By Vanessa Blum
The Recorder - July 15, 2013
A Northern District patent trial pitting rival website translation businesses and their elite law firms has ended in a $1 million award.
In a verdict reached Friday afternoon, the jury sided with TransPerfect Solutions Inc., represented by Latham & Watkins and Kasowitz, Benson, Torres & Friedman.
Competitor MotionPoint Corp. and its lawyers at Quinn Emanuel Urquhart & Sullivan did not prevail on any claims.
Specifically, the jury found TransPerfect did not infringe three MotionPoint patents related to scanning a website's content; keeping foreign language versions synchronized; and managing the work of human translators and also found the patents to be invalid. The jury assessed a 4 percent royalty against MotionPoint's revenues and nothing against TransPerfect, after a roughly two-week trial before U.S. District Chief Judge Claudia Wilken in Oakland.
Though hardly an eye-popping award, TransPerfect's lead lawyer, Latham partner Douglas Lumish, said in an interview Monday morning that the case was never about money. The team's legal strategy centered on fending off patent claims made by MotionPoint, he said.
"This case was about who was going to have control of the marketplace going forward," Lumish said. "Is it going to be a one-player market with a monopoly patent that blocks everybody out? Or is it going to be good old-fashioned American competition?"
Had the trial gone the other way, MotionPoint was asking for lost profits of $11.6 million and intended to seek a ban on TransPerfect's website translation services.
Instead, jurors found MotionPoint infringed a 2005 TransPerfect patent by employing a single-action translation button and rejected MotionPoint's patents.
MotionPoint's lead attorney, Quinn partner Robert Stone, said his client is disappointed but "remains resolute in protecting its intellectual property." Neither side was awarded what it asked for, Stone noted.
"MotionPoint believes that its rights ultimately will be vindicated," he added.
TransPerfect and MotionPoint are both privately owned and offer competing cloud-based translation services, where their computers act as an intermediary between a client's English-language website and the Internet user seeking translated content. The firms use software to detect changes in the client's site and employ a combination of automated and human translation to update the foreign language site.
New York-based TransPerfect is 99 percent owned by its two founders, Phil Shawe and Elizabeth Elting. Riverwood Capital, a Menlo Park equity fund, owns the majority stake in MotionPoint, which is located in South Florida and counts Best Buy, Delta Airlines and Verizon as clients.
Don DePalma, chief strategy officer with the market research firm Common Sense Advisory, said the trial had high stakes in the language technology sector. DePalma's firm, which provides research in the translation industry, counts TransPerfect as a customer.
"The technology that's in question here is being used by dozens of suppliers," DePalma said. "MotionPoint could have had everybody in court for the next five or 10 years."
Now, according to DePalma, the question is whether TransPerfect, buttressed by the jury's decision, will get aggressive with its single-action translation patent.
Lumish said his client has not decided whether to seek an injunction against MotionPoint or how it will assert its patent.
"They've never sued anyone for patent infringement before. This case obviously started with a focus on MotionPoint's patents," he noted.
The dispute started in late 2009, with a letter to TransPerfect informing the company that MotionPoint intended to "enforce its intellectual property rights aggressively." TransPerfect filed a declaratory judgment action against MotionPoint in June 2010.
Lumish, then a Kasowitz partner, stepped into the case the following year, replacing a team from Orrick, Herrington & Sutcliffe. Just six weeks before trial, Lumish joined Latham. Rounding out TransPerfect's trial team which combined lawyers at both firms were Latham partners Jeffrey Homrig and Gabriel Gross in Silicon Valley and Michael Eisenberg in New York, along with Kasowitz partner L. Okey Onyejekwe.
For MotionPoint, Stone, a partner in Quinn's Silicon Valley office, was backed up at trial by San Francisco partner Amy Candido and New York partner Richard Erwine. (Quinn litigator Charles Verhoeven, who represented Samsung Electronics Co. at trial against Apple Inc., had been listed as MotionPoint's lead attorney on court documents but did not participate in the translation trial.)
The Quinn team had tried to portray the case as a David versus Goliath showdown. TransPerfect, a larger business, attempted to acquire MotionPoint, Stone said, and when that failed simply copied its patented methods for translating a complex website.
In his closing argument last week, Stone told the jury his client was an innovator and TransPerfect, an imitator.
Lumish insisted it was MotionPoint that was late to the field of translation and failed to appreciate how much work had already been done.
"They recreated the wheel," Lumish said "That doesn't make you an inventor."