Monday, October 15, 2012
We are providing an update on the significant developments in our ITC case, which has involved a total of 5 patents out of more than 200 and has been one component of our multi-pronged strategy to realize value for shareholders based on Unwired Planet’s intellectual property assets.
Quick Summary of Events Following Our Last Post:
- On Thursday morning, October 11th, all of the parties in the ITC investigation (Apple, RIM, Unwired Planet and ITC Staff counsel) filed a joint agreed motion petitioning Administrative Law Judge (“ALJ”) Gildea for summary determination of non-infringement (based upon the results of the claim construction orders) to immediately allow us to appeal what Unwired Planet considered to be an erroneous claim construction without having to bear the delay and substantial expense of a trial.
- Despite the agreement of the parties, the ALJ denied the joint motion and ordered the parties to proceed to trial even though he had already determined that the patents were not infringed based on the claim construction order. The trial, which would have covered all other matters besides infringement (such as validity and domestic industry), would have been futile for Unwired Planet in view of the indication from the ALJ that he intended to find no infringement.
- Rather than proceed with a costly trial, we determined that it was in our shareholders’ best interests for us to terminate the investigation, which would allow us to turn our focus to our pending cases in the Federal District Courts of Nevada and Delaware. The Delaware case was filed in August 2011 in parallel with -- and involving the same patents as -- the ITC investigation, and provides us with a fresh opportunity to seek a revised claim construction that is more favorable.
The ALJ entered several orders in the past several weeks that had the collective effect of: (i) undercutting our infringement case, (ii) requiring us to bear substantial costs to move to the next phase and (iii) postponing our opportunity to seek an appeal of the effects of these orders. As a collective result, we have terminated the investigation.
First, in his claim construction (Order No. 46), the ALJ made an unfavorable, and in our view, erroneous construction of a set of closely-related terms - the mobile device terms - in three of our patents. The error was that the ALJ limited the invention of the patents to mobile devices that do not contain a “computer module,” as shown in the following quote from the ALJ’s opinion:
Order 46, at Page 77 (emphasis added):
Based on the foregoing, the Administrative Law Judge finds that term "mobile device" in the '037 patent should be construed to mean "portable wireless two-way communication device that does not contain a computer module“
The ALJ went on to seemingly define a “computer module” as something separate and in addition to the processing power already present in a cell phone:
Order 46, again from Page 77 (emphasis added):
Based on the portions of the specification previously cited, the Administrative Law Judge finds that one of ordinary skill in the art would understand that a "computer module" would be understood to be "memory and processing power" separate from and in addition to the limited "memory and processing power" already found in a cellular phone, pager, or telephone.
We believe the introduction of computer module into the patent claims was an error. Nonetheless, based on this definition of a “computer module” and the word “separate”, infringement under this construction was still possible.
On Friday, October 5th, the ALJ issued a clarification order (Order No. 51) in which he stated that, despite the language of his prior order (No. 46) which stated how a person of skill in the art would understand the meaning of the term “computer module,” he had not meant to actually define the term and did not intend the parties to restrict the meaning of that term at trial:
Order 51, at Page 3
The ALJ also rejects any notion that the Markman provides an express definition for the term “computer module”. Thus, to the extent UP is seeking to rewrite the construction for the mobile device terms to incorporate an express definition of the term “computer module”, that request is rejected.
After this clarification order, which we believe is also erroneous, there could be no infringement. As a result, there was no way to prove infringement at the trial.
Unwired Planet, Research in Motion and Apple together, as well as the investigatory staff of the ITC, filed a joint request to stay the proceedings, enter an initial determination of non-infringement (based on the claim construction), and permit an immediate appeal. Despite the agreement of all parties, the ALJ denied this joint request in Order No. 57 and ordered the parties to proceed with a trial on the remaining issues (validity of the patents and the existence of a domestic industry) commencing immediately.
This latest decision would have created untenable consequences had we proceeded. It would have required the parties to bear the considerable expense of trial which could not possibly result in a victory for Unwired Planet. Then we would have had to wait until February 2013 for an initial determination, then further wait until approximately June 2013 for the ITC Commission to review the determination, and then (and only then) proceed to an appeal at the Federal Circuit of the ALJ’s claim construction (another 12-18 months process).
In view of the cost of the trial and the length of time before appeal, the Company decided to withdraw the ITC case and proceed in district court on these patents.
As we stated in our last blog, the ALJ’s claim construction is not binding on the court in our Delaware case. We will have a Markman hearing in front of a federal judge who is required to define the “mobile device” terms, as well as all the other disputed claim terms, as he or she sees fit without deferring to the ALJ’s views. We will have an opportunity to persuade that judge that the ALJ committed error in his definition of “mobile device.” In addition, in the Delaware case we will be able to pursue an award of damages (something that was not available at the ITC).
We will be able to reuse a substantial portion of our discovery and other work product that was created in the ITC investigation. In our estimation, we have a chance to get to the point of a new Markman ruling as fast, if not faster, than if we had proceeded forward with a trial in the ITC.
The Procedural Status:
At our request, the ALJ has terminated the investigation and we are now waiting for the Commission to certify the termination (a process that typically takes around 30 days). Once we have this certification, we can then petition the Delaware court to lift the stay on that case and move it forward.