Patent Dispute Means SanDisk Can Only Show Photos Of New MP3 Players

from the patents-and-innovation dept

In the US, the courts are finally recognizing that an automatic injunction in patent disputes doesn't always make sense. The same is not necessarily true elsewhere. In Germany, a patent licensing/management firm named Sisvel, who has accused SanDisk of patent infringement in many different countries concerning MP3 patents, has convinced a judge that SanDisk should be barred from even showing its new MP3 players at a trade show. Instead, they can only show photographs of the devices. This doesn't make very much sense. If SanDisk is infringing, then they should be fined and/or barred from selling the devices -- but as a recent article shows, no court case has even started yet. So why should the devices be barred? What good does it do to simply bar them from showing the actual devices at a trade show? If anything, it acts as a bigger attention getter for SanDisk, as people wonder why the devices are not being shown.

Another interesting point is that Sisvel seems to defend themselves by pointing to everyone else who licensed their patents in the past: "It means that the 600 companies, the biggest ones, who have taken a license, they are stupid, because all of the other have paid." This goes back to the question some asked last week about why it matters to other firms trying to challenge a patent if some companies (especially big name ones) have licensed the patent. While it doesn't actually impact any legal standing, it does put additional pressure on them to settle. Patent holders use the fact that others licensed the patent in the court of public opinion to put pressure on the other companies. That's true even if the calculus from those who licensed the patent is that it's cheaper to just pay up than fight -- even if they don't believe the patents are valid or (if the patents are valid) that they infringe. Having other companies license the patents makes people believe that they must be valid, even if they are not.

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  1. identicon
    Susheel Daswani, 5 Sep 2006 @ 7:46am

    Re: Licensing Leverage

    Patent holders use the fact that others licensed the patent in the court of public opinion to put pressure on the other companies.

    In my opinion, the most relevant factor about whether to pursue a declaratory judgment that a patent is invalid is not how many other people have licensed that patent, but how expensive it is to litigate the case. As Mike admits, the fact that everyone in the world but you has licensed the patent has little or no legal weight. If the cost to litigate a infringement / declaratory judgment suit was $1, no company would care how many other companies have licensed a patent. In the end, it is a cost/benefit analysis that compares how valuable the patent is to a certain company (benefit) vs. how expensive it is to have the patent invalidated (cost).

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