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Patent Enforcement Companies Keep Trying to Skirt eBay v. MercExchange

By Peter Zura

Say what you will about patent enforcement companies (i.e., "patent trolls", "non-practicing entities", etc.), but they certainly aren't short on creative ideas when it comes to getting new angles on patent litigation strategy. Since the Supreme Court's decision in eBay v. MercExchange, patent holding companies have been looking for ways to tip the scales of the four-factor injunction test in their favor.

In mid-2007, the E.D. Texas heard CSIRO v. Buffalo Technology, Inc., where the court recognized "research institutions" as participants in the research group market, thus qualifying them for injunctive relief. Accordingly, companies like Wi-LAN began forming "research and development teams" that complemented their patent holdings in an effort to get move favorable treatment in the jurisdiction on injunctions. According to a CNNMoney article:

In addition to providing Wi-LAN with future patents . . . the firm's research
and development activities and university funding may also help the firm obtain
permanent injunctions in litigation, as the courts could recognize the firm's
status as a research and development organization (see earlier 271 Blog coverage here).

Rembrandt IP has taken a few creative steps of their own. When litigating contact lens-related patents against CIBA Vision and Bausch & Lomb (who competes with CIBA), Rembrandt allegedly tendered to Bausch & Lomb (B&L) a unique settlement offer: purchase rights in the patent so that Rembrandt keeps monetary damages, but B&L obtains the right to seek an injunction against CIBA if Rembrandt prevails at trial. In earlier coverage from the Troll Tracker Blog (no longer accessible), CIBA noted with the district court that this arrangement would "effectively cause" B&L to switch sides in the case, and "[b]y purporting to transfer the right to seek an injunction to B&L, Rembrandt Vision hopes to improve its chances of obtaining an injunction." While it is unclear whether this strategy will prove successful, it is worth noting that Rambrandt recently obtained a $41 million dollar verdict in the case.

Not sitting still, Rembrandt recently made news again when it was reported that the company teamed with a small Taiwanese cable modem manufacturer to make "Rembrandt" cable modems (branded "Remstream") to complement ongoing patent litigation against a multitude of cable companies. According to a court filing by defendant Comcast, ?Rembrandt has endeavored to become a supposed market participant or direct competitor of the MSOs and/or DOCSIS-compliant equipment manufacturers for the sole purpose of seeking injunctive relief and/or lost profits in its infringement suits.? Additional parties have alleged that Rembrandt's ?sham? attempts to portray itself as a cable-modem vendor violated antitrust regulations.

See Multichannel News, "Operators, Vendors Accuse Patent Firm Of Modem 'Sham'" (link)

See DowJones Newswire: "New Strategy To Obtain Injunction Alleged In Patent Dispute" (link)

See Forbes, "Patent Payday" (link)

Full post as published by Two-Seventy-One Patent Blog on June 04, 2008 (boomark / email).