Court Opinion

ID: 807368
Source: CourtListenerOpinion
Date Created: 2012-08-24 15:19:04+00
Date Added: 2024-06-11T18:00:24.648930
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
               __________________________

         ACTIVEVIDEO NETWORKS, INC.,
             Plaintiff-Cross Appellant,
                            v.
  VERIZON COMMUNICATIONS, INC., VERIZON
             SERVICES CORP.,
 VERIZON VIRGINIA INC., AND VERIZON SOUTH
                   INC.,
            Defendants-Appellants.
               __________________________

           2011-1538, -1567, 2012-1129, -1201
              __________________________

   Appeals from the United States District Court for the
Eastern District of Virginia in case no. 10-CV-0248, Judge
Raymond A. Jackson.
              ___________________________

                Decided: August 24, 2012
              ___________________________

    THOMAS M. PETERSON, Morgan, Lewis & Bockius,
LLP, of, San Francisco, California, argued for plaintiff-
cross appellant. With him on the brief were DANIEL
JOHNSON, JR. and BRETT M. SCHUMAN; and MICHAEL J.
LYONS, DION M. BREGMAN, AHREN C. HSU-HOFFMAN and
MICHAEL F. CARR and JASON E. GETTLEMAN, of Palo Alto,
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   2

California; NATHAN W. MCCUTCHEON and DAVID M.
MORRIS, of Washington, DC.

    MICHAEL K. KELLOGG, Kellogg, Huber, Hansen, Todd,
Evans & Figel, P.L.L.C. of Washington, DC, argued for
defendants-appellants. With him on the brief were EVAN
T. LEO and W. JOSS NICHOLS. Of counsel on the brief were
JOHN THORNE and JOHN P. FRANTZ, Verizon Communica-
tions Inc., of Arlington, Virginia, and GREGORY N.
STILLMAN, Hunton & Williams LLP, of Norfolk, Virginia;
and HENRY B. GUTMAN and NOAH M. LEIBOWITZ, Simpson
Thacher & Bartlett, LLP, of New York, New York. Of
counsel were LEONARD C. SUCHYTA and Caren Khoo,
Verizon Corporate Resources Group, of Basking Ridge,
New Jersey; and RICHARD G. TARANTO, Farr & Taranto, of
Washington, DC.
              __________________________

    Before BRYSON, DYK, and MOORE, Circuit Judges.
MOORE, Circuit Judge.

    These appeals stem from a patent infringement action
brought by ActiveVideo Networks, Inc. (ActiveVideo)
against Verizon Communications, Inc. et al. (Verizon).
Verizon counterclaimed that ActiveVideo infringed cer-
tain of its patents. After trial, a jury found that Verizon
infringed four ActiveVideo patents and that ActiveVideo
infringed two Verizon patents and awarded damages to
both parties. Following trial, the district court entered a
permanent injunction against Verizon but delayed en-
forcement of the injunction for six months during which
Verizon was ordered to pay a sunset royalty. On appeal,
Verizon challenges the infringement finding and damages
award as well as the permanent injunction and sunset
3                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

royalty. Verizon also appeals the district court’s grant of
summary judgment of invalidity as to a third Verizon
patent and its grant of judgment as a matter of law
(JMOL) preventing Verizon’s invalidity defenses from
reaching the jury. ActiveVideo cross-appeals the district
court’s denial of JMOL of non-infringement and its grant
of JMOL preventing ActiveVideo’s invalidity defenses
from reaching the jury. For the reasons set forth below,
we affirm-in-part, reverse-in-part, vacate-in-part, and
remand.
                      BACKGROUND
    ActiveVideo asserted U.S. Patent Nos. 5,550,578 (’578
patent), 6,205,582 (’582 patent), 6,034,678 (’678 patent),
and 6,100,883 (’883 patent) against Verizon at trial.
ActiveVideo alleged that Verizon’s video on demand (VoD)
feature of the Verizon FiOS-TV system infringed claim 9
of the ’578 patent, claims 1 and 2 of the ’678 patent,
claims 1 and 26 of the ’883 patent, and claims 5, 7, and 8
of the ’582 patent. The ’578, ’678, and ’883 patents share
a common specification and generally disclose and claim
interactive television systems and methods for delivering
interactive television to subscribers. For purposes of the
issues on appeal, the ’578 and ’883 patents generally
disclose a system with three major components: (1) a
headend processing center with information storage and
processing capabilities to provide information services
such as VoD to subscribers; (2) home interface controllers
connected to subscriber televisions that receive and
display information services from the headend and allow
subscribers to request information services from the
headend; and (3) a communication network between the
headend and home interface controllers. The ’678 patent
generally discloses a method of delivering information
services to cable subscribers by establishing interactive
sessions over a cable distribution network between a
ACTIVEVIDEO   v. VERIZON COMMUNICATION                     4

headend node and a home interface controller connected
to a subscriber television. The ’582 patent generally
discloses an interactive television system where the
headend processing center includes a frame server com-
ponent and a plurality of individually assignable proces-
sors, which communicate with assigned home interface
controllers.
    Verizon asserted counterclaims that ActiveVideo in-
fringed claim 1 of U.S. Patent No. 6,169,542 (’542 patent)
and claim 9 of U.S. Patent No. 7,561,214 (’214 patent).
Verizon also asserted U.S. Patent No. 6,381,748 (’748
patent), but this patent was held invalid by the district
court prior to trial. The three Verizon patents generally
disclose systems and methods related to interactive
television features, including internet access (’748 patent),
two-dimensional channel navigation (’214 patent), and
advertising (’542 patent).
    During a three week jury trial, the district court ex-
cluded testimony from Verizon’s damages expert about an
agreement between ActiveVideo and Cablevision because
the agreement post-dated the date of hypothetical nego-
tiation. The district court overruled Verizon’s objection
and allowed testimony from ActiveVideo’s damages expert
about indemnity agreements Verizon had with its FiOS-
TV equipment suppliers. The district court also denied
Verizon’s motion for JMOL on damages, concluding that
Verizon failed to establish that it was an intended third-
party beneficiary to an agreement between ActiveVideo
and TV Guide, which potentially barred any assessment
of damages against Verizon prior to the agreement’s
expiration. The district court granted-in-part and denied-
in-part Verizon’s motion for JMOL on pre-suit damages
for ActiveVideo’s failure to mark its products under
35 U.S.C. § 287. And the district court granted both
ActiveVideo’s and Verizon’s motions for JMOL on validity,
5                    ACTIVEVIDEO   v. VERIZON COMMUNICATION

preventing the invalidity defenses of both ActiveVideo
and Verizon to reach the jury.
    The jury found that the parties infringed each others’
patents and awarded ActiveVideo $115,000,000 and
Verizon $16,000 in damages. After trial, the district court
entered a permanent injunction against Verizon, estab-
lished a sunset royalty for Verizon’s continued infringe-
ment until the injunction was to take effect, and denied
Verizon’s motions for JMOL or new trial on infringement,
damages, and invalidity. The district court also denied
ActiveVideo’s motions for partial new trial on infringe-
ment and invalidity. Verizon appeals and ActiveVideo
cross appeals. On June 25, 2012, after oral argument in
this case, we stayed the permanent injunction pending
appeal.          We      have      jurisdiction      under
28 U.S.C. § 1295(a)(1).
                          DISCUSSION
                     I.   Infringement
    We review the denial or grant of JMOL under re-
gional circuit law. ClearValue, Inc. v. Pearl River Poly-
mers, Inc., 668 F.3d 1340, 1343 (Fed. Cir. 2012). The
Fourth Circuit reviews post-verdict JMOL rulings de
novo, determining whether substantial evidence supports
the jury verdict. Carolina Trucks & Equip., Inc. v. Volvo
Trucks of N. Am., 492 F.3d 484, 488 (4th Cir. 2007). The
Fourth Circuit reviews the grant of pre-verdict JMOL
rulings de novo, considering the evidence in the light most
favorable to the non-moving party and determining
whether a reasonable jury could find for the non-moving
party on the issue in question. Brown v. CSX Transp., 18
F.3d 245, 248 (4th Cir. 1994) (citing Fed. R. Civ. P. 50(a)).
    Determining literal infringement is a two step proc-
ess: the “proper construction of the asserted claim and a
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   6

determination whether the claim as properly construed
reads on the accused product or method.” Georgia-Pacific
Corp. v. U.S. Gypsum Co., 195 F.3d 1322, 1330 (Fed. Cir.
1999). The first step is a question of law, which we review
de novo. Id. The second step is a question of fact, which
we review for substantial evidence. i4i Ltd. P’Ship v.
Microsoft Corp, 598 F.3d 831, 849 (Fed. Cir. 2010), aff’d,
131 S. Ct. 2238 (2011).
    Verizon contends the district court committed three
errors in denying Verizon’s JMOL of non-infringement.
First, Verizon argues that the district court erred because
its FiOS-TV system does not meet the “information ser-
vice” limitation, which is required by every asserted
claim. Second, with respect to the ’578 patent only,
Verizon argues that the district court erred because its
FiOS-TV system does not satisfy the “television communi-
cation” limitation. Third, with respect to the ’582 patent
only, Verizon argues that the district court erred because
the Verizon FiOS-TV system does not satisfy the “indi-
vidually assignable processors” limitation.
    In cross-appeal, ActiveVideo argues that the district
court committed two errors in denying its JMOL of non-
infringement. First, ActiveVideo argues that the district
court erred in failing to construe the “superimposing”
limitation in the ’214 patent and that under the correct
construction, ActiveVideo’s system does not infringe.
Second, ActiveVideo contends that the district court’s
construction of “video still image” was erroneous and that
under the correct construction, ActiveVideo’s system does
not infringe.
7                    ACTIVEVIDEO   v. VERIZON COMMUNICATION

                 A. “information service”

    The term “information service” appears in each claim
asserted by ActiveVideo. 1 The district court adopted an
agreed construction for “information service,” which is set
forth in each of the patent specifications:
    a service capable of being furnished to a television
    viewer having an interface permitting (but not
    necessarily requiring) interaction with a facility of
    the cable provider, including but not limited to an
    interactive information service, video on demand,
    local origination service, community event service,
    regular broadcast service, etc.
J.A. 215 (emphasis added); ’578 patent col.5 ll.28-34; ’678
patent col.5 ll.25-31; ’883 patent col.5 ll.25-31; ’582 patent
col.3 ll.36-43. For purposes of this appeal, claim 8 of the
’578 patent, from which asserted claim 9 depends, is
representative. It reads:
    An interactive television information system . . .
    comprising:
        a plurality of home interface controllers,
        one such home interface controller associ-
        ated with each subscriber television, for
        providing an output in communication
        with the subscriber television and having
        (i) a signal output for television informa-

    1   The term “information service” appears in ’582
patent claims 5, 7, and 8, ’678 patent claims 1 and 2, ’578
patent claim 9, and ’883 patent claim 1. For ’883 patent
claim 26, the district court construed “interactive mode”
as “a mode in which the node is providing an information
service to the home interface controller . . . .” J.A. 254
(emphasis added); see ’883 patent col.5 ll.40-44. This
construction is not challenged.
ACTIVEVIDEO   v. VERIZON COMMUNICATION                 8

       tion signal and (ii) a data transceiver op-
       erative over a data communications link to
       the headend;
       a plurality of subscriber selection devices,
       one device associated with each home in-
       terface controller and in communication
       with the data transceiver, for permitting
       subscriber interaction; and
       a plurality of interactive controllers, dis-
       posed at the headend, each interactive
       controller (i) in television communication
       with the information source means and (ii)
       in assignable television communication
       over the network with an assigned home
       interface controller and (iii) in assignable
       data communication over the data com-
       munications link with the assigned home
       interface controller, so that the interactive
       controller furnishes the information ser-
       vice interactively over the network to the
       assigned home interface controller and its
       associated television.
’578 patent claim 8 (emphasis added).
    Verizon argues that FiOS-TV does not infringe be-
cause its “interface” is generated not by the “headend”
network as required by the asserted claims but instead by
the accused home interface controllers (set-top-boxes or
STBs) that are located in subscriber homes. Verizon
contends that the asserted claims require the network
“headend” to generate and furnish the entire viewer
interface and that information content including “[d]ata
and metadata are not an interface.” Because the FiOS-TV
STBs generate the “generic user interface that is avail-
able to the user,” Verizon contends that the FiOS-TV
9                    ACTIVEVIDEO   v. VERIZON COMMUNICATION

headend network does not furnish an “information ser-
vice.”
    ActiveVideo responds that the asserted claims do not
require the interface to be “network-generated” because
under the doctrine of the last antecedent, “having an
interface” in the construction of “information service”
refers to the television viewer, not the service. Thus,
according to ActiveVideo, it is the television viewer that
must have an “interface” permitting interaction with a
facility of the cable provider. ActiveVideo argues that
because the Verizon STBs generate a viewer interface
from content received from the FiOS-TV network, the
“information service” limitation is met. Even if the inter-
face must be network-generated, ActiveVideo contends
the jury’s verdict is supported by substantial evidence
that the FiOS-TV interactive media guide, widget, and
VoD catalog interfaces are generated by the network.
    We agree that substantial evidence supports the jury’s
verdict and district court’s denial of JMOL. The construc-
tion of “information service,” which is not disputed on
appeal, requires that the service furnished by the
headend network have “an interface permitting (but not
necessarily requiring) interaction with a facility of the
cable provider.” We disagree with Verizon that the con-
struction requires the entire viewer interface to be fur-
nished by the headend network or that the interface
furnished must take any specific form. We likewise reject
Verizon’s assertion that under this construction, “[d]ata
and metadata are not an interface.” Appellants’ Br. 15.
The district court’s construction is not so narrow; it states
“interface permitting . . . interaction” and does not other-
wise specify the nature of the interface. The construction
also does not preclude the interface furnished by the
headend from being processed by an STB before being
presented to a viewer. Verizon contests factual issues of
ACTIVEVIDEO   v. VERIZON COMMUNICATION                    10

infringement that were appropriately decided by the jury.
See PPG Indus. v. Guardian Indus. Corp., 156 F.3d 1351,
1355 (Fed. Cir. 1998) (“[A]fter the court has defined the
claim with whatever specificity and precision is war-
ranted by the language of the claim and the evidence
bearing on the proper construction, the task of determin-
ing whether the construed claim reads on the accused
product is for the finder of fact.”).
     ActiveVideo’s expert testified at trial that the content
for the interactive media guide, widgets, and VoD catalog,
which are viewer interfaces provided by FiOS-TV, is
provided by the headend to an STB either automatically
or as requested by a viewer. J.A. 3811-17, 5239-40, 5248-
51. ActiveVideo’s expert also testified that:
    [M]ost of the functions that would provide any
    content to a user, you know, provide a list of
    things to look at or let you watch a program or
    something, those all come down from the server.
    That is the key information that’s passed back
    from the server and then displayed to the user, for
    instance, in the form of menus.
J.A. 5213-14 (emphasis added). This is substantial evi-
dence from which the jury could reasonably conclude that
the content and information provided by the FiOS-TV
headend satisfies the information service’s “interface”
requirement. See Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938) (defining substantial evidence as “such
evidence as a reasonable mind might accept as adequate
to support a conclusion”); Fonar Corp. v. General Elec.
Co., 107 F.3d 1543, 1551-52 (Fed. Cir. 1997) (concluding
expert testimony was substantial evidence to support
jury’s infringement finding); Orthokinetics, Inc. v. Safety
Travel Chairs, Inc., 806 F.2d 1565, 1572-73 (Fed. Cir.
1986) (“Because a jury must by definition be permitted to
11                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

accept some probative evidence and reject other probative
evidence, we may not decide whether we would as jurors
have found [certain] evidence . . . believable in light of the
evidence as a whole.” (internal quotation marks omitted)).
Accordingly, the district court did not err in denying
Verizon’s JMOL on the “information service” limitation.
       B. “television communication” – ’578 patent

    Although the “television communication” limitation
appears in asserted claims of multiple patents, Verizon’s
appeal on this term is limited to the ’578 patent. See
Appellants’ Br. 18; Oral Argument at 14:10-14:35, Ac-
tiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., Nos.
2011-1538, -1567, 2012-1129, -1201, available at
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
11-1538.mp3. Independent claim 8, from which asserted
claim 9 depends, recites in relevant part: “a plurality of
interactive controllers, disposed at the headend, each
interactive controller (i) in television communication with
the information source means . . . .” ’578 patent claim 8.
The district court construed “television communication”
as “providing an information service via a television
information signal.” J.A. 216; see ’578 patent col.5 ll.35-
36. The district court construed “television information
signal” as “any signal that may be utilized by a television
for video display, regardless of the form, including a
standard NTSC-modulated rf carrier, an MPEG-
compressed digital data stream, or any other format.”
J.A. 254; see ’578 patent col.5 ll.36-40. These are the
express definitions provided in the patent specifications
and neither party challenges them.
    Verizon argues that the district court erred in denying
Verizon’s JMOL of non-infringement because the accused
FiOS-TV “interactive controllers” (headend processors) do
not communicate with an “information source” (storage
ACTIVEVIDEO   v. VERIZON COMMUNICATION                  12

servers) in a signal format compatible with a television.
Instead, Verizon argues that although FiOS-TV VoD
content is stored on servers in MPEG format, the VoD
content is transmitted from the storage servers to the
headend processors using a proprietary signal format—
CCP or RAID2—that is not compatible with a television.
    ActiveVideo responds that substantial evidence sup-
ports the jury’s determination that MPEG video is trans-
mitted between the FiOS-TV storage servers and headend
processors. Because MPEG is one type of “television
information signal” as expressly stated in the construc-
tion, ActiveVideo contends that transmission of MPEG
video between the FiOS-TV storage servers and headend
processors is “television communication.” ActiveVideo
also points out that MPEG itself is a signal that must be
decoded by an STB before being displayed on a television,
and that MPEG is expressly defined as a television infor-
mation signal. Thus, ActiveVideo argues, regardless of
whether the MPEG video in FiOS-TV is transmitted using
RAID2 or CCP, it is still MPEG and constitutes television
communication.
    We agree with ActiveVideo that substantial evidence
supports the jury’s determination and district court’s
denial of JMOL. The construction of television informa-
tion signal expressly includes as one example “an MPEG-
compressed digital data stream.” J.A. 254. Before an
MPEG-compressed digital data stream can be used by a
television, however, it must be decoded and decom-
pressed. A “television information signal” is thus broad
enough to include signals that require decoding and
decompression before they can actually be used by a
television. Similar to the exemplary MPEG-compressed
digital data stream, the CCP or RAID2 signal in the
FiOS-TV system must be decoded and decompressed
before it can be used by a television. It was therefore the
13                    ACTIVEVIDEO   v. VERIZON COMMUNICATION

jury’s role to determine whether decoding and decom-
pressing the CCP or RAID2 signal satisfied the television
information signal and television communication limita-
tions. ActiveVideo’s expert testified to the following:
     A television information signal is an MPEG
     stream, and it makes no difference how the MPEG
     stream is stored or communicated. Sometimes it’s
     communicated over IP, for example, over the
     internet protocol from the interactive controller
     all the way to the set-top box. . . . As long as it’s an
     MPEG signal, it’s a television information signal,
     according to the Court’s construction, regardless
     of whether it’s embedded or encapsulated in IP or
     RAIDs or CCPs or anything else. As long as you
     have access to their MPEG file, it is a television
     information signal and therefore it is television
     communication. . . . [W]hether [the MPEG signal]
     is wrapped in CCP or any other form, that doesn’t
     change the fact that it is in television communica-
     tion and can ultimately be utilized for display to a
     television user.
J.A. 5263-64. See also J.A. 4973-74 (Verizon’s expert
testifying that the FiOS-TV video content is “MPEG-
encoded” when stored and transmitted but “formatted in a
way that televisions can’t utilize because it’s in a proprie-
tary format”); J.A. 4554 (Verizon’s expert testifying that
the FiOS-TV system stores MPEG video and sends that
video over IP to cache servers and delivers the data to set-
top boxes over an IP network). We hold that substantial
evidence supports the jury’s determination that the FiOS-
TV CCP and RAID2 signals containing MPEG video
constitute television communication between the storage
servers and headend processors. The district court did
not err in denying Verizon’s JMOL of non-infringement.
ACTIVEVIDEO   v. VERIZON COMMUNICATION                    14

  C. “individually assignable processors” – ’582 patent

    The “individually assignable processors” limitation is
recited in the asserted claims of the ’582 patent. Inde-
pendent claim 5 of that patent reads:
   An interactive cable system comprising:
       (i) an information service distribution
       network, for delivering information ser-
       vices from a headend to subscriber televi-
       sion;
       (ii) a plurality of home interface control-
       lers, each home interface controller asso-
       ciated with a subscriber television and
       having a data transceiver operative over a
       data communications link to the headend;
       (iii) a plurality of subscriber selection de-
       vices, each such device associated with a
       home interface controller and in commu-
       nication with the data transceiver thereof;
       (iv) a plurality of individually assignable
       processors, disposed at the headend, in as-
       signable data communication with an as-
       signed home interface controller and in
       television communication over the network
       with the subscriber television associated
       with the assigned home interface control-
       ler, and
       (v) a frame server in communication with
       a plurality of home interface controllers
       each assigned to one of a plurality of proc-
       esses running in said frame server for in-
       teractive service, said processes receiving
       data communications from the subscribers
15                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

       associated with their respective assigned
       home interface controllers, said frame
       server generating interactive pages re-
       sponsive to the data communications and
       supplying the interactive pages to the
       subscriber televisions associated with the
       assigned home interface controllers in
       digitally encoded television signals over
       the information service distribution net-
       work.
’582 patent claim 5 (emphasis added). The district court,
after analyzing the prosecution history and finding dis-
claimer, construed “individually assignable processors” to
mean “processors that are capable of being assigned on a
one-to-one basis to a home interface controller.” J.A. 233-
35 (emphasis added). Neither Verizon nor ActiveVideo
challenges the district court’s construction.
    Verizon argues that the district court erred in denying
Verizon’s JMOL of non-infringement because the FiOS-
TV headend processors are not assigned on a one-to-one
basis to a home interface controller (e.g., STB). That is,
Verizon argues that FiOS-TV does not infringe because
each FiOS-TV headend processor is always able to com-
municate with multiple STBs; there is no capability to
individually assign a single processor to a single STB.
Verizon notes that ActiveVideo distinguished a single-
processor prior art system for lacking a processor that can
be individually assigned to a subscriber. If the prior art
system lacks individual assignment, argues Verizon, then
so does FiOS-TV because its processors are shared in the
same manner as the single processor in the prior art.
    ActiveVideo argues that substantial evidence shows
FiOS-TV has headend processors that are capable of being
assigned one-to-one. ActiveVideo argues that assignment
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   16

is different than “using”; using can be done by multiple
people even though the assignment of a processor to STB
is one-to-one based on each individual request. Even if
the claims require a processor to be “used” one-to-one by a
home interface controller, ActiveVideo contends that
FiOS-TV still infringes because when the FiOS-TV system
first starts, the first subscriber is “assigned” a processor
and that processor is used one-to-one by that first sub-
scriber.
    We disagree. ActiveVideo’s attempt to distinguish be-
tween “assigning one-to-one” and “using one-to-one” lacks
merit. The district court’s unchallenged construction
requires that a single headend processor and single STB
be assigned on a one-to-one basis—a single processor to
a single STB. Separating the assignment of the processor
to the STB from the usage of the processor by the STB
ignores the “one-to-one” requirement of the district court’s
construction as well as the additional claim language that
requires these individually assignable processors be in
“assignable data communication with an assigned home
interface controller and in television communication over
the network.” The claim language specifies that proces-
sors are “assignable” with respect to data and television
communication and thus clearly includes “usage” of the
processor by an STB.
    ActiveVideo’s “system startup” argument also lacks
merit. The district court concluded that the plain and
ordinary meaning of “assign” is “to set aside for a particu-
lar purpose.” J.A 223. ActiveVideo does not challenge
this construction. In this case, the “particular purpose”
for assignment is set forth expressly in the claim: “data
communication with an assigned home interface control-
ler” and “television communication . . . with the sub-
scriber television associated with the assigned home
interface controller.” The record evidence fails to estab-
17                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

lish—at system startup or otherwise—that the accused
FiOS-TV processors are “set aside” for communication on
a one-to-one basis with a home interface controller.
Indeed, ActiveVideo’s expert testified that except for
“assignment,” FiOS-TV processors are used by more than
one STB. See, e.g., J.A. 3811 (“The assignment itself is
done on a one-to-one basis.”); J.A. 3865 (“Using can be
done by multiple people. . . . [A]nd the assignment is done
on a one-to-one basis. Once each assignment takes place,
[the processor] then can be used by more than one and is
routinely used by more than one . . . .”).
    The testimony of ActiveVideo’s expert, that the FiOS-
TV processors are routinely “used by more than one
[STB],” shows that they are not set aside for data and
television communication with a home interface controller
on a one-to-one basis. This testimony is consistent with
ActiveVideo’s understanding expressed during prosecu-
tion that a prior art processor was not “individually
assignable” where numerous subscribers may be in com-
munication with that processor. See J.A. 94796. Al-
though a first subscriber may use only one FiOS-TV
processor for a brief period of time at system startup, that
processor has not been set aside for communication with
the subscriber on a one-to-one basis because a second
subscriber may begin sharing that FiOS-TV processor at
any instant. We conclude that the record does not contain
substantial evidence that the accused FiOS-TV processors
are assigned on a one-to-one basis, and therefore we
reverse the district court’s denial of Verizon’s JMOL of
non-infringement of the ’582 patent.
            D. “superimposing” – ’214 patent

    The “superimposing” limitation is recited in claim 9 of
the Verizon ’214 patent. The ’214 patent generally dis-
closes a two-dimensional method of channel surfing
ACTIVEVIDEO   v. VERIZON COMMUNICATION                 18

having anchor channels oriented on a vertical axis and
channels related to the anchor channels (multiplex chan-
nels) oriented on a horizontal axis. Additionally, super-
imposed on the display of an anchor channel are two
indications: one identifying the anchor channel as an
anchor channel and another indicating the existence of
associated multiplex channels. For example, ABC could
be an anchor channel (vertical axis), with ABC News,
ABC Sports, ABC Movies, etc. as multiplex channels
(horizontal axis) associated with anchor channel ABC.
See ’214 patent figs. 1 and 2. Independent claim 9 of the
’214 patent reads:
   A method of providing channel selection, compris-
   ing:
       providing a set of channels;
       displaying a first anchor channel from the
       set of channels when selected;
       providing a first indication that the first
       anchor channel is an anchor channel;
       superimposing the first indication over the
       display of the first anchor channel;
       including with the first indication a sec-
       ond indication, wherein the second indica-
       tion is included when there is at least one
       multiplex channel associated with the first
       anchor channel;
       receiving a first command to select from
       the second indication a first multiplex
       channel of the at least one multiplex
       channel associated with the first anchor
       channel;
       displaying the first multiplex channel;
       providing for the selection of a second an-
19                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

       chor channel from the set of channels
       through the use of a second command of a
       different type than the first command; and
       performing at least one of:
            switching between multiplex channels
            associated with an anchor channel
            from the set of channels using com-
            mands of the same type as the first
            command;
            switching between anchor channels
            from the set of channels using com-
            mands of the same type as the second
            command; and
            switching from a multiplex channel
            associated with one anchor channel
            from the set of channels to a different
            anchor channel from the set of chan-
            nels through a command of the same
            type as the second command.
’214 patent claim 9 (emphasis added).
    ActiveVideo, citing O2 Micro International Ltd. v. Be-
yond Innovation Technology Co., 521 F.3d 1351 (Fed. Cir.
2008), argues that the district court erred in declining to
construe “superimposing the first indication over the
display of the first anchor channel” and “including with
the first indication a second indication” in asserted claim
9. ActiveVideo argues that the first and second indica-
tions must be overlayed on the displayed anchor channel
and that they must be distinct from the content of the
anchor channel. ActiveVideo argues that its system does
not infringe under its “correct” construction because the
indications (channel labels) in its system are broadcast as
ACTIVEVIDEO   v. VERIZON COMMUNICATION                    20

part of the “underlying content” of the anchor channel and
are thus not superimposed.
    Verizon argues that the district court resolved the
dispute between the parties and satisfied O2 Micro by
declining to adopt ActiveVideo’s construction and giving
the terms their plain and ordinary meaning. Verizon
contends that ActiveVideo’s construction is confusing,
unhelpful, adds no clarity to the claim language itself,
and is erroneous to the extent it attempts to narrow the
claims by adding “overlay” and “distinct” limitations.
Verizon also argues that even under ActiveVideo’s con-
struction, ActiveVideo’s products infringe because its
proposed construction places no limitation on how or
where the indication is generated, as opposed to how it is
displayed to the viewer.
    The district court did not err in concluding that these
terms have plain meanings that do not require additional
construction. ActiveVideo’s proposed construction errone-
ously reads limitations into the claims and the district
court properly rejected that construction and resolved the
dispute between the parties. See O2 Micro, 521 F.3d at
1363. It was up to the jury to determine from the evi-
dence presented at trial whether the ActiveVideo system
satisfied the plain and ordinary meaning of the “superim-
posing” limitations. We affirm the district court’s denial
of ActiveVideo’s JMOL of non-infringement for the ’214
patent.
           E. “video still image” – ’542 patent

    The “video still image” limitation is recited in asserted
claim 1 of the ’542 patent. The ’542 patent generally
discloses a method of delivering advertising over an
interactive video system where an advertisement is
presented in a menu and supplementary information
21                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

about the advertisement is provided upon viewer selec-
tion. See ’542 patent figs. 4, 8, and 9. Claim 1 of the ’542
patent reads:
     A method of delivering advertising through a head
     end facility of an interactive video distribution
     system, said method comprising the steps of:
        transmitting an advertisement to an in-
        teractive video subscriber unit in connec-
        tion with an interactive video program;
        receiving, at said head end facility over a
        return path, a request to register said ad-
        vertisement in a menu;
        generating an entry for said advertise-
        ment in said menu;
        communicating to said subscriber unit,
        said menu in a video still image;
        obtaining, at said head end facility over
        said return path, a selection request for
        said entry; and
        providing to said subscriber unit, in re-
        sponse to said selection request, supple-
        mentary       advertising      information
        associated with said advertisement.
’542 patent claim 1 (emphasis added).
     ActiveVideo argues that the district court miscon-
strued “video still image” as “an image which is not in
motion.” ActiveVideo argues that the district court should
have instead construed the term to mean a “static image
for display on a television that is not part of a full motion
video.” Under this construction, ActiveVideo argues that
its system does not infringe because the accused “video
still image[s]” in its system are actually full motion
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   22

MPEG videos that display a series of identical frames so
that the full motion video appears still.
    We hold that the district court correctly construed the
term “video still image.” The district court’s construction
is consistent with the plain meaning of the term and is
also consistent with the specification, which explains that
“nothing prevents the principles described herein from
being applied to an interactive video distribution system
that is Motion Pictures Experts Group (MPEG) compli-
ant.” ’542 patent col.14 ll.57-60. Further, ActiveVideo’s
proposed construction erroneously imports a limitation
into the claim and ignores the word “video.” ActiveVideo
disputes only the district court’s construction and does not
contest the sufficiency of the evidence supporting the
jury’s verdict. We therefore affirm the district court’s
denial of ActiveVideo’s JMOL of non-infringement for the
’542 patent.
                      II.   Invalidity
    Invalidity must be established by clear and convincing
evidence. Microsoft Corp. v. i4i Ltd, 131 S. Ct. 2238, 2242
(2011). Clear and convincing evidence is such evidence
that produces “an abiding conviction that the truth of
[the] factual contentions are ‘highly probable.’” Colorado
v. New Mexico, 467 U.S. 310, 316 (1984). Anticipation
under 35 U.S.C. § 102 is a question of fact. ClearValue,
Inc. v. Pearl River Polymers, Inc., 668 F.3d 1340, 1343
(Fed. Cir. 2012). To anticipate a patent claim, a prior art
reference must describe “each and every claim limitation
and enable one of skill in the art to practice an embodi-
ment of the claimed invention without undue experimen-
tation.” Id. (quoting Am. Calcar, Inc. v. Am. Honda Motor
Corp., 651 F.3d 1318, 1341 (Fed. Cir. 2011)). Obviousness
under 35 U.S.C. § 103 is a question of law based on fac-
tual underpinnings. Graham v. John Deere Co., 383 U.S.
23                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

1, 17 (1966). To invalidate a patent claim based on obvi-
ousness, a challenger must demonstrate “by clear and
convincing evidence that a skilled artisan would have
been motivated to combine the teachings of the prior art
references to achieve the claimed invention, and that the
skilled artisan would have had a reasonable expectation
of success in doing so.” Procter & Gamble v. Teva
Pharms. USA, Inc., 566 F.3d 989, 994 (Fed. Cir. 2009)
(quoting Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1361
(Fed. Cir. 2007)).
                     A. ActiveVideo Patents

     1. Obviousness – ’578, ’678, ’883, and ’582 patents

     Verizon argues that the district court erred in grant-
ing ActiveVideo’s JMOL of no invalidity, which prevented
Verizon’s obviousness defense from reaching the jury.
The district court determined that the obviousness opin-
ions offered by Verizon’s expert were conclusory and
lacked factual support. Verizon contends that testimony
by its expert about six prior art references, the “modular
nature of the components in the asserted claims,” and
how combining any of the prior art references would yield
a predictable result, was sufficient for the question of
obviousness to reach the jury. Verizon also argues that
efficiency and market demand were sufficient motivations
to combine any of the prior art references discussed by its
expert.
    We agree with the district court that the obviousness
testimony by Verizon’s expert was conclusory and factu-
ally unsupported. Although Verizon’s expert testified
that “[t]hese are all components that are modular, and
when I add one, it doesn’t change the way the other one
works,” J.A. 4709, he never provided any factual basis for
his assertions. The expert failed to explain how specific
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   24

references could be combined, which combination(s) of
elements in specific references would yield a predictable
result, or how any specific combination would operate or
read on the asserted claims. Rather, the expert’s testi-
mony on obviousness was essentially a conclusory state-
ment that a person of ordinary skill in the art would have
known, based on the “modular” nature of the claimed
components, how to combine any of a number of refer-
ences to achieve the claimed inventions. This is not
sufficient and is fraught with hindsight bias. See KSR,
550 U.S. at 418 (“A patent composed of several elements
is not proved obvious by merely demonstrating that each
of its elements was, independently, known in the prior
art.”); Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363,
1373-74 (Fed. Cir. 2008) (“Such vague testimony would
not have been helpful to a lay jury in avoiding the pitfalls
of hindsight that belie a determination of obviousness.”).
    The opinion by Verizon’s expert regarding the motiva-
tion to combine references was likewise insufficient.
Verizon’s expert testified that:
   The motivation to combine would be because you
   wanted to build something better. You wanted a
   system that was more efficient, cheaper, or you
   wanted a system that had more features, makes it
   more attractive to your customers, because by
   combining these two things you could do some-
   thing new that hadn’t been able to do before.
J.A. 4709-10. This testimony is generic and bears no
relation to any specific combination of prior art elements.
It also fails to explain why a person of ordinary skill in
the art would have combined elements from specific
references in the way the claimed invention does. See
KSR, 550 U.S. at 418 (“[I]t can be important to identify a
reason that would have prompted a person of ordinary
25                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

skill in the relevant field to combine the elements in the
way the claimed new invention does . . . because inven-
tions in most, if not all, instances rely upon building
blocks long since uncovered, and claimed discoveries
almost of necessity will be combinations of what, in some
sense, is already known.”); Innogenetics, 512 F.3d at 1373
(Fed. Cir. 2008) (“[K]nowledge of a problem and motiva-
tion to solve it are entirely different from motivation to
combine particular references . . . .”). Because the record
evidence was insufficient for a reasonable jury to support
a determination of obviousness, the district court’s grant
of ActiveVideo’s JMOL on obviousness was not erroneous.
         2. Anticipation – ’578 and ’582 patents

    Verizon argued at trial that the asserted claims of the
’578 and ’582 patents were anticipated by multiple prior
art references, including a 1986 article by C.W. Lundgren
and P.S. Natarajan entitled Single Mode Fiber Transport
and Coaxial Distribution of Video on Demand (Bellcore
VoD) and U.S. Patent No. 4,616,263 (GTE VoD). Bellcore
VoD discloses a system having a single computer (master
control console) that controls a robotic arm to retrieve
video cassettes from a storage cabinet and insert them
into video tape recorders to be played for viewers. J.A.
91731. GTE VoD discloses a video system having video
control clusters (microprocessors) that supervise the
retrieval of video segments from mass storage video disks.
Coupled to the video disks are modulators for frequency
translating the video segments for transmission to view-
ers. J.A. 91738-40.
    Before the case was submitted to the jury, the district
court granted ActiveVideo’s JMOL of no invalidity, hold-
ing that there was insufficient evidence for Verizon’s
anticipation defenses to reach the jury. For the ’578
patent, the district court found that Verizon’s expert
ACTIVEVIDEO   v. VERIZON COMMUNICATION                  26

failed to explain how the Bellcore VoD tape recorders are
in “assignable television communication” with a home
interface controller. The district court also found that
Verizon’s expert failed to offer any opinion or analysis as
to how GTE VoD’s video control clusters are in assignable
television communication with a home interface control-
ler. For the ’582 patent, the district court found that
Verizon’s expert failed to explain how the Bellcore VoD
tape recorders are individually assignable processors in
assignable communication with a home interface control-
ler. The district court also found that Verizon’s expert
failed to identify Bellcore VoD structure corresponding to
the claimed “frame server.” And the district court found
that Verizon’s expert failed to explain how the GTE VoD
video cluster controllers are individually assignable
processors in assignable communication with a home
interface controller.
    Verizon argues that expert testimony regarding the
Bellcore VoD and GTE VoD references was sufficient to
allow the jury to decide whether either of them antici-
pates the ’578 and ’582 patent claims. We disagree.
Verizon’s expert failed to explain how the Bellcore VoD
“tape recorders,” which play video cassettes (e.g., VCRs),
are “processors” as required by the claimed “plurality of
interactive controllers” (’578 patent) and “individually
assignable processors” (’582 patent). Verizon’s expert
similarly failed to explain how these “tape recorders” are
in “data communication” with a home interface controller
(’578 patent) and how they are in “assignable . . . data
communication” with a home interface controller (’582
patent). 2 And Verizon’s expert failed to identify any

   2    To the extent that Verizon’s expert opined that
the “master control console” in Bellcore VoD satisfied the
“interactive controller” element of the ’578 patent claims
or the “individually assignable processors” element of the
27                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

Bellcore VoD structure having a data transceiver and
subscriber selection device as required by the ’578 pat-
ent’s home interface controller. Verizon’s expert also
failed to explain how any Bellcore VoD structure provides
interactive pages to viewers and uses a plurality of proc-
esses, as required by the ’582 patent’s frame server com-
ponent.
    Similarly, Verizon’s expert failed to explain how the
video cluster controllers in the GTE VoD reference (al-
leged “interactive controllers” and “individually assign-
able processors”) are connected to a home interface
controller, much less in “assignable . . . communication”
with one. Even though the ’578 patent claims require the
interactive controller to be in television communication
with an information source, see ’578 patent claim 8,
Verizon’s expert testified that the video cluster controllers
in GTE VoD are not in television communication with the
video disk unit (alleged information source). J.A. 4787.
The expert also testified that the video signal is sent to a
subscriber not from the video cluster controller but in-
stead from the video disk unit. J.A. 4665, 4786-87. That
is not what the ’578 or ’582 patent claims require. And
Verizon’s expert testified that the GTE VoD reference
does not disclose “a plurality of processes running in said
frame server” as required by the ’582 patent claims.
Compare J.A. 4792 (“The [GTE VoD] patent does not say
there are separate processes.”), with ’582 patent claim 5
(“each [home interface controller] assigned to one of a
plurality of processes running in said frame server”).

’582 patent claims, see J.A. 4623-24, this opinion is also
insufficient because there is only one master control
console disclosed in Bellcore VoD and the claims require a
plurality of interactive controllers and individually as-
signable processors.
ACTIVEVIDEO   v. VERIZON COMMUNICATION                  28

    We agree with the district court. The testimony of
Verizon’s expert on anticipation of the ’578 and ’582
patent claims was insufficient for a reasonable jury to
conclude that Bellcore VoD or GTE VoD anticipate the
asserted claims.
                 B. Verizon ’214 and ’542 Patents

     ActiveVideo argued that asserted claim 9 of the ’214
patent was anticipated by European Patent Application
No. 0,721,253 A2 (EP253). ActiveVideo also argued that
claim 1 of the ’542 patent was anticipated by U.S. Patent
No. 5,319,455 (’455 patent) and the CoverGirl advertise-
ment. 3 Before the case was submitted to the jury, the
district court granted Verizon’s JMOL of no invalidity,
determining that there was insufficient evidence for
ActiveVideo’s anticipation defenses to reach the jury.
With respect to the ’214 patent, the district court con-
cluded that ActiveVideo’s expert failed to show that the
EP253 reference disclosed a first or second indication or a
first or second command for selecting anchor channels, as
required by asserted claim 9. With respect to the ’542
patent, the district court found that ActiveVideo’s expert
failed to show that the CoverGirl advertisement was
enabled and failed to show that the ’455 patent disclosed
“receiving, at said head end facility over a return path, a
request” or “obtaining, at said head end facility over said
return path, a selection request” as required by asserted
claim 1.
    The district court did not err by preventing ActiveVi-
deo’s anticipation defenses from reaching the jury. For
the ’214 patent, ActiveVideo’s expert failed to explain,

   3   The “CoverGirl” advertisement is contained in a
video promoting ActiveVideo’s interactive television
concept. J.A. 110003.
29                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

from EP253, how a user “would be able to ascertain that
any given channel located to the right of another in the
station index originated from a common broadcast pro-
vider.” See J.A. 273. That is, ActiveVideo’s expert failed
to explain how EP253 discloses the required first anchor
channel indication and a second multiplex channel indica-
tion when at least one multiplex channel exists that is
associated with the anchor channel. ActiveVideo’s expert
testified that the “ESPN” logo on EP253 figure 14A (re-
produced below) constituted the “first indication” while
the “ESPN2” logo, which is “pretty clearly branded and
coming from ESPN” was the “second indication” corre-
sponding to a multiplex channel associated with the
ESPN anchor channel. J.A. 5678.

J.A. 96077. EP253 Figure 14A does not, however, permit
a user to identify an anchor channel or any associated
multiplex channels either by similarity in logo “branding”
or by spatial proximity. For example, channels 206 and
207 both show a similarly “branded” “ESPN” logo but
there is no indication as to which one of them is the
“anchor channel” and which is a “multiplex channel”
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   30

associated with an anchor channel.        And, although
“ESPN2” appears spatially to the right of “ESPN,” the
same spatial orientation is true of unrelated channels,
such as “E!” and “TNT.” The district court correctly
concluded that Figure 14A in EP253 does not disclose the
required first indication and second indication, and thus
that no reasonable jury could conclude that EP253 antici-
pates ’214 patent claim 9.
     For the ’542 patent, the testimony provided by Ac-
tiveVideo’s expert is conclusory and lacks sufficient tech-
nical detail. The expert provided no description of how
the systems disclosed in the CoverGirl advertisement or
the ’455 patent actually work. For example, the expert
failed to explain what “nodes” are, whether or how they
are related to a headend facility, or how any information
is passed back and forth between a user and a “node” or
headend facility. We agree with the district court that the
testimony of ActiveVideo’s expert about these references
was insufficient for a reasonable jury to find anticipation
of ’542 patent claim 1.
                  C. Verizon ’748 Patent

    The Fourth Circuit reviews the grant of summary
judgment de novo. Boitnott v. Corning, Inc., 669 F.3d 172,
175 (4th Cir. 2012). Verizon originally asserted a coun-
terclaim that ActiveVideo infringed independent claim 13
and dependent claim 20 of the ’748 patent. Claim 13
reads:
   A method of retrieving and retransmitting data
   processing network information in response to a
   user selection request, comprising:
   transmitting first selection information to be dis-
   played on a television;
31                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

     receiving a user selection request based on the
     transmitted first selection information;
     retrieving data processing network information, in
     a network format, corresponding to the user selec-
     tion request;
     transforming the data processing network infor-
     mation from the network format having a first in-
     teractive element to a television format having a
     second interactive element; and
     transmitting the data processing network infor-
     mation in the television format to the television.
’748 patent claim 13 (emphasis added).
     Shortly after construing the disputed terms of the as-
serted claims, ActiveVideo moved for summary judgment
of invalidity, arguing that U.S. Patent No. 6,034,689 (’689
patent) anticipated the asserted claims. In response,
Verizon’s primary argument was that the ’748 patent was
limited to transforming network information at the gate-
way server rather than at the STB. Verizon also argued
that:
     In addition, the ’689 fails to meet the fourth and
     fifth limitations of claim 13 of the ’748 Patent.
     The ’689 Patent discloses only the resizing of ele-
     ments in an HTML document. Nowhere does it
     disclose the transformation of an HTML docu-
     ment. If “parsing” were sufficient to constitute a
     “transformation,” then the patent examiner would
     not have allowed the claims . . . .
J.A. 16467. Verizon did not expand on this argument.
    The district court granted ActiveVideo’s motion, con-
cluding that because claim 13 did not limit the location in
the system where transformation must occur, the ’689
ACTIVEVIDEO   v. VERIZON COMMUNICATION                  32

patent disclosed every element of asserted claims 13 and
20. Verizon moved for partial reconsideration, arguing
that the “parsing” performed by the ’689 patent was not
the same as the “transformation” required by ’748 patent
claim 13. Verizon argued that the ’689 patent preserves
the HTML format of its interactive elements instead of
transforming them into different interactive elements as
required by claim 13. The district court denied Verizon’s
motion, concluding that reconsideration was an improper
vehicle for Verizon to “seek to expand upon an argument
that they failed to develop in their original brief in the
form of a Motion for Reconsideration.” J.A. 39685.
    Verizon argues on appeal that the district court erro-
neously granted summary judgment because a genuine
issue of material fact exists as to whether the ’689 patent
discloses “transforming . . . information from the network
format having a first interactive element to a television
format having a second interactive element,” as required
by ’748 patent claim 13. Verizon presents essentially the
same argument here that it made in its motion for partial
reconsideration before the district court: because the ’689
patent does not transform a first interactive element
(HTML “hypertext anchors” or “hot links”) into a different
second interactive element, a genuine issue of material
fact exists as to whether the ’689 patent anticipates claim
13 of the ’748 patent.
    ActiveVideo argues that Verizon waived this argu-
ment by failing to present it to the district court or by
presenting it “at best . . . in skeletal form.” Cross-
Appellant’s Br. 36. We conclude that Verizon did not
waive the argument that the ’689 patent fails to disclose
the transformation required by ’748 patent claim 13.
Verizon presented its present argument to the district
court sufficiently to preserve it for appeal. See Warner-
Lambert Co. v. Teva Pharms. USA, Inc., 418 F.3d 1326,
33                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

1338 n.11 (Fed. Cir. 2005). Whether the “parsing” of an
HTML element as disclosed in the ’689 patent satisfies
the ’748 patent claim limitation requiring transformation
from a network format having a first interactive element
to a television format having a second interactive element
is a question of fact that should be decided by a jury.
Because a genuine issue of material fact exists as to
whether the ’689 patent anticipates claims 13 and 20 of
the ’748 patent, we vacate the district court’s judgment of
invalidity as to the ’748 patent and remand for further
proceedings.
                      III.   Damages
     We review a district court’s decision regarding dam-
ages methodology for abuse of discretion. Lucent Techs.,
Inc. v. Gateway, Inc., 580 F.3d 1301, 1310 (Fed. Cir.
2009). The jury’s damages award is reviewed for substan-
tial evidence. Id. We review evidentiary rulings under
the law of the regional circuit. Verizon Servs. Corp. v. Cox
Fibernet Va., Inc., 602 F.3d 1235, 1331 (Fed. Cir. 2010).
The Fourth Circuit reviews a district court’s evidentiary
rulings for an abuse of discretion. United States v.
Wilkerson, 84 F.3d 692, 696 (4th Cir. 1996).
                      A. Evidentiary Issues

    Verizon argues that the district court abused its dis-
cretion by preventing Verizon’s damages expert from
relying on an agreement between ActiveVideo and Cable-
vision, which post-dated the hypothetical negotiation by
several years. Verizon argues that because the district
court allowed ActiveVideo’s damages expert to rely on a
Gemstar agreement even though it post-dated the hypo-
thetical negotiation by two years, it was an abuse of
discretion to exclude the Cablevision agreement. Verizon
also argues that the district court erroneously prevented
ACTIVEVIDEO   v. VERIZON COMMUNICATION                  34

it from cross-examining ActiveVideo’s damages expert
about an ActiveVideo offer to license its patents to Scien-
tific Atlanta on a royalty-free basis. And Verizon argues
that testimony from ActiveVideo’s damages expert—that
he discounted $100 million from Verizon’s VoD equipment
costs because Verizon would get that money back from its
suppliers through indemnity agreements—was severely
prejudicial and erroneously allowed the expert to testify
to a legal conclusion.
    Although we may not have decided these evidentiary
issues the same way had we presided over the trial, the
district court did not abuse its discretion. The Cablevi-
sion agreement post-dated the hypothetical negotiation by
four years and the district court thus had a legitimate
reason to exclude it. The fact that the district court
allowed ActiveVideo’s expert to rely on the Gemstar
agreement, which post-dated the hypothetical negotiation
by two years, is irrelevant because Verizon never chal-
lenged its admissibility. The district court likewise had a
legitimate reason for disallowing cross-examination of
ActiveVideo’s expert on the Scientific Atlanta offer be-
cause it was unsigned and was not admitted into evi-
dence. And although the district court allowed indemnity
testimony by ActiveVideo’s expert, that testimony was
allowed only to rebut the criticism by Verizon’s damages
expert; the district court contemporaneously instructed
the jury that ActiveVideo’s expert could not testify to a
legal conclusion. We conclude that the district court did
not abuse its discretion in deciding these evidentiary
issues.
                     B. Methodology

   Verizon argues that the testimony of ActiveVideo’s
damages expert should have been excluded for failing to
meet the reliability requirement of Federal Rule of Evi-
35                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

dence 702 and Daubert v. Merrell Dow Pharmaceuticals,
Inc., 509 U.S. 579 (1993). Verizon argues that reliance by
ActiveVideo’s expert on the Gemstar and Grande agree-
ments as royalty benchmarks was improper because (1)
Gemstar did not involve the patents-in-suit and did not
cover any of the technologies in the case, and (2) Grande
covered ActiveVideo patents and software services yet the
entire license fee was attributed to the asserted patents
without any attempt to “disaggregate the value of the
patent license from the value of the services.” Appellants’
Br. 35-36. Verizon contends the Grande fee is “at best a
too-high ceiling, not a reasonable benchmark.” Id. Veri-
zon argues that ActiveVideo’s expert improperly calcu-
lated the value of VoD to Verizon by looking at the growth
in DirecTV customers before and after it introduced VoD,
without controlling for other factors that led to this
growth, including a new marketing relationship with
AT&T and the transition to digital television. And Veri-
zon argues that ActiveVideo’s expert’s calculation of
62.5% churn (customer cancellations) in Verizon custom-
ers in the absence of VoD is flawed because he failed to
control for factors other than VoD that affect churn,
including pricing, quality, customer service, and reliabil-
ity.
    Verizon points out various weaknesses in the dam-
ages assessment by ActiveVideo’s expert. At their core,
however, Verizon’s disagreements are with the conclu-
sions reached by ActiveVideo’s expert and the factual
assumptions and considerations underlying those conclu-
sions, not his methodology. These disagreements go to
the weight to be afforded the testimony and not its admis-
sibility. See i4i, 598 F.3d at 854 (holding that a party’s
quarrel with the facts the damages expert used go to the
weight, not admissibility, of the expert’s opinion). The
degree of comparability of the Gemstar and Grande
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   36

license agreements as well as any failure on the part of
ActiveVideo’s expert to control for certain variables are
factual issues best addressed by cross examination and
not by exclusion. See id. at 852 (“[W]hen the methodology
is sound, and the evidence relied upon sufficiently related
to the case at hand, disputes about the degree of rele-
vance or accuracy (above this minimum threshold) may go
to the testimony’s weight, but not its admissibility.”) The
district court did not err by failing to exclude the testi-
mony of ActiveVideo’s damages expert.
                       C. Marking

    In this case, the district court granted Verizon’s
JMOL on pre-suit damages for three of the four asserted
ActiveVideo patents due to ActiveVideo’s failure to mark
its products under § 287(a). The district court, however,
denied Verizon’s JMOL with respect to the ActiveVideo
’678 patent, which contains only method claims. Verizon
argues, based on Devices for Medicine, Inc. v. Boehl, 822
F.2d 1062 (Fed. Cir. 1987), that the district court erred in
denying JMOL on the ’678 patent because it merely
claims a method of using the system claimed in the other
patents. Verizon argues that the long standing rule that
marking is not required for patents with only method
claims should not apply if the patentee has also asserted
other patents that contain apparatus claims embodying
the same invention. We decline to adopt the rule of law
suggested by Verizon and conclude that it would in fact be
contrary to our established precedent.
    If a patentee practices the claimed invention and fails
to mark its product with the relevant patent number,
damages may be limited. See 35 U.S.C. § 287. The mark-
ing provision provides, in relevant part:
37                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

     In the event of failure to so mark, no damages
     shall be recovered by the patentee in any action
     for infringement, except on proof that the in-
     fringer was notified of the infringement and con-
     tinued to infringe thereafter, in which event
     damages may be recovered only for infringement
     occurring after such notice. Filing of an action for
     infringement shall constitute such notice.
35 U.S.C. § 287(a). However, “[t]he law is clear that the
notice provisions of § 287 do not apply where the patent is
directed to a process or method.” Fujitsu Ltd. v. Netgear
Inc., 620 F.3d 1321, 1332 (Fed. Cir. 2010) (quoting Crown
Packaging Tech., Inc. v. Rexam Beverage Can Co., 559
F.3d 1308, 1316 (Fed. Cir. 2009)); see also Crystal Semi-
conductor Corp. v. TriTech Microelectronics Int’l, Inc., 246
F.3d 1336, 1353 (Fed. Cir. 2001) (“Because the [asserted]
patent only claims methods, the notice provisions of §
287(a) do not apply to it.”); Am. Med. Sys., Inc. v. Med.
Eng’g Corp., 6 F.3d 1523, 1538 (Fed. Cir. 1993); Hanson v.
Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1083 (Fed.
Cir. 1983) (“It is ‘settled in the case law that the notice
requirement of [§ 287(a)] does not apply where the patent
is directed to a process or method.’” (quoting Bandag, Inc.
v. Gerrard Tire Co., 704 F.2d 1578, 1581 (Fed. Cir.
1983))). The demarcation lines have been clear for many
years: patents with only method claims do not require
marking whereas patents with apparatus claims do.
    In American Medical, we held that if a single patent
contains both apparatus claims and method claims, the
marking requirement applies to all the claims:
     Where the patent contains both apparatus and
     method claims, however, to the extent that there
     is a tangible item to mark by which notice of the
     asserted method claims can be given, a party is
ACTIVEVIDEO   v. VERIZON COMMUNICATION                     38

   obliged to do so if it intends to avail itself of the
   constructive notice provisions of section 287(a).
Am. Med., 6 F.3d at 1538. Verizon argues that the mark-
ing requirement should likewise apply to ActiveVideo’s
’678 patent despite the fact that it contains only method
claims because ActiveVideo’s other three asserted patents
contained apparatus claims. This we cannot do. “The law
is clear that the notice provisions of section 287 do not
apply where the patent is directed to a process or
method.” Am. Med., 6 F.3d at 1538. See also State Contr.
& Eng’g Corp. v. Condotte Am., Inc., 346 F.3d 1057, 1074
(Fed. Cir. 2003) (“[American Medical] is inapposite be-
cause here an asserted patent—the ’288 patent—contains
only method claims, and we look to the asserted patents
independently. We have not previously held that a patent
containing only method claims is examined to see if
something could have been marked in order to assess
whether the notice provision applies, and we decline to do
so now.”). 4
    Verizon asks us to extend the marking requirement to
patents with nothing but method claims, if the patentee
also asserts other patents with apparatus claims embody-
ing the same invention in the same litigation. Verizon
argues that in this case, the claims in the method patent

   4    Verizon argues that in Devices for Medicine, we
“applied the marking bar to a method-claim only patent.”
Appellants’ Br. 33. This is incorrect. In Devices for
Medicine, this court reviewed a jury instruction which
stated: “Notice is not required on the method claims as to
an infringement but must be marked on an appliance.”
Id. at 1066. The court did not, however, hold that this
statement of law was erroneous, but rather held: “Be-
cause DFM did not present to the jury an adequate evi-
dentiary basis on which it could have based a contrary
verdict, any error in the instruction given, if error there
were, was necessarily harmless.” Id.
39                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

are simply directed to a method of using the apparatus
claimed in ActiveVideo’s other asserted claims. The
proposed rule would be a confusing mess for the district
courts to try to apply. Here for example, it is not clear
that the ’678 patent is merely a method of using the
apparatuses claimed in the ’578 and ’883 patents. Indeed,
the method claims in the ’678 patent contain limitations
that are not present in the apparatus claims. Compare,
e.g., ’678 patent claim 1, with ’578 patent claim 9, and
’883 patent claim 26. Our prior decisions that patents
which contain only method claims are not subject to the
section 287 marking requirements have a sound basis.
And we reaffirm the bright-line easy to enforce rule: if
the patent is directed only to method claims, marking is
not required.
    We affirm the district court’s denial of Verizon’s
JMOL with respect to the ActiveVideo ’678 patent, which
contains only method claims.
                 D. Covenant Not to Sue

    As one of its damages defenses, Verizon argued that it
was an intended third party beneficiary to an agreement
between ActiveVideo and TV Guide and that the Ac-
tiveVideo-TV Guide agreement contained a covenant not
to sue that barred damages against Verizon until the
agreement expired. Prior to trial, both parties moved for
JMOL on this defense. The district court granted Ac-
tiveVideo’s motion and denied Verizon’s, concluding that
Verizon failed to prove that it was an intended beneficiary
to the agreement. Verizon contends that the district
court’s ruling was clearly erroneous.
    It is undisputed that the ActiveVideo-TV Guide
agreement is governed by New York law. Under New
York law, an intended beneficiary may enforce a contract,
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   40

but it bears the burden of proving its status as an in-
tended third-party beneficiary. Port Chester Elec. Constr.
Corp. v. Atlas, 357 N.E.2d 652, 655 (N.Y. 1976). To prove
it is an intended beneficiary, a party must show (1) the
existence of a valid contract, (2) that the contract was
intended for its benefit, and (3) that the benefit is suffi-
ciently immediate, rather than incidental, to indicate the
assumption by the contracting parties of a duty to com-
pensate the intended beneficiary. Burns Jackson Miller
Summit & Spitzer v. Linder, 451 N.E.2d 459, 469 (N.Y.
1983).
    Verizon argues that the plain and unambiguous lan-
guage of the agreement proves that Verizon is a third
party beneficiary to the agreement because (1) Verizon is
both a customer and licensee of TV Guide and (2) the
covenant expressly bars any claims of patent infringe-
ment against customers and licensees of TV Guide.
Verizon offers no additional evidence. ActiveVideo argues
that Verizon is not an intended beneficiary of the TV
Guide agreement, which was a joint development agree-
ment between ActiveVideo’s predecessor and TV Guide to
produce a specific product. ActiveVideo argues that the
covenant extended to customers and licensees of the
product to be jointly developed under the agreement and
that the product was never actually completed. ActiveVi-
deo argues that Verizon did not even become a TV Guide
customer until years after the joint development project
collapsed and that Verizon failed to offer any evidence to
establish its status as an intended beneficiary.
   The district court did not err in granting ActiveVideo’s
JMOL that Verizon failed to prove it was an intended
beneficiary to the agreement. The purpose of the agree-
ment was for ActiveVideo’s predecessor ICTV and TV
Guide to “adapt” the ICTV application to operate with TV
Guide’s interactive program guides. The agreement is not
41                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

clear, however, as to exactly who the included covenant
was intended to cover or what product(s) were intended to
be covered. Neither “customer” nor “licensee” is defined
in the agreement, and the agreement does not indicate
that the parties intended for the covenant to run to any
and all TV Guide customers or licensees without regard to
the type of product or service purchased or licensed from
TV Guide.
     Verizon’s reading of the agreement is commercially
unreasonable. The agreement in question was a joint
development agreement between TV Guide and ICTV for
the purpose of developing a product that integrated
ICTV’s technology with TV Guide’s interactive program-
ming guide. J.A. 92243. It would be reasonable for the
parties making such an agreement to seek protection for
the potential licensees of the anticipated product from
claims of patent infringement. But in this case, Verizon’s
relationship with TV Guide has nothing to do with this
agreement. The joint product was never developed and
the project was abandoned. See J.A. 4342, 6938-39. And
Verizon did not become associated with TV Guide until
well after the joint development project collapsed. See
J.A. 4203, 4219-20. At trial, ActiveVideo offered testi-
mony that the parties to the agreement intended the
covenant to apply only to licensees of the product that was
to be jointly developed. J.A. 6945. Verizon, on the other
hand, offered no evidence as to the parties’ intent. Veri-
zon only offered the ambiguous language of the agreement
itself. We conclude, as did the district court, that Verizon
failed to meet its burden to show that the agreement was
intended for Verizon’s benefit and that the benefit to
Verizon was sufficiently imminent. See Burns Jackson,
451 N.E.2d at 469. Accordingly, the district court did not
err in granting ActiveVideo’s JMOL or in denying Veri-
zon’s.
ACTIVEVIDEO    v. VERIZON COMMUNICATION                    42

        IV.   Permanent Injunction and Sunset Royalty
    After trial, ActiveVideo moved the district court to
permanently enjoin Verizon from future infringement of
the ’578 and ’582 patents. 5 The district court granted
ActiveVideo’s motion and stayed the injunction for a six-
month sunset royalty period. Verizon challenges the
injunction and sunset royalty amount. We granted Veri-
zon’s motion to stay the injunction pending appeal. The
permanent injunction entered by the district court reads:
    IT IS ORDERED that effective May 23, 2012,
    Defendants are enjoined from (1) further in-
    fringement of the U.S. Patent 5,550,578 (“the ‘578
    patent”), including by use of SeaChange and
    NextGen VOD services and others not colorably
    different, until expiration of the ‘578 patent and
    from (2) further infringement of U.S. Patent
    6,205,582 (“the ‘582 patent”), including by provid-
    ing VOD via SeaChange, NextGen, and others
    systems not colorably different, offered in conjunc-
    tion with (a) widgets or (b) on-demand VOD cata-
    logs, including post view navigation or others not
    colorably different, until expiration of the ‘582
    patent.
J.A. 5.
    We review the grant of a permanent injunction for
abuse of discretion. Broadcom Corp. v. Qualcomm, Inc.,
543 F.3d 683, 702 (Fed. Cir. 2008). For a permanent
injunction to issue, the party requesting an injunction
must demonstrate that: (1) it has suffered an irreparable
injury; (2) legal remedies, such as money damages are
inadequate compensation; (3) the balance of hardships

    5   The ’883 and ’678 patents expired and are thus
not part of the injunction.
43                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

warrants an injunction; and (4) the public interest would
not be disserved by an injunction. eBay Inc. v. MercEx-
change, LLC, 547 U.S. 388, 391 (2006). “We may find an
abuse of discretion on a showing that the court made a
clear error of judgment in weighing relevant factors or
exercised its discretion based upon an error of law or
clearly erroneous factual findings.” Innogenetics, 512 F.3d
at 1379 (internal quotation marks omitted).
                     A. Permanent Injunction

    In this case, the district court found that all four fac-
tors favored the granting of a permanent injunction.
Verizon challenges the grant of the injunction on both
legal and factual grounds. As the district court correctly
observed, the issues of irreparable harm and adequacy of
remedies at law are inextricably intertwined. The parties
briefing to this court has similarly intertwined the discus-
sion of these two factors.
     The district court found that ActiveVideo suffered ir-
reparable harm because “Verizon’s unlawful infringement
unquestionably impedes upon the portion of the market
share which Cablevision could have, and it thus impedes
on ActiveVideo’s ability to introduce its patented technol-
ogy to the portion of the market that Verizon controls.
There is no doubt that ActiveVideo suffers indirect losses
when Cablevision suffers direct losses from Verizon’s
infringement.” J.A. 11-12. “Without Verizon’s added
competition, Cablevision would have more subscribers
and need an expanded CloudTV platform which would, in
turn, generate more revenue and broader recognition for
ActiveVideo. The presence of Verizon’s infringing product
leads to a loss of market share for ActiveVideo and Cable-
vision.” J.A. 15. The district court also found that the
litigation costs, which caused the patentee to divert
resources from developing technology and improving its
ACTIVEVIDEO   v. VERIZON COMMUNICATION                    44

business, “are the type of past harm which a court can
consider in determining whether to issue injunctive
relief.” J.A. 16. The district court rejected Verizon’s
arguments regarding delay in bringing suit and ActiveVi-
deo’s licensing campaign.
    As an initial matter, it was legal error for the district
court to determine that ActiveVideo’s litigation costs
supported irreparable harm and favored granting an
injunction. Litigation costs are undoubtedly undesirable
and may take funds away from other endeavors, but they
are not an irreparable harm in the injunction calculus.
See Innogenetics, 512 F.3d at 1381 n.8 (“If litigation costs
were a factor, injunctive relief would be warranted in
every litigated patent case.”). Reliance on litigation costs
to support a determination of irreparable harm was
therefore legal error.
    The district court also clearly erred in its reliance on
the loss of market share Cablevision suffers due to Veri-
zon’s infringement as a predicate for its irreparable harm
finding. Verizon and ActiveVideo do not compete; this is
not disputed. ActiveVideo sells VoD hardware and soft-
ware to providers of video services; Verizon markets and
sells video services to end users. ActiveVideo has a cus-
tomer, Cablevision, who licenses ActiveVideo’s Cloud TV
platform. Cablevision markets and sells video services to
end users under its brand name, “Optimum” and “iO.”
Cablevision has a license from ActiveVideo wherein it
pays ActiveVideo a licensing fee for each subscriber
Cablevision has. Hence, if Verizon takes a customer away
from Cablevision, ActiveVideo loses that fee. As Verizon
argues, such a loss is certainly not irreparable. Straight-
forward monetary harm of this type is not irreparable
45                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

harm. 6 Whether ActiveVideo receives this subscriber fee
from Verizon or from Cablevision, it will be adequately
compensated. Nor is this harm “incalculable” as Ac-
tiveVideo argues. The inquiry is whether ActiveVideo is
irreparably harmed by Verizon’s infringement. ActiveVi-
deo does not lose market share when Cablevision loses a
subscriber to Verizon, it loses the Cablevision licensing
fee. Cablevision, not ActiveVideo, has lost market share.
Determining how many additional subscribers Cablevi-
sion would have absent Verizon’s infringing activity might
be difficult to calculate. But, the question is not how
many subscribers Cablevision would have absent Veri-
zon’s infringement. Cablevision does not have an exclu-
sive license to the patents at issue. The question is how
much was ActiveVideo harmed by Verizon’s infringement.
ActiveVideo, as the patent holder, is harmed, not just
when its licensee loses sales, but rather every time the
infringing service is sold. The harm to ActiveVideo due to
Verizon’s infringement is readily quantifiable. When
Verizon pays ActiveVideo a per month royalty for each
FiOS-TV subscriber, then ActiveVideo is adequately

    6   ActiveVideo argues that this case is like Robert
Bosch LLC v. Pylon Manufacturing Corp., 659 F.3d 1142,
1153-54 (Fed. Cir. 2011), where we held it was an abuse of
discretion for the court to decline to award injunctive
relief. We do not see the parallel between this case and
Bosch. In Bosch, the finding of irreparable harm was
based upon three facts: (1) the parties were direct com-
petitors; (2) there was a loss of market share and poten-
tial customers; and (3) due to financial problems, the
infringer might not be able to satisfy a monetary judg-
ment. 659 F.3d at 1152-55. In this case, ActiveVideo and
Verizon are not direct competitors and there is no sugges-
tion that Verizon would be unable to pay whatever royalty
or judgment is ultimately assessed. Every injunctive case
must be considered according to its unique facts.
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   46

compensated. Cablevision’s loss of market share does not
make ActiveVideo’s harm irreparable. Given that the
district court’s fact finding regarding irreparable harm
was based in large part on the loss of market share to
Cablevision, this fact finding is clearly erroneous. To be
clear, we are not suggesting that loss of market share
cannot be a basis for irreparable harm or that there can
be no irreparable harm absent direct competition. We
conclude only that in light of the evidence presented and
the relationships of the relevant parties, no such basis is
present in this case.
    Finally, in support of its irreparable harm finding, the
district court found that “[w]ith every customer Verizon
has unlawfully acquired, they have taken away ActiveVi-
deo’s ability to spread its brand name, to obtain refer-
ences from potential customers, and to expand its
goodwill throughout the areas in which Verizon and
Cablevision are fierce competitors.” J.A. 15-16. There is
no evidence, however, indicating that FiOS-TV damages
ActiveVideo’s “CloudTV” brand name. Indeed, the record
shows that Cablevision does not even use the ActiveVideo
“CloudTV” brand and instead uses its own brands, “Opti-
mum” and “iO.” J.A. 91469, 92427, 93132. As for custom-
ers, the district court mixes apples and oranges.
ActiveVideo does not share a customer base with Verizon.
Verizon competes for customers with Cablevision, not
ActiveVideo. The focus of the irreparable harm analysis
should be on harm to ActiveVideo, not Cablevision. As
discussed above, the number of subscribers to whom
Verizon offers the infringing service is quantifiable and
compensable by an ongoing royalty. See Paice LLC v.
Toyota Motor Corp., 504 F.3d 1293, 1314-15 (Fed. Cir.
2007).
    The district court only briefly mentions harm to Ac-
tiveVideo (as distinct from Cablevision’s lost market share
47                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

and potential loss of brand recognition). The district court
found that “Verizon’s actions stripped ActiveVideo of the
opportunity to get a nationwide deployment which would
have bolstered ActiveVideo’s reputation in the cable
industry. This lost opportunity, which is also difficult to
quantify, favors granting an injunction.” J.A. 17. The
district court does not cite any record evidence in support
of this claimed harm, and we can find none in the record.
The evidence of record including evidence from ActiveVi-
deo’s own witnesses indicates that Verizon’s use of VoD
stimulates an increased demand for such services. See,
e.g., J.A. 47164 n.9 (listing testimony); J.A. 4081 (“Q:
Okay. Mr. Wagner, it is your opinion that ActiveVideo
would not lose any sales by licensing to Verizon, correct?
A: I have not calculated any lost profits here, so that is
correct.”); J.A. 47264-65 (“Q: So you conclude that Veri-
zon’s entry into the television business with its FiOS TV
service in 2005 influenced the other MSOs to introduce
more robust VoD offerings; is that correct? A: Yes. . . . Q:
So that would have created an increased demand for
interactive TV services, such as . . . VoD . . . from the
MSOs; is that correct? A: In theory, yes, that’s cause and
effect.”). 7

     7  The district court does not find that there has
been any price erosion, nor does ActiveVideo argue price
erosion. ActiveVideo, in one general sentence, claims:
“Moreover, a compulsory license would have myriad and
complex negative effects on ActiveVideo’s bargaining
position vis-à-vis other potential customers or licensees.”
Cross-Appellant’s Br. 64-65. The evidence supporting this
assertion, a declaration by ActiveVideo’s CEO, claims
Verizon’s infringement erodes prices for the CloudTV
platform. This declaration cites no evidence of price
reduction that has occurred. It only speculates that but
for Verizon’s infringement, ActiveVideo would be able to
lock in a more profitable deal with Comcast in the future.
The facts of this case call that speculation into question:
ACTIVEVIDEO   v. VERIZON COMMUNICATION                    48

     We conclude that the district court clearly erred when
it found that this record supported a finding of irreparable
harm. This factor weighs against granting an injunction.
The losses to ActiveVideo due to Verizon’s infringement
are clearly quantifiable. Moreover, ActiveVideo sought to
broadly and extensively license this technology (Cablevi-
sion, Grande, and TV Guide) including a campaign to
secure a license from Verizon itself, which started in 2004.
In light of the record evidence including ActiveVideo’s
past licensing of this technology and its pursuit of Verizon
as a licensee, no fact finder could reasonably conclude
that ActiveVideo would be irreparably harmed by the
payment of a royalty (a licensing fee). As ActiveVideo’s
CEO testified, ActiveVideo had been trying to get Verizon
as a customer since 2004. J.A. 3356 (“we really wanted a
U.S. customer like Verizon”); J.A. 3373 (“ActiveVideo had
been trying to get Verizon as a customer since late 2004;
isn’t that right? A. Yeah”); J.A. 6058 (“Q. Now ActiveVi-
deo’s been willing to license its patents in the past, right?
A. We have always been willing to for the right price. Q. I
believe you’ve also been willing to sell them, correct? A.
Everything’s for sale except my children.”). In fact, dur-
ing this litigation Verizon sought an eight-month sunset
royalty (Verizon would have a compulsory license for eight
months) to give it an opportunity to design around.
ActiveVideo asked for a sunset royalty of a “minimum of a

ActiveVideo’s license to Cablevision is $0.17 per sub-
scriber. It seems unlikely that an ongoing royalty to
Verizon at $2.74 could drive the price down in the future.
Indeed, ActiveVideo’s expert stated that “because the
verdict of infringement increases the value of ActiveVi-
deo’s patents and . . . places ActiveVideo in a stronger
position in its negotiations with [potential customers],
ActiveVideo would be able to demand more from cable
operators to keep Verizon at a competitive disadvantage.”
J.A. 49369-70.
49                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

one-year period,” four months longer than Verizon re-
quested and six months longer than the court eventually
ordered. The fact that ActiveVideo actually sought to
extend the sunset royalty period longer than Verizon
wanted is further evidence that ActiveVideo is not being
irreparably harmed and that money damages can ade-
quately compensate ActiveVideo for any Verizon in-
fringement. To be clear, we are not holding that any time
a patentee offers a license to the defendant, it will be
unable to secure an injunction. We conclude only that in
light of the record in this case, which shows extensive
licensing, licensing efforts, solicitation of the defendant
over a long period of time preceding and during litigation,
and no direct competition between Verizon and ActiveVi-
deo, it was clearly erroneous for the district court to
conclude that money damages would not adequately
compensate ActiveVideo for Verizon’s infringement.
    Analyzing the adequacy of remedies at law, the court
again referenced ActiveVideo’s lost business opportuni-
ties: “The Court cannot predict how large a share of the
television market ActiveVideo would have been able to
control, and it cannot speculate as to how much ActiveVi-
deo’s brand name and recognition would have grown
absent Verizon’s infringement.” J.A. 18-19. The district
court, however, cited no evidence in the record to support
these assertions. Loss of business opportunity or damage
to brand recognition could provide a basis for concluding
that monetary relief would be inadequate. There simply
is not record evidence which establishes these losses.
ActiveVideo can be adequately compensated for Verizon’s
infringement through an on-going royalty payment.
There are no concerns about Verizon’s inability to pay.
Cf. Bosch, 659 F.3d at 1154-55. ActiveVideo’s loss of
revenue due to Verizon’s infringement can be adequately
remedied by an ongoing royalty from Verizon for each of
ACTIVEVIDEO   v. VERIZON COMMUNICATION                  50

its subscribers. This is what ActiveVideo has sought from
Verizon since 2004, and based on the infringement deter-
minations ActiveVideo is certainly entitled to it. There is
no record evidence that ActiveVideo has lost any market
share or any customers at all due to Verizon’s infringe-
ment. In fact, ActiveVideo’s own expert testified that
ActiveVideo has not lost any sales by licensing to Verizon.
Finally, there is no evidence that ActiveVideo’s brand
would be harmed as Cablevision sells its product under its
own brand name. The district court’s fact finding that
ActiveVideo has proven that no adequate remedy at law
exists is clearly erroneous. This record cannot support
such a finding. Therefore, this factor also weighs against
granting an injunction.
    Verizon also argues that the district court improperly
weighed the balance of hardships in favor of ActiveVideo
because (1) an injunction would have potentially disas-
trous consequences for Verizon while the payment of
ongoing royalties in lieu of an injunction would give
ActiveVideo unprecedented profits, and (2) there is no
evidence that ActiveVideo’s small company size would
render it more susceptible to harm from Verizon’s contin-
ued infringement, especially since they are not competi-
tors.
    Balancing the hardships the district court found that
“both parties will suffer hardship in this case, but the
greater hardships lie with ActiveVideo.” J.A. 20. It
concluded that “[b]ecause it is such a small corporation
(with less than 150 employees), ActiveVideo will suffer
serious hardship if an injunction is not granted.” Id. The
district court failed, however, to identify any reason why
this is the case. It is certainly true that ActiveVideo
would suffer substantial hardship if it was not compen-
sated for Verizon’s infringement. But there is no evidence
that an injunction is necessary to avoid hardship to
51                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

ActiveVideo. The fact that ActiveVideo is a smaller
company or that it is more reliant on these patents than
Verizon does not mean that there is hardship absent an
injunction, especially here where ActiveVideo and Verizon
do not compete in the same market. In fact, ActiveVideo
does not dispute Verizon’s contention that under the
sunset royalty rate established by the district court,
ActiveVideo would receive from Verizon, in one month,
70% of the total revenue ActiveVideo has generated
during its entire 23 year history. The district court
clearly erred in its determination that the balance of the
hardships favors granting an injunction. There is no
evidence in this record upon which the district court could
conclude that the hardship favored ActiveVideo receiving
an injunction.
     The final factor asks whether “the public interest
would not be disserved by a permanent injunction.” eBay,
547 U.S. at 391. The heart of the patent grant is the right
to exclude. See 35 U.S.C. § 154(a)(1) (“Every patent shall
contain . . . a grant to the patentee . . . of the right to
exclude others from making, using, offering for sale, or
selling the invention throughout the United States.”).
Although enforcing the right to exclude serves the public
interest, the public interest factor requires consideration
of other aspects of the public interest. See 7 Donald A.
Chisum, Chisum on Patents § 20.04[2][c][vii] (2009) (“The
proper question on the public interest should be: will an
injunction harm a specific public interest that outweighs
the public’s interest in a robust patent system?” (internal
citations and quotation marks omitted)). Here, the dis-
trict court found that Verizon’s customers will suffer some
harm with the removal of their VoD services, but it was
satisfied that ActiveVideo showed that the customers’
interests in entertainment did not outweigh the public
interest in allowing patentees to enforce their right to
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   52

exclude. The district court finding that the public interest
supports the grant of an injunction here is not clearly
erroneous.
    Given the record in this case, it was an abuse of dis-
cretion for the district court to grant a permanent injunc-
tion. The district court fact findings that there was
irreparable harm, inadequate remedies at law, and hard-
ship which favored granting an injunction to ActiveVideo
are clearly erroneous. Given that these findings cannot
be supported by the record evidence, no injunction can
issue. If the general public interest in upholding patent
rights alone was sufficient to mandate injunctive relief
when none of the other three factors support injunctive
relief, then we would be back to the general rule that a
patentee should always receive an injunction against
infringement. But the Supreme Court rejected the idea
that there is a general rule that courts should issue
permanent injunctions against patent infringement.
eBay, 547 U.S. at 393-94. We vacate the grant of a per-
manent injunction in this case and remand for the district
court to consider an appropriate ongoing royalty rate for
future infringement by Verizon. See Paice, 504 F.3d at
1315, 1317; Amado v. Microsoft Corp., 517 F.3d 1353,
1361-62 (Fed. Cir. 2008).
                    B. Sunset Royalty

     Following trial, Verizon asked the district court to
stay the injunction during an eight month “sunset” period
during which a design around to the ActiveVideo patents
could be completed. The district court stayed the perma-
nent injunction for a six month sunset royalty period
during which Verizon was ordered to pay a sunset royalty
for its continued infringement. The court held that grant-
ing this sunset royalty would mitigate harm to the public
and provide Verizon considerable time to implement non-
53                  ACTIVEVIDEO   v. VERIZON COMMUNICATION

infringing alternatives. Verizon moved this court for a
further stay of the injunction pending appeal, which we
granted.
     On appeal, Verizon argues that the sunset royalty
amount should be vacated because it was based on the
“flawed damages methodologies” of ActiveVideo’s expert.
Appellants’ Br. 42. ActiveVideo sought a sunset royalty
amount of $3.40 per subscriber per month. Verizon
argues that the royalty rate should be $0.17 per FiOS-TV
subscriber per month. Verizon argues that ActiveVideo
receives $0.17 before costs in its agreement with Cablevi-
sion. In a thorough and well-reasoned opinion, the dis-
trict court concluded that the sunset royalty rate should
be $2.74 per FiOS-TV subscriber per month. The district
court accepted ActiveVideo’s expert testimony that Veri-
zon received an incremental profit of $6.86 per FiOS-TV
subscriber per month. The court analyzed the respective
bargaining positions of the parties post-verdict, and
concluded that “it would have been reasonable for the
parties to make an agreement whereby Verizon would
receive 60% of the profits and ActiveVideo would receive
40% of the profits.” J.A. 31. This results in the $2.74 per
subscriber per month royalty. The district court rejected
Verizon’s suggestion that it should pay the same rate as
Cablevision. The district court found that after the patent
is held not invalid and infringed by Verizon, ActiveVideo
is in a much better bargaining position with Verizon than
it was with Cablevision in 2009. Based on the fact that
Verizon may be able to design around, but does not know
precisely how effective such a design around might be, the
court discounted the profit split from the 50/50 to 60/40
(in favor of Verizon).
     This may seem high, and while it is likely true that
Verizon would not have agreed to that amount prior to
litigation, Verizon has been adjudicated to infringe and
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   54

the patent has been held not invalid after a substantial
challenge by Verizon. See Paice, 504 F.3d at 1317 (Rader,
J., concurring) (“[P]re-suit and post-judgment acts of
infringement are distinct, and may warrant different
royalty rates given the change in the parties’ legal rela-
tionship and other factors.”); Amado, 517 F.3d at 1362
(“Prior to judgment, liability for infringement, as well as
the validity of the patent, is uncertain, and damages are
determined in the context of that uncertainty. Once a
judgment of validity and infringement has been entered,
however, the calculus is markedly different because
different economic factors are involved.”). The district
court is correct; there has been a substantial shift in the
bargaining position of the parties. See Amado, 517 F.3d
at 1362 (“There is a fundamental difference, however,
between a reasonable royalty for pre-verdict infringement
and damages for post-verdict infringement.”). We reject
Verizon’s argument that the district court erred in con-
cluding that the jury verdict placed ActiveVideo in a
stronger bargaining position.
    Verizon also argues that the royalty amount adopted
by the district court was erroneous because the jury
rejected ActiveVideo’s profit calculation when it failed to
adopt ActiveVideo’s bottom-line damages number. And
Verizon contends that the district court erred in failing to
explain why the royalty number proposed by ActiveVideo
was correct. We discern no error in the district court’s
analysis. Verizon’s “flawed methodology” argument is
merely a continuation of the argument we previously
dismissed. See supra Part III.B. There are a number of
reasons why the jury may have rejected ActiveVideo’s
“bottom-line” damages number. There is no way to know
whether the jury rejected ActiveVideo’s profit figure or
whether it discounted the damages model based on other
factors. ActiveVideo’s expert reconciled his profit figure
55                   ACTIVEVIDEO   v. VERIZON COMMUNICATION

with the jury verdict, and the district court did not clearly
err in crediting that testimony to determine an appropri-
ate sunset royalty rate. See Honeywell Int’l, Inc. v. Ham-
ilton Sundstrand Corp., 523 F.3d 1304, 1314 (Fed. Cir.
2008) (concluding that it can virtually never be clear error
for a judge to credit the testimony of one witness over
another when the witness has told a consistent, coherent,
and facially plausible story).
    We held in Amado that an assessment of prospective
damages for ongoing infringement should “take into
account the change in the parties’ bargaining positions,
and the resulting change in economic circumstances,
resulting from the determination of liability.” Amado,
517 F.3d at 1362. And, although Amado dealt with the
imposition of royalty damages while an injunction was
stayed during appeal, this holding applies with equal
force in the ongoing royalty context. 8 Though we vacate
the district court’s injunction, we see no error in its post-
verdict royalty calculation. The district court, on remand,
should determine an appropriate ongoing royalty, an
inquiry that is much the same as its sunset royalty analy-
sis. The district court may wish to consider on remand
additional evidence of changes in the parties’ bargaining
positions and other economic circumstances that may be
of value in determining an appropriate ongoing royalty.
See Paice, 504 F.3d at 1315 (“Upon remand, the court may
take additional evidence if necessary to account for any
additional economic factors arising out of the imposition
     8  However, some of the Amado factors considered
by the district court in its sunset royalty analysis may not
directly apply in an ongoing royalty situation. For exam-
ple, the district court considered the defendant’s likeli-
hood of success on appeal, the ability of the defendant to
immediately comply with the injunction, and the evidence
and arguments found material to granting the permanent
injunction. J.A. 28-29; see Amado, 517 F.3d at 1362.
ACTIVEVIDEO   v. VERIZON COMMUNICATION                   56

of an ongoing royalty.”). Indeed, ActiveVideo’s bargaining
position is even stronger after this appeal. We leave the
procedural aspects of how to proceed on the issue of
prospective damages to the discretion of the district court.
                       CONCLUSION
    For the foregoing reasons, the district court’s judg-
ment of infringement against Verizon as to the ActiveVi-
deo ’582 patent is reversed. The district court’s grant of
summary judgment of invalidity as to the Verizon ’748
patent is vacated and remanded for further proceedings.
The district court’s entry of a permanent injunction is
reversed. The district court’s imposition of a sunset
royalty is affirmed. The district court’s judgment of
infringement with respect to the ActiveVideo ’578, ’678,
and ’883 patents is affirmed. Because Verizon has not
argued either before the district court or on appeal that a
finding of non-infringement of the ’582 patent should
result in a reduction of damages, we affirm the damages
award against Verizon in full. The district court’s judg-
ment in all other respects is affirmed.
    AFFIRMED-IN-PART, REVERSED-IN-PART,
      VACATED-IN-PART, AND REMANDED
                          COSTS
   No costs.