Blackboard Loses Most Claims, Wins Millions And Injunction

Posted on | May 23, 2008 | No Comments

2008-1368 Blackboard v. Desire2Learn
ED/TX 9:06CV155

Both parties appeal from the final judgment of Judge Ron Clark finding that claims 1-35 of Blackboard’s 6,988,138 patent are invalid (indefinite), but confirming the jury’s verdict that claims 36-38 are not invalid and infringed.  The jury also awarded Blackboard over $3 million in lost profits and royalties, and the court granted a permanent injunction.  This case previously received some coverage from Michael Smith and Phil Brooks.

Despite the judgment, however, the issue is still far from settled:  in addition to the appeal, the ’138 is currently in reexamination and the initial office action (see More Reading below) has rejected all of the claims, including 36-38.

Infringement:  Desire2Learn’s JMOL asserted several grounds for non-infringement:

1) there is no substantial evidence to support a jury finding that all steps of the asserted method claim are performed within the U.S.;
2) there is no substantial evidence to support a jury finding that any single entity performs each and every step of the asserted claims;
3) there is insufficient evidence of specific instances of infringement;
4) there is insufficient evidence that all steps of claim 36 were performed after the issuance of the ´138 patent; and
5) there is no substantial evidence of indirect infringement.   

With scant discussion of the specific evidence supporting the verdict, the court summarily rejected all of these arguments:

Desire2Learn seems to apply the wrong standard of review. Admittedly, it presented testimony, which, if believed, supported its positions. Blackboard, which had only to prove infringement by a preponderance of the evidence, also presented testimony, that supported the jury’s finding, so long as the jury believed that testimony. The question is not how a judge might review the cold record, but how the jury assessed the credibility of the witnesses. In this case, the demeanor of the witnesses, their reluctance to give straight answers to some questions, and the way they answered others would have supported a juror’s decision to discount what could easily have been perceived as self-serving testimony of some Desire2Learn employees and officers. The court can also easily understand why some of Blackboard’s witnesses could have been perceived as more trustworthy.

Invalidity of Claims 36-38:  The court also found that Desire2Learn failed to meets its clear and convincing burden on anticipation and obviousness.  Besides being highly critical of defendant’s expert witness, the court found fault with the defense’s overall presentation:

Desire2Learn had to prove invalidity by clear and convincing evidence. That standard must be applied to the evidence that was actually presented to the jury at trial, and not to pages of lengthy documents not actually shown or explained to the jury. Such material may technically be in the record because an expert or other witness may have referred to a few pages of a manual or book while explaining certain aspects of the accused method, or of alleged prior art, or while discussing a summary presented on a demonstrative chart. In the end, the jury still has to determine the credibility of the witness, even an expert witness.

Post-Judgment Interest:  The court awarded post-judgment interest at prime rate (6% according to the court) despite the provisions of 28 U.S.C. § 1961 setting the rate at the 1 year Treasury yield (currently about 2%).  However, Desire2Learn’s counsel apparently agreed to prime on the record, and the court reasoned that the parties could agree on a rate different from § 1961.

Stay of Permanent Injunction:  The court also declined to stay the proceedings (including the permanent injunction) pending the reexamination.  Clearly vexed at Desire2Learn’s third request for a stay, the court concluded:

Now that trial has completed and a judgment has been entered on all claims and counterclaims, there is absolutely no indication that a stay would result in any savings of time or resources. See Sovereign Software LLC v. Amazon.com, 356 F.Supp.2d 660, 662 (E.D. Tex. 2005). In fact, it is hard to imagine a more useless grant of a stay at this stage of the proceedings. 

The court also noted that the reexamination proceeding was still at the early stages and was unimpressed by the PTO’s initial rejection of the claims.  Further, Desire2Learn’s counsel had previously stated that a design-around to the claims was "easy and inexpensive" and in the "final stages."  The court also noted that it had previously delayed the start of the injunction until 11 June in order to let Desire2Learn finish its design-around.

More Reading:

Order on JMOL
Order on StayClaim Construction and Indefiniteness (Judge Earl Hines)
Initial Office Action in Reexam

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