Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-02000/USCOURTS-casd-3_07-cv-02000-4/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1338 Patent Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

LUCENT TECHNOLOGIES, INC. and

MULTIMEDIA PATENT TRUST

Plaintiffs and CounterDefendants,

CASE NO. 07-CV-2000-H (CAB)

consisting of matters severed from

the consolidated cases:

CASE NO. 02-CV-2060-B (CAB)

CASE NO. 03-CV-0699-B (CAB)

CASE NO. 03-CV-1108-B (CAB)

ORDER ON POST-TRIAL

MATTERS FOR UNITED

STATES PATENT NUMBERS

4,439,759; 4,763,356; 4,958,226;

AND 5,347,295; INCLUDING:

(1) MOTIONS FOR JUDGMENT

AS A MATTER OF LAW, NEW

TRIAL, OR REMITTITUR; AND

(2) RULINGS ON EQUITABLE

MATTERS TRIED TO THE

COURT

[Doc. Nos. 759, 760, 770, 772.]

vs.

GATEWAY, INC., et al.

Defendants and Counterclaimants.

and

MICROSOFT CORPORATION,

Intervenor and Counterclaimant

AND RELATED CLAIMS

This order addresses the remaining post-trial questions in this case, including

motions for judgment as a matter of law (“JMOL”), motions for new trial, and rulings

on equitable matters tried to the Court. The trial involved four United States Patents:

4,439,759 (“Fleming ‘759” or “‘759”); 4,763,356 (“Day ‘356” or “‘356”); 4,958,226

(“Haskell ‘226” or “‘226”); 5,347,295 (“Agulnick ‘295” or “‘295”). Lucent

Technologies, Inc. (“Lucent”) asserted the ‘356 and ‘295 patents against Microsoft

Case 3:07-cv-02000-H-CAB Document 852 Filed 06/19/08 Page 1 of 56
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Corporation (“Microsoft”) and Dell Inc. (“Dell” and collectively with Microsoft

“Defendants”). Lucent asserted the ‘759 patent against Microsoft only. Multimedia

Patent Trust (“MPT”), a Delaware trust with Lucent as the primary beneficiary,

asserted the ‘226 patent against Microsoft only.

The parties filed their initial briefs on these post-trial matters on May 5, 2008.

MPT moved for JMOL, new trial, and entry of judgment on equitable matters related

to the ‘226 patent. (Doc. No. 759.) Lucent moved for JMOL and new trial on the ‘759

and ‘356 patents. (Doc. No. 760.) Microsoft moved for JMOL, new trial, or remittitur

on various issues related to the ‘356, ‘295, and ‘226 patents. (Doc. No. 770.) Dell

joined in sections of Microsoft’s motions applicable to it. (Doc. No. 792.) Microsoft

also moved for entry of judgment on the equitable matters related to the ‘226 patent yet

to be decided by the Court. (Doc. No. 772.)

The parties filed their responsive briefing on May 19, 2008. Dell filed an

opposition to Lucent’s motion regarding the ‘759 and ‘356 patents. (Doc. No. 804.)

Microsoft filed an opposition to MPT’s motion regarding the ‘226 patent. (Doc.

No. 805.) MPT opposed Microsoft’s combined motion to the extent that it addressed

the ‘226 patent. (Doc. No. 808.) Lucent opposed Microsoft’s combined motion to the

extent that it addressed the ‘356 and ‘295 patents. (Doc. No. 809.) MPT filed an

opposition to Microsoft’s motion for entry of judgment on the bench trial issues. (Doc.

No. 810.)

The parties filed their reply briefs on May 27, 2008. Microsoft filed replies in

support of its post-trial motions and motion for entry of judgment on bench trial issues.

(Doc. Nos. 826-28.) Lucent filed a reply in support of its motion regarding the ‘759

and ‘356 patents. (Doc. No. 830.) MPT filed a reply in support of its motion regarding

the ‘226 patent. (Doc. No. 831.)

The Court held a hearing on these matters on June 13, 2008. Robert Appleby,

Paul Bondor, John Desmarais, Jeanne Heffernan, James Marina, and Michael Stadnick

appeared for Lucent and MPT. John Gartman, Juanita Brooks, and Roger Denning

appeared for Microsoft. Joseph Micallef appeared for Dell.

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28 1Microsoft and Dell also asserted counterclaims for tortious interference with prospective

economic advantage, relating to Lucent’s allegedly improper creation of MPT. The jury found for

Lucent on this issue, and Defendants did not raise it in their post-trial motions.

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Background

I. Overview of Infringement Liability

The underlying trial concerned the alleged infringement of four patents asserted

by Lucent and MPT against Microsoft and Dell.1 On April 4, 2008, the jury returned

a special verdict for all four patents, including advisory verdicts on certain equitable

issues to be decided by the Court. (Doc. No. 735.) The jury found that Microsoft

infringed the ‘356 patent, and that both Microsoft and Dell infringed the ‘295 patent.

The jury found no infringement of either the ‘226 or ‘759 patents. The jury found

Microsoft liable to Lucent for $357,693,056.18 based on infringement of the ‘356

patent. For infringement of the ‘295 patent, the jury found Microsoft liable to Lucent

for $10,350,000 and Dell liable for $51,000.

II. Day ‘356

The Patent and Trademark Office (“PTO”) issued the ‘356 patent, entitled

“Touch Screen Form Entry System,” on August 9, 1988, based on an application filed

December 11, 1986. Only method claims 19 and 21 were at issue in this trial. Claim

19 is an independent claim, and claim 21 is a related dependent claim. Claim 19 states:

A method for use in a computer having a display comprising the steps of

displaying on said display a plurality of information fields,

identifying for each field a kind of information to be inserted therein, 

indicating a particular one of said information fields into which

information is to be inserted and for concurrently displaying a predefined

tool associated with said one of said fields, said predefined tool being

operable to supply information of the kind identified for said one field,

said tool being selected from a group of predefined tools including a tool

adapted to supply an individual entry from a menu of alternatives and at

least a tool adapted to allow said user to compose said information, and

inserting in said one field information that is derived as a result of said

user operating said displayed tool.

Claim 21 further limits the step of “displaying said pattern” to include “the step of

displaying one or more of said information fields as a bit-mapped-graphics field.”

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2The jury also found that Lucent had provided Dell with pre-suit notice regarding the ‘356

patent, and Dell did not bring a motion attacking this finding.

3VC-1 decoders are also referred to in the record as WMV-9 decoders.

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For this patent, Lucent submitted evidence of indirect infringement. Lucent

asserted claim 19 against Microsoft and Dell based on versions of Microsoft Money,

Microsoft Outlook, and Windows Mobile. Lucent also asserted claim 19 against Dell

only, based on sales of Quicken versions 2000 through 2006. Lucent asserted claim

21 against Microsoft and Dell based only on the various versions of Windows Mobile.

The jury found Microsoft liable on claim 19 as to all three products and on claim

21 as to Windows Mobile, and it returned a finding of no infringement by Dell.2 The

verdict did not distinguish between inducing and contributory infringement. The jury

awarded a single lump sum against Microsoft for all products involved.

Defendants presented affirmative defenses of anticipation and obviousness. The

jury found for Lucent on both.

III. Haskell ‘226

The PTO issued the ‘226 patent, entitled “Conditional Motion Compensated

Interpolation of Digital Motion Video,” on September 18, 1990, based on an

application filed September 27, 1989. At trial, Lucent only asserted claim 12, a meansplus-function apparatus claim which states:

A circuit responsive to coded video signals where the video signals

comprise successive frames and each frame includes a plurality of blocks

and where the coded video signals comprise codes that describe

deviations from approximated blocks and codes that describe deviations

from interpolated blocks, comprising:

means for developing block approximations from said codes that describe

deviations from approximated blocks; and 

means responsive to said block approximations and to said codes that

describe deviations from interpolated blocks to develop said interpolated

blocks.

MPT introduced evidence of both direct and indirect infringement by Microsoft.

The accused products included Microsoft software and hardware containing an

MPEG-1, MPEG-2, or VC-13 video decoder, referring to industry standards for video

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compression and playback used for various products including DVDs and HD DVDs.

Specifically, MPT accused Microsoft based on Windows operating system versions

95B through Vista, the Microsoft Xbox 360 video game system, and Windows Media

Player versions 9 through 11.

The jury found that none of Microsoft’s accused products had infringed claim

12. The jury also found that claim 12 was invalid for obviousness, though not invalid

for anticipation. Furthermore, the Court asked the jury to return advisory verdicts on

Microsoft’s defenses of laches and inequitable conduct regarding the ‘226 patent. The

jury recommended that Lucent be barred from obtaining pre-suit damages due to

laches, but found no inequitable conduct.

IV. Agulnick ‘295

The PTO issued the ‘295 patent, entitled “Control of a Computer Through a

Position-Sensed Stylus,” on September 13, 1994, based on an application filed October

31, 1990. At trial, Lucent only asserted claim 1, a means-plus-function apparatus claim

which states:

An apparatus for controlling a computer system, the computer system

comprising a screen for displaying information and a stylus having a tip

for inputting information into the computer, including:

first detecting means coupled to said computer for detecting a stroke of

the stylus tip in contact with the screen; 

second detecting means coupled to said computer for detecting a

departure of the stylus tip from the screen;

means coupled to said computer for defining termination of a gesture

comprising at least one stroke in response to said departure of the stylus

tip;

means coupled to said computer for recognizing a plurality of said

gestures, said recognizing means including means for comparing each

said gesture to at least one predefined shape;

means coupled to said computer for implementing each said recognized

gesture, said implementing means including means for performing a

predetermined action associated with each said predefined shape, said

predetermined action being determined by the context in which said

gesture was used, including a first context in which said action is

executed upon an operating system level object and a second context in

which said action is executed upon an application level object.

Lucent introduced evidence of direct and indirect infringement by Dell, and

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evidence of indirect infringement by Microsoft. The accused products were Tablet PC

Computers installed with the Windows XPTabletPC Edition operating system. Lucent

based its accusations against Microsoft on all sales of Windows XP Tablet PC Edition,

while its accusations against Dell were limited to Dell’s sales of Windows XP Tablet

PCs.

The jury returned a finding that both Microsoft and Dell had infringed claim 1.

The jury awarded Lucent damages of $10,350,000 from Microsoft and $51,000 from

Dell. 

Defendants presented affirmative defenses of anticipation and obviousness. The

jury found for Lucent on both.

V. Fleming ‘759

The PTO issued the ‘759 patent, entitled “Terminal Independent Color

Memory for a Digital Image Display System,” on March 27, 1984, based on an

application filed May 19, 1981. At trial, Lucent only asserted claim 1, a meansplus-function apparatus claim which states:

In a digital image display system:

a memory for storing color data values;

processing means responsive to a predetermined command and data

sequence comprising at least one command, the processing means

decoding the predetermined command and data sequence, the

predetermined command and data sequence selecting one of a plurality of

modes of access to color data values, the modes comprising:

a first mode of access wherein an in-use foreground color is directly

specified as a color data value; 

a second mode of access wherein the in-use foreground color is specified

as an index into the color memory; and

a third mode of access wherein the in-use foreground color and an in-use

background color are specified as indexes into the color memory; and

display means responsive to the processing means, the display means

displaying the colors associated with the color data values accessed by the

selected mode.

Lucent introduced evidence of both direct and indirect infringement by Dell.

The accused products covered all computer systems sold by Dell between October 20,

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1998, and May 19, 2001, that included a version of the Windows operating system.

Lucent based its accusations on the presence of the Windows graphics device interface

(“GDI”) in these products.

The jury found that Lucent failed to prove that it had provided Dell with pre-suit

notice of infringement for this patent. Significantly, the jury also returned a finding of

no infringement. Dell asserted affirmative defenses of anticipation and obviousness,

and the jury found for Lucent on both. Furthermore, the Court asked the jury to return

advisory verdicts on Microsoft’s defenses of laches and inequitable conduct regarding

the ‘759 patent. The jury recommended that Dell should not prevail on either equitable

defense.

Discussion

I. Standards for JMOL, New Trial, and Remittitur

In patent cases, the standards on motions for judgment as a matter of law or new

trial are questions of regional circuit law. Finisar Corp. v. DirecTV Group, 523 F.3d

1323, 1328 (Fed. Cir. 2008). Judgment as a matter of law is available where “a

reasonable jury would not have a legally sufficient evidentiary basis to find for the

party on that issue.” Fed. R. Civ. P. 50(a)(1). A party may renew the motion when not

granted at trial. Fed. R. Civ. P. 50(b). A court must uphold the jury’s verdict if it is

supported by substantial evidence. Wallace v. City of San Diego, 479 F.3d 616, 624

(9th Cir. 2007). “Substantial evidence is evidence adequate to support the jury's

conclusion, even if it is also possible to draw a contrary conclusion from the same

evidence.” Id. (quoting Johnson v. Paradise Valley Unified Sch. Dist., 251 F.3d 1222,

1227 (9th Cir. 2001)). Substantial evidence requires only “such relevant evidence as

a reasonable mind might accept as adequate to support a conclusion.” Blanton v.

Anzalone, 813 F.2d 1574, 1576 (9th Cir. 1987) (quoting Transgo, Inc. v. Ajac

Transmission Parts Corp., 768 F.2d 1001, 1014 (9th Cir. 1985)). The court must not

weigh the evidence and must “disregard all evidence favorable to the moving party that

they jury is not required to believe.” Wallace, 479 F.3d at 624. Furthermore, the court

draws all reasonable inferences in favor of the nonmoving party. Id. Judgment as a

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matter of law is only appropriate if, once the court has applied this standard, it

concludes that the evidence permits only one reasonable conclusion that is contrary to

the jury’s verdict. Id.

A party may also move for a new trial when requesting judgment as a matter of

law following a jury trial. Fed. R. Civ. P. 50(b), 59. Whether to grant a new trial is a

matter of the trial court’s discretion. City Solutions, Inc. v. Clear Channel

Communications, 365 F.3d 835, 843 (9th Cir. 2004). The court may grant a new trial

if “the verdict is contrary to the clear weight of the evidence, or is based upon evidence

which is false, or to prevent, in the sound discretion of the trial court, a miscarriage of

justice.” United States v. 4.0 Acres of Land, 175 F.3d 1133, 1139 (9th Cir. 1999)

(quoting Oltz v. St. Peter’s Cmty. Hosp., 861 F.2d 1440, 1452 (9th Cir. 1988)). To

make a “clear weight of the evidence” determination, the court weighs the evidence as

the court saw it. Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (quoting

Murphy v. City of Long Beach, 914 F.2d 183, 187 (9th Cir. 1990)). If a court

concludes that a new trial is appropriate due to excessive damages, the court may

exercise its discretion to grant a new trial either without qualification, or conditioned

on the winner’s refusal to accept a reduction in damages, known as remittitur. See

Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 433 (1996).

II. Day ‘356

A. Validity

1. Anticipation 

Defendants seek judgment as a matter of law that a system known as the Foreign

Exchange Front End (“FXFE”) anticipated claim 19 under 35 U.S.C. §§ 102(b) or

102(g). Under section 102(b), patent protection may be unavailable where the

invention was “in public use . . . more than one year prior to the date of the application

. . . .” Under section 102(g), patent protection may be unavailable where “before . . .

invention thereof, the invention was made in this country by another inventor who had

not abandoned, suppressed, or concealed it.” An anticipating public use or prior

invention must include every limitation of the patented invention. Netscape

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Communications Corp. v. Konrad, 295 F.3d 1315, 1321 (Fed. Cir. 2002); Hybritech

Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1379 (Fed. Cir. 1986).

Anticipation, like other invalidity defenses, requires proof by clear and convincing

evidence. Netscape Communications Corp. 295 F.3d at 1320.

The application for the ‘356 patent was filed on December 11, 1986. In January

1984, Datamation magazine published an article describing a prototype touch-screen

system used by Chemical Bank, through which currency traders could fill out forms

electronically. (DX AOD (Datamation article); AOE (enlargement of Datamation

article’s photograph).) The system was known as the Foreign Exchange Front End.

The Datamation article included a single photograph of the FXFE display, with limited

detail.

Judgment as a matter of law or new trial is not appropriate because the jury could

have reasonably rejected the credibility of Defendants’ witnesses, found that the FXFE

did not include all elements of the method in claim 19, or found that the FXFE was not

prior art under section 102. The evidence is sufficient to support a finding that the

FXFE did not include “indicating a particular one of said information fields into which

information is to be inserted .” The Datamation article did not describe this capability.

(See DX AOD.) Defendants argue that a single FXFE photograph, of limited clarity,

shows that a particular on-screen button is highlighted. (See DX AOE.) The jury could

have concluded that this was not a “field” into which information could be entered. 

Furthermore, applying the appropriate standards for these proceedings, there is

a limited showing of whether the FXFE even involved “information fields” into which

information was “inserted,” within the meaning of the patent. The available image is

limited in detail, and the text merely refers to entering information into “the system.”

 (See, e.g., DX AOD at 148 (“For instance, when the user hits the ‘broker’ cell on the

right, a list of brokers appears on the left; the trader then hits the name of the broker . . .

and that information is entered into the system.”); DX AOE.) Particularly given the

standard of clear and convincing evidence, the jury could have reasonably concluded

that Defendants failed to meet their burden on these elements as well. Lucent also

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argued that the FXFE did not have “graphical” tools or “concurrently display” a tool

with an information field, though the Court concludes that there are ample other

grounds to support the jury's finding of no anticipation.

The jury also could have concluded that the FXFE did not meet the requirements

of section 102(b) or 102(g) prior art. Viewed under the applicable standards, the

evidence indicates that the FXFE was developed mostly or entirely outside the United

States, and still in a developmental or prototype form. Furthermore, the nature and

circumstances of the demonstration are unclear in many respects. The jury could have

reasonably concluded that the use was not sufficiently public or that any prior invention

was abandoned. Public use is determined under the totality of the circumstances, and

the Court concludes that this demonstration does not constitute clear and convincing

evidence of public use as a matter of law. Cf. Harrington Mfg. Co. v. Powell Mfg. Co.,

815 F.2d 1478, 1480-81 (Fed. Cir. 1986) (demonstration to reporter was sufficiently

public use where evidence included “clear indication of . . . commercial motive,” and

indication that device operated “flawlessly”). The jury could draw many inferences

against Defendants sufficient to conclude that the use was not public. For example,

even if made to a reporter, it is unclear to what extent the demonstration was

completely functional.

Also, there is no dispute that the touch-screen FXFE, as demonstrated, was not

commercialized. “[A] first inventor may seek to avoid a determination of abandonment

by showing that he or she marketed or sold a commercial embodiment of the invention

or described the invention in a publicly disseminated document.” Checkpoint Sys., Inc.

v. U.S. Int’l Trade Comm’n, 54 F.3d 756, 762 (Fed. Cir. 1995). The ambiguities

surrounding the FXFE demonstration, however, cast serious doubt on whether it

preserved sufficient information about the system in the public domain to avoid a

finding of abandonment. See id. (citing Palmer v. Dudzik, 481 F.2d 1377, 1387

(C.C.P.A. 1973), for the proposition that “to negate a finding of suppression or

concealment, the public must have gained knowledge of the invention which will

insure its preservation in the public domain”). In summary, there is substantial

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4Secondary considerations, or “objective indicia of nonobviousness,” may also be considered,

though they are not at issue here. See Finisar, 523 F.3d at 1339.

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evidence in the record to support the jury’s determination of no anticipation.

Furthermore, the Court concludes that the jury’s finding is not against the clear weight

of the evidence.

2. Obviousness

Defendants challenge the jury’s finding that the ‘356 patent was not obvious.

As prior art, they assert both the Datamation article and the FXFE system described

above, along with J.K. Lasser’s Your Money Manager software (“YMM”) and the

Windows 1.01 calculator. The obviousness defense requires proof by clear and

convincing evidence. Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., 492 F.3d

1350, 1355 (Fed. Cir. 2007) “The ultimate judgment of obviousness is a legal

determination.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. ___, 127 S.Ct. 1727, 1745

(2007) (citing Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17 (1966)).

While courts therefore need not give deference to the jury’s ultimate legal

determination, courts still give deference to the jury’s underlying findings of fact. See

Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1338 (Fed. Cir. 2008) (“[T]his

court reviews a jury's conclusions on obviousness, a question of law, without

deference, and the underlying findings of fact, whether explicit or implicit within the

verdict, for substantial evidence.”) (quoting Dippin’ Dots, Inc. v. Mosey, 476 F.3d

1337, 1343 (Fed. Cir. 2007)). These underlying findings include “the scope and

content of the prior art, the differences between the prior art and the claims at issue, the

level of ordinary skill in the pertinent art . . . .” Id. at 1338-39.4

When determining obviousness, “neither the particular motivation nor the

avowed purpose of the patentee controls.” KSR Int’l Co., 127 S.Ct. at 1741-42.

Instead, courts should determine whether the “objective reach of the claim”

encompasses obvious subject matter. Id. at 1742. This may include “noting that there

existed at the time of invention a known problem for which there was an obvious

solution encompassed by the patent's claims.” Id. “[T]he results of ordinary innovation

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are not the subject of exclusive rights under the patent laws.” Id. at 1746. However,

courts must avoid “falling prey to hindsight bias,” “ex post reasoning,” and “[r]igid

preventative rules that deny factfinders recourse to common sense.” Id. at 1742-43.

Furthermore, “when the prior art teaches away from combining certain known

elements, discovery of a successful means of combining them is more likely to be

nonobvious.” Id. at 1740.

“A patent composed of several elements is not proved obvious merely by

demonstrating that each of its elements was, independently, known in the prior art.”

KSR Int’l Co., 127 S.Ct. at 1741. A combination is likely nonobvious if the elements

work together “in an unexpected and fruitful manner.” Id. at 1740. In contrast, a

patent is likely to be obvious if it merely yields a predictable result by substituting one

element for another known in the field. Id.

On this record, the jury could have reasonably concluded that Defendants failed

to provide clear and convincing evidence that the ‘356 patent is invalid for

obviousness. First, there are factual problems with treating the FXFE as prior art.

There were factual questions with whether the FXFE constitutes a prior public use or

prior invention under sections 102(b) or 102(g). In this context the scope of prior art

for obviousness purposes implicates the same considerations as section 102 prior art.

Lucent Techs., Inc. v. Gateway, Inc., 537 F. Supp. 2d 1095, 1110 n.4 (S.D. Cal. 2008).

Therefore, the jury was not required to accept the FXFE as prior art for the obviousness

analysis. Also, with regard to the Datamation article, there were substantial

uncertainties about the capabilities of the system described. The jury could have

reasonably taken a narrow view of the descriptions offered by the article and its single

photograph, which lacked any fine detail or portrayal of the FXFE interface at different

steps in the process.

Regarding the YMM software, Lucent argued that it does notinvolve “graphical”

tools, since its display is composed of text and symbols. It also argued that YMM does

not permit “pointing” to the display keys of any tool, since the user controls Your

Money Manager only using the keyboard, without aid of a mouse, touch pad, or similar

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device. Around the time of the Day ‘356 patent, the personal computer industry was

undergoing a change from text-based, keyboard-only operation to operation using a

keyboard and mouse to control graphical user interfaces. Based on the evidence, the

jury could have concluded that there was insufficient evidence of obviousness.

The Court concludes that substantial evidence supports the jury finding of no

obviousness. Lucent introduced evidence, including its expert’s opinion and testimony

from the designer of YMM, that adapting YMM to a mouse-driven graphical interface

would not have been an obvious or trivial undertaking. For example, the designer of

YMM stated that “from a technical and business standpoint, it made no sense to even

consider” this adaptation to an interface like Windows 1.01. (Trial Tr. XII

215:13-216:16.) The jury could reasonably have accepted this testimony, and the

corresponding opinion of Lucent’s technical expert, while rejecting that of Defendants’

expert. The patented technology is more than 20 years old, the patent term having

expired in 2006. While users of today’s computers may find many graphical interfaces

intuitive, and hardware advances have eased the implementation of more sophisticated

controls, the obviousness analysis must avoid hindsight bias, as the jury did here.

Neither JMOL or a new trial is appropriate on the jury’s finding that the ‘356 patent is

not invalid for obviousness.

B. Infringement

1. The Jury’s Finding of Infringement by Microsoft

a. Whether Outlook Contains a Composition Tool

A finding of infringement requires that every limitation of a claim be present,

either literally or by the doctrine of equivalents. Odetics, Inc. v. Storage Tech. Corp.,

185 F.3d 1259, 1268 (Fed. Cir. 1999). “A determination of non-infringement, either

literal or under the doctrine of equivalents, is a question of fact.” Miken Composites,

L.L.C. v. Wilson Sporting Goods, Co., 515 F.3d 1331,1336 (Fed. Cir. 2008). 

Microsoft challenges the jury’s finding of infringement for Microsoft Outlook

(“Outlook”), contending that Outlook does not contain a “composition tool,” within the

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5Dell joined some, but not all, aspects of Microsoft’s challenge to the jury’s infringement

finding. (See Doc. No. 792.) Dell did not join in certain arguments regarding the sufficiency of

evidence of indirect infringement by Microsoft, nor did it join in Microsoft’s argument that the

findings as to Microsoft and Dell are inconsistent.

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meaning of the claims.5 A composition tool is one limitation in the third step of

method claim 19, which requires:

indicating a particular one of said information fields into which

information is to be inserted and for concurrently displaying a predefined

tool associated with said one of said fields, said predefined tool being

operable to supply information of the kind identified for said one field,

said tool being selected from a group of predefined tools including a tool

adapted to supply an individual entry from a menu of alternatives and at

least a tool adapted to allow said user to compose said information.

The Court concludes that substantial evidence supports the jury’s finding that

Outlook infringes claim 19. Outlook is a software product that provides the user with

a number of services including e-mail, calendar and appointment management, and

management of contact information. Microsoft’s documentation describes form entry

as a central aspect of Outlook’s user interface. (See, e.g., PX 1138B (Outlook help file

stating that “Every Outlook item . . . is based on a form.”).) Outlook includes a

calendar tool to assist the user in entering dates on its form for specifying appointment

information. The tool displays a monthly calendar as a grid of numbered dates, along

with graphical controls that allow the user to scroll to adjacent months or skip directly

to a different month and year. Within the currently displayed month, the user can select

a particular date. Once the user defines a date with this tool, the software enters the

numerical day, month, and year into the corresponding field in the appointments form.

(See, e.g., PX 697 (screenshot); Trial Tr. VI 117:11-118:12 (testimony accompanying

video demonstration).)

Much like the number pad tool shown in the patent, the calendar tool in Outlook

allows the user to select a series of numbers, corresponding to the day, month, and year,

using graphical controls. (Cf. ‘356 4:18-21 (“The number entry tool . . . operates

similar to a standard hand-held calculator in which the user composes a string of

numbers by touching individual ones of the displayed buttons . . . .”).) Both competing

experts testified that the normal definition of “composition” includes combining or

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putting together different parts. (See Trial Tr. VI 111:5-112:11 (Mr. Tognazzini, for

Lucent); Trial Tr. XII 174:18-175:9 (Mr. Buscaino, for Microsoft).)

The jury rejected Microsoft’s argument that the Outlook calendar tool is instead

a “menu of alternatives.” The number of possible dates in the Outlook calendar

exceeds one million. (Trial Tr. V 135:17-136:6.) The patent states that, with a menu

of alternatives, “all that the user needs to do is point to one of the entries . . . .” (‘356

3:55-56.) With the calendar tool, however, the user may change the various elements

of the date before settling on a final entry. The user cannot reach all options without

making multiple selections. The Court concludes that there was substantial evidence

permitting the jury to conclude that the Outlook calendar tool allowed the user to

compose the date. Viewing all the evidence from the trial, the jury could have

reasonably concluded that the calendar tool allowed the separate selection and

combination of day, month, and year, thus making it a composition tool.

b. Whether Windows Mobile Contains a Composition

Tool

Microsoft also argues that there can be no infringement of Windows Mobile

because the Windows Mobile keyboard is not a composition tool that is “a predefined

tool associated with said one of said fields.” The Court disagrees. First, contrary to

Microsoft’s argument, the keyboard tool was not the only alleged composition tool

offered by Lucent for Windows Mobile. The passage of Lucent’s expert testimony

cited by Microsoft for this supposed limitation clearly asserts that the expert “found

several tools that allow you to compose information,” not just the keyboard tool.

(See Trial Tr. V 155:24-156:4.) Lucent also introduced evidence of both a Windows

Mobile calendar tool, similar to that already discussed for Microsoft Outlook, and a

Windows Mobile number pad tool. (See, e.g., PX 832A (screenshots of Windows

Mobile tools).)

Microsoft further argues that the keyboard tool is not “associated with said one

of said fields,” as required by claim 19, because it is an operating system level tool that

may be used by a variety of applications. Though the jury could have relied on one of

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the other asserted composition tools, the Court also concludes that there wassubstantial

evidence to support the conclusion that the keyboard tool was a composition tool

“associated with said one of said fields.” Microsoft does not dispute that the keyboard

tool may be used by various applications running on a Windows Mobile system. (See,

e.g., Microsoft’s Mem. P. & A. Supp. Combined Mot. JMOL, New Trial, Remittitur,

at 17 (“[Windows Mobile keyboard] is provided at the operating system level for use

across many different applications . . . .”).) Lucent introduced substantial evidence that

the keyboard tool is used by these applications to input information directly into active

fields, sufficient for the jury to conclude that it is “associated with said one of said

fields.” (See, e.g., Trial Tr. V 154:20-156:4, XVII 107:18-108:23.)

Finally, Microsoft challenges the credibility of Lucent’s expert, Mr. Tognazzini,

regarding the keyboard tool. The jury also assessed his credibility and rendered its

verdict. Viewed under the standards for post-trial motions, there is substantial

evidence to support Mr. Tognazzini’s testimony.

c. Proof of Specific Acts of Infringement

Microsoft seeks judgment as a matter of law based on Lucent’s purported failure

to introduce evidence of specific acts of direct infringement. Proof of indirect

infringement by inducement requires, in part, that the plaintiff prove there has been

direct infringement. Symantec Corp. v. Computer Assocs. Int’l, Inc., 522 F.3d 1279,

1292 (Fed. Cir. 2008). Since the asserted claims are method claims, proof of direct

infringement requires a showing that the claimed process was performed, not merely

that defendant sold an apparatus capable of infringement. Ormco Corp. v. Align Tech.,

Inc., 463 F.3d 1299, 1311 (Fed. Cir. 2006). 

A plaintiff may prove direct infringement using circumstantial evidence. In

Symantec Corp., the Federal Circuit vacated a summary judgment of non-infringement

on an inducement claim, observing that “[the patentee] has produced sufficient

circumstantial evidence of direct infringement . . . even though [it] has not produced

evidence that any particular customer has directly infringed the . . . patent. Direct

evidence of infringement, as opposed to circumstantial evidence, is not necessary.”

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Symantec Corp., 522 F.3d at 1292-93; see Golden Blount, Inc. v. Robert H. Peterson

Co., 438 F.3d 1354, 1363 (Fed. Cir. 2006) (concluding that patentee could rely on

circumstantial evidence, including instruction sheets provided with product, to prove

direct infringement); Arthrocare Corp. v. Smith & Nephew, Inc., 406 F.3d 1365,

1375-77 (Fed. Cir. 2005) (affirming denial of judgment as a matter of law of no indirect

infringement based, in part, on “strong circumstantial evidence” of directinfringement,

including literature accompanying the product involved); Moleculon Research Corp.

v. CBS, Inc., 793 F.2d 1261, 1272 (Fed. Cir. 1986) (upholding district court’s

determination that patentee demonstrated direct infringement, as part of inducement

claim, using circumstantial evidence including extensive sales and instructions

distributed with the product); cf. E-Pass Techs., Inc. v. 3Com Corp., 473 F.3d 1213,

1222-23 (Fed. Cir. 2007) (affirming summary judgment of no infringement under the

approach of Moleculon, observing that product manuals in question, at best, only

taught method steps in isolation).

Lucent introduced sufficient circumstantial evidence forthe jury to conclude that

Microsoft customers actually used the software to carry out the method steps of the

‘356 patent. Lucent provided evidence in the form of instruction and encouragement

offered via tutorials, help files, web pages, manuals, promotional materials, the

testimony of those familiar with these materials, and other sources. (See, e.g., PX 742

(excerpts of Microsoft Money user’s guides); PX 1139B (excerpt from Microsoft

Outlook help files); PX 651 (user’s guide for Microsoft Windows Mobile product).)

A reasonable jury could have reviewed this extensive record and concluded, based on

the circumstantial evidence, that there was direct infringement.

The cases cited by Microsoft do not require a different result. In ACCO Brands,

Inc. v. ABA Locks Mfrs. Co., 501 F.3d 1307, 1313 (Fed. Cir. 2007), the court stated,

in the context of an inducement claim, that “[i]n order to prove direct infringement, a

patentee must either point to specific instances of direct infringement or show that the

accused device necessarily infringes the patent in suit.” Unlike the present case and

others cited above, however, the court in ACCO Brands, Inc. concluded that there was

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no evidence in the record that the alleged infringer distributed materials encouraging

the infringing method of operation. See id.

Microsoft also cites E-Pass for the proposition that the accused infringer must

expressly instruct the user regarding every step together, in the required order. E-Pass

Techs., Inc. v. 3Com Corp., 473 F.3d at 1222. The relevant portion of E-Pass

concerned the requirement that a the patentee must show that all steps were actually

performed, in order. See id. at 1222. The court concluded that the product manual

evidence in that case showed “at best, that the Palm defendants taught their customers

each step of the claimed method in isolation. Nowhere do the manual excerpts teach

all of the steps of the claimed method together, much less in the required order.” Id.

It also concluded that “the accused PDAs are general-purpose computing devices that

can be used for a variety of purposes and in a variety of ways.” Id. Here, the accused

products are executable software, with their particular capabilities, not general-purpose

computing devices. Furthermore, the jury could have reasonably concluded that only

minimal instruction was needed to encourage a user to cause the accused software to

carry out all of the steps involved. Viewing the evidence favorably to Lucent, a user

of the accused software only needs to open a form and enter information in an

appropriate field to trigger all steps of claim 19.

d. Contributory Infringement

Liability for contributory infringement derives from 35 U.S.C. § 271(c), which

states:

Whoever offers to sell or sells within the United States or imports into the

United States a component of a patented machine, manufacture,

combination or composition, or a material or apparatus for use in

practicing a patented process, constituting a material part of the invention,

knowing the same to be especially made or especially adapted for use in

an infringement of such patent, and not a staple article or commodity of

commerce suitable for substantial noninfringing use, shall be liable as a

contributory infringer.

Microsoft argues that there can be no finding of contributory infringement since all

three products in question are capable of substantial noninfringing uses. It further

argues that the Court’s instructions failed to focus analysis on “the thing sold,” and that

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it should therefore receive a new trial. Microsoft also points to a statement in Hodosh

v. Block Drug Co., Inc., 833 F.2d 1575, 1578 (Fed. Cir. 1987), that “the thing sold

must not be a ‘staple article or commodity of commerce suitable for substantial

noninfringing use.’” Id. (quoting with approval P.J. Federico, Commentary on the New

[1952] Patent Act, 35 U.S.C.A. at 53 (1952)).

First, the Court notes that the jury verdict was not necessarily premised on

contributory infringement. The special verdict only stated that the jury found liability

by either inducement or contributory infringement. Nevertheless, even if contributory

infringement was the basis for liability, theCourt concludes that Microsoft’s challenges

to Lucent’s contributory infringement theories do not support judgment as a matter of

law or a new trial.

In Hodosh, the accused infringer argued that its toothpaste product, which

admittedly resulted in infringement of a patented method when used by customers,

should escape liability because it contained an ingredient that was a “staple article or

commodity capable of substantial noninfringing use.” See id. at 1576-77. When

quoting the Federico commentary in this context, the Federal Circuit was explaining

why the accused infringer could not avoid liability for its overall product by including

a staple ingredient. See id. at 1578. The present situation is, in many respects, the

opposite of that in Hodosh. Microsoft attempts to avoid liability for the “ingredient,”

here a tool included in its software, by arguing that the entire software product has

other noninfringing uses. Hodosh prevented a proposed erosion of protection available

under 35 U.S.C. § 271(c). See id. (“The drafters of the section explicitly recognized

that without protection from contributory infringers, owners of method patents, like the

owner here, would have no effective protection.”) Extending it to these circumstances

would have the opposite effect by allowing potential infringers to escape liability

merely by packaging an infringing component for sale with some other staple article.

See Philips Elecs. N. Am. Corp. v. Contec Corp., 411 F. Supp. 2d 470, 476 (D. Del.

2006) (“[I]t would indeed violate the ‘logic of the patent laws’ to allow a potential

infringer to avoid liability for contributory infringement by simply adding a

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noninfringing function to a device that practices a patented method.”).

Lucent introduced evidence sufficient for the jury to conclude that Microsoft’s

tools did not have substantial noninfringing uses immunizing it from liability for

contributory infringement. Microsoft argued, for example, that a user could bypass its

graphical tools by keyboard entry, as with the Outlook calendar tool, or by

downloading relevant data directly, as with the Microsoft Money transaction form. The

jury could have reasonably concluded that typical users rarely, if ever, bypass the

graphical tools by using these methods.

Microsoft also argues that its software cannot be an infringing component for

purposes of section 271(c), citing Microsoft Corp. v. AT&T Corp., 127 S.Ct. 1746,

1755 (2007). The Microsoft Corp. opinion was not so broad. There, the Supreme

Court held that software, in the abstract, could not be a component, for purposes of

infringement of an apparatus patent under 35 U.S.C. § 271(f). Section 271(f) creates

infringement liability in certain circumstances where a supplier in the United States

sends a component abroad for purposes of combining it into an infringing product. Id.

at 1752. The Supreme Court’s opinion did not reach contributory infringement under

section 271(c), and it expressly left open the question of whether software, even in the

abstract, may be a component of a method claim for section 271(f) purposes. Id. at

1756 n.13 (“If an intangible method or process, for instance, qualifies as a ‘patented

invention’ under § 271(f) (a question as to which we express no opinion), the

combinable components of that invention might be intangible as well.”) Furthermore,

while the Supreme Court concluded that software “in the abstract” was not a

component in the relevant context, it did not extend its holding to tangible copies of

software. See id. at 1755 (distinguishing the abstract software code at issue from

computer-readable copies, such as those “inserted into a CD-ROM drive or

downloaded from the Internet”). The Court therefore declines to extend Microsoft

Corp. in order to limit the application of section 271(c) here. The dispute over the ‘356

patent involves method claims and commercial sales of software copies, not apparatus

claims and foreign distribution of software “in the abstract.”

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e. Inducement

Microsoft seeks judgment as a matter of law, arguing that there is insufficient

evidence of intent to support a finding of indirect infringement by inducement. It also

seeks a new trial based on a purported error in the Court’s instructions, which required

that the accused infringer have “an intent to cause the encouraged acts.” (Jury

Instruction 21, Doc. No. 738.) Microsoft asserts that Lucent must further prove that

it had the specific intent to cause infringement, not merely acts constituting

infringement. The Court’s instructions, however, also required the jury to find that the

accused infringer “is aware of the patent, and knows or should have known that

encouraged acts constitute infringement of the patent.” (Id.)

First, as with contributory infringement, the Court notes that the jury’s verdict

was not necessarily premised on inducement. The jury may have based its verdict on

contributory infringement alone, inducement alone, or both. Nevertheless, even if

inducement was the basis for liability, the Court concludes that these arguments do not

support judgment as a matter of law or a new trial.

In DSU Medical Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1306 (Fed. Cir. 2006)

(en banc in relevant part), the court stated that “the inducer must have an affirmative

intent to cause direct infringement.” “[I]nducement requires evidence of culpable

conduct, directed to encouraging another’s infringement, not merely that the inducer

had knowledge of the direct infringer’s activities.” Id. In keeping with this directive,

the Court required the jury to find more than mere intent to cause the acts constituting

direct infringement. The Court also required the jury to find that the accused infringer

“is aware of the patent, and knows or should have known that encouraged acts

constitute infringement of the patent.” (Jury Instruction 21, Doc. No. 738.) DSU

Medical Corp. approved of the following formulation of the required state of mind:

It must be established that the defendant possessed specific intent to

encourage another’s infringement and not merely that the defendant had

knowledge of the acts alleged to constitute inducement. The plaintiff has

the burden of showing that the alleged infringer’s actions induced

infringing acts and that he knew or should have known his actions would

induce actual infringements.

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DSU Medical Corp., 471 F.3d at 1306 (quoting Manville Sales Corp. v. Paramount

Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990), and observing that Supreme Court

precedent had validated this approach). The Court’s instructions followed that

approach.

The Court concludes that Lucent introduced substantial evidence to support a

jury verdict of inducement. The extensive record in this case, including the various

manuals, help files, web pages, and other sources, is adequate for a jury to conclude

that Microsoft intended customers to use the tools in an infringing manner. Lucent also

introduced substantial evidence that Microsoft was aware of the ‘356 patent as early

as April, 2002. (See, e.g., PX 367 (e-mail from Dell notifying Microsoft, for

indemnification purposes, of Lucent’s assertion of the ‘356 patent). )

2. The Jury’s Finding of No Infringement by Dell

Lucent moves for judgment as a matter of law that Dell infringed the ‘356 patent,

or for a new trial. As with its allegations against Microsoft, Lucent asserted claims 19

and 21 against Dell based on theories of inducement and contributory infringement. 

Dell argues, and the Court agrees, that there is substantial evidence to support

a finding that Dell lacked the culpable mental state required for indirect infringement.

See, e.g., DSU Medical Corp., 471 F.3d at 1306 (discussing required state of mind).

As with Microsoft, Lucent introduced evidence of alleged intent in the form of

tutorials, help files, web pages, manuals, promotional materials, the testimony of those

familiar with these materials, and other sources. Not all of the documents and evidence

necessarily implicated Dell, however, and the jury could reasonably disregard

Microsoft documents as they relate to Dell’s mental state. Dell is a reseller of the

accused Microsoft software, while Microsoft is the designer and programmer. For

judgment as a matter of law, the Court must “disregard all evidence favorable to the

moving party that they jury is not required to believe.” Wallace, 479 F.3d at 624.

Furthermore, the Court concludes that the clear weight of the evidence is not against

the jury’s verdict. Though the parties’ post-trial briefing focused on the Microsoft

products, the Court also reaches an equivalent conclusion for Quicken, asserted only

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28 6These arguments may have more force as to Quicken, but the Court does not reach these

questions, having concluded that the jury could have reasonably determined that Dell lacked the

necessary culpable mental state as to Quicken.

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against Dell.

Much like Microsoft, Dell also argued that there was no proof of direct

infringement by Dell’s customers, similarly citing ACCO Brands, Inc. and E-Pass

Techs., Inc. Dell resells Microsoft’s software to consumers, often packaged with a

computer system. As the Court noted with Microsoft’s motion, the circumstantial

evidence was sufficient for a jury to conclude that there were acts of direct

infringement by users of the software. Since many of the end users in question overlap

between Dell and Microsoft, the Court does not rely on this part of Dell’s argument in

upholding the jury’s verdict on the Microsoft products. Similarly, the Court does not

rely on Dell’s argument that substantial non-infringing uses precluded a finding of

infringement for the Microsoft products.6 The Court rejects this argument for the same

reasons discussed above in regards to the infringement finding against Microsoft.

3. Consistency of the Verdicts for Microsoft and Dell

Microsoft moves for a new trial on the ground that the jury verdict is facially

inconsistent. Whether to grant a new trial is a matter within the Court’s discretion, and

it is only required for an inconsistent verdict when “it is impossible under a fair reading

to harmonize the [jury’s] answers.” See Magnussen v. YAK, Inc., 73 F.3d 245, 246

(9th Cir. 1996) (quoting Omar v. Sea-Land Serv., Inc., 813 F.2d 986, 991 (9th Cir.

1987). First, the special verdict is not facially inconsistent. Nothing in the special

verdict form or the jury instructions required the jury to reach the same conclusion as

to Microsoft and Dell on this issue. Furthermore, it is possible to harmonize the jury’s

answers for Microsoft and Dell. The Court has reviewed the record and concludes that

the jury could have reached different conclusions as to whether Microsoft and Dell had

the required culpable mental state.

/ / /

/ / /

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4. Claim Construction

Microsoft challenges the Court’s construction of “concurrently displaying” as

“displaying at the same time, as by a window overlaying the form.” It argues that the

definition of concurrently should also include “automatically.” The Court declined to

include this limitation, both following its original Markman hearings and after

subsequent briefing. (See Claim ConstructionOrder Clarifying and Superceding Order

of March 1, 2004, Case No. 02-CV-2060, Doc. No. 1552.) The Court continues to

conclude that, in this context, “concurrently displaying” does not require

“automatically displaying.” The preferred embodiments described in the patent do not

always require that a predefined tool be automatically displayed. (See, e.g., ‘356 Fig.

15, 13:46-53 (indicating that, under certain settings, the sample application may await

user input before displaying a specific tool).)

C. Damages

1. Damages Verdict by Lump-Sum Royalty

A patent holder is entitled to “damages adequate to compensate for the

infringement, but in no event less than a reasonable royalty for the use made of the

invention by the infringer . . . .” 35 U.S.C. § 284. The trial court has discretion to

determine the method of calculating damages. Maxwell v. J. Baker, Inc., 86 F.3d 1098,

1108 (Fed. Cir. 1996). One common method for calculating damages, applied by the

experts for both sides in this case, is a hypothetical negotiation. Under this approach,

a reasonable royalty is the amount that the patentee and accused infringer would have

agreed upon in a hypothetical negotiation at the time of the first infringement, on the

assumption that the patent is valid and would be infringed. See Rite-Hite Corp. v.

Kelley Co., Inc., 56 F.3d 1538, 1554-55 (Fed. Cir. 1995) (en banc); Maxwell, 86 F.3d

at 1108-1110; Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 869-70 (Fed. Cir.

1993). “[W]hat an infringer would prefer to pay is not the test for damages.” Rite-Hite

Corp., 56 F.3d at 1555. The Court also instructed the jury that it may consider factors

including, but not limited to, commonly applied Georgia-Pacific factors. See GeorgiaPacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).

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7This period extendsfrom January 13, 2003, when Microsoft received notice of the ‘356 patent,

to December 11, 2006, when the patent expired. Lucent also sought $125 million in damages for

Dell’s sales during this period, and sought to hold both Microsoft and Dell liable for the latter amount.

(See, e.g., Trial Tr. XVIII 209:15-210:14 (excerpt from closing argument summarizing Lucent’s

damages theory for the ‘356 patent).)

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Lucent’s expert advocated an 8% royalty on actual sales of the software

products. Using this amount, Lucent asked the jury to award $561.9 million based on

Microsoft’s total sales of the accused products during the applicable time period.7

Microsoft’s expert countered that damages, if any, should be limited to a lump-sum

royalty of $6.5 million for all three products. He argued that a lump-sum payment

covering the entire period in question would be appropriate for several reasons,

including the uncertainty and cost involved in monitoring and enforcing running

royalty payments based on actual sales. (See, e.g., Trial Tr. XVI 180:22-185:8

(explaining benefits of lump-sum payment in context of the ‘295 patent), 206:6-20

(incorporating same reasons in discussion of the ‘356 patent).) The jury awarded a

lump-sum royalty of approximately $358 million for infringement of the ‘356 patent.

There is substantial evidence to support the jury’s verdict.

Microsoft argues that the jury’s verdict violates the entire market value rule,

requiring judgment as a matter of law or a new trial. The entire market value rule

considers whether a patentee may recover damages based on the value of an entire

apparatus containing several features, not all covered by the patent. In this case,

Lucent advocated a reasonable royalty at trial, and the experts disagreed as to the

amount of the royalty. See Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1549

(Fed. Cir. 1995). The Federal Circuit has allowed recovery based on the value of an

“entire apparatus containing several features when the patent-related feature is the

‘basis for customer demand.’” Id. (quoting State Indus., Inc. v. Mor-Flo Indus., Inc.,

883 F.2d 1573, 1580 (Fed. Cir. 1989)). The patented and unpatented components

“must function together . . . in some manner so as to produce a desired end product or

result.” Id. at 1550. The components “must be analogous to components of a single

assembly or be parts of a complete machine, or they must constitute a functional unit.”

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Id. The Federal Circuit has applied this rule where a patentee seeks to recover based

on the entire value of a product used to practice a claimed method. See Fonar Corp.

v. Gen. Elec. Co., 107 F.3d 1543, 1552-53 (Fed. Cir. 1997) (applying entire market

value rule to damages sought based on value of MRI machines where claims involved

method for improved use of the machines). The Court instructed the jury on the entire

market value rule. (See Jury Instruction 46, Doc. No. 738.)

The jury did not adopt either side’s approach outright. By examining the

hypothetical scenario from the parties’ standpoint at the time infringement began, the

jury may have considered a wide variety of factors, not merely the actual product

revenue. Therefore, the award does not reflect an entire market value calculation on

its face. Furthermore, the Court concludes that substantial evidence supports the jury’s

verdict, whether or not the entire market value rule applies.

2. Substantial Evidence

The jury’s verdict is supported by substantial evidence. Lucent introduced

examples of actual lump-sum royalty licenses from the computer industry with

payments ranging as high as $290 million. (See, e.g., PX 5142, 5150, 5151, 5152.)

Lucent also introduced sample license agreements to support its expert’s theory that a

reasonably royalty would be 8% of the retail selling price. (See, e.g., PX 5140, 5141,

5172.) Lucent introduced evidence, including its experts’ testimony, that the patented

technology was an important part of Microsoft’s products and that these products were

highly profitable and commercially successful. Microsoft sold tens of millions of

copies of the accused software during the relevant period. The jury could have

reasonably accepted that, in a hypothetical negotiation, the success of these products

would have been foreseeable. 

The law allows a jury to settle on a royalty rate or lump-sum different than those

offered by the parties’ experts. See, e.g., Fuji Photo Film Co., Ltd v. Jazz Photo Corp.,

394 F.3d 1368, 1378 (Fed. Cir. 2005). Furthermore, by considering the hypothetical

negotiation’s assumption that the patent is valid and would be infringed, the jury could

reach an amount higher than those in actual licenses. In a real-world negotiation,

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validity and infringement may carry uncertainty that limits the strength of the

patentee’s negotiating position. By assuming validity and infringement, the patentee’s

position may be stronger in the hypothetical negotiation. Having viewed the testimony

and reviewed the trial record, the Court concludes that the jury’s verdict is supported

by the evidence, is not excessive, and does not reflect mere speculation.

The Court also notes that, even if the entire market value rule applied, there was

substantial evidence for the jury to rely on the whole value of the software. Lucent

introduced substantial evidence, such as marketing material, product documentation,

and expert testimony, that the accused features were important to the success of

Microsoft’s products and were promoted by Microsoft. (See, e.g., PX 651, 742

1139B.) The jury could have reasonably accepted this evidence and concluded that,

without the user interface benefits provided by the patented method, the products

would have suffered commercially by not meeting consumer expectations. See Tec

Air, Inc. v. Denso Mfg. Michigan Inc., 192 F.3d 1353, 1362 (Fed. Cir. 1999)

(upholding award based on the entire value of radiator and condenser assemblies,

where patents involved the manufacture of properly balanced fans without which the

assemblies would not have met customer requirements). Additionally, viewing the

record as a whole and considering the credibility of the witnesses, the Court concludes

that the damages award is not against the clear weight of the evidence.

3. Other Considerations

Microsoft argues in the alternative that, if the jury did not use an entire market

value calculation, its verdict must be rejected as purely speculative. The Court

disagrees. Substantial evidence supports the verdict. Indeed, Lucent’s experts testified

to an award of more than $500 million based on actual licenses and industry practice.

Microsoft’s own expert testified that Microsoft would negotiate a one-time lump sum

payment for the life of the patent, rather than a running royalty. (See, e.g., Trial Tr.

XVI 180:22-185:8, 206:6-20.) Furthermore, nothing on the face of the verdict

indicates mere speculation. If the precision of the jury’s “down-to-the-penny”

calculation shows anything, it is that the jury used some form of numerical derivation

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from values in the evidence. This is not a case where the jury’s award should be

reduced because it was based on an expert’s speculative testimony. Cf. Go Medical

Indus. Pty., Ltd. v. Inmed Corp., 471 F.3d 1264, 1274 (Fed. Cir. 2006) (affirming

reduction in jury’s award of trademark royalty based on expert’s testimony that offered

no rationale for selecting the particular values used); Shockley v. Arcan, Inc., 248 F.3d

1349, 1361-64 (Fed. Cir. 2001) (vacating jury’s award of future lost profits for patent

infringement where it was based on an expert opinion that used speculative

assumptions). Lucent’s expert supported his theories with evidence including license

agreements from contexts that the jury could accept as comparable to the present

situation.

Microsoft also argues that the damages award is unwarranted due to a lack of

evidence that the claimed method was actually used. The Court concludes that there

was adequate circumstantial evidence to support a finding of direct infringement.

Similarly, the jury could have reasonably concluded that the acts of direct infringement

were sufficiently prevalent to support its award. As a whole, the evidence is sufficient

to support the damages awarded by the jury.

D. Summary for Day ‘356

As to the ‘356 patent, the Court DENIES all motions for judgment as a matter

of law and all motions for a new trial or remittitur.

III. Haskell ‘226

A. Validity

1. Obviousness

MPT moves for judgment as a matter of law that claim 12 of the ‘226 patent is

not invalid for obviousness. The Court agrees that the evidence is insufficient to

support the jury’s finding of obviousness by clear and convincing evidence. See

Takeda Chem. Indus., Ltd., 492 F.3d at 1355 (burden for obviousness). “The ultimate

judgment of obviousness is a legal determination.” KSR Int’l Co., 127 S.Ct. at 1745.

Courts give deference, however, to the jury’s underlying findings of fact. See Finisar

Corp., 523 F.3d at 1338. These underlying findings include “the scope and content of

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8MPT’s motion did not seek to overcome the finding of obviousness with secondary

considerations of nonobviousness. There is no significant dispute as to the level of ordinary skill in

the art. Microsoft’s expert testified that a person of ordinary skill would have either: (1) a Bachelor

of Science degree in electrical engineering or computer engineering and two years of experience in

video compression; or (2) a Master’s degree in electrical engineering, computer engineering, or a

similar field, including study of video compression technology. (Trial Tr. XVI 60:13-25.) MPT's

expert has offered a similar definition. See Lucent Techs. v. Gateway, Inc., 537 F. Supp. 2d 1095,

1101 (S.D. Cal. 2008).

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the prior art, the differences between the prior art and the claims at issue, the level of

ordinary skill in the pertinent art . . . .” Id. at 1338-39.8

a. The Micke Thesis and Related References

Microsoft offered two theories of obviousness. The first focused on a document

known as the Micke Thesis in combination with other references. Thomas Micke wrote

his 1986 “Comparison of a Predictive and an Interpolative Motion Compensating

Coding Method for Television Video Signals” as a master’s thesis for the University

of Hanover’s Institute for Theoretical Communications Engineering and Information

Technology (“TNT”). (See DX CAN (translated); DX IKH (original German).) The

Micke Thesis describes an investigation into the benefits of combining “the DPCM

method with motion compensating prediction” with “motion compensating

interpolation of the video signal” into a single method called “motion compensating

interpolation error coding.” (Id. at GW-LT 255055.) Micke’s research simulated this

approach and concluded that the tests “yielded rather good results but still need

confirmation by additional investigations and subjective tests.” (Id. at GW-LT

255083.) Microsoft argued that the Micke thesis therefore encouraged what Microsoft

characterized as the central innovation of the ‘226 patent, namely the transmission of

interpolation error to aid in the overall video coding process.

Microsoft asserted the Micke Thesis in combination with either the “Musmann”

or “Jain & Jain” references, or both. Since the Micke Thesis did not involve the use

of a discrete cosine transform (“DCT”) to encode error information, as in the patent,

Microsoft offered these references as prior art allegedly making it obvious to use a

DCT in combination with the teachings of the Micke Thesis. The Musmann article,

entitled “Advances in Picture Coding,” was published in the April 1985 proceedings

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of the IEEE. (DX CSN.) The article discusses the relative benefits of using a DCT for

transform coding, including use for “natural pictures.” (See, e.g., id. at

MSLT_0004925.) Jain & Jain published “Displacement Measurement and Its

Application in Interframe Image Coding” in the December 1981 IEEE Transactions on

Communications. (DX CRO.) It discloses the use of DCT coding in the context of

“motion compensated interframe hybrid coding.” (See, e.g., id. at MSLT_0004887.)

Micke observed that further improvement “is possible by . . . transformation coding of

the motion compensated errors,” and he cited to the Musmann and Jain & Jain

references. (DX CAN at GW-LT 255072, 255084.) Dr. Delp offered his opinion that

the Micke thesis, in combination with either or both of these references, rendered the

‘226 patent obvious. (See, e.g, XVI 63:6-80:5.)

The Court concludes that Microsoft’s evidence of obviousness regarding the

Micke Thesis and related references is insufficient, as a matter of law, to support the

jury’s conclusion that claim 12 is invalid for obviousness. In particular, Microsoft did

not provide evidence, sufficient to meet a clear and convincing standard, that the

structures corresponding to the means-plus-function elements in claim 12 would have

been obvious in light of these references. A conclusory expert opinion, without factual

support, will not support a finding of obviousness by clear and convincing evidence.

See Upjohn Co. v. Mova Pharm. Corp., 225 F.3d 1306, 1311 (Fed. Cir. 2000); cf.

Symbol Techs., Inc. v. Opticon, Inc., 935 F.2d 1569, 1574-76 (Fed. Cir. 1991)

(concluding that jury could rely on expert’s ultimate opinion of infringement without

detailed explanation, where burden is a preponderance of the evidence). Dr. Delp

testified that certain code in Micke’s Thesis corresponded to the means-plus-function

elements of claim 12. (See, e.g., Trial Tr. XVI 76:5-77:4 (correlating first means-plusfunction element to portions of the Micke Thesis); 77:5-12 (similar, second meansplus-function element).) Dr. Delp showed at most, however, that the code performed

a similar or identical function, without explaining why the particular structures

disclosed in the ‘226 patent would have been obvious to one of ordinary skill based on

these references. For example, regarding the second means-plus-function, Dr. Delp

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28 9The Court discussed the nature of this dispute at the summary judgment stage, and though the

trial record is more extensive, the essential character of the dispute remained the same. See Lucent

Techs., 537 F. Supp. at 1101.

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stated:

Q: . . . What does the next slide blowup show you, which is IKH at

5255 through 56?

A: This is some more code from the thesis, Micke thesis. This is

Element 2 of the 226 patent. So he’s talking about doing the

interpolation field forward and backward, and he talks about

quantizing the prediction error. Now, in this case he’s talking

about the interpolation error.

(Trial Tr. XVI 77:5-12.) At best, this testimony and the related evidence only provides

clear and convincing evidence that a person of ordinary skill would have been

motivated to pursue an invention implementing the same function, but not necessarily

using the particular structure disclosed.

Furthermore, while the references show that it may have been obvious to use

certain individual structural components in video coding, such as the DCT transform,

the structure of a means-plus-function element is viewed as a whole, not just a

collection of discrete pieces. See, e.g., Odetics Inc. v. Storage Tech. Corp., 185 F.3d

1259, 1268 (Fed. Cir.1999). In addition, an obviousness inquiry considers the claim

“as a whole,” not whether each individual element was known. 35 U.S.C. § 103(a).

Microsoft did not offer clear and convincing evidence that it would have been obvious

to implement claim 12’s means-plus-function elementsin combination using the overall

structures disclosed by the patent. Microsoft’s efforts to rehabilitate the evidentiary

offering with attorney argument are unavailing.

The Court also notes that there were factual disputes over whether the Micke

Thesis even constitutes prior art since it was only available, if at all, from the TNT

library, and the accessibility of the thesis during the relevant time period was disputed.9

These uncertainties may present a further obstacle in finding claim 12 obvious by clear

and convincing evidence, but the Court need not reach this issue.

/ / /

/ / /

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28 10This comment about “conventional” coding appears in the patent’s description of its encoder,

and the description of relevant structure in the decoder incorporates the relevant description of the

encoder by reference. (See ‘226 5:2-6.)

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b. The H.261 References

Microsoft’s second obviousness theory also fails to present clear and convincing

evidence of obviousness, taking the claim as whole. Microsoft argues that claim 12 is

obvious in light of two documents from a March, 1986 meeting in Tokyo regarding

H.261, a video compression standard used in video conferencing. (See Trial Tr. XVI

46:19-50:11.) They are known as Document 81 and Document 103R. Document 81,

entitled “Comments on Conditional Motion Compensated Frame Interpolation,”

includes a diagram of a coder for conditional motion compensated interpolation.

(See DX BJL at MSLT0625893 Fig. 1.) The diagram shows the coder taking the

difference of the received picture and a motion interpolative prediction, then sending

that output through a coding unit. (Id.) Document 103R, entitled “Report of the Fifth

Meeting in Tokyo (March 25-28, 1986),” contains a block diagram of a reference

model video coder. (See DX BXY at MSLT0626039 Fig. 3.)

Microsoft argues that Figure 3 of Document 103R discloses the first element of

claim 12. At least to this extent, the evidence supports Microsoft’s position. Indeed,

Document 103R shows a model motion compensated coder, and the patent itself relates

the first means-plus-function element to “conventional motion compensation coding.”

(See ‘226 4:26-34; 4:63-5:6.)10 Dr. Delp also offered his expert opinion, explaining

how the elements of Figure 3 in Document 103R corresponded to the first means-plusfunction element and were known before the ‘226 patent. (See, e.g., Trial Tr. XVI

57:17-58:13.)

The crux of the matter lies with Document 81 and the second means-plusfunction element of claim 12. Microsoft did not make a sufficient showing for a jury

to find that claim 12, as a whole, is obvious by clear and convincing evidence,

particularly with regard to the second means-plus-function element, either alone or in

combination with the more “conventional” coding of the first element. Though

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11Microsoft argues that the second means-plus-function element does not require blockwise

operation, but this is contrary to the plain language of the claim. The second element involves

developing “interpolated blocks” from “block approximations” and “codes that describe deviations

from interpolated blocks.”

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Document 81 discloses sending some form of data representing the difference between

a motion interpolative prediction and an input signal, it does not indicate on its face

that this process should involve blockwise coding or a DCT, as in claim 12.11

Additionally, Dr. Delp testified that a person of ordinary skill would have read

Document 81 in context as involving the use of a DCT, though he agreed that there is

no reference to blockwise coding on the face of the document. (See, e.g., Trial Tr. XVI

59:25-60:4, 110:25-111:24.) Nevertheless, even if Document 81 disclosed the second

means-plus-function element in its entirety, which the Court questions, there is

insufficient evidence that it would have been obvious to combine its teachings with

those of Document 103R to produce the invention of claim 12.

In reaching this conclusion, the Court recognizes that a “teaching, suggestion,

or motivation” from the prior art is no longer strictly required to establish obviousness.

See KSR Int’l Co., 127 S.Ct. at 1739-41. Nevertheless, that requirement provided

“helpful insight” that the Court may still consider in a flexible, common sense manner.

Id. at 1741. Microsoft presented insufficient evidence that it would have been obvious

to combine these references. Though Document 103R cites to Document 81, it does

so as one among many documents in the context of an industry organization exploring

many possible options for a video coding standard. (See, e.g., DX BXY at

MSLT0626010, 6018-19.) Furthermore, the Document 103R report described the

motion-compensated interpolation of Document 81 merely as one option in the overall

context of a complex, multifaceted standardization effort. (Id. at MSLT0626019.)

Viewed in context, these documents do not rise to the level of clear and convincing

evidence of obviousness.

/ / /

/ / /

/ / /

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12Dell did not join in this aspect of Microsoft’s motion. This legal question was not an issue

at trial, and the Court understands that Microsoft wishes to preserve it for appeal.

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2. Indefiniteness

Microsoft moves for judgment as a matter of law that claim 12 of the ‘226 patent

is invalid for indefiniteness under 35 U.S.C. § 112 ¶ 2.

12 Indefiniteness is a legal

conclusion that may arise in the course of the Court’s duty to construe the patent

claims. See Howmedica Osteonics Corp. v. Tranquil Propects, Ltd., 401 F.3d 1367,

1371 (Fed. Cir. 2005). To be sufficiently definite, a claim must be amenable to

construction, “even though the task may be formidable and the conclusion may be one

over which reasonable persons will disagree.” See Exxon Research and Eng’g Co. v.

United States, 265 F.3d 1371, 1375 (Fed. Cir. 2001). Courts “accord respect to the

statutory presumption of validity” by finding claims “indefinite only if reasonable

efforts at claim construction prove futile.” Id.

Microsoft argues that claim 12’s use of the term “interpolated blocks” is

nonsensical and inconsistent. The Court construed claim 12 well in advance of trial,

having provided the parties ample opportunity to brief and argue their positions on

claim construction. In doing so, the Court concluded that the claim was amenable to

construction. Id. Therefore, the Court declines to reconsider its claim construction or

to grant judgment as a matter of law that claim 12 of the ‘226 patent is indefinite.

B. Infringement

MPT moves for judgment as a matter of law that Microsoft infringed claim 12

of the ‘226 patent, or for a new trial on this issue. Literal infringement of a meansplus-function claim “requires that the relevant structure in the accused device perform

the identical function recited in the claim and be identical or equivalent to the

corresponding structure in the specification.” Odetics, Inc., 185 F.3d 1259, 1267 (Fed.

Cir. 1999). “[T]he claim limitation is the overall structure corresponding to the claimed

function.” Id. at 1268. An accused structure is equivalent if it “performs the claimed

function in substantially the same way to achieve substantially the same result.” Id. at

1267. “The proper test is whether the differences between the structure in the accused

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28 13The bracketed text is part of the original claim construction and identifies the corresponding

structure of the claimed encoder. At times, the patent describes the decoder of claim 12 with reference

to the corresponding encoder elements. (See, e.g., ‘226 5:7-10.)

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device and any disclosed in the specification are insubstantial.” Chiuminatta Concrete

Concepts, Inc. v. Cardinal Indus., Inc., 145 F.3d 1303, 1309 (Fed. Cir. 1998). To

literally infringe a means-plus-function claim, a structural equivalent must have been

available at the time the claim issued. Al-Site Corp. v. VSI Int’l, Inc., 174 F.3d 1308,

1320 (Fed. Cir. 1999). After-arising technology may only infringe a means-plusfunction claim under the doctrine of equivalents. Id. at 1320-21 & n.2.

1. MPEG-1 and MPEG-2 Products

There is substantial evidence to support the jury’s verdict under Microsoft’s

theory that there is no infringement because its accused MPEG-1 and MPEG-2

decoders use a “measured motion” rather than a “guessed motion” technique.

Microsoft contends that, as a result, the MPEG-1 and MPEG-2 decoders do not contain

structure equivalent to the structure of the second means-plus-function element of

claim 12, which states:

means responsive to said block approximations and to said codes that

describe deviations from interpolated blocks to develop said interpolated

blocks.

The Court identified the corresponding structure as:

Decoder 25, DCT-1 34, Adder 35, and Shift Circuits 31 and 39, including

all inputs and outputs of these elements related to the claimed function

(See Fig. 2; Col. 4, lines 63-65; Col. 5, lines 7-23 [description of the

structure and inputs that correspond to these elements is at Col. 4, lines

38, 50]).13

The adder and shift circuits produce an interpolated estimate of a video frame using

motion vectors representing motion between the frames preceding and succeeding the

interpolated frame. (See ‘226 4:38-50, 5:7-10.) As described in the patent, these

circuits produce the interpolated frame by taking the average of: (1) the preceding

frame, shifted by half of the motion vectors; and (2) the succeeding frame, shifted by

half of the same motion vectors, but in the opposite direction. (Id.) This is the

so-called “guessed motion” approach.

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14The Court was not persuaded to an extent sufficient to prompt a new trial, however.

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For the MPEG-1 and MPEG-2 decoders, Microsoft introduced substantial

evidence that the encoder measures and transmits two separate sets of motion vectors

representing differences between the frame to be reconstructed by interpolation and the

frames immediately preceding and succeeding it. The MPEG-1 and MPEG-2 decoders

create an interpolated frame from estimates made using both sets of vectors, not from

a single set of vectors that are, for example, divided in two to estimate motion. (See,

e.g., Trial Tr. XVI 30:16-31:11, 36:8-37:2, 37:25-38:19, 40:6-22 (excerpts of Dr.

Delp’s testimony regarding these differences).) This is the so-called “measured

motion” approach. MPT’s expert, Dr. Girod, agreed that MPEG-1 and MPEG-2 do not

send and use a single set of motion vectors in the same manner described in the patent.

(See Trial Tr. XVII 39:13-21.)

MPT argues that the disclosed structure is not necessarily restricted to one that

implements the “guessed motion” method, and that Shift Circuits 31 and 39 could be

circuits that receive and process two sets of motion vectors in the same manner as in

MPEG-1 and MPEG-2. Figure 2 of the patent plainly indicates, however, that the

inputs to Shift Circuits 26, 31, and 39 are the same. Shift Circuit 26 reproduces the

succeeding frame from the motion vectors representing differences from the preceding

frame. (See ‘226 4:26-32, 4:67-5:6.) Based on the evidence, the jury could have

reasonably concluded that a structure designed to process two sets of measured motion

vectors was not identical to that disclosed in the patent.

Furthermore, Microsoft introduced substantial evidence from which the jury

could conclude that the MPEG-1 and MPEG-2 decoders did not contain a structure

equivalent to that disclosed in the patent. To be equivalent, the accused structure must

perform “the claimed function in substantially the same way to achieve substantially

the same result.” Odetics, Inc., 185 F.3d at 1268. The jury could have reasonably

found that either or both of these requirements were not met. While the Court was

persuaded by the reasoning of MPT’s expert Dr. Girod,14 the jury could have

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reasonably accepted the opinion of Microsoft’s expert, based on his knowledge of the

video coding standards and analysis of the source code involved, that the variance in

motion compensation methods indicates that the accused products do not perform the

claimed function in substantially the same way. (See, e.g., Trial Tr. XVI 36:8-37:2,

37:25-38:19, 40:6-22.) Furthermore, both Dr. Delp and one of the inventors, Dr.

Haskell, testified that the “measured motion” method results in improvements over the

approach in the ‘226 patent, and the jury could reasonably conclude that the MPEG-1

and MPEG-2 decoders do not achieve substantially the same result. (See, e.g., Trial

Tr. XVI 30:5-33:4 (Dr. Delp), 122:6-20 (Dr. Haskell); see also Trial Tr. III 42:11-15

(MPT’s expert, Dr. Girod, discussing general benefits of motion vectors).)

2. VC-1 Products

Microsoft also made the “measured” versus “guessed” motion argument for the

products using VC-1 decoders. Though the underlying analysis is similar in some

respects, there are unique considerations to VC-1. In particular, the VC-1 standard

describes a “direct mode” of operation in which an interpolated frame is created by

halving the motion vectors between the preceding and succeeding frames. (See,

e.g., PX 3556 Fig. 71.) Microsoft counters by arguing that VC-1 only uses the direct

mode after measuring the motions vectors for the interpolated frame, and that VC-1

source code never actually uses vectors between the preceding to the succeeding frame

to guess at a location in the interpolated frame. (See, e.g., Trial Tr. XVI 40:6-11,

102:2-104:17 (testimony from Dr. Delp on these issues).) The jury could have

reasonably accepted Dr. Delp’s analysis and concluded that there were substantial

differences between the claim and the VC-1 decoders. The Court concludes that MPT

is not entitled to judgment as a matter of law or a new trial. 

Furthermore, Microsoft introduced substantial evidence for the jury to conclude

that the accused structures were not equivalent because Microsoft’s VC-1 products do

not use the DCT, and its inverse, for encoding and decoding. There is no dispute that

the VC-1 integer transforms are not identical to the DCT. Microsoft introduced

substantial evidence sufficient for the jury to conclude that replacing the DCT with

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15Microsoft also argued, for example, that: (1) MPT failed to provide any evidence that certain

VC-1 decoders include the claimed structures; (2) MPT failed to provide sufficient evidence of indirect

infringement; and (3) downloads of Windows Media Player cannot infringe in light of Microsoft Corp.

v. AT&T Corp., 127 S.Ct. 1746 (2007).

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VC-1 integer transforms would result in structures that, as a whole, were not equivalent

to those in the claim elements. For example, Microsoft introduced a memo describing

the VC-1 integer transforms which observed that interchanging the two would result

in a “severe mismatch” and that “the decoded sequence will quickly degenerate” (DX

IIC at MSLT_1027528.) VC-1 replaced the 32-bit inverse DCT processing from

previous products with 16-bit operations allowing for better processing efficiency.

(Id.) Microsoft also introduced evidence that VC-1’s approach also resulted in better

subjective performance for video playback, which won an industry competition. (See,

e.g., PX 1804 at LUC 1263646-48, Trial Tr. XV 118:4-121:2.) Lucent counters that

the Microsoft documentation indicates a high level of correlation with DCT, at times

greater than 99%. (See, e.g., DX IIC at MSLT_1027530.) Given the other evidence

that VC-1 achieved this high correlation with better efficiency and better subjective

results, however, the jury could reasonably conclude that the differences were

substantial. Furthermore, the jury could reasonably conclude that this substitution

rendered the overall structure of the VC-1 decoders substantially different from those

in the claim elements.

Since the issues discussed here provide ample reason to deny MPT’s motions

with respect to infringement of the ‘226 patent, the Court declines to reach Microsoft’s

other arguments for upholding the finding.15

C. Equitable Defenses

The jury returned advisory verdicts on two equitable defenses for the ‘226patent.

The jury found no inequitable conduct, and it found that the laches defense applied to

Lucent’s assertion of the ‘226 patent. The ultimate determination of these issues rests

with the Court, and it is not required to accept the jury’s recommendations. See, e.g.,

Huser v. Santa Fe Pomeroy, Inc., 513 F.2d 1298, 1299 (9th Cir. 1975); cf. Los Angeles

Police Protective League v. Gates, 995 F.2d 1469, 1473 (9th Cir. 1993).

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1. Inequitable Conduct

Patent applicants “are required to prosecute patent applications with ‘candor,

good faith, and honesty.’” Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc.,

326 F.3d 1226, 1233 (Fed. Cir. 2003) (quoting Molins PLC v. Textron, Inc., 48 F.3d

1172, 1178 (Fed. Cir. 1995)). “A patent applicant commits inequitable conduct when,

during prosecution of the application, he makes an affirmative representation of a

material fact, fails to disclose material information, or submits false material

information, and does so with the intent to deceive.” Amgen Inc. v. Hoechst Marion

Roussel, Inc., 314 F.3d 1313, 1358 (Fed. Cir. 2003). The defendant may prove

inequitable conducting by showing both a failure to disclose information material to

patentability and an intent to deceive. M. Eagles Tool Warehouse, Inc. v. Fisher

Tooling Co., Inc., 439 F.3d 1335, 1340 (Fed. Cir. 2006). Inequitable conduct requires

proof by clear and convincing evidence. Id., 439 F.3d at 1340 (burden applies to both

elements); Monsanto Co. v. Bayer Bioscience N.V., 363 F.3d 1235, 1239 (Fed.

Cir. 2004).

The test for materiality is “what a ‘reasonable examiner would consider . . .

important in deciding whether to allow the application to issue as a patent.’” A.B. Dick

Co. v. Burroughs Corp., 798 F.2d 1392, 1397 (Fed. Cir. 1986). Under the rule in effect

during the prosecution of the ‘226 patent, information is material where there is a

substantial likelihood that a reasonable examiner would consider it important in

deciding whether to allow the application to issue as a patent. 37 C.F.R. § 1.56 (1989).

Mere oversight or negligence is insufficient to meet the requisite intent to

deceive. See, e.g., Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1351 (Fed.

Cir. 2002); Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876

(Fed. Cir. 1988) (en banc in relevant part) (concluding that even gross negligence does

not justify inference of intent to deceive). The defendant may prove intent using

circumstantial evidence. See, e.g., Merck & Co., Inc. v. Danbury Pharmacal, Inc., 873

F.2d 1418, 1422 (Fed. Cir. 1989). In determining whether circumstantial evidence

supports a finding of intent, “it is proper to consider the degree of materiality of the

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information.” Lipman v. Dickinson, 174 F.3d 1363, 1370 (Fed. Cir. 1999). The degree

of intent the defendant must prove is based a sliding scale related to the materiality of

the information. Abbott Labs. v. TorPharm, Inc., 300 F.3d 1367, 1380 (Fed. Cir.

2002).

Microsoft argues that the applicants for the ‘226 patent committed inequitable

conduct by failing to disclose the Micke Thesis and the H.261 documents. These

references did not render the ‘226 patent invalid for obviousness, and the jury returned

a finding that claim 12 was not invalid for anticipation. The materiality of the

documents, if any, is limited accordingly, and Microsoft’s burden of showing intent is

correspondingly increased. Even assuming some degree of materiality, Microsoft did

not offer clear and convincing evidence of an intent to deceive. 

a. H.261 Documents

Dr. Haskell, one of the named inventors, attended the March, 1986, meeting in

Tokyo where the H.261 documents, and any related demonstrations, were presented.

(See Trial Tr. XVI 146:22-148:11; DX BJL; DX BXY at MSLT0626024.) Dr. Haskell

testified that the H.261 meetings included breakout sessions only for interested parties.

(Trial Tr. XVI 130:8-131:3.) Though Dr. Haskell conceded that the documents

indicated that he attended, Dr. Haskell never recalled attending the meetings or viewing

Document 81 or any related demonstration. MPT did not offer any other direct

evidence that Dr. Haskell was aware of the H.261 documents. One other attendee, Dr.

Steffan Ericsson, recalled a discussion of “conditional motion-compensated

interpolation where interpolation error is transmitted,” and credited the idea with some

importance. (See, e.g., Trial Tr. XV 170:22-172:18.) The patent application was filed

more than three years after the Tokyo meeting. These circumstances, and all the

evidence reviewed by the Court, do not prove by clear and convincing evidence that

Dr. Haskell was specifically aware of Document 81 at any time, let alone at the time

of the patent application.

/ / /

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28 16The Court also notes that the jury’s recommendation of no equitable conduct followed its

finding of obviousness, overturned by the Court here. Thus, the jury reached its recommendation

despite viewing some of the references as more material to patentability than in the Court’s view.

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b. Micke Thesis

Dr. Haskell may have been aware of the existence and general subject matter of

the Micke Thesis as early as 1987, though there is not clear and convincing evidence

that he ever read it and was familiar with its details. For example, Dr. Haskell was

familiar with the work of the TNT institute, and even wrote a 1987 IEEE editorial that

discussed a paper by Dr. Girod that referred to the Micke Thesis. (See, e.g., DX ISU,

Trial Tr. 126:7-22.) Having determined that the Micke Thesis does not render the

patent obvious in combination with other references, the Court concludes that these

circumstances would not provide clear and convincing evidence of intent to deceive.

In summary, the Court adopts the jury’s recommendation and concludes that Microsoft

did not prove its defense of inequitable conduct by clear and convincing evidence.16

2. Laches

To establish laches, a defendant must prove by a preponderance of the evidence

that: (1) “the plaintiff delayed filing suit for an unreasonable and inexcusable length

of time from the time the plaintiff knew or reasonably should have known of its claim

against the defendant,” and (2) “the delay operated to the prejudice or injury of the

defendant.” A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1032

(Fed. Cir. 1992) (en banc). If successful, the laches defense bars pre-suit damages. Id.

at 1028. 

Courts also consider and weigh any excuse offered for a delay, such as other

litigation and negotiations with the accused. Id. at 1033. Where the plaintiff delays

more than six years, a presumption of laches arises. Id. at 1034-36. This presumption

shifts only the burden of production, not the ultimate burden of persuasion. Id. at

1037-39.

Material prejudice may be economic or evidentiary. Id. at 1033. Evidentiary

prejudice includes the “inability to present a full and fair defense on the merits” for

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17Lucent was the original plaintiff asserting the ‘226 patent in this case. Lucent only created

MPT and transferred the patent to MPT after the start of this litigation.

18These cases were eventually consolidated, and a portion of the litigation was severed to create

the present case. (See Doc. No. 1.)

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reasons such as loss of records and fading memories. Id. Economic prejudice normally

requires more than the damages attributable to a finding of infringement liability,

though a patentee may not wait silently, watching damages escalate when the infringer

could have easily switched to a noninfringing product. Id. Courts look for a change

in the alleged infringer’s economic position during the delay. Id.

Laches is an equitable judgment made by the trial court “in light of all the

circumstances.” Id. at 1036. The Court may decline to apply the laches defense, even

where the defendant establishes the laches factors by proof or presumption. Id.

The evidence showed that for several years leading up to the start of the

litigation underlying this case, beginning around 1998 through 2002 and 2003, Lucent

engaged in efforts to sell a license for the ‘226 to computer manufacturers Gateway and

Dell.17 Eventually, Lucent sued both companies for infringement, initiating the

lawsuits underlying the present case. (See, e.g., 02-CV-2060 (initially suit against

Gateway, transferred from E.D. Va. case 02-CV-389), 03-CV-1108 (initial suit against

Dell, transferred from D. Del. case 03-CV-205).)18 Microsoft then joined as an

intervener, seeking a declaratory judgment that it did not infringe. (See, e.g., Intervener

Microsoft’s Answer and Counterclaims filed March 18, 2003, Case No. 02-CV-2060,

Doc. No. 27.) Under the circumstances of this case, the Court concludes that any delay

was reasonable or excusable since Lucent attempted to seek compensation for its patent

through the computer manufacturers, not Microsoft, and Microsoft entered the dispute

voluntarily. 

Microsoft argues that the six year presumption should apply because it

announced its plans to implement MPEG-1 as early as 1995, more than six years before

the start of this litigation. At best, however, this merely shifted the burden of

production, and Dell came forward with specific evidence to explain any delay. The

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19Having granted a renewed motion for JMOL, Rule 50(c)(1) requires the Court to

conditionally rule on any motion for new trial in the event the judgment is later vacated or reversed.

Fed. R. Civ. P. 50(c)(1). Exercising its discretion in light of all the circumstances of this litigation,

the Court conditionally denies any motion for new trial on this issue, subject to any future instruction

from the appellate court. See Fed. R. Civ. P. 50(c)(2).

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burden of persuasion remains with Microsoft on this issue. A.C. Aukerman Co., 960

F.2d at 1037-39.

In summary, the Court does not adopt the jury’s recommendation. Microsoft did

not prove the laches factors by a preponderance of the evidence, and even if it had, the

Court would exercise its discretion and decline to apply laches in light of all the

circumstances of this case.

D. Summary

The Court GRANTS Lucent’s motion for judgment as a matter of law that the

‘226 patent is not invalid for obviousness.19 The Court DENIES all other motions for

judgment as a matter of law or new trial regarding the ‘226 patent. As to the ‘226

patent, the Court follows the jury’s advisory verdicts in part. The Court finds no laches

and no inequitable conduct as to the ‘226 patent.

IV. Agulnick ‘295

A. Infringement

1. Whether the Product Compares a Tap to a Predefined Shape

The fourth means-plus-function element of claim 1 requires a “means coupled

to said computer for recognizing a plurality of said gestures, said recognizing means

including means for comparing each said gesture to at least one predefined share.” The

parties dispute whether Windows XP Tablet PC (“Tablet PC”) devices recognize a tap

gesture by comparing it to a predefined shape. Lucent introduced evidence that, in

order to identify a tap, the Tablet PC software examines a series of points representing

the stylus location and determines whether they fall within a small bounded area, and

whether they are below a certain length. A gesture is considered a “tap” when it falls

within both criteria. (See, e.g., Trial Tr. VI 260:1-19.) Defendants’ expert offered a

similar explanation. (See, e.g., Trial Tr. XIII 244:3-12.) Lucent also introduced the

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28 20Though Dell joined in most aspects of Microsoft’s motion regarding the ‘295 patent, it did

not join in this portion. (See Doc. No. 792.) Lucent also accused Dell of direct infringement of the

‘295 patent.

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source code analyzed by its expert to reach this conclusion, and Microsoft documents

list a tap among various “gestures” recognized by the Tablet PC software. (See PX

964, 965, 5544, 6326.) 

Defendants argue that this bounding box method merely examines the size of

stylus movements, and thus does not involve “comparing . . . to at least one predefined

shape.” They also argue that there is no comparison of “shape” because the software

will recognize any configuration of points that fits within the given space and length

requirements. The Court did not further construe “predefined shape,” and the jury

could have reasonably applied common sense to the evidence and concluded that the

Tablet PC tap recognition procedure meets this limitation. The procedures include

comparison of a gesture to a small box. Lucent’s expert also opined that, as whole, the

procedure compares the gesture to a tap, or small dot, which the jury could reasonably

conclude is a “predefined shape” within the meaning of the claim. (See, e.g., Trial Tr.

VI 260:3-19.)

2. Substantial Evidence of Indirect Infringement

Microsoft argues that, as a matter of law, the evidence does not support a finding

of indirect infringement.20 This question concerns the Court’s previous determination

that products with front-mounted digitizers did not infringe the ‘295 patent. A pen

position digitizer is part of a typical tablet PC’s system for detecting the stylus location.

(See, e.g., ‘295 Fig. 2, 6:20-22.) The Court previously granted summary judgment of

no infringement as to certain products with a front-mounted digitizer. (See Order

Granting Summ. Adjudication No Infringement ‘295 Patent, Case No. 02-CV-2060,

Doc. No. 1226.) The Court reasoned that with the digitizer mounted in front, the stylus

can never contact the “screen” as construed by the Court, thus preventing any

infringement of the means-plus-function element “for detecting a stroke of the stylus

tip in contact with the screen.” (Id. at 4-7.)

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Microsoft argues that there can be no inducement because it lacked the intent to

induce computer manufacturers to use its Tablet PC software in systems using rearmounted digitizers. As discussed above regarding the ‘356 patent, “[t]he plaintiff has

the burden of showing that the alleged infringer’s actions induced infringing acts and

that he knew or should have known his actions would induce actual infringements.”

DSU Medical Corp., 471 F.3d at 1306 (quoting Manville Sales Corp. v. Paramount

Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990)). Lucent introduced evidence sufficient

for the jury to reasonably conclude that Microsoft induced infringement of the ‘295

patent. Lucent introduced substantial evidence that Microsoft encouraged hardware

manufacturers to use rear-mounted digitizersthrough technical specifications and other

documents. (See, e.g.,PX749 (containing Microsoft Tablet PC hardware specification,

including digitizer capabilities).) Lucent’s expert testified that, during the relevant time

period, the only commercially available digitizers meeting Microsoft’s requirements

were rear-mounted. (See, e.g., Trial Tr. VII 90:11-93:10.) Microsoft asserted the

existence of front-mounted digitizer technology when the patent issued, but the jury

could have reasonably accepted the position of Lucent’s expert, who stated that such

technology was not commercially available during the relevant time frame. (See Trial

Tr. VII 60:9-65:20.) Based on the evidence, the jury could have reasonably concluded

that Microsoft encouraged use of its software in Tablet PCs and knew or should have

known that it would be used in an infringing manner on Tablet PCs with rear-mounted

digitizers.

Similarly, Microsoft challenges any finding of contributory infringement on the

ground that its product was not “especially made” or “especially adapted” for

infringement. See 35 U.S.C. § 271(c). Lucent introduced substantial evidence

sufficient for the jury to conclude that the product was especially made or adapted for

use with rear-mounted digitizers since they were the only commercially available

option. Furthermore, Lucent introduced substantial evidence that the accused gestures

were necessary to normal operation of a Tablet PC, sufficient for the jury to conclude

that there were not substantial non-infringing uses. (See, e.g., PX 749 (Microsoft

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product documentation describing use of a Tablet PC running Windows software).)

The Court also concludes that the infringement finding was not against the clear weight

of the evidence.

3. The Means-Plus-Function Instructions

Defendants challenge the Court’s decision to instruct the jury on the doctrine of

equivalents concerning after-arising technologyin the contextof ameans-plus-function

infringement. The Court rejects Defendants argument that the Court’s April 30, 2007,

ruling on a motion in limine is a final order not subject to modification. (See Order on

Mots. Limine for Group 4 Trial, Case No. 02-CV-2060, Doc. No. 1737 at 3.) On May

11, 2007, the Court vacated the original trial date. (Case No. 02-CV-2060, Doc. No.

1780.) The remaining patents from 02-CV-2060 were consolidated for a single trial

date in February, 2008, and issues related to those patents were severed to create this

case. (See Doc. No.1; Case No. 02-CV-2060, Doc. No. 1876.) On February 8, 2008,

the Court held a new hearing on motions in limine for the consolidated trial. (See Doc.

No. 496.)

The Court has the authority to depart from its ruling on a motion in limine,

depending on the circumstances of trial. The Court advised the parties to object

contemporaneously at trial regarding any ruling, as the Court would then have the full

context of the proffered evidence. Defendants argued that certain aspects of the Tablet

PCs were after-developed technology and therefore could not meet the means-plusfunction elements under a literal infringement theory. See Chiuminatta Concrete

Concepts, Inc., 145 F.3d at 1310-11 (Fed. Cir. 1998). In light of Defendants’

argument, and all the circumstances of this case, the Court permitted Lucent to respond

by arguing that the after-developed technology may satisfy a means-plus-function

element under the doctrine of equivalents. See, e.g., Al-Site Corp., 174 F.3d at 1320

n.2 (Fed. Cir. 1999) (“Patent policy supports application of the doctrine of equivalents

to a claim element expressed in means-plus-function form in the case of ‘after-arising’

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21Microsoft’s current motion does not challenge the Court’s jury instruction on the doctrine of

equivalents.

22Microsoft raised this objection contemporaneously, and the Court allowed a standing

objection on the Rule 26 issue. (See Trial Tr. VI 257:6-7, 258:5-7.)

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technology . . . .”). The Court instructed the jury accordingly.21 The Court declines to

grant judgment as a matter of law or a new trial based on its decision to allow the jury

to consider the doctrine of equivalents.

4. Evidentiary Objection Regarding Expert Testimony

Defendants erroneously argue that Lucent’s expert, Mr. Ward, testified about

source code analysis not contained in his expert report, particularly how Tablet PC

software recognizes tap gestures. (Trial Tr. VI 257:1-261:25.)22 Mr. Ward’s expert

report of March 31, 2006, however, includes a discussion of specific Tablet PC source

code, identified by filename. (See 3/31/2006 Ward Expert Report at ¶ 157.)

Defendants were free to challenge his opinion on cross examination and introduce

statements from his deposition that he did not analyze the “size and exact criteria” in

certain source code when he prepared his report. (See Ward Depo. Tr., 6/15/06,

10:7-9.) Mr. Ward made this statement, however, in a context primarily involving

Pocket PC, not Tablet PC software. (See id. 7:19-10:19.) In any case, the Court favors

a determination on the merits and continues to exercise its discretion to allow the

testimony. See Childress v. Darby Lumber, Inc., 357 F.3d 1000, 1010 (9th Cir. 2004)

(reviewing denial of motion to exclude expert opinion based on violation of Fed. R.

Civ. P. 26(a)(2)(B) for abuse of discretion).

5. The Court’s Instructions on Indirect Infringement

For the ‘295 patent, Defendants incorporate by reference the same challenges to

the sufficiency of the Court’s jury instructions raised with the ‘356 patent. Defendants

again point to Hodosh, 833 F.2d at 1578, for the proposition that the Court’s instruction

must focus the jury on “the thing sold.” As with the ‘356 patent, extending Hodosh to

the present circumstances would produce the opposite result sought by that opinion.

Rather than ensuring patent protection, Defendants’ reading would allow an infringer

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to avoid liability merely by packaging an infringing component with a noninfringing

component. See id. at 1578 (“The drafters of the section explicitly recognized that

without protection from contributory infringers, owners of method patents, like the

owner here, would have no effective protection.”); Philips Elecs. N. Am. Corp., 411 F.

Supp. 2d at 476 (D. Del. 2006) (“[I]t would indeed violate the ‘logic of the patent laws’

to allow a potential infringer to avoid liability for contributory infringement by simply

adding a noninfringing function to a device that practices a patented method.”).

Defendants also incorporate their argument that the Court provided insufficient

instructions on the intent required for inducement. The Court properly instructed the

jury that it is sufficient, in relevant part, that the alleged infringer “knew or should have

known his actions would induce actual infringements.” DSU Medical Corp., 471 F.3d

at 1306 (quoting Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed.

Cir. 1990)). In summary, the Court denies Defendants’ request for a new trial based

on the instructions for indirect infringement.

6. Claim Construction

Defendants seek judgment as a matter of law or a new trial based on alleged

errors in the Court’s claim construction. First, Defendants object to the Court’s

definition of the corresponding structure for the “means coupled to said computer for

recognizing a plurality of said gestures, said recognizing means including means for

comparing each said gesture to at least one predefined shape.” The Court identified the

corresponding structure as a processor running one of three handwriting recognition

algorithms.

“Structure supporting a means-plus-function claim . . . must appear in the

specification.” Atmel Corp. v. Info. Storage Devices, Inc., 198 F.3d 1374, 1381 (Fed.

Cir. 1999.) This determination “must be made in light of the knowledge of one skilled

in the art.” Id. at 1380. “[D]isclosure of structure corresponding to a

means-plus-function limitation may be implicit in the written description if it would

have been clear to those skilled in the art what structure must perform the function

recited in the means-plus-function limitation.” Id. (quoting with approval PTO

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Supplemental Examiner Guidelines on Applying 35 U.S.C. 112 ¶ 6, 58 Fed. Reg. 443,

444 & nn. 12-13 (1999)). “[K]nowledge of one skilled in the art can be called upon to

flesh out a particular structural reference . . . .” Creo Prods., Inc. v. Presstek, Inc., 305

F.3d 1337, 1347 (Fed. Cir. 2002). Citing the title of an article may be sufficient to

disclose structure, where it would provide sufficient indication of the structure to one

skilled in the art. See Atmel Corp., 198 F.3d at 1382.

The Court concludes that one skilled in the art would have recognized the

relevant algorithms as part of the structure disclosed by the ‘295 patent. The external

sources incorporated by the claim construction, an IEEE article and a related patent, are

both expressly cited in the patent and indicate the nature of the information contained

in them. (See ‘295 4:41-46, 5:1-6.) For example, the IEEE article is entitled

“Automatic Recognition of Handprinted Characters—The State of the Art.”

Furthermore, the element in question is only one part of a claim with several other

means-plus-function elements, each with disclosed structure, and it was reasonable for

the patentee to rely on the knowledge of one skilled in the art in describing this aspect

of the invention. See, e.g., Atmel Corp. 198 F.3d at 1382 (“The requirement of

specific structure in § 112, ¶ 6 . . . does not raise the specter of an unending disclosure

of what everyone in the field knows . . . .”).

Defendants also challenge the Court’s construction of the “second detecting

means” and “means . . . for defining termination.” They argue that the Court’s

construction should have required proximity detection to terminate a gesture and that

Lucent failed to present evidence on this issue. This does not warrant judgment as a

matter of law or a new trial. First, the Court concludes that its construction of claim

1 appropriately omitted proximity detection. Dependent claim 3 adds proximity

detection as a further limitation, and including it in claim 1 would render claim 3

superfluous. Courts presume that dependent claims are narrower in scope than the

claims on which they depend. See, e.g., Regents of Univ. of Cal. v. Dakocytomation

Cal., Inc., 517 F.3d 1364, 1375 (Fed. Cir. 2008). Defendants did not overcome this

presumption. Cf. id. at 1375-76 (holding that evidence in prosecution history overcame

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23Dell does not join in this aspect of Microsoft’s motion, though it does join in Microsoft’s

argument that the damages for the ‘295 patent violate the entire market value rule.

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the presumption). Furthermore, Lucent did introduce evidence of proximity detection

in the accused products. (See, e.g., PX 749 (setting out Microsoft’s Tablet PC

hardware requirements, including proximity detection).) 

B. Damages

Microsoft argues that it should receive a new trial or remittitur of the jury’s

allegedly speculative lump-sum award of $10.35 million.23 A jury may arrive at a

royalty rate or lump-sum different than those offered by the parties’ experts, if

supported by substantial evidence. See, e.g., Fuji Photo Film Co., 394 F.3d at 1378.

In this case, substantial evidence supports the jury’s award. For example, Microsoft

introduced lump-sum agreements licensing patents for similar technologies at $10

million and $30 million. (See DX BCH, BCI; Trial Tr. XVI 186:3-187:23, 205:21-

206:20.) The $30 million license covered only two graphical user interface patents.

(Trial Tr. XVI 205:21-206:20.) Lucent also introduced evidence supporting its 1%

royalty theory, including its expert testimony and sample license agreements. (See,

e.g., PX 5137, 5139-41;Trial Tr. VIII 200:18-201:3, 202:2-14, 203:10-20, IX 15:1-21.)

In addition, Lucent introduced substantial evidence, in the form of expert testimony and

marketing materials, sufficient for the jury to reasonably conclude that the ‘295 patent

is important to the success of stylus based computing and customer demand for Tablet

PCs. (See, e.g., PX 5206A, Trial Tr. VI 186:16-187:19, 237:18-238:11 (technical

expert opining that patent improved capability and flexibility of interface across

different applications and contexts); IX 33:12-44:19 (damages expert discussing

importance of patented feature in Tablet PCs).)

Defendants also challenge the lump-sum royalty awards against Microsoft and

Dell as improper applications of the entire market value rule. First, the Court

concludes that the lump-sum damage awards do not necessarily reflect an entire market

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24While the jury returned a verdict of $51,000 against Dell, as advocated by Lucent, it did not

do so using a running royalty theory.

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value calculation. The jury did not adopt either expert’s recommendation,24 and the

jury was free to consider a wide variety of factors in the evidence, not just the actual

sales revenue. Nevertheless, even if the entire market value rule applies, the Court

determines that substantial evidence supports Lucent’s theory. Lucent introduced

substantial evidence tying the patented technology to the commercial success of Tablet

PCs. (See, e.g., PX 5206A, Trial Tr. VI 186:16-187:19, 237:18-238:11; IX 33:12-

44:19.) Furthermore, the Court concludes that the damages awarded against Microsoft

and Dell for the ‘295 patent were not against the clear weight of the evidence.

C. Summary

As to the ‘295 patent, the Court DENIES all motions for judgment as a matter

of law and all motions for a new trial or remittitur.

V. Fleming ‘759

A. Pre-Suit Notice

Lucent challenges the jury’s finding that it failed to prove by a preponderance

of the evidence that it gave pre-suit notice to Dell. See Dunlap v. Schofield, 152 U.S.

244, 248 (1894); Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1111-12 (Fed. Cir. 1996)

(burden of showing compliance with section 287(a) is on patentee). The ‘759 patent

expired before this litigation began. Under 35 U.S.C. § 287(a), a party required to give

pre-suit notice in order to recover damages must provide “affirmative communication

of a specific charge of infringement by a specific accused product or device.” Amsted

Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994). This

inquiry focuses on the actions of the patentee, not the subjective belief of the accused

infringer. Gart v. Logitech, Inc., 254 F.3d 1334, 1346 (Fed. Cir. 2001). The

communication must provide “sufficient specificity regarding [the patentee’s] belief

that the recipient may be an infringer.” Id.

Lucent presented evidence of an October 20, 1998 meeting that allegedly

provided notice of infringement for the ‘759 patent. (See, e.g., Trial Tr. VII

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25Though Dell disputes the characterization of these meetings and the materialspresented there,

it does not dispute that they took place.

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133:24-135:6, VIII 32:1-33:3, XIII 136:15-142:14, PX 1875-76, PX 351A-B.) Lucent

also offered evidence of a meeting on December 16, 1998, which included a video

demonstration.25 (See, e.g., PX 5057 (e-mail confirming meeting); DX EOK (video

demonstration).) The video begins by showing a Dell Inspiron 3000 M223XT installed

with Windows. Lucent then ran a demonstration on the computer, purportedly

demonstrating the three modes of access involved in the ‘759 patent. 

Had the Court been the fact finder, it would have concluded that Lucent gave

sufficient notice. This was a jury question, however, and there is substantial evidence

to support the verdict. For example, given the passage of time, the jury may have

reasonably doubted the accuracy of Lucent’s witnesses. The jury may have also

accepted Dell’s theory that the video demonstration did not implicate Windows. (See,

e.g., Trial Tr. XIII 187:18-188:20 (Dell’s witness characterizing the video

demonstration as being purely based in DOS, an older operating system).)

The subsequent indemnification letter sent from Dell to Microsoft would have

persuaded the Court, as a fact finder. Nevertheless, it does not require the Court to

alter the jury’s finding. (See, e.g., PX 355 (indemnification notice of January 12,

1999).) Dell sent the letter to inform Microsoft that Lucent had made a “charge of

infringement” regarding seven patents, including ‘759, and that these accusations

“potentially impact products that we have purchased from Microsoft, including

Windows 98.” (Id.) The letter may provide evidence of actual notice by the patentee,

but this was a matter for the jury. The jury could have reasonably concluded that

although Microsoft’s letter characterized the meeting as presenting a “charge of

infringement,” the actual notice given did not meet the legal standard, which does not

depend on the accused’s subjective belief. Gart, 254 F.3d at 1346.

The Court also concludes that the jury’s finding of no pre-suit notice was not

against the clear weight of the evidence. Though the Court would have weighed the

evidence differently, the jury’s determination does not warrant a new trial.

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B. Infringement

Lucent seeks judgment as a matter of law or a new trial that Dell infringed claim

1 of the ‘759 patent. First, the Court notes that recovery may be unavailable since

Lucent did not establish pre-suit notice, and the patent expired before it brought this

action against Dell. Furthermore, the Court concludes that judgment as a matter of law

is not required under Lucent’s infringement theories. For similar reasons, the Court

also concludes that the jury’s finding of no infringement is not against the clear weight

of the evidence.

1. Evidence of Noninfringement

Substantial evidence supports a finding that the structures related to GDI differ

substantially from the “processing means” element of claim 1. “The proper test is

whether the differences between the structure in the accused device and any disclosed

in the specification are insubstantial.” Chiuminatta Concrete Concepts, Inc., 145 F.3d

at 1309. The structure for the processing means element includes a quantitative

algorithm that sets to color mode based on the number of operands sent to the mode

selection function. (See ‘759 Fig. 4.) In contrast, Dell introduced substantial evidence

that the accused portions of GDI use a qualitative algorithm, meaning one in which the

number of operands is constant and the mode selection, if any, depends on the values

passed through the operands. (See, e.g., Trial Tr. XI 99:5-105:20 (testimony of Dell’s

expert, Dr. Wedig, on this issue);see also Trial Tr. IV 167:3-11 (testimony of Lucent’s

expert Mr. Richter, also stating that accused algorithm is qualitative, not quantitative).)

The jury could reasonably conclude that these differences were substantial, and that the

accused structure was not an equivalent. Lucent cites to deposition testimony from Dr.

Wedig allegedly conceding that qualitative and quantitative algorithms are equivalent.

(See Trial Tr. XVII 200:13-17 (acknowledging that “qualitative commands for

selecting modes of access were known prior to [the ‘759 patent].”) The jury could

reasonably interpret Dr. Wedig’s statement as merely conceding that qualitative

commands were known prior the patent, not that the differences were insubstantial.

(See id.)

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26Dell also argued, for example, that: (1) its products do not include a processor programmed

to perform an algorithm for selecting a mode of access, (2) the accused products are not “responsive

to a predetermined command and data sequence,” and (3) the accused products employ after-developed

technology.

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Dell also introduced substantial evidence that the accused structure could not

perform the function of the processing means element. Dr. Wedig offered his analysis

that the commands identified by Mr. Richter merely involved setting specific colors,

not selecting modes of color access. (See, e.g., Trial Tr. XI 88:13-24, 89:5-94:9,

95:4-10; see also PX 3901 (Microsoft GDI documentation).) The jury could have

reasonably accepted this analysis and concluded that the accused structure was not able

to perform the function of selecting a mode of access. The Court declines to reach

Dell’s other arguments, having concluded that there are adequate grounds to deny

Lucent’s motion for judgment as a matter of law or new trial.26

2. Requests for Further Instructions

The Court denies Lucent’s request for a new trial based on argument offered by

Dell concerning the structure of the processing means elements. In construing the

structure, the Court’s expressly excluded text related to setting colors, as opposed to

selecting modes of access. The disputed statements are consistent with the position

that the claim construction only excluded structures when they perform color-setting

alone, not that the Court excluded structure performing both functions. (See, e.g., Trial

Tr. XI 90:16-19, 91:11-14, 94:23-95:3 (excerpts from Dr. Wedig’s direct

examination).) Lucent did not raise contemporaneous objections, and even assuming

that its objections are preserved, the Court concludes that Lucent had an adequate

opportunity to respond to Dell’s arguments and explain its infringement theory to the

jury.

Lucent also seeks a new trial based on the Court’s infringement instructions.

Lucent argues that Dell misled the jury by suggesting that infringement of claim 1

required that the “predetermined command and data sequences” must have actually

been used, and that the Court should have issued further instructions explaining why

this is not required. (See, e.g., Trial Tr. XI 155:13-18, 156:4-10, 156:25-157:11

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(excerpts from Dr. Wedig’s testimony arguing that Lucent failed to show that the

sequences are actually used).) A new trial is not needed. First, the Court properly

instructed the jury that infringement is not limited to using the invention and may

include “importing, making, using, offering to sell, or selling.” (Jury Instruction 16,

Doc. No. 735.) The Court also explained the role of the function and structure in

means-plus-function elements. (Jury Instruction 19, Doc. No. 735.) Furthermore,

Lucent had adequate opportunity to respond to Dell’s arguments and explain its

infringement theory. Finally, there were ample grounds for the jury to enter a finding

a no infringement, independent of this issue.

C. Equitable Defenses

The jury entered advisory verdicts of no laches and no inequitable conduct with

respect to Lucent’s claims for the ‘759 patent. Dell did not challenge these conclusions

in its post-trial briefing, and neither party submitted proposed findings of fact or

conclusions of law under the briefing schedule provided by the Court. The ultimate

determination of these issues rests with the Court. See, e.g., Huser, 513 F.2d at 1299.

As neither party has disputed the advisory verdicts at this stage of the proceedings, and

the Court has reached the same conclusions on the trial record without deference to the

jury on these questions, the Court adopts the advisory verdicts in their entirety as they

relate to the ‘759 patent.

D. Summary

As to the ‘759 patent, the Court DENIES all motions for judgment as a matter

of law and all motions for a new trial. The Court follows the jury’s advisory verdicts

as they relate to the ‘759 patent. The Court finds no laches and no inequitable conduct

as to the ‘759 patent.

/ / /

/ / /

/ / /

/ / /

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Conclusion

I. Matters Tried to the Bench

For the reasons set forth above, the Court follows the jury’s advisory verdicts on

equitable issues in part. The Court finds no laches for either the ‘226 or ‘759 patents.

Furthermore, the Court finds no inequitable conduct for either the ‘226 or ‘759 patents.

II. Motions for JMOL, New Trial, or Remittitur

As to the ‘356, ‘295, and ‘759 patents, the Court DENIES all motions for

judgment as a matter of law, new trial, or remittitur. As to the ‘226 patent, the Court

GRANTS Lucent’s motion for judgment as a matter of law that the ‘226 is not invalid

for obviousness. The Court DENIES all other motions for judgment as a matter of law

or new trial regarding the ‘226 patent.

III. Closing Remarks

The Court takes this opportunity to compliment all attorneys involved for their

excellent work in these proceedings. Counsel for all parties worked diligently to

accommodate the Court’s schedule, prepared their materials thoroughly, and conducted

themselves in a professional and courteous manner that does credit to their profession.

IT IS SO ORDERED.

DATED: June 19, 2008

MARILYN L. HUFF, District Judge

UNITED STATES DISTRICT COURT

COPIES TO:

All parties of record.

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