Judge Issues Further Decisions on Legal Dispute between DealerTrack, RouteOne and Finance Express
LAKE SUCCESS, N.Y. — In response to the latest decisions on Tuesday by Judge Andrew Guilford, of the U.S. District Court of California, DealerTrack, RouteOne and Finance Express all issued victory statements regarding the ongoing legal battle revolving around three patents.
The three patents in question are related to DealerTrack's computer-assisted credit application analysis and decision routing systems, including the methods used by these systems.
Kicking off the slew of statements was DealerTrack, which indicated that the judge issued several rulings favorable to the company.
Officials claimed that in its rulings, the court resolved in DealerTrack's favor disputed issues of claim interpretation and patent validity for the company's recently issued patent.
"The court rejected RouteOne's argument that the claims were indefinite and did not accept RouteOne's claim interpretations of claims one, two and four of the patent. The court denied RouteOne's motion for summary judgment of non-infringement," officials reported.
This follows Judge Guilford's ruling in March on this patent that denied RouteOne's motion for partial summary judgment that the patent was invalid, in addition to favorable rulings in July with regard to this patent on inventorship and validity, executives added.
As a result, the court's rulings allow DealerTrack to pursue patent infringement claims, damages and injunctions against RouteOne and Finance Express at trial, the company said.
The jury trial, which was scheduled for Oct. 28, has now been rescheduled for Feb. 24, 2009.
"The repeated delays have been caused by RouteOne's motions and Finance Express' recent withdrawal of counsel," officials claimed.
In other rulings, the company indicated that the court found that claims of two other issued patents in the lawsuit were either not infringed or invalid. In order to win on patent infringement DealerTrack has to win on only one claim of one patent, executives highlighted.
"We are pleased that the court has rejected all of RouteOne's and Finance Express' challenges to the validity and enforceability of our patent and we feel strongly that a jury trial will confirm the validity and infringement of this patent," said Mark O'Neil, chairman and chief executive officer of DealerTrack.
O'Neil added, "We are firmly committed to protecting our intellectual property rights, including enjoining RouteOne's and Finance Express' infringing activities. We are confident in the merits of our case and look forward to the jury trial in February."
Next up with a response to the recent rulings was RouteOne, which announced Wednesday that it obtained "a significant victory in its five-year patent dispute with DealerTrack."
According to RouteOne, the court ruled as follows:
—'403 Patent: All claims asserted against RouteOne are invalid.
—'841 Patent: All asserted claims are not infringed by the RouteOne system. Any system using the Internet for application transmission does not infringe the ‘841 patent.
The court also ruled that the RouteOne Messenger system does not infringe any asserted claim of any of DealerTrack's three patents, officials pointed out.
The court's decisions, which leave only DealerTrack's recently issued '427 patent for a jury trial in February 2009, eliminates nearly three years of potential damages and also eliminates DealerTrack's claim of willful infringement or any possibility of resulting trebling of damages, executives explained.
"In response to another of RouteOne's summary judgment motions, DealerTrack conceded that it had no case for willful infringement with respect to the ‘427 patent," officials claimed.
In addition to the dismissal from the suit of two of DealerTrack's patents, the court's Sept. 30 decision on claim construction issues leaves RouteOne "well-positioned for any trial on the remaining ‘427 patent," the company stated.
For the upcoming trial, RouteOne executives said the company "has not only its invalidity defenses, but also all of its inequitable conduct defenses against the ‘427 patent."
"In a previous decision announced in July 2008, the court denied in its entirety a DealerTrack motion seeking summary judgment dismissal of RouteOne's inequitable conduct defenses, which are based on RouteOne's assertion that DealerTrack withheld from the Patent Office known, highly material prior art with an intent to deceive," officials reported.
Should RouteOne prevail on any of its several grounds for inequitable conduct, the company claimed that DealerTrack may be liable to RouteOne for its attorney fees.
"We are gratified by the court's decision," said Mike Jurecki, RouteOne's chief executive officer.
"It greatly simplifies this litigation, reducing the dispute from three patents to only one patent. We are very comfortable with our defenses to the remaining patent claims and, if necessary, will deal with this remnant of the case at trial," Jurecki continued.
"We continue to believe that there was no basis for DealerTrack to sue RouteOne and intend to press our inequitable conduct defenses at trial and to recover from DealerTrack our attorney fees for having to defend the case," he added.
As for the movement of the trial, RouteOne claimed, the "trial of the case is now scheduled for February 2009 as a result of the court, on its own, having twice moved the trial date because of other matters pending on the court's calendar."
"We remain convinced, as we have been from the outset that RouteOne does not infringe any valid patent claim owned by DealerTrack. We remain focused on providing valuable products and services for our dealer and finance source customers," Jurecki pointed out.
And finally, Finance Express issued its response, and like the other two companies, also claimed that it has achieved "a significant victory over DealerTrack in its ongoing patent dispute."
In his rulings, Judge Guilford effectively dismissed all but three of DealerTrack's patent claims against Finance Express, according to company executives.
Basically, Judge Guilford rejected all of the claims asserted by DealerTrack related to U.S. Patent No. 5,878,403 by holding them invalid, Finance Express stated.
Further, for the same reasons that the court granted summary judgment of non-infringement to RouteOne, his rulings also effectively rejected all of the claims asserted by DealerTrack related to U.S. Patent No. 6,587,841 against Finance Express' accused products, the company went on to indicate.
As a result of these rulings, Finance Express said DealerTrack is left with only three claims of a single patent to pursue at trial.
As a further result of the court's ruling, if DealerTrack were to be successful, Finance Express indicated that its damages in the case are limited to Feb. 20, 2007 and forward period.
"However, DealerTrack must also prevail on Finance Express's invalidity and unenforceability claims at trial in order to be entitled to any damages. Should Finance Express prevail on any of its several grounds for inequitable conduct, DealerTrack may be liable to Finance Express for Finance Express' attorneys' fees," executives said.
Moreover, the company pointed out that DealerTrack has dropped its claim against Finance Express for willful infringement as to the '427 patent.
"This decision by the court could not have been more favorable for Finance Express," explained David Huber, president of Finance Express. "While we never expected the dismissal of all DealerTrack's claims, only three out of all their original patent claims remain in the case.
"The fact that two out of their three patents were found to be either non-infringing or invalid is an incredible victory not only for our company, but the industry in general," he continued. "We could not have hoped for a better outcome, and it supports our belief that we will prevail at trial on the remaining few issues, succeed with our counterclaims, and will recover our attorneys' fees from DealerTrack for having to defend this case."
Finance Express' attorneys also noted, "DealerTrack's claims against Finance Express have been crippled by this decision."
Huber went on to say, "DealerTrack has spent an enormous amount of their shareholders' money to stop Finance Express and RouteOne. This decision virtually guarantees that, in the unlikely event they were to prevail on the remaining few claims, the resulting damages to Finance Express would be negligible.
"Without question, this is a huge victory for Finance Express, and we are looking forward to prevailing on the remaining three claims at trial. Yesterday's (Tuesday) court rulings are so decidedly in favor of the defendants that it is hard to imagine that DealerTrack could tell the public and its shareholders that it prevailed," Huber concluded.
History of Legal Battle
After discussions of a potential business arrangement between DealerTrack, RouteOne and Finance Express broke down several years ago, a legal battle soon followed.
After the deal fell through, DealerTrack apparently began exploring legal proceedings as it contended that despite differences in applications, both RouteOne and Finance Express are infringing on its patents and asked the court system for declaratory and injunctive relief, as well as damages.
More than four years ago, DealerTrack kicked off legal proceedings against RouteOne, claiming the company is infringing on its patents.
Just over two years later, Finance Express was drawn into the legal battle when the DealerTrack took similar action against it in the New York court system. That lawsuit was soon dismissed in favor of being reinstated in the California Federal Court system.
Both RouteOne and Finance Express officials assert their business models are not infringing on any patents owned by DealerTrack, and in response to DealerTrack's allegations these companies filed countersuits.
In response to the legal action against it, Finance Express claimed in its countersuit that the company provided confidential information (or trade secrets) to DealerTrack in its previous talks and that DealerTrack misappropriated these trade secrets, among other allegations. RouteOne made similar claims.
Again, the essence of the battle revolves around three patents related to DealerTrack's computer-assisted credit application analysis and decision routing systems, including the methods used by these systems.