Failure to Obtain Advice of a Third Party Is Not Evidence of Willfulness
In Provisur Technologies, Inc., v. Weber, Inc., Appeal No. 23-1438, the Federal Circuit held that patentees cannot use an accused infringer’s failure to obtain noninfringement advice from a third party to prove the accused infringement was willful.
Provisur filed a lawsuit alleging Weber’s SmartLoader products infringed a Provisur patent. A jury found Weber willfully infringed and awarded damages. Following the verdict, Weber moved for judgment as a matter of law of no willful infringement and no infringement, and for a new trial on damages. The district court denied Weber’s motions. Weber appealed.
The Federal Circuit reversed the district court’s willfulness finding. It found testimony from Provisur’s expert violated 35 U.S.C. § 298, which prohibits using an accused infringer’s failure to obtain advice of counsel to prove willfulness. During trial, the expert testified about Weber’s failure to consult a third party to evaluate the allegedly infringed patents. The Federal Circuit held that Provisur cannot circumvent § 298 by substituting advice from a third party for advice of counsel, and that the district court erred in admitting the expert’s testimony. The Court found the remainder of the expert’s testimony insufficient as a matter of law to establish willfulness.
The Federal Circuit also reversed the district court’s denial of judgment as a matter of law of noninfringement. According to the Court, Provisur’s infringement theory relied on establishing Weber’s SmartLoader could be reprogrammed to operate as claimed. Provisur’s expert testified this could be accomplished by manipulating certain parameters of the SmartLoader’s conveyor. However, the Court noted, doing so required access that was not available to Weber’s customers. Additionally, the expert testified not that he was able to configure the SmartLoader as claimed, but that he merely could have done so. The Federal Circuit concluded the expert’s testimony was therefore not substantial evidence demonstrating infringement.
Third, the Federal Circuit reversed the district court’s denial of a new trial on damages. It held the district court erred by permitting Provisur to use the entire market value rule. The Court noted the accused features of Weber’s SmartLoader are parts of a larger component, which itself is just one component of an entire multicomponent food packaging line. The Federal Circuit held that Provisur failed to present sufficient evidence demonstrating the patented features drove demand for the entire line.
The Sufficiency of a Party’s Patent Infringement Pleading is Intertwined with the Patent’s Complexity
In Alexsam, Inc. v. Atena, Inc. Appeal No. 22-2036, the Federal Circuit reviews a trial court’s determination of the sufficiency of a party’s pleading of patent infringement de novo and considers numerous factors in doing so, including the complexity of the patent itself.
AlexSam brought suit against Aetna for patent infringement, alleging that Aetna marketed both Mastercard-branded and VISA-branded products which infringed AlexSam’s multifunctional debit/credit card technology. AlexSam and Mastercard had previously entered into a licensing agreement authorizing Mastercard to process, and enable others to process, “licensed transactions”—defined as “each process of activating or adding value” to an account. Aetna filed a motion to dismiss, which the district court granted. The district court found that (1) Aetna had an express license via the licensing agreement to market the Mastercard and VISA-branded products, and (2) that AlexSam’s pleadings were defective because only third-party customers could have directly infringed AlexSam’s technology.
The Federal Circuit vacated the district court’s decision. The Federal Circuit analyzed the licensing agreement and concluded that the plain language of the agreement established that any transactional component that did not include activation or adding value was not licensed under the agreement. Because AlexSam’s asserted patent claims were not limited solely to transactions involving activation or adding value, not every act infringing AlexSam’s patent claims would be licensed under the agreement. The Federal Circuit also reiterated the framework for sufficiently pleading patent infringement and listed factors—including the “complexity of the technology, the materiality of any given element to practicing the asserted claim(s), and the nature of the allegedly infringing device.” The Federal Circuit held that its review of trial court determinations on this matter is de novo and concluded that AlexSam’s pleadings were sufficient, based in part on the complexity (or lack thereof) of the technology involved. Accordingly, the Federal Circuit vacated and remanded for further proceedings.
Resolving Claim Construction Dispute at 12(b)(6) Stage May Be Error if Specification Indicates Claim Term Does Not Have its Plain Meaning
In Utto Inc. v. Metrotech Corp., Appeal No. 23-1435, the Federal Circuit held that the district court erred in construing the claims at the motion to dismiss stage where the plain meaning of the word “group” was “two or more,” but the specification indicated the term may mean “one or more.”
UTTO Inc. sued Metrotech Corp. alleging patent infringement and moved for a preliminary injunction. The asserted patent claimed methods for detecting underground utility lines, which the patent refers to as “buried assets.” In denying the preliminary injunction motion, the district court construed the phrase “group of buried asset data points” to require “two or more” data points for each buried asset. Medtrotech moved three times to dismiss UTTO’s infringement claim under Rule 12(b)(6) because UTTO alleged that Medtrotech’s product used only one data point for each buried asset. The district court granted those motions but, for the first two, permitted UTTO to amend its complaint. However, the district court granted the third motion to dismiss with prejudice because UTTO’s allegations did not satisfy the court’s construction requiring “two or more” data points. UTTO appealed, arguing that the district court erred by construing claims at the motion to dismiss stage.
The Federal Circuit vacated and remanded district court’s dismissal of the infringement claim. The court expressly rejected the argument that claim construction is categorically forbidden at the motion to dismiss stage. However, the Federal Circuit agreed with UTTO that the district court did not sufficiently analyze whether “a group of buried asset data points” must be at least two data points, and thus fuller claim construction proceedings were required. While the Federal Circuit acknowledged that the plain meaning of “a group…” usually means two or more, it emphasized that the specification must play a central role in the claim construction analysis. In the specification, the Federal Circuit found two passages supporting UTTO’s argument that the claimed “group” refers to one or more data points. The district court had rejected UTTO’s argument because such support appears “only twice” in the specification, but the Federal Circuit questioned why twice was not enough to overcome the general presumption that plural terms like “group” refer to two or more. The court also indicated that extrinsic evidence may be helpful in the claim construction proceedings on remand.
The Intersection of FRAND Obligations and Anti-Suit Injunctions
In Telefonaktiebolaget Lm Ericsson v. Lenovo (United States), Inc., Appeal No. 24-1515, the Federal Circuit held that The threshold requirement for anti-suit injunctions, that the domestic suit must be dispositive of the foreign action, is satisfied when the domestic suit considers whether the party seeking foreign injunctions has engaged in fair, reasonable, and non-discriminatory (“FRAND”) licensing negotiations prior to seeking the injunctions.
Both Lenovo and Ericsson are members of the European Telecommunications Standards Institute (“ETSI”), which developed the standard for determining which 5G-related patents were considered Standard Essential Patnets (“SEPs”). Members of ESTI agreed to a policy that requires they “‘grant irrevocable licen[s]es’ to their SEPs on ‘fair, reasonable[,] and non-discriminatory [FRAND] terms and conditions.’” Both Lenovo and Ericsson agreed that “the FRAND commitment includes an obligation to negotiate in good faith over licenses to SEPs.”
After the parties failed to reach agreement on a global cross-license for 5G SEPs, Ericsson sued Lenovo in the Eastern District of North Carolina for patent infringement and breach of its FRAND commitment to negotiate in good faith. Ericsson also sought a declaration that it had complied with its FRAND commitment to negotiate in good faith. Later, Ericsson sued Lenovo in Columbia and Brazil seeking a preliminary injunction based on its SEPs in those countries. Both injunctions were granted within a few weeks. In response, Lenovo filed a motion in the district court for an anti-suit injunction prohibiting Ericsson from enforcing its Brazilian and Columbian injunctions.
The district court denied the motion and held that a threshold requirement for anti-suit injunctions—that the domestic suit be “dispositive of the foreign action to be enjoined”—was not satisfied. The district court reasoned that, “to be dispositive, the domestic suit would have to result in a global cross-license between the parties.” Because there was no guarantee that such a license would result from the litigation, the district court held that the domestic suit was not dispositive of the foreign action and denied the anti-suit injunction.
The Federal Circuit vacated the district court’s decision. The Federal Circuit stated that, if the district court ruled that Ericsson had not complied with its FRAND commitment, then Ericsson would be precluded from seeking foreign injunctions related to those patents. Thus, the Federal Circuit held that the question before the district court – whether Ericsson had in-fact negotiated in good faith – could be dispositive of the foreign actions. Because this threshold requirement was satisfied, the Federal Circuit remanded for consideration of the remaining anti-suit injunction factors.