Intellectual Property: Newegg Loses Patience; Apple Wins New Damages Trial; Jawbone Targets Fitbit

By Michael Bathon | July 9, 2015

Newegg Inc. has been waiting for almost two years for a Texas federal judge to make a final ruling on a patent lawsuit it lost. On Monday it stopped waiting and asked an appeals court to force the judge into action.

Newegg lost a trial over Internet encryption technologies when a jury found that it had infringed TQP Development LLC’s patent. The judge in Marshall, Texas, has yet to enter a final order on the jury’s verdict. Without an order being final Newegg can’t formally appeal the $2.3 million judgment.

“It has now been 20 months since Newegg went to trial against TQP,” the online retailer said in its petition to the Federal Circuit court of appeals.

“That is nearly two years of unnecessary and unduly burdensome business uncertainty with respect to a substantial $2.3 million liability that the district court should have extinguished long ago,” Newegg’s lawyers said in the court filing.

Following the jury’s November 2013 decision Newegg filed a motion for a judgment as a matter of law asking U.S. District Court judge Rodney Gilstrap to throw out the award.

The judge took no action on Newegg’s request, and declined to hold an oral hearing to allow the retailer to press its claims.

In June 2014 Newegg presented the judge with a ruling in a related case where TQP lost a virtually identical patent infringement lawsuit against Intuit Inc. also in the Eastern District of Texas. In ruling the Intuit judge relied on TQP’s expert witness testimony at the Newegg trial as proof that Intuit hadn’t infringed.

The evidence “that conclusively establish that Newegg does not infringe, and especially in light of” the Intuit decision, “20 months is far, far too long to wait for a judgment to expunge the $2.3 million of liability that the jury unduly found,” Newegg argued to the appeals court.

The online retailer said being forced to keep the $2.3 million liability on its books for such a long time period has hurt its ability to hire new employees, buy small businesses, and expand its operations.

The case is In re Newegg Inc., 15-142, U.S. Court of Appeals for the Federal Circuit. The patent lawsuit is In re TQP Development LLC v. Inc., 11-cv-00248, U.S. District Court, Eastern District of Texas (Marshall).

Apple Wins New Trial Over $533 Million Patent Damage Award

Apple Inc. won a new trial over $533 million damages awarded to a Texas patent owner in February over iTunes software.

A federal judge in Texas Tuesday threw out the award and ordered a new trial related only to damages to begin in September. The judge separately denied Apple’s request for a new trial on the question of whether the company infringed patent rights.

Apple and Samsung Electronics Co. are scheduled to ask an appeals court Thursday to put their respective cases on hold while the U.S. Patent and Trademark Office reviews the validity of the Smartflash LLC patents. The agency is considering whether the ideas, related to ways to control digital content, are eligible for legal protection.

The Smartflash patents are being reviewed under a patent office process started in 2012 to take a second look at patents for conducting finance-related business methods.

The dispute is over digital rights management and inventions related to data storage and managing access through payment systems. Smartflash claimed that iTunes used the inventions in applications such as Game Circus LLC’s Coin Dozer and 4 Pics 1 Movie.

The suit against Samsung involves Google Play, the app distribution platform for Samsung products, and Google Inc. has agreed to cover some of Samsung’s costs.

The case is Smartflash LLC v. Apple Inc., 13-447, U.S. District Court for the District of Texas (Tyler). The appeals are Smartflash LLC v. Samsung Electronics Co., 15-1707 and Smartflash v. Apple Inc., 15-1701, both U.S. Court of Appeals for the Federal Circuit (Washington).

Jawbone Seeks to Block Fitbit Imports With U.S. Trade Complaint

Jawbone filed a complaint Wednesday with the U.S. International Trade Commission that seeks to bar imports of Fitbit activity trackers into the U.S. market.

The fight stems from Jawbone’s claims that Fitbit is infringing six patents, including ones for tracking a user’s sleep or activity, suggestions to achieve weight loss, protective coatings and power management.

Jawbone also accuses Fitbit of luring away employees to steal confidential supply chain and product development information.

“The poached employees have misappropriated Jawbone’s trade secret information and threaten to continue to do so as long as they remain employed by Fitbit,” Jawbone said in the trade commission complaint.

The complaint mirrors allegations in lawsuits filed last month, just before Fitbit became a publicly traded company. The Washington agency has the power to block products at the U.S. border and works more quickly than the typical U.S. court.

Flextronics International Inc., which previously made Jawbone products and now makes Fitbits, also is named in the trade complaint and accused of stealing trade secrets.

Even after the contract expired and Jawbone chose another manufacturer for its newest models, Flextronics employees continued to access Jawbone’s database of confidential documents, according to the complaint. One of those employees led the engineering team for Fitbit’s wearable products, Jawbone contends.

The ITC typically completes its cases 15 to 18 months after it institutes an investigation. The patent case is likely to be put on hold until the trade agency completes its work.

The case is In the Matter of Certain Activity Tracking Devices, Complaint No. 3075, U.S. International Trade Commission (Washington).

The district court patent case is AliphCom Inc. v. Fitbit Inc., 15cv02579, U.S. District Court for the Northern District of California (San Francisco). The trade secret case is AliphCom Inc. v. Fitbit Inc., CGC15-546004, California Superior Court, San Francisco County (San Francisco).

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