for
    instance:
    linux/if_packet.h:

    /***********************************************************
    *****************
    ****************************************************************************
    ***
    *** This header was automatically generated from a Linux kernel header
    *** of the same name, to make information necessary for userspace to
    ***
    call into the kernel available to libc. It contains only constants,
    ***
    structures, and macros generated from the original header, and thus,
    ***
    contains no copyrightable information.
    ***
    ****************************************************************************
    ****************************************************************************/

    [ Reply to This | # ]

    Red Hat & Novell Beat IP Innovation and in Marshall, Texas, too - Updated
    Authored by: Anonymous on Sunday, May 02 2010 @ 01:23 PM EDT
    In any event it is not Linux or GNU/Linux that implements the feature, it is the
    GUI, and the GUI can run on other platforms... like Windows (KDE). The GUI is
    simply an application on top of the CLI based O/S. These people have no clue.

    [ Reply to This | # ]

    Smart Judge - Red Hat & Novell Beat IP Innovation and in Marshall, Texas, too - Updated
    Authored by: Anonymous on Sunday, May 02 2010 @ 06:48 PM EDT
    The judge has got it right. Aside from the fact that the "patent" is
    merely an extension of spawning another process, I find the multiple desktops
    sometimes switch on me when I don't intend to. I prefer everything to be
    available on a single desktop. Easier for me to use, so I reset my system to a
    single desktop. (Also, I must confess, I'm using a free, as in beer, download).

    [ Reply to This | # ]

    Are you sure the Patents are invalidated?
    Authored by: Anonymous on Monday, May 03 2010 @ 11:44 AM EDT
    One question. Did he invalidate the patents or just throw the case out because
    the damages were calculated incorrectly? The article name and summary make it
    sound like he invalidated the patents. But, in reading the quoted portion of
    the order, he didn't. All he did was threw out the expert testimony on damages
    because he used a flawed system to calculate them. And that caused the case to
    fall apart.

    So, I'm not sure if this is a "victory" for Linux as much as it was a
    setback for IP Innovations. Although I DO HOPE that he invalidated their
    Patents as well.

    Have a great day:) (And IANAL)
    Patrick.

    [ Reply to This | # ]

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