» Patent, Trademark and Copyright Litigation

ZeniMax Files Lawsuit in Texas District Court, Claiming Stake in Oculus Virtual Reality Technology

A video game company has filed a federal lawsuit in Northern Texas district court against virtual reality headset maker Oculus. ZeniMax Media is claiming that Oculus misappropriated intellectual property for use in its Rift virtual reality headset. 

Facebook recently purchased Oculus for $2 billion.

In its lawsuit, ZeniMax claims that it directed the development of the Rift software and designed its specifications and functionality. The suit alleges that John Carmack and other ZeniMax employees provided Oculus with confidential programming code and technical expertise that transformed the Rift prototype and made it a commercially viable virtual reality headset. 

ZeniMax is the parent company of Id Software, which Carmack cofounded.

Allegedly, Carmack first encountered the Rift prototype in April 2012, in a “primitive” form that was “little more than a display panel.” The suit argues that Oculus founder Palmer Luckey had not developed a viable display and did not have the technical expertise to do so. The lawsuit further alleges that Carmack and other ZeniMax employees made improvements to prevent distortions and reduce latency of the display’s reaction to movement.

Additionally, the plaintiff claims that ZeniMax employees worked on the Oculus Rift project under a nondisclosure agreement, but that talks broke down on the terms of a formal working relationship. Allegedly, Oculus offered to sell ZeniMax a three percent stake in the company for $1.2 million, but ZeniMax maintained that it should have a much larger equity stake. According to the lawsuit, an agreement was never reached, and Oculus never provided ZeniMax with any compensation. The lawsuit notes that John Carmack left ZeniMax to join Oculus as Chief Technology Officer in August 2013. Five other ZeniMax employees left for Oculus as well.

ZeniMax is seeking an unspecified amount in damages for misappropriation of trade secrets, breach of contract, copyright infringement, unjust enrichment, unfair competition, trademark infringement and false designation.

Texas Company Sues Cisco for Patent Infringement

A small data storage-technology company filed lawsuits against Cisco Systems Inc. and others in federal court in Texas, claiming patent infringement.

The lawsuits were filed by Crossroads Systems Inc. against Cisco, NetApp Inc. and Quantum Corp. in U.S. District Court for the Western District of Texas, alleging infringement of U.S. Patents 6,425,035 and 7,934,041, part of Crossroads’ 972 Patent Family.

Crossroads has licensed the patent family to more than 40 different companies since 2001, receiving more than $60 million in revenue from licenses and settlements.

The lawsuits allege that the defendant companies have incorporated technology patented by Crossroads into their data-storage systems, including storage arrays and series switches.

Crossroads said that its technology is fundamental to efficient and secure access to network data-storage systems. The company said that it always seeks to avoid litigation, but that it has a responsibility to its shareholders to pursue legal action when companies engage in unlicensed use of its patented technology.

The lawsuit is seeking injunctive relief and monetary damages. Crossroads is based in Austin and employs about 60 people. The company is led by CEO Richard K. Coleman Jr.

Crossroads also filed patent-infringement lawsuits of a similar nature against Dell Inc. and other companies in November 2013.

Texas Company Sues Cisco for Patent Infringement

A small data storage technology company has filed lawsuits against Cisco Systems Inc. and others in Texas federal court, claiming patent infringement.

The lawsuits were filed by Crossroads Systems Inc. against Cisco, NetApp Inc. and Quantum Corp. in U.S. District Court for the Western District of Texas, alleging infringement of U.S. Patents 6,425,035 and 7,934,041, which are part of Crossroads’ 972 Patent Family.

Crossroads has licensed the patent family to over 40 different companies since 2001, receiving more than $60 million in revenue from licenses and settlements.

The lawsuits allege that the defendant companies have incorporated technology patented by Crossroads into their data storage systems, including storage arrays and series switches, illegally.

Crossroads said that its technology is fundamental to efficient and secure access to network data storage systems. The company stated that it always seeks to avoid litigation, but that it has a responsibility to its shareholders to pursue legal action when companies engage in unlicensed use of its patented technology.

The lawsuit is seeking injunctive relief and monetary damages. Crossroads is based in Austin and employs about 60 people. The company is led by CEO Richard K. Coleman Jr.

Crossroads also filed patent infringement lawsuits of a similar nature against Dell Inc. and other companies in November 2013.

Eye Clinic Denied Injunction Due to Improper Noncompete Agreement

A Texas court has denied an injunction requested by a Houston eye clinic based on an improper noncompete agreement.

LasikPlus of Texas requested a court order to enforce the covenant not to compete against a doctor, formerly employed by the clinic, who planned to open his own clinic nearby. The Fourteenth Court of Appeals rejected the request, finding that the noncompete agreement did not contain language required by statute.

The agreement in question barred the doctor from opening a competing business within 20 miles of LasikPlus and from soliciting its clients for a period of 18 months following the end of his employment. The agreement included terms allowing for reasonable enforcement even if it was found to be unreasonable in scope, and it expressly provided for an injunction if the agreement was violated.

However, the agreement did not include language required by the Texas Covenants Not to Compete Act, which provides that covenants relating to the practice of medicine must include a reasonable buyout provision. The court found that because the agreement in question contained no such provision, it was unenforceable as a matter of law.

Among other arguments, LasikPlus said that there was a mutual mistake with regard to the drafting of the agreement. However, the court noted that the doctor had submitted an uncontroverted affidavit stating that he had raised the possibility of a buyout, and that the suggestion was rejected.

Dell Accuses Optical Disk Drive Manufacturers of Fixing Prices

Dell Inc. has filed a lawsuit claiming that Hitachi-LG and other optical disk drive makers conspired to fix prices. The lawsuit by the Round Rock, Texas-based personal computer manufacturer claims that the price fixing occurred between 2004 and 2010.

According to the lawsuit, filed in federal court in Austin, the manufacturers shared information about sales, pricing and production and agreed to rig bids and fix prices for their products sold in the United States. As a result, Dell said, the company was charged inflated prices for disk drives it bought from the manufacturers.

The lawsuit claims that billions of dollars of purchases over several years were affected. The companies are accused of breach of contract and violation of U.S. antitrust laws. Under antitrust law, Dell is seeking triple damages for the overcharges.

Dell is Central Texas’ largest private employer, with about 14,000 workers in the area. The company is the third-largest manufacturer of personal computers in the world, after HP and Lenovo. Optical drives are components of personal computers and Blu-ray and DVD players. In 2011, the Justice Department said that Hitachi-LG pleaded guilty to fixing prices and rigging bids for disk drives, agreeing to pay a $21.1 million fine.

According to the Justice Department, Hitachi-LG and other companies conspired to fix prices for disk drives to be sold to Dell during a period from 2004 to 2009. Hitachi-LG is a joint venture of Hitachi Ltd., based in Tokyo, and LG Electronics Inc., based in Seoul. According to Dell’s lawsuit, four Hitachi-LG executives pleaded guilty to participation in the price-fixing conspiracy.

The lawsuit also names as defendants Koninklijke Philips Electronics NV, based in Amsterdam; BenQ Corp., based in Taiwan; Samsung Electronics Co., based in Suwon, South Korea; and Sony Corp. and Toshiba Corp., both based in Tokyo. The defendant companies declined comment, citing the pending litigation.

The lawsuit comes at a time when Michael Dell, the founder and CEO of the company, is leading a push to take the company private at a bid of $24.4 billion, or $13.65 per share. Other large Dell shareholders have said they are prepared to make a different offer to investors to take over the company, which would then continue to be publicly traded.

Dell, founded in Austin, Texas in 1984, is one of the world’s largest tech companies, employing more than 100,000 people worldwide. The company is listed as number 38 in the Fortune 500 list of top publicly traded and closely held companies.

Someone Has Challenged Your Patent’s Validity. What Do You Do?

When you accuse another party of violating a patent you own, the first thing that usually happens is the opposing party asserts that your patent is invalid. If you have already filed suit against the infringing party, that opposing party will likely file a claim that your patent is invalid in the pending suit. On the other hand, if you have just threatened action against an infringing party, that infringing party may file a suit alleging patent invalidity against you in a jurisdiction that is favorable to them. What do you do?

Hopefully, before you accused the infringing party of violating your patent you had already retained a qualified patent attorney. That attorney likely already advised you of the risks that a suit could be filed against you if you asserted that someone violated your patent. Because of this possibility, sometimes it is important to file a patent suit in the jurisdiction you prefer before sending a letter threatening suit against an infringing party. On the other hand, sometimes it might be important to attempt to work through a potential infringement before a suit is filed. Every situation is different and therefore it is important to consult with a knowledgeable patent attorney before sending a demand letter to an infringing entity.

If you send a demand letter to an infringing party and they sue you in an unfavorable jurisdiction, you will then likely be faced with a decision of whether to proceed in the unfavorable jurisdiction or attempt to transfer the case to a place you would prefer. Again, knowledgeable legal counsel should be able to advise you on such matters. Either way, arguing that a patent is invalid is a big weapon for a party accused of patent infringement. Your patent becomes essentially worthless if a court finds it is invalid. Obviously, it is crucial to have effective legal representation when the validity of one of your patents is challenged.

To learn more, contact Austin patent litigation attorney, Austin business lawyer and Austin business litigation attorney Gregory D. Jordan at 512-419-0684.

Dr Pepper Lawsuit Highlights the Complexities of a Licensing Agreement

As Dr Pepper takes one of its bottlers to court, it brings up the importance of franchisees knowing the ins and outs of their licensing agreement. In Dr Pepper/Seven Up, Inc. (DPS) v. Dr Pepper Bottling Company of Dublin, Texas, the parent company says that Dublin Dr Pepper is violating its licensing agreement. DPS owns the brand and trademarks associated with the popular soda. It has relationships with 170 bottlers throughout North America, and allows them to sell the soda with approved bottles and cans with strictly authorized logos and trademarks.

In its complaint, DPS claims the actions of Dublin Dr Pepper, “…harm the brand and its trademarks by creating confusion as to the quality, source, and origin of the brand and its trademarks and creating the potential for erosion of the trademark and brand recognition, loyalty, and value.” Dublin Dr Pepper is selling retro bottles with six different designs that remind consumers of soda fountains, use patriotic and Texas designs, and promote Dublin, Texas. The Dublin bottler is the oldest DPS bottler in the U.S. and wants to emphasize the fact that it has been open since 1891 and still uses cane sugar to sweeten the soda.

DPS acknowledges that from time to time it has special campaigns with retro and unique logos, but asserts that Dublin Dr Pepper has done this for too long and additionally sells unapproved merchandise with the coveted logo. DPS also has issue with the fact that Dublin is selling its goods online and throughout the U.S., encroaching on other bottlers’ defined territories.

When it comes to operating an entity that licenses products from another, it is important to have legal representation so that questions related to intellectual property, license agreements and contracts, and actions with competitors are addressed early on before disputes arise.

Licensing agreements can be extraordinarily complex as there are many factors and competing concerns that must be addressed. Furthermore, situations change with time. For an entity like Dublin Dr Pepper that has been in business since 1891, this can mean vast changes over the life of the business.

If a dispute arises over a licensing agreement that your business is involved in, it is recommended to retain a skilled business litigation attorney who is experienced in this area. To learn more, contact Austin business litigation attorney and Austin business lawyer Gregory D. Jordan at (512) 419-0684.

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