With all the coverage of the Blackboard v. Desire2Learn case, most of us (including me) have very little insight into the actual trial process. And with emotions running high about the case, it's easy for people to jump to extreme conclusions about the process and everyone involved in it. That's why I've asked Jim Farmer to write a first-hand account of the portion of the trial that he attended. In addition to being a knowledgeable observer of the legal system as a former expert witness in the U.S. Tax Court on behalf of the California State University in Los Angelese and in District Court in Denver on financial aid software, Jim is also a gentleman's gentleman. I knew that he would give an account that is fair-minded and charitable to all parties involved. And that's what he did.
In the interest of full disclosure, Jim asks me to remind you all that Georgetown University, where he coordinates the Scholarly Systems Group, is a long-term satisfied Blackboard Learning Systems user. The views expressed in this blog post are solely his own.
Lufkin, TX is a 107-mile drive from Houston's George H. W. Bush International Airport. U.S. Highway 59 is being transformed from a four-lane highway into an eight-lane freeway with frontage roads on both sides. As you travel further the scene alternates between McMansions and tracts of commuter's middle-class houses. Gas stations and convenience stores cluster at intersections. Further on the highway narrows to four lanes-two on each side of a wide grass strip. Gas stations and houses and the occasional motel appear. Only Livingston-61 miles northeast-is big enough to have a Wal-Mart.
Lufkin first appears as a series of motels. Then the highway divides into Business 59 and 59 with farm-country Wal-Mart and Big K-Mart on the left, and Lufkin Mall-J.C. Penny and Sears-on the right. Business 59 is a series of local business and national fast food franchises routed around "downtown" decades ago. Turning north on Lufkin Avenue toward the center of town, there are no cars on the two lane street. Soon you see the federal courthouse surrounded on three sides with many empty parking spaces. City hall is across the street. No one is on the streets.
Lufkin-population 32, 709 in 2000; median house price of $74,600 according to city-data.com-and Marshall, Texas have become know for patent litigation. The Eastern District of Texas has 7% of the patent cases; Delaware has 14%, no other has more than 4%--Western District of Washington. Why the Eastern District? Akin Gump Strauss Hauer & Feld LLP attorney Daniel F. Perez observes: "Hardworking judges - the willingness of Judges Ward, Davis, Fulsom, Schell and now Judge Clark out of Beaumont to put in the extra hours to thoroughly understand a case and to move it along." In a 2006 intereview by "The Metropolitan Corporate Counsel," Attorney Sanford E. Warren Jr. commented "I first heard the term in the Eastern District of Virginia. They were one of the first districts to use it. The Eastern District of Texas is considered a rocket docket because of its speed leading to early resolution of cases. Other districts have adopted similar rules [to speed trials]."
The federal courthouse is a one-story building constructed in 1934 at the end of the depression. Stone with marble staircases. I entered into a small vestibule with the required metal detector, x-ray machine, and court security. The courtroom is located on the first floor with offices for the judge and court clerks and bailiffs-now called court security. A stairways leads to the basement where there are two suites for visiting judges and, in this case, used by the two legal teams. As you enter the courtroom there are three benches on the left and three on the right. Like church pews; comfortable for about 10 people. At each end they were filled with boxes of documents-28 on the Blackboard side, 41 on the Desire2Learn side-and blue-suited attorneys and corporate staff, and a few witnesses. In front of the benches were two large conference tables with a network of cables. At the left table Blackboard CEO Michael Chasen sat nearest the benches; General Counsel Matt Small was on the opposite side toward the center of the room. Four attorneys at the table, more in the first row of benches. All had laptop computers connected to the network and power. On the right Desire2Learn CEO John Baker sat on the opposite side of the table; General Counsel Diane Lank on the right facing the jury, four attorneys at the conference table and some in the first row.
The jury box was on the left side-ten jurors, seven on the first row, three on the second. A bailiff stood by the jury box. Each juror had a court-provided one-inch black binder to take notes, though I never saw anyone write. Opposite the entryway and across from the benches, Judge Clark sat on the second tier. He had a computer with a large LCD panel on his right he often watched. Just below was a long bench where five court clerks and court reporters, partially shielded by wood paneling, worked. Each had a computer and LCD panel. The right side of the room had a large screen-about 12 by 9 feet-where documents were displayed to the jury and all of those in the court.
The courtroom reminded me of the packed courtroom in the Microsoft antitrust trial where attorney David Boies effectively used multimedia presentations in his questioning of Bill Gates. He created a massive problem for court clerks and an example for complex litigation. In Lufkin the attorneys could also display any document, highlighting and enlarging any portion, or use prepared slides as witnesses were questioned. There was a database of trial exhibits-some 1,500 documents-available to both parties. In printed form enough three-inch binders to fill ten feet of exhibit documents for the jury. In addition, each user had their version of documents obtained during discovery that had not been introduced as evidence. Though I did not see it, video clips were used as well during the trial. Both sides had real-time transcript with a draft flowing across a window on their laptop only seconds after the words were spoken. The transcript was edited and available in final form each night about 10:00 p.m. Attorneys spoke from a podium that permitted them to switch sources of information-from a feed on a colleague's laptop, to the trial transcript, or documents placed under a camera that would be shown. In the basement, both teams had attorneys and staff in direct communication with the team in the courtroom for further research or preparation of presentation materials. In addition there was Internet access to Lexis/Nexis, Westlaw, and other sources of information. Blackboard's SEC Form 10K filing revealed Blackboard capitalized $6.1 million of the costs of enforcing their patent only through December 31, 2007; the trial expenses could exceed $10 million. "In Texas, typical fees in a patent case of average complexity can range from $2.5 to $5 million."
The jury represented the community. Like people pushing their carts from Wal-Mart toward their pickup dressed as if they were going to church. Throughout the trial the jury focused on the testimony. No one ever appeared to be bored. No one relaxed even for a moment. Their eyes moved from the attorney to the witness across the room and back. They followed like spectators watching a slow motion tennis match. Attorney Sanford E. Warren Jr. said "Most people in East Texas are everyday citizens and fairly conservative. There have been jury research studies which show that in the Eastern District of Texas jurors are less inclineded to believe that the government would make a mistake. They are more inclined to believe that a patent issued by the patent office will be valid and a good thing.
Judge Clark looks like a runner with grey hair. Typically silent, but never losing attention. He has a special interest in jury trials. During a few minutes "off the record" he commented about a study he did of jury response to attorneys who are "nasty" to the witnesses. He found those attorneys lose more trials than those who were more respectful of witnesses. One of the bailiffs said the courtroom had just been remodeled adding the technology requested by Judge Clark to make the trials move more quickly.
Patent trials are especially challenging. Counsel seeks to get a favorable jury verdict requiring careful attention to how ordinary people, often without a technical background, interpret the evidence. At the same time, patent verdicts are often appealed. Judges in the Federal Circuit have a technical background, clerks with extensive knowledge of the field, and have focused on the intricacies of patent law.
On the first day I attended, Mark Jones was testifying as Blackboard's expert witness. According to the U.S. Attorney's Manual (USAM), "An expert witness qualifies as an expert by knowledge, skill, experience, training or education, and may testify in the form of an opinion or otherwise. (See Federal Rules of Evidence, Rules 702 and 703). The testimony must cover more than a mere recitation of facts. It should involve opinions on hypothetical situations, diagnoses, analyses of facts, drawing of conclusions, etc., all which involve technical thought or effort independent of mere facts." Mark Jones is Professor of Electrical Engineering at Virginia Institute of Technology and State University.
Blackboard attorney Andrew Olek excerpted and annotated these statements from the trial transcript for me:
Q. [Chris Bright, Attorney representing Blackboard] Doctor, can you just tell us and summarize, if you would, what the Blackboard patent is about?
A. [Mark Jones, expert called by Blackboard] As we've talked about, this is for a course management system and the key aspect of this patent is that this is a system that allows a user on a single login to have multiple roles across multiple courses.
Trial Transcript, p. 583, lines 7-12 (February 13, 2008).
Q. [Chris Bright, Attorney representing Blackboard] Now let's turn to your second finding of infringement, joint direct infringement by Desire2Learn and its U.S. customers. Now, before we talk more about that, you understand, doctor, do you not, that each of these steps in the method claims 36 through 38 have to be performed in the United States?
A. [Mark Jones, expert called by Blackboard] Yes, I do.
Q. Okay. Can you give us an example of how each of these steps is performed in the United States?
Q. Please do.
A. So, an example is when Desire2Learn is hosting a system for a U.S. school and that school is using the system.
MR. BRIGHT: Let's go ahead and put up, if we can, Slide 141.
BY MR. BRIGHT:
Q. And this is a blowup of part of Slide 18 that we saw earlier. Doctor, can you explain your opinion?
A. Yes. So, let's look at claim 36 first and look at Step A of claim 36. In Step A Desire2Learn is establishing for these users that they may have multiple roles and levels of access and control. That establishing is being established in the United States for users in the United States. Looking at Step B, again, establishing a course. That's being established for users in the United States and that step has three parts. The first thing is generating a set of course files. In this case we're talking about joint direct infringement. In the first -- remember in A I had it's Desire2Learn doing that establishing. In B it's, for example, an instructor user at the university. So, one of these users -- for example, this instructor user -- in the U.S. creating a course file and then that instructor user transferring that course file. Both Steps 1 and 2 performed by the user at a U.S. university, so a user in the United States. Going down to three, the allowing -
Q. Doctor, I'm sorry. Let me stop you there. How can the transfer of course files happen in the United States when the server is in Canada?
A. Because the action is the transferring part. If we look at the first part of the claim, it's transferring the course files. That's happening when the user hits the button. So, the instructor says transfer the course files, he hits the button on his computer, and the transferring takes place.
Q. When you say "hits the button," can you just explain that to us?
A. For example, in the drop box, when a student or instructor user is going to upload a file, we saw --through some of the earlier things we saw demonstrations that to upload a file, they click a button on their screen, on their Web browser; and that causes the transferring to take place from that computer.
MR. BRIGHT: Now let's go to Slide 132 -- excuse me, 133.
BY MR. BRIGHT:
Q. We're talking about your opinions of joint direct infringement; is that right, doctor?
Q. Do Desire2Learn and its U.S. customers work together?
A. Actually can I -- let me actually walk through the remainder of the example.
Q. Okay. Go ahead.
A. We have Desire2Learn performing Step A doing the establishing, its customers gathering the course files and transferring them. Then going down, we have allowing access and control to established -- to the course files according to the established roles. That's happening -- the allowing is happening down here (indicating). Steps C and D are providing a level of access and control to users. So, this one is to a student user; this is to a nonstudent user. That level of access and control is being provided to these users in the United States.
Q. And that's where the users are?
Q. Now, as I was asking, doctor, do Desire2Learn and its U.S. school customers work together?
A. Yes, they do.
Q. And can Desire2Learn's customers use the Desire2Learn system in the hosted situation without Desire2Learn being involved?
A. No, they cannot.
Q. So, in your opinion, doctor -- well, do you have any evidence to support your opinion?
A. Well, first, if we could turn to --
MR. BRIGHT: Let's go to Slide 136.
A. So, this slide -- we've seen this document before.
This is Plaintiff's Exhibit 329, and this is pages 1 and 8. And this talks about the installation of the Learning Environment at a customer site, and these are some of the steps that take place. Some of these things are done by Desire2Learn. These things here, for example, the Sanity Test and configuring, these are done by Desire2Learn. In here (indicating) we have things like -- let's look at one -- brand sites according to customer requirements. So, the customer is telling Desire2Learn how to brand the site, how to put their label on it. Or configure organizations according to specifications. The customer is giving them specifications, and Desire2Learn is doing what they are asking them to do.
Trial Transcript, p. 719, line 7 through p. 723, line 15 (February 13, 2008)
Q [Chris Bright, Attorney representing Blackboard]. Now, finally, doctor, we've heard a lot about the question of Canada and whether Desire2Learn having its server computer in Canada avoids infringement. Do you agree, doctor, that having a server there avoid infringement?
A. [Mark Jones, expert called by Blackboard] No. To summarize what I said last week, this establishing that each user -- this establishing is taking place where the physical users are. That's where it's being established. The generating and transferring of course files I laid out is happening where the user is. The allowing access and control is happening where the users are. The "providing" verbs here for C and D -- this level of access and control is being provided to the physical users. Those physical users, as we talked about -- for example, in the Tennessee Board of Regents case, those physical users are in the United States.
Q. And, so, can you just remind us what your conclusion is when Desire2Learn is hosting and has its server computer just over the border in Canada?
A. It's my opinion that Desire2Learn in that situation is still infringing claims 36 through 38 of the '138 patent.
Trial Transcript, p. 2062, line 4 through p. 2063, line 1. (February 20, 2008).
Expert witnesses always are asked about their fees. When asked how much he had earned, Mark Jones was unable to give an answer. He said he had spent "hundreds of hours" and gave his rate as $325 per hour. (I thought he said $375, but court documents have the lower amount). He also said he had received $170,000 in fees from Blackboard before the end of 2007 as his [IRS Form] 1099 showed. It is likely he will have been paid more than $300,000 for his testimony when the trial is complete.
In his jury instructions, Judge Clark cautioned: "In deciding whether to accept or rely upon the opinion of such a [expert] witness, you may consider any bias of the witness, including any bias you may infer from evidence that the witness has been or will be paid for reviewing the cast and testifying or from evidence that he testifies regularly and that his income from such testimony represents a significant portion of his income."
University of Delaware Professor Fred Hofstetter was an early developer of educational technology. He developed the Serf learning system first used in 1997-two years before Blackboard filed its patent application. Because Serf was identified as prior art, Fred was a "fact witness" According to USAM, "A fact witness is a person whose testimony consists of the recitation of facts and/or events, as opposed to an expert witness, whose testimony consists of the presentation of an opinion, a diagnosis, etc." Fact witnesses may be compelled to testify; Fred volunteered. As contrasted to expert witnesses, a fact witness must bear their own expenses. Fred was in Lufkin for two weeks testifying at various times in the trial.
Testimony ended Wednesday, February 20th, at 5:00 p.m. The court adjourned at 5:24 p.m. As we learned the next day, Judge Clark, the court clerks and reporters, and attorneys remained until after 10:00 p.m. discussing the jury instructions to be given the following morning.
Thursday morning February 21st the jury was seated and given a copy of the instructions that Judge Clark was going to read. The instructions described the decisions the jury must reach and the criterion for each decision-preponderance of the evidence or clear and convincing evidence. To assist the jury he had provided a copy of the three claims with all of the words that had been defined in "Appendix A" in bold. "The claim language I have not defined for you in Appendix A is to be given its ordinary and accustomed meaning as understood by one of ordinary skill in the art in the context of the patent specification and prosecution history."
The jury considerations included (1) "two types of direct infringement, one, literal infringement and, two, infringement under the doctrine of equivalents." (2) "two types of indirect infringement, one, induced infringement and, two, contributory infringement." (3) Invalidity of the patent. "Only a valid patent may be infringed." (4) If infringing, damages, including lost profits and reasonable royalty. Judge Clark told the jury: "You must compare the accused Desire2Learn method with each and every one of the steps of that claim of the '138 patent to determine whether Blackboard has proved by a preponderance of the evidence that each step of that claim is performed and that each step is performed in the United States." Several times he reminded the jury and witness the scope of the patent was limited to use in the United States. (Australia has also awarded the patent to Blackboard Inc., but that would require a separate trial under Australian law.)
Judge Clark also said: "There are two ways in which Desire2Learn may try to prove that the invention described in a particular claim is invalid. These ways, sometimes called "anticipation" and "obviousness," are described below (referring to the jury instructions). Desire2Learn is relying on items of prior art that Blackboard does not agree are prior art. Desire2Learn must prove by clear and convincing evidence that the items fall within one or more of the following categories of prior art. Desire2Learn relies on three types of prior art, printed publications, prior use, and prior patents." "Desire2Learn contends that the claimed invention was in public use in the form of Serf 1.0 system [Fred Hofstetter's development] and CourseInfo ILN 1.5 system [Developed in 1996-97 by Daniel Cane, then a current student, and Stephen Gilfus, then a teacher's assistant at Cornell University]." Also Desire2Learn relied on the publications of the National Institute of Standards and Technology, AACRAO and EDUCOM. Desire2Learn cited U.S. Patents 6,453,353 to Win, et al in 1999, "Role-based navigation of information resources" and, 6,201,948 to Cook, et al in 1998, "Agent based instruction system and method."
The closing arguments began on Thursday, February 21st-the end of the second week. Blackboard attorney Fay E. Morisseau had 45 minutes to make his opening statement for plaintiff Blackboard. He used large posters to illustrate how the evidence supported the various decisions urging the jury to mark "Yes" on every blank in the form. And they did. He was followed by Desire2Learn attorney Jim Dasso. He claimed Blackboard was "moving the fence" from a narrow patent to encompass Desire2Learn's methods. An effort to distinguish predetermined roles from role-based access and single signon to multiple signons for the same person. Dasso urged the jury to mark "No" on every blank in the form. Morisseau made a brief response.
The case went to the jury. After a lunch break the bench trial focused on Desire2Learn's counterclaim of inequitable conduct. Wikipedia summarizes: "The patent applicant has a duty of candor and good faith to the US Patent and Trademark Office when applying for their patent. Breach of this duty constitutes inequitable conduct, which includes the following: (a) failure to submit prior art likely to be deemed relevant; (b) failure to explain references in a foreign language or submit pre-existing full or partial translations of the references; (c) misstatements of fact, including misstatements in affidavits concerning patentability; and (d) mis-description of inventorship."
During lunch Fred Hofstetter and I talked about Serf and how it was used at the University of Delaware. From Fred's perspective, the student body was becoming more diversely prepared. Briefly I thought Fred should teach at a California community college to understand the diversity of preparation for college, but said nothing. Fred uses educational technology, developed over a decade, to identify what a student knows and doesn't know to focus instruction and learning on the "zone" where the student is qualified, but has not yet mastered the material. Through this process instruction is adapted to each individual student.
Later Fred and I went out for coffee during a break walking the two blocks to "Main Street." No fast food, no cafes, just local stores and vacant buildings. The City Dinner set back from the street will brew a cup of coffee. At 3:00 p.m. we were the only people at the counter. A one-story bank with an empty parking lot in the early afternoon. Maybe the bank was closed. Just like cowboy movies, downtown so deserted you wait for the show-down between the sheriff and the badman knowing that everyone is hiding waiting to hear the shots.
Friday morning at 11:20 a.m. the jury had reached a decision. All boxes on their form were marked as yes-valid patent (for this trial, at least, since there are two re-examinations in progress), infringement, and damages. "Plaintiff [Blackboard] sought $17 million, and the jury awarded $3.1 million."
Desire2Learn informed their clients of the jury's decision:
I am writing to update you on the current status of the Blackboard v. Desire2Learn Patent Infringement lawsuit. Earlier today the jury handed down its verdict that the patent is valid and that Blackboard should be awarded damages of approximately $3 million.
For the past two weeks, we have been in Lufkin, Texas, heavily engaged in the trial at the Lufkin Federal Courthouse. The case concluded yesterday with closing arguments. The jury deliberated for a number of hours before returning its verdict today.
There is no immediate threat to you our clients. We will work with you to ensure there are no future issues. We are financially sound and are confident of our ability to work through this matter.
And Blackboard provided a brief statement responding to press inquiries:
Today, Blackboard received a favorable ruling in its patent case against Desire2Learn. "We are pleased that the jury recognized the importance of our contribution to e-Learning. We look forward to continuing to innovate and invest in new technologies that help education institutions around the globe improve teaching and learning," said Michael Chasen, President and Chief Executive Officer of Blackboard. "We also continue to stand behind our Patent Pledge which covers this patent and reflects our ongoing commitment to interoperating with and supporting the evolution of open source and home-grown systems," said Matthew Small, Chief Legal Officer of Blackboard.
Court documents reveal that Blackboard and Desire2Learn will meet in Washington, DC on Wednesday, February 27th, to discuss a proposed settlement . Blackboard will file for an award on February 29.th Both will appear before Judge Clark on March 10th about an implementing order.
Remaining claims in Defendant’s Motion for Judgment as a Matter of Law [ Doc. #308] denied. Defendant’s Inequitable Counterclaim and defense is DENIED. All remaining Rule 50(a) motions are DENIED for reasons stated on the record. Attorneys Fees will not be granted. Court set a hearing on March 10, 2008, at 10:00, in Beaumont, Tx. on injunctive relief and future damages. Court in recess at 2:10.
Desire2Learn does not have to pay Blackboard’s legal expenses. The litigation may end with an agreement or it could be appealed to the Federal Circuit; many with unpredictable results.
One of the observations from Lufkin was the professionalism of the participants. This was not “anything goes combat,” but rather two businesses that had a different perspectives of U.S. patent law and it applicability to their business. And a judge who has mastered the issues of technology patent cases and developed procedures to move those cases through efficiently and effectively. At the end of closing arguments Blackboard attorney Fay E. Morisseau walked briefly over to Desire2Learn attorney Jim Dasso congratulating him on his rebuttal—two courtroom masters appreciating the performance of the other. Blackboard General Counsel Matthew Small and Desire2Learn General Counsel Diane Lank focused on the issues and showed respect to all of the witnesses, to the jury, and to the opposing team. This is what higher education expects and deserves; we should be grateful.