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IP, Patent

TiVo Mindwarp: Court Renders Permanent Injunctions Worthless In Key Patent Ruling

Apparently, years of litigation and a consistent track record of demonstrating a valid, infringed patent are just not enough to actually be awarded your constitutionally guaranteed right to exclude.  TiVo sued Echostar over DVR technology back in 2004 (US Patent 6,233,389).  TiVo won. Bigtime. They won about $74 Million in lost profits and reasonable royalties. And, in keeping with the constitutional promise, they were awarded an injunction prohibiting Echostar from providing any more of the infringing products.

Unphased, Echostar made minor modifications to its set-top boxes and continued selling them, in violation of the court’ s order.  I’m not making that up, that’s what a federal judge said in 2009.  Two years later, that order has been wiped clean by the court of appeals, and Judge Folsom will be asked to reconsider under the new “guidelines” provided in today’s ruling.  I won’t bother you with a blow-by-blow of the opinion.  If you want that, check out Dennis Crouch’s coverage at PatentlyO.

The highlight, as far as enforcing injunctions is concerned, is the new standard the court is providing.  Basically, if a patent owners has been awarded an injunction, and the infringer continues to sell products while claiming to have modified them, the patent owner must bring this to the court’s attention.  The court is then instructed to determine whether the modification or removal of “one or more of those elements previously found to infringe” is significant.  (Order at p. 20).  If the change is significant, then the new product is “more than colorably different” and the court cannot provide you any kind of remedy for violating the injunction.

That sounds fair enough, right? Make significant changes to those product features that were determined to meet the various claim elements, and the manufacturer should be off the hook, right?  Except that the court also carved out a highly relevant inquiry in determining what makes a change “significant.”  Specifically, the court said: “the inquiry into whether the newly accused product actually infringes is irrelevant.”  (emphasis added).

That’s not a typo. They really did say that.  So all the infringer has to do is “change” in some “significant” way one of the features that was found to practice the claim elements and they can escape any liability for violating an order of the court even if the claim elements are still met!  Seriously, what could be more significant than determining whether the changes avoid practicing the patent the defendant was found to have infringed?

Luckily for TiVo, the opinion is not a total loss.  Echostar is still in violation of a separate part of the injunction (rightly so, I might add), and Judge Folsom has been asked to revisit the case to determine if any of Echostar’s changes are “significant.”  Chief Judge Rader joined an opinion that would have crushed TiVo’s case completely by hijacking the trial court’s job of deciding the facts.

Finally, there were a number of other issues decided in this opinion, and I may or may not opine on them later … but for now I’m still in disbelief over this latest ridiculous set-back in TiVo’s attempt to enforce its patent rights.

Read the full opinion in TiVo v Echostar, if you dare.

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