Law of Cards: Electronic Trading Card Patent Lawsuit Update

Law of Cards: Electronic Trading Card Patent Lawsuit Update

To emphasize just how slowly the judicial system works (especially for patent cases), let's check in on the Wildcat v. 4Kids Entertainment case. This is the patent infringement action against a plethora of defendants, including Konami, Panini, Topps, Wizards of the Coast, etc. on a patent that concerned electronic trading cards.

To get everybody back up to speed, this case was filed on July 1.

Last year.

So, what's happened in this case in the year since the filing?

Very little. Although there are nearly 150 filings in the case, the only ones of note are that 1) two defendants (Chaotic USA Entertainment and Nintendo) were dismissed without prejudice, 2) the rest of the defendants are trying to sever, dismiss and/or transfer the action and 3) a schedule for future events was set.

Legal translation of 1: When parties are dismissed "without prejudice," the plaintiff can go back and sue them again. So, while Chaotic and Nintendo are out of the case, if Wildcat so chooses, it can sue them all over again on the patent.

Now, dismissals without prejudice typically indicate that a settlement occurred where no money exchanged hands. Kind of a "let's both just walk away from this one" agreement. If money did change hands and you are a defendant, you want the dismissal to be with prejudice, which means you can't be sued again. However, in order to get a dismissal like that, you'll need to pay (a plaintiff is usually not going to give a defendant anything for free).

If I had to guess, Chaotic and Nintendo might have shown the plaintiff that they don't infringe the patent. Therefore Wildcat released them from the suit with a warning that if they do anything suspect in the future, they'll be right back in the mix.

Legal translation of 2 (the remaining defendants trying to dismiss, sever or transfer the case): Due to recent changes in the law, all alleged infringers in a patent infringement lawsuit need to have some type of relationship with one another. Before the law changed this year, patent holders could sue multiple infringers with one case, and that suit generally was not broken up into multiple cases. That's because in patent cases there are common issues to all defendants (such as they all allegedly infringe the same patent, or have similar products, or will work together throughout the lawsuit to weaken or invalidate the patent, etc.).

While this case predates those changes in the law, the defendants still filed motions to sever or dismiss all of the defendants in the suit because they are "not related." In the legal world, this is a standard defense attorney tactic for patent cases.

Legal translation: Believe me, there's a playbook defense attorneys use for patent cases. After you represent plaintiffs for a while, you can really look like a magician to your clients by pointing out defense moves months in advance (thank you patent defense bar!).

If the judge grants the defendants' motions to sever/dismiss, it would, in essence, blow up the case into ten different lawsuits, some of which would be transferred to other courts throughout the country. Now, there are a lot of common (and complex) issues that these different courts will need to address in isolation from each other, like defining what the patent's claim terms mean. Because these courts don't talk with each other, they invariably issue inconsistent orders. That then becomes a huge mess (e.g., defendants in one case telling the court, "Hey! That judge bought the same argument you just rejected!") that will slow everything down until years later when the court of appeals that hears patent cases can straighten things out. And then they'll send all of the cases back to the various courts they came from.

Legal translation: I may be mocking and slightly ranting against the patent defense playbook, but it works.

And, although the case will have been blown up into 10 separate cases, the defendants will still all work together behind the scenes to coordinate their legal strategies.

Turning back to the Wildcat case, the defendants followed the standard defense attorney playbook tactic to a T. All of the motions were filed and fully briefed in May, but as of yet, the court has not ruled on the motions.

Legal translation of 3: Despite these motions, the court did issue a scheduling order that outlines how this case will proceed if it stays in this court. This order is not an indication that the defendants will lose their motions (I think that some, if not all, of the defendants' motions will be granted actually). Courts just do this to keep the ball rolling. As you can see, patent infringement cases last long enough already.

The key dates here are the claim construction hearing on December 20, 2012 (this is where the judge will determine what the patent covers), and the start of the jury trial, set for July, 2013.

The claim construction hearing date interests me the most (and not just because it is one day before the Mayan Calendar allegedly ends). Prior to then, both sides will file briefs, and those briefs will indicate the future issues of the case. Consider it a sneak peak, of sorts.

Once those briefs are filed, I will have plenty more to write about regarding this case.

So, while nothing much happened in the first year of the suit, I expect a lot could happen in the next year.

However, I emphasize could, because in addition to the motions to sever/dismiss, the defendants took another page from the patent defense attorney playbook and filed a request for reexamination of the patent with the USPTO.

Legal translation: A reexamination is where the defendants tell the Patent Office, "Hey, we think you guys screwed up. How about a do-over?" If the Patent Office acquiesces, that gives the defendants two chances to kill the patent: one before the Patent Office and another before the court. Also, if the Patent Office agrees to reexamine the patent, defendants will also try to pause the court case until the Patent Office finishes (which takes years).

As you can see, the reexam (if granted) is a powerful tool in the defendants' playbook.

In this case, the Patent Office has not yet decided if it will initiate a reexamination proceeding. Because the defendants waited a year to ask for it, they might have waited too long. Trial dates in the Eastern District of Texas are precious. Once they are allotted, the court feels committed to the case, and will be less inclined to stay the case for a Patent Office reexam that is likely to take multiple years. Heck, the judge and jury will already decide all of the issues (and more) that the Patent Office would decide years in advance. Given that, there is no need to pause the case.

However, if the case is blown up and transferred to multiple other courts (who haven't already had the case for a year) and the Patent Office decides to go forward with a reexamination, those courts will stay the case. And this case will not wrap up for a long, long, long time.

Yes, patent cases move at a glacial pace, and the timeline of this case is unfortunately pretty typical. Two years to trial is actually somewhat on the fast side, but given the other actions going on, it would not surprise me if this case lasts for three more years (yes, that's right -- three additional years) without a trial.

Sounds crazy, but welcome to the slow world of patent litigation.

And, here's something else you likely didn't know. The last few pages of the patent defense playbook contain the Mayan Calendar, which reassures all defense attorneys that really, it doesn't matter whether you slow the case down for six months, or a year, or even five years. Just slow it down enough so you get past December 21, 2012.

After that, allegedly, nothing else matters.

Legal translation: Yes, that's right. Let's get some fear mongering going about the Mayan Calendar already. Don't you guys know that's only four months away?!?!

The information provided in Paul Lesko's "Law of Cards" column is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in the sports industry. This information is not intended to create any legal relationship between Paul Lesko, the Simmons Browder Gianaris Angelides & Barnerd LLC or any attorney and the user. Neither the transmission nor receipt of these website materials will create an attorney-client relationship between the author and the readers.

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Paul Lesko is a shareholder at Simmons Hanly Conroy and the chair of its Intellectual Property Department (http://www.simmonsfirm.com). Don’t hold the fact that Paul is a lawyer against him, he’s also a rabid baseball and college basketball fan, and an avid baseball card collector. Paul can be found on Twitter @Paul_Lesko and Google+.

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