Damages for Improvement Patents: Are the Georgia-Pacific factors sufficient?

by Dennis Crouch

Time Warner Cable, Inc., v. Sprint Communications Company, L.P. (Supreme Court 2019) [Petition for Writ of Certiorari]

The Kansas jury sided with Sprint — finding all five patents infringed and not invalid and awarding a $140 million reasonable royalty verdict.

On appeal, the Federal Circuit affirmed judgment – albeit in a 2-1 split.  Time Warner has now petitioned the Supreme Court on two questions of patent law: damage apportionment; and written description requirement.

Questions presented:

  1. Whether the Federal Circuit erred by affirming a damages award based on unapportioned end-user service revenues.
  2. Whether the Federal Circuit erred in ruling that a patent satisfies 35 U.S.C. §112(a)’s requirement of “a written description of the invention” merely because the specification does “not expressly exclude[]” technology within the scope of the patent claims.

In its petition, Sprint explains the basis for damages — that they should be calculated as adequate to compensate for the infringement” — no more and no less.

Apportionment: For over 150 years, courts have struggled with the apportionment issue for improvement or component patents.  The question is how to ensure that full damages are awarded for infringement of the patent; but simultaneously avoiding an award of damages for non-patented features.  In its 1884 decision, the Supreme Court wrote that patentee “must in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented feature.” Garretson v. Clark, 111 U.S. 120 (1884), quoting Garretson v. Clark, 10 F. Cas. 40, 44 (C.C.N.D.N.Y. 1878).  In its opinion, the Federal Circuit concluded that apportionment is implicitly achieved by applying the Georgia-Pacific factors “under proper instructions.”  The petitioner here calls BS on that implicit approach.

Written Description: The patent here claims voice communication via “packet communication” that is clearly broad enough to encompass the accused Voice-over-Internet-Protocol (VoIP) systems.  However, the patent specification does not disclose or discuss VoIP, but rather asynchronous transfer mode (ATM).  ATM uses packets, but mimics legacy circuit-switching by establishing a virtual circuit (something not done by an IP system). As IP has proven itself capable and less expensive, it is largely replacing the ATM approach.  The petition here argues that the breadth of claims are not supported by the written description.

In its opinion, the majority sided with the patentee — noting that that IP technology “is not expressly excluded” by the specification and that the document refers to ATM as one possible “broadband system.”  The “such as” language “strongly suggests that the patents are not limited to ATM technology.”  Here, the court also concluded that a lightweight disclosure was acceptable since IP systems were known in the art as a form of broadband.

Judge Mayer wrote in dissent. He concluded that VoIP should not be understood as within the disclosure since the specification repeatedly focused on ATM style virtual circuits with no disclosure of other packet networks. “[T]he specification’s disclosure makes sense only in the context of ATM technology.”

Former Solicitor General Paul Clement (Kirkland & Ellis) is leading the petition.

37 thoughts on “Damages for Improvement Patents: Are the Georgia-Pacific factors sufficient?

  1. 7

    As always, it’s dangerous to read only half the story. I agree that IF the dissent’s characterization of fact is correct, then the argument under the law is good. But the majority makes at least two references to the expert testifying that some terms in the specification could only make sense in terms of IP. Assuming THAT characterization of the evidence to be true, then the jury had a factual basis that should be upheld. In other words, I disagree that the majority premised upholding the WD finding “merely” because of because the specification did not explicitly exclude the VOIP embodiment, but I agree that if they did that it is reversible error.

    It is irrelevant if the specification uses the word IP or VOIP, it is only relevant if the disclosure reasonably suggests that the inventors posited the VOIP embodiment, and if the expert testified – and such testimony is credible – that one of skill would have viewed the disclosure as having an IP embodiment, there is no WD violation. The complaint is not enablement (even the majority seems to dance around that there is no enablement of a VOIP embodiment), which seems to be a mistake on the part of the defense.

    That being said, I agree the dissent makes a much more forceful argument: But-for those two references to the expert, the majority decision is replete with statements that suggest the majority considers *if the genus was considered* (an improper standard), while the dissent takes the proper and undisputed position that it is not enough for the genus to be considered, but the full breadth of the genus must be shown to be possessed. However, the majority’s bad generic statements (““is not expressly excluded” and ““strongly suggests that the patents are not limited to ATM technology”) aside, the majority does indeed attempt to marshal facts in favor of the disclosure of an IP embodiment, not merely that the specification only did not limit itself to ATM, which shows that they understand the correct legal requirement. Whether the facts actually get there or not simply isn’t clear to me from the opinion.

    As the Abbvie court stated:

    [A]nalogizing the genus to a plot of land, if the disclosed species only abide in a corner of the genus, one has not described the genus sufficiently to show that the inventor invented, or had possession of, the genus. He only described a portion of it. That is the case here.

    It is important not to take the analogy of a plot of land too far in thinking of written description issues because, even if one builds a house only in one corner of the plot, one may still own the whole plot. One describes a plot of land by its furthest coordinates, in effect drawing a perimeter fence around it. That may be akin to the function of patent claims to particularly point out and distinctly circumscribe the outer boundaries of a claimed invention. With the written description of a genus, however, merely drawing a fence around a perceived genus is not a description of the genus. One needs to show that one has truly invented the genus, i.e., that one has conceived and described sufficient representative species encompassing the breadth of the genus. Otherwise, one has only a research plan, leaving it to others to explore the unknown contours of the claimed genus.

    Or, as this very blog concluded: Federal Circuit: To Satisfy the Written Description Requirement, a patent “must at least describe some species representative” of the accused product.

    It is undoubtably correct that “merely not expressly excluding” an infringing embodiment is insufficient to meet written description of a scope that includes that embodiment.

    1. 7.1

      I should note, btw, that the petition relies in part upon Perkin’s Glue.

      In Holland Furniture Co. v. Perkins Glue Co., 277 U.S. 245 (1928), this Court explained that one of the aims of the statute is to prevent overbroad claiming that captures future innovation, such as where the inventor invents and discloses one solution to a problem, but then claims every solution.

      Kudos to a practitioner finally getting to where I was 5-6 years ago just starting on this Board. If you’re reading, you might want to lean a bit more heavily on Morse in the future. Let me help you out – Here’s Morse:

      For aught that we now know some future inventor, in the onward march of science, may discover a mode of writing or printing at a distance by means of the electric or galvanic current, without using any part of the process or combination set forth in the plaintiff’s specification. His invention may be less complicated — less liable to get out of order — less expensive in construction, and in its operation. But yet if it is covered by this patent the inventor could not use it, nor the public have the benefit of it without the permission of this patentee.

      and here’s how Crouch randomly characterized the issue:

      the patent specification does not disclose or discuss VoIP, but rather asynchronous transfer mode (ATM). ATM uses packets, but mimics legacy circuit-switching by establishing a virtual circuit (something not done by an IP system). As IP has proven itself capable and less expensive, it is largely replacing the ATM approach.

      Obviously the petition writer understands:

      The Patent Act allows amendments, and “continuation” and “divisional” applications that relate back to the priority date of an earlier
      application. 35 U.S.C. §§120-121. Patent applicants thus have a built-in incentive to wait until they see a product in the marketplace, draft new claims to cover that product, attach those claims to an earlier patent
      application, and sue for infringement. Robert P. Merges, Software and Patent Scope: A Report from the Middle Innings, 85 Tex. L. Rev. 1627, 1653 (2007) (referring to “misappropriation by amendment”). The written description requirement prevents patentees from taking unfair advantage of that incentive. When the written description requirement is enforced as this Court contemplated in Holland Furniture, it prevents patentees from filing new claims that are broader than what they invented and disclosed in the underlying patent application.

      Yup – to make the rule anything other than “each distinct means must be described” simply means that someone will come up with a terrible solution, use a bunch of generic language (“But this disclosed solution is only one possible solution, and the invention does not limit itself to this solution”), wait until *better* inventors come along, and mug them for their money. Nothing could be more damaging to patent law than for someone who came up with a terrible solution to be able to sue someone who spent R&D to come up with a distinct, better solution. That system rewards not actual scientific advancement, but creative writing.

      1. 7.1.1

        That system rewards not actual scientific advancement, but creative writing.

        How much does that sound like the s1ckness that has infected the Supreme Court (those damm scriveners…)…?

      2. 7.1.2

        … quoting Merges is a sure sign that you are in the anti-patent camp.

        That Random delights in such banality is not s surprise.

        At all.

      3. 7.1.3

        Re: “When the written description requirement is enforced as this Court contemplated in Holland Furniture, it prevents patentees from filing new claims that are broader than what they invented and disclosed in the underlying patent application.” [To cover different later actual products of others,]
        A nice statement of un-enforced 112 law, as demonstrated by literally thousands of Lemelson and Hyatt broadened claims added decades after the original application filing date. But the ambiguous “broader than what they invented” leaves the real issue un-answered.

        1. 7.1.3.1

          A nice statement of un-enforced 112 law,

          Feeding Random’s delusion helps no one Paul.

          Front and center here, the notion of improvement patents annihilates Random’s delusional 112 understanding.

          1. 7.1.3.1.1

            I myself have a problem with the term “improvement patents.” Is that intended to differentiate them from so-called “pioneer ” patents, for which some older cases say are entitled to broader claim constructions? But what patent is not really an improvement patent these days? Also, if I had to pick a “pioneer ” patent it would be Edison’s invention of the first ever device or method of sound recording. Yet ironically its claims were avoided by flat phonograph records using lateral needle movement rather than vertical.

            1. 7.1.3.1.1.1

              Edison certainly stood on the shoulders of those before him, so I doubt that your own definitions are sufficient for the designation that you want to give him.

              Regardless, the point here is that Random’s delusions IMPLODE when one considers improvement patents. Your follow-on here intimating that MOST ALL innovation is of the “improvement” variety ONLY accentuates the problem of Random’s crusades.

          2. 7.1.3.1.2

            Feeding Random’s delusion helps no one Paul.

            It must eat at you that people agree with me. I guess constantly quoting caselaw and saying “This is the law” will do that over loud, pointless complaining, huh?

            1. 7.1.3.1.2.1

              Not at all.

              People are always entitled to their opinions and that includes those that simply lack critical thinking.

              I have no illusion that such people will change, but that does not mean that the rants should be left un-commented upon, as that only feeds the delusions.

              1. 7.1.3.1.2.1.1

                People are always entitled to their opinions and that includes those that simply lack critical thinking.

                You literally have no supporters here other than a bunch of screeching sycophants who, like you, can hardly manage to squeeze out a single paragraph before dissolving into incoherent gibberish or apocalyptic nonsense.

                Heck, even though Greg DeL is wrong about a lot of stuff, I can appreciate that he knows how to put together an argument and write sentences in English.

                Please just go away and polish Big Jeans b-ttons over at the sweat chamber. It’s what you do best. You’re good at that.

                1. LOL – what is it with you and that 0bsess10n over Quinn?

                  No wait, I really don’t want to know.

                  As to “supporters,” you confuse the typical crowd of YOUR sycophants as somehow indicating ANY sense of validity to critical thinking.

                  The MUCH BETTER view is whether or not the points put on the table for discussion are actually engaged in an inte11ectually honest manner.

                  As you (especially) have practically NEVER done so – and those with whom you would ascribe some type of “support” effect, have never meaningfully</I done so, it is clear who has the better legal reasoning here. (hint: it’s me.)

        2. 7.1.3.2

          But the ambiguous “broader than what they invented” leaves the real issue un-answered.

          I don’t think so, the two (alleged) views in this case are 1) simply not confining yourself to a particular embodiment (i.e. boilerplate expanding language) is sufficient to meet WD or 2) WD of a genus is met only by disclosure of sufficient species to prove possession of the full breadth.

          i.e. Does disclosing a bow and then simply saying “The bow is just one embodiment, and the invention is all machines that fire projectiles” suffice for WD? Or must one also disclose a gun (and all other projectile firers) in order to claim the scope.

          As quoted above, there’s a ton of caselaw which says it is (2) and not (1). Although as I state above, I question whether that supposed distinction between the majority/dissent even truly exists.

          1. 7.1.3.2.1

            What does “full breadth” mean in the world of improvement patents?

            (Not snark)

            1. 7.1.3.2.1.1

              What does “full breadth” mean in the world of improvement patents?

              An improvement upon the known art may or may not be patentable and it may or may not be infringing of a valid scope. A bike with tassels may be both a patentable improvement and infringing upon a claim to a bike, generally. Or it may be one without the other, or neither. But a motorcycle is not infringing upon a valid bike claim, because there is no such thing as a valid bike claim that reaches a motorcycle. There are only undescribed bike claims that reach a motorcycle and described bike claims that do not reach a motorcycle. That is true whether you view the “engine for human work” energy source swap as “an improvement” or “a pioneering invention” or not.

              Because the method of powering the bicycle is certainly relevant, leaving out limitations that deal with the power source renders the claim undescribed. Because the tassles are not relevant, leaving out limitations that deal with tassles has no bearing on description. It’s (just like obviousness, which the POSITA also controls the standard for) fact- and situation-specific and it always depends upon whether one of skill in the art, rather than the patentee, thinks that patent protection should extend. The art chooses when the detailed description is no longer representative of the claim scope and thus when the patentee has overclaimed. The patentee can protect themselves from this decision through good usage of dependent claims, but the decision as to “what scope is valid” is never becomes his, and it’s never dependent upon whether the attorney can craft vague language, it’s always the art’s.

              People like anon and Night confuse that the applicant has the right to draft whatever claims they see fit with the art’s ability to pronounce a disclosure sufficient (or insufficient) to support a claim scope. You are free to describe your invention in any manner you see fit. But the art is free to state that the claim is overbroad because your disclosed embodiments aren’t representative of the full scope claimed. And what does that mean? It means whatever the art wants it to mean, just like non-obvious means whatever the art wants it to mean. It’s their threshold to choose. Choosing to use broad or vague terminology like functional language not limited by manner of achievement is the right of the applicant, but does not shield them from the decision of the art that this scope is now too broad for the embodiments disclosed.

              tl;dr – You’re certainly capable of writing a claim that includes foot pedals, as you had to include the foot pedals in the description in order to enable the bike. Your choice to leave the pedals out of the claim is yours to make, but if you leave it out, someone who comes along with a motorcycle may prove that your claim is overbroad, in which case you may have to rely upon a well-crafted dependent claim or, if you have anon or Night, sue your attorney.

              1. 7.1.3.2.1.1.1

                You ascribe “confusion” where there is none – and from a place (yours) that is masked in confirmation bias and an INABILITY to actually understand law.

                Heck, you won’t even answer whether or not you abide by your own rants here and examiner per your rants (or per how your superiors must often correct you to do).

                Let me know when you get out of the Patent Office and do actual law for a living, Random.

                1. Let me know when you get out of the Patent Office and do actual law for a living, Random.

                  I’m sure all those commenters complaining about “civility” will show up to scold Bildo at any moment.

                  [crickets]

                  [crickets]

                  [crickets]

                  Huh. I wonder if maybe their complaints are really about something else besides “civility.” Gosh, I would be so irresponsible to speculate …

                2. What the F has civility have to do with anything here, Malcolm?

                  Look in your “book” for my quote to John Maynard Keynes.

                3. Let me know when you get out of the Patent Office and do actual law for a living, Random.

                  But if the patent office doesn’t do actual law, why that would mean we are an authority unto ourselves, wouldn’t it?

                  How terrible for you if you were correct.

    2. 7.2

      As always, it’s dangerous to read only half the story.

      Says the guy with the absolute worst case of confirmation bias that I have ever seen…

    3. 7.3

      Pretty much the same take I had, RG. Thanks for the write-up.

  2. 6

    Right, The 15(!) Georgia Pacific factors with $1M in expert testimony just isn’t enough. Our patent system is totally insane.

    We should have 15 layers of case law each with 15 factors and if the inventor fails to prove one of the 225 permutations then they should lose all their patent rights and pay the infringer’s attorney fees. We are not far from that.

    I am shocked that there is still an industry and revenue to support a blog on this. The whole thing is nuts.

    Here is a new plan that no one will support. Infringers must pay 100% of their stolen profits to the patentee.

  3. 5

    I was curious what the alleged lack of damages apportionment was, and found this in the cert petition: “Although Sprint’s patent claims covered only one specific feature (the ability to have voice calls with customers on the older “PSTN” telephone network), it took a cut of Petitioners’ entire service revenues, without apportioning between revenues attributable to Sprint’s patents and those attributable to unpatented aspects of VoIP service. Sprint did not, for example,
    apportion to exclude voice calls between customers on the same VoIP network, which would not use the allegedly infringing technology. Nor did Sprint apportion for the noninfringing technology comprising Petitioners’ VoIP service (e.g.,network architecture, reception quality technology, or emergency calls). It simply asked for and received royalties on Petitioners’ entire VoIP revenues.”
    What I did not see was an assertion of how much not counting those uses would have substantially changed the damages award?

    1. 5.1

      “What I did not see was an assertion of how much not counting those uses would have substantially changed the damages award?”

      Agree Paul. T-W would have been better served had they provided an amount that they feel WOULD be fair.

      For while SCOTUS can’t by law make their own factual findings (or at least isn’t supposed to), giving a well-supported, much lower alternative figure would likely help their case; including increasing the odds SCOTUS would be willing to accept the case in the first place.

      1. 5.1.1

        Indeed Pro Se, thank you. But defendants seem to quite often fail to put on any damages expert testimony of their own for supporting lower damages in case they lose on the merits. I recall a breach of contract case between oil companies years ago where that cost the defendant an extra billion.

  4. 4

    Some folks seem to think transmissions by packet switching is a new idea. Even Wikipedia under that subject cites a 1964 RAND publication for this statement: “In the early 1960s, American computer scientist Paul Baran developed the concept Distributed Adaptive Message Block Switching with the goal to provide a fault-tolerant, efficient routing method for telecommunication messages as part of a research program at the RAND Corporation, funded by the US Department of Defense.[1]” Early 1060’s indeed. As a Signal Corps officer in early 1960 I sat in a classroom in Ft. Monmouth NJ for a lecture on it. It was not a classified lecture.

    1. 4.1

      The magnitude of the gap between historical reality and maximalist fever dreams about what constitutes patent worthy “innovation” in 2019 is close to infinite in size.

      The PTO isn’t much better. Terms like “wireless” and “computer” and “remote” and “mobile” are perpetually shiny for a certain class of attorneys and Examiners. Maybe some law professor could write a paper on the cost of the massive cost of such ignorance to the patent system and to society in general.

      1. 4.1.1

        Your cognitive dissonance is noted.

  5. 3

    In its opinion, the majority sided with the patentee — noting that that IP technology “is not expressly excluded” by the specification and that the document refers to ATM as one possible “broadband system.” The “such as” language “strongly suggests that the patents are not limited to ATM technology.” Here, the court also concluded that a lightweight disclosure was acceptable since IP systems were known in the art as a form of broadband.

    Judge Mayer wrote in dissent. He concluded that VoIP should not be understood as within the disclosure since the specification repeatedly focused on ATM style virtual circuits with no disclosure of other packet networks. “[T]he specification’s disclosure makes sense only in the context of ATM technology.”

    Seems like the majority here has muddled its claim construction doctrines with the written description requirement. That’s a problem. Using broadening boilerplate and phrases like “such as” should have the effect of expanding the literal scope of the claim. That’s why it’s there.

    But whether possession of a particular species falling within a genus has been demonstrated is another question. Where the genus is large and where the particular species was never referred to specifically in writing but some other species is referred to over and over again, and where the species were not known and commonly described in the art (at the time of filing) as obviously/easily interchangeable for all purposes, that raises the written description flag (I’m definitely not assuming that those are the facts in the instant case; as always, I look forward to hearing from the “experts” out there as to who has the better arguments with respect to the possession issue).

    1. 3.1

      But whether possession of a particular species falling within a genus has been demonstrated is another question.

      Correct me if I am in error, but was not that the question answered by the majority in favor of the patentee?

      Or is this merely (yet another) sign of your cognitive dissonance in which your first (last, and only) view is against the patentee…?

  6. 2

    Where in the law does it say an infringing item has to be mentioned in the disclosure?

    1. 2.1

      Where in the law does it say an infringing item has to be mentioned in the disclosure?

      That’s not the issue.

      The issue in this case — if I understand the facts correctly — is whether possession of the claimed genus has been demonstrated. It would definitely have saved the patentee some money in this instance (probably a couple hundred thousand in attorney/expert fees, at least) if the specific element in question had been “mentioned” in the specification at least once. According to the facts, the species was known in the prior art. How long does it take to type out the most relevant and well-known species as opposed to typing “such as” and naming only one species? Not too long if you’ve got a skilled attorney with knowledge in the art.

      1. 2.1.1

        Its funny how often you strain your shoulder trying to pat yourself on the back while posting material that shows just how lousy of an attorney you are.

        Supposedly, you are in the business of obtaining innovation protection for your clients…

    2. 2.2

      Where in the law does it say an infringing item has to be mentioned in the disclosure?

      link to patentlyo.com

      1. 2.2.1

        You do realize that your link (and the present case) show the opposite of your desired position, right Random?

        Or is your confirmation bias so over-powering that you think that your desired Ends is actually strengthened here?

        1. 2.2.1.1

          The case speaks for itself Jut09. I suggest you read it and conclude whether anon knows what he is talking about or not.

  7. 1

    Random must be in conniptions on the 112 issue.

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