i4i v. Microsoft

This case involved an invention for editing custom XML, a markup language, in which the “improvement stems from storing a document’s content and metacodes separately.” The jury found claims infringed and not invalid and awarded $200 million. The district court added $40 million in enhanced damages plus a permanent injunction going forward. Below are excerpts concerning some of issues considered.

Claim Construction

“Because the claims themselves do not use the word ‘file’ and the specification discloses embodiments where the storage format is not a file, we conclude that ‘distinct’ does not require storage in separate files.” “In evaluating whether a patentee has disavowed claim scope, context matters.” “The statements Microsoft now plucks from the prosecution history do not ‘clear[ly] and unmistakabl[y] disavow’ storage means that are not files.” (p. 9.)

“[N]ot every benefit flowing from an invention is a claim limitation.” (p. 10)

Permissive Language Alert. “The specification’s permissive language, ‘could be edited,’ ‘can be created,’ and ‘ability to work,’ does not clearly disclaim systems lacking these benefits.” (p. 11.) As such, there were “no statements that unequivocally narrow the claims.” (p. 11.)



Review of Obviousness Limited Without a JMOL. “The extent to which we may review the jury’s implicit factual findings depends on whether a pre-verdict JMOL was filed on obviousness. In this case, Microsoft has waived its right to challenge the factual findings underlying the jury’s implicit obviousness verdict because it did not file a pre-verdict JMOL on obviousness for [certain prior art] references. … [A] party must file a pre-verdict JMOL motion on all theories, and with respect to all prior art references, that it wishes to challenge with a post-verdict JMOL. Microsoft’s pre-verdict JMOL on anticipation … was insufficient to preserve its right to post-verdict JMOL on a different theory (obviousness), or on different prior art …. Accordingly, we do not consider whether the evidence presented at trial was legally sufficient to support the jury’s verdict. Our review is limited to determining whether the district court’s legal conclusion of nonobviousness was correct, based on the presumed factual findings.” (p. 14.)

Corroboration. “[W]e hold that corroboration was not required in this instance, where the testimony was offered in response to a claim of anticipation and pertained to whether the prior art practiced the claimed invention.” (p. 18.) The court was distinguishing the corroboration requirement that applies when “any witness whose testimony alone is asserted to invalidate a patent.” (p. 18.)

Contributory Infringement. “In assessing whether an asserted noninfringing use was ‘substantial,’ the jury was allowed to consider not only the use’s frequency, but also the use’s practicality, the invention’s intended purpose, and the intended market.” (p. 25.)

Damages: Review Limited Because Microsoft Did Not File Pre-Verdict JMOL. “Although Microsoft now objects to the size of the damages award, we cannot reach that question because Microsoft did not file a pre-verdict JMOL on damages.” (p. 36.) The court would not consider whether the damages award was excessive because “Microsoft waived its ability to have us decide that question by failing to file a pre-verdict JMOL on damages. Fed. R. Civ. P. 50(a), (b).” (p. 36-37.) “Instead of the more searching review permitted under Rule 50(b), we are constrained to review the verdict under the much narrower standard applied to denials of new trial motions. This standard is highly deferential: we may set aside a damages award and remand for a new trial only upon a clear showing of excessiveness. To be excessive, the award must exceed the maximum amount calculable from the evidence.” (p. 37.) Since it didn’t, the award was affirmed, though the court suggested it might have reached a different result under the other standard of review, sufficiency of the evidence.

Permanent Injunction

Past Harm Is Relevant to Irreparable Harm. “Although injunctions are tools for prospective relief designed to alleviate future harm, by its terms the first eBay factor looks, in part, at what has already occurred.” (p. 43)

Remedies at Law. “Difficulty in estimating monetary damages is evidence that remedies at law are inadequate.” (p. 44.) Microsoft took a large percent of the market and i4i had to change its business model.

Public Interest Satisfied by Narrow Scope. “The scope of this injunction is narrow, however. It applies only to users who purchase or license Word after the date the injunction takes effect. Users who purchase or license Word before the injunction’s effective date may continue using Word’s custom XML editor, and receiving technical support.” (p. 42.) “The injunction’s narrow scope substantially mitigates the negative effects on the public, practically and economically. By excluding users who purchased or licensed infringing Word products before the injunction’s effective date, the injunction greatly minimizes adverse effects on the public.” (p. 45.)

Date Injunction Begins. The court changed the effective date of the injunction based on the evidence presented to the district court. But since this change was applied to the district court’s order, the end result is that the injunction will take effect in a few weeks of this decision.

IN RE NINTENDO

Groundhog Writ. The Federal Circuit has granted a petition for a writ of mandamus, ordering a case to be transferred out of the Eastern District of Texas to another venue after the district court had denied a motion to transfer. “The writ of mandamus is available in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power.” (p. 3.) However, it has been used rather frequently recently to get cases out of the Eastern District of Texas. As in the other recent transfer cases, there was no real connection between the case and Texas. Further, the Federal Circuit noted that the district court gave too much emphasis on the plaintiff’s choice of venue and not enough emphasis on local interest and on the location of sources of proof and witnesses.

Automated Merchandising Systems v. Crane

This non-precedential decision discusses the standards for preliminary injunctions, in particular the requirements for showing irreparable harm, avoiding a finding of likelihood of success by making a case for invalidity, and the implications of a reexamination proceeding for seeking a preliminary injunction.

1. Irreparable Harm

The court discussed what is required to demonstrate irreparable harm, which is harm that cannot be compensated via monetary damages. Evidence of lost sales, by itself, is presumed to be compensable by monetary damages and thus does not provide evidence of irreparable harm. The court stated that, in light of eBay, the “burden is now on the patentee to demonstrate that its potential losses cannot be compensated by monetary damages.” (p. 6.) Loss of market share must be shown to be non-compensable by monetary damages. Similarly, price erosion “might support a finding of irreparable harm sufficient to warrant a preliminary injunction” if it could be shown that prices could fall enough to drive the plaintiff out of the market. (p. 7.)

2. Likelihood of Success

The district court improperly shifted the burden from the plaintiff (to show a likelihood of success) to the defendant (to show that the plaintiff is unlikely to success on the merits.) The defendant’s argument against a preliminary injunction was based on an invalidity claim. The court acknowledged that “it may be difficult to determine precisely how much of an invalidity case Crane needs to present at this preliminary stage” because it does in fact have the “burden at trial of proving invalidity by clear and convincing evidence.” (p. 8.) Nonetheless, the district court did not sufficiently analyze the defendant’s invalidity argument, and so the Federal Circuit could not agree with its conclusion.

3. Preliminary Injunctions and Stays Due to Reexamination

The court explained that, in almost all circumstances, it would be improper to both grant a preliminary injunction and a stay pending reexamination. “[T]he district court ordinarily should not grant both a preliminary injunction and a stay. This is because a stay pending reexamination is appropriate only if there is a substantial issue of patentability raised in the reexamination proceeding, while the injunction against the accused infringer is appropriate only if there is no substantial issue of patentability. Because it logically seems that there cannot simultaneously be a substantial issue of patentability and no substantial issue of patentability, stays pending reexamination are typically inappropriate in cases in which preliminary injunctions are appropriate.” (p. 10.)

Intellectual Science v. Sony Electronics

The issue on appeal was whether the patentee had provided sufficient evidence through its expert’s declaration to survive summary judgment of non-infringement. The patent was directed toward an “apparatus for reading optical discs in a computer that reduces the role of magnetic disk drives.” The defendants moved for summary judgment (before claim construction) based on the insufficiency of the patentee’s evidence for infringement. In particular, there was no evidence in the record pointing to specific structures in the accused devices that met the claimed “data transmission means.” Therefore, summary judgment of non-infringement was affirmed.

After reviewing the expert declaration, the court found that “it does not sufficiently identify the structural elements of the claimed ‘data transmitting means.’” (p. 8.) The expert declaration also failed to explain how one of skill in the art would recognize how the cited components were infringing. (p. 10.) To present a triable issue of fact on infringement, the patentee must provide at least a “clear identification of the claimed structure or its equivalent in the accused devices.” (p. 14.)

The court included additional statements about the sufficiency of expert opinions in the infringement context: “An expert’s unsupported conclusion on the ultimate issue of infringement will not alone create a genuine issue of material fact.” (p. 8.) “To satisfy the summary judgment standard, a patentee’s expert must set forth the factual foundation for his infringement opinion in sufficient detail for the court to be certain that features of the accused product would support a finding of infringement….” (p. 7-8.)

Source Search Technologies v. LendingTree

Obviousness. The claims at issue in this case involved “a computerized procurement service for matching potential buyers with potential vendors over a network.” One limitation, as construed, required that the system return from potential sellers “quotes” that included “price and other terms of a particular transaction in sufficient detail to constitute an offer capable of acceptance.” (p. 12.) Because there were at least factual issues about whether the prior art disclosed the use of such “quotes,” the district court’s grant of summary judgment of obviousness was vacated.

Infringement. The district court had also found that the accused system infringed. This finding was also vacated for a related reason—there were fact issues regarding whether the accused system returned “quotes” as construed (capable of acceptance) from potential buyers. (p. 19.)

Collateral estoppel. The patentee contended that the defendant should not be able to argue that its “quotes” were non-infringing based on positions it had taken in another litigation. The court agreed with the district court that collateral estoppel was not appropriate because the prior issue involved “an unrelated patent, with different asserted claims, and dissimilar claim constructions.” (p. 17.)

Indefiniteness. The defendant also argued that the claims were indefinite because a person of skill could not differentiate between the claimed “standard” and unclaimed non-standard goods and services. While noting that completely subjective claim terms were improper, the court rejected this argument, finding that a person of skill could determine what was standard once a market was chosen. “To hold otherwise would require the patent to list every possible good or service. This court does not load the indefiniteness requirement with this unreasonable baggage. Although at times difficult to determine the bounds of a “standard” product or service, a person having ordinary skill in the art will possess an understanding of the system that will supply an objective definition to the various markets and applications of the system.” (p. 21.)

Tyco Healthcare v. Ethicon Endo-Surgery

The district court dismissed without prejudice this patent infringement case because the plaintiff failed to prove it had ownership of the patents and therefore standing to sue. The defendant cross-appealed, contending that the dismissal should have been without prejudice. The Federal Circuit affirmed.

The standing issue turned on a contractual provision in an agreement that assigned certain patents to the plaintiff, but excluded patents that were “related to pending litigation.” Because the plaintiff failed to provide evidence regarding any pending litigation, it failed to meet its burden regarding standing.

On the with/without prejudice issue, the court noted that dismissal for lack of standing is “ordinarily” without prejudice and found no abuse of discretion by the district court. It is also worth noting that this issue was not raised until trial, and the court noted that the work done for the case could be used in a subsequent proceeding.

Encyclopaedia Britannica v. Alpine Electronics

This non-precedential opinion discusses the standards for the specificity of disclosure for functions carried out on computers. The court stated that, for means-plus-function claims, simply disclosing a general computer was not sufficient. The “corresponding structure for such claims is the algorithm disclosed in the specification. …If the algorithm is not adequately disclosed in the specification, the claim is invalid for indefiniteness.” (p. 6.)

The patentee made three arguments that were all rejected. First, it argued that the specification implicitly discloses a class of algorithms corresponding to the recited function to a person of skill in the art. This was rejected because it the “understanding of one of skill in the art does not relieve the patentee of the duty to disclose sufficient structure to support means-plus-
function claim terms.” (p. 7-8 (citing Lucent Techs., Inc. v. Gateway, Inc., 543 F.3d 710, 719 (Fed. Cir. 2008).)

Second, it argued that the specification discloses a one-step algorithm for the recited function. This was rejected because the “purported ‘one-step’ algorithm … is not an algorithm at all. Rather, it is simply a recitation of the claimed function.” (p. 9.)

And finally, it argued that it “need not disclose an algorithm where the computer function being performed is well known.” This was rejected because, regardless of the simplicity of the algorithm, “when a means-plus-function limitation is a computer programmed with software to carry out the claimed function, a recitation of the corresponding algorithm is required to provide sufficient disclosure of structure under § 112 ¶ 6 to avoid indefiniteness under § 112 ¶ 2.” (p. 10.)