Fujitsu and LG Electronics and U.S. Philips v. Netgear (CAFC 2010-1045) precedential

Summary judgment is appropriate when, drawing all justifiable inferences in the nonmovant's favor, there exists no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). We also review claim construction de novo. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1455-56 (Fed. Cir. 1998) (en banc).

Infringement flows from claim construction. The rule of claim construction is like Shusaku at the go board: the simplest move that works.

The words of a claim are generally given their ordinary and customary meaning as understood by a person of ordinary skill in the art when read in the context of the specification and prosecution history. See Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc).

Three asserted patents: 4,974,952, owned by Philips; 6,018,642, owned by Fujitsu; and 6,469,993, owned by LG.

4,974,952

'952 claims a method of segmenting a network message.

Contributory Infringement

To establish contributory infringement, the patent owner must show the following elements relevant to this appeal: 1) that there is direct infringement, 2) that the accused infringer had knowledge of the patent, 3) that the component has no substantial noninfringing uses, and 4) that the component is a material part of the invention. Id.

As to evidence of direct infringement, the telling issue was whether infringement analysis necessarily requires analyzing the accused product, as Netgear argued, or that infringement can be found more simply by adoption of an industry standard, as the patent holders wished. The CAFC jumped into the deep end of the pool.

We hold that a district court may rely on an industry standard in analyzing infringement. If a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement. We agree that claims should be compared to the accused product to determine infringement. However, if an accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product. We accepted this approach in Dynacore where the court held a claim not infringed by comparing it to an industry standard rather than an accused product. An accused infringer is free to either prove that the claims do not cover all implementations of the standard or to prove that it does not practice the standard.

Public policy weighs in favor of this approach. If a court determines that all implementations of a standard infringe the claims of a patent, then it would be a waste of judicial resources to separately analyze every accused product that undisputedly practices the standard. This is not prejudicial to present or future litigants. If two products undisputedly operate in the same manner, a finding of infringement against one will create a persuasive case against the other. In such a case, there will be no prejudice.

This was followed by a caveat for specificity.

Only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.

Philips' assertion was partly felled by caveat, having failed to show direct infringement when a product may operate in multiple modes.

We agree with the district court that Philips failed to establish a genuine issue of material fact regarding direct infringement for all but the four models with corresponding customer service records. Unless the claim language only requires the capacity to perform a particular claim element, we have held that it is not enough to simply show that a product is capable of infringement; the patent owner must show evidence of specific instances of direct infringement. Intel Corp. v. U.S. Int'l Trade Comm'n, 946 F.2d 821, 832 (Fed. Cir. 1991) (holding that the claim term "programmable selection means" only required that the infringing product be capable of infringing); Acco Brands, Inc. v. ABA Locks Mfg. Co., 501 F.3d 1307, 1313 (Fed. Cir. 2007) (holding that the patent owner must show actual infringement, rather than just the capability to infringe). The present case is similar to Acco, where the accused product worked in two modes, only one of which infringed and the claim was not drawn to the mere capability to perform an element. Id. The patent owner presented expert testimony and instructions for the product that showed it could operate in an infringing manner. Id. With the exception of the customer service records, Philips' evidence shows only that the accused products are capable of infringement.

Talking out of both sides of its mouth, as is litigation lawyers wont, having lost on summary judgment, Philips backstop argument was that summary judgment was inappropriate, "that there are genuine issues of material fact relating to knowledge that preclude summary judgment of noninfringement."

[W]e disagree with Philips' claim that it need only show that Netgear knew of the patent and of the relevant acts, not whether these acts constituted infringement. Our case law is clear that Philips must show that Netgear "knew that the combination for which its components were especially made was both patented and infringing." Golden Blount, Inc. v. Robert H. Peterson Co., 365 F.3d 1054, 1061 (Fed. Cir. 2004) (quoting Preemption Devices, Inc. v. Minn. Mining & Mfg. Co., 803 F.2d 1170, 1174 (Fed. Cir. 1986)). In this case, Philips provided a letter that identified the '952 patent and stated that all 802.11 compliant products infringe. Construing all facts in a light most favorable to Philips, we cannot hold that Netgear did not have the requisite knowledge as a matter of law.

The issue of substantial noninfringing uses went Philips way, in that activating a feature necessarily meant infringement. Hence, the only issue was the extent of infringement.

We reverse the district court's summary judgment of no contributory infringement for the four accused models for which Philips showed evidence of direct infringement. We affirm summary judgment of no contributory infringement for all other models.

Induced Infringement

"Whoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). To establish inducement, a patent owner must show that the accused infringer induced the infringing acts and knew or should have known that its actions would induce actual infringement. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304 (Fed. Cir. 2006). It is not enough to simply intend to induce the infringing acts. Id. at 1306.

The district court relied on its notice analysis under § 287(a) holding that because Netgear did not have notice of the '952 patent, Netgear could not have the requisite intent for inducement. It held that "if defendant did not know its products might infringe, it would not have been able to form the intent necessary for a finding of liability." Second Noninfringement Order, 2009 WL 3047616, at *29.

The district court essentially agreed with Philips, "that there are genuine issues of material fact that preclude summary judgment of no induced infringement." This included the licensing letter sent. Reversed.

Limitation on Damages

Patents are like dog piss with respect to marking as notice of territory, with barking to follow upon perceived encroachment.

If a plaintiff practices the claimed invention and fails to mark its product with the relevant patent number, damages may be limited. 35 U.S.C. § 287(a) states, in pertinent part:

In the event of failure to so mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

The district court missed the nuance that method claims don't require notice.

The district court held that Philips practiced the claims of the '952 patent and failed to mark its products. The district court further held that Philips did not provide notice to Netgear prior to filing the instant case. Second Noninfringement Order, 2009 WL 3047616, at *9. It held that the letters from Via Licensing did not constitute adequate notice under the statute and that because the '952 patent expired before filing of the present action, there could be no damages. Id.

We hold that the district court erred because "[t]he law is clear that the notice provisions of § 287 do not apply where the patent is directed to a process or method." Crown Packaging Tech., Inc. v. Rexam Beverage Can Co., 559 F.3d 1308, 1316 (Fed. Cir. 2009). All claims of the '952 patent are drawn to a method and we therefore find that the district court erred by limiting damages under § 287.

6,018,642

'642 "claims a system for reducing power consumption in mobile devices that access wireless networks."

The fate of '642 rested on claim construction, particularly time-based terms.

Fujitsu's lawyers ridiculously argued that "'synchronously' does not mean 'at the same time.'" But lawyers argue anything. Credibility is an abstraction.

We hold that the proper construction of the term is "just before or at the same time." This is the only construction consistent with the specification.

Next, "the data receive-ready (DRR) period", which was construed by district court as "a fixed period of time during which an intermittent power-on type mobile station is in its power-on state and prepared to receive data, with the period beginning immediately after the intermittent power-on type mobile station receives the first beacon signal telling it there is data to be transmitted to it." Fujitsu argued for a broader construction based upon embodiments that were "not the subject of the claims at issue." District court construction affirmed.

Noninfringement because "the accused products do not satisfy the DRR period limitation," having no fixed period as claimed. Affirmed.

6,469,993

'993 goes to priority-based quality of service for terminals (devices) in a communications network.

The accused products implement the WMM Specification. The WMM Specification is a complement to the 802.11 standard that outlines a set of structures and methods to ensure better quality of service within an 802.11 compliant network. WMM Specification § 1.1.

But those standards don't require setting priority levels for devices.

The district court held that the accused products do not infringe claim 25 as a matter of law because they do not "set[ ] a priority level of each of a plurality of mobile terminals." First Noninfringement Order, 2009 WL 36616, at *8; Second Noninfringement Order, 2009 WL 3047616, at *15. The court held that the WMM Specification requires message priority based only on the type of data, not terminal priority. Second Noninfringement Order, 2009 WL 3047616, at *14-15.

The CAFC agreed.

The WMM Specification explicitly assigns priority levels to messages, not to terminals. The undisputed fact that a lower priority message may transmit before a higher priority message shows that the terminals do not adopt the priority level of the highest priority message.

Affrimed.

Another relatively clear-cut case, for the most part, particularly '642 (Fujitsu) and '993 (LG). Well-written ruling by Judge Moore.