IP Law Daily Shure violated preliminary injunction in microphone dispute by selling new similar product
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Wednesday, September 2, 2020

Shure violated preliminary injunction in microphone dispute by selling new similar product

By Robert B. Barnett Jr., J.D.

The circumstantial evidence indicated that Shure’s replacement product was continuing to be installed in a way that violated ClearOne’s patent, thus violating the injunction.

In a patent dispute involving ceiling-mounted microphone arrays, Shure Inc. has been found in contempt of a preliminary injunction prohibiting it from selling arrays that infringe patents held by its competitor ClearOne, Inc., because Shure designed and sold a replacement product not colorably different from the infringing product, a Chicago federal district court has ruled. While the replacement product was designed to be installed in a way that did not violate the patent, in reality it was designed to allow installers to more easily install the new product in the infringing configuration. In addition, the court granted ClearOne the right to conduct additional discovery to determine the full scope of the violation and the potential relief the court might order (Shure Inc. v. ClearOne, Inc., September 1, 2020, Chang, E.).

Background. ClearOne owns a patent for an invention that combines a beamforming microphone array with a ceiling tile. It is installed in a conference room for recording purposes so that the ceiling tile with the microphone would look to attendees like any other suspended ceiling tile. In 2019, ClearOne was granted a preliminary injunction preventing its competitor, Shure, from selling its product that infringed on the ClearOne patent. The infringement occurred in the way the product was installed. If the microphone array hung down below ceiling level, it would not violate the patent. If the ceiling tile was flush with the other ceiling tiles, it would violate the patent.

New model. Shure released a new model that was designed to avoid the patent infringement. Rather than be flush with the other ceiling tiles, the new model hung down from the ceiling. A problem existed, however, with the installation of the new model. Standard ceiling tile brackets in commercial buildings come in two sizes, 15/16 inch and 9/16 inch. If the building contained a 15/16 inch bracket, the installation was more complicated than it was if it contained a 9/16 inch bracket. In that case, it required the installer to manipulate the bracket to allow it to hang below ceiling level. If the installer did not want to go to the trouble of manipulating the bracket, the installer could install the new model in a way that would cause it to be flush with the ceiling, which violated both the patent and the preliminary injunction.

Contempt. ClearOne realized the problem when it tried to install the new product in its own building as a test. In its motion for contempt, ClearOne cited its own experience with the installation, evidence that some installers were not going to the trouble of installing the product in the correct way, and the fact that the majority of commercial buildings have 15/16 inch brackets. Shure argued, on the other hand, that the new product was a completely new product and that it did not have a legal obligation to police installations of its new product. The contempt motion, the court said, "boils down to the factual question of whether or not Shure ‘allows’ integrators to install its speaker products…in a configuration in violation of the preliminary injunction order."

Ultimately, the court concluded that Shure did, in effect, allow the installers to install the new products in violation of the injunction. To succeed on its motion, ClearOne had to satisfy a two-step test. First, it had to show that the new product was not colorably different from the infringing product. Second, it had to show that the new product infringed the injunction. As for the first step, while Shure did change the design, the changes made no difference functionally, given that the installers were still installing it in the same way as the old product. As a result, the court said, "the record strongly suggests that the [new product] is not colorably different." It was too easy for installers to ignore the design changes and mount the product as before. In its design, the court concluded that Shure provided an incentive for the installers to choose the no-effort option of installing the product flush with the ceiling rather than undertake the extra labor of mounting the product in accordance with the product changes. Furthermore, including installation instructions that call for installing the product in a non-infringing way could not "paper over" the fact that the two products were not colorably different.

Several pieces of additional evidence indicated that Shure’s intentions in designing the new product were not pure and continued to violate the patent. First, Shure had another product in development that would not violate the patent. Why not wait for that product? The fact that Shure instead pressed against with this substitute product indicated that they knew that it violated the injunction. Second, after the injunction was issued, Shure provided adapters to installers that would let them install another Shure product in an infringing manner. Third, Shure took steps to evade the preliminary injunction by quick-selling the existing product before the injunction took effect. In the injunction, the court had allowed already-installed products to remain.

The court thus concluded that Shure violated the preliminary injunction by selling a product that was not colorably different from the infringing product. It did not issue a penalty, however, instead calling for more discovery to reveal the full extent of both Shure’s pre-injunction and post-injunction behavior, as well as more information about whether another product that Shure sold may have violated the injunction.

The court, therefore, granted the motion to hold Shure in contempt in part, and it entered and continued the motion in part to determine the scope of the violation. ClearOne’s motion for leave to conduct additional discovery was granted in part and denied in part (it was denied as to a product to be released that would not be in violation).

This case is No. 1:17-cv-03078.

Attorneys: Bradley F. Rademaker (Neal, Gerber & Eisenberg LLP) for Shure Inc. Douglas J. Dixon (Hueston Hennigan LLP) for ClearOne, Inc.

Companies: Shure Inc.; ClearOne, Inc.

MainStory: TopStory Patent GCNNews IllinoisNews

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