PublishedFebruary 1, 2010

Beating the odds in Eastern Texas

We have discussed the Eastern District of Texas’s reputation as a haven for patent trolls.  Patent holders suing for infringement check in at a 78 percent success rate in the Eastern District of Texas, far higher than any other region in the country.However, even in the most patent-friendly districts reason prevails every once in awhile.  In a rare defendant’s victory in the Eastern District of Texas, Google successfully defended themselves against plaintiff and patent holder, Function Media, last Tuesday.  Though the story was only picked up by the local newspaper, The Marshall News Messenger, it deserves additional mention.

Function Media asked the jury for $600 million in damages.  The dispute was over three patents—which we’ll kindly label as “broad” – pertaining to customization of web ads.  The patents in this suit particularly targeted Google’s AdSense and AdWords technologies, as well as general means for providing media advertisement. Ultimately, the jury focused on only two of the patents that were in dispute.

Ed Sperling at EDN was all over this back when the lawsuit was first initiated in July 2007.  His research found that Function Media’s legitimacy was questionable at best:

“How can two people with absolutely no searchable past, working for a company that has no history, obtain three separate patents and challenge Google and Yahoo? […] From an Internet history standpoint, Dean, Stone and Function Media appear to be ghosts. There is no trace of them except at the U.S. Patent Office.”
Sure enough, a simple web search of Function Media produces the EDN article, the actual court case, and little else.
A victory for Function Media would have made one more example of the Eastern District of Texas enabling non-producing entities to take advantage of the broken patent system. Yet, in a departure from the trend seen over the past few years, jurors in Marshall, Texas, refused to side with the patent holder. Despite the argument by Function Media’s attorneys likening the patent infringement in this case to someone drilling for oil on someone else’s personal property, the jury ultimately held that the patents here, spanning nine claims total, were anticipated by the prior art and obvious.  This holding may inhibit Function Media from asserting these same patents against other new defendants.
Anecdote isn’t data, so one isolated case of a defendant coming out on top in this hostile district is not necessarily evidence of a permanent trend.  Still, it is encouraging to see reason prevail.
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