ACQIS Wins Its Second Infringement Verdict—11 Years After Its First One

A Western District of Texas jury has returned an $18M infringement verdict in one of the longest-running patent litigation campaigns still active. On March 22, the jury found that ASUSTek infringed two patents asserted against it by inventor-controlled ACQIS LLC, following an extended back-and-forth over whether a claim construction ruling that led to a judgment of noninfringement in prior litigation should have a preclusive effect here. The verdict in this case is the plaintiff's second, the first handed down in 2011 in the campaign's inaugural lawsuit—which was filed all the way back in April 2009.

ACQIS filed that first case in the Eastern District of Texas, targeting server products from Appro, ClearCube, Dell, Fujitsu, HP, Hitachi, IBM, NEC, Nexcom, Oracle, and Super Micro, all sued in a single complaint (a practice later barred by joinder reforms imposed by the America Invents Act, which required that companies' infringement must arise from of the same transaction or occurrence for them to be sued together). Each of the other defendants was dismissed with prejudice by the time that trial proceeded against IBM; in February 2011, a Texas jury returned a verdict in ACQIS's favor, finding that IBM infringed claims 12 and 74 of the 6,718,415 patent, claim 56 of the 7,363,416 patent, and claims 16, 26, and 57 of the 7,376,779 patent and awarding ACQIS just over $9M in damages. By early 2012, posttrial motions were over, the court having entered judgment in ACQIS's favor, to the tune of roughly $12.2M and ACQIS having filed a sealed motion to amend that judgment and impose sanctions—at which point the parties notified the court of a resolution and the litigation ended.

ACQIS then launched a second wave of litigation in 2013, filing separate Eastern District of Texas complaints against Alcatel-Lucent (acquired by Nokia), EMC (later acquired by Dell), Ericsson, and Huawei. Ten patents, many of them reissues, were asserted in overlapping sets across those four complaints; three of those patents (8,041,873; RE43,171; RE42,814) were left unscathed after a set of inter partes reviews (IPRs) filed by EMC—one for which the Patent Trial and Appeal Board denied institution, and two others in which the Board found no challenged claims unpatentable. Several of the patents have also been subject to reexamination, including the '416, '873, and '814 patents, with the validity of most claims upheld. However, in the EMC litigation, East Texas District Judge Leonard Davis partially granted the defendant's indefiniteness challenge, holding in an April 2015 Markman order that claims 6 and 26 of the '624 patent and claim 36 of the '873 patent are invalid as indefinite based on the use of the term "similar in design". While that claim term had also been the subject of an earlier, unsuccessful motion in the campaign's first lawsuit, the second motion prevailed under the "reasonable certainty" standard subsequently imposed by Supreme Court in its Nautilus v. Biosig Instruments decision (which abrogated the prior "insolubly ambiguous" standard).

Shortly after that ruling, the case was transferred to the District of Massachusetts, where it ended up before District Judge Allison D. Burroughs. Litigation proceeded through September 2018, at which point multiple dispositive motions had been fully briefed—only to sit undecided for nearly two years, prompting ACQIS's counsel to ask for a hearing date in a motion that cited the advanced age of some of the plaintiff's key witnesses. In February 2021, Judge Burroughs then granted EMC's motion for summary judgment of noninfringement of all claims from the eight asserted patents, principally because the accused products do not comply with the PCI Local Bus Specification, as Judge Burroughs ruled is required under the court's construction of certain PCI bus transaction terms from the patents' claims. In May 2022, the Federal Circuit affirmed that decision in a brief, per curiam, nonprecedential opinion.

Meanwhile, ACQIS continued to file new waves of litigation, including a round of fall 2020 cases hitting ASUSTek (6:20-cv-00966) (the case just tried), Inventec (6:20-cv-00965), Lenovo (6:20-cv-00967), MiTAC (6:20-cv-00962), and Wistron (Wiwynn) (6:20-cv-00968) in the Western District of Texas and a September suit against Samsung in the Eastern District of Texas.

Defendants in that 2020 wave sought to use prior Markman rulings to their advantage, including the 2021 constructions in the EMC case and those from a 2015 order in the Alcatel-Lucent litigation. However, Magistrate Judge Roy S. Payne declined to apply collateral estoppel based on those constructions, determining that the EMC and Alcatel courts had not determined "all that is required" with respect to claim language variously describing a "PCI bus transaction" and "address and data [bits]" (the address bits terms). Judge Payne found that settling this issue would be inappropriate under the circumstances, merely construing such a "transaction" as one that is "defined by the PCI Local Bus Specification as is known in the art" and giving the address bits terms their plain and ordinary meaning. Judge Gilstrap adopted this decision over the defendants' objections, and Judge Albright mostly followed suit in the West Texas cases—construing a "PCI bus transaction" in a manner similarly linked to the PCI Local Bus specification, and also assigning the address bits terms their plain and ordinary meaning.

Most of the 2020 cases settled in the wake of the Federal Circuit's affirmance of the EMC ruling, beginning with the suits against MiTAC (dismissed with prejudice in February 2022 in light of a settlement) and Inventec (the same, but in June 2022). However, ASUSTek, Lenovo, and Wiwynn continued to press forward on issue preclusion, with Lenovo filing a motion to dismiss that the other two defendants joined. Lenovo settled in early December 2022, before a supplemental Markman hearing later that month in which the court addressed the impact of the Federal Circuit's EMC affirmance and denied the motion to dismiss. Wiwynn settled roughly six months later, in June 2023, leaving just the ASUSTek case still bound for trial. ASUSTek then filed a motion for summary judgment of noninfringement, again asserting that the EMC construction should have preclusive effect.

Judge Albright denied that motion in an October 2023 omnibus order that either denied or mooted a variety of other summary judgment motions, but granted ASUSTek's motion to exclude an opinion from the plaintiff's damages expert for failure to properly apportion. The following month, in another omnibus order, Judge Albright denied an ASUSTek summary judgment motion asserting that two of the asserted reissue patents are invalid under 35 USC Section 251 for incorporating new subject matter; ACQIS had argued in a dueling validity motion, granted by the court, that this argument had been based on an "improper incorporation" theory previously "rejected 21 times by six distinct [PTAB] panels". Days later, the court reset trial in the ASUSTek case from November 6, 2023 to March 18, 2023.

Trial began as scheduled on March 18, with jury deliberation beginning on March 21. During those deliberations, the jury sent multiple notes to Judge Albright, including one asking for clarification on the difference between direct and indirect infringement, due to confusion over the word "induced" (to which the judge responded by pointing the jury to the court's jury instructions); and asking which exhibit quantified a particular period of the defendant's US profits (the court merely reminding the jury that it had a copy of all exhibits introduced at trial).

The jury returned its verdict on March 22, as noted above, finding that ASUSTek had directly infringed claim 19 from the 8,756,359 patent and claims 10 and 13 from the 9,529,768 patent, but that it had not induced the infringement of those claims. The jury also found that ACQIS had given adequate notice of infringement to one of the two ASUSTek defendant entities in suit (to ASUSTeK Computer, Inc. but not to ASUS Global Pte Ltd.), finding that infringement had not been willful for either patent, and awarded $18M in damages. Additionally, for claims addressing an alter ego argument raised by the plaintiff, the jury found that ASUSTeK Computer was liable for the activities of ASUS Global and nonparty Asus Computer International, and that ASUS Global is also liable for the activities of Asus Computer. The jury further determined that ASUSTek had not shown that the tried claims are invalid as indefinite or for lack of an adequate written description.

Amid all this activity, ACQIS has also continued to file new litigation, most recently including a round of cases brought in December 2023. For an update on those latest complaints and notable activity in other ACQIS cases, including the denial of a motion for a convenience transfer filed by 2022 defendant Sony and the denial of a motion for partial dismissal of Section 271(g) claims filed by 2023 defendant Quanta Computer, see "ACQIS Reloads in Long-Running Campaign" (December 2023). More on the earlier years of this campaign can also be found here: "As Everyone Ages, ACQIS Requests Movement in EMC Case, Files New Suit Against Samsung" (September 2020).

Originally published March 30, 2024.

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