Harlequin-EFI Battle In Court

BOSTON—As the new year began, the war of words between Waltham, MA-based Harlequin and Foster City, CA-based Electronics for Imaging (EFI), heated up. On the same day that Harlequin filed a lawsuit in United States District Court here claiming that EFI has violated a federal law that governs false advertising, the U.S. District Court in San Francisco ruled in EFI's favor in its patent infringement lawsuit against Harlequin.

The San Francisco court ruled for EFI on all 17 issues raised by Harlequin. EFI officials say the San Francisco court's rulings pave the way for EFI to fully press its infringement case against Harlequin.

In its complaint filed in Boston, Harlequin charges that EFI has violated the Lanham Act by telling Harlequin's OEM customers that Harlequin's products infringe EFI's patents "when EFI knows or should know that their allegations are false."

EFI's lawsuit, filed in November 1998, alleges that Harlequin's Scriptworks, Full Color System and Profile Processor, infringe three EFI patents for proprietary color management and color calibration technology.

Jim Etheridge, EFI's general counsel, says that last summer the San Francisco court ruled against Harlequin's attempt to enjoin EFI from contacting Harlequin's original equipment manufacturers (OEMs). Last fall the court denied a Harlequin motion for summary judgment in its favor.

But, in Boston, Harlequin's suit seeks to prevent EFI from disseminating, to Harlequin's OEM customers and the industry at large, claims that Harlequin's products infringe EFI's patents, as well as to recover unspecified damages. In addition to the federal claims, the suit also claims that EFI has violated several Massachusetts state laws, including defamation and the Massachusetts Unfair and Deceptive Acts and Practices Statute.

According to Harlequin, the suit was triggered by EFI's recent letters to several of Harlequin's OEM customers, threatening them with legal action if they continue to sell Harlequin products that EFI claims infringe on its patents. Harlequin believes that EFI has resorted to these pressure tactics because EFI has been unable to find any legal support to prove its claims of patent infringement, as alleged in its lawsuit filed in November 1998. In addition, Harlequin noted that EFI has taken the desperate step of contacting a Harlequin OEM that does not even sell or license product in the United States.

"In our opinion, EFI has embarked on a public campaign to smear Harlequin's products with the taint of infringement when EFI knows that it has no basis for its claims," states Johan Volckaerts, chairman of Harlequin.

"EFI is clearly trying to frighten our customers and materially damage our business reputation. EFI's allegations are completely unfounded, and we are particularly disturbed by EFI's threats to abuse the court's rules and attempt to drag our customers into its lawsuit," he says.

In addition to commenting on the grounds for Harlequin's suit, Volckaerts confirmed that Harlequin has intensified its investigation into prior art and believes Harlequin will be able to successfully claim that at least two of the three EFI patents should be invalidated.

"With only two years remaining on the 'Schreiber patent,' which is the core of EFI's intellectual property, EFI clearly is concerned about maintaining the validity of its other patents," he adds. "In light of EFI's recent actions against Harlequin's customers, it is our opinion that EFI is accelerating its attempts to uphold its patents at any cost, even when it knows that the claims are unfounded." Volckaerts vows that "Harlequin will continue to fully support its products, protect its OEM customers and vigorously defend its rights in this litigation."

"The Federal Court in San Francisco has already addressed the issues raised in Harlequin's Boston lawsuit and press release," Etheridge contends. "We believe that the suit will either be thrown out or transferred to the court in San Francisco."