The Prior Art

Patent Litigation Weekly: Upstairs, Downstairs in Marshall

This week: Both floors of the best little courthouse in Texas have been busy—producing very different results.

Taking A Big Bite Out of Apple

OPTi, Inc. v. Apple, Inc.
07-cv-00021, E.D. Texas (Marshall), filed 1/17/2007.

OPTi Inc. is a Palo Alto company that used to manufacture chipsets for computers. In 2002, after Intel decided to stop using OPTi’s chipsets, the company shuttered its operations and moved into the patent-licensing business. Since then, as OPTi said in its SEC filings, the company has been “engaged in perfecting its intellectual property position" by investigating the unlicensed use of its technology, and filing lawsuits against alleged infringers. As of now, OPTi—still a public company, although it's not traded on any major exchange—has only one full-time employee: CEO Bernard Marren. (The OPTi we discuss here should not be confused with OPTI Canada, an operating energy company.)

Last week, OPTi wrapped up the first jury trial of its new incarnation—and wound up a winner. In ruling for OPTi and against Apple, a Marshall jury awarded the former more than $19 million for willfull infringement. It's a remarkable victory, in part because the jury gave the plaintiff exactly what it had asked for and accepted its testimony on damages wholesale. OPTi's lawyers interviewed by TPA said Apple’s expert witnesses suggested that—if the computer maker had infringed—it only owed OPTi about $300,000.

PerfumeBay v. eBay: The Final Chapter

eBay has long fought to keep cyberspace clear of other websites ending in "bay," arguing that sites with "generic plus bay" names infringe its trademark. Most of these lawsuits haven't lasted long, as the defendants quickly settled. The online commerce giant recently concluded its longest and hardest-fought battle of the bunch, against an Orange County-based perfume retailer that, until recently, did business primarily at PerfumeBay.com.

PerfumeBay.com disappeared from cyberspace last week, following a court order. [Order Amending Judgment, PDF] After losing to eBay in district court in C.D. Cal, Perfume Bay president Jacquelyn Tran started blogging her experiences while she appealed to the 9th circuit. That appeal resulted in a strong win for eBay, and Perfume Bay has now changed its name to Beauty Encounter.

I first wrote about this case in October when I worked at the Daily Journal; a reprint of the story is available online. eBay was represented by Cooley Godward Kronish partner John Crittenden, who has shut down several other "generic plus bay" web sites, most recently CoinBay.biz; and earlier sites that were more "colorful," such as KinkyBay, BrickBay, and NaziBay.

"Each one has its own amusing story, and the explanations have often been the same," Crittenden told me last year. "People have said, oh yeah, 'I have a dog named Bay'. Or, 'I meant a bay of water.' Well, what bay are you talking about? The explanations really don't hang together."

Stanford Prof. Mark Lemley, arguing in favor of a federal trademark dilution law, submitted a list of 186 "something-bay-dot-coms" to Congress in 2005. [read Lemley's testimony]

Photo: shabbir / flickr

An eBay Holiday: Four Lawsuits a-Leaping

Lots of folks are busily buying Christmas presents on eBay these days, but what ends up in company stocking, legally speaking, remains to be seen. The 2007 holiday season is shaping up to be a great one for eBay the plaintiff, and a not-so-great one for eBay the defendant.

One month after eBay’s trademark victory at the 9th U.S. Circuit Court of Appeals against Orange County-based rival Perfume Bay, the online marketplace filed another trademark lawsuit on Dec. 5, this time against CoinBay.biz, an auction and sales site run by a Florida coin collector Bob Martino.

eBay Inc. v. Martino, 07-cv-06172-CRB, N. D. California.

I wanted to ask eBay if there was any relationship between the 9th Circuit win and this new lawsuit. My call to their spokesman went unreturned last week; which is understandable, since the company has some much bigger fish to fry (more below).

The Perfume Bay case that went to the 9th circuit is Perfumebay.com Inc v. Ebay Inc., 04-01358-WDK, C. D. California.

Martino didn’t want to get into specifics about the lawsuit or his negotiations with eBay, which are ongoing. He did say that the coin Web site doesn’t generate much income for him, and that coin collecting is his hobby, not his career.

"The coin dealers aren’t really able to make money with eBay," said Martino. "I wanted a site that offered no listing fees. I don’t care if I don’t make a dime. My grandfather got me into coin collecting 30
years ago."

It may not be a living, but Martino did want eBay to buy the CoinBay.biz site from him, according to the company's complaint. (available here, courtesy Eric Goldman)

He suggested that he could be bought out at a price far lower than eBay's legal team, led by Cooley Godward Kronish partner John Crittenden. eBay thought that was so funny they suggested he could pay their attorney's fees after flying out to meet them in a San Francisco courtroom.

Martino says he's complying with all the company's demands now.

He was busy re-vamping his Web site when we talked last Thursday. CoinBay has become CoinDay, and the CoinBay.biz domain now re-directs to CoinDay.com. (I doubt eBay will be permanently satisfied with that re-direct)

Martino also removed his  "Buy Now" buttons, which eBay said infringed its "Buy it Now" trademark.

Compare:  vs.

eBay has waged a long campaign to keep the Internet clear of commerce sites that end in “Bay,” and such sites often get emailed warnings shortly after they go online. But Martino’s site has been operating under CoinBay.biz since June 2006, and he says he was only contacted by eBay a couple months ago.

In the CoinBay complaint, Crittenden has the usual list of amusing "Generic + Bay" sites, including AlternaBay, EggBay, MexBay, and NaziBay. He has represented eBay in several other domain-name trademark cases, including the Perfumebay.com case.

My piece in the Daily Journal about the 9th circuit decision in that case, "Another 'Bay' Goes Down to eBay's Trademark Punch," is reprinted here.

Perfumebay.com Inc v. Ebay Inc., 04-01358-WDK, C. D. California.

Perfume Bay was ordered to stop using the Perfumebay.com domain name; the company has since asked the 9th circuit for a re-hearing, and has appealed to let it keep the domain name while it appeals. Perfume Bay president Jacquelyn Tran maintains a blog about the lawsuit at www.MakesNoScents.com.

So that’s eBay’s good news; the bad and possibly-really-bad news comes from the East Coast.

The battle royale is a big trademark battle in a Manhattan federal court that should see a decision any day now. Luxury goods maker Tiffany & Co. sued eBay in 2004, saying the online retailer hadn’t done enough to root out counterfeit goods on its site. EBay says it does plenty and that Tiffany should take a bit of responsibility. WSJ Law Blog coverage of that is here.

Tiffany (NJ) Inc. v. eBay Inc., 04-cv-04607-RJS, S. D. New York.

The Tiffany trial is over, but the rhetoric seems to be hitting a post-trial peak. Tiffany filed a brief last week saying eBay was a “rat’s nest” of fakes; eBay says a bad decision could “wreak havoc” on its business and hurt Internet commerce generally. That decision could come any day now.

In Virginia, eBay was ordered to finally pay up the $25 million plus interest it was ordered to pay in 20003 to MercExchange, a tiny company that claims it has patents covering eBay's "Buy It Now" online sales. That case ultimately went to the Supreme Court, and set a new, tougher test for when patent plaintiffs can get an injunction to kick a losing defendant out of a market.

Mercexchange, L.L.C. v. eBay, Inc., et al. 01-cv-00736, E. D. Virginia.

eBay really doesn’t want to pay this one. The patent tide has turned, and it looks like they want complete victory here. The company wants MercExchange’s patents to be re-examined under the harsh new light of a 2007 Supreme Court decision, KSR v. Teleflex, which said court have to apply a stricter test for what patents should be tossed out for being too obvious.

I’ll have more to say about MercExchange v. eBay in the coming weeks.

In the meantime, if the Tiffany case doesn’t go its way, Bob Martino’s new logo for CoinDay.com might be the best thing that happens to eBay this holiday season. Happy Hanukah.