Monday, July 20, 2009

District Court Awards almost $2.5M In Sanctions For NPE Asserting Unenforceable Patents

Nilssen, et al v. Wal-Mart Stores Inc, et al, No. 1-04-cv-05363 (N.D. Il., June 30, 2009, order) (R. Gettleman)

Plaintiff Ole K. Nilssen held a number of patents on compact fluorescent lamps ("CFLs") and exclusively licensed them to his not-for-profit Cayman Islands foundation, plaintiff Geo Foundation, Ltd. Plaintiffs entered into a license agreement with Technical Consumer Products, Inc. ("TCP") under which TCP would manufacture "off-brand" CFLs. That license agreement required Geo to bring litigation against the defendants alleging that their sale of off-brand CFLs infringe Nilssen's patents.

At the same time, Nilssen was prosecuting another patent infringement suit against Osram Sylvania, Inc. ("Osram"). On July 6, 2006, after a six day bench trial, the judge in that case issued an opinion holding that Nilssen's patents were unenforceable because of inequitable conduct by Nilssen in the PTO. The case was exceptional and the judge awarded attorneys' fees of some $5.5 million against plaintiffs. The Federal Circuit subsequently affirmed the district court's decision (link).

The defendants in this case followed with a Summary Judgment motion to find the patents unenforceable for the same inequitable conduct. The court quickly granted the motion, noting

This court sees no reason to revisit Judge Darrah's or the majority opinions in the Osram litigation. Far too much judicial resources have been devoted to this losing litigation. Plaintiffs have been found in the Osram case to have intentionally failed to inform the PTO of related litigation, made materially false priority claims with the intent to mislead the PTO, misrepresented that Nilssen was entitled to small entity status (allowing him to maintain his patents for far less money than he would otherwise been required) and failed to cite material prior art when prosecuting its patents with the PTO. Plaintiffs' conduct was intentional, material and repeated. If this isn't an exceptional case, this court fails to see what is.

Accordingly, the parties stipulated to the following amounts, which the court recently approved:

Ikea Illinois, LLC: $994,241 Attorney's Fees, $30,196 Costs
Lowe's Home Centers, Inc.: $815,512 Attorney's Fees
Costco Wholesale Corporation: $642,500 Attorney's Fees, $6,000 Costs

Total amount: $2,488,449

Read the original SJ opinion here (link)

Read the Ikea award here (link)

Read the Lowe's award here (link)

Read the Costco award here (link)

2 Comentários:

Anonymous said...

I'm having trouble understanding why collateral estoppel wouldn't have applied to make this a non-starter. Even if the first case was on appeal to the CAFC, collateral estoppel should have kicked in the moment Darrah's judgment became final. Right?

Two-Seventy-One Patent Blog said...

I believe that the issue was that there were additional patents asserted in the second case; thus the CAFC's decision only affected 5 out of the 7 patents.


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