United States Court of Appeals for the Federal Circuit 

2007-1546, -1580 

LUCENT TECHNOLOGIES, INC., 

 Plaintiff/Counterclaim Defendant- 

 Appellant, 

and 

LUCENT TECHNOLOGIES GUARDIAN I LLC, 

 Counterclaim Defendant, 

and 

MULTIMEDIA PATENT TRUST, 

 Plaintiff/Counterclaim Defendant, 

v. 

GATEWAY, INC., GATEWAY COUNTRY STORES LLC, 

GATEWAY COMPANIES, INC., COWABUNGA ENTERPRISES, INC., 

and GATEWAY MANUFACTURING LLC, 

 Defendants/Counterclaimants, 

and 

DELL INC., 

 Defendant, 

and 

MICROSOFT CORPORATION, 

 Defendant/Counterclaimant- 

 Cross Appellant. 

Richard G. Taranto, Farr & Taranto, of Washington, DC, argued for 

plaintiff/counterclaim defendant-appellant. Of counsel on the brief were John M. 

Desmarais, Robert A. Appleby, Paul A. Bondor, and Michael P. Stadnick, Kirkland & Ellis 

LLP, of New York, New York. 

John E. Gartman, Fish & Richardson P.C., of San Diego, California, argued for 

defendant/counterclaimant-cross appellant. With him on the brief were John W. 
Thornburgh, Matthew C. Bernstein, and Justin M. Barnes, and John A. Dragseth, of 

Minneapolis, Minnesota. Of counsel on the brief was Stephen P. McGrath, Microsoft 

Corporation, of Redmond, Washington. 

Appealed from: United States District Court for the Southern District of California 

Senior Judge Rudi M. Brewster 
United States Court of Appeals for the Federal Circuit 

2007-1546, -1580 

LUCENT TECHNOLOGIES, INC., 

 Plaintiff/Counterclaim Defendant- 

 Appellant, 

and 

LUCENT TECHNOLOGIES GUARDIAN I LLC, 

 Counterclaim Defendant, 

and 

MULTIMEDIA PATENT TRUST, 

 Plaintiff/Counterclaim Defendant, 

v. 

GATEWAY, INC., GATEWAY COUNTRY STORES LLC, 

GATEWAY COMPANIES, INC., COWABUNGA ENTERPRISES, INC., 

and GATEWAY MANUFACTURING LLC, 

 Defendants/Counterclaimants, 

and 

DELL INC., 

 Defendant, 

and 

MICROSOFT CORPORATION, 

 Defendants/Counterclaimant- 

 Cross Appellant. 

Appeal from the United States District Court for the Southern District of California in 

consolidated case nos. 02-CV-2060, 03-CV-0699, and 03-CV-1108, Senior Judge Rudi 

M. Brewster. 
 __________________________ 

DECIDED: September 25, 2008 

 __________________________ 

Before LOURIE, BRYSON and PROST, Circuit Judges. 

PROST, Circuit Judge. 

 This case involves alleged infringement by Gateway, Inc. (“Gateway”), Microsoft 

Corporation (“Microsoft”), and Dell Inc. (“Dell”) of two patents owned by Lucent 

Technologies, Inc. (“Lucent”). After a jury verdict of infringement and a damages award 

of $1,538,056,702, the district court granted judgment as a matter of law (“JMOL”), and 

alternatively a new trial, on infringement and damages. Lucent Techs., Inc. v. Gateway, 

Inc., 509 F. Supp. 2d 912 (S.D. Cal. 2007) (“Lucent”). For the reasons set forth below, 

we affirm the court’s grant of JMOL based on lack of standing for one patent and based 

on non-infringement for the other patent. We need not decide the damages issues. 

I 

A 

The patents at issue in this appeal are directed to methods of compressing digital 

audio files to reduce storage space without compromising the quality of sound produced 

from the files. The methods involve using the frequencies of the audio signals to 

generate frequency coefficients, and then using certain thresholds—which dictate what 

data can be ignored and how finely to encode the data—to assign numbers to the audio 

signals, i.e., to “quantize” the frequency information. For example, an “absolute hearing 

threshold” is an estimate of the quietest sounds a person can hear. A “masking 

threshold” reflects what sounds are inaudible when other sounds are present. 

2007-1546, -1580 2
James Johnston and Joseph Hall are the listed inventors on the earliest 

application, Application No. 07/292,598 (“the ’598 application”), which was filed in 1988 

while they were working at AT&T Bell Laboratories (“AT&T”).1 They are likewise the 

inventors of U.S. Patent No. 5,341,457 (“the ’457 patent”), which was filed in 1993 and 

is a continuation, through two other applications, of the ’598 application. The claims of 

the ’457 patent are directed to a method of compressing digital audio files wherein 

“tonality values” are used in generating masking thresholds for quantization. Claim 1 

recites: 

1. A method of processing an ordered time sequence of audio signals 

partitioned into a set of ordered blocks, each said block having a discrete 

frequency spectrum comprising a first set of frequency coefficients, the 

method comprising, for each of said blocks, the steps of: 

(a) grouping said first set of frequency coefficients into at least one 

group, each group comprising at least one frequency coefficient; 

(b) generating at least one tonality value, each group having an 

associated tonality value, said at least one tonality value reflecting 

the degree to which said time sequence of audio signals comprises 

tone-like quality; 

(c) generating at least one noise masking threshold, each said at least 

one noise masking threshold being based upon at least a portion of 

said at least one tonality value; and 

(d) quantizing at least one frequency coefficient in said at least one 

group, said quantizing based upon said at least one noise masking 

threshold. 

(Emphases added). Claims 5 further limits the method to one wherein each block is 

representable by a number of bits. Claim 10 is directed to a storage medium 

“manufactured in accordance with” the method of claim 1. 

U.S. Patent No. 5,627,938 (“the ’938 patent”), which was filed in 1994, claims 

priority to an application filed in 1992. Johnston is the sole inventor of the ’938 patent. 

Three of the claims of the ’938 patent are directed to a method that, instead of using 

 1

 AT&T Bell Laboratories is now Lucent Technologies, Inc. 

2007-1546, -1580 3
tonality values in quantizing, uses a masking threshold and an absolute hearing 

threshold, and an iterative process for achieving a required bit rate. The fourth claim is 

directed to a decoder for decoding a set of frequency coefficients. The claims are as 

follows: 

1. A method of coding an audio signal comprising: 

(a) converting a time domain representation of the audio signal into a 

frequency domain representation of the audio signal, the frequency 

domain representation comprising a set of frequency coefficients; 

(b) calculating a masking threshold based upon the set of frequency 

coefficients; 

(c) using a rate loop processor in an iterative fashion to determine a 

set of quantization step size coefficients for use in encoding the set 

of frequency coefficients, said set of quantization step size 

coefficients determined by using the masking threshold and an 

absolute hearing threshold; and 

(d) coding the set of frequency coefficients based upon the set of 

quantization step size coefficients. 

2. The method of claim 1 wherein the set of frequency coefficients are 

MDCT [modified discrete cosine transform] coefficients. 

3. The method of claim 1 wherein the using the rate loop processor in 

the iterative fashion is discontinued when a cost, measured by the number 

of bits necessary to code the set of frequency coefficients, is within a 

predetermined range. 

4. A decoder for decoding a set of frequency coefficients representing 

an audio signal, the decoder comprising: 

(a) means for receiving the set of coefficients, the set of frequency 

coefficients having been encoded by: 

(1) converting a time domain representation of the audio signal into 

a frequency domain representation of the audio signal 

comprising the set of frequency coefficients; 

(2) calculating a masking threshold based upon the set of 

frequency coefficients; 

(3) using a rate loop processor in an iterative fashion to determine a 

set of quantization step size coefficients needed to encode the 

set of frequency coefficients, said set of quantization step size 

coefficients determined by using the masking threshold and an 

absolute hearing threshold; and 

(4) coding the set of frequency coefficients based upon the set of 

quantization step size coefficients; and 

2007-1546, -1580 4
(b) means for converting the set of coefficients to a time domain signal. 

(Emphases added). 

In April 2006, following a reissue proceeding, the ’938 patent was surrendered in 

favor of U.S. Patent No. RE 39,080 (“the ’080 patent”). Notably, claim 2 was canceled 

during the reissue proceeding. In addition, the priority claim was amended such that the 

’080 patent claims priority, through several applications, as a continuation-in-part (“CIP”) 

to the ’598 application. 

B 

 In 1988, AT&T entered into a Joint Development Agreement (“JDA”) with a 

German company, Fraunhofer Gesellschaft (“Fraunhofer”), which was also working on 

digital compression technologies. Under the JDA, Fraunhofer’s scientist, Karlheinz 

Brandenburg, went to work with Johnston at AT&T beginning in April 1989. The JDA 

preserved “Existing Technology,” technology developed by AT&T or by Fraunhofer 

before April 1989, to each company. The JDA defined Existing Technology as: 

Existing Technology is the results of work relating to Digital Audio Coding 

needed to cover ISO work done by AT&T’s Information Principles 

Research Laboratory and FhG [Fraunhofer] at its AIS (including the work 

of Mr. Brandenburg and his colleagues at the University of Erlangen, 

cooperating with FhG/AIS) before the beginning of the Period. 

Existing AT&T Technology is described in Attachment A (papers 

describing technical information) and Attachment B (patents and patent 

applications). 

Existing FhG Technology is described in Attachment C (papers describing 

technical information) and Attachment D (patents and patent applications). 

2007-1546, -1580 5
(Emphasis added).2

 In contrast, “New Work,” technology developed after April 1989, 

was to be jointly owned—and each company had the nonexclusive right to make use of, 

and to grant nonexclusive licenses to others to use, the technology. Specifically, the 

JDA stated: 

All New Work is treated as joint work. The intellectual property rights to 

that work will be jointly owned by AT&T and FhG [Fraunhofer]. Each party 

has the nonexclusive right to make use of the results of New Work 

(including intellectual property rights), and may grant nonexclusive 

licenses to others to use the results of such New Work. 

Although the JDA was originally set to terminate on September 30, 1990, it was later 

extended indefinitely. 

 Working together in late 1989, Johnston and Brandenburg implemented and 

assisted in setting the industry standard ISO 11172-3 Audio Layer 3 (“MP3”) coding 

techniques. By 1997, Fraunhofer had written software for MP3 functionality, and 

licensed hundreds of companies to use its MP3 software and patents. Microsoft sought 

to add to its Windows Media Player the ability to play MP3 files. Thus, in 1997, 

Microsoft obtained a license from Fraunhofer for the MP3 decoder software and 

incorporated it into computers containing Windows Media Player to allow the computers 

to play MP3 files. 

In 2004, after the commencement of this litigation, Microsoft took another license 

from Fraunhofer for encoding and decoding software for use in its Windows Media 

Player 10. The software included two encoders—the “Fast” encoder and the “High 

Quality” encoder. Only the High Quality encoder uses tonality values as required by the 

 2

 ISO work refers to work performed for submission to and possible 

adoption as a standard by the International Organization for Standardization. AIS refers 

to Fraunhofer’s research group, the Arbeitsgruppe für Integrierte Schaltungen. 

2007-1546, -1580 6
’457 patent. In late 2006, Microsoft released Windows Media Player 11, which retains 

the Fast encoder, but omits the High Quality encoder. 

C 

In 2002, Lucent filed suit against Gateway for patent infringement in the United 

States District Court for the Eastern District of Virginia. The action was transferred to 

the Southern District of California. Microsoft intervened and filed a declaratory 

judgment action against Lucent. In 2003, Lucent filed suit against Dell for patent 

infringement in the District of Delaware. That case was also transferred to the Southern 

District of California and consolidated with the other cases. The patents at issue were 

divided into five groups for summary judgment and trial.3

 

 In 2004, the district court issued a claim construction order for the ’457 patent. 

Lucent Techs., Inc. v. Gateway, Inc., Nos. 02-CV-2060, 03-CV-0699, 03-CV-1108 (S.D. 

Cal. Feb. 25, 2004). A claim construction order was issued for the ’080 patent in 2006, 

following the reissue proceedings. Lucent Techs., Inc. v. Gateway, Inc., Nos. 02-CV2060, 03-CV-0699, 03-CV-1108 (S.D. Cal. Aug. 21, 2006). 

Then, in early 2007, a two-week jury trial was held. At issue was infringement 

and validity of claims 1, 5, and 10 of the ’457 patent and all claims (claims 1, 3, and 4) 

of the ’080 patent. In a Special Verdict Form, the jury was asked to answer a Special 

Question relevant to the infringement analysis with respect to the ’080 patent: 

Has Microsoft proven by a preponderance of the evidence that work was 

performed on or after April 1989 which was incorporated into any of the 

claims of the ’938 patent? 

 3

 We affirmed-in-part and vacated-in-part the district court’s grant of 

summary judgment of non-infringement for two other patents. Lucent Techs., Inc. v. 

Gateway, Inc., 525 F.3d 1200 (Fed. Cir. 2008). 

2007-1546, -1580 7
Lucent Techs., Inc. v. Gateway, Inc., Nos. 02-CV-2060, 03-CV-0699, 03-CV-1108, slip 

op. at 5 (S.D. Cal. Feb. 22, 2007). The jury answered that Microsoft had failed to prove 

that any claim of the ’938 patent incorporates work first performed on or after April 1989 

(i.e., New Work). Id. The jury found contributory and induced infringement of all 

asserted claims and rejected all invalidity defenses. Id. at 2-8. The jury awarded 

damages in the amount of $1,538,056,702 ($769,028,351 for each of the ’457 patent 

and the ’080 patent), based on a 0.5% royalty rate for the value of the entire computer 

that performed the MP3 encoding functions. Id. at 8-9. 

 The district court set aside the jury verdict, granting JMOL and, in the alternative, 

a new trial on infringement of claims 1, 5, and 10 of the ’457 patent, and dismissed the 

claims for infringement of the ’080 patent. Lucent, 509 F. Supp. 2d at 942. In particular, 

the court held that, while the jury permissibly found that claims 1 and 3 of the ’938 

patent incorporate only Existing Technology, the jury lacked substantial evidence and 

acted against the clear weight of the evidence in so finding for claims 2 and 4. Id. at 

919-22. Because the court determined that claims 2 and 4 encompassed New Work, it 

concluded that the ’938 patent, and hence the ’080 patent, was jointly owned by AT&T 

and Fraunhofer, and Lucent lacked standing to sue in the absence of Fraunhofer. Id. at 

922-24. Thus, the court dismissed Lucent’s infringement claims based on the ’080 

patent. Id. at 924. 

With respect to the ’457 patent, the court held that the jury lacked substantial 

evidence and acted against the clear weight of the evidence in finding infringement of 

method claims 1 and 5 by Microsoft’s Windows Media Player given that Lucent provided 

insufficient evidence to establish that the High Quality encoder actually ever ran and 

2007-1546, -1580 8
performed the claimed method. Id. at 925-27. For the same reasons, the court held 

that there was insufficient evidence of infringement of claim 10, which, although directed 

to a storage medium, used the phrase “manufactured in accordance with a process 

comprising,” thus requiring evidence of practice of the claimed process. Id. at 927-28. 

Therefore, the court granted Lucent’s motion for JMOL, or alternatively for a new trial, 

on infringement of the ’457 patent. Id.4

 

Finally, the district court granted JMOL or a new trial on damages. Id. at 938, 

940. It held that the jury acted against the clear weight of the evidence in using the 

value of the entire computer as the royalty base, and thus erred in its application of the 

entire market rule. Id. at 935-38. The court, therefore, granted JMOL or a new trial on 

damages on that basis. Id. at 939. The court could not definitively conclude that there 

was insufficient evidence to support the jury’s 0.5% royalty rate. Id. at 938-40. Thus, it 

denied the motion for JMOL on that basis, but granted a new trial. Id. at 940. 

Lucent appeals. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). 

II 

 We review decisions on motions for JMOL and motions for a new trial under the 

law of the regional circuit. DyStar Textilfarben GmbH v. C.H. Patrick Co., 464 F.3d 

1356, 1359 (Fed. Cir. 2006). In the Ninth Circuit, a district court’s grant of JMOL is 

reviewed de novo. CollegeNet, Inc. v. ApplyYourself, Inc., 418 F.3d 1225, 1230 (Fed. 

Cir. 2005); City Solutions, Inc. v. Clear Channel Commc’ns, 365 F.3d 835, 839 (9th Cir. 

2004). A grant of JMOL is appropriate when “the evidence, construed in the light most 

 4

 The court also ordered a new trial on claim 10 of the ’457 patent on an 

alternative basis, because it concluded that its jury instruction for infringement of that 

product-by-process claim was confusing. Id. at 928. 

2007-1546, -1580 9
favorable to the non-moving party, permits only one reasonable conclusion, and that 

conclusion is contrary to the jury’s.” CollegeNet, 418 F.3d at 1230 (quoting Pavao v. 

Pagay, 307 F.3d 915, 918 (9th Cir. 2002)); City Solutions, 365 F.3d at 839. 

The district court’s grant of a new trial is reviewed for abuse of discretion. 

CollegeNet, 418 F.3d at 1230; Wallace v. City of San Diego, 479 F.3d 616, 630 (9th Cir. 

2007). We may find that the “district court abused its discretion in ordering a new trial if 

the jury’s verdict is not against the clear weight of the evidence.” CollegeNet, 418 F.3d 

at 1230 (quoting United States v. 4.0 Acres of Land, 175 F.3d 1133, 1139 (9th Cir. 

1999); Wallace, 479 F.3d at 630. 

We review the district court’s dismissal for lack of standing without deference. 

Consol. Edison Co. of N.Y. v. Richardson, 233 F.3d 1376, 1379 (Fed. Cir. 2000). 

Contract interpretation is a question of law, which we review de novo. St. Christopher 

Assocs., L.P. v. United States, 511 F.3d 1376, 1380 (Fed. Cir. 2008). Infringement is a 

question of fact, which we review for substantial evidence when tried to a jury. Finisar 

Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1332-33 (Fed. Cir. 2008). 

III 

 Lucent challenges the district court’s holding that it lacks standing to sue for 

infringement of the ’080 patent in the absence of Fraunhofer on two grounds. First, 

Lucent avers that the court erred in finding that claims 2 and 4 of the ’938 patent 

constitute New Work under the JDA. Alternatively, Lucent contends that, even if claims 

2 and 4 are New Work, the court erred in concluding that Fraunhofer is a co-owner of 

the ’938 patent, and thus the ’080 patent. 

2007-1546, -1580 10
A 

The jury determined that all four claims of the ’938 patent incorporate Existing 

Technology, not New Work, under the JDA. The district court upheld the jury’s finding 

that claims 1 and 3 of the ’938 patent are Existing Technology; however, the court 

determined, contrary to the jury’s finding, that claims 2 and 4 are New Work. Claim 2 

limits the frequency coefficients to MDCT coefficients. Claim 4 requires a “means for 

receiving” and a “means for converting” (i.e., decoding) the set of frequency coefficients. 

Lucent contends that the district court erred in setting aside the jury’s finding and 

concluding that claims 2 and 4 constitute New Work. According to Lucent, the jury’s 

finding that claims 2 and 4 of the ’938 patent do not incorporate New Work is supported 

by substantial evidence. Further, Lucent asserts that for claims 2 and 4 to constitute 

Existing Technology, it is not necessary for there to be written descriptive support for 

the claims in the specification of the ’938 patent since contract law governs, not 35 

U.S.C. § 112, first paragraph. Lucent asserts that under the JDA, all that is required is 

for the claimed subject matter to have been in the public domain prior to April 1989. 

This interpretation of the JDA is apparently attributable to the language “the results of” 

in the definition of Existing Technology. 

 With respect to claim 2, Lucent contends that the original ’598 application, filed in 

1988, refers generally to means to transform and that, before April 1989, a person of 

skill in the art would have recognized that MDCT was among the existing means to 

transform. In fact, Lucent asserts that its expert testified that MDCT was known in the 

prior art, and that evidence indicated that Johnston recognized the availability of MDCT 

2007-1546, -1580 11
prior to April 1989. Thus, Lucent argues, use of the MDCT transform in the method of 

claim 1 was part of “the results of” Johnston’s pre-April 1989 work. 

 With respect to claim 4, Lucent argues that the means-plus-function elements, 

“means for receiving” and “means for converting,” encompass structures for receiving 

and decoding frequency coefficients. According to Lucent, the district court erred in 

limiting the structures that support the means-plus-function elements to the digital signal 

processor (“DSP”) and the Very Large Scale Integration (“VLSI”) hardware, rather than 

to include their equivalents. Lucent asserts that it is undisputed that some structure for 

encoding and decoding was part of Johnston’s pre-April 1989 work. In particular, 

Lucent points to the specification and drawings of the ’457 patent, which date to 1988, 

and evidence of Johnston’s working embodiment. Moreover, Lucent contends that its 

expert testified that personal computers have DSPs and VLSIs, and that Johnston 

testified that he tested his software on Alliant and Data General computers. 

We cannot adopt Lucent’s strained interpretation of the JDA. Existing 

Technology is clearly defined in the JDA to refer to technology developed by AT&T or 

by Fraunhofer prior to April 1989. Indeed, what was recognized by the parties to 

constitute Existing AT&T Technology and Existing Fraunhofer Technology was 

specifically described in Attachments A-D to the JDA. There is simply no basis for 

reading Existing Technology more broadly to encompass any technology in the public 

domain prior to April 1989. Notably, Lucent points to nothing in Attachments A-D that 

supports its argument that the subject matter of claims 2 and 4 was Existing 

Technology. 

2007-1546, -1580 12
Furthermore, we disagree that written descriptive support in the specification is 

not relevant to determining when the claimed technology was developed. In order to be 

valid, each patent claim must meet all the statutory requirements, including written 

description under 35 U.S.C. § 112, first paragraph. Patent claims are awarded priority 

on a claim-by-claim basis based on the disclosure in the priority applications. Go Med. 

Indus. Pty., Ltd. v. Inmed Corp., 471 F.3d 1264, 1270 (Fed. Cir. 2006); Augustine Med., 

Inc. v. Gaymar Indus., Inc., 181 F.3d 1291, 1302 (Fed. Cir. 1999). When the ’080 

patent application was filed as a reissue of the ’938 patent, the priority was amended to 

claim priority as a continuation to an application filed in 1992, which in turn was a CIP of 

another application that was a continuation of the ’598 application, filed in 1988. Thus, 

while the ’080 patent (and the ’938 patent) shares the same specification as the 

application filed in 1992, it does not share the same specification as the ’598 

application. Since the critical date for distinguishing between New Work and Existing 

Technology is April 1989, it is important to establish whether the claims of the ’080 

patent are entitled to the priority date of the ’598 application (i.e., 1988) or only to the 

1992 priority date. 

 The district court determined that the ’457 patent (which shares the same 

specification as the ’598 application filed in 1988) does not mention MDCTs and thus 

there is no evidence that the work embodied in claim 2 was performed prior to April 

1989. Lucent, 509 F. Supp. 2d at 920. Even if the implementation of MDCTs into the 

claimed technology would have been obvious to one of skill in the art, the court correctly 

recognized that a demonstration of obviousness is not sufficient to show possession. 

Id.; see PowerOasis, Inc. v. T-Mobile USA, Inc., 522 F.3d 1299, 1306 (Fed. Cir. 2008); 

2007-1546, -1580 13
Regents of the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1566 (Fed. Cir. 1997); 

Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1571-72 (Fed. Cir. 1997). Moreover, the 

court relied on the testimony of Johnston that he had not heard of MDCTs and had not 

performed work with MDCTs before the collaborative period with Fraunhofer. Lucent, 

509 F. Supp. 2d at 920. We find the court’s analysis to be sound, and thus we conclude 

that claim 2 constitutes New Work. We next proceed to consider claim 4.5

 

The court first restated its earlier construction of the claim 4 terms, “means for 

receiving” and “means for converting,” as means-plus-function claim terms under 35 

U.S.C. § 112, ¶ 6, requiring the following corresponding structure described in the 

specification of the ’938 patent: 

[A] digital signal processor (DSP), a DSP with software, VLSI hardware 

embodiments, or hybrid DSP/VLSI embodiments. 

Lucent, 509 F. Supp. 2d at 921; see ’938 patent col.23 l.59–col.24 l.1. The court then 

recognized that none of the corresponding structures appeared in the specification of 

the ’457 application (which is entitled to priority to the ’598 application filed in 1988), but 

instead first appeared in the ’938 patent application (i.e., in the priority application filed 

in 1992). Lucent, 509 F. Supp. 2d at 921. The court rejected Lucent’s attempt to rely 

on Figure 7 of the ’457 patent for support because the figure does not identify any 

structures. Id. We agree with the district court that claim 4, in that it recites the two 

means-plus-function claim terms, is only entitled to a priority date of 1992. Lucent does 

not point to other corresponding structures in the ’938 patent specification that support 

 5

 We note that, since claim 2 was canceled from the ’938 patent when it 

was reissued as the ’080 patent, there may be some question of the significance of 

claim 2 to the ownership of the ’080 patent. 

2007-1546, -1580 14
the terms “means for receiving” or “means for converting,” nor does Lucent point to 

support for DSP or VLSI in the ’598 application. 

Further, the court properly rejected Lucent’s arguments that one of skill in the art 

would have known in 1988 that DSP and VLSI are satisfactory structures for a “means 

for receiving” and a “means for converting.” Id. The understanding of one of skill in the 

art does not relieve the patentee of the duty to disclose sufficient structure to support 

means-plus-function claim terms. Biomedino, LLC v. Waters Techs. Corp., 490 F.3d 

946, 952 (Fed. Cir. 2007). Thus, claim 4 is entitled only to a priority date of 1992, after 

the April 1989 critical date. We further agree with the district court that Lucent 

presented insufficient evidence to support the jury’s finding that claim 4 had an earlier 

date of invention. As such, claim 4 is New Work and not Existing Technology. Given 

that claims 1 and 3 of the ’938 patent are Existing Technology and claims 2 and 4 are 

New Work, we must now consider the ownership of the ’938 patent (and the ’080 

patent). 

B 

 Lucent argues, in the alternative, that even if claims 2 and 4 incorporate New 

Work under the JDA, ownership of the ’938 patent (and thus the ’080 patent) remains 

solely with Lucent since claims 1 and 3 are Existing Technology. Lucent contends that 

while the JDA may have attempted to assign joint ownership to some of the claims of 

the ’938 patent, it was ineffective to do that. According to Lucent, by law a patentee 

may only assign title to an entire patent; a transfer of less is merely a license. Thus, 

Lucent avers, AT&T merely granted a license to Fraunhofer in claims 2 and 4 of the 

’938 patent, not an ownership interest in the entire patent. Because Fraunhofer is not a 

2007-1546, -1580 15
co-owner of the ’080 patent, Lucent contends that it does not lack standing to sue in the 

absence of Fraunhofer. 

In making its argument, Lucent relies primarily on Pope, and on subsequent 

Supreme Court and Federal Circuit precedent reiterating the principles set out in Pope. 

See Pope Mfg. Co. v. Gormully & Jeffery Mfg. Co., 144 U.S. 248 (1892). Lucent 

contends that while the district court correctly recognized that Pope precluded the 

separation of claims 1 and 3 from claims 2 and 4, it arrived at the wrong conclusion—

that the JDA therefore assigns ownership of the entire patent. Instead, Lucent argues, 

Pope mandates that the result of a mixed assignment is a mere license. In addition, 

Lucent criticizes the district court’s application of Israel Bio-Engineering Project v. 

Amgen, Inc., 475 F.3d 1256, 1263-64 (Fed. Cir. 2007). According to Lucent, Israel BioEngineering is distinguishable from the instant case because it involved co-inventors 

who began with an ownership interest. 

 We find no error in the district court’s application of Pope and Israel BioEngineering. The issue in Pope was whether the plaintiff in an infringement suit had 

legal title to a patent and thus the right to sue. 144 U.S. at 250. The patent related to 

bicycles, the second claim reciting: “In a velocipede, an adjustable hammock seat, J, 

substantially as set forth.” Id. at 249. Other claims did not mention a hammock seat. 

Id. at 250. The plaintiff had obtained title to the patent through a series of assignments, 

the first of which conveyed “all rights for past infringement so far as said patent relates 

to or covers the adjustable hammock seat or saddle . . . .” Id. at 249. Thus, the Court 

considered “whether a patentee can split up his patent into as many different parts as 

there are claims, and vest the legal title to those claims in as many different persons.” 

2007-1546, -1580 16
Id. at 250. The Court concluded that the right of the patentee to assign his monopoly 

was limited to: 

(1) the whole patent, comprising the exclusive right to make, use, and 

vend the invention throughout the United States; 

(2) an undivided part or share of that exclusive right; or 

(3) the exclusive right under the patent within and throughout a specified 

territory. 

Id. at 251 (citing Waterman v. Mackenzie, 138 U.S. 252 (1891), and Gayler v. Wilder, 51 

U.S. 477 (1850)). A transfer of less, according to the Court, did not convey title in the 

patent and the right to sue; instead, it conveyed merely a license. Pope, 144 U.S. at 

252. Therefore, the Court determined that the plaintiff lacked title in the patent and 

could not sue for infringement. Id. The district court correctly recognized that Pope

stands for the proposition that the owner of a patent cannot split up its ownership rights 

in a patent and assign different claims to different parties. Pope, however, has limited 

relevance to the instant case where we need to determine ownership of the patent in 

the first instance, i.e., upon issuance of the patent. 

 More relevant is Israel Bio-Engineering, which, like this case, involved 

determination of the ownership of a patent when some of the claimed subject matter 

was invented under a contract and some was invented outside the contract. Israel BioEngineering involved a five-year contract between Inter-Yeda, Ltd. (“Inter-Yeda”) and 

Israel Bio-Engineering Project (“IBEP”) in which IBEP would fund research conducted 

by Inter-Yeda in cooperation with Yeda Research and Development Co., Ltd. (“Yeda”), 

Inter-Yeda would apply for patents in its sole discretion, and all ownership interests in 

patents so obtained would be assigned to IBEP. Israel Bio-Eng’g, 475 F.3d at 1259. 

After the termination of the contract a patent issued, which named four inventors and 

2007-1546, -1580 17
named Yeda as the assignee. Id. at 1260. One of the inventors, Dr. Rubenstein, had 

joined the research project after the contract ended. Id. at 1261. While the subject 

matter of claim 1 of the patent was discovered during the contract term, the subject 

matter of claims 2 and 3 was discovered by Rubenstein after the termination of the 

contract. Id. at 1260-61. Rubenstein had assigned his ownership rights to Yeda. Id. at 

1261, 1268. When IBEP sued Amgen and others for infringement of claim 1 of the 

patent, this court had to determine whether IBEP had standing to sue without the joinder 

of Yeda. Id. at 1261-63. We held that Rubenstein was a presumptive co-owner of the 

patent because he was listed on the patent and had discovered the subject matter of 

claims 2 and 3 of the patent; however, he had assigned his ownership rights to Yeda. 

Id. at 1268. Because Yeda was a co-owner of the patent by virtue of claims 2 and 3, we 

held that IBEP lacked standing to sue for patent infringement in the absence of Yeda. 

Id.

Here, the district court properly relied on Israel Bio-Engineering to conclude that 

because claims 2 and 4 of the ’938 patent were invented during the period covered by 

the JDA, and thus constitute New Work, Fraunhofer is a co-owner of the ’938 patent—

and thus the ’080 patent. As such, Lucent lacks standing to sue for infringement of the 

’080 patent in the absence of Fraunhofer. We disagree with Lucent that Israel BioEngineering is distinguishable because it concerns co-inventors who began with an 

ownership interest. Instead, at issue in Israel Bio-Engineering was whether one of the 

inventors listed on the patent (who, in turn, assigned his ownership rights) was required 

to be joined in the infringement lawsuit even though he had not invented the asserted 

claim. Similarly, here, the issue is whether Fraunhofer is an owner of the ’080 patent 

2007-1546, -1580 18
even though it did not contribute to the invention of some of the claims. The answer in 

both cases is a resounding yes. Pope indeed dictates that patent rights cannot be split 

between claims, but Israel Bio-Engineering holds that an inventor of one or more claims 

of the patent is an owner of all claims of the patent. 

Finally, Lucent contends that the result arrived at by the district court unfairly 

grants ownership rights over Existing Technology to Fraunhofer, contrary to the intent of 

the JDA, which disallowed each party from licensing the other party’s Existing 

Technology. Moreover, Lucent asserts that Fraunhofer, not Microsoft, should have 

raised a grievance regarding its ownership interest and it has not done so. 

But, Lucent’s predecessor, AT&T, had the ability to file patent applications at its 

own discretion, and had the option to file separate applications on inventions 

constituting New Work and inventions constituting Existing Technology, or to include 

both inventions in a single application.6

 See Israel Bio-Eng’g, 475 F.3d at 1267. Since 

AT&T chose the latter route, Lucent is required to join Frauhofer in any infringement suit 

involving the ’080 patent.7 It was perfectly appropriate for Microsoft to raise this defect 

in standing before the district court. 

We find no error in the district court’s determination that claims 2 and 4 of the 

’938 patent—claim 4 of the ’080 patent—constitute New Work and its conclusion that 

 6

 Particularly, as here, where AT&T filed a reissue application and canceled 

claim 2, it could easily have canceled claim 4 as well if it wished to retain sole ownership 

rights in the ’080 patent. 

7

 We find the result advocated by Lucent to be sharply in conflict with the 

JDA because it would allow either party to the JDA, by adding at least one claim to a 

patent application directed to Existing Technology, to thereby deprive the other party to 

the JDA of joint ownership of any New Work claimed in the same application. 

2007-1546, -1580 19
Fraunhofer was thus a co-owner of the ’080 patent. Accordingly, we affirm the district 

court’s grant of JMOL and its dismissal of Lucent’s infringement claims with respect to 

the ’080 patent for lack of standing.8 

IV 

 Lucent next contends that the district court erred in setting aside the jury’s verdict 

of direct infringement of claims 1, 5, and 10 of the ’457 patent by concluding that the 

jury lacked substantial evidence in finding that the High Quality encoder is used in 

Microsoft’s Windows Media Player. According to Lucent, the jury’s finding was 

supported by circumstantial evidence. First, Lucent’s expert, Dr. Polish, testified that 

Microsoft’s software is designed to call the High Quality encoder as a backup to the 

Fast encoder under specified conditions, and thus it could be inferred that the High 

Quality encoder actually runs in practice. In addition, Polish testified that the conditions 

for the Fast encoder to fail are probably “very common” in practice, and even Microsoft’s 

witness, Mr. Jones, acknowledged that the Fast encoder “could fail for any number of 

reasons.” Finally, Polish testified that he could find no basis for concluding that the High 

Quality encoder would necessarily fail if the Fast encoder failed since the two encoders 

use different initialization tests. 

 Lucent asserts that the district court mistakenly relied on E-Pass Technologies, 

Inc. v. 3Com Corp., 473 F.3d 1213 (Fed. Cir. 2007), and Acco Brands, Inc. v. ABA 

Locks Manufacturer Co., 501 F.3d 1307 (Fed. Cir. 2007), in finding no direct 

infringement even though both cases can be distinguished from the present case. 

 8

 Because we affirm the district court’s grant of JMOL, we need not consider 

whether its grant, in the alternative, of a new trial was proper. 

2007-1546, -1580 20
According to Lucent, in E-Pass, the patentee could have easily introduced testimony to 

prove direct infringement since the claimed invention involved user choice. Similarly, 

Lucent contends that, in Acco, the patentee could have readily obtained evidence of 

infringing use, but did not. In contrast, here, Lucent avers, the infringing steps are 

automatic and undetectable, and thus there is no available but omitted evidence of 

infringement. Lucent relies principally on Polish’s testimony that he lacked the means to 

observe an individual use of the High Quality encoder. 

 A patentee may rely on either direct or circumstantial evidence to prove 

infringement. Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1219 (Fed. Cir. 

2006) (citing Moleculon Research Corp. v. CBS, Inc., 739 F.2d 1261, 1272 (Fed. Cir. 

1986)). “In 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.” Acco, 501 F.3d at 1313. 

Lucent did not show specific instances of direct infringement. Instead, Lucent 

relied on circumstantial evidence to attempt to show that Microsoft’s Windows Media 

Player necessarily infringes the ’457 patent. Proof of infringement of the method of 

claims 1 and 5 required proof that the High Quality encoder had actually run. The 

district court found, however, that the circumstantial evidence presented by Lucent 

established only uncertainty and speculation as to whether the High Quality encoder 

had run even once. Lucent, 509 F.2d at 926. In particular, the court noted that Polish’s 

opinion that errors would occur that would cause the Fast encoder to fail and would not 

cause the High Quality encoder to fail was based only on his review of the source code, 

and that he did not know at what rates such errors occurred and did not ever observe 

2007-1546, -1580 21
such errors. Id. Further, the court reasoned that if running of the High Quality encoder 

was so common and so routine, then certainly Lucent could have produced evidence of 

at least one instance when the High Quality encoder had run. Id. Thus, the court 

concluded that Lucent did not provide sufficient evidence to establish that the High 

Quality encoder had ever run. Id. With regard to claim 10, directed to a storage 

medium “manufactured in accordance with” the method of claim 1, the court held, based 

on the same reasoning, that there was insufficient evidence to establish infringement. 

Id. at 927-28. Thus, the court granted JMOL of non-infringement of the ’457 patent. Id.

We find no error in the district court’s analysis or in its reliance on Acco and EPass. In Acco, the patents at issue were directed to locking systems. 501 F.3d at 

1310. This court reversed the district court’s finding of infringement because the 

patentee failed to provide specific evidence of direct infringement or evidence that the 

accused device necessarily infringed. Id. at 1313. In so concluding, we recognized that 

the accused device could be operated in two ways, one infringing and one noninfringing, and that the lock users received instructions describing only the noninfringing method. Id. In E-Pass, the patents were directed to a method of substituting 

an electronic multi-function card for a plurality of credit cards. 473 F.3d at 1216. We 

affirmed the district court’s grant of summary judgment of non-infringement because we 

determined that the evidence provided by the patentee at best showed that customers 

were taught each step of the claimed method in isolation, yet failed to establish that all 

of the steps of the method had actually been performed in the prescribed order. Id. at 

1222. Thus, we held that it would be too speculative to conclude that any customer 

actually performed the claimed method. Id. Here, too, Lucent has failed to provide 

2007-1546, -1580 22
2007-1546, -1580 23

sufficient evidence to establish that the High Quality encoder actually runs on Windows 

Media Player and thus it would be too speculative to conclude that Windows Media 

Player necessarily infringes the ’457 patent. 

 Lucent also asks this court to reinstate the jury verdict of infringement of claim 10 

“if the ‘457 infringement verdict regarding Claim 1 and 5” is reinstated. Resp. & Reply 

Br. 27. For the reasons stated previously, we decline to reverse the district court’s 

decision on claims 1 and 5, and therefore decline to reverse the court’s judgment of 

non-infringement on claim 10 as well. Accordingly, we hold that the district court 

properly granted JMOL of non-infringement of the ’457 patent.9 

V 

For the foregoing reasons, we affirm the district court’s dismissal of the 

infringement claims with respect to the ’080 patent for lack of standing, and the court’s 

grant of JMOL of non-infringement with respect to the ’457 patent. 

AFFIRMED

 9

 Because we affirm the district court’s grant of JMOL, we need not consider 

whether the court erred in granting, in the alternative, a new trial. We further need not 

consider the remaining issues raised by Lucent on appeal or by the appellees in their 

cross-appeal.