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CAFC Weekly: December 24, 2010

by Orlando Lopez

“Twas the week before Christmas” and the CAFC handed down 5 precedential decisions, one of them clarifying the amount of control by one of the infringing parties over the other, required for there to be joint infringement. Another decision defines an exclusive licensee’s standing to sue when there were prior licenses granted. Additionally, there was a case related to inventorship, a case related to claim construction, as well as a gem of a case (or a case about gems) related to claim construction and inequitable conduct, which also included corroboration of testimony and preserving the right to appeal.

In WiAV Solutions LLC v. Motorola, Inc, WIAV had acquired an exclusive license to a number of patents owned by Mindspeed Technologies; however, before entering into the WIAV exclusive license, Mindspeed or its predecessors had granted a number of nonexclusive licenses. WiAV sued Motorola and a number of other defendants for infringement of one of WiAV’s patents and the Mindspeed patents. The District Court ruled that WiAV did not have standing to sue on the Mindspeed patents. Even in view of the convoluted trail of prior licenses, the CAFC reversed the district court decision and held that “an exclusive licensee does not lack constitutional standing to assert its rights under the licensed patent merely because its license is subject not only to rights in existence at the time of the license, but also to future licenses that may be granted only to parties other than the accused.” However, the exclusive licensee does not have standing to sue a party that already has a license or has the ability to obtain such a license. The holding by the CAFC in this opinion clarifies the standing of an exclusive licensee in the (fairly common) case of a tangled web of prior licenses resulting from prior spinoffs of companies.

In Akamai Technologies, Inc. v. Limelight Networks, Inc., Akamai owns a number of patents related to content delivery services for speeding up the transfer of information over the Internet and sued Limelight for infringement. The District Court, in a judgment as a matter of law, overturned the jury finding of infringement of the method claims since Limelight did not perform all the steps of the method. Akamai appealed to the CAFC, arguing that the steps not performed by Limelight were performed by Limelight’s customer under the control of Limelight.

The CAFC upheld the district court decision and held that there can only be joint infringement over a method claim when the two parties jointly performing the method steps have an agent/principal relationship, or when one of the two jointly infringing parties has a contractual relationship obligating that party to perform some of the method steps. These holding by the CAFC clarify the amount of control necessary to result in joint infringement and makes a finding of joint infringement difficult to obtain.

In Lazare Kaplan International v. Photoscribe Technologies, Inc., Lazare owned two patents related to technology for marking gems and sued Photoscribe for infringement. The District Court found that Photoscribe did not infringe one of the patents, that an asserted claim of the other patent was invalid and that the patents were unenforceable due to inequitable conduct. Lazare also owns a prior patent for gem marking technology (the Gresser patent). Although Lazare disclosed the Gresser patent to the USPTO, Lazare did not disclose the system that implemented the Gresser patent. The disclosure of the system was considered to be relevant to the patentability and based on the lack of disclosure, the District Court found that the Lazare patents were unenforceable due to inequitable conduct. The CAFC reversed the inequitable conduct finding, reviewed the District Court claim construction and reversed the finding of noninfringement of one of the patents. The CAFC based the reversal of the inequitable conduct finding on the lack of a showing of intent.

In Shum v. Intel Corporation, Shum had sued for correction of inventorship of 6 patents and for a number of state law claims related to fraud. Frank Shum (“Shum”) and Jean-Marc Verdiell (“Verdiell”) were co-founders of Radiance, a startup company. Radians was unsuccessful and was dissolved. Upon dissolution of Radiance, both Shum and Verdiell were allowed to independently exploit the intellectual property developed by Radiance and to pursue any business activity they desired. Verdiell continued to develop the technology under another startup company, LightLogic, and eventually sold the company to Intel. Shum then sued Intel, LightLogic and Verdiell. The jury at District Court found that Shum was the co-inventor of five of the six patents contested. The jury failed to reach a verdict in the other patent contested or in the state claims. The District Court granted judgment as a matter of law in favor of the defendants for the claims in which the jury failed to reach a verdict. Shum appealed. In view of the dissolution agreement for Radiance, the CAFC affirmed the judgment as a matter of law for the state claims. The CAFC also affirmed the judgment as matter of law denying co-inventorship of the claims where the jury could not reach a verdict, since Shum did not prove that he had made a contribution to the patent claims at issue. In a separate opinion, the CAFC upheld the award of costs against Shum.

In Spansion Inc v. ITC, Tessera filed a complaint with the international Trade Commission (ITC) alleging that seven companies infringed two of Tessera’s patents by importing semiconductor chips or products. Motorola settled the dispute with Tessera. The ITC found that the other six companies directly infringed one of the patents and were contributory infringers of the second one. The six companies appealed. The CAFC affirmed the ITC’s claim construction and the ITC’s finding of infringement. The section of the opinion reviewing the finding of contributory infringement is of interest since it shows how the requisite knowledge (the lack of which is a usual defense) resulted from knowledge of the patent and lack of non-infringing uses.

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