By Matthew Spieler
Hicksville, N.Y.—For the first time since laminate companies began suing each other over patent infringements of mechanically locking flooring panels has a case gone to a jury trial and a verdict was handed down. Unfortunately, the case is far from over.

The case in question involves a 2002 suit by Pergo accusing Alloc, Berry Wood and Armstrong World Industries of infringing upon two of its U.S. patents—6,421,547 and 6,397,970. The accused products were manufactured by Alloc and Berry and were subsequently sold by Armstrong. Alloc and Berry are members of the Beaulieu International Group (BIG) and Armstrong is a customer and licensee of the BIG. The accused products featured locking systems that were manufactured under license of Välinge Innovation AB from Sweden.

Last month, after a two-week jury trial in U.S. District Court for the Eastern District of Milwaukee, the jury decided the accused products do not infringe any of the asserted claims. In addition, it found all claims asserted by Pergo against the defendants invalid.

Christophe Deroose, BIG’s CEO, called the verdict “a true milestone decision. It is the first time since glue-free laminate flooring was introduced to the market in 1996 that a legal action in the U.S. in this field has gone to a jury verdict.” He feels the experience Alloc, Berry and Välinge have built in the last 10 years “has largely contributed to this victory.”

Frida Rosenholm, senior vice president and general counsel of Pergo AB and head of Pfleiderer’s (Pergo’s parent company) Intellectual Property Business Unit, said it is still too early for either side to be claiming victory. “This is a jury verdict, not a district court decision. Pergo will be asking the judge to set aside the verdict as we find it inconsistent and not supported by the evidence presented.” The content of the judge’s decision, expected in late spring, will dictate whether Pergo appeals the verdict.

In a sense, the same holds true for BIG in that if the judge does set aside the verdict it will need to decide whether it should appeal.

If the jury verdict were to stand, Rosenholm feels the ramifications will not be a big deal. They would be only if the verdict gets overturned. “You have to put this verdict in perspective. The verdict only pertains to eight claims of 64 in two of our patents. Since Pergo has over 450 patents and patent applications in its portfolio divided into 90 patent families, several of them relating to mechanical joints, a negative final decision would have a limited effect on the company.”

Deroose believes different, saying, “We consider the patents as a whole of no threat any longer.” Why? “We consider these eight claims as essential for the product/technology and the patents as a whole. The number of 64 claims must be put into perspective also. The two patents involved only have about 10 independent claims and 54 dependent claims. This means if an independent claim is invalidated, all claims depending from this independent claim are invalidated as well.”

If the verdict is overturned, Rosenholm noted, “The case would have a significant financial impact for the parties and the industry as a whole. Companies would have to pay us a license fee for all products with tight glueless joints or stop selling such products.”

If this all sounds confusing, don’t worry, you are not alone; both sides readily admit the complexities of these patent cases are a reason this is the first time one has gone as far as a jury.

“Patent holders will think twice before taking a patent case to a jury,” said Rosenholm. “Sometimes, unfortunately, juries fall for colorful, yet legally irrelevant arguments instead of looking at the facts. This is especially the case where the other side has a home court advantage with a local jury inclined to side with local industries, as we faced in this instance.”

While Deroose agreed “the outcome is quite often unpredictable—even before a professional judge—because of the complexity of the matter and the pre-trial decisions, which makes each case different,” he added, “On the other hand, BIG has always been convinced of the strength of its arguments and the solidity of its own position so it had no alternative but to come up for its rights and litigate the matter whatever the cost. The outcome shows it paid off.”

So, while the parties await the judge’s decision in this case, they can turn their attentions to another case in the same court. The difference in this one is BIG, through its Berry Finance subsidiary, is the plaintiff and Pergo is the defendant.

“We hope the lawsuit against Pergo will go to trial within a year, and we are confident we will prevail,” Deroose said. He added Berry Finance is also involved in a lawsuit with the Belgium company, Balterio.

Rosenholm said the latter suit is “basically the same litigation as the International Trade Commission (ITC) case where the ITC, and in 2003 the court of appeals, found Pergo does not infringe on certain patents owned by Välinge. The litigation is slowly moving through the system.”

Interestingly, even though lawsuits have been filed by both sides, Rosenholm noted Pergo has “had settlements with both [Välinge and Unilin, the other major patent holder of mechanical locking systems] and overall have a good relationship with each other.”

And, despite the large amount of legal fees manufacturers have spent over the last 10 years on these patent infringement cases—which many feel could have been better spent advancing the category through research and development—Rosenholm contends these lawsuits are a necessary evil until companies around the world start respecting the intellectual property of others. “If somebody is using our technology without paying, we may have to take the matter to the courts. The patent lawsuits will end when companies start paying to use technology invented and patented by others, and not as the case is today where they use the technology without paying.”