Troutman Sanders: Judge Jackson Enjoins Verzion FIOS’ Video on Demand Service but Grants Six Month Sunset Provision

By Dabney Carr

As we posted here and here, ActiveVideo Networks won a jury verdict that the Verizon FiOS Video on Demand ("VOD") Service infringes two of its patents. On November 23, Judge Raymond Jackson granted ActiveVideo's motion for a permanent injunction of the FiOS VOD service but instituted a six-month sunset provision so that Verizon could implement a non-infringing alternativeActiveVideo Networks, Inc. v. Verizon Comm's., Inc., 2011 U.S. Dist. LEXIS 135673 (E.D.Va. Nov. 23, 2011) (Jackson, J.) (opinion found here).

Applying the four-factor test for a permanent injunction from eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), [enhanced version available to lexis.com subscribers  /unenhanced version available from lexisONE Free Case Law ] Judge Jackson ruled:

  • ActiveVideo was suffering irreparable harm from Verizon's continuing infringement even though it was not a direct competitor of Verizon.
     
  • ActiveVideo's willingness to license its patents to Verizon prior to the jury's verdict did not preclude injunctive relief.
     
  • "With every customer Verizon has unlawfully acquired, they have taken away ActiveVideo's ability to spread its brand name, to obtain references from potential customers and to expand its goodwill ..."
     
  • ActiveVideo's diversion of millions of dollars to its litigation against Verizon qualifies as lost opportunities which can support a finding of irreparable harm.
  • ActiveVideo's failure to request a preliminary injunction did not bar it from obtaining a permanent injunction.
     
  • In the absence of some other key interest, the value of consumer entertainment will not outweigh the public interest in protecting patents.

Judge Jackson awarded ActiveVideo a royalty of 40% of Verizon's profits from the FiOS VOD service, equaling $2.74 per customer per month.

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