Eolas Techs. Inc. v. Adobe Sys., Inc.

The Eastern District of Texas Puts End to Eolas’ Patent Trolling By Dorothy Du – Edited by Jeffery Habenicht Eolas Techs. Inc. v. Adobe Sys., Inc., No. 6:09-cv-446 (E.D. Tex. July 19, 2012) Slip opinion (hosted by Justia.com) The United States District Court for the Eastern District of Texas denied plaintiff Eolas’s motion for judgment as a matter of law that its patents are valid or, alternatively, a new trial. Eolas Techs. Inc. v. Adobe Sys., Inc., No. 6:09-cv-446, slip. op. at 1 (E.D.Tex.July 19, 2012). Judge Davis of the district court held that Eolas, a non-practicing entity, failed to show either that the jury had insufficient evidence to find the patents invalid or that they were entitled to a new trial under the Federal Rules of Civil Procedure. First, the court found that, as required under Rule 50(b), the evidence at trial, primarily the defendant’s expert testimony, was sufficient for a reasonable jury to find that the patents were anticipated and obvious. Id. at 11, 12, 15. Second, the court determined that there was no evidence that the jury was influenced by passion or prejudice and, therefore, no new trial was required under Rule 59. Id. at 16. Ars Technica provides an overview of case. ZDNet strongly approves the decision and predicts that the Federal Circuit would deny an appeal by Eolas. Eolas was founded in 1994 by Michael Doyle, a biologist who claims he invented the “interactive web” while employed at University of California, San Francisco. In this case, Eolas sued a striking cast of defendants—including Adobe Systems, Google, Yahoo!, YouTube, and other prominent companies—alleging infringement of two patents, the‘906 patent and the ‘985 patent, which broadly cover methods to invoke apps and interact with embedded objects in web browsers. Id. at 2. After a four-day trial solely on validity, the jury issued a verdict that the two patents were invalid. Id. Eolas then filed the motion that was denied in this opinion. The court found that when “all reasonable inferences [are drawn] in favor of the nonmoving party,” as required by Rule 50(a), there was sufficient evidence for a reasonable jury to find for the defendants. Id. at 3. First, the court ruled that, contrary to Eolas’s contentions, the defendants’ expert did not improperly combine multiple prior art into a single prior art reference for purposes of anticipation. Instead, the expert provided sufficient evidence for a jury to find a single prior art reference embodied all the claimed limitations. Id. at 6–7, 11. Next, the court determined that there was sufficient evidence, particularly in the form of expert testimony, for a reasonable jury to find the patents obvious in light of several prior art web browsers, such as Viola and Mosaic. Id. at 12. Moreover, the court rejected Eolas’s argument that a finding of obviousness could not be sustained because the court excluded important secondary indicia of nonobviousness—license agreements and settlements from cases like Eolas Techs., Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005). Id. at 11. At trial, the court had excluded the evidence because the prejudicial effect of the agreements on the jury would outweigh its probative value. Id. at 14. In rejecting Eolas’s 50(b) motion, Judge Davis noted that “[j]ust because secondary indicia of nonobviousness are one element of the obviousness determination does not mean that all evidence related to secondary considerations is necessarily admissible.” Id. at 14–15. Last, the court turned to Eolas’s motion in the alternative for a new trial on the grounds that the jury based its verdict on “passion and prejudice.” Id. at 16. The court determined that a new trial was not warranted because there was no indication that the jury based its verdict on anything other than the evidence at trial. Id. at 16. This case is significant because it largely puts an end to Eolas’s patent-trolling activities against leading technology, commercial, and financial companies. Patent trolling is generally seen as a burden on society because it drives up costs and creates business uncertainty for companies that produce goods and services. The case is also notable because the District Court for the Eastern District of Texas ruled against Eolas despite that court’s pro-patent-troll reputation. Dorothy Du is a 3L at Harvard Law School.