Opinion ID: 175546
Heading Depth: 4
Heading Rank: 1

Heading: Evidence of Direct Infringement

Text: As an initial matter, Netgear asks us to find no evidence of direct infringement because the district court relied on the WMM Specification (i.e., § 9.4), rather than the accused products, in assessing infringement. Netgear argues that we should establish a rule precluding the use of industry standards in assessing infringement. 1 Netgear argues that we should require a plaintiff to separately accuse and prove infringement for all accused products, even if those products all comply with a standard that is relevant to the patent-in-suit. It argues that it is legally incorrect to compare claims to a standard rather than directly to accused products. Netgear further argues policy reasons to disallow the use of standards in infringement determination. Specifically, it argues that a holding that practicing a standard infringes a patent would amount to an automatic conclusion of infringement 1 Netgear argues this for all of the patents-in-suit. 7 FUJITSU LIMITED v. NETGEAR against all future accused infringers. It argues that these later litigants would be deprived of a fair opportunity to prove that their products do not infringe. Amicus Association of Corporate Counsel, supporting Netgear’s position, argues that it is dangerous to assess infringement based on a standard because the text of a standard may not be specific enough to ensure that all possible implementations infringe a patent claim. Further, it argues that many standard sections are optional and that users may never activate a potentially infringing feature. Finally, Amicus argues that to allow this type of analysis would have a “chilling effect” on industries that rely on standards. It argues that companies would be less likely to comply with industry standards if a patent owner can argue that all compliant products infringe. Philips argues that we have approved the use of standards in assessing patent infringement in Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263 (Fed. Cir. 2004) and Broadcom Corp. v. ITC, 542 F.3d 894 (Fed. Cir. 2008). It argues that, in these cases, we compared a standard to the patent claims and determined that the scope of the claims did not encompass every implementation of the standard. Although these cases resulted in findings of noninfringement, Philips argues that they show our willingness to rely on standards in assessing infringement. Philips further argues that it is more efficient for courts to assess infringement based on industry standards when applicable. It argues that this can alleviate the need for highly technical fact-finding such as the review of complicated source code. It also argues that when a standard provides the necessary level of specificity, this saves judicial resources by not requiring the courts to FUJITSU LIMITED v. NETGEAR 8 separately consider products that all function in accordance with that standard. We hold that a district court may rely on an industry standard in analyzing infringement. If a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement. We agree that claims should be compared to the accused product to determine infringement. However, if an accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product. We accepted this approach in Dynacore where the court held a claim not infringed by comparing it to an industry standard rather than an accused product. An accused infringer is free to either prove that the claims do not cover all implementations of the standard or to prove that it does not practice the standard. Public policy weighs in favor of this approach. If a court determines that all implementations of a standard infringe the claims of a patent, then it would be a waste of judicial resources to separately analyze every accused product that undisputedly practices the standard. This is not prejudicial to present or future litigants. If two products undisputedly operate in the same manner, a finding of infringement against one will create a persuasive case against the other. In such a case, there will be no prejudice. We acknowledge, however, that in many instances, an industry standard does not provide the level of specificity required to establish that practicing that standard would always result in infringement. Or, as with the ’952 patent, the relevant section of the standard is optional, and standards compliance alone would not establish that the 9 FUJITSU LIMITED v. NETGEAR accused infringer chooses to implement the optional section. In these instances, it is not sufficient for the patent owner to establish infringement by arguing that the product admittedly practices the standard, therefore it infringes. In these cases, the patent owner must compare the claims to the accused products or, if appropriate, prove that the accused products implement any relevant optional sections of the standard. This should alleviate any concern about the use of standard compliance in assessing patent infringement. Only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance. In the instant case, the district court held that compliance with the fragmentation sections of the 802.11 Standard would result in infringement of the asserted claims. However, the district court held that these sections are optional, that fragmentation is not a requirement of the standard. Specifically, the court noted that the relevant sections of the standard do not require fragmentation, they simply describe how to fragment. Second Noninfringement Opinion, 2009 WL 3047616, at . Therefore, someone could comply with the standard without fragmenting, and thereby not infringe the patent. The court noted the undisputed fact that the accused products are capable of fragmentation, but default to no fragmentation. In other words, the court relied on the fact that when a customer purchases the accused product, it does not fragment until and unless the customer purposely activates this option. Id. at -27. The district court held that unless a customer activated the fragmenting option, then there was no direct infringement. Therefore, the district court held that Philips must show evidence of direct infringement by showing that customers actually use the infringing fragmentation features. FUJITSU LIMITED v. NETGEAR 10 Philips presented user manuals that describe fragmentation, advertisements, the 802.11 Standard, and customer service records that showed when Netgear’s support staff advised customers to activate fragmentation. The district court determined that only the customer service records were evidence of direct infringement and noted that Philips presented this evidence for just four models of the accused products: WPN111, WG511, WPN824, and WG311T. It held that all other evidence (customer service manuals, advertisements, etc.) were only evidence of capability to infringe, and did not amount to evidence of actual direct infringement. On appeal, the parties do not dispute that when a product fragments messages in accordance with § 9.4, it infringes the asserted claims. They dispute the extent to which customers activate the fragmentation function and thus directly infringe. Philips argues that the district court erred by requiring evidence of direct infringement. Citing Ricoh Co. v. Quanta Computer Inc., 550 F.3d 1325, 1338 (Fed. Cir. 2009), Philips argues that because the fragmentation component of the accused products necessarily infringes when it is used, we should presume instances of direct infringement. It further argues that under Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1326 (Fed. Cir. 2009), evidence that an accused device will infringe in some circumstances combined with the occurrence of those circumstances is sufficient to support a finding of direct infringement. Philips further argues that it presented circumstantial evidence of direct infringement sufficient to withstand summary judgment. It argues that user manuals describing fragmentation and the availability of a fragmentation tool are evidence of direct infringement. Netgear argues that simply because the accused products may be capable of infringement does not mean 11 FUJITSU LIMITED v. NETGEAR that they necessarily infringe. It argues that Ricoh is not relevant because that case did not present a question of direct infringement and only addressed whether a product has substantial noninfringing uses. Netgear also argues that Philips’ circumstantial evidence does not amount to a genuine issue of material fact. We agree with the district court that Philips failed to establish a genuine issue of material fact regarding direct infringement for all but the four models with corresponding customer service records. Unless the claim language only requires the capacity to perform a particular claim element, we have held that it is not enough to simply show that a product is capable of infringement; the patent owner must show evidence of specific instances of direct infringement. Intel Corp. v. U.S. Int’l Trade Comm’n, 946 F.2d 821, 832 (Fed. Cir. 1991) (holding that the claim term “programmable selection means” only required that the infringing product be capable of infringing); Acco Brands, Inc. v. ABA Locks Mfg. Co., 501 F.3d 1307, 1313 (Fed. Cir. 2007) (holding that the patent owner must show actual infringement, rather than just the capability to infringe). The present case is similar to Acco, where the accused product worked in two modes, only one of which infringed and the claim was not drawn to the mere capability to perform an element. Id. The patent owner presented expert testimony and instructions for the product that showed it could operate in an infringing manner. Id. With the exception of the customer service records, Philips’ evidence shows only that the accused products are capable of infringement. The cases cited by Philips are distinguishable from the present case. In Vita-Mix, there was expert testimony that certain testing and demonstrations conducted by the defendant constituted direct infringement. Id. at 1325. There is no equivalent testimony or evidence here, the FUJITSU LIMITED v. NETGEAR 12 manuals and expert testing only show that the products are capable of infringing, they do not provide evidence of direct infringement. Further, Ricoh is distinguishable because it dealt with the presence of noninfringing uses rather than direct infringement. These are two separate requirements for contributory infringement and Philips must establish both. We hold that Philips failed to establish a genuine issue of material fact regarding direct infringement for all but the four accused models identified by the district court as being the subject of the relevant customer service records.