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July 6, 2010

Garbage Bits

Telcordia sued Cisco for infringing network data transfer patents 4,893,306; 4,835,763; and RE36,633. '306 was knocked out by noninfringement in summary judgment. '763 and '633 ran the gauntlet through trial to a $6.5 million damages award. The district judge then tacked on prejudgment interest, an accounting for interim sales, and "ordered the parties to negotiate the terms of a royalty that would apply to the accounting and to post-judgment sales." Telcordia appealed the '306 claim construction. Cisco cross-appealed '306 and '763 validity, as well as the post-trial damages award and ongoing royalty negotiation dictate.

Telcordia Technologies v. Cisco Systems (CAFC 2009-1175) precedential

'306 claims a method for migrating from the 1970s telephone circuit-switched network to the 1990s packet transmission format.

One disputed term was "empty payload field."

Claim construction is an issue of law that this court reviews without deference. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1455-56 (Fed. Cir. 1998) (en banc). The claim terms "are generally given their ordinary and customary meaning." Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc) (quotation omitted). "[T]he claims themselves provide substantial guidance as to the meaning of particular claim terms." Id. at 1314. Also, a patent's specification "is always highly relevant to the claim construction analysis." Id. at 1315 (quotation omitted). Courts should also consider prosecution history of the asserted patents. Id. at 1317. However, because prosecution history represents an ongoing negotiation between the United States Patent and Trademark Office and the inventor, "it often lacks the clarity of the specification and thus is less useful for claim construction purposes." Id.

Did an "empty payload" include "garbage bits"?

The district court construed the term "empty payload field" to mean "a payload field that is empty of source data, but including bit signals of some kind, i.e. garbage bits." Telcordia Techs., Inc. v. Cisco Sys., Inc., No. 04-cv-876, slip. op. at 6 (D. Del. June 22, 2006) ("Claim Construction Order"). The parties dispute whether the claim construction includes the explanatory phrase "i.e. garbage bits," which, according to the parties, limits the "bit signals of some kind" to "bits that serve no purpose other than place-holding."

The empty payload fields are "empty" of data packets and therefore have non-source bit signals only. The specification explains that "a train of DTDM frames with empty payload fields . . . has a bit rate which defines a basic backbone transmission rate for the DTDM system." '306 patent col.7 ll.27-30. Therefore, the bit signals help the DTDM system maintain a bit stream even when it is not transmitting data from an information source. The specification does not specify where in the frame the "bit rate" is stored nor does it specify the type of non-source bits used to maintain the bit rate. Therefore, nothing in the '306 patent restricts the bit signals in the empty payload field to ones that serve no purpose other than place-holding.

The district court apparently took the explanatory phrase from an ad lib comment made during an oral hearing at the Federal Circuit [in an earlier '306 assertion]... During oral hearing, Bell Communications agreed with Circuit Judge Bryson's characterization of bits in the "empty payload fields" as "garbage."

The district court erred by limiting the claim scope based on the ad lib comment from the bench.

Accordingly, "empty payload field" means "a payload field that is empty of source data, but includes bit signals of some kind."

Asserted claims 1, 3 and 4 also had a limitation regarding inserting data packets in an "empty payload field" of a data frame.

The district court construed all three claim elements to require that the "packets are only put into frames which are empty." Claim Construction Order at 6-7. The district court further clarified that the claims encompass only one packet per frame. Telcordia Techs., Inc. v. Cisco Sys., Inc., 514 F. Supp. 2d 598, 606 (D. Del. 2007). Each SONET frame in the accused products carries multiple ATM cells or packets. Id. Telcordia therefore concedes on appeal that it cannot prove infringement if the asserted claims encompass only one packet per frame.

This court recognizes that during the prosecution of the '306 patent, the applicant made statements suggesting that a frame may be able to store more than one packet...

These prosecution history comments cannot trump the plain language of the claims and the direct teaching of the specification. See Biogen Inc. v. Berlex Labs., Inc., 318 F.3d 1132, 1140 (Fed. Cir. 2003) ("Representations during prosecution cannot enlarge the content of the specification . . . .").

This court agrees with the district court's construction that each frame in the DTDM bit stream can carry only one data packet. The specification clearly limits the disclosed mechanism to one packet per frame.

Because Telcordia concedes that it cannot prove infringement based on these claim constructions, this court affirms the district court's grant of summary judgment of non-infringement.

The district court had snubbed Cisco's bite at invalidating '306 after granting summary judgment of non-infringement. That was wrong.

"A party seeking a declaratory judgment of invalidity presents a claim independent of the patentee's charge of infringement." Cardinal Chem. Co. v. Morton Int'l, 508 U.S. 83, 96 (1993). Therefore, this court's affirmance of the district court's non-infringement findings as to the '306 patent does not moot Cisco's invalidity counterclaim on cross-appeal. See Old Town Canoe Co. v. Confluence Holdings Corp., 448 F.3d 1309, 1318 (Fed. Cir. 2006). This court reaches Cisco's argument that the asserted claims of the '306 patent are invalid as independently anticipated by two prior art publications...

The CAFC "reached" to telling the district court, on remand, to reconsider "Cisco's invalidity counterclaim under the revised claim construction."

'763 "claims a survivable or self-healing ring network that can withstand a cut line or failed node." "Monitoring of errors in the arriving signals is essential to the invention." The disputed '763 claim included a means-plus function limitation.

The district court determined that the term "monitoring means" was a means-plus function term pursuant to 35 U.S.C. § 112, ¶ 6.

Title 35 provides that "[t]he specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention." 35 U.S.C. § 112, ¶ 2. For a means-plus function claim to satisfy the definiteness requirement, the written description must clearly link or associate structure to the claimed function. Biomedino, LLC v. Waters Techs. Corp., 490 F.3d 946, 950 (Fed. Cir. 2007). Whether the written description adequately sets forth the structure corresponding to the claimed function must be considered from the perspective of a person skilled in the art. Intel Corp. v. VIA Techs., Inc., 319 F.3d 1357, 1365-66 (Fed. Cir. 2003). "The question is not whether one of skill in the art would be capable of implementing a structure to perform the function, but whether that person would understand the written description itself to disclose such a structure." Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1338 (Fed. Cir. 2008). "While corresponding structure need not include all things necessary to enable the claimed invention to work, it must include all structure that actually performs the recited function." Default Proof Credit Card Sys. v. Home Depot U.S.A., Inc., 412 F.3d 1291, 1298 (Fed. Cir. 2005). "A determination of claim indefiniteness is a legal conclusion that is drawn from the court's performance of its duty as a construer of patent claims." Personalized Media Commc'ns, L.L.C. v. Int'l Trade Comm'n, 161 F.3d 696, 705 (Fed. Cir. 1998).

In an attempted § 112 ricochet shot, banking § 112 ¶ 6 off ¶ 1 to hit ¶ 2, Cisco aimed for indefiniteness.

As Cisco notes, the figures of the '763 patent show the controller's circuit as a black box, i.e., nothing in the figures describes the details of its inner circuitry. "[H]owever, the absence of internal circuitry in the written description does not automatically render the claim indefinite." Tech. Licensing, 545 F.3d at 1338. As noted, claim definiteness depends on the skill level of an ordinary artisan. Intel, 319 F.3d at 1365-66. Therefore, the specification need only disclose adequate defining structure to render the bounds of the claim understandable to an ordinary artisan. Id. (holding that the internal circuitry of an electronic device need not be disclosed in the specification if one of ordinary skill in the art would understand how to build and modify the device). Here, [Telcordia's expert] Dr. Prucnal testified that an ordinary artisan would know how to interpret the specification and actually build a circuit. The record shows that an ordinary artisan would have recognized the controller as an electronic device with a known structure. Therefore, the specification along with the figures shows sufficient structure to define the claim terms for an ordinarily artisan in the relevant field.

Cisco tried to dig a hole for Dr. Prucel, but couldn't dig it deep enough to bury him.

[P]atents are presumed to be valid, and so, Cisco bears the burden of proving that an ordinary artisan would not understand the disclosure. 35 U.S.C. § 282; see Aero Prods. Int'l, Inc. v. Intex Rec. Corp., 466 F.3d 1000, 1015 (Fed. Cir. 2006). The record shows that Cisco did not show that an ordinary artisan would not understand the link between the controller and the monitoring function. Therefore, this court affirms the district court's decision to deny Cisco's JMOL motion that the asserted claims of the '763 patent are indefinite.

Judge Prost dissented definiteness, finding the need to connect the dots a wee much.

The majority holds that one of skill in the art would understand that the selector component is not capable of performing the monitoring function, and by process of elimination would deduce that the controller is the structural component of the node associated with the claimed function. Majority Op. at 20-21. It is not enough, in my view, that a skilled artisan can follow the clues in the patent and solve the mystery of what structure must perform the claimed function. See Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1338 (Fed. Cir. 2008). Our precedent requires that the specification clearly link a particular structure with a claimed function. See Biomedino, LLC v. Waters Techs. Corp., 490 F.3d 946, 950 (Fed. Cir. 2007); Tech. Licensing, 545 F.3d at 1338.

Accordingly, I would hold that the term "monitoring means" is indefinite under 35 U.S.C. § 112 for failing to disclose a structure associated with the claimed function, and thus hold the asserted claim of the '763 patent invalid.

Figuring damages in patent cases is often veracious.

During the trial, the parties presented three sets of damages numbers to the jury. Telcordia's damages expert testified that the proper damages award should be based on a running royalty. Cisco's expert testified that the award should be based on a lump-sum, paid-up license. Cisco's expert also applied a running royalty analysis to show the differences between Telcordia's and Cisco's approaches to damages. Id. To complicate the matter further, the parties also presented different royalty rates and royalty bases. Therefore, it is unclear whether the jury based its award on a lump-sum, paid-up license, running royalty, some variation or combination of the two, or some other theory.

District courts have broad discretion to interpret an ambiguous verdict form, because district courts witness and participate directly in the jury trial process. The district court was in a position to assess whether the verdict figure represented past infringement as well as ongoing infringement. In the absence of an express statement in the verdict, this court cannot determine whether the jury compensated Telcordia for all of Cisco's infringing activities. The $6.5 million award is closer to $5 million proposed by Cisco for past and ongoing infringement than $75 million proposed by Telcordia for past infringement only. However, neither party proposed the exact $6.5 million figure. In any event, this court holds that the district court's finding that the jury's verdict compensates Telcordia only for past infringement is not clearly erroneous. In the circumstances of this case, this court finds that the district court did not abuse its discretion in interpreting the verdict form.

Title 35 provides for the calculation of damages "together with interest . . . as fixed by the court." 35 U.S.C. § 284. In patent infringement cases, "prejudgment interest should be awarded under § 284 absent some justification for withholding such an award." General Motors Corp. v. Devex Corp., 461 U.S. 648, 657 (1983). Cisco asserts that the jury's damages award includes prejudgment interest, thereby barring its award under section 284. For the same reasons, the verdict form is ambiguous as to whether the jury's damages award includes prejudgment interest. Because the district court did not clearly err by concluding that the jury's damages award did not include prejudgment interest, the district court's award of interest under section 284 does not constitute an impermissible double recovery.

"Under some circumstances, awarding an ongoing royalty for patent infringement in lieu of an injunction may be appropriate." Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1314 (Fed. Cir. 2007). If the district court determines that a permanent injunction is not warranted, the district court may, and is encouraged, to allow the parties to negotiate a license. Id. at 1315. The district court may step in to assess a reasonably royalty should the parties fail to come to an agreement. Id.

In this case, after declining Telcordia's motion for permanent injunction, the district court directed the parties to negotiate a reasonable royalty for ongoing infringement. An award of an ongoing royalty is appropriate because the record supports the district court's finding that Telcordia has not been compensated for Cisco's continuing infringement. Therefore, the district court did not abuse its discretion by directing the parties to negotiate the terms of the appropriate royalty.

Accordingly, this court affirms the district court's grant of an accounting and prejudgment interest. As the district court properly instructed the parties to negotiate the royalty, this court remands to the district court so that the parties can complete the royalty negotiation process. If the parties cannot reach an agreement, the district court should step in and assist or calculate on its own the appropriate rate. Telcordia and Cisco will have an opportunity to appeal the royalty set by the district court.

The upshot -

Accordingly, this court vacates the district court's denial of Cisco's JMOL motion on invalidity of the '306 patent and remands for determination of the validity issue. This court also remands to allow the parties to negotiate the terms of the royalty. In all other respects, this court affirms.

Posted by Patent Hawk at July 6, 2010 8:47 PM | Claim Construction


O noes! Not an infringement! Say it ain't so!

If you don't mind, could you be so kind as to tell me where I could buy a disposable waste container for a potty-chair comprising: a bag member having an opening therein and being adapted to be removably disposed in a waste receptacle of a potty-chair, said bag member having a plurality of perforations spacedly disposed through a wall and near said opening of said bag member; a flange-like collar being securely attached along an edge of said opening of said bag member and being adapted to removably rest upon a seat of the potty-chair; a means for closing said bag member including a drawstring member having a string being wound through said perforations and also having a tie member for tightening and closing said string about said bag member; and a splatter guard member being securely and perpendicularly attached to said flange-like collar?

Is it at my local K-mart? Walmart?

Posted by: 6000 at July 13, 2010 2:17 PM