It was during CinemaCon of 2014 when RealD served papers on MasterImage and Volfoni for infringement of its patents detailing polarization light doubling for 3D projection. MasterImage alone chose to fight the case. As often occurs in infringement cases, Masterimage filed inter partes review (IPR) with the US Patent and Trademark Office (USPTO) to invalidate RealD’s patents. During CinemaCon this year (2016), the USPTO issued its final written decision with regard to US patent 8,220,934 (‘934), crippling the patent by invalidating its most powerful claims, and reducing the novelty of the invention to a method not seen in actual products.
The decision is available on the USPTO web site, if one knows where to look, but available here for readers. The decision is based on prior art not previously considered in the prosecution of RealD’s patents, originated by Kodak, Minolta, Westinghouse, and Stereographics (long acquired by RealD), one of which dates back to 1982. (For those reading the decision, references to patent inventor “Liptoh” are to Lenny Lipton. Apparently his last name was misspelled at the time of patent filing, and the error continues to propagate.)
The impact on the worldwide standing of this patent is substantial. The ‘934 patent was challenged when first attempting to file in Europe, where the European Patent Office (EPO) accepted the modification of key claims presented by RealD in its defense. The result was a reduction in the total number of claims from the original ‘934, and the overall strength of the patent. If RealD were to assert the EPO version of ‘934 in Europe, the alleged infringer could file a new “opposition” to the patent based on the recent USPTO action. An application based on ‘934 was also made to the World Intellectual Property Office (WIPO), for which patent status remains to be granted. One would expect that the recent action of the USPTO will be considered in WIPO’s final decision.
In practice, however, the impact of the ‘934 invalidation on the market may not be so strong. RealD significantly retains intact its 7,857,455 (‘455) patent for polarized 3D light doubling, which the USPTO declined to review. Even if invalidation of ‘934 led to a more open market, the worst for RealD is that it would have to compete on price, quality, and service, rather than dominating the market through intellectual property. In the end, the winner would be the exhibitor. Fortunately, as a newly private company, RealD is in better position to react to such challenges than before, should they occur.
Those following this case will recall that these patents are also before the US International Trade Commission (ITC), which has now delayed its decision regarding US importation of MasterImage’s Horizon light doubler until June, as a result of the USPTO decision. It’s possible that the ITC could take it upon itself to review ‘455. Or not. Prior to the USPTO decision against ‘934, the ITC issued new questions of the parties, as reported here. At this point, speculation on the outcome of the ITC case is pure guesswork.
The oddity of the patent invalidation is that it was RealD who put this on itself. When seeking to use its patents to offset competition, a legal battle that would inevitably include the risk of IPR of its patents should have been the last option on the list. Polarized beam splitting has long been used in LCD projectors, resulting in a rich stew of experts willing to point out why RealD’s patents violate prior art. RealD was successful in shooing away Volfoni, who has no resources to fight legal battles. But it’s hard to believe that it never occurred to RealD’s management that Masterimage, whose investors include Foxconn and Samsung, would be motivated to fight back. Other options could have included a cross-licensing deal so that RealD would benefit from the R&D of others, which could have led to a reduction in its massive $20M annual R&D budget. Of course, there was always the option to simply buy out competition. If arrogance is what led RealD into the invalidation of a key patent, then this was a tough lesson learned.
