Vizio Inc. has amassed dozens of patent litigation victories over the past five years, highlighting the maker of smart TVs, sound bars and other digital entertainment products’ expertise in dismissing claims, and upholding the validity of its own patents, in an era of high-stakes intellectual property law.
In its most recent win in Wi-Lan Inc. v. Vizio Inc., Chief Judge Leonard Stark ruled in February that the Irvine-based company did not assert “any control over the precise functionality” of certain chips embedded in their smart TV’s for video processing, thereby clearing infringement claims brought by the Canadian patent licensor.
The summary judgment granted in the U.S. District Court of Delaware came more than three years after the case was filed.
“If we are being shaken down on bad, questionable, non-applicable claims, then we need to stand our ground,” Jerry Huang, Vizio’s senior vice president and general counsel, told the Business Journal.
Huang—a Business Journal General Counsel of the Year award winner in 2012—has kept a watchful eye on the evolution of patent law for more than two decades.
Huang was hired a decade ago to lead legal affairs at Vizio. He participated in briefings during the Obama administration with the U.S. Patent and Trademark Office after they pushed for major reform that made its way into the America Invents Act.
The law, signed in 2013, brought significant changes related to filing procedures rather than fighting “patent trolls” or “nonpracticing entities,” both considered pejorative terms used in tech and legal circles to describe companies that don’t make products and license technologies they haven’t designed or developed.
Most notably, though, it provided new avenues for the USPTO to challenge the validity of patents.
At the time, Vizio and other big tech companies were embroiled in patent litigation. At its peak, Huang’s docket was filled with more 30 cases. As of a few years ago, Vizio counted nearly 200 owned and pending patents that his office protected while also staving off claims of infringement.
“It was immense,” he said of the related work, mostly involving competitor claims.
$3.5 Billion at Stake
Vizio entered the year in jeopardy of losing its long-held No. 2 position in flat-panel TV sales in North America to LG Electronics Inc. in Seoul, the home of perennial No. 1 seller, Samsung Electronics Co. Ltd., the world’s largest consumer electronics maker.
Vizio was OC’s fifth largest private company last year. It employs 185 in Irvine and 419 companywide.
Huang’s first notable patent victory with Vizio came in 2014, and coincidentally also dealt with video processing technology. The case was filed by Oplus Technologies Ltd., which was represented by famed Chicago law firm, Niro, Haller & Niro.
Founder Ray Niro is credited with starting this type of patent litigation, and in the mid-1980s was called a “patent troll” by Intel Corp.’s assistant general counsel. The nickname followed him throughout his career, which included 20 straight favorable jury verdicts that surpassed $1 million. In all, he won verdicts and settlements resulting in more than $1 billion, prompting the National Law Journal in 1997 to name him one of the nation’s top 10 trial attorneys.
“We were able to stand toe-to-toe and won the case,” Huang said.
Niro died in 2016 at age 73.
Senior patent counsel Charles Koole oversees Vizio’s patent litigation docket. The company has relied on a strong network of local firms to support the workload, including Irvine-based Thomas Whitelaw & Kolegraff LLP and Akin Gump Strauss Hauer & Feld LLP, which established an Irvine office in 2014.
“We were able to build up a very strong outside counsel network,” Huang said. “That’s why were able to achieve over 30 victories to date.”
Most cases range from 18 months to three years, according to Huang, with judgments from the tens of thousands to more than a $1 million.
Lighter Docket
“The docket thankfully is relatively light” these days, said Huang. “In the single digits.”
Perhaps no factors have been as influential in easing the case load than a pair of Supreme Court rulings.
The high court’s 2014 decision in Alice Corp. v. CLS Bank International established a new way to invalidate patents, particularly in software computing, ruling that the litigated patent is an “abstract idea.”
A pivotal ruling three years later in TC Heartland v. Kraft Foods substantially restricted the locations where a patent enforcement company could file a patent lawsuit, preventing in many cases the patent enforcement company from filing in locations perceived as patent owner-friendly.
The decision primarily affected the U.S. District Court for the Eastern District of Texas, a hotspot of patent litigation for years that at one point saw a quarter of the country’s patent litigation cases.
“We do see significantly less activities in the Eastern District of Texas,” Huang said. “We used to get hit quite a bit in East Texas but we no longer do.”
To a lesser extent, the decision also cut back patent cases in Vizio’s legal backyard, the Central District of California in Santa Ana.
He views the changing landscape as a positive.
“It truly is to level the playing field,” he said. “People have to be more concerned and diligent in bringing the right claims.”
It appears the current standard in patent litigation will remain in place as the Supreme Court isn’t slated to take up a related case this term.
“There’s different scrimmages here and there but nothing transformative,” Huang said.
