Eyeticket Corp. v. Unisys Corp.

• Decision Date: 23 February 2001
• Docket Number: No. Civ.A. 200CV940.,Civ.A. 200CV940.
• Citation: 155 F.Supp.2d 527
• Court: U.S. District Court — Eastern District of Virginia
• Parties: EYETICKET CORPORATION f/b/o Iridian Technologies, Inc., Plaintiff, v. UNISYS CORPORATION, Defendant.

155 F.Supp.2d 527

EYETICKET CORPORATION f/b/o Iridian Technologies, Inc., Plaintiff, v. UNISYS CORPORATION, Defendant.

No. Civ.A. 200CV940.

United States District Court, E.D. Virginia, Norfolk Division.

February 23, 2001.

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Thomas M. Buchanan, Michael T. Dyson, Winston & Strawn, Washington, DC, Michael J. Lichtenstein, Swidler Berlin Shereff Friedman, LLP, Washington, DC, Stephen Edward Noona, Kaufman & Canoles, PC, Norfolk, VA, for plaintiff.

Robert A. Gutkin, Blair Martin Jacobs, Robert James Walters, Pillsbury Winthrop LLP, McLean, VA, for defendant.

OPINION ON GRANT OF PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

MORGAN, District Judge.

On December 18, 2000, the Court held a hearing on Plaintiff's Motion for a Temporary Restraining Order and Motion for Expedited Discovery. The Court ruled from the bench, granting a temporary restraining order against the Defendant, subject to the posting of bond. The Court also permitted both parties to engage in expedited discovery, allowing each party to depose two key witnesses prior to the hearing on the Motion for Preliminary Injunction.

On December 29, 2000, the Court held a hearing on the Plaintiff's Motion for Preliminary Injunction. At the conclusion of that hearing, the Court extended the previously issued temporary restraining order for ten more days, and the Court took the Motion for Preliminary Injunction under advisement. After due consideration, the Court GRANTED the Plaintiff's Motion for Preliminary Injunction by Order dated January 8, 2001. This Opinion sets forth the reasoning upon which the Court granted and extended the Temporary Restraining Order and granted the Plaintiff's Motion for a Preliminary Injunction.

FACTUAL AND PROCEDURAL BACKGROUND¹

The Plaintiff, EyeTicket Corporation ("EyeTicket"), specializes in the practical application of biometrics, the science of identifying a person by a specific physical characteristic. The best known example of biometric technology is fingerprinting. EyeTicket, however, focuses on iris (the colored portion of the eye) recognition technology. According to the Plaintiff, this biometric technology has the most potential for high volume commercial applications. (Complaint, ¶¶ 7, 8). EyeTicket has focused its energies specifically in the application of this technology to ticketing and boarding in the airline industry.

Iridian Technologies, Inc. f/k/a Iriscan, Inc. ("Iridian") is a leading developer of iris recognition technology. Iridian owns United States Patents 4,641,349 and 5,291,560 (the "Patents"). (Pltf.'s Mem.Supp. TRO, Exs. A (Patent 4,641,349) and B (Patent 5,291,560)). Iridian also allegedly owns numerous corresponding international patents, including Canadian Patent 1244552.² (Complaint, ¶ 10). Iris recognition technology uses video cameras to take a picture of the iris and computer software to generate a unique map of an individual's particular iris, such that it can be used as a means of secure identification. (Id. at ¶ 11).

On March 24, 1999, EyeTicket (by its former name, Spring Technologies, Inc.) entered into an exclusive licensing agreement with Iridian (the "License Agreement") to obtain the Patents for "product applications for automated ticketing and authentication in the public air transportation carrier industry encompassing air transportation applications (i.e., scheduled and charted U.S. and foreign air carriers) including boarding of aircraft, with or without an instrument, by passengers and airline/airport personnel, and including development, deployment, and use of a reservations and/or booking system to operate alone and/or interface with existing industry systems in order to support the iris recognition application" (the "Field of Use"). (Pltf.'s Mem.Supp. TRO, Exhibit C (License Agreement), § 1.8). Iridian granted to EyeTicket the exclusive right to purchase, distribute, sell, and service Iridian technology in the Field of Use. (Id. at § 3.1). The term of the license was to terminate on December 31, 1999 with an optional extension till June 30, 2000. (Id.).

EyeTicket developed a business plan to market its exclusively licensed technology to airlines for universal passenger check-in and boarding services. The service would allow passengers to check-in with one look at a camera, which would automatically notify the computer of the passenger's airline. EyeTicket would profit by charging the airlines a fee for each passenger that used the service. (Complaint, ¶ 12).

Representatives of the Plaintiff met with representatives of the Defendant, Unisys Corporation ("Unisys"), in July of 1999, during which Unisys showed a strong interest in the application of iris recognition technology to the public air transportation carrier industry. (Smith Aff., ¶ 12; see also Calvesio Dep. at 20 (stating that the meeting occurred in June of 1999)). The Unisys representatives included Raymond Calvesio, Director of Airport Systems for Unisys, and John Olson, Integration Architect for Unisys. Though informed at this meeting of EyeTicket's exclusive rights, Unisys began to utilize technology covered by the Iridian Patents to develop and market similar iris recognition products to airlines and agencies for purposes within EyeTicket's Field of Use. Mr. Calvesio admits that after the meeting, he called Bill Vottmer, the President of Iridian, to inquire about the exclusive rights of EyeTicket, specifically requesting a copy of the Licensing Agreement. (Calvesio Dep. at 20).

Shortly thereafter, EyeTicket avers that its initially favorable relationship with KLM Royal Dutch Airlines (KLM) cooled. KLM officials explained that Unisys was marketing a similar product, which confused KLM officials because EyeTicket claimed to have exclusive rights to the technology. (Smith Decl., ¶ 14). In January of 2000, EyeTicket marketed its iris recognition technology to the airline industry at the ATTIS 2000 trade show in Orlando, Florida (Id. at ¶ 5). At the trade show, EyeTicket became aware that Unisys was operating a booth at the same show and marketing iris recognition technology to the airline industry within EyeTicket's exclusive Field of Use. (Id.). In addition, EyeTicket became aware that Unisys was publicizing the availability of these products on their website. (See Pltf.'s Mem.Supp. TRO, Ex. E). The Unisys website pitches its kiosk based iris recognition technology for airline check-in and boarding services: "The self-service check-in and border control processes are non-intrusive and expeditious.... If allowed passage, a printed receipt is presented to the client for boarding or border clearance." (Id.) (emphasis added). In a March 1, 2000 Philadelphia Inquirer article, Unisys also touts its new iris recognition products for the airline industry:

The system could be used to reduce lines at departure, baggage check, baggage claim and immigration.... Unisys will develop software to link the card system to other airport computer systems, customer loyalty programs and reservations systems. Many of these systems are already available through Unisys, whose software [is] being used by 18 of the World's top 20 airports.

(Pltf.'s Mem.Supp. TRO, Ex. F). On April 18, 2000, an article in Australian IT, in relation to Unisys' demonstrations at a Sydney, Australia trade show, quoted a Unisys executive to say the following: "Unisys global transportation business relations executive Doug Broadhurst said there was strong interest from the local airline industry.... Unisys is rolling out iris technology...." (Pltf.'s Mem.Supp. TRO, Exhibit G).

Subsequent to the ADDIS trade show, Unisys representatives contacted Iridian representatives apparently to discuss EyeTicket's reaction to its demonstration at the trade show. Mr. William Vottmer, the President of Iridian, sent the following email to John Calvesio of Unisys on January 28, 2000:

Ray—I received a message from Lisa that said you had spoken. I'd like to spend a moment to clarify and hopefully ease some of the concern. We currently have a relationship with [EyeTicket] that gives them the right-of-first-refusal to ticketing applications for travel and sports event. They do not have any say in immigration, baggage or any other type travel scenarios. This agreement expires mid year 2000 and we look to remove the right at that time (please keep this part confidential). So, therefore, the CAC project, has no issue except perhaps the later phases but we will have the rights resolved by then. The Schipol opportunity could have an issue, but as I committed to you on the phone that we (IriScan) would run interference to ensure that there is no issue. John Siedlarz and I have been on the same page and have both spoken with [EyeTicket] several times about a) either Unisys will sub work to [EyeTicket] based on Unisys' plans and needs (please seriously consider this), or b) IriScan will fund the appropriate commissions to [EyeTicket] should Unisys be the contract holder and determine to not use [EyeTicket]. We thought we had an initial acceptance of these conditions from [EyeTicket], but your relayed message suggests that perhaps we (Iriscan) need to go back and revisit....

(Def.'s Mem.Opp. TRO, Attach. A) (emphasis added).

After becoming aware of these perceived violations of its licensing agreement, EyeTicket elected to sue the patentee, Iridian, in this District. Before the court made any determinations, even as to injunctive relief, Iridian and EyeTicket negotiated a settlement agreement, disposing of all disputed issues between the parties (the "Settlement Agreement"). The Court made the Settlement Agreement part of its Consent Order, dismissing the action with prejudice and finding the patents valid and enforceable. (Pltf.'s Mem.Supp. TRO, Exhibit I (Consent Order)). Pursuant to this agreement EyeTicket's period of exclusivity was extended until December 31, 2000. Also as a part of the Settlement Agreement, on ...