Buffalo Technology Can Sell Again in U.S.�For Now

Buffalo Technology, which has been embroiled in ongoing U.S. patent litigation with the Australian organization Commonwealth Scientific Research and Industrial Organization (CSIRO) over its Wi-Fi products, got a break Wednesday when a federal judge stayed the permanent injunction that had been preventing the wired and wireless networking, storage, and memory solutions vendor from selling, using, importing, or manufacturing its IEEE 802.11a- and 802.11g-standard-compliant products in the U.S. 

CSIRO originally sued Buffalo Inc. and its US affiliate Buffalo Technology (USA) Inc. in 2006, alleging that Buffalo’s products infringed its U.S. Patent 5,487,069, which was filed in 1993 and concerns Wi-Fi technology relating to the transmission and modulation of wireless signals. 

In June of 2007, after the U.S. District Court for the Eastern District of Texas held that Buffalo’s products did, in fact, infringe certain claims of the patent and that those claims were valid, the Court ordered Buffalo to stop selling its (allegedly) infringing products in the U.S. immediately.

Buffalo appealed that order to the U.S. Court of Appeals for the Federal Circuit.

On September 19, 2008, the Federal Circuit remanded the case back to the district court, raising the issue of whether the CSIRO patent is, in fact, valid. To be certain that by vacating the decision on validity the injunction was also lifted, Buffalo’s legal team, led by Dick Kelly, asked the trial court to stay the injunction to the extent that it was still in force.

“We weren’t sure that [vacating the decision on validity] necessarily lifted the stay, so we went back to Judge Davis, and he—and everyone, including CSIRO–agreed,” said Kelly. “We did not want the possibility of being accused of violating an injunction and being held in contempt of court. It’s better to be safe than sorry. We’ve got the blessing of the court and we’re now off to the races.”

The order staying the permanent injunction means that Buffalo is free to sell IEEE 802.11a, 802.11g, and 802.11n-compliant products in the United States until a new decision is rendered. 

As of 3pm EST Thursday, customers could not yet purchase products via the Buffalo Web site. Visitors to the product pages for Buffalo’s Wi-Fi-related devices received only the outdated news that the injunction was still in place as of September 19, 2008. Representatives from Buffalo did not respond to inquiries by press time, but Kelly said he was surprised that the product pages were not yet active. He speculated that the likely cause was that the company has no inventory.

“They could not have any imports,” said Kelly. “They couldn’t bring in any material, so that they have to basically bring them in now, appropriately boxed and labeled for the US. That’s likely the delay here. I would suspect that they’ll have the Web site up selling as soon as possible.”

The next step in the case is a status conference to be held in Texas on December 16th, at which time Judge Davis—who has presided over the case from the beginning—will determine whether the other suits being brought by CSIRO against a long list of defendants, including Intel, Marvel, Belkin, Cisco, and Netgear will be consolidated.

The best case scenario, said Kelly, is that the patent is invalidated. Buffalo’s legal team contends that prior art dating back to 1991 invalidates CSIRO’s 1993 patent, which applies only to IEEE 802.11 a, g, and n—not 802.11b. “I have no idea why,” said Kelly. “But we’ve been able to supply b products to some OEMs.”

The worst case scenario for Buffalo is that the patent holds up in District Court. “Then we have no other defenses,” said Kelly. “We would then appeal.”

If the CSIRO patent is not invalidated, the terms of the settlement are likely to be large, said Kelly. “They want past damages, based on sales to date. They would then also want a running royalty going forward, whether they would entertain a lump sum payment, we don’t know. The parties could—if there’s a separate trial on validity and everybody loses—we could sit down and settle or go to trial [to determine damages].”

Some of the defendants in the various CSIRO suits have a trial date set for April.

In a statement issued at its Web site Wednesday night, Buffalo said it, “expects that the trial court will, in the near future, schedule a trial on whether CSIRO’s asserted patent claims are invalid and is confident that a jury will vindicate its position.”

CSIRO made no public comment today and could not be reached for comment by press time.

Naomi Graychase is Managing Editor at Wi-Fi Planet.

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