by Dennis Crouch
In its original decision in the case, a 2-1 appellate panel upheld a jury’s $140 million verdict in favor of the patent holder Sprint. Time Warner petitioned for rehearing on two grounds: (1) damages apportionment; and (2) written description requirement. In response, the appellate panel has slightly modified its original opinion — but only to better explain its damages decision. As such, the $140 million verdict remains.
On apportionment, Time-Warner argues that the jury was able to rely upon a prior-verdict for damages calculation that did not correctly perform any apportionment to account for the unclaimed portions of its VoIP technology. In the revised opinion here, the court explained its position:
- The “Georgia-Pacific factors, under proper instructions embody apportionment principles.”
- Here, Sprint’s expert did address apportionment and told the jury that damages should be attributed only to “incremental profits are attributable to the patents in suit.” Further, the jury instructions indicated that damages should be based upon the value added by the patented features.
- Finally, the court noted that Sprint did not propose alternative jury instructions.
Written Description: The divide between the majority opinion (Judges Bryson and Chen) and the Dissent (Judge Mayer) is based upon the second issue — written description.
The Patent Act requires a “written description of the invention, and of the manner and process of making and using it.” 35 U.S.C. 112(a). Judge Mayer concluded in dissent that description in the specification does not support the full-breadth of the asserted claims.
Here, the accused infringing systems are Voice-over-Internet-Protocol (VoIP) systems. The claims are not directed to internet protocol (IP) but rather use the broader category of “packet communication.” Why not claim IP?: the original specification does not mention internet protocol but instead is directed toward a separate packet-communication form known as asynchronous transfer mode (ATM). ATM was popular legacy telecommunications systems, but is being largely replaced by IP. Although ATM and IP both involve packet communications, they are quite different in how they work. For instance, ATM creates a virtual circuit / fixed call path while IP does not.
For Judge Mayer, the bulk of the specification is focused on the virtual circuits with no disclosure of other packet networks. He concludes that “the specification’s disclosure makes sense only in the context of ATM technology.” As such, the claims that cover non-ATM IP-switching are not supported by the written description.
The majority disagreed with Judge Mayer and found sufficient support (giving deference to the jury’s implicit fact finding). In its analysis, the majority first noted that IP technology “is not expressly excluded” by the specification and that the specification is not expressly limited to ATM:
[T]he specification refers to “[b]roadband systems, such as Asynchronous Transfer Mode (ATM),” a formulation that strongly suggests that the patents are not limited to ATM technology.
In addition, Sprint presented evidence that a person of skill in the art would understand the disclosure to — especially the term “broadband” — to include IP.
For the majority, the evidence here was enough to allow the patent to remain valid. Even if the result is uncomfortable, it is easier to see after considering the level of deference. The court should only overturn the jury verdict if the only reasonable conclusion is that invalidity was proven with clear and convincing evidence.