Judge Tosses Last IAS Fingerprint Technology Suit

By Liz McKenzie
Law360, New York (January 15, 2009, 12:00 AM ET) --

A year after a federal judge found IAS Inc.'s fingerprint-recognition patent in its infringement suits against Microsoft Corp. and others to be invalid, the last of the technology company's cases involving the patent has been dismissed.

Judge Dee Benson for the U.S. District Court for the District of Utah dismissed the case on Monday for lack of jurisdiction following a January 2008 ruling of invalidity involving the same patent in a similar suit filed by IAS against Microsoft and Digital Persona Inc.

Upek remained in the suit long after other defendants in order to seek attorneys' fees and to resolve its pending counterclaims so the case could receive final judgment.

Judge Benson denied Upek’s motion for attorneys' fees and motions to strike testimony from a lawyer who claims he assisted in pretrial investigations of the patent. The judge said in Monday’s opinion, however, that IAS would be required to pay Upek for “reasonable” costs and attorneys' fees incurred by Upek in filing its last motions.

Upek filed motions for attorneys' fees based on the notion that the case was "exceptional" due to IAS' prefiling investigation, which had not included an attorney at the first notice. IAS later filed testimony that it had employed a lawyer in its pretrial investigation.

“Merely showing that a ‘nonideal’ prefiling investigation was performed, however, is not enough to justify an award under § 285; rather, the conduct must rise ‘to the level of bad faith litigation or gross negligence,’” Judge Benson wrote, dismissing the motions for attorneys' fees.

“We were gratified to see that the court did refer to the cases and are currently evaluating the opinion,” said Upek attorney Jeffrey Miller of Orrick Herrington & Sutcliffe LLP.

The Utah district court granted Microsoft and Digital Persona’s motion for summary judgment of invalidity for U.S. Patent Number 5,598,474 in January 2008, effectively ending all of IAS’ cases related to the fingerprint technology.

Microsoft and Digital Persona were dismissed from the case and did not seek attorney’s fees. Shortly after the summary judgment, a judge consolidated the Upek action, which also named Lenovo Inc. and IBM Corp. as defendants, into the Digital Persona case.

However, the action continued on into 2009 for Upek because the company had filed motions seeking attorneys fees based on alleged inequitable conduct. Likewise, a judge had not entered final judgment into the Upek case, and IAS was denied an appeal on that basis.

IAS filed the case against the defendants in January 2006, alleging that Digital Persona, Microsoft and Upek, among others, had infringed its fingerprint-reading technology.

Originally issued to Neldon P. Johnson in 1997, the ‘474 patent covers the process for reading fingerprints and converting the features of the fingerprint into a verification code.

Johnson later assigned the patent to IAS, which now fully owns the rights to the invention.

Johnson claimed he became aware of the infringement when he stumbled across an IBM notebook computer with a fingerprint recognition system.

Labeling the infringement as “willful and wanton,” IAS accused the defendants of trying to deliberately filch the company’s invention.

“IAS has suffered monetary damages, including but not limited to lost profits, and will continue to suffer more damages because of the defendants’ acts of infringement of the patent,” the complaint said.

Founded in 1988 by a former AT&T communications engineer, Salem, Utah-based IAS develops high-technology products for an array of fields, including energy production, wireless communications, consumer purchasing and financial transactions.

The case is International Automated Systems Inc., v. Digital Persona Inc. et al., case number 2:06-CV-00072, filed in the U.S. District Court for the District of Utah.

--Additional reporting by Anne Urda