Prior Art Preference for an Alternative is Not Enough to Teach Away

In Meirsonne v. Google, Inc., [2016-1755] (March 7, 2017), the Federal Circuit affirmed the PTAB determination that claims 16, 17, 19 and 20 of U.S. Patent No. 8,156,096 on a system whereby a
user can identify a supplier of goods or services over the
Internet, were invalid for obviousness.

The Federal Circuit began with the observation that a combination of known elements is likely to be obvious when it yields predictable results. The Federal Circuit observed that obviousness may
be defeated if the prior art indicates that the invention
would not have worked for its intended purpose or otherwise
teaches away from the invention. The Federal Circuit explained that a reference teaches away “when a person of ordinary skill, upon reading the reference, would be discouraged from following the path set out in the reference, or would be led in a direction divergent from the path that was taken” in the claim. However  a reference that “merely expresses a general preference for an alternative invention but does not criticize, discredit, or otherwise discourage investigation into” the claimed invention does not teach away.

Although Meiresonne argued that the references taught away from the combination of descriptive text and a rollover viewing area because both prior art references disparage and criticize the use of descriptive text.  The Federal Circuit concluded upon reviewing the references, substantial evidence supported the Board’s fact finding that the prior art does not teach away from the claimed combination, and therfore affirmed.  The Federal Circuit disinguished cases like Depuy Spine, where the prior art taught that the combination would be inoperative for its intended purpose.

Complaints About Claim Construction Irrelevant Without a Showing of How it Would Make a Difference

In Comcast IP Holdings I LLC v. Sprint Communications Company LP, [2015-1992] (March 7, 2017) the Federal Circuit affirmed a $7.5 million dollar award for infringement of U.S. Patent Nos. 8,170,008,
7,012,916, and 8,204,046 directed to the use of computer network
technology to facilitate a telephone call.

Sprint complained about the construction of “switched telecommunication system” but the Federal Circuit failed to show how is construction would result in a different result.  Moreover, the Federal Circuit found that the claim language and the specification did not support Sprint’s proposed construction.

Sprint also complained that there was insufficient that its met the “call destination” and “identifier of a second party” limitations of the claims, which were given their plain and ordinary meaning because neither party requested a claim construction.  The Federal Circuit found that Sprint was essentially proffering a claim construction argument in the guise of a challenge to the sufficiency of the evidence of infringement.”

Finally, Sprint complained about the construction of “parsing,” arguing that the district court failed to apply disclaimers made by the patent owner during prosecution. But the Federal Circuit again found that Sprint failed to show how this affected the outcome.  However the Federal Circuit ultimately agreed with the district court’s construction.

The Federal Circuit also affirmed the award of prejudgment interest from the date of the earliest patent, finding that would be the date of negotiation of the undifferentiated reasonable royalty.


Licenses in Prior Settlement Agreements May be Relelvant to Reasonable Royalty Damages

In Prism Technologies v. Sprint Spectrum L.P., [2016-1456, 2016-1457] (March 6, 2016) the Federal Circuit affirmed a $30 million judgment entered after a jury verdict against Sprint Spectrum L.P. lfor infringement of U.S. Patent Nos. 8,127,345 and 8,387,155.

Sprint raised several arguments why the district court should have granted JMOL, including error in admitting a prior settlement agreement with AT&T regarding the patents. Sprint claimed it was an abuse of discretion under FRE 403 to admit the Settlement Agreement, but the Federal Circuit disagreed.

The Federal Circuit said that a license agreement entered into in settling an earlier patent suit sometimes is admissible in a later
patent suit involving the value of the patented technology, and sometimes is not. A settlement involving the patented technology can be probative of the technology’s value if that value was at issue in the earlier case. The reason is simple: such a settlement can reflect the assessment by interested and adversarial parties of the range of plausible litigation outcomes on that very issue of valuation.  However the Federal Circuit recognized that for various reasons a
settlement may be pushed toward being either too low, as
in Hanson, or too high, as in LaserDynamics, relative to
the value of the patented technology at issue in a later
suit.  However the Federal Circuit also recognized that for various reasons a settlement may be pushed toward being either too low or too high relative to the value of the patented technology at issue in a later suit.  The Federal Circuit said that what is needed for assessing the probativeness and prejudice components of the Rule 403 balance, then, is consideration of various aspects of the particular litigation settlements offered for admission into evidence.

The Federal Circuit said that the mere fact that the license resulted from litigation does not automatically mean that the prejudice outweighs probativeness side, noting that Sprint itself relied upon settlement agreements (although with lower royalty rates).  The Federal Circuit found that the circumstances of the AT&T Settlement Agreement affected the Rule 403 assessment in ways that support
the district court’s admission of the Agreement.  The Federal Circuit noted that the AT&T Settlement was made after the entire case had been tried, so the entire record was developed, enhancing the reliability of the parties assessment of the value of the settlement.  The Federal Circuit found not abuse of discretion in admitting the AT&T settlement agreement.

The Federal Circuit also rejected per se rules suggested by Sprint for excluding settlement agreements.  The Federal Circuit noted the inconsistency of Sprint’s position, before Prism and AT&T settled, Sprint affirmatively urged the admission of various Prism licenses
resulting from patent-litigation settlements, and even moved to exclude the damages testimony of Prism’s expert on the ground that he failed to rely on such settlement agreements. Sprint contended that those agreements were “reliable marketplace evidence of the value of the patents-in-suit” and therefore “‘highly probative as to
what constitutes a reasonable royalty for those patent rights because such actual licenses most clearly reflect the economic value of the patented technology in the marketplace.’”  When Sprint first opposed admission of the AT&T settlement agreement, it did not invoke any categorical rule, which the Federal Circuit found was a strategic choice so that Sprint could urge for the admission of lower rate licenses while opposing higher rate licenses.


Disavowal is Not Limited to What is Necessary; A Patentee May Give Up More than Necessary

In Technology Properties Limited LLC v. Huawei Technologies Co., Ltd., [2016-1306, 2016-1307, 2016-1309, 2016-1310, 2016-1311] (March 3, 2017), the Federal Circuit vacated and remanded the case because the district court erred in a portion of its construction
of “entire oscillator” in U.S. Patent No. 5,809,336 on a microprocessor with two independent clocks.

The claims require “an entire oscillator disposed upon said integrated
circuit substrate and connected to said central processing
unit.”  The district court construed the term to mean “an oscillator located entirely on the same semiconductor substrate as the central processing unit that does not require a control signal and whose frequency is not fixed by any external crystal.”  Appellee argued that the second part of this construction was required because of disclaimers made during prosecution to overcome Magar, U.S. Patent No. 4,503,500, and Sheets, U.S. Patent No. 4,670,837.

The Federal Circuit began noting that an applicant’s statements to the PTO characterizing its invention may give rise to prosecution disclaimer. The Fedeal Circuit said that prosecution disclaimer can
arise from both claim amendments and arguments made
to the PTO, but does not apply unless the disclaimer is “both clear and unmistakable to one of ordinary skill in the art.  When determining
whether disclaimer applies, applicant’s statements must be cosnidered in the context of the entire prosecution.  If the statements are ambiguous or amenable to multiple reasonable interpretations, prosecution disclaimer is not established.

After examining the applicants arguments regarding Magar during prosecution, the Federal Circuit agreed with the district court’s conclusion that the “entire oscillator” must be a variable frequency oscillator rather than a fixed-frequency crystal.  The Federal Circuit
said that the disclaimer may not have been necessary, but the statements made to overcome Magar were clear and unmistakable.

The Federal Circuit said that the patent owner presented clear and concise arguments about the distinctions between Magar and the
patent in its briefing, and add that had those same arguments been made to the Patent Office, the construction may have been different because the patentee likely disclaimed more than was necessary to overcome the examiner’s rejection. However, the Federal Circuit admonished:

the scope of surrender is not limited to what is absolutely necessary to avoid a prior art reference; patentees may surrender more than necessary.

As to disclaimers based upon Sheets, the Federal Circuit found that the district court went too far in limiting an “entire oscillator” to one “that does not require a control signal.” The Fedeal Circuit said that this was beyond the arguments made by application that the term is properly construed as one “that does not require a command
input to change the clock frequency.”

The Federal Circuit indicated that its minor modification to the district court’s construction likely does not affect the outcome in this case, because the parties stipulated to non-infringement under the district court’s construction, the proper course was to vacate.