CHICAGO — A jury has saved a small manufacturer $4 million after siding with the defendant in a lawsuit over patents and trade secrets.
Crimson AV, a Glenview company that makes and distributes television wall mounts, was sued in 2011 by Peerless Industries in federal court, over claims that Crimson's design infringed a patent. Peerless further alleged that Crimson had obtained trade secrets from a Chinese supplier that had previously manufactured products for Peerless.
Johnson & Bell, the Chicago law firm that represented Crimson AV, called the outcome “a major defense jury verdict” in a June news release. Ahead of the trial, the court ruled that Crimson AV’s products infringed Peerless Industries’ patent. At issue at trial was whether the Peerless Industries patent was valid. The trial lasted two weeks and, after two days of deliberation, the jury brought back a verdict finding the patent invalid and finding no trade secrets were at issue.
“We simply presented a more compelling case that the jury obviously understood, believed and agreed with. It’s a great outcome for Crimson AV,” Joseph R. Marconi, a partner at Johnson & Bell and the lead trial attorney, said in a news release.
Jacques Dulin of Innovation Law Group in Sequim, Washington, assisted in the defense. In a news release following the verdict, he said Peerless filed three lawsuits “in an attempt to deny Crimson entry into the TV mount field.” The cases claimed Crimson infringed five patents and misappropriated trade dress and trade secrets. Claims over trade dress and four patents were dismissed.
Dulin called this case an example of a larger company bullying a small competitor.
That scenario isn’t unheard of, but enforcing patents remains a part of the public’s interest, and companies of any size can infringe a patent, Adam Kelly, vice president of the Intellectual Property Law Association of Chicago (IPLAC), told the Cook County Record.
“I’m aware of instances where a patent owner would use a patent litigation as a means to thwart competition, generate licensing fees, or change the behavior of their competitor in the marketplace,” Kelly said. “But the other side of this sword is if you are the patent owner and you’re overly aggressive by pursuing meritless patent infringement claims against competitors in your field, the real risk is facing not only losing your infringement claims, but facing sanctions and attorneys' fees for bringing a frivolous lawsuit.”
The expense of patent litigation likely prevents this kind of “patent bullying” from happening frequently, Paul Kitch, chair of the American Intellectual Property Law Association’s Patent Law Committee and president-elect of IPLAC, told the Record.
“Generally many companies will not find litigation worthwhile unless the amount of damages at stake is large and the accused infringer is financially able to pay those damages,” Kitch said.
The median cost of a patent lawsuit in Chicago is $2.4 million when $1 million to $10 million is at risk, he said, citing the AIPLA 2015 Report of the Economic Survey.
“Here the patent owner was apparently willing to spend millions of dollars in an attempt to secure a judgment of $4 million,” he said.