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Federal Circuit Permits Use of Industry Standards to Establish Direct Infringement

10-1045
September 20, 2010

Decision icon Decision

Last Month at the Federal Circuit - October 2010

Judges: Lourie, Friedman, Moore (author)

[Appealed from: W.D. Wis., Chief Judge Crabb]

In Fujitsu Ltd. v. Netgear Inc., No. 10-1045 (Fed. Cir. Sept. 20, 2010), the Federal Circuit affirmed the district court’s grant of SJ of noninfringement of U.S. Patent No. 4,974,952 (“the ’952 patent”) for all but four models of the accused products for which evidence of direct infringement was presented.  For these four models, the Court reversed the district court’s SJ of no contributory and no induced infringement.  The Court also affirmed the district court’s grant of SJ of noninfringement of U.S. Patent No. 6,018,642 (“the ’642 patent”) and of U.S. Patent No. 6,469,993 (“the ’993 patent”).

U.S. Philips Corporation (“Philips”), Fujitsu Limited (“Fujitsu”), and LG Electronics, Inc. (“LG”) own by assignment the ’952 patent, the ’642 patent, and the ’993 patent, respectively.  Each patent relates to a different aspect of wireless communication technologies.  Philips’s ’952 patent is directed to a method for transmitting data messages in a communications network.  The sole independent claim describes a method for segmenting and transmitting messages.  Fujitsu’s ’642 patent is directed to a system for reducing power consumption in mobile devices that access wireless networks.  A mobile station’s wireless communication subsystem is configured to only power up in time to receive one type of beacon signal.  After this signal, the mobile station is capable of receiving data for a fixed period of time called the data receive-ready (“DRR”) period.  If a beacon signal indicates there is no data to send to the mobile station, then the mobile station immediately powers off.  LG’s ’993 patent is directed to a method for ensuring quality of service in a communications network.  The ’993 patent describes a plurality of mobile terminals each having a priority value.  The base station, considering the overall traffic load, groups the priority values into batches.

The ’952, ’642, and ’993 patents implicate two industry standards:  the Institute of Electrical and Electronics Engineers 802.11 2007 Standard (“802.11”) and the Wi-Fi Alliance Wireless Multi-Media Specification, Version 1.1 (“WMM”). 

The three plaintiffs were part of a licensing pool (“Via Licensing”) that purported to include patents that any manufacturer of 802.11- and WMM-compliant products must license.  Via Licensing sent a letter to Netgear Inc. (“Netgear”), offering to license a set of patents allegedly essential to the practice of the standard.  Of the patents-in-suit, this letter mentioned only the ’952 patent and expressly stated that it was not alleging infringement.

After Netgear refused to take a license, Philips, Fujitsu, and LG sued Netgear, accusing it of infringement by implementing wireless networking protocols for sending and receiving messages between a base station, such as a wireless router, and a mobile station, such as a laptop.  The plaintiffs moved for SJ of infringement, arguing that, by simply complying with the standards, Netgear necessarily infringed the asserted claims.  The district court denied the motion, holding that the plaintiffs must show evidence of infringement for each accused product. 

Philips also alleged contributory and induced infringement for two classes of products:  those that only fragment messages and those that only defragment messages.  The district court held that any product that complied with certain sections of the IEEE 802.11 Standard infringed the asserted claims.  The district court, however, also noted that the fragmentation option is disabled by default in the accused products and required Philips to show evidence of direct infringement by users turning on the fragmentation function.  Moreover, the district court held that the notice letters sent by Philips prior to the instant suit were insufficient to establish the knowledge and intent elements of contributory and induced infringement, respectively.  Accordingly, the district court denied the plaintiffs’ motions for SJ of infringement and granted Netgear’s cross motion for SJ of noninfringement.  Fujitsu, LG, and Philips appealed the construction of certain claim terms, its denial of SJ of infringement, and its grant of SJ of noninfringement.

On appeal, the Federal Circuit first considered contributory infringement of Philips’s ’952 patent, which requires a showing of (1) direct infringement, (2) knowledge of the patent, (3) no substantial noninfringing uses, and (4) the accused component constituting a material part of the invention.  With regard to direct infringement, the Federal Circuit agreed with the district court that Philips failed to establish a genuine issue of material fact for all but four product models for which Philips had produced customer service records showing that Netgear’s support staff had advised customers to activate fragmentation.  The Court reminded that it is not enough to simply show that a product is capable of infringement.  The patent owner must show evidence of specific instances of direct infringement, unless the claim language only requires the capacity to perform a particular claim element.

Netgear asked the Federal Circuit to establish a rule precluding the use of industry standards in assessing infringement because it is legally incorrect to compare claims to a standard rather than directly to accused products.  The Court declined to do so, holding that, if claims are construed such that the reach of the claims includes any device that practices a standard, this can be sufficient for a finding of infringement.  The Court directed that, 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 for purposes of infringement analysis.  In cases where the relevant section of the standard is optional, and standards compliance alone would not establish that the accused infringer chooses to implement the optional section, however, the patent owner must compare the claims to the accused products or, if appropriate, prove that the accused products implement any relevant optional sections of the standard.  The Court stated that only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.

Next, considering the other three prongs of contributory infringement analysis, the Federal Circuit held that there were genuine issues of material fact relating to Netgear’s knowledge that preclude SJ of noninfringement.  The Court disagreed with Netgear that, because a user can turn off the infringing features, there are substantial noninfringing uses.  Finally, the Federal Circuit agreed with the district court that the asserted claims included no defragmentation steps and therefore held that models that only defragment messages cannot constitute a “material part” of the invention.  Accordingly, the Federal Circuit reversed the district court’s SJ of no contributory infringement for the four accused models for which Philips showed evidence of direct infringement and affirmed SJ of no contributory infringement for all other models.

The Court also held that there are genuine issues of material fact that preclude SJ of no induced infringement, such as whether the Via Licensing letters put Netgear on notice of the allegedly infringing acts by identifying the ’952 patent and 802.11-compliant products, and whether Netgear had the requisite intent to induce infringement were disputed facts.  Accordingly, the Court reversed the district court’s SJ of no induced infringement for the four accused models for which Philips presented evidence of direct infringement and affirmed SJ of no induced infringement for all other models.

Considering any limitation on damages, the Federal Circuit reversed the district court’s decision that Philips failed to mark its products under 35 U.S.C. § 287(a), that Philips did not provide notice to Netgear prior to filing suit, that the letters from Via Licensing did not constitute adequate notice under § 287, and that because the ’952 patent expired before filing of the present action, there could be no damages.  The Court reiterated that the notice provisions of § 287 do not apply where the patent is directed to a process or method. 

Turning to the construction of claims in Fujitsu’s ’642 patent, the Federal Circuit held that the proper construction of “synchronously” is “just before or at the same time,” because this is the only construction consistent with the specification.  The Court found the district court’s construction too narrow because it required the term “synchronous” to mean “simultaneous,” and would directly contradict the disclosure of the ’642 patent.  The Court however concluded that the district court did not err in its construction of the term “data receive-ready period” as being “a fixed period of time during which an intermittent power-on type mobile station is in its power-on state and prepared to receive data, with the period beginning immediately after the intermittent power-on type mobile station receives the first beacon signal telling it there is data to be transmitted to it.” 

With regard to infringement of Fujitsu’s ’642 patent, the Federal Circuit agreed with the district court that there was no genuine issue of material fact and that the accused products did not satisfy the DRR period limitation.  The Court found that the DRR period limitation must be fixed and that Fujitsu’s expert’s tests established that there is no fixed period of time that the mobile station is available to receive data.  The Court therefore affirmed the district court’s grant of SJ of noninfringement of the asserted claims of the ’642 patent.

Finally, the Federal Circuit agreed with the district court that the accused products did not infringe LG’s ’993 patent as a matter of law.  The Court noted that the WMM specification explicitly assigns priority levels to messages, not to terminals.  The Court reasoned that because the undisputed facts demonstrate that a lower priority message may transmit before a higher priority message, it showed that the terminals did not adopt the priority level of the highest priority message.  Thus, the Court affirmed the district court’s grant of SJ of noninfringement, as there was no genuine issue of material fact that the accused products did not set a priority level of each of a plurality of terminals.

 

Summary authored by Charles D. Cathey, Ph.D., Esq.