In a patent infringement action involving standard essential patents, standard-essentiality is to be determined by judges in bench trials and juries in jury trials
| September 11, 2020
Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holdings Ltd. (Fed. Cir. 2020) (Case No. 2019-2215)
August 4, 2020
Prost (Chief Judge), Newman and O’Malley. Court opinion by O’Malley
Summary
The Federal Circuit unanimously affirmed all aspects of the district court’s rulings and the verdict predicated thereon in favor of a patentee in a patent infringement action involving standard essential patents. In Fujitsu, the Court endorsed standard compliance as a way of proving infringement, holding that, 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. In this case, the Court moved on to hold that standard-essentiality is a question for the factfinder (meaning judges in bench trials and juries in jury trials), rejecting the defendant’s argument that, under Fujitsu, the court must first make a threshold determination as part of claim construction that all implementations of a standard infringe the claims.
Details
I. background
In a patent infringement action for U.S. Patent Nos. 8,385,239 and 8,351,538 in the U.S. District Court for the District of Delaware filed by Godo Kaisha IP Bridge 1 (“IP Bridge”) against TCL Communication Technology Holdings Ltd. et al. (“TCL”), asserted claims are directed to the Long-Term Evolution (“LTE”) standard, a standard for wireless broadband communication for mobile devices and data terminals, and IP Bridge’s infringement theory relied on Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321 (Fed. Cir. 2010), holding, on appeal from a summary judgment decision, that a district court may rely on an industry standard in analyzing infringement. Specifically, the Federal Circuit stated:
“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 Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263 (Fed.Cir.2004)] 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.” Fujitsu, 620 F.3d at 1327.
IP Bridge presented evidence to show that (1) the asserted claims are essential to mandatory sections of the LTE standard; and (2) the accused products comply with the LTE standard. In contrast, TCL did not present any evidence to counter that showing.
After a jury trial in 2018, the jury found that TCL was liable for infringement of the asserted claims by its sale of LTE standard-compliant devices such as mobile phones and tablets. The jury also awarded IP Bridge damages in the amount of $950,000.
Following the verdict, TCL filed a motion for judgment as a matter of law (“JMOL”), contending that IP Bridge’s theory of infringement was flawed because the Fujitsu “narrow exception” to proving infringement in the standard way, and IP Bridge filed a motion to amend the judgment under Federal Rule of Civil Procedure 59(e), seeking supplemental damages and an accounting of infringing sales of all adjudicated products through the date of the verdict, and ongoing royalties for TCL’s LTE standard-compliant products, “both adjudicated and non-adjudicated.”
The district court denied TCL’s JMOL motion, concluding that substantial evidence supported the jury’s infringement verdict. In contrast, the district court awarded the requested pre-verdict supplemental damages, and awarded on-going royalties in that amount for both the adjudicated products and certain unadjudicated products, with finding that the jury’s award represented a FRAND (Fair, Reasonable And Non-Discriminatory) royalty rate of $0.04 per patent per infringing product. The district court reasoned that, because IP Bridge demonstrated at trial that LTE standard-compliant devices do not operate on the LTE network without infringing the asserted claims, the unaccused, unadjudicated products “are not colorably different tha[n] the accused products.”
TCL timely appealed the district court’s infringement finding and its rulings regarding royalties.
II. The Federal Circuit
The Federal Circuit unanimously affirmed all aspects of the district court’s rulings and the verdict predicated thereon in favor of a patentee in a patent infringement action involving standard essential patents.
The issue in the appeal was a question not expressly answered by its case law including Fujitsu: who determines the standard-essentiality of the patent claims at issue—the court, as part of claim construction, or the jury, as part of its infringement analysis? The Court agreed with IP Bridge that standard-essentiality is a question for the factfinder.
TCL’s entire appeal rested on a single statement from Fujitsu, 620 F.3d at 1327: “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” (emphasis added). In TCL’s view, the statement mandates that a district court must first determine, as a matter of law and as part of claim construction, that the scope of the claims includes any device that practices the standard at issue.
The Court rejected TCL’s contention for three reasons below.
First, the Court pointed out that the statement in Fujitsu assumed the absence of genuine disputes of fact on the two steps of that analysis, which would be necessary to resolve the question at the summary judgment stage. The passing reference in Fujitsu to claim construction is simply a recognition of the fact that the first step in any infringement analysis is claim construction.
Second, the Court stated that its reading of Fujitsu is buttressed by that decision’s reference to Dynacore where the Court affirmed the summary judgment of non-infringement because the patentee did not show that a particular claim limitation was mandatory in the standard. The Court read Dynacore such that: “Although we referenced the claim construction by which the patentee was bound, Dynacore considered the possibility of the dispute going to the jury and rejected it based on undisputed facts.” Based on this, the Court concluded that, under Dynacore, which Fujitsu referenced in its holding, standard-essentiality of patent claims is a fact issue. The Court noted that the standard-essentiality may be amenable to resolution on summary judgment in appropriate cases like any other fact issue, but that it does not mean it becomes a question of law.
Finally, the Court expressed a view that determining standard-essentiality of patent claims during claim construction hardly makes sense from a practical point of view. Essentiality is, after all, a fact question about whether the claim elements read onto mandatory portions of a standard that standard-compliant devices must incorporate. In the Court’s view, this inquiry is more akin to an infringement analysis (comparing claim elements to an accused product) than to a claim construction analysis (focusing, to a large degree, on intrinsic evidence and saying what the claims mean).
From the foregoing, the Court found that substantial evidence fully supports the jury’s infringement verdict.
Further, the Court saw no reason to disturb the district court’s conclusions after carefully considering TCL’s remaining arguments—including its argument that the district court abused its discretion in awarding on-going royalties in this case.
In conclusion, the Court unanimously affirmed all aspects of the district court’s rulings and the verdict predicated thereon in favor of a patentee in a patent infringement action involving standard essential patents.
Takeaway
· In a patent infringement action involving standard essential patents, standard-essentiality is to be determined by judges in bench trials and juries in jury trials.
