Wednesday, October 10, 2007

Oklahoma Jury Tags Patentee $1.5M for Tortious Interference for Asserting Patent

Dickson Industries, Inc. v. Patent Enforcement Team LLC - W.D. Okla. (CIV-02-0467-HE)

The five-year case involved rumble strip grinding machines, which etch rough lines onto highway shoulders to warn drivers when they drift out of the driving lanes. Patent Enforcement Team (PET) obtained a patent claiming to cover the grinding machines Dickson manufactured, and proceeded to send demand letters to Dickson, Dickson's customers, and potential customers. Soon thereafter, Dickson's rumble strip equipment business began drying up.

Dickson filed a declaratory judgment action near its home town of Tecumseh, Oklahoma, claiming that the patents were invalid, and also accused PET of tortious interference for acting intentionally and with malice toward Dickson and its customers. After a two-week trial, the jury returned a verdict that not only invalidated PET's patent, but also found PET liable for tortious interference, granting Dickson $503,873 in actual damages, and $1,037,363 in punitive damages.

To see the verdict form, click here (link)

According to the jury, Dickson succeeded in showing that:

(1) Dickson had a valid business relationship or expectancy;

(2) PET knew or under the circumstances reasonably should have known about the business relationship or expectancy;

(3) PET interfered with the business relationship or expectancy;

(4) PET’s alleged interference was malicious and wrongful, and neither justified, privileged, nor excused; and

(5) Dickson suffered damages as a direct result of PET’s alleged interference.

This is an unusual case, since owners clearly have the right to enforce their patents, but the jury felt that PET's actions in this case were over the line.

Another interesting rub is the court's jury instructions regarding obviousness and invalidity. PET's patent survived a pre-KSR reexamination request, where the examiner utilized the TSM test, which KSR later disavowed. According to this jury instruction, the court appears to suggest that the KSR decision negated the presumption of validity:

During the reexamination of the ‘069 patent, the patent examiner allowed the patentee to overcome the initial obviousness rejection based on the examiner’s application of what is known as the teaching, suggestion, and motivation test. After the reexamination in this case was completed, the U. S. Supreme Court concluded, in the course of other litigation, that the teaching, suggestion, and motivation test was being improperly applied by some courts. The reexaminer’s determination as to obviousness of the ‘069 patent had relied on the approach of those courts which improperly applied the test. You are therefore instructed that the reexaminer’s determination as to obviousness of the ‘069 patent is not entitled to a presumption of validity due to this improper application of the applicable test.
To view the jury instructions, click here (link)

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