United States Court of Appeals 

for the Federal Circuit ______________________

SRI INTERNATIONAL, INC.,

Plaintiff-Appellee

v.

CISCO SYSTEMS, INC.,

Defendant-Appellant

______________________

2017-2223

______________________

Appeal from the United States District Court for the 

District of Delaware in No. 1:13-cv-01534-SLR-SRF, Judge 

Sue L. Robinson.

______________________

OPINION ISSUED: March 20, 2019

OPINION MODIFIED: July 12, 2019∗

______________________

FRANK SCHERKENBACH, Fish & Richardson, PC, Boston, MA, argued for plaintiff-appellee. Also represented by 

PROSHANTO MUKHERJI; DAVID MICHAEL HOFFMAN, Austin, 

TX; HOWARD G. POLLACK, Redwood City, CA; FRANCIS J.

ALBERT, JOHN WINSTON THORNBURGH, San Diego, CA. 

 

∗ This opinion has been modified and reissued following a petition for rehearing filed by Defendant-Appellant.
2 SRI INT’L, INC. v. CISCO SYS., INC.

 WILLIAM F. LEE, Wilmer Cutler Pickering Hale and 

Dorr LLP, Boston, MA, argued for defendant-appellant. 

Also represented by ANDREW J. DANFORD, LAUREN B.

FLETCHER, LOUIS W. TOMPROS. 

 ______________________

Before LOURIE, O’MALLEY, and STOLL, Circuit Judges.

Opinion for the court filed by Circuit Judge STOLL.

Dissenting opinion filed by Circuit Judge LOURIE.

STOLL, Circuit Judge.

This is an appeal from a final judgment in a patent 

case. Cisco Systems, Inc. (“Cisco”) appeals the district 

court’s (1) denial of Cisco’s motion for summary judgment 

of patent ineligibility under § 101, (2) construction of the 

claim term “network traffic data,” (3) grant of summary 

judgment of no anticipation, and (4) denial of judgment as

a matter of law of no willful infringement. Cisco also appeals the district court’s grant of enhanced damages, attorneys’ fees, and ongoing royalties. 

We affirm the district court’s denial of summary judgment of ineligibility, adopt its construction of “network 

traffic data,” and affirm its summary judgment of no anticipation. We vacate and remand the district court’s denial 

of judgment as a matter of law of no willful infringement,

and therefore vacate and remand the district court’s enhancement of damages and award of attorneys’ fees. Finally, we affirm the district court’s award of ongoing 

royalties on post-verdict sales of products that were actually found to infringe or are not colorably different. Accordingly, we affirm-in-part, vacate-in-part, and remand for 

further proceedings consistent with this opinion.
SRI INT’L, INC. v. CISCO SYS., INC. 3

BACKGROUND

I

While the interconnectivity of computer networks facilitates access for authorized users, it also increases a network’s susceptibility to attacks from hackers, malware, 

and other security threats. Some of these security threats 

can only be detected with information from multiple

sources. For instance, a hacker may try logging in to several computers or monitors in a network. The number of 

login attempts for each computer may be below the threshold to trigger an alert, making it difficult to detect such an 

attack by looking at only a single monitor location in the 

network. In an attempt to solve this problem, SRI developed the inventions claimed in U.S. Patent Nos. 6,484,203 

and 6,711,615. The ’615 patent (titled “Network Surveillance”) is a continuation of the ’203 patent (titled “Hierarchical Event Monitoring and Analysis”). 

II

SRI had performed considerable research and development on network intrusion detection prior to filing the patents-in-suit. In fact, SRI’s Event Monitoring Enabling 

Responses to Anomalous Live Disturbances (“EMERALD”) 

project had attracted considerable attention in this field. 

The Department of Defense’s Defense Advanced Research 

Projects Agency, which helped fund EMERALD, called it a 

“gem in the world of cyber defense” and “a quantum leap 

improvement over” previous technology. J.A. 1272–73 

at 272:16–17, 273:7–9. In October 1997, SRI presented a 

paper entitled “EMERALD: Event Monitoring Enabling 

Responses to Anomalous Live Disturbances” 

(“EMERALD 1997”) at the 20th National Information Systems Security Conference. 

EMERALD 1997 is a conceptual overview of the 

EMERALD system. It describes in detail SRI’s early research in intrusion detection technology and outlines the 
4 SRI INT’L, INC. v. CISCO SYS., INC.

development of next generation technology for detecting 

network anomalies. SRI Int’l Inc. v. Internet Sec. Sys., Inc., 

647 F. Supp. 2d 323, 334 (D. Del. 2009). The parties do not 

dispute that EMERALD 1997 constitutes prior art under 

35 U.S.C. § 102(b). EMERALD 1997 is listed as a reference 

on the face of the ’615 patent. 

III

The patents share a nearly identical specification and 

a priority date of November 9, 1998. At the summary judgment stage, SRI asserted claims 1–4, 14–16, and 18 of the 

’615 patent and claims 1–4, 12–15, and 17 of the ’203 patent. By the time of trial, SRI had narrowed the asserted 

claims to claims 1, 2, 12, and 13 of the ’203 patent and 

claims 1, 2, 13, and 14 of the ’615 patent. The jury considered only this narrower set of claims. 

The parties identify different representative claims. 

Cisco proposes claim 1 of the ’203 patent, while SRI proposes claim 1 of the ’615 patent. The claims are substantially similar, as the minor differences between them are 

not material to any issue on appeal. As such, we adopt 

SRI’s proposal and use ’615 patent claim 1 as the representative claim.1 It reads:

1. A computer-automated method of hierarchical 

event monitoring and analysis within an enterprise 

network comprising: 

 

1 The minor differences between the two claims are 

in the detecting clause—claim 1 of the ’615 patent allows 

for network traffic data selected from “one or more of” the 

enumerated categories, and includes two extra categories 

in its list: “network connection acknowledgements” and 

“network packets indicative of well-known network-service 

protocols.” Compare ’203 patent col. 14 ll. 19–35 (claim 1),

with ’615 patent col. 15 ll. 2–21 (claim 1). 
SRI INT’L, INC. v. CISCO SYS., INC. 5

deploying a plurality of network monitors in 

the enterprise network; 

detecting, by the network monitors, suspicious 

network activity based on analysis of network 

traffic data selected from one or more of the following categories: {network packet data transfer commands, network packet data transfer 

errors, network packet data volume, network 

connection requests, network connection denials, error codes included in a network packet, 

network connection acknowledgements, and 

network packets indicative of well-known network-service protocols}; 

generating, by the monitors, reports of said 

suspicious activity; and 

automatically receiving and integrating the reports of suspicious activity, by one or more hierarchical monitors.

’615 patent col. 15 ll. 2–21.

After SRI sued Cisco for infringement of the ’615 patent and the ’203 patent, Cisco unsuccessfully moved for 

summary judgment on several issues, including that the 

claims are ineligible and that the EMERALD 1997 reference anticipates the claims.2 SRI Int’l, Inc. v. Cisco Sys., 

 

2 The patents previously survived multiple anticipation challenges based on the EMERALD 1997 reference. 

The Patent Office considered EMERALD 1997 during the 

original prosecution and issued the patents over it. 

J.A. 32734 ¶ 47; J.A. 32814–15 ¶ 207. In addition, during 

the two reexaminations, the Patent Office again considered 

the validity of the asserted claims over EMERALD 1997 

and again found the claims valid. J.A. 32734 ¶ 47. Additionally, in SRI International Inc. v. Internet Security
6 SRI INT’L, INC. v. CISCO SYS., INC.

Inc., 179 F. Supp. 3d 339 (D. Del. Apr. 11, 2016) (“Summary Judgment Op.”). The district court denied Cisco’s motions and instead sua sponte granted summary judgment 

of no anticipation in SRI’s favor.3 Id. at 369.

The court then held a jury trial on infringement, validity, and willful infringement of claims 1, 2, 13, and 14 of 

the ’615 patent and claims 1, 2, 12, and 13 of the ’203 patent, as well as damages. The jury found that Cisco intrusion protection system (“IPS”) products, Cisco remote 

management services, Cisco IPS services, Sourcefire4 IPS 

products, and Sourcefire professional services directly and 

indirectly infringed the asserted claims. The jury awarded 

SRI a 3.5% reasonable royalty for a total of $23,660,000 in 

compensatory damages. The jury also found by clear and 

convincing evidence that Cisco’s infringement was willful. 

After post-trial briefing, the district court denied 

Cisco’s renewed motion for JMOL of no willfulness. SRI 

 

Systems, Inc., a jury found the patents not anticipated by 

EMERALD 1997. 647 F. Supp. 2d at 350. The district 

court denied JMOL, concluding that the verdict was supported by expert testimony that EMERALD 1997 failed to 

disclose the claim limitation at issue. Id. We affirmed 

without opinion. SRI Int’l Inc. v. Internet Sec. Sys., Inc., 

401 F. App’x 530 (Fed. Cir. 2010).

3 The parties disputed only whether 

EMERALD 1997 discloses detection of any of the network 

traffic data categories listed in claim 1 of the ’203 and 

’615 patents and whether EMERALD 1997 is enabled. 

One of the claimed categories of network traffic is “network 

connection requests,” which Cisco asserts is disclosed by 

EMERALD 1997. 

4 “Sourcefire” is a network security company that 

Cisco acquired in 2013. J.A. 2467–68. Cisco now markets 

network security products and services under the 

Sourcefire name.
SRI INT’L, INC. v. CISCO SYS., INC. 7

Int’l, Inc. v. Cisco Sys., Inc., 254 F. Supp. 3d 680, 717

(D. Del. 2017) (“Post-Trial Motions Op.”). Based on the 

willfulness verdict, the district court determined that 

“some enhancement is appropriate given Cisco’s litigation 

conduct,” the “fact that Cisco lost on all issues during summary judgment,” and “its apparent disdain for SRI and its 

business model.” Id. at 723. The court then doubled the 

damages award. It also granted SRI’s motion for attorneys’ 

fees, compulsory license, and prejudgment interest.

Cisco appeals the district court’s claim construction

and denial of summary judgment of ineligibility,5 as well 

as its grant of summary judgment of no anticipation, enhanced damages, attorneys’ fees, and ongoing royalties. 

We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

I

We review de novo whether a claim is drawn to patenteligible subject matter. Berkheimer v. HP Inc., 881 F.3d 

1360, 1365 (Fed. Cir. 2018) (citing Intellectual Ventures I 

LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1338 

(Fed. Cir. 2017)). Section 101 defines patent-eligible 

 

5 We may review this denial of summary judgment 

because “a denial of a motion for summary judgment may 

be appealed, even after a final judgment at trial, if the motion involved a purely legal question and the factual disputes resolved at trial do not affect the resolution of that 

legal question.” United Techs. Corp. v. Chromalloy Gas 

Turbine Corp., 189 F.3d 1338, 1344 (Fed. Cir. 1999) (citing 

Wolfgang v. Mid-Am. Motorsports, Inc., 111 F.3d 1515, 

1521 (10th Cir. 1997); Rekhi v. Wildwood Indus., Inc., 

61 F.3d 1313, 1318 (7th Cir. 1995)). Neither party contends that fact issues arise in the patent-eligibility analysis 

in this case. Therefore, we may review the purely legal 

question of patent eligibility.
8 SRI INT’L, INC. v. CISCO SYS., INC.

subject matter as “any new and useful process, machine, 

manufacture, or composition of matter, or any new and 

useful improvement thereof.” 35 U.S.C. § 101. Laws of nature, natural phenomena, and abstract ideas, however, are 

not patentable. See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70–71 (2012) (citing Diamond v. Diehr, 450 U.S. 175, 185 (1981)).

To determine whether a patent claims ineligible subject matter, the Supreme Court has established a two-step 

framework. First, we must determine whether the claims 

at issue are directed to a patent-ineligible concept such as 

an abstract idea. Alice Corp. v. CLS Bank Int’l, 573 U.S.

208, 217 (2014). Second, if the claims are directed to an 

abstract idea, we must “consider the elements of each claim 

both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.” Id.

(quoting Mayo, 566 U.S. at 79). To transform an abstract 

idea into a patent-eligible application, the claims must do

“more than simply stat[e] the abstract idea while adding 

the words ‘apply it.’” Id. at 221 (quoting Mayo, 566 U.S. 

at 72 (internal alterations omitted)).

We resolve the eligibility issue at Alice step one and 

conclude that claim 1 is not directed to an abstract idea. 

See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 

(Fed. Cir. 2016). The district court concluded that the 

claims are more complex than merely reciting the performance of a known business practice on the Internet and are 

better understood as being necessarily rooted in computer 

technology in order to solve a specific problem in the realm 

of computer networks. Summary Judgment Op., 

179 F. Supp. 3d at 353–54 (citing ’203 patent col. 1 ll. 37–

40; DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 

1257 (Fed. Cir. 2014)). We agree. The claims are directed 

to using a specific technique—using a plurality of network 

monitors that each analyze specific types of data on the 

network and integrating reports from the monitors—to 
SRI INT’L, INC. v. CISCO SYS., INC. 9

solve a technological problem arising in computer networks: identifying hackers or potential intruders into the 

network.

Contrary to Cisco’s assertion, the claims are not directed to just analyzing data from multiple sources to detect suspicious activity. Instead, the claims are directed to 

an improvement in computer network technology. Indeed, 

representative claim 1 recites using network monitors to

detect suspicious network activity based on analysis of network traffic data, generating reports of that suspicious activity, and integrating those reports using hierarchical 

monitors. ’615 patent col. 15 ll. 2–21. The “focus of the 

claims is on the specific asserted improvement in computer 

capabilities”—that is, providing a network defense system 

that monitors network traffic in real-time to automatically 

detect large-scale attacks. Enfish, 822 F.3d at 1335–36. 

The specification bolsters our conclusion that the 

claims are directed to a technological solution to a technological problem. The specification explains that, while

computer networks “offer users ease and efficiency in exchanging information,” ’615 patent col. 1 ll. 28–29, “the 

very interoperability and sophisticated integration of technology that make networks such valuable assets also make 

them vulnerable to attack, and make dependence on networks a potential liability.” Id. at col. 1 ll. 36–39. The 

specification further teaches that, in conventional networks, seemingly localized triggering events can have globally disastrous effects on widely distributed systems—like 

the 1980 ARPAnet collapse and the 1990 AT&T collapse. 

See id. at col. 1 ll. 43–47. The specification explains that 

the claimed invention is directed to solving these weaknesses in conventional networks and provides “a framework for the recognition of more global threats to 

interdomain connectivity, including coordinated attempts 

to infiltrate or destroy connectivity across an entire network enterprise.” Id. at col. 3 ll. 44–48. 
10 SRI INT’L, INC. v. CISCO SYS., INC.

Cisco argues that the claims are directed to an abstract 

idea for three primary reasons. First, Cisco argues that the 

claims are analogous to those in Electric Power Group, LLC 

v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016), and are 

simply directed to generic steps required to collect and analyze data. We disagree. The Electric Power claims were 

drawn to using computers as tools to solve a power grid 

problem, rather than improving the functionality of computers and computer networks themselves. Id. at 1354. 

We conclude that the claims are more like the patent-eligible claims in DDR Holdings. In DDR, we emphasized that 

the claims were directed to more than an abstract idea that 

merely required a “computer network operating in its normal, expected manner.” 773 F.3d at 1258. Here, the claims 

actually prevent the normal, expected operation of a conventional computer network. Like the claims in DDR, the 

claimed technology “overrides the routine and conventional 

sequence of events” by detecting suspicious network activity, generating reports of suspicious activity, and receiving 

and integrating the reports using one or more hierarchical 

monitors. Id.

Second, Cisco argues that the invention does not involve “an improvement to computer functionality itself.” 

Enfish, 822 F.3d at 1336. In Alice, the Supreme Court advised that claims directed to independently abstract ideas 

that use computers as tools are still abstract. 573 U.S. 

at 222–23. However, the claims here are not directed to 

using a computer as a tool—that is, automating a conventional idea on a computer. Rather, the representative 

claim improves the technical functioning of the computer 

and computer networks by reciting a specific technique for 

improving computer network security. 

Cisco also submits that the asserted claims are so general that they encompass steps that people can “go through 

in their minds,” allegedly confirming that they are directed 

to an abstract concept. Appellant Br. 27–28 (citing Capital 

One, 850 F.3d at 1340; Intellectual Ventures I LLC v. 
SRI INT’L, INC. v. CISCO SYS., INC. 11

Symantec Corp., 838 F.3d 1307, 1318 (Fed. Cir. 2016); CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 

1371 (Fed. Cir. 2011)). We disagree. This is not the type 

of human activity that § 101 is meant to exclude. Indeed, 

we tend to agree with SRI that the human mind is not 

equipped to detect suspicious activity by using network 

monitors and analyzing network packets as recited by the 

claims. 

Because we conclude that the claims are not directed 

to an abstract idea under step one of the Alice analysis, we 

need not reach step two. See Enfish, 822 F.3d at 1339. Accordingly, we affirm the district court’s summary judgment 

that the claims are patent-eligible. 

II

A district court’s claim construction based solely on intrinsic evidence is a legal question that we review de novo. 

See Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 

841 (2015). Claim construction seeks to ascribe the “ordinary and customary meaning” to claim terms as a person 

of ordinary skill in the art would have understood them at 

the time of invention. Phillips v. AWH Corp., 415 F.3d 

1303, 1312–14 (Fed. Cir. 2005) (en banc) (quoting Vitronics 

Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 

1996)). “[T]he claims themselves provide substantial guidance as to the meaning of particular claim terms.” Id.

at 1314. In addition, “the person of ordinary skill in the art 

is deemed to read the claim term not only in the context of 

the particular claim in which the disputed term appears, 

but in the context of the entire patent, including the specification.” Id. at 1313. 

The district court construed “[n]etwork traffic data” to 

mean “data obtained from direct examination of network 

packets.” SRI Int’l, Inc. v. Dell Inc., No. CV13-1534-SLR, 

2015 WL 2265756, at *1–2 (D. Del. May 14, 2015). After 

reviewing the parties’ pleadings on summary judgment,

the district court determined that its construction would 
12 SRI INT’L, INC. v. CISCO SYS., INC.

benefit from clarification. The district court explained that 

“[t]o say that the data ‘is obtained from direct examination 

of network packets’ means to differentiate the original 

source of the data, not how or where the data is analyzed. . . . The fact that the data may be stored before analysis is performed on the data does not detract from its 

lineage.” Summary Judgment Op., 179 F. Supp. 3d at 363. 

The district court explicitly rejected the opinion of Cisco’s 

expert, Dr. Clark, that the court’s claim construction

should require that the analysis of data obtained from network packets take place without any further manipulation

whatsoever. Id.

On appeal, Cisco offers a more nuanced construction, 

asserting that term should instead be construed as “detecting suspicious network activity based on ‘direct examination of network packets,’ where such ‘direct examination’

does not include merely examining data that has been obtained, generated, or gleaned from network packets.” Appellant Br. 42. According to Cisco, based on SRI’s express 

prosecution disclaimer during reexamination, the claims 

require detecting suspicious activity based on “direct examination” of network packets, not data “generated” or 

“gleaned” from packets. Cisco would thus construe the 

term to exclude a process that decodes the network packet. 

We conclude that Cisco’s proposed construction goes 

too far in limiting the amount of preprocessing encompassed by the claim. The specification shows that preprocessing is a contemplated and expected part of the claimed 

invention. Indeed, the specification specifically mentions 

different forms of preprocessing network packets prior to 

examination, including decryption (’615 patent col. 3 

ll. 61–63), parsing (id. at col. 8 ll. 10–12), and decoding (id.

at col. 8 ll. 7–9). 

Cisco’s argument that SRI disclaimed preprocessing 

during reexamination of its patents is also not persuasive. 

To invoke argument-based estoppel, “the prosecution 
SRI INT’L, INC. v. CISCO SYS., INC. 13

history must evince a ‘clear and unmistakable surrender’”

of this kind of preprocessing. Deering Precision Instruments v. Vector Distrib. Sys., 347 F.3d 1314, 1326 (Fed. Cir. 

2003) (quoting Eagle Comtronics, Inc. v. Arrow Commc’n 

Labs., Inc., 305 F.3d 1303, 1316 (Fed. Cir. 2002)); see also 

Krippelz v. Ford Motor Co., 667 F.3d 1261, 1267 (Fed. Cir. 

2012) (applying prosecution history disclaimer from reexamination proceedings). Here, SRI’s statements during 

reexamination reflect that SRI drew the line between what 

does and does not comprise “direct examination” by excluding information derived from network packet data (for example, network traffic measures and network traffic 

statistics). At the same time, SRI explained that “direct 

examination” includes the data from which the network 

traffic measures and network traffic statistics are derived 

(that is, the data in the network packets). For example, 

SRI explained that the specification:

[D]emonstrates that the term “network traffic 

data” requires information obtained by direct 

packet examination by using the distinctly different terms “network traffic measures” and “network 

traffic statistics” when discussing information derived from network traffic observation, as compared to the data from which the measures and 

statistics are derived. 

Brief for the Patentee on Appeal at 7, In re Porras, Reexam 

No. 90/008,125 (B.P.A.I. Jan. 14, 2010) (citing ’203 patent 

col. 4 ll. 55–60 (discussing “network traffic statistics”) and 

col. 5 ll. 28–30 (discussing “network traffic measures”)). 

We read SRI’s statements during reexamination as

simply explaining that “network traffic statistics,” such as 

number of packets and number of kilobytes transferred, 

are statistics derived from the network packet data—not 

the underlying data itself. SRI did not argue that the actual data underlying the measures and statistics—the data 

in the network packets—could not be subject to direct 
14 SRI INT’L, INC. v. CISCO SYS., INC.

examination. Nor did SRI take the position that “direct examination” must take place before any or all processing. 

SRI did not mention processing at all during reexamination. Moreover, as the specification makes clear, the system may need to decrypt, parse, or decode the data 

packets—all forms of preprocessing—in order to directly 

examine the network packet data underlying the network 

traffic statistics. 

We hold that SRI’s statements in the prosecution history do not invoke a clear and unmistakable surrender of 

all preprocessing, including decryption, decoding, and 

parsing. Accordingly, we agree with the district court’s 

construction of “network traffic data” to mean “data obtained from direct examination of network packets.” 

III

We also hold that the district court did not err in granting summary judgment that the asserted claims are not anticipated by SRI’s own EMERALD 1997 reference. We 

review the district court’s summary judgment of no anticipation under regional circuit law. See MAG Aerospace Indus., Inc. v. B/E Aerospace, Inc., 816 F.3d 1374, 1376 

(Fed. Cir. 2016). The Third Circuit reviews a grant of summary judgment de novo, applying the same standard as the 

district court. See Gonzalez v. Sec’y of Dep’t of Homeland 

Sec., 678 F.3d 254, 257 (3d Cir. 2012). Summary judgment 

is appropriate when, drawing all justifiable inferences in 

the nonmovant’s favor, there exists no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); see also Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 255 (1986). Anticipation requires that a single prior art reference disclose each and 

every limitation of the claimed invention, either expressly 

or inherently. See Verdegaal Bros. v. Union Oil Co. of Cal., 

814 F.2d 628, 631 (Fed. Cir. 1987). 

EMERALD 1997 discloses a tool for tracking malicious 

activity across large networks. The question before us is 
SRI INT’L, INC. v. CISCO SYS., INC. 15

whether the district court erred in concluding on summary 

judgment that EMERALD 1997 does not disclose detection 

of any of the network traffic data categories listed in 

claim 1 of the ’203 and ’615 patents. The Patent Office considered EMERALD 1997 during the original examination 

of the ’615 patent, and the patentability of the claims over 

the reference was confirmed in multiple reexamination and

litigation proceedings. Indeed, during reexamination, the 

Patent Office accepted SRI’s argument that the claim limitation requires detecting suspicious activity based on “direct examination” of network packets to distinguish 

EMERALD 1997. J.A. 26402 (“[T]he closest prior art of 

record, Emerald 1997, fails to teach direct examination of 

packet data.”); J.A. 27101 (same). 

EMERALD 1997 describes detecting a DNS/NFS attack in “real-time.” J.A. 5004. To achieve this, 

EMERALD 1997 explains:

The subscription list field is an important facility 

for gaining visibility into malicious or anomalous 

activity outside the immediate environment of an 

EMERALD monitor. The most obvious examples 

where relationships are important involve interdependencies among network services that make local policy decisions. Consider, for example, the 

interdependencies between access checks performed during network file system [“NFS”] mounting and the IP mapping of the DNS service. An 

unexpected mount monitored by the network file 

system service may be responded to differently if 

the DNS monitor informs the network file system 

monitor of suspicious updates to the mount requester’s DNS mapping.

J.A. 5008. EMERALD 1997 further explains that:

Above the service layer, signature engines scan the 

aggregate of intrusion reports from service monitors in an attempt to detect more global 
16 SRI INT’L, INC. v. CISCO SYS., INC.

coordinated attack scenarios or scenarios that exploit interdependencies among network services. 

The DNS/NFS attack discussed [above] is one such 

example of an aggregate attack scenario.

J.A. 5010.

Cisco’s expert submitted a report concluding that a person of ordinary skill in the art would understand from this 

disclosure that “monitoring specific network services, such 

as HTTP, FTP, network file systems, finger, Kerberos, and 

SNMP would require detecting and analyzing packets indicative of those well-known network service protocols, one 

of the enumerated categories in claim 1 of the ’615 patent.” 

J.A. 30347 (emphasis added). During deposition, however, 

Cisco’s expert retreated from this position, admitting that 

a person of ordinary skill reading EMERALD 1997 would 

have understood that it was not necessary to directly examine the packets, although that would be “one very good 

way” to prevent attacks. J.A. 50040 at 159:12–21. 

On this record, we conclude that summary judgment

was appropriate. EMERALD 1997 does not expressly disclose directly examining network packets as required by 

the claims—especially not to obtain data about network 

connection requests. Nor does Cisco’s expert testimony create a genuine issue of fact on this issue. Rather, we agree 

with the district court that Cisco’s expert’s testimony is 

both inconsistent and “based on [] multiple layers of supposition.” Summary Judgment Op., 179 F. Supp. 3d at 358. 

Because the evidence does not support express or inherent 

disclosure of direct examination of packet data, we conclude that the district court did not err in holding that 

there was no genuine issue of fact regarding whether 

EMERALD 1997 disclosed analyzing the specific enumerated types of network traffic data recited in the claims. 

Cisco next argues that the district court erred by granting summary judgment for SRI sua sponte despite SRI’s 

failure to move for such relief. We disagree. Under Third 
SRI INT’L, INC. v. CISCO SYS., INC. 17

Circuit law, a district court may properly enter summary 

judgment sua sponte “so long as the losing party was on 

notice that she had to come forward with all of her evidence.” Gibson v. Mayor & Council of City of Wilmington, 

355 F.3d 215, 222 (3d Cir. 2004) (quoting Celotex Corp. v. 

Catrett, 477 U.S. 317, 326 (1986)). By filing its own motion 

for summary judgment, Cisco was on notice that anticipation was before the court, and Cisco had the opportunity to 

put forth its best evidence. Additionally, SRI did argue, in 

opposition to Cisco’s summary judgment motion, that the 

district court should outright reject Cisco’s assertion of invalidity. J.A. 31650 (“Cisco’s assertion of invalidity should 

be rejected . . . .”). Indeed, SRI expressly took the position 

that EMERALD 1997 “does not anticipate any claim of the 

’203 or ’615 patents.” J.A. 31678. Thus, any notice requirement was satisfied because Cisco itself indicated that the 

issue was ripe for summary adjudication and SRI took the 

position that the claims were not anticipated. Accordingly, 

we see no error in the sua sponte nature of the district 

court’s order and we affirm the summary judgment of no 

anticipation. 

IV

Cisco also appeals the district court’s denial of JMOL 

that it did not willfully infringe the asserted patents because the jury’s willfulness finding is not supported by substantial evidence. We agree that the jury’s finding that 

Cisco willfully infringed the patents-in-suit prior to receiving notice thereof is not supported by substantial evidence 

and therefore vacate and remand.

We review decisions on motions for JMOL under the 

law of the regional circuit. Energy Transp. Grp. Inc. v. William Demant Holding A/S, 697 F.3d 1342, 1350 (Fed. Cir. 

2012). The Third Circuit reviews district court decisions 

on such motions de novo. Acumed LLC v. Adv. Surgical 

Servs., Inc., 561 F.3d 199, 211 (3d Cir. 2009) (citing Monteiro v. City of Elizabeth, 436 F.3d 397, 404 (3d Cir. 2006)). 
18 SRI INT’L, INC. v. CISCO SYS., INC.

In the Third Circuit, a “court may grant a judgment as a 

matter of law contrary to the verdict only if ‘the record is 

critically deficient of the minimum quantum of evidence’ to 

sustain the verdict.” Id. (citing Gomez v. Allegheny Health 

Servs., Inc., 71 F.3d 1079, 1083 (3d Cir. 1995)). The court 

should grant JMOL “sparingly” and “only if, viewing the 

evidence in the light most favorable to the nonmovant and 

giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find liability.” Marra v. Phila. Hous. Auth., 

497 F.3d 286, 300 (3d Cir. 2007) (quoting Moyer v. United 

Dominion Indus., Inc., 473 F.3d 532, 545 n.8 (3d Cir.

2007)). 

As the Supreme Court stated in Halo, “[t]he sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, badfaith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.” Halo Elecs., Inc. v. Pulse 

Elecs., Inc., 136 S. Ct. 1923, 1932 (2016). While district 

courts have discretion in deciding whether or not behavior 

rises to that standard, such findings “are generally reserved for egregious cases of culpable behavior.” Id. Indeed, as Justice Breyer emphasized in his concurrence, it 

is the circumstances that transform simple “intentional or 

knowing” infringement into egregious, sanctionable behavior, and that makes all the difference. Id. at 1936 (Breyer, 

J., concurring). A patentee need only show by a preponderance of the evidence the facts that support a finding of willful infringement. Id. at 1934. 

In denying Cisco’s motion for JMOL on willfulness, the 

district court concluded that the jury’s willfulness determination was supported by two evidentiary bases. First, the 

court identified evidence that “key Cisco employees did not 

read the patents-in-suit until their depositions.” Post-Trial 

Motions Op., 254 F. Supp. 3d at 717. Second, the court 

identified evidence that Cisco designed the products and 

services in an infringing manner and that Cisco instructed 
SRI INT’L, INC. v. CISCO SYS., INC. 19

its customers to use the products and services in an infringing manner. Based on these two facts, the district court 

denied Cisco’s renewed motion for JMOL on willfulness, 

stating that “[v]iewing the record in the light most favorable to SRI, substantial evidence supports the jury’s subjective willfulness verdict.” Id.

On appeal, SRI identifies additional evidence that purportedly supports the jury’s willfulness verdict. Specifically, SRI presented evidence that Cisco expressed interest 

in the patented technology and met with SRI’s inventor in 

2000 before developing its infringing products. J.A. 1484–

86; J.A. 5027. Additionally, SRI submitted evidence that 

Cisco received a notice letter from SRI’s licensing consultant on May 8, 2012, informing Cisco of the asserted patents 

(a year before SRI filed the complaint). Finally, like the 

district court, SRI makes much of the fact that “key engineers” did not look at SRI’s patents until SRI took their 

depositions during this litigation. In particular, Cisco engineers Martin Roesch and James Kasper did not look at 

the patent until their depositions in 2015.

Even accepting this evidence as true and weighing all 

inferences in SRI’s favor, we conclude that the record is insufficient to establish that Cisco’s conduct rose to the level 

of wanton, malicious, and bad-faith behavior required for 

willful infringement. First, it is undisputed that the Cisco 

employees who did not read the patents-in-suit until their 

depositions were engineers without legal training. Given 

Cisco’s size and resources, it was unremarkable that the 

engineers—as opposed to Cisco’s in-house or outside counsel—did not analyze the patents-in-suit themselves. The 

other rationale offered by the district court—that Cisco designed the products and services in an infringing manner 

and that Cisco instructed its customers to use the products 

and services in an infringing manner—is nothing more 

than proof that Cisco directly infringed and induced others 

to infringe the patents-in-suit.
20 SRI INT’L, INC. v. CISCO SYS., INC.

It is undisputed that Cisco did not know of SRI’s patent 

until May 8, 2012, when SRI sent its notice letter to Cisco. 

Oral Arg. at 23:46, available at http://oralarguments.cafc.

uscourts.gov/default.aspx?fl=2017-2223.mp3. It is also undisputed that this notice letter was sent years after Cisco 

independently developed the accused systems and first sold 

them in 2005 (Cisco) and 2007 (Sourcefire). As SRI admits, 

the patents had not issued when the parties met in 

May 2000. Indeed, the patent application for the parent 

’203 patent was not even filed until several months after 

the parties met. Thus, Cisco could not have been aware of 

the patent application.

While the jury heard evidence that Cisco was aware of 

the patents in May 2012, before filing of the lawsuit, we do 

not see how the record supports a willfulness finding going 

back to 2000. As the Supreme Court recently observed, 

“culpability is generally measured against the knowledge 

of the actor at the time of the challenged conduct.” Halo, 

136 S. Ct. at 1933. Similarly, Cisco’s allegedly aggressive 

litigation tactics cannot support a finding of willful infringement going back to 2000, especially when the litigation did not start until 2012. Finally, Cisco’s decision not 

to seek an advice-of-counsel defense is legally irrelevant 

under 35 U.S.C. § 298. 

Viewing the record in the light most favorable to SRI, 

the jury’s verdict of willful infringement before May 8, 2012 

is not supported by substantial evidence. Given the general verdict form, we presume the jury also found that 

Cisco willfully infringed after May 8, 2012. When reviewing a denial of JMOL, “where there is a black box jury verdict, as is the case here, we presume the jury resolved 

underlying factual disputes in favor of the verdict winner

and leave those presumed findings undisturbed if supported by substantial evidence.” Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., 876 F.3d 1350, 1358 

(Fed. Cir. 2017), (citing WBIP, LLC v. Kohler Co., 829 F.3d 

1317, 1326 (Fed. Cir. 2016)), cert. denied, 139 S. Ct. 143 
SRI INT’L, INC. v. CISCO SYS., INC. 21

(2018). We leave it to the district court to decide in the first 

instance whether the jury’s presumed finding of willful infringement after May 8, 2012 is supported by substantial 

evidence.6 In so doing, the court should bear in mind the 

standard for willful infringement, as well as the above 

analysis regarding SRI’s evidence of willfulness. Accordingly, we vacate and remand the district court’s denial of 

Cisco’s renewed motion for JMOL of no willful infringement.

Cisco also argues that the district court abused its discretion by doubling damages. Enhanced damages under 

§ 284 are predicated on a finding of willful infringement. 

Because we conclude that the jury’s finding of willfulness 

before 2012 was not supported by substantial evidence, we 

do not reach the propriety of the district court’s award of 

enhanced damages. Instead, we vacate the award of enhanced damages and remand for further consideration 

along with willfulness.

V

We next turn to the district court’s award of attorneys’

fees under § 285, which we vacate and remand for further 

consideration. Under § 285, a “court in exceptional cases 

may award reasonable attorney fees to the prevailing 

 

6 We recognize that, ideally, it should not fall to the 

district court to determine when, if ever, willful infringement began through the mechanism of JMOL. Rather, the 

question of when willful infringement began is a fact issue 

that would have been best presented to the jury in a special 

verdict form with appropriate jury instructions. Better yet, 

perhaps SRI could have recognized the shortcomings in its 

case and presented a more limited case of willful infringement from 2012 onwards. Or perhaps Cisco could have 

filed a motion for summary judgment of no willful infringement prior to May 8, 2012. 
22 SRI INT’L, INC. v. CISCO SYS., INC.

party.” An “exceptional” case under § 285 is “one that 

stands out from others with respect to the substantive 

strength of a party’s litigating position (considering both 

the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane 

Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 

554 (2014). The party seeking fees must prove that the 

case is exceptional by a preponderance of the evidence, and 

the district court makes the exceptional case determination 

on a case-by-case basis considering the totality of the circumstances. See id. at 554, 557.

We review a district court’s grant or denial of attorneys’ 

fees for an abuse of discretion, which is a highly deferential 

standard of review. Highmark Inc. v. Allcare Health Mgmt. 

Sys., Inc., 572 U.S. 559, 564 (2014); Bayer CropScience AG 

v. Dow AgroSciences LLC, 851 F.3d 1302, 1306 (Fed. Cir. 

2017) (citing Mentor Graphics Corp. v. Quickturn Design 

Sys., Inc., 150 F.3d 1374, 1377 (Fed. Cir. 1998)). To meet 

the abuse-of-discretion standard, the appellant must show 

that the district court made “a clear error of judgment in 

weighing relevant factors or in basing its decision on an error of law or on clearly erroneous factual findings.” Bayer, 

851 F.3d at 1306 (quoting Mentor Graphics, 150 F.3d 

at 1377); see also Highmark, 572 U.S. at 563 n.2.

We see no such error in the district court’s determination that this was an exceptional case. The district court 

found: 

There can be no doubt from even a cursory review 

of the record that Cisco pursued litigation about as 

aggressively as the court has seen in its judicial experience. While defending a client aggressively is 

understandable, if not laudable, in the case at bar, 

Cisco crossed the line in several regards.

Post-Trial Motions Op., 254 F. Supp. 3d at 722. 
SRI INT’L, INC. v. CISCO SYS., INC. 23

The district court further explained that “Cisco’s litigation strategies in the case at bar created a substantial 

amount of work for both SRI and the court, much of which 

work was needlessly repetitive or irrelevant or frivolous.” 

Id. at 723 (footnotes omitted). Indeed, the district court inventoried Cisco’s aggressive tactics, including maintaining 

nineteen invalidity theories until the eve of trial but only 

presenting two at trial and pursuing defenses at trial that 

were contrary to the court’s rulings or Cisco’s internal documents. Id. at 722. Nevertheless, the district court relied 

in part on the fact that the jury found that Cisco’s infringement was willful in its determination to exercise its discretion pursuant to § 285 to award SRI its attorneys’ fees and 

costs. Id. at 723. Accordingly, we vacate the district court’s 

award of attorneys’ fees and remand for further consideration along with willfulness.

We take no issue with the district court’s award of attorneys’ fees at the attorneys’ billing rates without adjusting them to Delaware rates. At the same time, however, 

the district court erred in granting all of SRI’s fees. Section 285 permits a prevailing party to recover reasonable 

attorneys’ fees, but not fees for hours expended by counsel 

that were “excessive, redundant, or otherwise unnecessary.” Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). We 

accordingly conclude that the district court should have reduced SRI’s total hours to eliminate clear mistakes. For 

example, one billing entry reads “DON’T RELEASE, 

CLIENT MATTER NEEDS TO BE CHANGED.” 

J.A. 32384. Accordingly, should the district court award 

attorneys’ fees on remand, it must remove attorney hours 

clearly included by mistake in its calculation of reasonable

attorneys’ fees. 

VI

We review for abuse of discretion a district court’s 

grant of an ongoing royalty. Whitserve, LLC v. Comput.

Packages, Inc., 694 F.3d 10, 35 (Fed. Cir. 2012). Here, the 
24 SRI INT’L, INC. v. CISCO SYS., INC.

district court did not abuse its discretion in awarding “a

3.5% compulsory license for all post-verdict sales.” PostTrial Motions Op., 254 F. Supp. 3d at 724. The district 

court’s ongoing royalty rate equals the rate found by the 

jury and the base is limited to the “accused products and 

services.” J.A. 182.

On appeal, Cisco argues that the district court abused 

its discretion in awarding the 3.5% ongoing royalty on “all 

post-verdict sales” without considering Cisco’s designarounds. According to Cisco, the court was obligated to assess whether Cisco’s redesigned products and services were 

more than colorably different from those products and services adjudicated at trial, and if not, whether those redesigned products and services infringe. To this end, Cisco 

moved to supplement its post-trial briefing with declarations describing its redesign efforts. Cisco argues that the 

district court abused its discretion by denying its motion to 

supplement.7 We disagree. The district court properly exercised its discretion in denying Cisco’s motion to supplement the record regarding alleged post-verdict designaround activity. Cisco did not redesign its products until 

after trial, and Cisco did not file its motion to supplement 

until after completion of post-trial briefing. Given the 

 

7 Finally, Cisco argues that, in the same order in 

which the court stated that “[t]here are no post-verdict royalties,” the court awarded a post-verdict royalty—an internal inconsistency. J.A. 175. We do not ascribe weight to 

the apparent clerical error creating the inconsistency. The 

district court’s final judgment order is clear that “Cisco 

shall pay a 3.5% compulsory license on all post-verdict 

sales of the accused products and services.” J.A. 182. To 

the extent that clear statement conflicts with the single 

sentence in the memorandum opinion, we think the court 

made its intentions clear in its final judgment and we see 

no error by the district court.
SRI INT’L, INC. v. CISCO SYS., INC. 25

stage of the proceedings and SRI’s opposition, the trial 

court acted within its discretion when denying Cisco’s motion to supplement. 

To the extent the district court’s order is unclear—and 

we think it is not—we reconfirm that the ongoing royalty 

on post-verdict sales is limited to products that were actually found to infringe and products that are not colorably 

different. We discern no error in the district court’s determination that Cisco’s submissions were untimely. Nevertheless, we acknowledge that the district court has not yet 

determined whether products and services that were not 

accused (that is, changed after the jury verdict) are colorably different for purposes of ongoing royalty calculations. 

Such an issue could be resolved in a future proceeding.

CONCLUSION

For the reasons above, we affirm the district court’s denial of summary judgment that the asserted claims are patent-ineligible. We also agree with the district court’s 

construction of “network traffic data” and affirm the district court’s grant of summary judgment of no anticipation. 

We vacate and remand the district court’s denial of Cisco’s 

renewed motion for judgment as a matter of law that Cisco 

did not willfully infringe the asserted claims. Accordingly, 

we vacate and remand the district court’s awards of enhanced damages and attorneys’ fees. Finally, we affirm the 

district court’s orders granting enhanced damages and ongoing royalties.

AFFIRMED-IN-PART, VACATED-IN-PART, 

AND REMANDED

COSTS

No costs.
United States Court of Appeals 

for the Federal Circuit ______________________

SRI INTERNATIONAL, INC.,

Plaintiff-Appellee

v.

CISCO SYSTEMS, INC.,

Defendant-Appellant

______________________

2017-2223

______________________

Appeal from the United States District Court for the 

District of Delaware in No. 1:13-cv-01534-SLR-SRF, Judge 

Sue L. Robinson.

______________________

LOURIE, Circuit Judge, dissenting.

I respectfully dissent from the majority’s decision upholding the eligibility of the claims. In my view, they are 

clearly abstract. In fact, they differ very little from the 

claims in Electric Power Group, LLC v. Alstom S.A., 830 

F.3d 1350, 1355 (Fed. Cir. 2016), where we found the 

claims to be abstract.

The majority opinion focuses on claim 1 of U.S. Patent 

6,711,615 (“the ’615 patent”), which recites: 

1. A computer-automated method of hierarchical 

event monitoring and analysis within an enterprise 

network comprising:
2 SRI INT’L, INC. v. CISCO SYS., INC.

deploying a plurality of network monitors 

in the enterprise network; 

detecting, by the network monitors, suspicious network activity based on analysis of 

network traffic data selected from one or 

more of the following categories: {network 

packet data transfer commands, network 

packet data transfer errors, network 

packet data volume, network connection 

requests, network connection denials, error 

codes included in a network packet, network connection acknowledgements, and 

network packets indicative of well-known 

network-service protocols}; 

generating, by the monitors, reports of said 

suspicious activity; and 

automatically receiving and integrating 

the reports of suspicious activity, by one or 

more hierarchical monitors.

Similarly, the claim we reviewed in Electric Power 

Group recited “[a] method of detecting events on an interconnected electric power grid in real time over a wide area 

and automatically analyzing the events on the interconnected electric power grid,” with the method comprising 

eight steps, including “receiving data,” “detecting and analyzing events in real time,” “displaying the event analysis 

results and diagnoses of events,” “accumulating and updating measurements,” and “deriving a composite indicator of

reliability.” 830 F.3d at 1351–52.

While that claim was lengthy, with eight steps, it 

merely described selecting information by content or source 

for collection, analysis, and display. Id. at 1351. In finding 

the claim directed to an abstract idea, we reasoned that 

“collecting information, including when limited to particular content (which does not change its character as 
SRI INT’L, INC. v. CISCO SYS., INC. 3

information)” was an abstract idea. Id. at 1353. Limiting 

the claim to a particular technological environment—

power-grid monitoring—was insufficient to transform it

into a patent-eligible application of the abstract idea at its

core. Id. at 1354. The claim was rooted in computer technology only to the extent that the broadly-recited steps required a computer. At step two, we noted that the claim 

did not require an “inventive set of components or methods . . . that would generate new data,” and did not “invoke 

any assertedly inventive programming.” Id. at 1355.

This case is hardly distinguishable from Electric Power 

Group. The claims in that case are said in the majority 

opinion to only be drawn to using computers as tools to 

solve a problem, rather than improving the functionality of 

computers and computer networks. 

The claims here recite nothing more than deploying 

network monitors, detecting suspicious network activity, 

and generating and handling reports. The detecting of the 

suspicious activity is based on “analysis” of traffic data, but 

the claims add nothing concerning specific means for doing 

so. The claims only recite the moving of information. The 

computer is used as a tool, and no improvement in computer technology is shown or claimed. There is no specific 

technique described for improving computer network security. 

I would find the claims directed to the abstract idea of

monitoring network security and proceed to step two of Alice. As in Electric Power Group, however, “[n]othing in the 

claims, understood in light of the specification, requires anything other than off-the-shelf, conventional computer, 

network, and display technology . . . .” 830 F.3d at 1355. 

The claims recite “types of information and information 

sources,” id., but such selection of information by content 

or source does not provide an inventive concept. Id. The 

specification further makes clear that the claims only rely 

on generic computer components, including a computer, 
4 SRI INT’L, INC. v. CISCO SYS., INC.

memory, processor, and mass storage device. See ’615 patent, col. 14 ll. 50–57. Indeed, the specification even deems 

the relevant memory bus and peripheral bus “customary 

components.” Id. col. 14 l. 55.

Finally, the majority opinion quotes from and paraphrases language from the specification that only recites 

results, not means for accomplishing them. See, e.g., Majority Op. at 9. The claims as written, however, do not recite a specific way of enabling a computer to monitor 

network activity. As we noted in Electric Power Group, result-focused, functional claims that effectively cover any 

solution to an identified problem, like those at issue here, 

frequently run afoul of Alice. 830 F.3d at 1356. 

Thus, I would find the claims to be directed to an abstract idea at Alice step one, without an inventive concept 

at step two, and reverse the district court’s finding of eligibility. Because I would find the claims at issue to be ineligible, I would not reach the remaining issues in the case.