IP Law Daily Determining standard-essentiality of patent claims is a question of fact
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Tuesday, August 4, 2020

Determining standard-essentiality of patent claims is a question of fact

By Cheryl Beise, J.D.

The Federal Circuit rejected the argument that determining standard-essentiality is question of law for the court to determine during claim construction.

In affirming a district court’s determination that substantial evidence supported a jury’s finding that mobile phone and tablet devices sold under the brands "Alcatel OneTouch" and "TCL" infringed the asserted claims of two LTE standard-essential patents owned by Godo Kaisha IP Bridge, the U.S. Court of Appeals for the Federal Circuit has clarified that the standard-essentiality of patent claims is question of fact to be determined by the fact finder part of its infringement analysis, rather than a question of law to be determined by the court as part of claim construction. The appeals court reiterated that if a district court finds that the patent claims cover any device that practices a standard, then comparing the claims to that standard is the same as the traditional infringement analysis of comparing the claims to the accused product (Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holdings Ltd., August 4, 2020, O’Malley, K.).

Godo Kaisha IP Bridge 1 ("IP Bridge") owns a patent portfolio covering Long-Term Evolution ("LTE") and related standards used in mobile telecommunications, including U.S. Patent No. 8,385,239 (the ’239 patent), entitled, "Control channel signalling for triggering the independent transmission of a channel quality indicator," and U.S. Patent No. 8,351,538 (the ’538 patent), entitled "Radio transmission device and radio transmission method." IP Bridge filed suit in the federal district court in Wilmington, Delaware, against China-based TCL Communication Technology Holdings Limited, Hong Kong-based TCT Mobile Limited, and Delaware affiliates TCT Mobile (US), Inc., and TCT Mobile, Inc. (collectively, "TCL"), claiming that TCL’s accused LTE standard-compliant mobile phone and tablet devices sold under the brands "Alcatel OneTouch" and "TCL" (the "Accused Products") infringed the ’239 and ’538 patent and two others that were dropped from the suit.

The district court held a jury trial in 2018. At trial, IP Bridge’s theory of infringement hinged on two "bedrock facts": that the patents-in-suit are essential to the LTE standard and that TCL’s accused devices are LTE-compatible. Relying on Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321 (Fed. Cir. 2010), IP Bridge put forth evidence to demonstrate that (1) the asserted patent claims are essential to mandatory sections of the LTE standard; and (2) the accused products comply with the LTE standard. After a seven-day trial, the jury found that TCL’s infringed all asserted claims (claims 9 and 12 of the ’239 patent and claims 15 and 16 of the ’538 patent), found the asserted claims valid, and awarded damages in the amount of $950,000 for infringement of both patents.

After trial, TCL moved for judgment as a matter of law (JMOL) of noninfringement and invalidity under Federal Rule of Civil Procedure 50(b). The court denied the motion.

The court determined that the jury’s damages award represented a FRAND royalty rate of $0.04 per patent per infringing product. The court awarded supplemental damages for infringing sales of all adjudicated LTE-standard-compliant products to the date of the verdict and also awarded on-going royalties in the same amount for both the adjudicated products and certain unadjudicated products that "were not colorably different" from the accused products because they also operated on the LTE network. The court also found that the jury was properly instructed on the elements of direct infringement, and the jury's infringement verdict was supported by substantial evidence. The court observed that IP Bridge’s expert, Dr. Min, testified that: (1) the asserted patent claims are essential to mandatory (not optional) functionality of the LTE standard (i.e., functionality that must be performed by any device that complies with the LTE standard); and (2) the accused products comply with the LTE standard. TCL appealed.

The Federal Circuit affirmed the district court’s decisions and the jury verdict without discussion. However, the court wrote an opinion to address a question it had not expressly addressed previously: whether the standard-essentiality of patent claims is a question of law to be determined by the court as part of claim construction, as argued by TCL, or a question of fact to be determined by the factfinder part of its infringement analysis, as argued by IP Bridge.

Determination of standard-essentiality. TCL stated that, to establish literal infringement, a patentee must demonstrate that every limitation set forth in a claim is present in the accused product. TCL argued that the Federal Circuit’s Fujitsu decision did not support IP Bride’s theory of infringement stemming solely from LTE-standard compliance. Instead, according to TCL, Fujitsu carved out a narrow exception to the literal infringement requirement by stating that "[i]f a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement." TCL reads this passage as requiring the court to first make a threshold determination as part of claim construction that all implementations of a standard infringe the claims.

The Federal Circuit rejected TCL’s argument and its interpretation of Fujitsu. Siding with IP Bridge, the court clarified that standard-essentiality is a question of fact for the factfinder. According to the appellate court, Fujitsu did not suggest that a district court must first determine, as a matter of law and as part of claim construction, that the scope of the claims includes any device that practices the standard at issue. "The passing reference in Fujitsu to claim construction is simply a recognition of the fact that the first step in any infringement analysis is claim construction," the court said. "To the contrary, in reviewing the district court’s summary judgment decision (where no facts were genuinely in dispute), we stated that, if a district court finds that the claims cover any device that practices a standard, then comparing the claims to that standard is the same as the traditional infringement analysis of comparing the claims to the accused product."

The court further opined that determining standard-essentiality during claim construction is impractical. "Essentiality is, after all, a fact question about whether the claim elements read onto mandatory portions of a standard that standard-compliant devices must incorporate," the court said. The court explained that this inquiry is more akin to an infringement analysis (comparing claim elements to an accused product) than to a claim construction analysis (focusing, to a large degree, on intrinsic evidence and saying what the claims mean).

Where there are material disputes of fact regarding whether asserted claims are in fact essential to all implementations of an industry standard, the question of essentiality must be resolved by the trier of fact in the context of an infringement trial, the court decided. In this case, substantial evidence supported the jury’s infringement verdict.

The case is No. 2019-2215.

Attorneys: Douglas Hallward (Ropes & Gray LLP) for Godo Kaisha IP Bridge 1. John Nilsson (Arnold & Porter Kaye Scholer LLP) for TCL Communication Technology Holdings Ltd., TCT Mobile Ltd., TCT Mobile [U.S.] Inc. and TCT Mobile, Inc.

Companies: Godo Kaisha IP Bridge 1; TCL Communication Technology Holdings Ltd.; TCT Mobile Ltd.; TCT Mobile (U.S.) Inc.; TCT Mobile, Inc.

MainStory: TopStory Patent FedCirNews GCNNews

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