In Finisar Corp. v. DirecTV Group, Inc., Nos. 07-1023, -1024 (Fed. Cir. Apr. 18, 2008), the Federal Circuit reversed the district court's construction of one claim term, and therefore vacated the verdict of infringement, reversed the denial of anticipation as to one claim, and remanded for a new trial on infringement and invalidity of the remaining claims.
Finisar Corporation ("Finisar") sued The DirecTV Group, Inc. and a number of related companies (collectively "DirecTV"), alleging infringement of U.S. Patent No. 5,404,505 ("the '505 patent"). The '505 patent claims systems and methods for broadcasting information from databases to subscribers. Rather than waiting for a subscriber's request, the claimed system determines the most popular requests and sends those programs to users at regular intervals. By arranging the database into a hierarchy of tiers according to popularity, the system may broadcast the more popular tiers with greater frequency than less popular tiers to maintain a user's copy of the most likely accessed information as current as possible.
DirecTV has offered direct-to-home satellite television service since 1994. The DirecTV system provides content of several general types: turnaround programming, which essentially matches the broadcast from an existing television channel; playback programming, to allow pay-per-view movies and other on-demand shows; conditional access information, which allows subscribers to pay for and receive certain programs; and program guide information, which provides information about current and future programs on the various channels.
Finisar sued DirecTV, alleging infringement of fifteen claims from the '505 patent. The district court granted SJ to DirecTV that seven of those claims were invalid for indefiniteness. After Finisar dropped one additional claim from the case, the parties went to trial, where a jury found that DirecTV willfully infringed the remaining seven claims, directly and by inducement and contribution. The jury found damages of $78.9 million as a reasonable royalty. The district court reversed the findings of induced and contributory infringement, and also denied Finisar's request for an injunction. The court instead granted DirecTV a compulsory license at $1.60 per set-top box, and enhanced damages by $25 million.
On appeal, DirecTV challenged the district court's construction of two claim terms, "information database" and "downloading into a memory storage device," and the jury's findings of infringement, no invalidity, and willfulness. Finisar cross-appealed the district court's denial of a permanent injunction, imposition of the compulsory license, and grant of SJ of invalidity on certain claims.
As to the first term on appeal, "information database," the Federal Circuit found that the term should be narrowly construed to require "searchability and retrievability beyond mere accessibility," because "[the] claim term repeatedly appears within a framework that requires referencing, embedding, assigning, and transmitting portions of the database." Slip op. at 9. Further looking to the specification, the Federal Circuit recognized a consistent description of the database that required some search and retrieval capabilities.
As to the second term on appeal, "downloading into a memory storage device," the Federal Circuit found that the claimed downloading step requires storage of the downloaded data for later retrieval. First, the Court gave meaning to the claim language itself, which calls for a "memory storage device." That language demonstrated to the Court that the downloading step requires retention of the downloaded data. The Federal Circuit also found support for a narrow construction in the specification. As the invention purports to provide an alternate to CDs or paper publications, both entail preservation and retention of the data. Now armed with a correct understanding of the appealed claim terms, the Federal Circuit turned to the question of literal infringement. With regard to the claim term "information database," the Federal Circuit found that its reversal of the district court's construction had no discernible effect on the jury's verdict and was thus harmless error. The Court, however, reached a different conclusion with respect to the second term. It recognized the four types of programming sent by DirecTV and that DirecTV subscribers may have different types of set-top boxes. Because the record and briefs on appeal provided insufficient information for the Court to sort out the various possibilities, it remanded the question of infringement under the proper construction to the district court.
As to the final issue with regard to infringement, the Federal Circuit rejected DirecTV's argument that claim 16 requires scheduling of all information transmitted to the user—something DirecTV only performs for about 3% of its content. The Court relied on the open-ended nature of the "comprising" claim transition and refused to limit the claim as DirecTV argued.
Next, the Court turned to invalidity. First addressing anticipation, the Federal Circuit focused on the requirement that an anticipating reference arrange the claimed elements in the same way as the '505 patent. After the jury's verdict of no anticipation, the question facing the Court became whether or not a reasonable jury could have understood the asserted reference to disclose something other than the claimed subject matter. The reference, a textbook titled The Architecture of Videotex Systems, disclosed scheduling of transmissions, but Finisar had argued that it fails to disclose scheduling to two different groups of transmissions.
The Federal Circuit disagreed, imputing to the jury a full understanding of grammatical rules. It concluded that a reasonable jury would understand the reference to disclose transmitting multiple subgroups of information on different schedules, as claim 16 requires. The Court found further support in figures of the reference. Because Finisar had not argued that the reference lacked any other limitation from claim 16, the Court reversed the district court's denial of JMOL, therefore granting DirecTV's motion for invalidity of claim 16.
Although holding claim 16 invalid, the Court found DirecTV's anticipating arguments regarding the other claims on appeal insufficient. Specifically, because DirecTV only presented the Court with a table correlating claim steps to pages in the prior art reference, the Federal Circuit concluded that DirecTV had failed to provide sufficient analysis. Because the information presented, in combination with the Court's analysis of claim 16, did suggest the possibility that the other claims are invalid, the Court remanded the issue for the district court to determine invalidity under the correct analysis. The Federal Circuit additionally remanded the issue of obviousness for the district court to consider in light of a correct understanding of the prior art reference, as discussed by the Court with respect to anticipation of claim 16.
Addressing the issue of willfulness, the Federal Circuit instructed the district court that a competent opinion of counsel on either the issue of noninfringement or on invalidity would sufficiently protect an infringer from willfulness. The Court further applied judicial estoppel to prevent Finisar from arguing that DirecTV knew of the '505 patent in 1997, much earlier than admitted. Because Finisar defeated DirecTV's laches defense by arguing that Finisar should not have known of its claim against DirecTV until 2003, the Court refused to allow a contrary argument with respect to willfulness.
Finally, the Federal Circuit addressed Finisar's cross-appeal. Because challenges to the denial of injunction and grant of compulsory license were moot in light of the remand, the Court only addressed Finisar's challenge of the district court's holding that seven of the asserted claims are invalid as indefinite.
The claims at issue all involve means-plus-function limitations under § 112, ¶ 6. The Court found that the only purported structure disclosed in the specification was software that performs the recited function in the claim, but no description of the algorithm used. The Court cited the rule from WMS Gaming, Inc. v. International Game Technology, 184 F.3d 1339, 1349 (Fed. Cir. 1999), that "the disclosed structure is not the general purpose computer, but rather the special purpose computer programmed to perform the disclosed algorithm." Slip op. at 29. Thus, the Federal Circuit noted, "the patent must disclose, at least to the satisfaction of one of ordinary skill in the art, enough of an algorithm to provide the necessary structure under § 112, ¶ 6." Id. The Court concluded that "the district court correctly determined that the structure recited in the '505 specification does not even meet the minimal disclosure necessary to make the claims definite. Simply reciting 'software' without providing some detail about the means to accomplish the function is not enough." Id.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.