/>iLast week, the Federal Circuit vacated both the infringement and damages judgments against Apple in a patent case that involves standard-essential patents (SEPs) related to Long-Term Evolution (LTE) technology brought in the Eastern District of Texas by Optis Cellular Technology, LLC. In Optis Cellular Technology, LLC v. Apple Inc. (22-1925), a panel for the Federal Circuit found that a single infringement question covering multiple patents in a jury verdict form violated Apple’s right to a unanimous jury verdict and remanded the case for a new trial. In addition, the panel addressed several patent eligibility issues and procedural errors in the trial proceedings. As a result, Apple has a second bite at the apple to try to avoid damages.
Background
Optis sued Apple in the Eastern District of Texas alleging that various Apple products implementing the LTE standard infringed five of Optis’ SEPs. The jury initially found Apple infringed certain claims of the asserted patents and awarded $506.2 million in damages. Apple moved for a new trial, arguing that the jury did not have an opportunity to hear evidence regarding Optis’ obligation to license the asserted SEPs on fair, reasonable, and nondiscriminatory (FRAND) terms. The district court granted a new trial on damages, which ultimately resulted in a reduced damages award to Optis of $300 million. Once its post-judgment motions were denied, Apple appealed to the Federal Circuit.
The Appeal
There is a lot to unpack here, but the core issues on appeal are summarized below:
- Whether the single infringement question on the verdict form covering all the asserted SEPs violated Apple’s right to jury unanimity;
- Whether claims 6 and 7 of U.S. Patent No. 8,019,332 (ʼ332 patent) are patent ineligible under 35 U.S.C. § 101;
- Whether the district court erred in construing claim 8 of the U.S. Patent No. 8,102,833 (ʼ833 patent);
- Whether the district court erred in finding claim 1 of U.S. Patent No. 8,411,557 (’557 patent) not indefinite under 35 U.S.C. § 112; and
- Whether the district court erred in admitting certain damages-related evidence.
With respect to the verdict form, the panel held that the single infringement question on the verdict form, which covered all five asserted SEPs, violated Apple’s right to a unanimous verdict. While Optis argued that, because the $506.2 million damages award “corresponded exactly to the sum of the five numbers that Optis’s damages expert gave as the measure of damages for each patent,” it was clear that the jury was unanimous in finding all asserted claims were infringed, the panel disagreed and explained that each asserted SEP constitutes an independent cause of action requiring separate infringement questions for each patent to ensure a unanimous verdict.
With respect to patent eligibility, the panel reversed the district court’s finding that claims 6 and 7 of the ʼ332 patent were not directed to an abstract idea under 35 U.S.C. § 101. In particular, the panel concluded that these claims were directed to a mathematical formula, an abstract idea, and remanded for further analysis under the Alice/Mayo framework. The panel also reversed the district court’s finding that the term “selecting unit” in claim 1 of the ʼ557 patent did not invoke 35 U.S.C. § 112 ¶ 6. In this aspect, the panel determined that the term “unit” does not sufficiently connote structure and is similar to other terms that held to be nonce terms similar to “means” such that they invoke § 112 ¶ 6. Since the term was found to invoke § 112 ¶ 6, on remand, the district court will need to conduct the second step of the means-plus-function analysis and determine whether the specification discloses adequate corresponding structure. However, the Federal Circuit affirmed the district court’s construction of claim 8 of the ʼ833 patent, rejecting Apple’s argument that the claim required mapping to start from the last row of a matrix.
Finally, the Federal Circuit found that the district court abused its discretion by admitting a settlement agreement between Apple and Qualcomm, which did not involve any of the SEPs at issue in this case, and related expert testimony. Before the damages retrial before the district court, Apple had unsuccessfully argued the settlement agreement was irrelevant and should be excluded “because any alleged relevance is outweighed by the substantial risk of confusion and unfair prejudice to Apple.” While the panel did not deem the settlement to be irrelevant, it held that the probative value of the settlement agreement was substantially outweighed by the risk of unfair prejudice to Apple.
Takeaways
This decision underscores the importance of ensuring jury unanimity in patent cases involving multiple patents. While general verdict questions that apply to more than one asserted patent or patent claim may seem attractive to patent owners and, at least in this case, signed off on by the district court judge, this verdict format is going to cause problems on appeal. The decision also highlights the continued scrutiny applied to patent eligibility, as well as the admissibility of settlement agreements in determining reasonable royalties.
