Finnegan Secures Jury Verdict for Philips over Dispute on CD-Disc Patent

FOR IMMEDIATE RELEASE

March 1, 2013

Contact:    John F. Hornick, 202.408.4076

                    Partner

Finnegan Secures Jury Verdict for Philips over Dispute on CD-Disc Patent

WASHINGTON, DC - On March 1, 2013, a jury in the Southern District of New York found five defendants liable for infringing Finnegan clients Koninklijke Philips Electronics N.V. and U.S. Philips’ valid patent (U.S. Patent No. 5,068,846 to Kramer). The Kramer patent claims the basic structure and framework for optical storage media devices, or CD-Discs.

Each of the five defendants in this case, including Universal Music Group Mfg. & Logistics, Entertainment Distribution Co., the ADS Group, American Media International, and Optical Experts Manufacturing, signed a contract with Philips to license the pool of patents covering CD-Disc technology. Although the defendants made CD-Discs and paid royalties for years, one day each decided to stop paying. Alleging breach of contract and patent infringement, Philips filed suit against the defendants in 2008. In response, the defendants alleged that their CD-Discs did not infringe the Kramer patent and that the Kramer patent was invalid.

The Kramer patent, issued to Dr. Pieter Kramer and Gisbertus Bouwhuis and assigned to Philips, covers the basic technology structure for CD-Discs. The technology in the Kramer patent forms the basis for CD-Discs standards (commonly referred to as the “Redbook”). Filed in 1972, the Kramer patent issued from the U.S. Patent and Trademark Office (USPTO) in 1991, after the Federal Circuit’s blessing. Additionally, the Kramer patent survived two requests for reexaminations before the USPTO. An independent expert commissioned to review the pool of CD-Disc patents found that the Kramer patent was “technically essential” to manufacturing CD-Discs. Since its invention, over 240 billion CD-Discs have been sold world-wide—enough to encircle the earth 7 times, or reach 3/4 of the way to the moon.

Although defendants claimed the Kramer patent was invalid for various reasons (including anticipation and obviousness), the jury resoundingly rejected those arguments. The jury determined that the Kramer patent was valid and infringed by each defendants’ products. The jury additionally found that Universal induced EDC’s infringement and that both these defendants’ infringement was willful.

This jury victory follows Philips’ nine successful motions for summary judgment relating to various breach of contract and patent issues. The damages portion of the trial is set to commence later this year, and Philips stands to recover tens of millions of dollars in unpaid royalties and interest.

About Finnegan

With more than 375 intellectual property lawyers, Finnegan is one of the largest IP law firms in the world. From offices in Washington, DC; Atlanta, Georgia; Boston, Massachusetts; Palo Alto, California; Reston, Virginia; Brussels, Belgium; Shanghai, China; Taipei, Taiwan; and Tokyo, Japan, the firm practices all aspects of patent, trademark, copyright, and trade secret law, including counseling, prosecution, licensing, and litigation. Finnegan also represents clients on IP issues related to international trade, portfolio management, the Internet, e-commerce, government contracts, antitrust, and unfair competition. For additional information on the firm, please visit www.finnegan.com.

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