Opinion-of-Counsel Evidence Relevant to Intent Analysis of Induced Infringement
September 24, 2008
Last Month at the Federal Circuit - October 2008
Judges: Linn (author), Friedman, Prost
[Appealed from: C.D. Cal., Judge Selna]
In Broadcom Corp. v. Qualcomm Inc., Nos. 08-1199, -1271, -1272 (Fed. Cir. Sept. 24, 2008), the Federal Circuit affirmed the district court’s judgment that Qualcomm Incorporated (“Qualcomm”) infringed certain claims of Broadcom Corporation’s (“Broadcom”) U.S. Patent Nos. 5,657,317 (“the ’317 patent”) and 6,389,010 (“the ’010 patent”). The Court also affirmed the issuance of a permanent injunction with regard to the ’317 and ’010 patents. The Court, however, reversedthe district court’s judgment of infringement with respect to Broadcom’s U.S. Patent No. 6,847,686 (“the ’686 patent”), finding the claim at issue invalid under the proper construction. Accordingly, the Court reversed the injunction and damages award related to the ’686 patent and remanded to the district court for adjustment.
The patents-in-suit are directed to wireless voice and data communications on cellular telephone networks. Broadcom accused Qualcomm’s wideband CDMA (“WCDMA”) baseband processor chips of infringing claim 3 of the ’686 patent and Qualcomm’s CDMA2000 chips and associated software of infringing several claims of the ’686, ’010, and ’317 patents. A jury found that Qualcomm directly infringed and induced infringement of the relevant claims of all three patents, that Qualcomm contributed to the infringement of the relevant claims of the ’010 patent, and none of the patents is invalid. The jury further found that Qualcomm willfully infringed the three patents and awarded damages of approximately $20 million. Qualcomm filed post-trial motions for JMOL, which the district court denied. Ten days later, the Federal Circuit released its decision in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).
The district court sua sponte invited a motion for reconsideration of its denial of Qualcomm’s request for a new trial on willfulness and its award of enhanced damages. The district court ultimately vacated the willfulness verdict and entered a permanent injunction on all three patents, but provided “sunset” provisions allowing continued sales pursuant to a mandatory royalty through January 31, 2009. Qualcomm appealed the judgment of infringement and the injunction orders.
On appeal, the Federal Circuit first addressed arguments regarding claim construction, infringement, and validity. With respect to the ’686 patent, the Court reviewed construction of the claim term “DSP controller controlling said plurality of processing units,” which the district court had construed to require a global controller. Broadcom argued that, without the “global controller” limitation, the claim would be self-invalidating based on generic prior art disclosed in the specification. The Court agreed with Qualcomm that the district court improperly imported the “global controller” limitation, after finding that a global controller is separate and distinct from a DSP. The Court found that, although the specification contemplates the possibility of a global controller, the claims of the ’686 patent are directed solely to a DSP. The Court also noted that Broadcom did not demonstrate that every limitation of the claims is found in the prior art disclosed in the specification. Broadcom conceded that, if the claim term were construed not to require a “global controller,” a Texas Instruments chip would anticipate the claim. Accordingly, the Court modified the district court’s claim construction to remove the requirement of a “global controller,” reversed the jury’s verdict of infringement as to the ’686 patent, and held claim 3 invalid as anticipated by the Texas Instrument chip.
With respect to the ’317 patent, the Court addressed the meaning of two claim terms, “simultaneously participate” and “networks.” The relevant claims of the ’317 patent require a radio unit with a transceiver that can “simultaneously participate” on two or more wireless networks. The Federal Circuit rejected Qualcomm’s argument that the claims required the claimed transceiver to be capable of communicating on multiple networks at the “same instant” in time, instead finding that the transceiver only needed to be capable of communicating on multiple networks “during the same period” of time. The Court noted that the specification states that, “[i]f the master has two radio transceivers, the master can service both networks. If, however, the master only has one radio transceiver, the master chooses to service one network based on network priority considerations.” Because the Court also found that the specification as a whole repeatedly clarifies that the invention is directed to a wireless device with only one transceiver, the Court agreed with the district court’s construction of “simultaneous participation” as referring to interleaved communications. Accordingly, the Court affirmed the jury’s verdict of infringement of the ’317 patent.
Qualcomm further argued that, even under the district court’s construction of the claim term “simultaneously participate,” U.S. Patent No. 5,550,895 (“Burson”) anticipates the relevant claims of the ‘317 patent. The Court found that Broadcom had provided detailed evidence at trial antedating the Burson reference by showing an earlier date of invention and that Qualcomm had failed to rebut that evidence. Accordingly, the Court affirmed the jury’s verdict that the Burson reference does not anticipate the ’317 patent.
Qualcomm next argued that the district court erroneously failed to construe the term “networks” and instead improperly left an issue of claim construction for the jury to decide. Because Qualcomm first raised this argument in its post-trial motions, the Federal Circuit agreed with the district court that Qualcomm had waived its right to request a construction of “networks.”
Turning to the ’010 patent, the Federal Circuit found that there was substantial evidence to support the jury’s verdict of infringement with respect to the claim term “an interface circuit that selectively couples to the first and second networks.” The Court noted that the term “selectively couples” was not construed by the district court because the parties agreed to let the ordinary meaning control. Thus, the Court reviewed the jury’s infringement verdict for substantial evidence. The Court found that there was more than adequate evidence to support the jury’s verdict. In particular, the Court noted that Broadcom’s expert testified that the term “selectively couples” did not require a direct connection, as Qualcomm contended. The Court also rejected Qualcomm’s contention that Broadcom was improperly presenting a post-trial claim construction because “Qualcomm has not provided convincing evidence that the ordinary meaning of ‘selectively couples’ requires a direct or physical connection, and the jury was entitled to credit the substantial evidence . . . , as general as it may be, in rendering a verdict in favor of Broadcom.” Slip op. at 21.
The Court next affirmed the district court’s denial of Qualcomm’s request for a new trial on the verdict of induced infringement. The Court disagreed with Qualcomm that Seagate altered the state-of-mind requirement for inducement and that opinion-of-counsel evidence is no longer relevant in determining intent in the context of inducement. Instead, citing DSU Medical Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) (en banc in relevant part), the Court reiterated that “opinion-of-counsel evidence, along with other factors, may reflect whether the accused infringer ‘knew or should have known’ that its actions would cause another to directly infringe,” and that “such evidence remains relevant to the second prong of the intent analysis.” Slip op. at 26. Accordingly, the Court found no legal error in the district court’s jury instructions with regard to inducement. Further, the Court found that, even if the jury instructions had been legally incorrect, Qualcomm failed to suggest any alternative instructions and the totality of circumstances supported the jury’s verdict of induced infringement.
Finally, the Court concluded that the district court did not abuse its discretion in issuing an injunction against Qualcomm’s CDMA2000 products.
Considering each eBay factor, the Court first acknowledged that it remains an open question “whether there remains a rebuttable presumption of irreparable harm following eBay.” Id. at 31 (quoting Amado v. Microsoft Corp., 517 F.3d 1353, 1359 n.1 (Fed. Cir. 2008)). The Court concluded that, even if there were no such presumption, Broadcom provided sufficient evidence of irreparable harm to its own commercial activities by Qualcomm’s infringing activity. Specifically, the Court found that “Broadcom provided evidence of irreparable harm, despite the fact that it does not currently practice the claimed inventions,” and that this result was “consistent with eBay, in which the Supreme Court cautioned that ‘traditional equitable principles do not permit such broad classifications’ as presuming that a patentee cannot establish irreparable harm based on a patentee’s ‘willingness to license its patents’ or ‘its lack of commercial activity in practicing the patents.’” Id. at 32.
The Court also found that Broadcom’s license with Verizon was not sufficient evidence that Broadcom could be adequately compensated by monetary damages, especially in light of the district court’s findings that the structural nature the relevant market favors a finding that monetary damages are inadequate. The Court found the balance of hardships neutral in light of the twenty-month sunset provisions, relying on the district court’s finding that the time from winning a design contract to actually bringing a product to the consumer is about eighteen months. The Court also found that the sunset provisions mitigate the harm to the public and that the district court did not abuse its discretion in fashioning a remedy that protects Broadcom’s rights while allowing Qualcomm time to develop noninfringing substitutes. Accordingly, the Court affirmed the issuance of a permanent injunction with regard to the ’317 and ’010 patents. Because the Court reversed the jury’s verdict of infringement of the ’686 patent, the Court also reversed the injunction and damages award pertaining to the ’686 patent and remanded to the district court for adjustment.