ITC JUDGE RULES THAT GEMSTAR PATENTS WEREN'T INFRINGED ON
Gemstar was dealt serious setback late Fri. when ITC administrative law judge ruled that 3 of its patents for on- screen interactive program guides (IPG) hadn’t been infringed upon. Judge Paul Luckern said “no domestic industry” existed for patents, thus allowing EchoStar, Pioneer and Scientific- Atlanta (SA) to continue importing satellite receivers and cable set-top boxes. All 3 had designed their own IPGs for STBs and Gemstar filed complaint with ITC in 2001 seeking to block import of STBs it said had IPG that infringed on its patents. Ruling could mean end to Gemstar’s headlock on IPG market and it risks licensing agreements with cable TV operators, including Comcast and Charter, to use its program guides.
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Luckern’s preliminary decision was worst-case scenario for Gemstar, analysts said. While judge found that patents submitted for review were valid, he nevertheless ruled that companies hadn’t infringed on them. He also held found that Gemstar “misused” one of its patents -- so-called ‘121’ patent for TV navigation -- and that it wasn’t enforceable for “failure to name a co-inventor.” Luckern’s decision means ITC is scheduled to complete investigation by Sept. 23 and issue final decision by Oct. 21.
Gemstar in reaction charged that Luckern’s decision was “erroneous” and wasn’t supported by “the proper application of law.” It said it would file request for review of ruling by full commission. ITC will rule on request within 45 days, Gemstar said. “We are obviously disappointed by Judge Luckern’s ruling,” said Jonathan Orlick, Gemstar’s chief legal officer and gen. counsel. “Nevertheless, the company is determined to continue to protect its intellectual properties and patents which crystallize our innovations and inventions. The ruling will not detract from the company’s long-standing policy to assert patents against infringing parties, including those involved in the current ITC case.”
SA spokeswoman said company was “very pleased” by decision and said it already had 10 million boxes on market enabled with its IPG technology. “This is really a first step, but it’s an important first step,” she said, noting that ITC still must make final decision. Pioneer Business Solutions Div. Pres. Paul Dempsey said company was “vindicated” by Luckern’s ruling and was “looking forward” to ending litigation. Echostar spokesman similarly said decision “vindicates Echostar’s position that it does not infringe the Gemstar patents at issue and that Gemstar is guilty of patent misuse.”
Ruling in Gemstar’s favor would have meant that companies would have had to redesign IPGs around its patents or sign licensing pact. While ruling in defendant’s favor may be “psychologically numbing,” it also maintains status quo, analyst said. Indeed, companies have had STBs in field with own IPG for several years. Gemstar also has long-term IPG agreements with some MSOs including Charter and Comcast.