By Jason Rantanen
Rembrandt Data Technologies, LP v. AOL, LLC (Fed. Cir. 2011) Download 10-1002
Panel: Gajarsa (Linn), Linn, and Dyk
In 2008, Rembrandt sued Canon and Hewlett-Packard, among others, for infringement of Patent Nos. 5,251,236 and 5,311,578. Rembrandt contended that Canon and HP infringed by marketing office products containing modem chips capable of implementing International Telecommunications Union protocol V.32. The modem chipsets in the accused products are manufactured by a third party, Conexant.
At the trial court level, the district court granted summary judgment in favor of the defendants on the basis that because Conexant was a licensee of the '236 and '578 patent, Rembrandt's rights were exhausted and it could not recover from Canon and HP. The court further held that claims 3-11 of the '236 patent were invalid for indefiniteness as they improperly mixed method and apparatus elements and that claims 1-11 (all of the asserted claims) were invalid for indefiniteness for failing ot disclose algorithms corresponding to functions set out in the claims. Rembrandt appealed.
Patent Rights Exhausted Through Prior License
The patents-in-suit were originally owned by AT&T, who granted a license to Rockwell International in the late 1980's. Under a 1995 side letter, AT&T also granted Rockwell the right to sublicense "to any future divested present business of Rockwell." That license was subsequently assigned to a reorganized Rockwell ("New Rockwell"), and then to Conexant as part of a spin-off of its modem business. The patents themselves changed hands several times through a series of divestitures and acquisitions until finally owned by Rembrandt.
On appeal, Rembrandt argued that patent exhaustion did not apply because Conextant was not a valid licensee under the terms of the agreements. Looking to the terms of the contact, the CAFC held that contrary to Rembrandt's argument, sublicensing did not require AT&T's consent as long as it occured as part of a divestiture of Rockwell's present business. Nor did the general rule that "the law does not recognize any right of a nonexclusive licensee to assign the license or to further sublicense" apply because the contract expressly allowed for such sublicenses to be granted.
The CAFC also applied a pro-licensee interpretation of the scope of the license. In connection with the sublicense provision, the 1995 Side Letter limited that right "only to the extent applicable to products and services sold by the future divested business prior to its divestiture." Rembrandt contended that this meant the specific models being sold by Rockwell in 1996, when it divested its semiconductor business to New Rockwell. The CAFC disagreed. Looking to the 1988 and 1995 agreements, the court noted that neither refers to specific models of modems, instead specifying product types in general, functional terms. Thus, because Old Rockwell sold modems prior to the transfer to New Rockwell, and because New Rockwell sold V.34 protocol-compliant modem chipsets prior to the divestiture to Conexant, the court concluded that the sublicensing conditions were satisfied.
The CAFC also addressed three separate indefiniteness issues. The court first affirmed the district court's grant of summary judgment that claims 3-11 of the '236 patent were indefinite because they contained both apparatus and method claims. "[R]eciting both an apparatus and a method of using that apparatus renders a claim indefinite under section 112, paragraph 2." Slip Op. at 15, quoting IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005). Rembrandt's only argument in response was to request that the court insert apparatus language into claim 3, from which claims 4-11 depended. Unsurprisingly, the court declined to do so. "[T]he correction suggested by Rembrandt is "not minor, obvious, free from reasonable debate or evident from the prosecution history.'" Slip Op. at 17 (quoting district court opinion).
Rembrandt fared somewhat better on claims 1 and 2. The district court invalidated these claims (as well as claims 3-11), construing them to contain several means-plus-function elements and holding them indefinite due to the patent's failure to disclose an algorithm able to perform the recited functions.
The CAFC disagreed that two of these elements were drafted in means-plus-function form. Although the elements contained the word "means," that created only a presumption that the limitation was drafted in means-plus-function format. "This presumption can be rebutted if the claim limitation itself recites sufficient structure to perform the claimed function in its entirety." Slip Op. at 19. That determination involves a 'one skilled in the art' analysis: "When determining whether a claim term recites sufficient structure, we examine whether it has an understood meaning in the art." Id.
Here, there was no dispute that two of the claim elements, "fractional rate encoding means" and "trellis rate encoding means" recited sufficient structure. Rembrandt's expert testified that these terms were used in publications and published patents in the early 1990's and were self-descriptive to one of ordinary skill in the art, testimony that went undisputed by the parties. Thus, these elements recited sufficient structure by themselves to overcome the presumption of treatment under § 112, ¶ 6.
The CAFC did recognize a dispute over two other terms, "buffer means" and "combining means." Here, the panel appears to have agreed with the district court's interpretation of these elements being in means-plus-function format. However, the panel could not agree that the specification failed to disclose algorithms for these elements. Remrandt's expert testified that the figures, text, and table in the '236 patent disclose complete algorithms to a person skilled in the art; Canon argued that they did not. Thus, the court reversed the district court's grant of summary judgment of invalidity of claims 1 and 2 of the '236 patent.