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Townsend and Townsend and Crew LLP, a 150-attorney law firm specializing in intellectual property and complex litigation, secured a major patent victory on behalf of computer software developer Intergraph Corporation over microprocessor giant Intel. Following a bench trial, U.S. District Court Judge T. John Ward of the United States District Court of the Eastern District of Texas held that Intel's Itanium processors infringe two Intergraph patents directed to parallel instruction computing. The court held that Intergraph is entitled to an injunction preventing Intel from manufacturing, using, selling, offering to sell, or importing Intel's Itanium or Itanium 2 processors.
FL: Intergraph and Intel have been battling in the courtroom since 1997. Does the typical patent case involve multiple lawsuits stretched over these many years?
This case was not typical. It is not that unusual to have multiple lawsuits, but it is unusual to have multiple lawsuits over multiple generations of patents and products like the Intergraph/Intel cases. The first lawsuit in Alabama was over the Pentium processor with one set of patents, and the second lawsuit in Texas concerned the Itanium processor with another set of patents.
FL: How did Townsend get involved in the Intergraph/Intel dispute?
Townsend prosecuted the original patents involved in the Intergraph/Intel dispute. The client then came to us when it needed to enforce the patents. Often, the law firm that writes the patent is also asked to handle the litigation. This works quite well because the law firm has technical knowledge applicable to the patents at issue and has a history with the inventors and the client.
FL: Intergraph is located in Alabama and Townsend is in California. What are the challenges with working with out-of-state clients?
There was no one location that was the center of all the action. The patents were generated by a division of Intergraph that was located in Silicon Valley. That was how Townsend originally got involved. Although Intergraph's headquarters are in Alabama, Townsend had the advantage of being close to the inventors, experts and other witnesses. Besides, it is much harder to find a firm in Alabama that would have expertise in the issues of this case.
The main challenges with out-of-state clients are the ability to work closely with in-house counsel and spend time with the inventors and experts and other witnesses. To the extent that you can maintain personal relationships, everything works better. We handle documents electronically these days so that is not an issue.
FL: The trial also took place in Texas. Was Texas counsel involved? If so, how did the law firms apportion the trial work?
The trial involved a combination of Texas counsel and Townsend attorneys. In this particular case, there was no jury trial. If it had been a jury trial, Texas counsel would have been used more at the trial. Texas counsel prepared the opening, while Townsend questioned the witnesses and presented the closing, and the Texas counsel was involved in all stages of the proceeding.
How the trial work is divided is an ad hoc decision. It depends on the attorneys involved, whether it will be a jury or non-jury trial, and the relationship between the witnesses and the various attorneys.
FL: Aside from the legal issues of whether to proceed with litigation, there must have been strategic, business issues too. Did you counsel Intergraph on the dangers of suing a big company like Intel?
Yes. This was a very, very difficult situation. At the beginning of the litigation, Intergraph was dependent on Intel processors for Intergraph's workstation computers. The main challenge wasn't that Intergraph was going against a big company, but that Intergraph was going against a company with whom it had a critical business relationship.
FL: Besides having deeper pockets to fund litigation, what other challenges does suing a larger company pose?
Deeper pockets is a large consideration. However, the real question is not who has deeper pockets, but whether each party can afford the lawsuit. The other main problem is that every company has its own patent portfolio, so you will be facing opposing patent claims. But that's a two-edged sword — often the larger company has more exposed sales volume, and has much more to lose.
FL: Tell us about the settlement agreement on liquidated damages. Is it common for parties to agree on damages before the court has determined liability? Whose idea was this?
In general, agreeing on liquidated damages is not unknown. However, this particular agreement is unprecedented. I am not aware of anything like it. It really was born of necessity. Both parties found that they could not resolve the situation completely because of their disagreement over the likelihood of success in the Texas case. This was not a full resolution, but the best the parties could come up with given that disagreement.
There was something in it for both sides. Both sides benefited from the resolution of the Alabama case. The main additional benefit for Intel was that it would not be enjoined from selling its Itanium processors. For Intergraph, the main benefit was the established monetary award if it prevailed, given that there were essentially no infringing product sales at the time. With the settlement, the remedy was established depending on the outcome of the trial and the result of the appeal.
FL: Tell us about the Townsend litigation team. What motivates engineers to become attorneys?
The Townsend team were all engineers who decided to become attorneys. It was an easy decision for me. After a few months as an engineer, I felt that I had already done everything once that I would be doing for the rest of my career. I had always wanted to be an attorney. It was more an accident that I became an engineer than an attorney.
Having an engineering background helped. I took the depositions of the chief architects of the Pentium and Pentium II processors, as an example, and had to understand the technology. It also helped during document review. You need to have some knowledge of what you are talking about or looking at in these types of cases or you are at a huge disadvantage.
FL: What is special about Townsend? What is it known for?
Three things. Townsend is known for its depth of patent prosecution practice with attorneys in the firm who provide expertise in every technical field. We have many people with advanced technical degrees and PhDs. Townsend is also known for its patent litigation, and other forms of intellectual property litigation such as trademark and trade secret. Complementing all of this is our strong antitrust practice, which often ties into patent and other intellectual property litigation. These areas of expertise work really well together. Usually, we are working with 2 or 3 of these practice areas in any one case, often all three.
FL: How did you celebrate your victory?
We were very satisfied with both the settlement and trial victory. Intergraph is a tremendous client, and helping them is especially rewarding. However, only two stages have been completed; we are in the midst of the appeal stage. The real celebration will have to wait.
| George M. Schwab is a partner and patent litigator in the San Francisco office of Townsend and Townsend and Crew LLP. He led the Intergraph trial team, along with Scott Wales and Greg Bishop. |
Originally founded in the 1860s, Townsend and Townsend and Crew LLP focuses on intellectual property law, teaming with inventors, entrepreneurs, scientists and investors to protect their innovative products and ideas. The firm offers a full range of intellectual property, prosecution and litigation services, with additional expertise in antitrust and other complex business litigation issues. With offices in San Francisco, Palo Alto, Walnut Creek, Denver and Seattle, Townsend has more than 150 attorneys, many of whom have advanced technical degrees and extensive scientific and business experience. For more information, visit the firm's Web site located at www.townsend.com.