Intellectual Property
Aug. 13, 2002
Houston Shootout Will Pit Compaq Against eMachines
Two California high-tech companies are prepping for a Texas shootout in a patent infringement trial in a Houston courtroom.
Two California high-tech companies are prepping for a Texas shootout in a patent infringement trial in a Houston courtroom.
The showdown pits a relatively small Irvine computer seller against a Silicon Valley powerhouse.
In a jury trial set for Oct. 15, Irvine's eMachines Inc., a distributor of personal computers, stands to lose tens of millions of dollars in past profits for allegedly stealing inventions from its rival Compaq Computer Corp., according to Robert J. Goldman, a partner at Fish & Neave's Palo Alto office.
Goldman represents Compaq, a Houston company bought out by Palo Alto's Hewlett-Packard in May.
Compaq sued eMachines in the summer of 1999 to stop the alleged infringement of 13 patent claims and to recover damages Goldman estimates at "well in excess of $100 million."
Compaq's case received a boost last month when U.S. District Judge Kenneth M. Hoyt ruled in its favor on a motion for summary judgment. Hoyt ordered eMachines to stop the unauthorized use of technology that infringes on two out of the 13 disputed patent claims.
One of the permanent injunctions limits eMachines' use of a patent for the creation of a password system that enhances computer security, Goldman says.
The other injunction concerns an invention for increasing the speed at which a computer executes certain "behind the scenes" instructions, he says.
Under the court's order, eMachines must remove the two infringing features from its computers, switch to components from suppliers licensed by Compaq or stop selling the computers with the offending technology.
But eMachines didn't completely strike out with the judge.
Hoyt ruled that the company did not violate four disputed claims, including the design of a door in back of a computer's hard drive.
Neither eMachines' attorneys nor a company spokesman would comment about the litigation.
A release issued by eMachines minimizes the impact of the judge's ruling.
"The injunction relates to older eMachines computer models and to outdated, industry-standard technology no longer used in the eMachines product line," the statement reads. "The injunction will not have any impact on company finances and operations."
The judge's July 15 order also found that eMachines had "literally" infringed seven other patent claims made by Compaq.
But unlike the two claims for which permanent injunctions were issued, these remaining allegations of infringement still can be rebutted at trial.
The judge's finding of "literal" infringement doesn't prevent the company from bringing up certain defenses.
EMachines can argue, among other things, that Compaq doesn't have valid patents for the seven claims either because someone else came up with the inventions or because Compaq's ideas aren't original enough to have deserved patent protection in the first place.
In addition, eMachines can try to limit damages for any alleged infringement.
Nevertheless, Goldman believes that so far the case affirms Compaq's place in the high-tech field.
"It recognizes Compaq as a pioneer in R&D in the computer industry," he says.
Compaq Computer Corp. v. eMachines Inc., H-99-2380 (S.D. Texas, partial summary judgment granted July 15, 2002; trial set for Oct. 15).
Eron Yehuda
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