Merchant & Gould Defends Lawson Software in Patent Infringement Case, Resulting in No Damages Awarded to Plaintiff

Merchant & Gould was retained by Lawson Software, Inc. to defend against patent infringement claims brought by ePlus, Inc. Plaintiff had successfully sued other companies and had previously collected over $50 million in settlements. Despite this track record for the plaintiff, Merchant & Gould brought the case to trial, with Lawson owing no damages. The case was tried in the District Court for the Eastern District of Virginia and appealed to the Court of Appeals for the Federal Circuit.

Case Summary

At issue in this case were several patents for systems and methods that allow businesses to purchase goods online, for example, by dividing a shopping list into multiple purchase orders. At trial, ePlus argued that Lawson infringed 11 claims of three patent: Nos. 6,023,683; 6,505,172; and 6,055,516.

Solution

Recent trends in patent cases have led to heightened scrutiny of patent damages and awards. Merchant & Gould leveraged this heightened scrutiny by finding faults with opposing side’s damages expert report and its lack of disclosure of its damages computations and evidence, resulting in a big client victory.

At the trial, plaintiff’s damages expert sought over $35 million in reasonable royalty damages. However, Merchant & Gould successfully moved to have this damages expert excluded from the trial. Furthermore Merchant & Gould also successfully moved to bar the plaintiff from seeking any damages at trial as a discovery sanction under Federal Rule 37. Merchant & Gould cited the plaintiff’s failure to disclose any other basis for damages than the excluded expert report. As a result the District Court awarded no damages despite a split verdict for infringement claims.

The case was appealed to the United States Court of Appeals for the Federal Circuit, and in November 2012 the court affirmed the lower court’s decision to bar plaintiff from receiving any damages award.

With respect to liability issues, the jury rejected the majority of the plaintiff’s infringement allegations against five different product configurations sold by Lawson. Those findings were adopted by the court, which entered an injunction. On appeal, however, Lawson prevailed n eliminating infringement of any system claims and all but one method claim. The appellate court agreed that Merchant & Gould proved that all asserted system claims, directed to computerized means, were indefinite under 35 U.S.C. §112 as a matter of law. The appellate court thus reversed the infringement findings as to the accused Lawson configurations systems found to infringe at trial. This eliminated all infringement by any Lawson systems. The appellate court also reversed the finding of infringement as to two of the three method claims at issue on appeal. The appeal for Lawson was argued by Don Dunner, who teamed with Merchant & Gould on the appeal.

After the appellate court vacated the injunction, it remanded the case back to the District Court to consider what changes are required to the terms of the injunction in order to be consistent with the appellate ruling. However, the decision to award $0 in damages stands. After the trial, Lawson was acquired by Infor for a deal reportedly near $2 billion in value.

Merchant & Gould Team

Daniel W. McDonald

William D. Schultz
 
Rachel C. Hughey
 
Kristin M. Drieman