As I noted in an earlier post, I’m traveling this week, so this post is going to be relatively short and light on analysis. If you’re trying to get a comprehensive picture of what’s happening, I’d start with the article in The Chronicle. (Incidentally, Katherine Mangan, who is new to the edupatent beat at The Chronicle, has been doing a good job of capturing some of the legal nuances that I haven’t seen covered in most of the other mainstream media stories.) Next, you’ll want to check with Al and Barry. Like both of these guys, there are some aspects of the ruling that I’m still trying to process. The judge came down with a pretty tough injunction against D2L along with some strict orders about how and when D2L must inform customers and prospects. The judge has placed an injunction on D2L regarding existing customers as well as new ones, which was more than Bb asked for. On the other hand, he also gave D2L a 60-day grace period to try to implement a work-around and pushed the two parties to negotiate a royalty settlement. You can find the rulings here and here.
To my mind, there are two crucial details that we’ll find out in the short term. First, we have to see whether D2L’s work-around allows them to get a non-infringement ruling. In addition to being crucial for D2L and their customers going forward, this will be another indication of just how hard the patent is to get around and therefore how much liability risk other systems will face. Second will be the royalty settlement. If Blackboard gets a royalty anywhere close to the 25% that they are asking for, that will be very tough for D2L or any other competitor found to infringe. If outcome breaks for Bb in both of these outcomes, then Bb will effectively have a legal stranglehold on the product category.
Update: D2L has a new post up on the orders. Here is their interpretation of them:
The combination of these orders is consistent with Desire2Learn’s expectations from the hearing. On March 10, the Court discussed two activities: first, that Desire2Learn go to market as soon as possible with a product that would not infringe, and second, that the parties make a good faith effort to talk about what payment should be made for use of any infringing products that may still be in use. Blackboard has consistently represented that it intended for Desire2Learn to be able to serve existing customers; that it was seeking not an injunction, but rather a reasonable royalty, for those clients. The Court’s order for the parties to meet requires discussion about a reasonable royalty.
Moreover, the 60-day stay period provides Desire2Learn with the opportunity to finalize and to implement its design-around, as we mentioned yesterday. At the hearing, the Court based its willingness to issue an injunction in part on the fact that we could easily, inexpensively and quickly design around the Blackboard patent claims. The product that we anticipate will include the design around – Learning Environment version 8.3 – will be available to all clients and prospects quite soon. Further, since the trial we have not, and will not, sell any product found to have been infringing.
Finally, the stay period provides an opportunity for Desire2Learn to file its post-trial motions to limit the scope of the injunction and request other relief. For example, we intend to file a motion that, that as a matter of law, D2L does not in fringe the patent respect to clients hosted in D2L’s Canadian facilities. The injunction should be narrowed and damage award reduced to reflect this.
In related news, Katherine Mangan has a report on the new edupatent suit (the one in which universities are being sued) that confirms the details that I had posted earlier. A lawyer representing the patent troll is quoted in the article as saying, “Nonprofits don’t need to worry about us chasing them. We’re an ally of theirs.” Recall that Bb promised D2L’s existing higher education customers would not be impacted by their request for an injunction. Clearly, children should not be allowed to play with loaded guns. Unfortunately, many of the parents are too busy loudly defending their right to bear arms while not paying attention to the fact that they left their own gun cabinets unlocked and in easy reach.
We’ll have more here as soon as we can, including some analysis from Jim Farmer on the long-term big picture.
