Defense Jury Verdict in Six-Patent Case in Eastern District of Texas
On April 12, Quinn Emanuel obtained a complete defense verdict on behalf of client KeyMe, LLC, from a jury in a six-patent case in the Eastern District of Texas, before Judge Gilstrap.
KeyMe provides more than 4,000 automated key-duplicating machines throughout the United States. Built with industry-leading software, KeyMe’s machines use artificial intelligence to recognize hundreds of different key types and to create new keys for customers that work better than the original. Through KeyMe’s technology, users can also store digital versions of their keys in the cloud, so that if a customer is locked out, they can visit any kiosk to get a replacement key made.
Plaintiff The Hillman Group also offers self-service key duplicating machines, using older technology. Hillman had put a self-service key duplicating machine into the market before KeyMe did, but once KeyMe entered, its superior technology allowed it to displace Hillman from multiple retailers. After KeyMe won a major retailer away from Hillman in early 2019, Hillman attempted to use the courts to do what it could not do in the market: beat KeyMe.
Hillman initially filed suit in June 2019, asserting two patents. In the meantime, Hillman was filing additional fast-track patent applications at the PTO. Each time a new patent issued, Hillman would add it to the litigation. Hillman ultimately asserted six different patents in two separate suits.
Just before claim construction, KeyMe’s previous counsel was disqualified. Enter Quinn Emanuel.
The firm first convinced the Court to allow KeyMe to present different claim construction positions than it had presented through previous counsel. These claim construction positions ultimately provided KeyMe with a global non-infringement defense to all six patents. Also in pretrial, Quinn Emanuel successfully moved the Court to consolidate the two actions into one. This was a major victory, both because it prevented Hillman from taking two bites at the apple, and delayed the (now-combined) trial by a few months, allowing KeyMe to take additional discovery to fortify its case. Quinn Emanuel then developed a new trial narrative that focused on KeyMe’s superior AI technology, which Hillman had never developed and which had not been captured by Hillman’s patents. This AI-based narrative also provided the bedrock for multiple non-infringement positions at trial. Finally, at the pretrial conference, Quinn Emanuel successfully convinced the Court, over numerous objections from Hillman, to admit evidence of IPR proceedings against one of the asserted patents which had gutted its alleged novelty.
Trial began on Monday, April 5. Hillman sought to capture a running royalty of 25% of KeyMe’s profits for both past and future sales. Hillman also sought treble damages for willfulness and a permanent injunction.
In its opening statement, Hillman claimed that it had invented self-service key duplicating machines and that KeyMe was merely copying Hillman’s technology. But this narrative never got off the ground, as Quinn Emanuel repeatedly demonstrated its trial theme that KeyMe, not Hillman, was the real innovator in the courtroom.
Over the week-long jury trial, the Quinn Emanuel team demonstrated, first, that Hillman had not invented self-service key duplicating machines, citing to prior art as well as the IPR proceedings. Second, the team demonstrated that from the very beginning, KeyMe had deliberately chosen to develop technology that differed from the technology used by Hillman. KeyMe’s CEO testified that he had analyzed Hillman’s product when he started his company—which Hillman tried to twist into a “copying” narrative—and determined that to differentiate his company from Hillman, KeyMe would need to build completely different technology, and not use the same systems that Hillman used. KeyMe’s engineer in charge of AI described the watershed moment for the company when it switched from more basic image-recognition techniques to state-of-the-art convolutional neural networks (CNNs), a form of Artificial Intelligence. KeyMe’s CTO explained to the jury that, unlike Hillman’s machines which merely duplicate a customer’s key, KeyMe’s software is designed to cut a key that works better than the original, including by restoring for the wear and tear of a customer’s key.
Following this affirmative testimony, Quinn Emanuel also used emails obtained through discovery to elicit admissions from Hillman that KeyMe was beating Hillman in the marketplace thanks to their more advanced feature set, and that the technology claimed in Hillman’s patents was in fact decades old. Quinn Emanuel also showed that years after KeyMe had brought AI to the key-duplication market, Hillman had filed additional patents seeking to claim similar cloud-based techniques.
After a brief deliberation, the jury returned a verdict that KeyMe did not infringe any of the 18 asserted claims, and also invalidated a majority of the asserted claims.