Grantley Downs Clear Channel

Posted on | September 11, 2008 | No Comments

2008-1508 Grantley Patent Holdings v. Clear Channel
ED/TX 06-cv-259
Judge Ron Clark

Clear Channel appeals from the judgment and orders of Judge Ron Clark confirming the jury’s verdict that Clear Channel willfully infringed Grantley’s patents and that the patents were not invalid or unenforceable.  With enhanced damages (+25% of damages), prejudgment interest and other add-ons, Clear Channel is staring down a payout of over $90 million.

The case has been covered by many others, including The Prior Ar and EDTexweblog.

Judge Clark denied Clear Channel’s post-trial motions–new trial, judgment as a matter of law, etc.–without a formal written opinion.  His reasons were apparently set forth during a June hearing and the transcript will be available in November.

Nor unsurprisingly, Clear Channel raised many, many issues and arguments related to the judgment, from erroneous claim construction through to bad jury instructions, including the usual "we don’t infringe" and the "patents’ are invalid."  In a nutshell, Clear Channel complains that Grantley argued a broad reading of the claims for infringement, but a narrow one for invalidity.

Although these arguments might have merit, the interesting one (to me) relates to willfulness.  There were 3 patents asserted, but Clear Channel knew of only 1 pre-suit.  It argued that its actions cannot be willful because it acted without an objectively high likelihood that it was infringing, outlining what it knew, when, and what it did, stating in part:

First, on an objective level, many bases exist to form a good faith, reasonable belief that the system Clear Channel was building would not be found to be infringing of a valid, existing patent. Many of these bases have been presented in this litigation, such as the existence of prior art in the radio industry and other industries, the anticipation by sources of prior art of which Clear Channel employees had intimate knowledge, and the narrowness of the claims as described, which included real time pricing based upon each prior order in response to a customer request. That Clear Channel hired a team to independently build the systems, which cost in excess of $32 million also proves an objectively reasonable and good faith basis to conclude that Clear Channel did not believe it was infringing a valid patent, but was employing the knowledge of its employees, who were skilled in the art.

Further, the evidence also demonstrates actual conclusions by Clear Channel concerning infringement, which were reasonable and good faith. Clear Channel employees read the ’691 patent and, after analysis determined they could proceed to develop BestRate without infringing the patent. (RR 824:14-825:13, 857:12-13, David Wilson of Clear Channel); (RR 1007:24-1008:18, Clear Channel “carefully developed Trade Winds not to infringe on methodologies which Maxagrid had patented,” Allan Ginsburg of Clear Channel); (RR 1021:3-12, Clear Channel believed that Trade Winds did not infringe because of the way Clear Channel was developing it, Allan Ginsburg of Clear Channel); (RR 1021:13-22, Clear Channel looked at diagrams in the patent and saw “reservations” while Clear Channel did not use reservations, David Murray of Clear Channel); (RR 1156:10-1157:5, David Murray of Clear Channel got a copy of the ’691 patent, discussed it with others within Clear Channel and decided development of Trade Winds could go forward; Trade Winds did not and does not use reservations).

The Clear Channel non-infringement position was objectively reasonable. Figures 1 and 6 of the ’691 patent show “reservations” as a central element of the system being depicted. The specifications state “FIG. 1 illustrates a system diagram of an integrated inventory management system (IMS) 10 according the invention.” ’691 patent 5:55-57. The Clear Channel persons reading and considering the ’691 patent were experienced in computer software for radio stations. RR 828:4-9; RR 925:24-926:13; RR 1098:6-1099:1. Whether their conclusion ultimately was correct is not the issue. As persons experienced in software for radio stations, they formed a “reasonable” and “good faith” belief that Trade Winds would not infringe. Reading the patent against the background of the system that it was developing, it would not have been known or obvious to Clear Channel that its non-infringement position was incorrect.

Clear Channel also complained that the jury was not asked about willfulness on a patent-by-patent basis, but rather globally, and there was no evidence that Clear Channel knew of the other two patents pre-suit.  In its June 10th Order, the court dismisses that argument in a footnote:

1 Clear Channel argued at the post-trial hearing on June 4, 2008 that a finding of wilfulness was not supported by the record because it was not aware of several of the patents prior to the suit being filed. However, there was considerable undisputed evidence that Clear Channel was aware of the ‘691 patent before Grantley commenced suit. For example, Clear Channel does not dispute that their Chief Information Officer (David Wilson) and one of their Ernst & Young consultants (Nick Cory) knew of the ‘691 patent in 2000. Grantley did not file this case until 2003. The jury was not asked about willfulness on a patent-by-patent basis, and Clear Channel did not object to this instruction. The dispute over whether Clear Channel was aware of the other three patents-in-suit prior to this case being filed was considered by the court, factored into its analysis of whether the willfulness justified enhanced damages, and reflected in the 25% enhancement. [Emphasis by PATracer].

However, Clear Channel dispute this:

The record reflects, however, that Clear Channel specifically objected to the general verdict form used regarding willfulness by the Court, rather than the specific verdict form of requesting an answer of willfulness patent by patent. See 7 RR 1692:7-10 (“We object to the form because it does not distinguish which patents are willfully infringed but only gives a general submission rather than the specific verdict submission.”); see also PT RR 35. To the extent the jury found willfulness based upon knowledge of any patent, the verdict form led to the rendition of an improper verdict. Similarly, interpreting the verdict to find that Clear Channel willfully infringed all patents is inappropriate.

Obviously this is only one side of the story–still, the court must have concluded that Clear Channel’s non-infringement and invalidity arguments were very, very weak, i.e., an objectively high likelihood that these arguments were wrong under Seagate:

Accordingly, to establish willful infringement, a patentee must show by
clear and convincing evidence that the infringer acted despite an
objectively high likelihood that its actions constituted infringement
of a valid patent.  The state of mind of the accused infringer is not
relevant to this objective inquiry.  If this threshold objective
standard is satisfied, the patentee must also demonstrate that this
objectively-defined risk (determined by the record developed in the
infringement proceeding) was either known or so obvious that it should
have been known to the accused infringer.

More reading:

Clear Channel’s Post Trial Motions

Counsel:

Grantley: Robins Kaplan Miller & Ciresi (Minneapolis) and Germer Gertz (Beaumont, TX).
Clear Channel: Andrews & Kurth (Texas).

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