Toshiba Suit Aims High, Likely To Strike Deal

A federal court can award damages, but the burden of proof is on the patent holder, according to a patent lawyer.
The 17 companies at the receiving end of Toshiba's DVD patent complaint and lawsuit are likely to try to strike a deal, according to a patent lawyer who said Toshiba had little choice but to go after the companies involved.

"Toshiba is doing what anyone would do if they were thinking 'people haven't bellied up to the bar to obtain a license for their technology," Bruce Sunstein, who heads the Patent Practice Group for Boston law firm Bromberg & Sunstein, said during an interview Wednesday.

Sunstein specializes in technology and engineering issues and has served as an expert witness and arbitrator in intellectual property disputes -- experiences that give him insight into Toshiba's strategy and challenges in suing a large number of companies in several countries.

Toshiba filed a formal complaint Friday with the U.S. International Trade Commission and filed a lawsuit in the United States District Court for Northern California seeking damages from 17 companies. It claims the companies failed to obtain licenses before manufacturing, distributing and selling DVD related products and infringing on Toshiba's patent rights.

"Toshiba has commenced firing out of each barrel of the gun," he said.

The ITC can issue an order excluding goods that Toshiba proves are an infringement. That process usually takes 18 months, which Sunstein said is an "accelerated process" compared to litigation.

The federal court can award damages, but the burden of proof is on the patent holder.

"You've got to tell a story, and that story is: 'Once upon a time, there was an invention,'" Sunstein said. "Who's going to tell the story that once upon time there was an invention?"

High-priced experts, lawyers and economists or accountants are all characters in the elaborate theater-like productions required to explain to a jury where technology came from, how it works and who owns the rights.

"That's a long song, a big production, but an important exercise," Sunstein said. "These can be some of the largest and most complicated cases in the courts."

Patent litigation frequently costs in the seven-figure range, he said. Costs are likely to compound with more than a dozen defendants from several different countries.

"A lot of companies faced with that kind of burden and expense will say, 'OK, let's make a deal," he Sunstein said. "The choices are: make a deal or get shut out. So they make a deal. If you're on the receiving end of this litigation, and Toshiba has a pretty good patent portfolio, you're really passing your time until you have to swallow a pretty good lump."

Since Toshiba is obligated to make licenses available, the company is likely to agree to a deal, he said. In the end, that could mean higher prices for consumers, but Toshiba had to take action if its representatives believed its patent rights were violated in order to run a fair business, Sunstein pointed out.

"If everybody else is paying for their ice cream and these people just came in and took it, it's a difficult position Toshiba to sustain in the long term, if they want to continue selling ice cream," he said.

The lawsuit and complaint target Daewoo Electronics America, jWIN Electronics and Memcorp from the United States.

They cite several Asian companies' operations, including: Dongguan GVG Digital Technology, Dongguan Tonic Electronics, Dongguan Xin Lian Digital Technology, GVG Digital Technology Holdings, Star Light Electronics, Starlight International Holdings, Starlight Marketing, Tonic Digital Products, Tonic DVB Marketing , Tonic Electronics, Tonic Industries Holding Limited, Tonic Trading Development and Tonic Technology.

Toshiba issued a statement explaining its actions.

"Through the filing of the ITC complaint and the district court lawsuit, Toshiba seeks to exclude infringing imports, recover monetary damages, and secure agreements to respect Toshiba's intellectual property rights in the future," the company said.

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