United States: Apple Invalidates Two Claims Of NetAirus' Patent But Faces Trial On Two Others: NetAirus v. Apple

Last Updated: March 22 2012
Article by Stanley M. Gibson

Plaintiff NetAirus Technologies ("NetAirus") contended that Apple was infringing U.S. Patent No, 7,103,380 (the "'380 Patent"), which pertains to a method in which a handset device communicates wirelessly over both local area networks and wide area networks. NetAirus claimed that the iPhone 3G and later models infringed the '380 Patent by switching between a cellular data network and local Wi-Fi hotspots. Apple moved for summary judgment contending that the '380 Patent was invalid.

After reviewing the claims of the patent and the relevant prior art, the district court found that claims 1 and 3 were indeed disclosed by the prior art. "[T]here are no claim limitations found in Claims 1 and 3 that are not disclosed in the prior art. Indeed, as the preceding evaluation of the Graham inquiries demonstrated, all of the following claim limitations are disclosed in the prior art: (i) selective communication, (ii) local area communication that includes e mail, (iii) differing transmit power levels, and (iv) a handset. Thus, under the standard set forth in § 103(a), the only remaining question pertinent to the legal determination of obviousness is whether, in light of these similarities between the prior art and the claimed invention, the claimed invention as a whole, i.e. the three-part combination of the Newton System, would have been obvious at the relevant time. 35 U.S.C. § 103(a) ("A patent may not be obtained . . . if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.")."

The district court then concluded that the combination would have been obvious to a person of ordinary skill in the art because it would have been obvious to combine the prior art Newton device with peripheral devices because the Newton was made for customization through the addition of third-party hardware attachments.

Nonetheless, the district court declined to invalidate two other claims, claims 7 and 11, because there were genuine issues of material fact as to how a person of ordinary skill in the art would interpret some of the prior art. According to the district court, "[c]laims 7 and 11 are substantially identical to claims 1 and 3, respectively, with one major difference: The handset must be able to transmit voice to and from a LAN. Thus, although creating a handset that could transmit voice and data to a WAN and data to a LAN was obvious, the Court finds that Defendant has not met its burden of proving that the claimed invention as a whole (based on claims 7 and 11), which includes voice transmission over a LAN, was obvious. As discussed in Section III.B.2.3, supra, Defendant claims that the addition of voice transmission over a LAN was disclosed in the prior art, and was obvious, because the Dayna Card transmitted using packet-switching technology, and the Sobrinho Article discusses integrating voice and data transmissions using packet-switching technology through a new, multiple access protocol. This argument is unpersuasive for two reasons First, it is not at all clear that a person of ordinary skill in the art, i.e., an electrical engineer with one year of experience, would be able to apply a new, potentially undeveloped and untested method to an existing product such that it could transmit voice and data through packet-switching. Second, it is not clear that such person of ordinary skill would have any reason to combine the ideas in the Sobrinho Article with the Newton prior art. Defendant points to the fact that both the Dayna disclosures and the Sobrinho Article discuss packet-switching as supplying a sufficient motivation to combine, but the Court finds that this link is not sufficiently clear to grant the relief sought by the present motion in view of the applicable standards."

The district court also found that "genuine issues of material fact remain regarding how a person of ordinary skill would interpret the Sobrinho Article, which goes to the underlying factual inquiry of the content of the prior art. This is a matter as to which expert testimony may be pertinent. On the current record, without such expert testimony, the motion must be denied because the Court cannot determine whether combining the Sobrinho Article with the Dayna Card disclosures and other prior art would be obvious to a person of ordinary skill in the art, or whether there was a motivation to combine these references. In short, Defendant has failed to introduce sufficient evidence on this point to meet the burden imposed by the present motion: To demonstrate affirmatively that there is no genuine issue of material fact. Although the ultimate legal determination of obviousness is a question of law, the underlying factual inquiries, such as the content of the prior art and the differences between the prior art and the claimed invention as perceived by a person of ordinary skill in the art, must inform that legal determination."
Accordingly, Apple invalidated some of the claims in the NetAirus patent but will still face trial on others.

NetArius Technologies, LLC v. Apple, Inc., Case No. CV10-03257 JAK (Ex) (C.D. Cal. Feb. 27, 2012)

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