Vintage Filings Legal Blog

Bose announced that it has settled its litigation against Phitek Corporation at the U.S. International Trade Commission (ITC) and U.S. District Court of Massachusetts.  Bose’s complaint charged that Phitek manufactured headphones for Audio-Technica and Creative Labs that infringe Bose U.S. patents protecting the active noise-reducing headphone technology found in Bose QuietComfort headphones.

As part of the settlement, Phitek has agreed to make certain changes to its headphones to be clear of the Bose patents at issue.

Bose has made significant investments in the research, development, engineering and design of the proprietary technologies found in its headphones. These patented Bose technologies enable the unique performance found in the QuietComfort 2 and QuietComfort 3 Acoustic Noise Cancelling headphones. Today, Bose headphone products are sold in the United States and throughout the world.

Crossroads Systems, a provider of solutions to connect, protect, secure and restore data-at-rest, today announced the settlement of its outstanding patent litigation with more than seven providers of network storage solutions. Under the terms of these settlement agreements, each of these companies received a non-exclusive license to Crossroads’ noteworthy patented access controls technology. The patents Nos. 6,425,035 and 7,051,147 are critical to high-technology companies offering robust storage security solutions as the patents cover the ability to control access between hosts and storage devices in a networked storage environment. Filed on May 22, 2008, the lawsuit claimed that these companies sold solutions that used one or both of U.S. patents.

“Our settlement of this litigation demonstrates Crossroads’ continued desire to deploy robust security solutions worldwide using Crossroads’ leading-edge inventions and reiterates our commitment to protect our extensive portfolio of intellectual property,” said Rob Sims, President and CEO of Crossroads Systems. “While our focus continues to be on the delivery of highly-reliable industry leading-edge storage products to customers and partners worldwide, including our recently released awards-winning product Crossroads ReadVerify Appliance™ 3.0, we also want to promote the deployment and defend usage of our leading-edge intellectual property as necessary.”

Today McKesson Corporation, one of the nation’s largest drug wholesalers, announced it would pay $350 million to consumers and health insurers, who were overcharged for several hundred prescription drugs since 2001. Spector Roseman Kodroff & Willis, PC was co-lead counsel in the class action, representing plaintiffs including the Teamsters Health & Welfare Fund of Philadelphia Vicinity, which provides benefits to more than 24,000 area workers.

Spector Roseman Kodroff & Willis partner, Jeffrey L. Kodroff said, “We have spent our legal careers trying to ensure that consumers get a fair shake by affording them access to the courts to right wrong doings. When people are overcharged for products/services, like they were in this prescription drug scam, they have a right to recoup their losses. We are proud to help and are optimistic that this settlement will have a lasting impact, as we anticipate that there will be a reduction in the future cost of hundreds of drugs.”

The $350 million McKesson settlement will pay back overcharges to class members, including among others the Philadelphia Federation of Teachers Health & Welfare Fund represented by co-counsel Marc Edelson of Edelson & Associates in Doylestown, PA. It provides money to both health insurers and consumers who paid for their medicines at prices based on the average wholesale price, a standard that is used by pharmacies and insurance companies as the basis of prescription payments. The case alleged that, starting in 2001, McKesson conspired with First Data Bank to arbitrarily increase the AWP price on hundreds of drugs by five percent at the expense of consumers and health insurers, who overpaid billions of dollars for prescription drugs.

The McKesson settlement is the second half of the resolution of this litigation. The plaintiffs had previously settled with co-defendant First Data Bank, for valuable injunctive relief. First Data Bank and Medi-Span, another publisher of drug information who was sued separately, have both agreed to pay more than $1,000,000.00 to class members, and, most importantly, to reduce the AWP price on hundreds of drugs within 90 days of the court’s approval, according to Kodroff. The settlements are awaiting final approval by US District Court Judge Patti Saris in Boston.

What typically happens after a patent lawsuit?  I’ve seen literally thousands of patent infringement lawsuits comes across my desk, and it never ceases to amaze me how they ALL seem to have the same result: a licensing agreement. It seems to me that the lawsuits would be able to be avoided entirely if, prior to launching a service, these companies would have hired a solid patent attorney to research if any infringement was taking place.  A recent case study for this process happened this week:

Public Service Enterprise Group (PSEG), an energy company with 2.1 million electric and 1.7 million natural gas customers located throughout New Jersey, headquartered in Newark, N.J., and Ronald A. Katz Technology Licensing, L.P., headquartered in Los Angeles, announced this week the settlement of patent litigation between the parties. As part of the settlement, PSEG has agreed to pay an undisclosed sum for a nonexclusive license under a comprehensive portfolio of patents that Katz owns relating to interactive voice applications.

The nonexclusive license covers services offered by Public Service Enterprise Group in the “Energy and Utility Services” Field of Use, including customer service provided via automated systems and live agents. Other terms of the license were not disclosed.

The patents held by Ronald A. Katz Technology Licensing, L.P. cover a wide range of interactive technology including automated forms of: customer service, prescription refill services, securities trading, merchandising, prepaid services, telephone conferences, registration, home shopping, as well as functions involved in securing information from databases by telephone, interactive cable transactions, and various other uses of toll free and local numbers.

Ronald A. Katz stated, “We welcome Public Service Enterprise Group to the large group of energy and utility companies who have purchased license rights under this portfolio.”

Mr. Katz is the named inventor on a large number of patents primarily in the fields of telecommunications and computing. He also formed Telecredit, Inc., the nation’s first on-line real time credit and check cashing authorization system, and was awarded a patent as co-inventor of that technology.

3M and Illinois Tool Works Inc. (ITW) have finally come to a mutual settlement concerning issues in patent infringement litigation brought by 3M in June 2006 in the U.S. District Court for the District of Minnesota relating to 3M’s patent covering its paint preparation system products.

So what does 3M do?  They are a recognized leader in research and development, 3M produces thousands of products for dozens of diverse markets. 3M’s core strength is applying its more than 40 distinct technology platforms – often in combination – to a wide array of customer needs. With $24 billion in sales, 3M employs 79,000 people worldwide and has operations in more than 60 countries. For more information, visit www.3M.com.

Under the terms of the agreement, the specifics of which are confidential, ITW has acknowledged the validity and enforceability of 3M’s patent rights and has taken a license under 3M patents. In addition, the parties have entered into a supply agreement under which 3M will supply a portion of ITW’s DeKups system in the future.

A jury in U.S. District Court in Minneapolis returned a damages verdict on Oct. 22 in favor of Global Traffic Technologies, LLC, headquartered in St. Paul, Minn.  Global Traffic Technologies was awarded $6.75 million in damages for infringement of U.S. Patent No. 5,172,113 by defendant Tomar Electronics, Inc. The jury trial for damages began on October 2, before Chief Judge Michael J. Davis.

Global Traffic Technologies markets and sells the patented Opticom^™ Infrared System for emergency vehicle preemption and transit signal priority. Tomar Electronics, based in Gilbert, Ariz., marketed and sold the Strobecom II traffic preemption system.

The original claim against Tomar Electronics, Inc. was filed on April 13, 2005, for infringement of U.S. Patent 5,172,113. On December 27, 2007, Global Traffic Technologies won an order of infringement against Tomar Electronics, when the court found Tomar had infringed multiple claims of this patent.

Cal-Bay International (OTC: CBAY) this past week announced that Cal-Bay International has reached an amicable settlement with one of the company’s largest creditors in an out of court settlement agreement, case # 07CC08736.

The settlement includes full relief of the debt to Cal-Bay and the removal of judgments against the company. The agreement also calls for satisfaction of the debt “With Prejudice.”

Melinda Rice of Cal-Bay International, Inc. commented that the company’s legal counsel reached an amicable settlement of the lawsuit “With Prejudice,” ensuring the permanent resolution of the issue.

The settlement terms are to remain confidential but will not result in a new issuance of the company’s stock to satisfy the agreement.

Shareholder lawsuits can be difficult to go through for companies, however they are an all too common occurrence.  Which is why I always am happy to see longstanding disputes get resolved. Take as a case study the Xethanol Corporation, a renewable energy company, announces that on October 6, 2008, the United States District Court for the Southern District of New York approved the settlement agreement negotiated between Xethanol and a class of plaintiff shareholders who had sued the company on October 24, 2006. The Final Approval Order also dismisses the action, which is now concluded.

The settlement agreement was reached on November 28, 2007 during a mediation overseen by a retired United States District Court Judge in West Palm Beach, Florida, and attended by counsel for plaintiffs, counsel for the company and the individual defendants and counsel for the company’s insurance carriers.

David Ames, President and CEO of Xethanol stated, “We are very pleased that the court has approved the settlement and that this matter is now behind us.”

So what happens when you go to battle with Visa?  Well, if you’re Cryptography Research it’s just a regular day at the office.  When you have strong patent protection, you will always have a solid position in the marketplace.  A great illustration of this happened this week when Cryptography Research signed a definitive agreement settling its litigation against Visa, under which Visa will become a licensee of Cryptography Research’s patent portfolio covering countermeasures to Differential Power Analysis (DPA). The license fee and other settlement terms are confidential per the agreement.

So what is DPA?  Differential power analysis is a side-channel attack which involves statistically analyzing power consumption measurements from a cryptosystem. The attack exploits biases varying power consumption of microprocessors or other hardware while performing operations using secret keys. DPA attacks have signal processing and error correction properties which can extract secrets from measurements which contain too much noise to be analyzed using simple power analysis. Using DPA, an adversary can obtain secret keys by analyzing power consumption measurements from multiple cryptographic operations performed by a vulnerable smart card or other device.[1]

“We are happy to add the world’s largest payment system to our growing list of DPA licensees,” said Paul Kocher, president and chief scientist at Cryptography Research. “Following the recent announcements of signed agreements with Infineon and Renesas, it is clear that the major players at all levels of the smart card industry are recognizing the value and importance of CRI’s DPA technology and the strength of our intellectual property in the area of tamper-resistant semiconductors.”

In the past decade, companies have been tirelessly ensuring that their brick and mortar locations are fully handicap accessible, and now the movement is migrating online.  The most recent settlement came this past month when The National Federation of the Blind (NFB) and Target (NYSE: TGT) announced today that they have settled a class action lawsuit regarding access to the Target.com Web site by blind people.

Dr. Marc Maurer, President of the National Federation of the Blind, said: “Access to Web sites is critical to the full and equal participation of blind people in all aspects of modern life. The National Federation of the Blind is pleased to have reached a settlement with Target that is good for all blind consumers, and we recognize that Target has already taken action to make certain that its Web site is accessible to everyone. We look forward to working with Target in the coming months to help make additional improvements that will enhance the experience of blind visitors to Target.com. It is our sincere hope that other businesses providing goods and services over the Internet will follow Target’s example and take affirmative steps to provide full access to their Web sites by blind consumers.”

Bruce Sexton, Jr., a named plaintiff in the case from the beginning, added: “This settlement marks a new chapter in making Web sites accessible to the blind. I commend Target for committing to being a leader in online accessibility.”

Steve Eastman, president of Target.com, said: “First and foremost, Target is committed to serving all our guests. As our online business has evolved, we have made significant enhancements in order to provide an accessible shopping experience. We are pleased to have reached an agreement with the National Federation of the Blind regarding the accessibility of Target.com for individuals who use assistive technologies and will work with the NFB on further refinements to our Web site.”

As part of the settlement, Target will establish a $6 million fund from which members of the California settlement class can make claims. In addition, the National Federation of the Blind will certify the Target Web site through its Nonvisual Accessibility Web Certification program once agreed upon improvements are completed in early 2009. Target and NFB have agreed to a three-year relationship during which NFB will perform accessibility testing of the Target Web site.

It may be a good idea for other consumer facing online shops to begin researching how they can become fully accessible to all audiences.