CAFC Reverses Key Parts of Judgment in Finisar v. DirecTV

Finisar Corp. v. The DirecTV Group (2007-1023) April 18, 2008 (link)

By a jury verdict, the E.D Texas found that DirecTV willfully infringed Finisar's U.S. Patent No. 5,404,505 (the ’505 patent), and the jury awarded $78.9 million in reasonable royalty damages, and $25 million in enhanced damages. On appeal, DirectTV challenged numerous issues in the case.

Claim Construction: On appeal, the CAFC found that the district court provided an "unjustifiably broad" interpretation to a key term found in each asserted claims. More interestingly, the CAFC reached this conclusion after turning to a claim construction provided by the N.D. California in a related case (Comcast v. Finisar):

Given “the importance of uniformity in the treatment of a given patent,” . . . this court would be remiss to overlook another district court’s construction of the same claim terms in the same patent as part of this separate appeal. In the interest of uniformity and correctness, this court consults the claim analysis of different district courts on the identical terms in the context of the same patent. Here, the Northern District of California’s efforts in the Comcast case are particularly helpful because that court repeatedly referred back to the Eastern District of Texas’s constructions—the subjects of this appeal.

Grammatical interpretation of prior art - Quite a bit of hay was thrown about over the interpretation of a passage in an anticipatory prior art reference. After analyzing referential and qualifying words and phrases, preceding antecedents, commas and modifiers, the CAFC concluded that "to avoid slipping into a realm of ambiguity that could render jury verdicts wholly unreviewable, this court imputes an understanding of English grammar and usage to the jury."

Finding that the new grammatical interpretation, coupled with additional supporting disclosure in the prior art, clearly and convincingly disclosed claimed features, the CAFC reversed the district court's denial of JMOL on anticipation.

Willfulness: The CAFC took issue with the district court faulting DirecTV in part for not obtaining an opinion on validity, weighing its failure to do so in Finisar's favor on the question of willfulness. Noting the Graco decision (“[t]here is no requirement that an opinion must address validity to negate a finding of willful infringement”), the CAFC concluded that "a competent opinion of counsel concluding either that DirecTV did not infringe the ’505 patent or that it was invalid would provide a sufficient basis for DirecTV to proceed without engaging in objectively reckless behavior with respect to the ’505 patent."

Software and Means-Plus-Function: Beware! Finisar's patent covered software elements, claimed in MPF format. However, the specification provided "nothing more than a restatement of the function, as recited in the claim." The CAFC upheld the finding of indefiniteness:

For computer-implemented means-plus-function claims where the disclosed structure is a computer programmed to implement an algorithm, “the disclosed structure is not the general purpose computer, but rather the special purpose computer programmed to perform the disclosed algorithm.” . . . Thus the patent must disclose, at least to the satisfaction of one of ordinary skill in the art, enough of an algorithm to provide the necessary structure under § 112, ¶ 6. This court permits a patentee to express that algorithm in any understandable terms including as a mathematical formula, in prose . . . or as a flow chart, or in any other manner that provides sufficient structure.

The district court correctly determined that the structure recited in the ’505 specification does not even meet the minimal disclosure necessary to make the claims definite. Simply reciting “software” without providing some detail about the means to accomplish the function is not enough . . . This court does not impose a lofty standard in its indefiniteness cases . . . But in this case, the claims are already quite vague. Without any corresponding structure, one of skill simply cannot perceive the bounds of the invention.

AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED