by Dennis Crouch
The Australian governmental research agency CSIRO has been the plaintiff in a number of E.D. Texas patent cases over the past decade — repeatedly enforcing its wireless local-area-network (LAN) U.S. Patent No. 5,487,069 that has been held to cover WiFi (802.11a and 802.11g).
After a long battle, CISCO stipulated to liability and validity of the patent. In a bench trial, the court found that a reasonable royalty was about $.83 per WiFi product sold by Cisco. On appeal, however, the Federal Circuit vacated that Judgment – holding that the royalty rate was likely too high because it internalized the lock-in value of the standardized technology. There are many ways to create a wireless local network and there really is not any indication that the ‘069 patent offers the best way (even among other available alternatives). Instead, what makes the ‘069 patent so valuable is that it was chosen as the standard.
The underlying question now on petition for certiorari to the Supreme Court is whether and the extent that CSIRO’s royalty rate should be discounted because the invention was chosen as the standard. However, CSIRO’s petition focuses on the standard of appellate review:
The Patent Act provides that a “[u]pon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement ….” 35 U.S.C. § 284. In contravention of this broad language, the Federal Circuit has erected a rigid set of legal rules to control the determination of damages by triers of fact. As a result, the Federal Circuit now exercises de novo review over inherently factual questions, resulting in routine reversals.
This Court has held with regard to another patent remedies provision that it is improper for the Federal Circuit to “superimposed an inflexible framework onto statutory text that is inherently flexible.” Octane Fitness. And this Court is considering related questions in relation to another portion of section 284 in Stryker Corp. and Halo Electronics.
The question presented is:
Is the Federal Circuit’s promulgation of rigid legal rules to control the weight to be given by the trier of fact to evidence of patent infringement damages proper under 35 U.S.C. § 284?
Because damages are now the fundamental remedy for patentees, this case will be an important one to follow.
[Read the Petition: CSIRO v. Cisco Petition for Certiorari]