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Contra Proferentem Results in Patent License

February 14, 2003

Decision icon Decision

Last Month at the Federal Circuit - March 2003

Judges: Michel (author), Mayer, and Clevenger

In Intel Corp. v. VIA Technologies, Inc., No. 02-1212 (Fed. Cir. Feb. 14, 2003), the Federal Circuit affirmed a district court’s SJ of noninfringement because the accused infringers were licensed. The Federal Circuit also affirmed the district court’s judgment of no invalidity, finding sufficient structure in the patent specification corresponding to a means-plus-function limitation such that the claims were not indefinite.

In 1996, Intel Corporation (“Intel”) promulgated a new industry standard related to a graphics-interface specification called Accelerated Graphic Port (“AGP”) interface specification, revision 1.0 (“AGP 1.0”). Then, in 1998, Intel published revision 2.0 of the AGP specification (“AGP 2.0”). Intel’s royaltyfree license under these specifications covers any patent claims that must be infringed in order to comply with these specifications.

In 1996, VIA Technologies, Inc., California and Taiwan (collectively “VIA”), signed a license agreement for AGP 1.0 and in 1998, signed a license agreement for AGP 2.0.

In 2000, Intel sued VIA for infringing U.S. Patent No. 6,006,291 (“the ‘291 patent”). VIA conceded that its products practiced certain claims of the ‘291 patent, but argued that it was licensed to practice the ‘291 patent under the AGP 2.0 license agreement. The issue turned on whether a “fast write” function covered by the ‘291 patent is required within the meaning of the AGP license, as the district court had so held.

On appeal, Intel argued that the fast-write feature of the ‘291 patent is an optional protocol and, therefore, although it is disclosed in the AGP 2.0 specification, it is not “required by” that specification, as stated in the AGP 2.0 license. VIA countered that although the fastwrite feature may be optional, when it is performed, it is required by the fast-write protocol of the AGP 2.0.

The Federal Circuit concluded that both interpretations of the license agreement were reasonable and, because the agreement is fairly susceptible to such different interpretations, there is an ambiguity as to whether the fastwrite optional protocol is licensed. By analogy, the Court stated that books “required by a school” could be books needed for required (nonoptional) classes or any class taken, including optional classes. Given the ambiguity in the agreement, the Federal Circuit agreed with the district court that SJ was proper, relying on contra proferentem, which, under Delaware law, requires that an agreement be construed against the drafter who is solely responsible for its terms. Intel had drafted the license agreement and offered it on “take it or leave it” terms. Thus, the Court agreed that the fast-write feature was covered by the AGP license.

VIA cross-appealed the district court’s decision that the ‘291 patent was not invalid for indefiniteness. Specifically, VIA argued that the specification did not provide sufficient structure corresponding to the functional recitations of certain means-plus-function limitations in the asserted claims. The claim limitations in question included “a selection device adapted to determine whether data is able to be written directly to [a] peripheral device.” The district court concluded that the core logic, as described in the specification and adapted both to write directly to and react to a write buffer full signal, is the structure corresponding to the functions in dispute. However, circuitry to adapt the described core logic was not disclosed in the specification, and VIA contended that the generic core logic was inadequate to show how that core logic should be modified. The Federal Circuit disagreed, concluding that the disclosure was not inadequate solely because no circuitry to modify the core logic was disclosed. The Court concluded that one of ordinary skill in the art could modify the core logic to perform the fast-write function, although Intel and VIA’s experts disagreed on this issue.