Re: Realtime Transcription and the Engate Patents

Posted: August 20, 2004

Overview

On August 19, 2004, by order of the Honorable MATTHEW F. KENNELLY, United States Federal District Court, Northern District of Illinois in Engate, Inc. v. Esquire Deposition Services, L.L.C. and Atkinson-Baker, Inc. , Case No. 01 C 6204, ten Engate interactive real-time patents were ruled invalid.
[Click here to view the full opinion]

The August 19th ruling coupled with Judge Kennelly's two previous summary judgment orders in favor of defendant court reporters, finding no direct or indirect infringement of Engate real-time patents, reinforces what Summation has repeatedly stated in previous postings:

First and foremost, we want to stress that we believe neither Summation's products nor use of those products by court reporters, attorneys and other professionals infringe any valid patent claim. [Summation is not a party to the above or any other Engate patent litigation.]

Highlights from the non-infringement summary judgment rulings includes:

"[T]he patents in suit do not cover real time court reporting generally.," [2003 WL 22117805, at *2 (ND. Ill. Sept. 10, 2003)]

"Engate has no right to prevent the use of real time reporting in and of itself." [Engate, supra. At *2]

Engate has not argued or shown that "Interactive Real-time", "Internet Real-time", and "Synchronization of Video to Transcript" can be only achieved by the means of the methods and systems claimed in the patents." [Engate, supra. at *11]

"[B]ecause the software products [Defendant Court Reporters] were using had substantial non-infringing uses, neither knowledge of possible or even probable infringement nor failure to prevent the infringement constitutes intent to actively induce infringement. Thus Engate cannot prove inducement or even create a genuine issue of fact as to that element." [2004 WL 609800, at 11 (ND. Ill. March 26, 2004)]

Highlights from the invalidity summary judgment order relating to each of the eleven claims ruled invalid are too numerous to include herein. (Again, see the link to the full opinion above). As such, we focus on a segment of the order addressing the Computer Integrated Courtrooms (CIC's) of the late 1980's and early 90's. Interactive real-time features used in the CIC's and described in several publications pre-dating the Engate patents were cited as supporting prior art for a number of the invalidity rulings.

"The use of real-time transcription in these courtrooms plainly constituted a public use, not an experimental one. The CICs were sponsored by the National Court Reporters Association to display the new services court reporters were capable of providing. The judges and lawyers used the technology on a day-to-day basis to do their work; they were not testing the efficacy of the system for software developers. Furthermore, no promise of confidentiality was imposed on the users. Quite the contrary, articles about the CICs, featuring interviews with judges and lawyers who used the system, were published in well-known magazines with national circulation. Although Xscribe Corp. donated the real-time transcription software used in the Phoenix courtroom, the Knox article discusses prices for setting up CICs, making clear that Xscribe's software was on sale. Knox, supra, at 6. When the cost of the technology is published, the court can infer that the seller wants to exploit the product commercially." [August 19, 2004 Amended Order at 10-11]

Thus we conclude that the defendants have shown by clear and convincing evidence that the CICs in Chicago, Detroit and Phoenix were in public use, and Engate has failed to raise a genuine issue of fact that the CICs served a primarily experimental purpose. The use of functions that enhanced real-time transcription services in the CICs constituted public uses that occurred prior to the critical dates of the patents at issue in this case." [August 19, 2004 Amended Order at 11]

The highlighted section above is also noteworthy because the Court recognized that the NCRA sponsored the CIC's. The NCRA's constituents are court reporters. Ironically, the class of entities and individuals who Engate has sued for patent infringement or issued demand letters to, may include those whose dues sponsored the CIC's where subject interactive real-time features were spawned.

Token System & Summation

Summation has not embedded a token-based system in any of its products. A token is not required to access the interactive real-time functionality currently in Summation's software.

The token system is an outgrowth of a combination between LiveNote and Engate, formed before the eleven patents were ruled invalid. The unveiling of the token system began in the summer of 2003. LiveNote, announced that it had entered into an exclusive license with Engate covering all of Engate's present and future patent claims. The patent claims licensed from Engate included the eleven the court ruled invalid, and others which are allegedly invalid because of prior art.

A provision of LiveNote's agreement with Engate to obtain the exclusive licenses to Engate's patent portfolio, was the inclusion of a lock-out mechanism in LiveNote's software precluding the receipt of any real-time feed without the payment of a token. LiveNote indicated that in addition to agreeing to incorporate the lock-out mechanism, it was able to procure the exclusive license agreement with Engate because of its market power in the real-time transcription market. In conjunction with this exclusive license, LiveNote proposed an "industry wide plan" that would include a license fee of $35 per connection per calendar day.

Summation declined to be part of the so-called Live Note/Engate "industry wide plan." Summation has declined LiveNote's offer to incorporate the LiveNote/Engate token system in its software, and receive a share of the license fee for tokens purchased for unlocking real-time functionality in Summation.

The Summation Blaze LG® product line, including the award- winning Summation iBlaze® are certainly products where the lion's share of the real-time functionality, such as quick-marks, automarks, annotations, issue-coding, and skipping to annotated transcript sections, relate to the interactive-realtime claims the court ruled to be invalid in its July 30, 2004 order. Any remaining real-time features in these products, have substantial non-infringing uses. These Summation products include features for searching, issue-coding, and annotating OCR documents and non-real-time transcripts. And of course the summary judgment is not the end of the line on the invalidity issue; a reading of the court's opinion (and prior art) regarding other claims not declared invalid on summary judgment suggests a very real prospect that they could later be adjudicated invalid.

LiveNote has propagated the term "Engate-Compliant™ Software". (It is not clear whether Engate-Compliant™ is a trademark of Engate, LiveNote, both or either.) According to LiveNote in a press release issued in the summer, 2003 "Engate-Compliant™ Software is defined as follows:

"Engate-Compliant™" software:

"This will be accomplished via the introduction of a new system precluding the receipt of a real-time transcript unless the recipient has purchased a license in the form of a 'token.' Attorneys may purchase tokens directly from LiveNote or via court reporters and agencies acting as resellers. This new token system will be released in version 8.3 of our software, and will commence on January 1, 2004."

As of the posting date herein, we have never seen a modification of LiveNote's definition of Engate-Compliant™ software as set forth above.

Precluding receipt of a real-time transcript, in and of itself, by requiring a token flies in the face of the court's repeated statement that Engate has no right to exclude the use of real-time generally or realtime in and of itself. Furthermore, requiring a token (license fee) to access interactive real-time features ruled by the court to be the subject of invalid Engate claims extends the patents beyond their scope (a potential basis for patent misuse or abuse). As such, promoting "Engate-Compliant™" as defined in the aforementioned LiveNote press release, and procuring license fees from customers under the above definition (or any definition extending the patents beyond their scope vis' a vis' the invalidity rulings) could be problematic. For example, telling a customer they need to purchase a token in order to receive a realtime feed creates a potential risk for liability to customers or a class thereof paying those fees. Likewise, the same analysis could apply to requiring a customer to purchase a token in order to use realtime features of the type ruled invalid such as quickmarking, automarking, autotagging, issue coding, annotation, and/or others.

Last but not least, beyond claims ruled invalid by the July 30, 2004 summary judgment order, Engate has never asserted or otherwise intimated to Summation that any feature of a Summation product infringes a valid Engate patent claim owned by Engate. (As of course Engate has never asserted, much less shown, that a particular function or feature in a Summation product can be only achieved by methods or systems set forth in a valid Engate patent claim.)

For the reasons set forth above, among others, Summation believes it has no right to preclude, without the purchase of a LiveNote/Engate token, our customers from:

1. receiving a real time transcript in and of itself into our products;
2. using in our products interactive real-time features that correspond to patent claims the court ruled invalid;
3. using features that are achieved by methods or systems beyond those claimed in valid Engate patents -- .

Request for Information

If you have any questions or wish to convey information regarding the above, please contact Nancy Hopp at 877-737-0800 or e-mail her at nhopp@summation.com.

This message is for informational purposes only. Nothing in this message is intended as specific legal advice. No express or implied legal representation has been created. Nothing in this message should be construed as indemnification by Summation for any conduct related to the use of Summation software. This statement should not be construed as a representation of immunity from a lawsuit arising from the act of transcribing real-time into Summation or using Summation software for receiving a real-time session. Nevertheless, if you have heard or are aware of any statement, threats or innuendo of patent infringement regarding the use of Summation software for receiving a real-time session, please advise us immediately. Please include in detail a description of the particular feature or function of Summation, and what patent claim or claims are at issue. Please convey any such information to Nancy as soon as possible.

About Nancy Hopp

Prior to joining Summation, Nancy was a court reporter for 25 years and a partner at Sonntag Reporting Service, Ltd., in Chicago, Illinois. Her reporting career has been diverse, including assignments as varied as the Space Shuttle Challenger accident investigation and Pope John Paul II's visit to St. Louis, as well as vast experience in writing realtime. Nancy is a Registered Diplomate Reporter, a Certified Realtime Reporter, a Certified Manager of Reporting Services, and a Contributing Editor to the National Court Reporters Association's Journal of Court Reporting. She also serves on the State of Illinois Certified Shorthand Reporters Board and the National Court Reporters Association Convention Committee.

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