CAFC Affirms California Court’s Claim Construction and Damages Calculation in Flash Drive Infringement Suit
“The CAFC held that reliance on an obvious minor clerical error in the claim language is not a valid defense to willful infringement.”
On Friday, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a decision by the U.S. District Court for the Central District of California from an appeal by Kingston Technology Company LLC, in which the district court held that Kingston willfully infringed U.S. Patent No. 6,926,544 (‘544 patent) and awarded $7,515,327.40 in compensatory damages, enhanced by 50%. The CAFC said in part that the district court can judicially correct claims when there are “obvious minor typographical and clerical errors in patents” without changing the scope of the claim.
Infringement Lawsuit
The ‘544 patent generally is directed to a “flash memory apparatus having a single body type rotary cover.” The ‘544 patent claims to solve problems in the prior art resulting in the flash memory device’s covers being lost after separation. The patent describes an apparatus that includes a flash memory main body that has a case containing a hinge.
In 2014, CATR Co (CATR), later substituted by Pavo Solutions (Pavo), filed a suit against Kingston alleging infringement of the ‘544 patent. Kingston responded by requesting an inter partes review (IPR) of the patent resulting in the court staying the litigation pending the outcome of the IPR. A portion of the claims of the ‘544 patent survived the IPR causing the district court to continue the case.
The district court agreed with Pavo that the claimed phrase “pivoting the case with respect to the flash memory main body” included an error which it judicially corrected by replacing the word “case” with the word “cover” in the district court’s claim-construction order. The district court determined that the error was clear from the face of the patent and supported by the prosecution history because the “case is described as a part of the main body, so it is not possible for it to rotate with respect to the body.” Kingston’s proposed alternative resulted in the same scope of protection from the claim. Kingston provided expert testimony, but the court determined the testimony was not consistent with the intrinsic record.
At trial, Pavo’s damages expert, Mr. Jim Bergman, presented a model for reasonable-royalty damages that was a profit-based model which relied on an earlier settlement agreement between CATR and IPMedia. In the earlier settlement agreement, IPMedia agreed to pay a 1-cent royalty for future sales which was approximately twenty-five percent of the profits recognized by IPMedia. Mr. Bergman concluded that Pavo and Kingston would have agreed to a license resulting in an amount of 40 cents per unit owed to Pavo based on the differences between Kingston and IPMedia.
Before trial, Kingston attempted to exclude the testimony of Mr. Bergman because his model results were based on speculation and incorrect. The district court denied Kingston’s motion observing that Mr. Bergman relied only on the express terms of the IPMedia License meaning that his conclusion did not involve speculation. The jury returned a verdict that Kingston willfully had infringed claims 1, 4, and 24 of the ‘544 patent at the conclusion of the trial. Pavo was awarded a 20-cent reasonable royalty and Kingston moved for a judgment as a matter of law, which the district court denied.
Kingston’s Arguments
On appeal, Kingston made five arguments, of which the court only substantively addressed three. Kingston’s two arguments that the CAFC did not address were that the district court gave improper jury instructions regarding the agreed upon construction of the claim and the district court permitted Pavo to prejudice the jury by allowing Pavo to refer to Kingston’s total revenue of sale. The arguments the court did address were that: 1) the district court should not have judicially corrected the phrase “pivoting the case with respect to the flash memory main body” because there was no error; 2) Kingston could not have formed the intent to infringe to support the willful infringement verdict because Kingston did not infringe on the originally written claims; and 3) the district court should not have allowed Mr. Bergman to rely on his model based on the IPMedia agreement.
The CAFC first addressed Kingston’s claim that the district court should not have judicially corrected the claims. Citing Novo Indus., L.P. v. Micro Molds Corp. (CAFC, 2003), the court stated that a district court can correct “obvious minor typographical and clerical errors in patents.” The court outlined the criteria necessary for it to be appropriate for correction. The correction cannot be subject to reasonable debate based on the claim language and the specification and the prosecution history does not suggest the claims to have a different interpretation.
Novo Indus Criterion Applied
The court began its analysis by determining whether the claim language contains an obvious clerical error. The CAFC found in claims 1 and 24 references to “case” in the phrase “pivoting the case with respect to the flash memory main body” is a mistake. The court found that this was a clear error in the full context of the claim language and the claim language alone shows that the reference to the case should have been to the cover, ultimately agreeing with the district court. The CAFC found Kingston’s arguments ignored the language of the claim and improperly cited prior decisions that were not applicable to the presented facts.
Next, the CAFC determined whether the correction is “subject to reasonable debate based on consideration of the claim language and the specification.” Citing CBT Flint Partners, LLC v. Return Path Inc. (CAFC, 2011), because the court found it instructive, the court found both corrections result in the same action, the meaning is clear based on the intended meaning of the applicant, meaning it was appropriate for the district court to conclude the correction was not subject to reasonable debate. Again, the court disagreed with Kingston’s arguments because the result of their claim correction would result in the same scope of the claim.
Finally, the court considered whether a different interpretation of the claims is supported by the prosecution history. The applicant and examiner both through the prosecution consistently characterized the claims as describing a case within a cover. The CAFC held that there was no other reasonable interpretation revealed by the prosecution history.
Willful Infringement and Expert Testimony
Kingston argued that it could not have the requisite intent to willfully infringe because it could not have anticipated the court changing the claim language. The CAFC held that reliance on an obvious minor clerical error in the claim language is not a valid defense to willful infringement. Noting that Kingston’s argument appeared to hinge on the belief that the district court changed the scope of the claims, the CAFC explained that a minor clerical error does not remake the claim.
Regarding Kingston’s final argument, the court found that the district court did not abuse its discretion when declining to exclude the testimony of Mr. Bergman. The district court’s decision for calculating damages is one that the CAFC reviews for an abuse of discretion. The CAFC said:
“Here, both parties agree that the IPMedia license was comparable. That license granted rights in the ’544 patent, and it plainly reflected the value that the contracting parties settled on for the patent. As the starting point for Mr. Bergman’s analysis, it provided sufficient evidence of ‘already built[-]in apportionment.’”
The court concluded its analysis by stating Kingston forfeited its two remaining arguments because they failed to raise the arguments in their post-trial motions to the district court.
Image Source: Deposit Photos
Author: billperry
Image ID: 161261406
