Jury Dings HTC in Chip Patent Trial
SAN FRANCISCO — After a long legal brawl to avoid paying licensing fees to a company it calls a patent bully, HTC Corp. has been handed a nearly $1 million bill.
A San Jose jury decided Thursday that the Taiwanese smartphone maker violated a microprocessor patent and awarded patent holders Technology Properties Limited and Patriot Scientific Corp. $958,560 in damages. However, in a partial win for HTC and its lawyers at Cooley, the jury found HTC neither infringed the patent willfully nor induced infringement and awarded just a fraction of what its adversaries had sought to recoup.
Despite the shrunken award, James Otteson, lead lawyer for Technology Properties and Patriot, cheered the verdict, which comes after a roughly week-long trial before U.S. Magistrate Judge Paul Grewal in San Jose.
"It validates the entire licensing program, not just against HTC but against other companies that make similar products," Otteson, a partner at Agility IP Law, said in an interview.
HTC wound up in court because it refused to license Technology Properties and Patriot's family of microprocessor patents, though more than 100 companies — including electronics giants like Apple and Sony — forked over money for the licenses. Instead, the smartphone maker in 2008 filed for a declaratory judgment that it did not violate the patents. Technology Properties, Patriot and licensing arm Alliacense accused HTC of direct and induced infringement in a counterclaim.
"A lot of time and trouble and money could have been avoided if they would have agreed to purchase a license earlier," Otteson said.
Lawyers at Cooley deferred to HTC for comment. An HTC spokeswoman said in a statement that the company was disappointed with the finding of infringement but heartened that Technology Properties had been granted "only a very small damages award."
"This will have no impact on HTC's business and focus on bringing innovation forward in its own products," the spokeswoman wrote in an emailed statement.
The jury's verdict has not settled all points of contention between HTC and the patent holders, Otteson said. The trial covered only HTC products through 2011, but the patent holders believe that the smartphone maker's latest devices infringe as well, he said.
Although five patents were once at stake, HTC and Technology Properties wrestled in trial over just one for microprocessors, the tiny chips that drive many popular electronics. U.S. Patent No. 5,809,336 emerged from inventor Charles Moore's creation of Shboom, a microprocessor that ran much faster than others at the time because of its dual clock system.
During his opening statement, Otteson said the invention is a key component of today's smartphones. But HTC's lawyers at Cooley argued that the company's products are powered by a distinct system. The '336 patent covers microprocessors that always operate at maximum speed, but HTC's products run at a constant speed to save battery life and be more dependable, Cooley partner Stephen Smith told the jury at the start of trial.
Smith used fighting words during his opening statement, describing Technology Properties as a non-practicing entity. He claimed many of the companies that have paid to license the microprocessor patents owned by Technology Properties and Patriot might have done so because "sometimes it's cheaper to take the license than it is to pay the lawyers."
But Otteson cried foul, insisting that Technology Properties has invested in product development, though its products have not been very successful. He said he devoted time in trial to explaining to the jury that Technology Properties was a far cry from a troll.
"It's a common tactic of big law firms that defend patent cases to try to paint the plaintiff as a patent troll," he said. "They were wrong about that."