IP Law Daily Security system infringement judgment and $30M award against Sprint properly set aside due to invalidity finding in other case (1)
Friday, February 1, 2019

Security system infringement judgment and $30M award against Sprint properly set aside due to invalidity finding in other case

By Thomas Long, J.D.

The same claims a jury found mobile carrier Sprint liable of infringing were later held invalid under Section 101 by the Federal Circuit in an appeal brought by cell provider T-Mobile. The judgment against Sprint had not been made final.

In a patent infringement suit brought by Prism Technologies, LLC, against mobile carrier Sprint Spectrum L.P. network security technology, the U.S. Court of Appeals for the Federal Circuit has held that a federal district court did not err in setting aside a judgment against Sprint because the patent claims at issue had been invalidated by the Federal Circuit in another infringement suit, brought by Prism against T-Mobile USA, Inc. The Federal Circuit rejected Prism’s argument that two of the claims asserted against Sprint had not been at issue in the T-Mobile litigation. Given that the judgment against Sprint had not been finalized, the district court correctly applied a strong federal patent policy against enforcing such liability judgments (Prism Technologies LLC v. Sprint Spectrum LP, February 1, 2019, Taranto, R.).

Prism sued Sprint for infringement of U.S. Patent Nos. 8,127,345 ("the ’345 patent"), titled "Method and system for managing access to protected computer resources provided via an internet protocol network," and 8,387,155 ("the ’155 patent"), titled "System for managing access to protected computer resources." The patents claimed and described methods and systems for managing access to protected information that was provided over "untrusted" networks.

After finding that Sprint had infringed two claims of the ’345 patent and two claims of the ’255 patent, a jury awarded Prism $30 million in reasonable-royalty damages. The district court denied Sprint’s motions for post-judgment relief, and the Federal Circuit affirmed. While the appeal was pending, Prism went to trial in a separate suit against another mobile carrier, T-Mobile USA, Inc., on claims of infringement of the same patents. In June 2017, the Federal Circuit invalidated Prism’s patent claims in the T-Mobile case as directed to patent-ineligible subject matter under 35 U.S.C. §101. The appellate court held that the asserted claims recited ineligible subject matter because they: (1) were directed to the abstract idea of controlling access to resources; and (2) were non-inventive because they recited generic computer hardware running generic computer software that performed the abstract functions routine to the process of restricting access.

Soon thereafter, Sprint moved for relief from the judgment under Federal Rule of Civil Procedure 60 and Prism moved to lift the stay and enforce the judgment. The district court ruled that the judgment against Sprint should not stand because the Federal Circuit conclusively adjudged the patent claims which provided the basis for Prism’s judgment to be invalid. Prism appealed.

The principal issue was whether the four patent claims on which Sprint was held liable were among the claims held invalid in the T-Mobile case. There was no dispute as to two of the claims—claim 1 of the ’345 patent and claim 37 of the ’155 patent—but there was a dispute as to the other two—claim 33 of the ’345 patent and claim 7 of the ’155 patent. The Federal Circuit conclude that those two claims, like the other two, were the subject of the T-Mobile invalidity decision.

Prism argued that T-Mobile failed to properly present a Section 101 challenge with respect to those two claims, so they were not at issue in that decision. The Federal Circuit disagreed. The claims were listed by Prism as having been asserted by it against T-Mobile, and while T-Mobile’s motion for summary judgment challenging the validity of the claims did not specifically mention Section 101, it used inclusive language that the Federal Circuit had previously deemed sufficient to encompass a challenge for ineligible subject matter. The district court in that case had said nothing to suggest that it thought T-Mobile did not properly raise the Section 101 issue, and it did not address its ruling to only a "subset" of the asserted claims. After trial, T-Mobile filed a post-trial motion seeking a ruling of invalidity of all the asserted claims, which the district court denied. Although Prism had narrowed its case at trial by removing some of the claims, T-Mobile continued to maintain that all of the claims addressed in its motion were patent-ineligible. Before the Federal Circuit in arguments regarding the T-Mobile appeal, Prism did not assert that the appeal was limited to the tried claims and expressly discussed a number of other claims. In fact, Prism specifically discussed claim 33 of the ’345 patent and claim 7 of the ’155 patent in that proceeding. Prism also made arguments going to the eligibility under Section 101 of the "hardware identity limitations in the Asserted Claims." In holding that the patent claims were ineligible under Section 101, the Federal Circuit had not limited the ruling to the six tried claims; rather, following Prism’s own presentation of the case, it addressed other claims. Under these circumstances, the Federal Circuit concluded that the T-Mobile decision covered and invalidated all of the claims that were the subject of the district court ruling on summary judgment, which included all four of the claims on which Sprint was held liable in this case.

The appellate court also concluded that the district court properly set aside the judgment against Sprint. There was a strong federal patent policy against enforcing an unexecuted judgment of patent liability when the patent claims underlying that judgment had been held invalid by another decision having sufficient finality for this purpose; proceedings on direct review of the judgment had not yet been completed; and no agreement existed making portions of the judgment final. Noting that the liability judgment in this case was still subject to direct review when the Federal Circuit, in T-Mobile, invalidated the claims on which the judgment rests; the judgment had not been executed; and no portion had been carved out as final by agreement, the appellate court determined that the district court properly relied on the foregoing principle in setting aside the judgment.

This case is No. 2018-1108.

Attorneys: Paul J. Andre (Kramer Levin Naftalis & Frankel LLP) for Prism Technologies LLC. Carter Glasgow Phillips (Sidley Austin LLP) for Sprint Spectrum L.P. d/b/a Sprint PCS.

Companies: Prism Technologies LLC; Sprint Spectrum LP d/b/a Sprint PCS

MainStory: TopStory Patent FedCirNews

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