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This week Yelp! Inc. the online review site was served with a class action lawsuit in California for Violations of California’s Unfair Competition Statute. The complaint filed in the US District Court for the Central District of California, alleges that that Yelp! manipulates reviews, which have a direct impact on business ratings, and then offers to remove them if the business purchases a monthly advertising subscription. The Plaintiff, Cats and Dogs Corp, provides veterinary services in Long Beach California and claims that it was extorted by Yelp!
Yelp!, a San Francisco based operation which was founded in 2004, recently walked away from Google’s $550 million dollar offer to purchase. These allegations however strike to the heart of Yelp! Business model which claims to provide “real people and real reviews.” To date, Yelp’s response to the complaint has been a statement denying the allegations.
While Toyota hopes that the Toyota Tundra’s Super Bowl actual demonstration advertisement “Killer Heat”will make a lasting impression on you this Sunday, we hope it also reminds you of the binding effect of Plaintiff’s patent counsel’s litigation strategy in patent litigation and other auxiliary proceedings. This is because on January 26, 2010, the United States Federal District Court for the Middle District of Florida granted summary judgmentagainst Solomon Technologies, Inc. and in favor of Toyota Motor Corporation relating to claims of infringement of U.S. Patent No. 5,067,932.
The case is memorable for several reasons. First of all because ever since In re Gabapentin Patent Litigation in 2007 much has been written and theorized about the applicability of summary judgment in patent litigation. And also because the case stands for the proposition that litigation strategy in other related proceedingsare binding in patent cases even if the claimant retains new counsel. Specifically, what occurred is that after initiating an action for infringement in the Middle District of Florida, which included a request for injunctive relief, the Plaintiff filed a complaint with the Unites States International Trade Commission (ITC). Soon after, both parties agreed to stay the court proceeding until a determination was reached by the ITC. During the ITC procedure the parties stipulated to meaning of certain claims which included the stipulation that “power conversion means” should be considered a “means plus function” limitation. After an extensive investigation, the ITC ruled against the Plaintiff who in turn appealed to the Federal Circuit. The appeal, however, was unsuccessful and the Plaintiff returned to the original litigation to pursue its claim of infringement. However, now represented by new counsel, Plaintiff argued that “power conversion means” was not a “means plus function limitation.” Toyota responded by moving for summary judgment, and the Court concluded that the Plaintiff’s tactic of abandoning the claim construction adopted in the other proceedings was a tactic that “offends the equitable principles underpinning the judicial estoppels doctrine.” In so doing, the Court rejected the Plaintiff’s argument that the Court was not bound by the findings of the ITC and the Federal Circuit, noting that the Plaintiff was “inviting this Court to revisit the same judicial landscape with its new counsel as its guide.”
This finding, while not unexpected, is something to carefully consider, since claim construction may occur early in patent litigation cases and other auxiliary proceedings. It is yet another reason to retain patent counsel and consider litigation strategy with their input, since failure to do so may result in a binding Killer Heat.