Among Other Things, the Federal Circuit Affirms Viability of Assignor Estoppel

In Mentor Graphics Corporation v. EVE-USA, Inc., [2015-1470, 2015-1554, 2015-1556] (March 16, 2016), the Federal Circuit:

  • affirmed the jury verdict of infringement of U.S. Patent Nos. 6,240,376, the denial of JMOL, and the award of $36,000,000 in damages, and that that assignor estoppel bars Synopsys from challenging the validity of the patent.
  • reversed summary judgment that U.S. Patent No.
    6,132,109 is indefinite.
  • affirmed summary judgment that U.S. Patent No. 7,069,526 lacks patent-eligible subject matter.
  • vacated the motion in limine precluding Mentor from
    presenting evidence of willful infringement.
  • reversed summary judgment that U.S. Patent No. 6,947,882 lacks
    written description.
  • reverse summary judgment that Mentor’s infringement allegations
    regarding U.S. Patent Nos. 6,009,531 and 5,649,176 are barred by
    claim preclusion.

Regarding Assignor Estoppel, the Federal Circuit rejected Synopsys argument that the Supreme Court abolished the doctrinal underpinnings of assignor estoppel in Lear, Inc. v. Adkins.

Regarding the Damage Award, the Federal Circuit noted that the facts of this case are remarkably simple for a patent damages appeal and Synopsys does not dispute any of them.

The jury found, and Synopsys does not dispute on appeal, that Mentor
satisfied all of the Panduit factors with regard to the sales to Intel for which the jury awarded lost profits:
(1) there was a demand by Intel for the patented product; (2) there were no non-infringing alternative emulator systems acceptable to Intel; (3) Mentor had the manufacturing and marketing capability to satisfy Intel’s demand; and, (4) Mentor established the amount of profit it would
have made if Synopsys had not infringed.  Synopsys argued that the lost profits shuold be apportioned to cover only the patentee’s inventive contribution.  The Federal Circuit agreed with Synopsys that apportionment is an important component of damages law generally, and we believe it is necessary in both reasonable royalty and lost
profits analysis.  However, the Federal Circuit said that Panduit’s requirement that patentees prove demand for the product as a whole and the absence of non-infringing alternatives ties lost profit damages to specific claim limitations and ensures that damages are commensurate with the value of the patented features.

Regarding indefiniteness, the Federal Circuit said that “a method for displaying the results of synthesized circuit analysis visually near the
HDL source specification that generated the circuit” was not indefinite.The Federal Circuit held that the term “near” informs a person of ordinary skill in the art about the scope of the invention with
reasonable certainty, noting that a skilled artisan would understand “near” requires the HDL code and its corresponding circuit analysis to be displayed in a manner that physically associates the two.

Regarding patentable subject matter, the Federal Circuit held that claims containing “machine-readable medium” renders the claimed
subject matter invalid under 35 U.S.C. § 101.  The specification defined machine-readable medium as including carrier waves, found to be unpatentable in In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007).

With respect to willful infringement, the Federal Circuit found the district court erred in barring evidence of willful infringement.  Specificaly, the Federal Circuit rejected a rigid rule that post-filing willful infringement cannot be presented unless the party moves for a preliminary injunction.

With respect to written description, the Federal Circuit found that there was adequate written description.  The Federal Circuit found that the very language of claim 1 which the court held was not supported by the specification was present in the originally-filed claims. Original claims are part of the original specification and in many cases will satisfy the written description requirement.

Finally, with respect to claim preclusion, the Federal Circuit said that claim preclusion does not bar later infringement allegations with respect to accused products that were not in existence at the time of the previous actions for the simple reason that claim preclusion requires that in order for a particular claim to be barred, it is necessary that the claim either was asserted, or could have been asserted, in the prior action.

 

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.