Monday, June 23, 2008

Company Files Defamation Action Against Patent Holding Company

Cognex Corporation v. VCode Holdings, Inc. (a.k.a. Acacia), No. 06-cv-01040, (D. Minn.)

Cognex has established a reputation for aggressively defending itself against patent infringement from holding companies. Back in 2005, the company successfully defended itself against Lemelson and invalidated 14 patents asserted in the action.

Recently, Cognex has been involved in a battle-royale with Acacia subsidiaries VCode Holdings and VData LLC in the district of Minnesota. In May, Judge Joan N. Ericksen held on Summary Judgment that one of the patents-in-suit ("the '524 patent"), claiming a system for capturing and reading 2D symbology codes, was both invalid and unenforceable due to inequitable conduct by the defendants during the procurement of the patent (read the order here).

Interestingly, Cognex asserted that Acacia's actions in the case were a violation of the Minnesota Uniform Deceptive Trade Practices Act, and that certain Acacia statements made to Cognex's customers were defamatory. While the district court dismissed the deceptive trade practices claim, the court denied Acacia's motion for summary judgment on the issue of defamation.

Recently Cognex filed a second amended complaint and a motion for summary judgment, claiming that Acacia published false and defamatory statements:

24. Upon information and belief, since the filing of Cognex’s original Complaint in this action, an authorized representative of Acacia has informed at least two alleged infringers of the ‘524 patent, who have raised this action as a reason to decline or defer taking a license under the ‘524 patent, that Cognex, as recently as last summer, offered to buy the ‘524 patent (along with a related patent, U.S. Patent No. 4,924,078 (the "’078 patent")) for an eight figure sum.

25. Specifically, in an e-mail dated April 27, 2006 to a Proctor and Gamble representative, the Acacia representative, Tisha DeRiamo, stated:

Your information regarding Cognex is very interesting. I hope their attorney told you that as recently as last summer, Cognex attempted to buy the ’078 and ’524 patents from Veritec for an eight-figure purchase price. In other words, they saw value in having the patents back then. But now, as Veritec has emerged out of bankruptcy and is able to enforce its rights regarding the patents, Cognex alleges that the patents are invalid. It’s incongruous. (emphasis in original).
26. Upon information and belief, Ms. DeRiamo also stated to at least one of these alleged infringers, Allison Payment Systems, a customer of Cognex for its data matrix symbol reader products, that Veritec was in possession of a letter of intent evidencing Cognex’s alleged offer to purchase the ‘524 and ‘078 patents for an eight figure sum.

27. These statements made by Ms. DeRiamo are false. Cognex never offered to buy the ‘524 and ‘078 patents for any sum, let alone one with eight figures.
The move by Cognex is also noteworthy in light of the SCOTUS decision in Quanta v. LG Electronics - since licenses "purchased" from patentees extinguish certain rights, patent holders will be restricted in selling a company a license, and suing the company's customers (see article here).

Hat tip: Groklaw (read more details here)

Read Cognex's 2nd Amended Complaint here

Motion for Summary Judgment (link)

Acacia's Memorandum in Opposition (link)

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