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Circumstantial Evidence Suggesting Use of an Accused Product in an Infringing Manner Is Enough to Preclude SJ of Noninfringement as to Inducement

11-1204
June 11, 2012

Decision icon Decision

Last Month at the Federal Circuit - July 2012

Judges: Dyk (concurring-in-part and dissenting-in-part), Schall, Moore (author)

[Appealed from: W.D. Wis., Magistrate Judge Crocker]

In Toshiba Corp. v. Imation Corp., No. 11-1204 (Fed. Cir. June 11, 2012), the Federal Circuit affirmed-in-part and vacated-in-part a district court’s grant of SJ of noninfringement. Specifically, the Federal Circuit held that the district court correctly granted SJ of noninfringement as to contributory infringement of U.S. Patent No. 5,892,751 (“the ’751 patent”), erred in granting SJ of noninfringement as to induced infringement of the ’751 patent, and erred in granting SJ of noninfringement of claim 1 of U.S. Patent No. 5,831,966 (“the ’966 patent”).

Both the ’751 and ’966 patents relate to optical disc technology. In particular, the ’751 patent is directed to how data are written onto DVDs. In accordance with DVD standards, the claims of the ’751 patent require, among other things, a disc organized into three areas: a “lead-in area,” a “data area,” and a “lead-out area.” The lead-in area contains information about the DVD’s structure and properties, the data area stores recorded data, and the lead-out area indicates the functional end of the data area. The asserted claims of the ’751 patent require that the optical discs have a test pattern in the lead-in area. Such test patterns may be used by DVD players to ensure that data are read properly from the DVD.

Data can be recorded onto DVDs using one of two methods: the “disc-at-once mode,” which writes all of the data to the disc in a single session (including the lead-in and lead-out areas), and a “multisession mode,” which allows a user to record some data in one session and then later record additional data to the DVD in another session. In multisession mode, a user may choose to “finalize” the DVD after all of the data have been recorded on the DVD. The DVD does not contain the test pattern or the lead-out data prior to finalization.

The ’966 patent describes a recording medium, such as a DVD, containing a “management region” with information about the structure of the medium. DVDs may have one or two sides on which data may be recorded. A DVD may also have one or more layers on a single side for recording data. The DVD standards require the lead-in areas of DVDs to include data that indicate the number of layers on the current side of the disc and to identify the current layer.

Toshiba Corporation (“Toshiba”) accused Imation Corporation (“Imation”) of infringing claims of the ’751 and ’966 patents. Imation moved for SJ of no indirect infringement of the ’751 patent. The district court granted Imation’s motion, concluding that the use of unfinalized DVDs was a substantial noninfringing use. In granting the motion, the district court held that both theories of indirect infringement—contributory and inducement—fail if there are any substantial noninfringing uses.

Imation also moved for SJ of no direct infringement of the ’966 patent. The district court granted the motion because the accused DVDs were only single-sided, so the identifying information on them did not have the “purpose of providing information for the entire recording medium,” in accordance with the district court’s claim construction of claim 1. Slip op. at 4. The parties stipulated to dismissal of the remaining claim of direct infringement.

On appeal, the Federal Circuit first reviewed the district court’s grant of SJ of noninfringement of the ’751 patent. On the issue of contributory infringement, the Court agreed with Imation that Toshiba failed to proffer evidence to create a genuine issue of material fact. The Court agreed with the district court that the evidence established that recording DVDs without finalizing them is a noninfringing use, and that there is no evidence that this use is not substantial. The Court rejected Toshiba’s argument that the DVD standards require finalization, concluding that the DVD standards recognize recording to DVDs without finalization. Finally, the Court found that Toshiba’s user manuals provided evidence that users may choose not to finalize DVDs because it is a laborious process. Finding insufficient evidence to create a genuine issue of material fact, the Court affirmed the grant of SJ of no contributory infringement of the ’751 patent.

Turning to induced infringement of the ’751 patent, the Federal Circuit found that the district court erred as a matter of law in holding that the existence of a substantial noninfringing use also precludes a finding of induced infringement. The Court explained that, to the contrary, the existence of a substantial noninfringing use does not preclude a finding of inducement.

The Court rejected Imation’s alternative argument that the grant of SJ of no inducement should be affirmed because Toshiba failed to provide evidence of direct infringement. In so doing, the Court explained that direct infringement can be shown by circumstantial evidence that “at least one person directly infringed an asserted claim during the relevant period.” Id. at 10. Significantly, the Court concluded that when used in the disc-at-once mode to record data, a DVD necessarily infringes the ’751 patent because it automatically writes the lead-in area with the test pattern, as well as the data area and the lead-out area. Further, the Court found that the disc-at-once mode does not contain a separate finalization option. The Court further explained that Imation’s user instructions provide that DVDs must be finalized to ensure compatibility with DVD standards, and advise against using the multisession mode to record data. Accordingly, the Court concluded that there was sufficient evidence, such that a jury could reasonably conclude that sometime during the relevant time period, more likely than not, one person in the United States finalized DVDs or used the disc-at-once mode.

Turning to the ’966 patent, the Federal Circuit reviewed the district court’s grant of SJ of noninfringement and its construction of two claim terms. Specifically, the Court reviewed the district court’s constructions of the phrases “number-of-recording planes identifying information” and “recording-plane identifying information that uniquely identifies that recording plane,” which the district court had construed as “information whose purpose is to identify the number of recording planes on the recording medium” and “information whose purpose is to identify the recording plane being reproduced,” respectively. Id. at 15. The Court ultimately agreed with Toshiba that the district court had improperly read a “purpose” requirement into claim 1. In particular, the Court noted that the language of the claim requires only that the information “represents” the number of recording planes or “uniquely identifies” the recording plane. Id. at 17.

In so holding, the Court rejected Imation’s argument that the ’966 patent contemplates only two-sided discs. The Court also found no requirement that the “number of recording planes” limitation in claim 1 requires identifying both the number of disc sides and the number of layers per side, as Judge Dyk stated in a dissenting opinion. Rather, the Court concluded that the claim language was broad enough to cover one-sided discs, the claim terms at issue are structural elements, and the district court erred in its construction of both terms and in granting SJ of noninfringement of the ’966 patent.

Judge Dyk dissented as to the claim construction and infringement analysis for claim 1 of the ’966 patent. In Judge Dyk’s view, “repeated and consistent references to disc sides in the specification and prosecution history clearly show that ‘number-of-recording-planes identifying information’ requires the identification of disc sides.” Dyk Dissent at 2. Because Judge Dyk concluded that claim 1 requires that an accused DVD be able to identify whether the DVD has one recording side or two recording sides, Judge Dyk would have affirmed the district court’s grant of SJ of noninfringement of the ’966 patent.

Summary authored by Christopher J. Siebens, Esq.