Federal Circuit Finds Claimed Invention Obvious, Reversing Trial Judge & Jury

Scott Daniels | August 27, 2015

ABT Systems v. Emerson Electric

August 19, 2015

Before: Prost, Clevenger & Schall, opinion by Schall

Summary:

A jury found the ‘017 patent (U.S. Patent No. 5,547,017) to be valid and infringed, and awarded reasonable royalty to the patentee as damages. The trial judge subsequently denied the accused infringer’s motion for JMOL that the patent was invalid as obvious. On appeal, the Federal Circuit concluded that the claimed invention was obvious and that the trial judge should have granted the JMOL motion. The Federal Circuit therefore remanded the case to the trial judge with instructions to enter judgment in favor of the accused infringer.


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The USPTO Appeals Board Must Adequately Explain Its Reasoning

Bill Schertler | August 27, 2015

Power Integrations v. Lee

August 12, 2015

Before: Moore, Mayer, Linn, opinion by Mayer

Summary

Power Integrations challenged a decision of the Board of Patent Appeals and Interferences (“board”) affirming the rejection of claims 1, 17, 18 and 19 of US Patent No. 6,249,876 (the ‘876 patent) as anticipated under 35 U.S.C. §102(b). The board’s construction of the claim term “coupled” was not adequately explained. The court vacated and remanded the board’s decision, holding only that the board on remand should carefully and fully assess whether the disputed claims of the ’876 patent are anticipated by the prior art, setting out its reasoning in sufficient detail to permit meaningful appellate review.


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35 U.S.C. δ271(a) and the meaning of “within the United States”

Lee Wright | August 12, 2015

Carnegie Mellow University v. Marvell Technology Group, Ltd., Marvell Semiconductor, Inc.

August 4, 2015

Before: Wallach, Taranto and Chen, Circuit Judges.

Summary

Carnegie Mellon University (“CMU”) sued Marvell Technology Group, Ltd. and Marvell Semiconductor, Inc. (collectively “Marvell”) for infringing two patents related to hard-disk drives.

A jury found for CMU on infringement and validity, and it awarded roughly $1.17 billion as a reasonable royalty for the infringing acts, using a rate of 50 cents for each of certain semiconductor chips sold by Marvell for use in hard-disk drives. The district court then used that rate to extend the award to the date of judgment, awarded a 23-percent enhancement of the past damages award based on Marvell’s willfulness (found by the jury and the district court), and entered a judgment of roughly $1.54 billion for past infringement and a continuing royalty at 50 cents per Marvell-sold chip.

Marvell appealed.

The Court affirmed the judgment of infringement and affirmed the validity of the patents.

The Court affirmed the rejection of Marvell’s laches defense.

The Court reversed the grant of enhanced damages under the governing willfulness standard.

Marvell’s challenge to the royalty (past and continuing) was rejected by the Court with one exception. The exception is a partial new trial is needed to determine the location, or perhaps locations, of the “sale” of the chips not made in or imported into the United States.

Details
The ’839 patent and the ’180 patent claim methods, devices and systems for improved accuracy in detection of recorded data. Inventors were Aleksandar Kavcic and José Moura.
Claim 4 of the ’839 patent is representative of the asserted claims:

4. A method of determining branch metric values for branches of a trellis for a Viterbi-like detector, comprising:

selecting a branch metric function for each of the branches at a certain time index from a set of signal-dependent branch metric functions; and

applying each of said selected functions to a plurality of signal samples to determine the metric value corresponding to the branch for which the applied branch metric function was selected, wherein each sample corresponds to a different sampling time instant.

Marvel engineers, as they were designing chips in the competition for the next generation of read heads, built a simulator to use as a “gold standard” for testing their chip designs, and they paid tribute to their source in dubbing the simulator “Kavcic Viterbi.” Marvell engineers later designed what they considered a “sub-optimal” version of the Kavcic Viterbi for use in a new generation of Marvell chips, and they again acknowledged Dr. Kavcic’s work as a source, internally naming their design the “KavcicPP” (“PP” for “post-processor”). Still later, Marvell created a detector that its engineers recognized “turn[ed] out to be the original structure that Kavcic proposed in his paper.”

The jury found that Marvell, both directly and indirectly, infringed the two method claims at issue by developing, testing, and selling to its customers—notably, some of the world’s leading makers of hard-disk drives—products that practice the claimed methods.

The Court rejected Marvell’s challenges, concluding that the jury had substantial evidence to support its verdict.

Laches

The district court also determined that Marvell suffered some evidentiary prejudice as a result of the delays, but rejected Marvell’s contention that it had suffered economic prejudice, finding that Marvell, for its own economic reasons, would have gone ahead with its infringement regardless, accepting the risk of liability.

“A court must look at all of the particular facts and circumstances of each case and weigh the equities of the parties.” Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1032 (Fed. Cir. 1992) (en banc).

Here, the district court weighed the equities and concluded that Marvell was not entitled to a laches defense to pre-suit damages. The Court affirmed.

The district court considered the entirety of the circumstances and concluded that “the equities clearly favor CMU rather than Marvell, which copied CMU’s patents consciously and deliberately for an entire decade.

In this case, the district court went beyond the mere conclusion of conscious copying. It considered the extent and egregiousness of Marvell’s copying, the culpability on the part of CMU in delaying suit, and the ramifications for public policy of allowing a laches claim. The Court held the district court did not abuse its discretion in concluding that the equities favored CMU and defeated Marvell’s defense.

Enhancement of Damages

Enhancement is not asserted to rest on the infringer’s actual knowledge that it was infringing. The district court may enhance damages only upon proof of willfulness, which the Court has held to require “clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent” and “this objectively defined risk . . . was either known or so obvious that it should have been known.”

The jury verdict rejecting the invalidity defense must be upheld, but that Marvell’s position on invalidity was substantial enough that the enhancement standard is not met.

The Court concluded that a jury could properly reject Marvell’s invalidity defenses based on [prior art] and that there was enough uncertainty about what [the prior art] discloses and what CMU’s claims require that the Court cannot say that the defenses were objectively unreasonable.

Place of sale

Marvell contends that the district court “erred in denying JMOL (and new trial or remittitur) striking the portion of the damages award that rested on sales of foreign chips that were manufactured, sold, and used abroad without ever entering the United States.”

The royalty rate is applied to chips that do enter the United States. However, the Court found that there is a “potential problem” with including the chips made and delivered abroad, and never imported into the United States, unless those chips can fairly be said to have been sold here. The Court indicates that that question requires a remand.

Patent law is to be understood against a background presumption against territorial reach. What constitutes a territorial connection that brings an action within the reach of a United States statute must ultimately be determined by examining the “‘focus’ of congressional concern” in the particular statute.

For the present context, the Court thinks that § 271(a) provides the basis for drawing the needed line. It states a clear definition of what conduct Congress intended to reach—making or using or selling in the United States or importing into the United States, even if one or more of those activities also occur abroad.

The Court considers that the presumption against extraterritoriality, to be given its due, requires something similar in the present royalty setting.

There is no extraterritoriality bar to include within the royalty base those chips which were imported into the United States for use in the United States.

The standards for determining where a sale may be said to occur do not pinpoint a single, universally applicable fact that determines the answer, and it is not even settled whether a sale can have more than one location. See Halo, 769 F.3d at 1378–79 (collecting cases; relying in part on N. Am. Philips Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576, 1579 (Fed. Cir. 1994)). Places of seeming relevance include a place of inking the legal commitment to buy and sell and a place of delivery, see id.; Transocean, 617 F.3d at 1311; cf. Norfolk & W. Ry. Co. v. Sims, 191 U.S. 441, 447 (1903), and perhaps also a place where other “substantial activities of the sales transactions” occurred, Halo, 769 F.3d 1379 & n.1 (focusing on where “substantial activities of the sales transactions” occurred, but declining to decide whether the location of contract formation on the facts of that case would have established a sales location). At this point, we do not settle on a legal definition or even to say whether any sale has a unique location.

Designers could take years to obtain the design (a “design win”).

The designs are specifically tailored for incorporating into customers’ products. Marvell’s facilities are in northern California, and CMU’s industry expert, Dr. Bajorek, showed that “with the exception of the chip making . . . all the activities related to designing, simulating, testing, evaluating, qualifying the chips by Marvell as well as by its customers occur[ ] in the United States.” J.A. 42,159; see also J.A. 35,075–77 (charts showing relevant activity and where it occurred); J.A. 43,650–55 (parties’ joint stipulation). He also used Marvell’s records to show that Marvell, from California, provided potential customers with samples and simulations incorporating its designs. E.g., J.A. 42,147–48; J.A. 53,570, 53,572, 53,612, 53,613. Marvell itself stipulated that “[d]uring [its] sales cycle, [its] engineers assist [its] customers in implementing [its] solutions into their product.” J.A. 43,654. And there was some evidence suggesting that specific contractual commitments for specific volumes of chips were made in the United States. Carnegie Mellon, 986 F. Supp. 2d at 645 (referencing testimony that sales were “signed off on” in California); J.A. 42,162 (similar testimony by CMU’s industry expert).

On this record, we cannot say that a jury could not find the chips to have been sold in the United States (perhaps not only in the United States). The parties’ chip stipulation, cited above, suggests a substantial level of sales activity by Marvell within the United States, even for chips manufactured, delivered, and used entirely abroad. That evidence is strengthened by the record details regarding Marvell’s contracting process, and Marvell has not pointed us to significant evidence that would block an inference that sales commitments occurred in the United States. (Moving the burden to the defendant to prove no sale in U.S.?)

“To the extent, however, that Marvell achieved sales resulting from Marvell’s alleged infringing use during the sales cycle, you may consider them in determining the value of the infringing use.” J.A. 45,456. Marvell challenges that instruction on the ground that it “includ[ed] sales of chips manufactured and sold abroad without entering the United States.” Marvell Opening Br. 58.

Conclusion

This court is pushing the envelope for interpreting 35 U.S.C. § 271(a) as to the meaning of “makes, uses, offers to sell, or sells within the United States.”

Takeaway

Chip design may be moved to foreign countries

Alice Issues (Footnote 3)
Marvell states that if the claims reached its simulations they would “cover an abstract idea not otherwise subject to patenting.” Marvell Opening Br. 44. The fleeting reference to “abstract idea” is not enough to raise an issue of subject-matter ineligibility, and Marvell’s actual argument following the reference rests on case law that does not address that issue.

Marvell neither cites nor discusses either 35 U.S.C. § 101 or any case law under it, much less any authority finding ineligibility of an unconventional method, like CMU’s, for improving a physical process by overcoming limitations in physical devices—discerning more accurately what is on a physical recording medium from what a read head has sensed. See Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014) (“[A]n invention is not rendered ineligible for patent simply because it involves an abstract concept. ‘[A]pplication[s]’ of such concepts ‘to a new and useful end,’ we have said, remain eligible for patent protection.”

Full Opinion

NON-ANALOGOUS ART

Stephen G. Adrian | August 5, 2015

THE FEDERAL CIRCUIT REITERATES THAT PRIOR ART MUST LOGICALLY COMMEND ITSELF TO AN INVENTOR’S ATTENTION

CIRCUIT CHECK INC. v. QXQ INC.

July 28, 2015

Before: Lourie, Dyk, and Moore

Summary:
The Federal Circuit reiterates that prior art must logically commend itself to an inventor’s attention. The parties disputed whether certain references could be considered analogous prior art. Merely being within the common knowledge does not mean that a reference is analogous art.


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