Apple, Inc. (AAPL) has lost an important, but under publicized patent infringement jury trial regarding its iPhone. The trial was held in the U.S. District Court for the District of Delaware, a jurisdiction that is viewed as plaintiff friendly (much like East Texas) and hence tends to attract patent litigation.
The jury in the Wilmington, Delaware court found Apple guilty of willfully infringing on three patents covering camera phones, call handling, and call rejection. The next phase will be a damages trial with the plaintiff’s attorneys already crowing that they expect a “substantial” payout from Apple.
The case was first filed in 2010 by MobileMedia Ideas LLC, and covered 14 patents. U.S. District Judge Sue L. Robinson was initially reticent to bring the case to trial, but she agreed to this year, when the plaintiffs whittled their list down to the three most important patents.
MobileMedia Chief Executive Officer Larry Horn told Bloomberg after the news was announced, “We’re very pleased. We think it’s justified. We’re not in the litigation business [we just want to license].”
Oh, it might be worth mentioning that MobileMedia is co-owned by Android phonemaker Sony Corp. (TYO:6758), Windows Phone maker Nokia Oyj. (HEX:NOK1V) and MPEG LA, a company specializing in licensing video codecs. In that regard, MobileMedia is what is called a “shell company” — a company that does not produce anything, but which one or more companies shuffle patents to for the purpose of suing.
The patents used in the case came from Sony and Nokia.
Under current U.S. patent and contract law, often times settlements between two companies don’t necessarily apply to their shell firms. Thus Nokia, for example, can sue Apple via MobileMedia without breaching its settlement from when it directly sued Apple. In most cases licensing settlements are written such that suing the licensed party breaches the contract.
Also by using shell firms, companies like Sony and Nokia can escape negative publicity of appearing overly litigious.
Steve Bauer, a partner at Proskauer Rose LLP — the law firm representing the victorious plaintiffs — wrote in an email to Bloomberg, “This was a very difficult case. It required us to take the jury back to 1994-1998, when these technologies were first invented.”
Apple has been struggling in the patent sphere of late, seeing the “Steve Jobs” multi-touch patent and the key “rubber-band” patent invalidated. Apple also was found to have infringed on a Swiss company’s protected clock design.
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