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Latest Federal Court Cases, 04/12/21

April 12, 2021

Overview

Wi-LAN Inc. v. Sharp Electronics Corporation, Appeal Nos. 2020-1041, -1043 (Fed. Cir. Apr. 6, 2021)

In this week’s Case of the Week, the Federal Circuit addressed issues of claim construction and various issues concerning evidence admissibility and sufficiency. 

The patents at issue related to Wi-LAN’s claimed methods of “deinterlacing” (the ’654 patent), a process used to “display interlaced video on a noninterlaced monitor,” and a system intended to optimize the bit rate of combined audio and visual data streams (the ’250 patent).

Vizio currently sells and Sharp previously sold “smart” television sets. Wi-LAN brought two separate suits alleging infringement of the same claims of both the ’654 patent and the ’250 patent. The district court entered judgments of non-infringement on both patents. As to the ’250 patent, the district court entered a stipulated judgment of non-infringement after Wi-LAN conceded that it could not prove infringement in light of the district court’s claim construction orders. As to the ’654 patent, to establish infringement, Wi-LAN needed evidence that “the source code of Sharp’s and Vizio’s systems actually practiced the patented method.” In an attempt to establish this fact, Wi-LAN “supplied documents from [ ] third-party chip manufacturers purported to be the source code printouts together with declarations from employees of the manufacturers purporting to authenticate the source code printouts.” Notably, in order to obtain these declarations, Wi-LAN sued the third-party manufacturers. Ultimately, the district court determined that the source code printout was inadmissible and granted Sharp’s and Vizio’s motions for summary judgment explaining that Wi-LAN “lacked sufficient admissible evidence to prove direct infringement.” On appeal, Wi-LAN challenged the district court’s ruling of inadmissibility as to the source code printout and its claim construction of several terms.

The Court affirmed both holdings. As to the ’654 patent, the Court addressed the issue of admissibility of the source code printout. Wi-LAN first argued that the source code printout was admissible as a business records exception to the hearsay rule. In order to rely on the source code printout as an admissible business record, Wi-LAN was required to authenticate the documents by testimony of a qualified witness showing the documents satisfied all elements of the rule. Wi-LAN argued that the declarations constituted sufficient testimony to establish the validity of the source code printout as a business record. The Court disagreed, explaining that declarations are not admissible at trial unless the declarant can be available as a trial witness. Wi-LAN was unable to “establish that the declarants would be available to testify at trial and, as a result, the declarations could not be [relied upon].” Wi-LAN tried to argue that “it properly authenticated the source code printout because the declarations were custodial declarations that were themselves admissible as business records.” The Court rejected this argument, explaining that because Wi-LAN obtained the declarations by suing the third-party manufacturers, the declarations did not constitute the “regularly conducted ‎activity of a business” as required by the business records ‎exception. ‎

Wi-LAN next argued that the source code printout was admissible under Federal Rule of Evidence 901(b)(4). Rule 901(b)(4) permits a record to be admitted into evidence if all the circumstances taken together “support a finding that the item is what the proponent claims it is.” The Court, agreeing with the district court, rejected this argument based on a lack of trustworthiness in the materials.

Finally, Wi-LAN argued that the source code printout was admissible under Federal Rule of Evidence 703. The Court addressed this in two parts. First, the Court addressed the issue of “whether the source code printout was admissible because it was relied on by [Wi-LAN’s] expert.” The Court held that “expert reliance does not translate to admissibility … and Rule 703 does not make admissible otherwise inadmissible evidence.” Second, the Court addressed the issue of “whether [Wi-LAN’s] expert’s testimony relying on the source code [printout] was admissible to establish infringement.” The Court held that such reliance was not admissible because “Wi-LAN did not establish that experts in the field ‘reasonably rely on’ unauthenticated source code [printouts].”

As to the ’250 patent, the Court rejected Wi-LAN’s claim construction arguments and affirmed the district court’s decision, explaining that the claims and written description provided sufficient support for the claim construction.

A copy of the opinion can be found here.

By Annie White

ALSO THIS WEEK

Apple Inc. v. Qualcomm Inc., Appeal Nos. 2020-1561, -1642 (Fed. Cir. Apr. 7, 2021)

In this case, the Federal Circuit dismissed for lack of standing Apple’s appeals of inter partes review decisions upholding the validity of two Qualcomm patents, where following final written decisions in the IPRs, Apple and Qualcomm entered into a global settlement of all pending litigation worldwide. The settlement contained a six-year license including the patents at issue that was subject to continuing payment obligations by Apple, which Apple argued supported finding an injury sufficient to confer Article III standing for purposes of appeal. 

As an initial matter, the Court observed that given the global settlement, Apple should have briefed the issue of standing in its opening brief at the risk of waiver. However, having granted Qualcomm’s motion to file a sur-reply on the issue and therefore finding no prejudice to appellee, the Court exercised its discretion to hear Apple’s arguments.

On the merits, the Federal Circuit held that because Apple had presented no evidence that the invalidation of these particular patents would affect its payment obligations under the global settlement agreement, those payments were insufficient to confer standing for appeal. Distinguishing the Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 529 U.S. 118, 120 (2007) (where declaratory judgment plaintiff paid patent royalties under protest, it was not required to breach the agreement before bringing suit to extinguish royalty obligations), the Court found that in this case, Apple’s arguments amounted to little more than buyer’s remorse over its voluntary agreement. The Federal Circuit also found Apple’s contentions that Qualcomm could sue upon expiration of the license term to be too speculative and remote to confer Article III standing, and re-affirmed its prior holdings that the estoppel effected by 35 U.S.C. § 315(e), without more, is also insufficient to create standing to appeal an adverse IPR decision.

A copy of the opinion can be found here.

By Jason Wrubleski

 

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