Wednesday, July 20, 2011

Playlist troll who was awarded $8 million from Apple files new lawsuit over more products including iPhone 4 and iPad 2

The week before last I blogged about a $8 million jury verdict in favor of a non-practicing entity named Personal Audio LLC against Apple for the infringement of some downloadable playlist patents. That lawsuit had been filed in June 2009, and the Apple products accused in the original complaint were "iPod classic, iPod mini, iPod shuffle, iPod nano, iPod Touch, and iPhone". At trial, the products considered by the jury were "the iPod Classic Generations 1 through 6, iPod Mini Generations 1 and 2, and iPod Nano Generations 1 through 5". Today Personal Audio LLC has just filed a new infringement suit (again in East Texas) accusing "the iPod Nano Generation 6, iPod Shuffle Generation 4, iPod Touch Generation 4, iPhone 4, and iPad 2".

Obviously the purpose of the second lawsuit is to expand upon the success of the first trial and squeeze even more money out of Apple. Personal Audio claims in its new complaint that "[a]ll of these products [the ones they accuse now] were the subject of Apple's stipulations to reserve these products for this lawsuit with the exception of the iPad 2, which was released after both stipulations". In paragraph 33 of today's complaint, Personal Audio LLC makes the following representation:

"The parties [Personal Audio LLC and Apple] entered into stipulations on July 22, 2010 [...] and September 20, 2010 [...] that any Apple product released after January 27, 2010 would not be included in the Personal Audio v. Apple I suit so long as the parties did not agree that its relevant functionality was substantially the same as that of a product accused in that lawsuit."

So those products weren't accused, and according to paragraph 34, Apple promised not to hold that fact against Personal Audio LLC in the future:

"Specifically, the parties agreed that 'Apple would not argue that Personal Audio could or should have added such unannounced product to the above-captioned lawsuit.'"

Paragraph 36 says:

"The parties specifically agreed that 'Personal Audio may initiate a separate lawsuit accusing the New Products of infringement of the Patents.'"

Today's lawsuit is that agreed-upon separate lawsuit. Personal Audio LLC now asserts U.S. Patent No. 6,199,076, which was apparently the winning one in the previous trial, but not U.S. Patent No. 7,509,178, which is a so-called divisional of the other.

This new lawsuit is more than just a nuisance for Apple to deal with. Damages in connection with the iPhone and iPad could could be substantially greater than in the previous trial that focused just on various iPod products. Also, Personal Audio LLC may now have an even better case for claiming willful infringement -- and one of Personal Audio LLC's prayers for relief is a request for an injunction.

I continue to believe that the parties are likely to settle their dispute rather soon. But this new lawsuit could drive up the cost significantly. The amount would probably still not be significant relative to Apple's gigantic cash reserves, but it could be huge for Personal Audio LLC and its shareholders.

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