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September 26, 2008

In the Fire

Broadcom and Qualcomm have a cell phone chip patent war going on. A major clash was appealed, with blood spilled.

Broadcom got a permanent injunction, even though it didn't practice the claimed invention. While the courts found it "generally in the public interest to uphold patent rights," an injunction would not have been granted if not for giving Qualcomm a "sunset provision" to wean itself from infringement. This ruling could be a roadmap for future injunctive relief.

Inducing infringement was rehashed. Unlike willfulness, where a clearing opinion means nothing, it can mean something when considering inducing infringement, which "may be established through circumstantial evidence," considering the totality of circumstances.

Further, the CAFC found obvious error with district court claim construction. Further evidence of a trial court system ill-equipped for patent cases. On appeal, Broadcom made one of the most bizarre claim construction arguments possible: that if a claim were properly construed, it would be prima facie invalid in light of cited prior art, ergo, could not construed that way. So what, the court ruled. It's invalid.

Broadcom v. Qualcomm (CAFC 2008-1199, -1271, -1272)

Permanent Injunction

Qualcomm and Broadcom are direct competitors. Broadcom succeeded in getting a permanent injunction from the trial court. The four-factor test outlined in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)" was given a workout.

Irreparable injury went Broadcom's way, "despite the fact that it does not currently practice the claimed inventions."

This result is consistent with eBay, in which the Supreme Court cautioned that "traditional equitable principles do not permit such broad classifications" as presuming that a patentee cannot establish irreparable harm based on a patentee's "willingness to license its patents" or "its lack of commercial activity in practicing the patents." 547 U.S. at 393; see also Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1547 (Fed. Cir. 1995) (en banc) (noting that "[t]here is no requirement in this country that a patentee make, use, or sell its patented invention" (citing Cont'l Paper Bag Co. v. E. Paper Bag Co., 210 U.S. 405, 424-30 (1908))).

Likewise money not being good enough. Broadcom had licensed the patent to Verizon. It meant nothing to the court. The CAFC, quoting the district court, offered only vagary.

Broadcom responds that the Verizon agreement provided many non-monetary benefits to Broadcom, such as the formation of a strategic business alliance, and that a license to Qualcomm's customer is of limited probative value as to its willingness to enter into a similar such agreement with its direct competitor.

"[T]he structural nature of a 'design win' market favors a finding that monetary damages are inadequate."

Balance of hardships was a draw "at best." That didn't help Qualcomm. The court offered only sour grapes.

At the outset, we note that "[o]ne who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected." Windsurfing Int'l, Inc. v. AMF, Inc., 782 F.2d 995, 1003 n.12 (Fed. Cir. 1986). We agree with the district court that Qualcomm should not be permitted to prevail on a theory "that successful exploitation of infringing technology shields a party from injunctive relief," Injunction Opinion at 16, but in any event we find this factor to be neutral at best.

As to public interest, an injunction was okay only because it was phased in, a so-called "sunset provision."

[T]he district court held that the aforementioned sunset provisions "balance[] the policy of protecting the patentee's rights against the desirability of avoiding immediate market disruptions." Id. at 18. We agree that the sunset provisions mitigate the harm to the public and that the district court did not abuse its discretion in fashioning a remedy that protects Broadcom's rights while allowing Qualcomm time to develop non-infringing substitutes. See Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1311 n.12 (Fed. Cir. 2007) (noting that a sunset provision would have allowed time for an infringer to implement non-infringing substitutes).

Inducement

Qualcomm induced infringement. Not getting a clearing opinion could be considered a piece in a puzzle that can be solved by circumstantial evidence.

"In order to prevail on an inducement claim, the patentee must establish 'first that there has been direct infringement, and second that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement.'" ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1312 (Fed. Cir. 2007) (quoting Minn. Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d 1294, 1304-05 (Fed. Cir. 2002)). The relevant standard for establishing the intent element of inducement was clarified by this Court in DSU, 471 F.3d at 1304-06 (en banc in relevant part). In DSU, we upheld a jury instruction providing that "[t]he defendant must have intended to cause the acts that constitute the direct infringement and must have known or should have known tha[t] its action would cause the direct infringement." Id. at 1305. In so doing, we held that "inducement requires evidence of culpable conduct, directed to encouraging another's infringement, not merely that the inducer had knowledge of the direct infringer's activities." Id. at 1306 (citing Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 936-37 (2005)). We further noted that "[t]he plaintiff has the burden of showing that the alleged infringer's actions induced infringing acts and that he knew or should have known his actions would induce actual infringements." DSU, 471 F.3d at 1306 (quoting Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990)).

Post-Seagate, not getting a clearing opinion means nothing towards willfulness. But inducing infringement is a different matter.

This instruction[, "you may not assume that merely because a party did not obtain an opinion of counsel, the opinion would have been unfavorable,"] comports with our holding in Knorr-Bremse Systeme Fuer Nutzfahrzeuge, GmbH v. Dana Corp., where we held that there is not "a legal duty upon a potential infringer to consult with counsel, such that failure to do so will provide an inference or evidentiary presumption that such opinion would have been negative." 383 F.3d 1337, 1345 (Fed. Cir. 2004) (en banc).

But, reading between the lines, not getting a clearing opinion may mean something, because circumstantial evidence can be damning in proving inducement. Damned if you do, damned if you don't. The totality of circumstances must be considered, and a clearing opinion is a chip in the pile.

While inducement "requires more than just intent to cause the acts that produce direct infringement," and also requires "that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement," DSU, 471 F.3d at 1306, this intent may be established through circumstantial evidence, see id. Moreover, "[t]he requisite intent to induce infringement may be inferred from all of the circumstances." Water Techs. Corp. v. Calco, Ltd., 850 F.2d 660, 669 (Fed. Cir. 1988). Additionally, we noted in DSU that this intent may be established where an alleged infringer who "knew or should have known his actions would induce actual infringements," is shown to have induced infringing acts through his actions. 471 F.3d at 1306 (emphasis added) (adopting the same two-part test articulated in Manville, 917 F.2d at 553). That is, the "affirmative intent to cause direct infringement," id., required by DSU may be shown--just as the jury was instructed in DSU itself--by establishing first that the defendant "intended to cause the acts that constitute the direct infringement," and second that the defendant "kn[ew] or should have known [that] its action would cause the direct infringement," DSU, 471 F.3d at 1305. Because opinion-of-counsel evidence, along with other factors, may reflect whether the accused infringer "knew or should have known" that its actions would cause another to directly infringe, we hold that such evidence remains relevant to the second prong of the intent analysis.

"A patentee may prove direct infringement or inducement of infringement by either direct or circumstantial evidence. There is no requirement that direct evidence be introduced, nor is a jury's preference for circumstantial evidence over direct evidence unreasonable per se." Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1219 (Fed. Cir. 2006) (internal citation omitted). Moreover, "[t]he drawing of inferences, particularly in respect of an intent-implicating question . . . is peculiarly within the province of the fact finder that observed the witnesses." Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1110 (Fed. Cir. 1986); see also Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1378 (Fed. Cir. 2005) (declining to disturb jury's verdict because intent to induce infringement "is a factual determination particularly within the province of the trier of fact").

Qualcomm was found guilty of inducement, and its request for a new trial, denied on that score, was upheld by the appeals court.

Claim Construction

Over 6,847,686 claim 1, and asserted dependent 3, the district court spuriously imported a limitation into the claim. The CAFC took it out.

Qualcomm contends that the district court improperly imported the "global controller" limitation into claim 1 (and, thus, claim 3) of the '686 patent and that the C80 chip anticipates this claim.

We agree with Qualcomm. There is no basis for importing the "global controller" limitation into claim 1. The claims make no reference to an external global controller, and we find no justification for adding limitations related to the more general video encoding device discussed in the specification when the claims are written to encompass only a specific element of that device.

Broadcom had argued to the contrary, admitting that the claim would be self-invalidating if the claim was properly construed. The CAFC criticized Broadcom for sloppy argument, but agreed with both parties that the claim was no good without the false crutch.

Broadcom also contends that the claim cannot be construed without the global controller limitation because claim 1 otherwise would be "self-invalidating" based on generic prior art disclosed in the specification. Broadcom points to Figure 2 of the '686 patent--labeled "PRIOR ART"--to support this argument.

"A patent is invalid as anticipated if every limitation in a claim is found in a single prior art reference." Nystrom v. TREX Co., 424 F.3d 1136, 1149 (Fed. Cir. 2005). Because Broadcom has not demonstrated that "every limitation" of claim 1 is found in this reference, its self-invalidating argument must fail. For example, Broadcom does not even allege that the generic prior art DSP referenced in the patent is implemented "on a single chip" as required by the claims. Moreover, "[w]hile we have acknowledged the maxim that claims should be construed to preserve their validity, we have not applied that principle broadly . . . . Instead, we have limited the maxim to cases in which the court concludes, after applying all the available tools of claim construction, that the claim is still ambiguous." Phillips v. AWH Corp., 415 F.3d 1303, 1327 (Fed. Cir. 2005) (en banc) (internal citation and quotation marks omitted); see also Tate Access Floors, Inc. v. Interface Architectural Res., Inc., 279 F.3d 1357, 1372 (Fed. Cir. 2002) (noting that "where claim language is clear we must accord it full breadth even if the result is a claim that is clearly invalid").

Accordingly, we modify the district court's claim construction to remove the requirement of a "global controller," reverse the jury verdict of infringement as to the '686 patent, and hold claim 3 invalid as anticipated by the C80 chip. See Akamai Techs., Inc. v. Cable & Wireless Internet Servs., Inc., 344 F.3d 1186, 1194-95 (Fed. Cir. 2003).

Construction of 5,657,317 asserted claims rode a split-hair rail of discerning between "simultaneous" and "fully spontaneous," which Broadcom claimed distinguishable, and with which the district court agreed. The CAFC concurred.

Claims 1, 6, 9, and 12 of the '317 patent all require a radio unit with a transceiver that can "simultaneously participate" on two or more wireless networks. The district court construed this claim term as "[t]aking part in communications with two or more networks either actively or in sleep-mode during the same period of time." Claim Construction Order at 12 (emphasis added). Qualcomm argues, as it did to the district court, that "simultaneously participate" requires the claimed transceiver to be capable of communicating on multiple networks at the same instant in time. Broadcom defends the district court's claim construction as supported by the specification, which it contends distinguishes between "simultaneous" and "fully simultaneous."

The claim language itself provides little insight as to the meaning of "simultaneous," and each party argues that the specification supports its own interpretation.

Because Qualcomm only argues that there can be no infringement under its proposed construction, but does not argue non-infringement under the district court's construction, we affirm the jury's infringement verdict.

Qualcomm tried ginning up a new claim construction bitter brew for appeal. No takers for the 11th-hour claim killer draught. Supposedly Qualcomm had legal counsel, but this makes it hard to tell.

Qualcomm further argues that the district court erroneously failed to construe the term "networks" and thus left an issue of claim construction to the jury. See O2 Micro Int'l Ltd. v. Beyond Innovation Tech. Co., 521 F.3d 1351, 1362 (Fed. Cir. 2008) ("When the parties present a fundamental dispute regarding the scope of a claim term, it is the court's duty to resolve it.").

We agree that Qualcomm cannot be allowed to create a new claim construction dispute following the close of the jury trial. "[A] party may not introduce new claim construction arguments on appeal or alter the scope of the claim construction positions it took below. Moreover, litigants waive their right to present new claim construction disputes if they are raised for the first time after trial." Conoco, Inc. v. Energy & Envtl. Int'l, L.C., 460 F.3d 1349, 1358-59 (Fed. Cir. 2006) (internal citations omitted). Qualcomm's eleventh-hour attempt to litigate a newly minted claim construction controversy falls squarely within our holding in Eli Lilly & Company v. Aradigm Corporation, where a party "never requested that the district court construe any terms in [the relevant claim] and never offered a construction of [that claim]," but rather "[o]nly after the presentation of all of the evidence to the jury . . . even suggest[ed] that claim construction might be helpful to determine the proper scope of the claimed invention." 376 F.3d 1352, 1360 (Fed. Cir. 2004). As in Eli Lilly, we hold that Qualcomm has waived its right to request a construction of "networks" and that Qualcomm has thereby implicitly conceded that the meanings of "networks" is clear and not in need of construction. Id.

Claim spat over 6,389,010 left Qualcomm infringing from the jury verdict.

Affirmed-in-part, reversed-in-part, and remanded.

Posted by Patent Hawk at September 26, 2008 9:30 PM | Injunction