CAFC reverses DRI: Microsoft did infringe Uniloc patent

Further to an earlier IPBiz post [
Rhode Island patent jury “lacked a grasp of the issues before it"; Microsoft gets win in Uniloc case ], the CAFC reversed the District Court of Rhode Island, and upheld a jury verdict of patent infringement against Microsoft.

Of the legal issue in the case, the CAFC wrote:

the claim construction
itself is not contested, but the application of that claim
construction to the accused device is. Thus, this court
applies the traditional rule for review of jury verdicts of factual issues discussed above.

Of testimony issues, the district court had found the jury did not understand
the issues before it:

(7) “[t]he jury ‘lacked a grasp of
the issues before it,’” id. at 173 (citing Tex. Instruments
Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1570
(Fed. Cir. 1996)) because it “ignored Dr. Wallach’s admit-
tedly complex explanation and embraced Mr. Klausner’s”
“incomplete, oversimplified and frankly inappropriate
explanation,” id. at 170 n.21.

The CAFC noted:

Third, the district court improperly rejected Klaus-
ner’s testimony as “incomplete, oversimplified and frankly
inappropriate,” justifying its rejection by Klausner’s
failure to discuss hashing, summation, or left-shifting in
his expert report, and his analogizing of an MD5 digest to
a Reader’s Digest book. Uniloc II, 640 F. Supp. 2d at 170
n.21. In common with the other circuits, First Circuit law
does not allow the district court in a jury trial to evaluate
“the credibility of witnesses, resolve conflicts in testimony,
or evaluate the weight of the evidence.” Gibson, 37 F.3d
at 735. Under Daubert, the district court must exercise
its “gatekeeper” function in ensuring that scientific testi-
mony is relevant and reliable. Kumho Tire Co. v. Carmi-
chael, 526 U.S. 137, 137 (1999) (discussing Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 589 (1993)). Here, the
district court explicitly noted that Klausner was “quali-
fied.” Uniloc II, 640 F. Supp. 2d at 172 n.25.
It is decidedly the jury’s role to evaluate the weight to be given to
the testimony of dueling qualified experts. i4i Ltd. P’ship
v. Microsoft Corp., 598 F.3d 831, 856 (Fed. Cir. 2010), cert.
granted, 562 U.S. --- (U.S. Nov. 29, 2010) (No. 10-290)
(“[I]t is not the district court’s role under Daubert to
evaluate the correctness of facts underlying an expert’s
testimony.”). The district court’s criticism of Klausner’s
use of the analogy of a digest to a “reader’s digest” is also
improper, because Microsoft did not object at trial and has
used the same analogy in describing the output of SHA1
as a “hash digest, where digest indicates a shortened size, similar to
Reader’s Digest condensed books.”

The CAFC commented on the district court about documentary
evidence:

Moreover, the district
court’s response to these documents is puzzling. The
district court acknowledged that “[s]ome of these docu-
ments no doubt say that MD5 and SHA-1 are a type of
hash, or checksum,” but noted that the documents did not
show what “the complex hashes in this case actually do,”
Uniloc II, 640 F. Supp. 2d at 172. However, MD5 and
SHA-1 are the complex hashes in this case.

Of a new trial, the CAFC wrote:

The district court granted Microsoft’s motion for a
new trial on the infringement issues in the alternative to
its JMOL motion, and did not present any analysis apart
from its analysis of the JMOL infringement issues dis-
cussed above. This court is convinced that the district
court’s grant of a new trial on infringement has no more
merit than the district court’s grant of JMOL on in-
fringement. Though it is a close issue, this is not a
situation where the evidence falls within the zone where
substantial evidence supports the verdict and the district
court’s discretion in granting a new trial trumps such
evidence. This court thus reverses the district court’s
grant of a new trial on infringement for the same reasons
as it reverses the grant of JMOL of non-infringement.

Of willfulness:

If the ac-
cused infringer’s position is susceptible to a reasonable
conclusion of no infringement, the first prong of Seagate
cannot be met. See Cohesive Techs., Inc. v. Waters Corp.,
543 F.3d 1351, 1374 (Fed. Cir. 2008) (“Because ‘rigid’ was
susceptible to a reasonable construction under which
Waters’s products did not infringe, there was not an
objectively high likelihood that Waters’s actions constituted infringement.”).

(...)

Uniloc’s argument about copying is largely inapposite.
See id. at 1336 (“[E]vidence of copying in a case of direct
infringement is relevant only to Seagate’s second prong.”).
As the district court noted, the facts here presented are
“hardly the stuff of which objectively reckless unreason-
able conduct is made.” Uniloc II, 640 F. Supp. 2d at 177.

The conclusion of the CAFC:

For the foregoing reasons, this court reverses the dis-
trict court’s grant of JMOL of non-infringement, affirms
the district court’s grant of JMOL of no willfulness, af-
firms the district court’s grant of a new trial on damages,
vacates the district court’s grant of an alternative motion
for new trial on infringement, and affirms the district
court’s denial of JMOL of invalidity of claim 19 of the
’216. The case is remanded for proceedings consistent with this opinion.