Friday, December 10, 2004

Discussion of Insituform case

Following a remand in view of the Supreme Court decision in Festo, Insituform won at the Federal Circuit by rebutting the presumption of surrender by using the tangential prong.

Jack Naudi discusses other aspects of the case.

-->Perhaps the most amazing aspect of the case is how relatively small it is at the core.

Cat Contracting stands accused of infringing on Insituform's patented pipe-repair process from late 1989 to mid-1991.

A federal judge ruled in 1999 that Cat owed Insituform $3.6 million in actual damages, a figure that's less than 1 percent of Insituform's 2003 revenues of $487 million.

Attorney fees, interest and other penalties added another $5.9 million.

At the time of the ruling, Insituform had claimed $1.6 million in attorney's fees. The company won't say how much it has spent since then.

Cat Contracting hasn't disclosed its legal expenses.

The case has dragged on for so long that not only is Cat out of business, so are two successor companies, Inliner USA Inc. and Firstliner USA Inc.

That means the primary defendant is Guilio Catallo, the founder and owner of those three companies.

Vickery, one of Catallo's lawyers, is frustrated by Insituform's aggressive pursuit of the case.

"Whenever I meet with a new client, at some point in the conversation I say, 'Tell me what your goals are,'" Vickery said. "I think it's pretty clear that the goals that they sought to achieve were achieved years ago. It has nothing to do with collecting any money from Cat or Inliner or Guilio Catallo."

Often, money isn't the key factor, said Sam Digirolamo, a patent lawyer who heads the intellectual-property group at Blackwell Sanders Peper Martin LLP in St. Louis.

"You're protecting your turf," Digirolamo said. "If you stop the first competitor, that's going to make it a lot easier for other competitors to stay away from your patents." <--

The case is on remand for analysis of damages issues:

The district court must reconsider a 1998 determination that Cat Contracting acted willfully, which could increase the size of the award.

Andy Vickery of Houston, the lawyer for the defendants, said he doubts Insituform will prove willful infringement of the patent or receive any damages.

But Harold James, a lawyer in New York who has represented Insituform throughout the entire case, disagrees. "It seems no doubt that we will collect substantial damages," he said.


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