Info-Hold, Inc. v. Muzak LLC, No. 2014-1167, 2015 U.S. App. LEXIS 6773 (Fed. Cir. Apr. 24, 2015) (Reyna, J.). Click Here for a copy of the opinion.
Info-Hold sued Muzak for infringement of USPN 5,991,374, which covers systems, apparatuses, and methods for playing music and messages through telephones and public speaker systems. During claim construction, the court adopted Muzak's proposed construction and construed the phrase "when a caller is placed on hold" to mean "at the moment a caller is placed on hold." Subsequently, the district court granted Muzak's summary judgment motion of no induced infringement on the basis that "Muzak did not possess actual knowledge that the acts it allegedly induced constituted infringement." The court also granted Muzak's motion of no lost profits because Info-Hold never introduced evidence of the profits it earned from solely the patented technology. The court excluded Info-Hold's expert report regarding reasonable royalty damages because he based his calculation on a method previously discredited by the Federal Circuit. Consequently, the court granted Muzak's summary judgment motion of no reasonable royalty damages for lack of evidence. Info-Hold appealed.
On appeal, despite affirming the district court's exclusion of Info-Hold's expert report, the Federal Circuit reversed on the issue of damages. The court found that aside from the expert report, there was other record evidence which the district court could use as a basis for determining a reasonable royalty. For example: statements made by Muzak's expert during deposition regarding royalty rates, the license of '374 patent to Trusonic, and the royalty paid to Hazenfield under his assignment of the '374 patent to Info-Hold. Therefore, a genuine issue of material fact existed with respect to the issue of reasonable royalty rate.
The Court also found a genuine issue of material fact as to whether Muzak acted with knowledge that its actions constituted infringement of the '374 patent. According to the record, Info-Hold contacted Muzak twice in an effort to put Muzak on notice of the '374 patent. In addition, despite Info-Hold's request that Muzak look into whether Muzak's systems infringed and Muzak's verbal agreement to do so, there was no evidence that Muzak took such action. This evidence raised the issue of "whether Muzak willfully blinded itself" to "whether it acted to induce infringement after becoming aware of the existence and alleged functionality of the '374 patent." Therefore, the Court reversed the determination of no reasonably royalty and no induced infringement.
With respect to the construction of "when a caller is placed on hold," the Court found that the district court's construction was supported by both the prosecution history and the claim language. Therefore, the Court affirmed.
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