Millions at Stake in Motorola-Fujifilm War

SAN FRANCISCO (CN) - Attorneys for Fujifilm and Motorola on Wednesday asked a federal judge to reverse a jury verdict and $10.2 million damages in a lawsuit over cellphone photo patents.

A jury in May found that Motorola did not infringe on three Fujifilm patents - two involving face-recognition technology and one on Wi-Fi data transmission.

But the jury found Motorola did infringe on a patent for converting color images to monochrome and awarded Fujifilm $10.2 million - an award Motorola says is unsupported by evidence.

U.S. District Judge William H. Orrick III heard attorney's debate the jury's findings and admissibility of expert testimony presented at trial for two hours Wednesday.

Orrick voiced frustration that Motorola had waited until the day before the hearing to inform him that it had challenged Fujifilm's color-to-monochrome patent with the U.S. Patent and Trademark Office.

"What happens if I agree with Fujifilm on the face-detection patents?" Orrick asked. "Will you then go to the PTO and make some challenge there? Are we in some sort of never-ending loop with issues here?"

Motorola attorney James Isbester said the patent office granted Motorola's request for a re-examination and endorsed some of its positions, but that "the game is far from over" because Fujifilm can present arguments and appeal any decision rendered by the PTO.

Regarding face-detection patents, Fujifilm attorney Thomas Kenworthy said the jury improperly heard expert testimony on claim construction definitions though it should have been allowed to consider only the "plain and ordinary meaning" of patent claims.

Motorola's claim that a second step in its facial-recognition scans made its technology non-infringing was based solely on improper claim construction testimony presented by its expert, Alan Bovik, Kenworthy said.

Isbester countered that Fujifilm's expert, Barbara Frederiksen-Cross, presented improper testimony when she showed the jury a modified chart and rebutted Motorola's assertions that its second face-scanning step invalidated infringement claims.

On the Bluetooth technology patent, Fujifilm attorneys disputed whether Motorola's Nokia 9000i cellphone, sold in the United States before 1999, was put on the market with infringing features before the patent's invention date.

"There may be a 9000i device that was sold, but what version was sold and what was the functionality of the device sold before the priority date?" asked Fujifilm attorney Jacob Snodgrass.

Turning to Motorola's request to reduce the damages for infringing the color-to-monochrome patent, Isbester said the jury's $10.2 million award cannot be justified by actual royalty rates, past phone sales or projected sales.

"The equation for damages inappropriately uses past sales to project future sales and uses a royalty rate of 50 cents per unit, which is completely unsupported by evidence and testimony," Isbester said.

Using the numbers provided by experts at trial, Isbester said, the court could not justify awarding damages higher than $3.48 million, and that the actual amount of damages is closer to $2.45 million

Fujifilm attorney Michael Carr countered that the jury relied on all evidence presented at trial to calculate damages, not just the testimony of any individual expert.

Isbester also urged the judge to use a lower interest rate when calculating prejudgment interest to be added to the damages award.

"There's a lot of precedent for awarding interest at a higher rate," Orrick said.

Isbester shot back that Fujifilm has submitted no evidence to show that its failure to receive royalties for the patent forced the company to borrow money to make payroll or build new facilities.

"They were sitting on a big pile of cash," Isbester said. "Ten million dollars would have made no difference to them."

Carr responded that Fujifilm did undertake substantial cost reductions in recent years that the company might have avoided had it received licensing fees for the color photo patent from Motorola.

After two hours of debate, Orrick ended the hearing, again commenting on his frustration with overlapping avenues for challenging patents through the executive and judicial branches.

"I think the way this system is set up is just a bad joke, and that's not the fault of the people in front of me, but whoever is thinking in a broader perspective of how these types of claims ought to be dealt with could not have done a worse job," Orrick said.

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