Well Tige will not get sued by Malibu now.

[chpthril]

No, CC was sued by Malibu, each spent several hundred thousand dollars on lawyers, and eventually they settled out of court with CC taking the first license Malibu ever issued for their SG portfolio. There was no court decision, no one won nor lost, and thus the question of validity has not been settled. It may be by MC's defense but I haven't checked on its status for a while.

feel free to split hairs. Bu took CC to court and now CC is paying the license. Slice it anyway you want. People with a winning case rarely settle in any manor to which it cost THEM monetarily. Bu won that round. To have no winner or loser would be a tie. Or in the legal world, case tossed out by court.

[IDBoating]

Not arguing, just being informative. Not splitting hairs either. The difference between a court decision and a settlement between the two parties is very real and very significant, particularly with patents.

If you read the court history for the case between Malibu and CC, the latter had very poor legal representation. They made several key mistakes, enough that we've had some lively discussions about them with two different patent law firms. That doesn't read on the (in)validity of Malibu's patents, but it does establish a tone during a particular prosecution. And since patent cases often involve a lot of subjectivity (as do patent issuances!), tone matters a lot.

But more importantly, there are a couple of details that I think led to a settlement:

* The very first company Malibu sued was the company that had the closest system to SurfGate. CC's system pushes tabs/diverters/fins/whatever out beyond the plane of the SIDES of the hull. Everyone else significant I can think of off the top of my head uses more traditional trim tabs that project BELOW the hull, not to its side. It would be easiest to "prove infringement" against CC versus, say, Tige or MC or SC.

* If you're seeking to extract licensing fees from people, there is enormous value in having some already in the bag. It projects a sense of validity. This is classic licensor behavior; it's been practiced for decades. You pick off the easiest guy first to set the precedent, then you pick off the rest as your "appearance" looks stronger with every licensee.

* And that's why I suspect CC got a "heck of a deal". I have nothing to corroborate this, but I bet CC got a sweetheart deal for settling because doing so also served Malibu's interests. It stopped the bloodletting of paying Malibu's attorneys (~$300K per quarter, as reported in their SEC filings), it gave Malibu their important "first licensee", and it successfully attacked the one of the Big Three who had a system closest to SurfGate. Meanwhile, it served CC's interests too. They were undoubtedly burning attorney cash just like Malibu, and they had this big unknown potential exposure hanging over their heads. In walks Malibu with a sweetheart deal, which likely costs less than the attorney bills and puts the matter behind them. CC doesn't care that settling strengthens Malibu against other industry players; they're only responsible for running THEIR business, not their competitor's. It's not CC's job to police the industry and secure altruistic moral victories.

With CC in the bag, Malibu instantly went after Mastercraft. This step was meant to expand the scope of their claims, in my opinion well past what is supported by reality. Trim tabs have been on boats, and have been imparting list and yaw to hulls, for decades. The fact that they weren't originally installed to enhance a surf wave is meaningless. Malibu cannot go back and retroactively claim that, basically, Lenco and Bennett have been selling "surf systems" all these years. Trim tabs exist; that they have lately proven useful for something new does not change history. If anyone had installed port and starboard trim tabs on a wakeboat prior to (IIRC) ~2011, there is no basis to claim them as being covered by a later patent.

Malibu has excellent patent counsel. They are running the classic playbook of maximizing their ROI on their intellectual property and (so far) it's working. As I've said, SurfGate is a stunningly brilliant insight worthy of protection. Morally I think they crossed a line when they went after MC and Tige, but that doesn't reduce the innovation of actual SurfGate. It remains to be seen how well MC can argue their position. If the case starts leaning toward MC, and threatens to question the validity of the SG patents (particularly with respect to trim tabs that project down and not sideways), I would again expect Malibu to offer MC a private, undisclosed, sweetheart deal to prevent establishing the precedent that their SG patents don't have the scope that they are telling licensees like Tige that they do. Better to take a smaller payment - or none at all! - than risk killing the goose that is laying golden eggs.

[h2o-ski]

Another consideration, is that normally forcing a competitor to pay and invalidating the patent go down 2 different paths. The first one is the sue'e showing how their product does not violate the patent through the claims or prior art. The 2nd, invalidating patents involves getting evidence of prior art or previously issued patents and presenting it to the US patent office who then reviews. If any one had kept up with the Apple v. Samsung patent litigation, there was I think 3 or 4 different trials going on in these different paths, Samsung trying to prove prior art and Samsung trying to invalidate Apple's patents.

Invalidating a patent does not invalidate licensing agreements made before the patent was invalidated unfortunately.

[Stingreye]

Wonder if this is a sign of a new surf system that would clearly infringe on Malibu's patent. Tige isn't afraid of changing surf systems quickly (Vx, Avx, and TAPs3 in successive years).

[Greeko]

wow, the land of the free and Sue everyone LOL

[IDBoating]

Invalidating a patent does not invalidate licensing agreements made before the patent was invalidated unfortunately.

A well written licensing agreement includes an escape clause if the underlying patents end up being invalidated. When we negotiate such things and the licensor balks, we simply ask "If you don't have faith in your own patents, why should we bother licensing them?"

[ericinmich]

I worked in controls design/dev in the big 3, involved in many of their patents. In the automotive areas there are thousands (millions?) of patients poorly written and cross over each other that there could be many many lawsuits. In the automotive areas, it's a bit of "mutually assured destruction" to the point they don't sue each other when the often could. Obviously the marine industry isn't at that point...

[IDBoating]

Not yet, for sure. But we are starting to dig into the patents from the automotive industry for prior art, to possibly invalidate some of the patents now being issued in the marine industry. There are some involving CAN and distributed power control, in particular, that look exactly like things that had already been shipping in cars and trucks for a decade or more. Those should have read as prior art on the marine patents, but since they two are considered different "art units" within the PTO it's likely the one isn't familiar with the other's material. The Examiners are under intense pressure so it's very common for them to miss things that are on-topic yet not within the normal purvue of their discipline.

What may prove most interesting is that some of the companies to whom such patents have issued ALSO sell to the car/truck industries. In which case, they almost certainly knew about the prior art but according to our research (PTO records are publicly viewable), they failed to notify the PTO in what is known as Information Disclosure. Failure to notify regarding prior art that you knew about is called "Fraud on the Patent Office" and is a Very Big No-No that causes all sorts of nasty problems if someone OTHER than the applicant is the source of the information. In other words, they would be better off to notify the PTO themselves now than to risk having the issue raised by a third party.