Verdicts National Instruments of Austin,

Verdicts

National Instruments of Austin, Texas had throughout the 1990s worked aggressively to defend its intellectual property. The firm felt that it had, in 1990, developed revolutionary new techniques for programming design. Their product, LabVIEW had been a strong performer, but had run into competition. Most of the times that National Instruments filed suit, the suit was settled out of court. The first time it reached trial was the suit that had been filed against Natick, MA based the MathWorks, over its product SimuLink.

The case of National Instruments vs. MathWorks pertains to patent violations in the case of some of National Instrument's proprietary software.

National Instruments contended that intellectual property pertaining to its LabVIEW product was violated by MathWorks in its SimuLink product. These patents related to certain innovations in programming design tools. At the heart of the case were "data flow diagrams" that were used to create model systems. One of the central problems in the case pertained to the specific definition of "data flow diagram," a point that was later raised by MathWorks when the case went to appeal.

In January 2000, the suit was filed in the U.S. District Court in Texas. In January 2003, the case went to trial. The trial lasted for two-week. The verdict was reached by a jury of eight, and an announcement was made at the end of January with respect to the jury's findings. There were four patents involved in the case. Of these four, all four were found by the jury to be valid patents. The jury also found that three of the patents had been violated, while one had not.

MathWorks had put on an aggressive defense, including diagrams of prior art intended to indicate that they had developed the technology in question on their own. However, that failed to sway the jury. National Instruments was awarded a royalty in the amount of $3.5 million from MathWorks for the violation of the patents.

A post-trial hearing was held in June of 2003. This took place in the U.S. District Court for the Eastern District of Texas (Marshall Division) and was presided over by the Honorable John T. Ward. He upheld the initial ruling, and then issued an injunction against the sale of the SimuLink product, which contained the patents deemed be violated. Damages were awarded to National Instruments as well, and those damages continued to accrue once MathWorks had an injunction against the sales ban implemented. Supplemental damages, interests and costs were also awarded at this hearing.

MathWorks appealed the original finding. With the appeal, they sought a judgment as a matter of law that they did not infringe on the National Instruments patents. The appeal also sought a new trial, a judgment that the claims of National Instruments were invalid and a reversal of the previous judgment against them. Part of the basis of the appeal was that some of the terms in the original case were poorly defined. The court had adopted its own interpretations, which MathWorks felt were inaccurate. These inaccuracies, it was claimed, were material and detrimental to MathWorks.

The appeal also alleged several other errors in the original trial. MathWorks contended that the evidence presented by National Instruments did not support its claims. Several material differences between the SimuLink and LabVIEW products were presented by MathWorks during the course of their appeal. Further, the jury in the original trial had overstepped its boundaries in issuing a permanent injunction against sales of SimuLink. This injunction, MathWorks contended, was excessive, in part because the SimuLink product had many uses that were non-infringing. That the product had been used to infringe was argued to be irrelevant. What matters, MathWorks argued, is the intent of the product. In their case, they argued that the intent of SimuLink was not to infringe and that they should not be held liable for actions that some of their customers may have undertaken that resulted in infringement. During the appeal process, MathWorks had the injunction against sales of SimuLink put aside.