Kilopass Sidense Legal Battle

The decision made by United States Court of Appeals for the Federal Circuit, “Affirming” the District Court for the Northern District of California’s summary judgment of non-infringement on Kilopass’ patent claims and its dismissal, with prejudice, of all remaining claims against Sidense, is certainly a good news for IP and EDA vendors playing a fair sales and marketing game in the field. Let’s make the assumption that you have not infringed anybody else rights, but developed innovative product (IP function or EDA tool), be clever enough in marketing the product and generate numerous design win, so your sales revenue start growing fast, leading your direct competitor to prefer using the legal field instead of fair market competition… We have seen many legal cases in the recent years in the EDA and IP ecosystem, and I am almost sure that some of these cases have been initiated to compensate for a marketing weakness.

The “typical” case is as follow: an IP vendor (or an EDA vendor) use to get the highest market share on a specific segment, enjoying good sales revenue because the company was the first to have positioned on this segment. Being the market leader, the company has neglected to develop new product. Suddenly, a new comer jump in this segment, bringing a really innovative product. If the product is really good, and the company is able to develop a top class marketing and sales organization, sales eventually rocket (even if this process takes at least 3 to 5 years), and the historic vendor see his market share downsizing and start losing best customers. Is it too late for this vendor to come back with a really innovative product? Probably not, but it looks much easier to initiate a legal case, management just need to select and pay a lawyer firm instead of investing in R&D: searching for a design guru, rebuilds a team, develop and launch a competitive product…

Do you know what? I am sure that this biased strategy works from time to time, as neither a judge or a jury are supposed to have PhD and to be able to make a decision on a topic they are far to understand!

I don’t know the NVM IP market history enough to be able to understand if the legal case between Sidense and Kilopass was similar to this above described typical case. That I know is that Kilopass was well established on this market segment, that Sidense was enjoying fast growing sales during the last couple of years, when the case was initiated by Kilopass, and that Kilopass has lost this case two times: “in summary judgment, and now on appeal, United States courts have agreed with Sidense that Kilopass’ lawsuit against it was entirely without merit.”

We can easily understand why litigation counsel for Sidense, Roger Cook, partner at Kilpatrick, Townsend and Stockton, was gratified by the win.

“Judge Illston ruled in Sidense’s favor on the patent infringement claims for four separate reasons, each one of which was soundly based and by itself sufficient to defeat Kilopass’ infringement claims. Outcome of the appeal was never in doubt. In more than 40 years of handling patent infringement cases, this one stands out. Sidense is seeking and richly deserves recovery of its attorney fees from Kilopass on the basis of bad faith and baseless patent litigation. Companies who engage in this type of anti-competitive litigation need to pay the price.”

Eric Esteve

lang: en_US