Commentary | Managing Patent Litigation in the Satellite Industry

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The pace of technology has continued to move forward in the satellite industry, most recently in the area of broadband satellite Internet. However, with this growth in technology, satellite companies can expect an increase in patent litigation. Recent filings against the primary satellite broadband providers highlight the importance of patents to this industry. Patent litigation has the possibility of substantial rewards, but also contains significant risks. By considering the strategies below, the satellite industry can be better prepared to manage the impact of patent litigation.

“Broadband Internet” commonly refers to Internet that is always on and is faster than traditional dial-up Internet. Since its widespread use in the early 2000s, the market for broadband Internet has been dominated by cable and DSL providers. However, satellite broadband companies added several hundred thousand new users in 2012, and satellite Internet’s over 1 million subscribers now comprise more than 1 percent of the broadband market.

Two of the largest providers of satellite Internet in the United States are Hughes Network Systems LLC, or HughesNet, and ViaSat Inc. In recent months, both ViaSat and HughesNet have significantly increased the capacity and bandwidth of their satellite Internet offerings. In March 2012, ViaSat launched a new satellite, ViaSat-1, and a new broadband service, called ViaSat Exede. ViaSat’s $400 million satellite investment now claims to provide American satellite Internet users with speeds comparable to or faster than DSL. HughesNet responded by launching a new satellite, EchoStar 17, and a new broadband service called HughesNet Gen4.

While the cable industry has faced a substantial number of patent lawsuits over the last few years, the satellite industry is no stranger to patent litigation as well. In recent years, the largest patent litigation involving the satellite industry was pursued by TiVo against EchoStar Corp. and Dish Network Corp. in 2004. This lawsuit, which dealt with digital video recording (DVR) technology, was settled in May 2011.

In litigation related to data transmission, Finisar Corp., a telecommunications company, sued DirecTV LLC and other cable companies over patents related to scheduling transmissions. Despite initial success at the trial level against DirecTV, the asserted patent claims ultimately were deemed invalid or not infringed.

Recently, ViaSat Inc., SpaceNet Inc. and Hughes Network Systems were sued by Network Acceleration Technologies LLC on U.S. Patent No. 6,091,710, entitled “System and method for preventing data slow down over asymmetric data transmission links.” While the case is still new and the allegations in the complaint have yet to be fully explained, it appears that Network Acceleration Technologies is targeting the broadband Internet technology of these companies.

As these cases make clear, patents will continue to play an important role in this industry.

There are several strategies that satellite companies should consider when facing a patent litigation claim.

  • A defendant in a patent litigation may wish to have the U. S. Patent and Trademark Office (PTO) play a role in defending against a claim of patent infringement. The PTO, the organization that issued the patent, may consider whether the patent in dispute should have been issued in the first place. If requested early enough in the patent litigation, it is possible that a court may stay the litigation pending a final decision by the PTO. However, bear in mind that the PTO is not required to reconsider the patent and, depending on the type of reconsideration requested, a defendant may be prevented from raising certain arguments during later stages of the litigation.
  • Due to the America Invents Act, a piece of legislation dealing with patent law that went into effect in September 2011, plaintiffs often file separate lawsuits against multiple parties involving the same patent. It may be advantageous for the multiple parties to combine forces by sharing the costs of litigation with other satellite companies as to common issues in defending the patent, in order to reduce costs and to ensure a unified strategy. This can be very effective in reducing the overall burden and cost of litigation. This strategy should be considered even if the lawsuits are separately filed in different jurisdictions.
  • Allegations of patent infringement may be based on equipment that is provided to satellite companies by vendors. It is possible that there may be an indemnification agreement in the contract with the vendor that could potentially provide coverage for the costs of patent litigation. Accordingly, these agreements should be examined early in the litigation.
  • A defendant will want to consider whether provisions in the Federal Circuit’s Model E-Discovery Order may be applicable. The model order was created in an effort to streamline discovery in patent cases. While it is not guaranteed to be adopted completely by the district court in which patent litigation is pending, it is still wise to consider whether portions are appropriate for the litigation.
  • It is important to consider whether the patent in dispute relates to all the actions conducted by the satellite companies. The technologies of many satellite companies often involve complicated networks. Therefore, it is possible that the patent at issue covers pieces of technology that are not practiced by the satellite companies alone, but by other third parties as well. If the technology of the third party is necessary for the satellite technology to function, then a possible defense is that a claim may not be brought against a satellite company since it is does not perform all the steps in the patent.
  • The damages theory in the case should also be reviewed to see whether a damages theory based on subscribers is the appropriate model. This is important to consider since the theory of damages adopted can result in wide differences in the amount of money at issue.
  • It is critical that satellite companies adopt a strong intellectual property program whereby technology developed within the company is documented and patented. Satellite companies that have patents of their own to assert may be able to deter the filing of lawsuits by competitors or to hasten settlement.

By considering these strategies, satellite companies can be better prepared to manage the expansion of patent litigation in the satellite industry.

 

George Medlock is a partner at Alston + Bird LLP and a member of the firm’s Intellectual Property Litigation Group, with an emphasis on patent litigation and enforcement. Joseph Vandegrift is an associate in Alston + Bird’s Intellectual Property Litigation Group, also focusing his practice on patent litigation and enforcement.