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Latest Federal Court Cases 3/25/19

March 25, 2019


SRI Int’l, Inc. v. Cisco Sys., Inc., Appeal No. 2017-2223 (Fed. Cir. Mar. 20, 2019)

In a decision following trial, the Federal Circuit addressed the issue of the eligibility of patent claims directed to technology meant to improve computer security. The Court decided matters concerning willfulness and the exceptional case doctrine.

The patents relate to techniques for identifying security threats on computer networks. Many security systems track the number of attempted logins to the network from a computer. But such a technique provides little protection where a hacker or malware tries to attack multiple computers on the same network. The number of login attempts for each computer may be below the threshold to trigger an alert, making it difficult to detect such an attack by looking at only a single monitor location in the network. The patents-in-suit claim a network surveillance system to address such threats.

Patent Eligibility Holding

Cisco asserted that the claims were ineligible under 35 U.S.C. § 101, alleging that they claimed only “abstract” ideas. The district court denied summary judgment of ineligibility. The Federal Circuit affirmed, holding that “[t]he claims are directed to using a specific technique—using a plurality of network monitors that each analyze specific types of data on the network and integrating reports from the monitors—to solve a technological problem arising in computer networks: identifying hackers or potential intruders into the network.” Thus, “the claims are not directed to just analyzing data from multiple sources to detect suspicious activity. Instead, the claims are directed to an improvement in computer network technology.” In reaching its conclusion, the Court relied on both the claims and the specification.

The Court distinguished its holding in Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016), stating that the claims in that case “were drawn to using computers as tools to solve a power grid problem, rather than improving the functionality of computers and computer networks themselves.”

Cisco also argued that the claims encompass steps that people can “go through in their minds.” The Court again disagreed: “This is not the type of human activity that § 101 is meant to exclude. Indeed, we tend to agree with SRI that the human mind is not equipped to detect suspicious activity by using network monitors and analyzing network packets as recited by the claims.”

Willfulness Holding

The jury held that Cisco willfully infringed the patents, and the judge denied JMOL to Cisco seeking a finding of no willfulness, relying on two evidentiary bases: “key Cisco employees did not read the patents-in-suit until their depositions,” and “Cisco designed the products and services in an infringing manner and … instructed its customers to use the products and services in an infringing manner.”

On appeal, SRI identified additional evidence to support a willfulness finding—that “Cisco expressed interest in the patented technology and met with SRI’s inventor in 2000 before developing its infringing products” and “a notice letter from SRI’s licensing consultants … informing Cisco of the asserted patents” in 2012, a year before SRI filed suit.

The Federal Circuit reversed, holding that this evidence is insufficient to meet the willfulness standard laid out in Halo Elects., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016). The Court noted that it was undisputed that Cisco was unaware of the patent until a year before the lawsuit was filed, and the patents had not issued (and one had not been applied for) when Cisco met with the inventor in 2000. The fact that two engineers did not read the patents prior to their depositions was irrelevant: “Given Cisco’s size and resources, it was unremarkable that the engineers—as opposed to Cisco’s in-house or outside counsel—did not analyze the patents-in-suit themselves.” Also irrelevant was the failure to get an opinion of counsel, under 35 U.S.C. § 298. The Federal Circuit held that there was no basis to find willful infringement dating back to 2000, as the jury apparently did.

The Court remanded for a finding of whether Cisco’s conduct after 2012 was willful.

Exceptional Case Holding

The district court held the case exceptional under 35 U.S.C. § 285 and awarded SRI its attorneys’ fees, finding “that Cisco pursued litigation about as aggressively as the court has seen in its judicial experience.” The district court explained that Cisco’s litigation strategies “created a substantial amount of work for both SRI and the court, much of which work was needlessly repetitive or irrelevant or frivolous.” For example, Cisco maintained “nineteen invalidity theories until the eve of trial but only present[ed] two at trial and pursu[ed] defenses at trial that were contrary to the court’s rulings or Cisco’s internal documents.”

The Federal Circuit affirmed, remanding only for the court to remove “attorney hours clearly included by mistake.”

Summary Judgment Determination

In addition to the above, the Court also affirmed a sua sponte summary judgment issued to SRI. Cisco had moved for summary judgment of anticipation. The district court turned the tables and granted summary judgment of no anticipation to SRI. Under Third Circuit law, a court may enter summary judgment sua sponte “so long as the losing party was on notice that she had to come forward with all of her evidence.” The Federal Circuit affirmed.

Judge Lourie issued a short, four-page dissenting opinion. He would have found the claims to be ineligible for patenting under 35 U.S.C. § 101 as abstract. In his opinion, the claims “differ very little from the claims in Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016), where [the Court] found the claims to be abstract.”

The opinion can be found here.

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