Failure to Present Base Station Source Code at ITC Dooms INVT’s Appeal Despite New Claim Construction
“To determine whether an accused device is a device with the ‘capability’ of performing the recited functions, it must be able to perform those functions when it is activated and put into operation… In this case, the user device’s capability is dependent on the base station’s capability.” – Federal Circuit Judge Chen
On August 31, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision in INVT SPE LLC v. International Trade Commission (ITC) affirming the ITC’s ruling that Apple and other respondents in a Section 337 investigation did not infringe upon INVT’s patent claims covering wireless communications systems and that there was no Section 337 violation. While the Federal Circuit did side with INVT’s arguments that its patent claims were drawn to device capability and not actual operation, the CAFC opinion, authored by Circuit Judge Raymond Chen, found that INVT did not produce evidence that the accused devices possessed the capability covered by the patent claims.
CAFC: Accused Devices Only Need Infringing Capability, Not Proof of Actual Operation
The main patent-at-issue in this appeal is U.S. Patent No. 7848439, Communication Apparatus, Communication System, and Communication Method. As the Federal Circuit noted, the ‘439 patent covers an improvement to adaptive modulation and coding (AMC) techniques for transmitting signals in an orthogonal frequency division multiplexing (OFDM) system. The technology enables a device communicating on an OFDM system, in which frequency bandwidths are divided into subcarriers, to perform AMC techniques using neighboring subcarriers, or subband grounds, for improved spectrum utilization. The steps recited in claim 1 of the ‘439 patent involve a user device determining adaptive parameters that are sent to a base station, which encodes parameter data that is sent back to the user device, which in turn decodes that parameter data.
In the Section 337 proceedings at the ITC, INVT had argued that the asserted claims of the ‘439 patent were essential to practicing the 3G and Long-Term Evolution (LTE) wireless standards, which involves the transmission of modulation and coding parameters between user devices and base stations. The administrative law judge (ALJ) presiding over the infringement proceedings, however, did not find the claims essential to the 3G or LTE standards, dismissing INVT’s arguments that LTE-compliant devices have the capability to decide parameters and decode parameter data sent from base stations. In assessing the potential that the devices infringed the ‘439 patent outside of LTE compliance, the ALJ found that the accused devices did not meet either the “per subband group basis” or “pattern storage section” limitations of claim 1.
On appeal, the Federal Circuit acknowledged that it has previously found that a device need only be capable of operating according to a claimed limitation in order to find infringement. Citing to Finjan v. Secure Computing Corp. (2010), the Federal Circuit noted that Finjan’s apparatus claims were infringed because the accused devices possessed the infringing capability even though the infringing software module had to be manually unlocked by a user, while Finjan’s method claims were not infringed because Finjan could not show any actual performance of the method.
Capability of Unclaimed Base Station is Part of Invention’s Environment
Intervenor HTC Corporation, a respondent in the underlying Section 337 proceedings, had argued that other Federal Circuit cases involving mechanical apparatus claims required actual performance of the infringing functionality. In rejecting these claims, the appellate court drew a distinction between the claim language at issue in those cases, which required the arrangement of elements in particular ways, from the language in INVT’s patent claims, which uses functional language to recite operative steps that need not be actually performed for purposes of finding infringement. While INVT’s patent claims lacked “for performing”-type claim language that was present in Finjan, the Federal Circuit pointed to its decision in Silicon Graphics v. ATI Technologies (2010) to support the contention that such specific language is not always necessary to find that the claim language covering a computer technology is directed to capability and not actual performance.
However, the Federal Circuit found that it was necessary to further construe the claims of the ‘439 patent in order to determine the operation of the base station, despite the fact that the base station was not a limitation on the claimed invention:
“To determine whether an accused device is a device with the ‘capability’ of performing the recited functions, it must be able to perform those functions when it is activated and put into operation… Here, that means that the accused device receives and then decodes and demodulates a data signal with a particular claimed protocol—using the same parameters it had previously chosen. In this case, the user device’s capability is dependent on the base station’s capability.”
The Federal Circuit likened the instant appeal to its 2011 decision in Advanced Software Design Corp. v. Fiserv, in which the court found that a claim preamble in a patent covering a system for validating a check defined the financial instrument that was validated by the system. In Advanced Software, although the preamble steps were not required to be performed by an accused infringer, they established part of the environment in which the invention operates such that a validated check must include the material recited in the preamble steps to infringe. “Because the communicating party (base station) generates the necessary environment, its operations must be known to determine whether the accused device infringes, i.e., is capable of performing the claimed functions,” the Federal Circuit reasoned.
INVT’s Failure to Introduce Base Station Source Code Made Infringement Analysis Impossible
Even though the ‘439 patent’s claims are directed to capability, the Federal Circuit found that INVT had not established infringement on the record. “Because we require claim limitations to have some teeth and meaning,” Judge Chen wrote, proof of reasonable capability requires a showing that an accused product executes all of the claimed functions at least once in the claim-required environment.
As to INVT’s arguments on essentiality to the LTE standard, the Federal Circuit found that INVT provided no evidence that the base station modulates and encodes data signals using parameters selected by the user device, thus INVT failed to prove that LTE-compliant devices infringe the claimed capability. As for a showing of infringement by proving actual operation, the Federal Circuit found that even under the more lenient capability standard, INVT’s failure to enter source code governing the base station’s operations into the evidentiary record made it impossible to determine if the base station making up the environment of the invention sent data signals in accordance with parameters determined by user devices.
Because INVT failed to show that the accused devices practiced the data obtaining section limitation of claim 1 of the ‘439 patent, the Federal Circuit did not consider INVT’s infringement arguments based on other limitations of claim 1. The Federal Circuit also held that its decision to affirm the ITC’s decision albeit on a different claim construction did not run afoul of administrative law principles stemming from the U.S. Supreme Court’s 1947 decision in Securities & Exchange Commission v. Chenery. While the ALJ’s claim construction presented a legal question, the ALJ’s factual findings for noninfringement supported the same ultimate result at the Federal Circuit. “Therefore, our affirmance is not ‘on a basis containing any element of discretion—including discretion to find facts and interpret statutory ambiguities—that is not the basis the agency used,’ that would improperly ‘remove the discretionary judgment from the agency to the court,’” Judge Chen wrote.
Patent Expiration Moots Other Portion of INVT’s Appeal
In a much briefer section of the Federal Circuit’s decision, the appellate court nixed as moot INVT’s appeal regarding noninfringement of U.S. Patent No. 6760590, Communication Terminal Apparatus, Base Station Apparatus, and Radio Communication Method. The ‘590 patent expired in March of this year and the ITC can only order prospective relief, the Federal Circuit noted. Although district court infringement litigation proceedings brought by INVT were stayed pending the outcome of the ITC proceedings, the Federal Circuit said that ITC proceedings do not have preclusive effect on district court litigation and found no potential for collateral consequences resulting from the possible stare decisis effect of the present decision.
