TIVO vs E*

[Greg Bimson]

I guess you didn't notice that the district court injunction in the KSM case that the defendant was found in violation of didn't mention infringement either. They were just told to stop using the fasteners or any similar fasteners. It was much stricter than the DVR injunction because it specifically proscribed similar items.

Because there was an admission of infringement. That admission of infringement turned into a consent decree, where the parties basically settled. A non-standard injunction was also signed by the judge.

The valid injunction also did not adhere to Rule 65(d), as the injunction "restrained from making, using or selling insulation hangers or refractory anchors of the type and nature identified by the Plaintiff in its Complaint against the Defendant for the remainder of the life of U.S. Patent No. 3,738,217 issued June 12, 1973." The injunction is not supposed to refer to another document.

So KSM filed a contempt motion which was granted by the District Court, without a finding of infringement on the new Ultra-Lok I and II. Upon appeal, the infringer Jones argues that the anchor which may be "of the type and nature identified by the Plaintiff in its complaint against the Defendant" must also be found infringing. So the finding of contempt was reversed, and we get the standard created because of KSM:

Under the standard we adopt, a judgment of contempt against an enjoined party for violation of an injunction against patent infringement by the making, using or selling of a modified device may not be upheld without a finding that the modified device falls within the admitted or adjudicated scope of the claims and is, therefore, an infringement.

Simple enough.

If the infringer creates a workaround, and the patentee accuses the infringer of contempt for violations of making, using or selling these workaround devices, then infringement must be found as the device has never been evaluated before the court. That is the complete principle of KSM.

Except that is not the accusation of contempt from TiVo: TiVo is not accusing modified DVR's of infringement*1*; TiVo is accusing DISH/SATS of not following the disable order on devices already adjudged as infringements.

There were four million DVR's in customers' hands that were found infringing upon TiVo's Time Warp patent. Joe Blow's four year old 501 DVR does not become a new manufacture simply because some software was downloaded.

*1* Actually, TiVo has accused that the modifications to the 501, 508, 510, 522 and 625 are still infringing, and has asked for Judge Folsom to find DISH/SATS in contempt on sales of those units as well. The question of ongoing infringement regarding the modifications will be addressed as well, but it may be moot with respect to the disable order.

This is going to be one of those "standards" cases. This will be one that will be cited over and over again when all is said and done.

[Thomas22]

This is going to be one of those "standards" cases. This will be one that will be cited over and over again when all is said and done.

There is nothing unique about this case. It is almost identical to the KSM case. Even though infringement wasn't mentioned in the KSM order to stop using the devices, the court immediately recognized that infringement was the fundamental issue and required the district court to look at whether the modified devices infringed.

[Greg Bimson]

There is nothing unique about this case. It is almost identical to the KSM case. Even though infringement wasn't mentioned in the KSM order to stop using the devices,

Sure there is. There were 4 million DVR's in end users hands which were found infringing.

In KSM, those devices were the Therma-Lock devices. They weren't modified at customer homes to become the Ultra-Lok devices.

In TiVo, one has to take a wild leap of faith to say that the devices found infringing no longer exist, because of some action taken by the infringer. They are still working, and they haven't been disabled. Joe Blow's DVR has been in the same spot over the past four years.

[Thomas22]

In TiVo, one has to take a wild leap of faith to say that the devices found infringing no longer exist, because of some action taken by the infringer.

Not at all. That's what is required to be determined in a contempt hearing. If there is more than a colorable difference then the adjudicated devices no longer exist and there cannot be a contempt finding.

If there is “more than a colorable difference” between the accused product and the adjudged infringing product such that “substantial open issues with respect to infringement to be tried” exist, contempt proceedings are not appropriate. KSM Fastening, 776 F.2d at 1532.

[Greg Bimson]

From Thomas22:

If there is “more than a colorable difference” between the accused product and the adjudged infringing product such that “substantial open issues with respect to infringement to be tried” exist, contempt proceedings are not appropriate. KSM Fastening, 776 F.2d at 1532.

Except that the accused product is the adjudged infringing product.

Joe Blow's four year old DVR has been found as an infringement. DISH/SATS pushed some software to it.

So when one gets down to it:

Under the standard we adopt, a judgment of contempt against an enjoined party for violation of an injunction against patent infringement by the making, using or selling of a modified device may not be upheld without a finding that the modified device falls within the admitted or adjudicated scope of the claims and is, therefore, an infringement.

The KSM standard. It applies when a patentee accuses an infringer of "making, using or selling" a modified device which the patentee believes still infringes. That is not the charge, here. Therefore, that is not the standard that should be used.

The charge is that DISH/SATS has not disabled the receivers adjudged as infringements. The boiling question is if a download changes the judgment against that receiver.

So the big question is if a software download changes the judgment on the devices. If Judge Folsom finds that the devices still exist, then he will find contempt without looking at KSM. If Judge Folsom finds that the devices in question no longer exist, then KSM must apply.

[Thomas22]

From Thomas22:Except that the accused product is the adjudged infringing product.

The accused product is the modified product. TiVo has already admitted that there has been a modification.

[Greg Bimson]

But the KSM standard only applies when a patentee accuses an infringer of "making, using or selling" a modified device which the patentee believes still infringes.

So KSM doesn't apply to existing devices ruled as infringing.

Like I said, the only question is if a software download changes the legal status of the devices adjudged as infringements, to non-adjudicated.

[Thomas22]

But the KSM standard only applies when a patentee accuses an infringer of "making, using or selling" a modified device which the patentee believes still infringes.

I'm pretty sure that TiVo thinks the modified DVRs still infringe.

[Greg Bimson]

I'm pretty sure that TiVo thinks the modified DVRs still infringe.

They are asking for that finding through the damages section; they did ask for that ruling when countering how the new software is "infringement-free".

[jacmyoung]

And there you have it. The judge needs to decide if KSM applies or not...

KSM applies to all contempt rulings in patent infringement cases when design around is an issue, the Circuit Court established their standard when they made the decision in KSM and asked all district courts to apply such standard, and it will have to be applied, that is not my words but the words of the Circuit Court, until such time a new standard is establised to supersede it.

If one reads the 9/4 transcript it is clear Judge Folsom was very perplexed by TiVo's attempt to dismiss KSM. Of course he did not say TiVo was wrong, just to understand in what logic was TiVo operating.

In a summary proceeding, the burden of proof is always on the mover (TiVo in this case), and the burden of proof is higher than in a regular trial too.

It is not enough for TiVo to simply dismiss all the cases such as KSM, for TiVo to prevail they need to cite cases to prove their own argument. TiVo failed to do so. The closest one, as the judge called it, is one which the injunction was ruled in violation of Rule 65(d), but prior to that the infringer simply continued infringement without any attempt to design around the patent, and contested the authority of the order during the contempt proceeding.

This "closest case" clearly does not prove anything here, it is not even close. Here the order is correct, and E* designed around the patent, and E* is not arguing now that the order is wrong. TiVo needed to know what was the argument before they cited a case.

TiVo cannot prove their case if they cannot cite a single relevant case in which an infringer was found in contempt after they designed around the patent with respect to the adjudicated products, and the design around was more than colorable.

It is not that TiVo's lawyers did not do a good research job, it was because they could not find one such case. In all the cases I have read, the infringers had always avoid a contempt ruling after they designed around the patent, regardless if the products were once adjudicated to have infringed, or whether the products were sold or in use already or not. Yes regardless what was even said in the injunction.

So TiVo was left to change the argument, insisting that E* was contesting the injunction, which as the E* lawyer told the judge on 9/4 repeatedly, no, E* was not contesting the order, E* agreed with the order, and E* believed they are in compliance with the order through legit design around, as KSM had told them to do.

I am not here to go circular with Greg again, only to point out that TiVo failed to cite a relevant case to prove their argument that even after a successful design around there can still be a contempt, just because how TiVo had interpreted the injunction in certain way. It is very easy for the judge to tell the parties how his injunction should be interpreted, as demonstrated by the StarBrite case E* cited. And one thing StarBrite taught us is, the judge can explain his injunction in a way we cannot even possibly imagine, if that ensures his ruling is in line with Rule 65(d).

So I think one reason the judge is taking so long with this is that both of those issues are difficult ones that require a good bit of thought and consideration. If the answer were as crystal clear as each side's argument above would seem to make it, the judge would have had an easy time picking the obvious right one and issued an order months ago. Now, it is also true that he is busy with other cases, and he may be hoping that a delay might let market forces push E* and TiVo to the negotiating table; but in my opinion, those are lesser reasons for the delay than the scholarly legal issues brought up in this case.

I think it is likely that the judge is too busy, by just looking at his schedule after 9/4 up to the end of the year, he had been and still is totally booked. People complain about our legal system, how costly and how long it takes to resolve legal disputes. I think the only way to help the situation is to increase the federal funding, a pipe dream at this point.