The technology offered by many MSOs now includes not only receivers, but DVRs, high speed Internet, and even software packages for mobile devices. These innovations have led to a significant increase in patent litigation against MSOs. In particular, a recent victory by MSOs in patent litigation related to high speed Internet technology brought by Rembrandt Technologies highlights the growth of litigation in this area and the importance of developing a strategy early on in the litigation.
Rembrandt Technologies is a non-practicing entity (“NPE”), meaning that it does not develop or commercialize any of the technologies covered by its patents. The business model of NPEs, such as Rembrandt, is based around the purchase and monetization of patents. Essentially, NPEs acquire patents solely for the purpose of brining lawsuits against alleged infringers for financial gain.
During 2006, Rembrandt Technologies filed two waves of lawsuits in Delaware, Texas and New York against more than 35 companies. While some of these lawsuits were brought against various technology companies and broadcast networks, they also targeted many of the largest cable-based MSOs, such as Comcast Corp., Time Warner Cable, Inc., Charter Communications, Inc., and Cablevision Systems Corp.
In the first wave of cases, Rembrandt asserted several patents, including U.S. Patent No. 5,243,627 (the “?627 patent”), relating to the broadcast of ATSC Digital Television Standard-compliant signals, as well as various other patents relating to high speed Internet service provided through DOCSIS-compliant cable modems. The second wave of cases, however, omitted the ?627 patent, and focused solely on high speed Internet technology. Due to the similar allegations in the suits, all allegations relating to the ?627 patent were combined into a single suit for pretrial proceedings, at the request of certain defendants.
During the litigation, the Court issued an order construing the claims of the ?627 patent. Claim construction is a critical issue in patent cases where the Court interprets the meaning of the claims and, consequently, the boundaries of the patent. During the claim construction process, the Court holds a hearing to consider each side’s views before issuing a ruling which, in many cases, can be determinative of the issues of invalidity or infringement.
In this case, the Court adopted the defendants’ proposed construction of the disputed term “signal point.” Following the Court’s claim construction Order, Rembrandt was forced to concede that none of the defendants infringed the patent-in-suit, based solely on the Court’s adoption of the defendants’ construction of this single term. Although defendants continued to pursue alternative non-infringement positions, the Court ultimately entered a final judgment dismissing the suit based on Rembrandt’s concession.
Following dismissal, Rembrandt appealed the decision and argued that the lower court improperly interpreted the patent’s claims, arguing that its claim construction proposals should be adopted in lieu of defendants’ positions. The appellate court, however, found no support for Rembrandt’s position, and upheld the lower court’s constructions and, consequently, the dismissal of Rembrandt’s claims.
Given the continued technological growth in the industry and the resulting surge of patent infringement allegations, Rembrandt highlights the import of developing a defensive strategy early in litigation. By developing claim construction positions in the early stages of litigation, MSOs can work effectively to identify compelling evidence that could result in an early victory that avoids the time and expense of trial. To do this requires a complete understanding of the technology and the patent(s) at issue, as well as an early commitment to collecting all evidence necessary to support one’s claim construction positions. Although success is not guaranteed, the benefits of securing a favorable outcome prior to trial far outweigh the costs of conducting a thorough investigation early in the case.
(George Medlock is partner at Alston + Bird LLP. He is a member of the firm’s Intellectual Property Litigation Group and his practice includes all areas of intellectual property litigation and counseling, with a particular emphasis on patent litigation and enforcement. Joshua Weeks is an associate in Alston + Bird LLP’s Intellectual Property Litigation Group, focusing his practice on patent litigation and enforcement.)