Hearing Held on Dispute between DealerTrack, RouteOne and Finance Express
LAKE SUCCESS, N.Y. — The legal battle between DealerTrack, RouteOne and Finance Express is slowly, but surely, coming to a head. In an important hearing held early last week, each company claims a judge found in its favor on certain aspects in contention.
In response to the rulings by judge Andrew Guilford, of the U.S. District Court for the Central District of California, each company involved in the patent infringement case issued statements this week. The trial is scheduled for late October.
How the Legal Battle Commenced
After discussions of a potential business arrangement between DealerTrack, RouteOne and Finance Express went sour several years ago, a legal battle soon followed.
After the deal didn't work out, DealerTrack began exploring legal proceeding as it contended that despite differences in applications, both RouteOne and Finance Express are infringing on its patents and asked the court system for declaratory and injunctive relief, as well as damages.
A little more than four years ago, DealerTrack kicked off legal proceedings against RouteOne, claiming the company is infringing on its patents. Just over two years later, Finance Express was drawn into the legal battle when the DealerTrack took similar action against it in the New York court system. That lawsuit was soon dismissed in favor of being reinstated in the California Federal Court system.
Both RouteOne and Finance Express officials assert their business models are not infringing on any patents owned by DealerTrack, and in response to DealerTrack's allegations these companies filed countersuits.
In response to the legal action against it, Finance Express claimed in its countersuit that the company provided confidential information (or trade secrets) to DealerTrack in its previous talks and that DealerTrack misappropriated these trade secrets, among other allegations. RouteOne made similar claims.
The heart of the legal battle revolves around three patents related to DealerTrack's computer-assisted credit application analysis and decision routing systems, including the methods used by these systems.
Beginning with DealerTrack's statement in response to the recent hearing, the company indicated the judge found in favor on five key motions in the litigation, including several motions for summary judgment.
In its rulings, the court resolved several issues in contention, coming down in favor DealerTrack for such as inventorship, validity, inequitable conduct and RouteOne's alleged exposure to a willful infringement claim, the company claimed in its statement.
Furthermore, according to this statement, these rulings eliminate certain defenses by RouteOne and Finance Express and allow DealerTrack's damages to be trebled if RouteOne's infringement is found to be willful at trial.
Moreover, the judge deferred on two additional motions pending his markman ruling, where the judge will basically define certain terms in the patent claims. The company also reported that judge denied DealerTrack's motion to remove one defense, reserving it for trial because of questions of fact.
"We are obviously very pleased with the progress of this litigation in support of our intellectual property rights," explained Mark O'Neil, chairman and chief executive officer of DealerTrack.
"In March, Judge Guilford denied RouteOne's motion for partial summary judgment that one of our three patents was invalid. Now he has ruled in DealerTrack's favor on five additional decisions that he has handed down," he continued.
Meanwhile, RouteOne also issued a statement Wednesday, discussing its side of the story. Basically, similar to what DealerTrack reported, RouteOne, too, indicated that several of the rulings from the July hearing are in its favor.
In fact, the company claims that one of the court's rulings, which denied in part a DealerTrack motion, resolved a dispute issue of inventorship of one of DealerTrack's in a manner favorable to RouteOne.
In another ruling, the company's statement said that the court denied in its entirety one of DealerTrack's motions for a summary dismissal of RouteOne's counterclaims "that the patents are unenforceable due to inequitable conduct or failure to disclose to the patent office material prior art."
RouteOne contends that by denying DealerTrack's motion, the way is clear for RouteOne to present its prior art-based inequitable conduct defenses at trial. The company indicated that if it prevails, this means that DealerTrack's patents will be held unenforceable and that RouteOne could also collect attorneys' fees.
Continuing on, the company reported that court "monetarily sanctioned DealerTrack for failing to disclose information in a timely manner."
However, two other motions filed by RouteOne, seeking summary judgment of invalidity and/or non-infringement of DealerTrack's patent claims were not ruled upon and are still under court consideration, the statement said.
"We feel very positive about the outcome of the hearing and look forward to the court's resolution of our remaining two motions," reported Mike Jurecki, RouteOne's CEO.
"Although DealerTrack has been attempting to use this litigation as a means to distract RouteOne and our customers from our core business, we remain fully dedicated to providing the industry's best credit aggregation solution for our finance source and dealer customers," he added.
Finally, in a third statement, Finance Express wrote that the judge denied a summary motion brought by DealerTrack to avoid a trial on allegations of fraud before the U.S. Patent and Trademark Office involving DealerTrack's asserted patents.
Finance Express claimed, "The court's ruling is significant because both RouteOne and Finance Express will be able to present the following allegations of fraud (regarding inequitable conduct) involving each of DealerTrack's three asserted patents at trial later this year:"
1. DealerTrack's '403 patent is unenforceable due to inequitable conduct for failure to disclose documents discussing the prior COINLink system.
2. The '403 patent is unenforceable due to inequitable conduct for failure to disclose information about the prior COINLink or DealerLink systems.
3. DealerTrack's '841 patent is unenforceable due to the fraud on the patent office during the prosecution of the '403 patent.
4. The '841 patent is unenforceable due to inequitable conduct for failure to disclose information about the prior COINLink or DealerLink systems.
5. DealerTrack's '427 patent is unenforceable due to the fraud on the patent office during the prosecution of the '403 and '841 patents.
6. The '427 patent is unenforceable due to inequitable conduct for failure to disclose documents created or produced in prior litigation.
7. The '427 patent is unenforceable due to inequitable conduct for failure to disclose documents and information concerning other prior art systems known to the inventors.
Dave Huber, of Finance Express, stated, "As Paul Harvey would say, ‘And now you know the rest of the story.' The press release from DealerTrack today (Tuesday) was surprisingly missing a lot of the details and facts that are unfavorable to their position.
"We have stated from the very beginning that this suite against Finance Express has not been about Finance Express infringing any patents, but is instead DealerTrack's attempt at putting a new company out of business," he claimed.
He went on to contend, "They have hoped to move into the independent dealer space and did not want Finance Express to continue to dominate this market. We are very much looking forward to this trial so that these facts and many others will finally brought to light."