In September last year Quantum announced it was filing a suit against Riverbed for infringing a data deduplication...
patent it held.
The next event was Riverbed returning the favour. Riverbed filed a patent infringement claim against Quantum in November last year. It was not going to roll-over and give in to Quantum's legal initiative. It bit back in spades, as a Bridge player might say, as Riverbed's complaint, filed in Federal District Court in San Francisco, identifies Quantum's data storage products utilizing its "data de-duplication" technology as infringing Riverbed's U.S. Patent No. 7,116,249.
The products accused of infringing include Quantum's DXi7500, DXi5500 and DXi3500 data backup and storage products. Riverbed seeks damages for infringement, including treble damages for willful infringement, and a permanent injunction against further infringement by Quantum.
That would mean Quantum would have to stop selling its DXi products until the infringing software was removed and replaced.
Brett Nissenberg, general counsel and VP corporate and legal affairs at Riverbed, was candid about why Riverbed was responding in this way: "Quantum's recent patent infringement suit against Riverbed caused us to carefully evaluate Quantum's DXi-series products and its "de-duplication" technology. In the process we discovered that Quantum is infringing one of Riverbed's fundamental patents covering data storage systems. We are therefore seeking substantial compensation from Quantum as well as a permanent injunction. We intend to vigorously protect the data storage technology covered by the '249 patent."
In January Quantum CEO Rick Belluzzo said nothing about the suit in his remarks about the results from the last quarter of 2007. That was curious but subsequent events cast light on his reticense.
Riverbed's lawyers filed a motion to dismiss the suit. On February 5th US federal judge William Alsup of the U.S. District Court for the Northern District of California dismissed the Quantum complaint against Riverbed. He ruled that the company lacked the rights to assert patent infringement.
The inventor of the '810 patent assigned the rights to Trustus Pty Ltd. which in turn assigned the rights to Rocksoft Ltd. ADIC bought Rocksoft, which became a wholly-owned subsidiary, and then Quantum bought ADIC.
ADIC and Quantum agreed a technology licensing arrangement one day before Quantum sued Riverbed and this meant all of ADIC's and ADIC's subsidiaries granted an exclusive license to Quantum for any and all patents and intellectual property owned by them.
Christmas present for Riverbed
Unfortunately, Rocksoft, the ADIC subsidiary, did not sign the rights of its IP and patents over to Quantum until Christmas Eve, 2007, which was four months after the suit had been filed. Riverbed's lawyers, probably ecstatic with this unexpected Christmas present, then filed a motion with the court that said, in effect, at the time Quantum filed its suit it didn't own the patent and so didn't have any standing on which to assert that Riverbed had infringed its patent; it simply wasn't its patent - then.
This must be a triumph for the discovery process as Riverbed's lawyers would have demanded access to all Quantum documents, e-mails, etc., relevant to the suit. The judge found that Quantum should have been more careful and actually checked that it really did own the '810 patent before filing suit against Riverbed. He said, in quite pointed remarks:
"In light of the proliferation of patent-infringement actions, it is not too much to ask sophisticated patent litigants to be careful when it comes to the threshold issue of standing. It is a simple task to execute express license agreements that satisfy the Federal Circuit standard. Among affiliated companies, it should be even simpler.
"It is true that patent litigants sometimes rush to stake out venue in a preferred forum. A rush to sue, however, cannot excuse the stern necessity of perfecting the required title before suit. District judges cannot overlook a defect in the chain of title, for the entirety of massive litigation might wind up being vacated years later, for lack of threshold standing."
Quantum's lawyers, attorneys from Sheppard Mullin Richter & Hampton LLP, have been made to look foolish. The question of the status of the Riverbed counter-suit, filed in a Delaware court, is unclear. However a Quantum spokesperson has said that Quantum is going to answer the legal standing issue in that case.