Alpex Computer Corp. v. Nintendo Co. Ltd.

• Decision Date: 06 November 1996
• Docket Number: 95-1229,Nos. 95-1191,s. 95-1191
• Citation: 102 F.3d 1214,40 USPQ2d 1667
• Parties: ALPEX COMPUTER CORPORATION, Plaintiff/Cross-Appellant, v. NINTENDO COMPANY LTD. and Nintendo of America, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1214

102 F.3d 1214

40 U.S.P.Q.2d 1667

ALPEX COMPUTER CORPORATION, Plaintiff/Cross-Appellant, v. NINTENDO COMPANY LTD. and Nintendo of America, Inc.,

Defendants-Appellants.

Nos. 95-1191, 95-1229.

United States Court of Appeals, Federal Circuit.

Nov. 6, 1996.

Rehearing Denied; Suggestion for

Rehearing In Banc Declined Jan. 15, 1997.

John L. Strauch, Jones, Day, Reavis, & Pogue, Cleveland, OH, argued for plaintiff/cross-appellant. With him on the brief were Barry L. Springel, Richard H. Sayler, and Joseph D. Pollack. Of counsel were Robert J. Hoerner and Marc L. Swartzbaugh.

Thomas G. Gallatin, Jr., Mudge Rose Guthrie Alexander & Ferdon L.L.P., and Herbert F. Schwartz, Fish & Neave, New York City, argued for defendants-appellants. With them on the briefs were John J. Kirby, Jr., Shelley B. O'Neill, and Robert J. Gunther, Jr., Mudge Rose Guthrie Alexander & Ferdon L.L.P. Of counsel was Larry S. Nixon, Nixon & Vanderhye, P.C., Arlington, VA.

Before ARCHER, Chief Judge, RICH, and NEWMAN, Circuit Judges.

ARCHER, Chief Judge.

Nintendo Company, Ltd. and Nintendo of America, Inc. (collectively Nintendo) appeal the January 6, 1995, judgment of the United States District Court for the Southern District of New York, Alpex Computer Corp. v. Nintendo Co., 34 USPQ2d 1167 (S.D.N.Y.1994), holding U.S. Patent No. 4,026,555 (the '555 patent), owned by Alpex Computer Corporation (Alpex), not invalid, willfully infringed, and awarding $253,641,445 in damages and interest. We affirm the judgment as to validity and reverse the judgment of infringement.

I.

This case deals with an invention within the art of video games. The video game industry began in the early 1970s and includes two branches, arcade video games and home video games. Arcade video games are large, expensive, coin-operated machines that are placed in high traffic areas such as amusement arcades. These machines are generally referred to as "dedicated" because they can play only one game. Home video games, in contrast, are small, relatively inexpensive devices that are easily connected to the antennae terminals of a standard television. The Magnavox Odyssey was the first home video game. It too was a dedicated system playing only one game which was referred to as the "ball and paddle" because a dot of light bounced between two player-controlled vertical lines.

In early 1974, the inventors of the patent in suit conceived of a new microprocessor-based home video game system that used modular plug-in units--replaceable, read-only memory, or ROM, cartridges--to permit home video systems to play multiple games, including games with rotating images. The '555 patent on this invention issued to Alpex on May 31, 1977. The patented invention was commercialized in systems by Atari, Mattel, and Coleco.

In the early 1980s, Nintendo entered the home video game market with the Nintendo Entertainment System (NES). After the NES was featured at the 1985 Consumer Electronics Show, Alpex notified Nintendo of possible infringement of the '555 patent. Soon thereafter, in February 1986, Alpex filed suit against Nintendo for patent infringement. Over the next several years, Alpex and Nintendo conducted various pre-trial proceedings. During these proceedings, Nintendo requested certification of certain issues to this court for interlocutory appeal, which the district court granted. However, this court denied leave to appeal. Alpex Computer Corp. v. Nintendo of America Inc., Misc. No. 320 (Fed.Cir. Sept. 2, 1992).

In order to resolve the outstanding questions of claim construction prior to trial, the district court held an evidentiary hearing with the assistance of a special master. The special master issued an initial report making specific recommendations on claim construction, which the district court adopted in part for purposes of instructing the jury. Following a four-week liability trial, the jury returned a verdict for Alpex. After this liability verdict, Nintendo filed a motion for judgment as a matter of law (JMOL) as to infringement and validity or, in the alternative, for a new trial. The damages trial followed before the same jury. The jury awarded Alpex a royalty of 6% which, when computed on the stipulated $3.4 billion of allegedly infringing products sold by Nintendo, resulted in a damage award of $253,641,445. Nintendo again filed motions for JMOL or a new trial and for a remittitur on damages. Alpex moved for entry of judgment and an award of prejudgment interest. The district court denied all of Nintendo's post-trial motions and entered judgment for Alpex with prejudgment interest.

Nintendo now appeals the judgment as to validity, infringement, and damages, and Alpex cross-appeals the amount of damages.

II.

The '555 patent claims a keyboard-controlled apparatus for producing video signals by means of random access memory (RAM) with storage positions corresponding to each discrete position of the raster for a standard television receiver. Figure 2 of the '555 patent depicts the structure of the invention, as follows:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The television raster comprises numerous discrete dots or bars, approximately 32,000, which the cathode ray beam illuminates on a standard cycle, which in turn creates the image on the television screen. The patented invention requires sufficient RAM to accommodate each of the approximately 32,000 memory positions needed to represent the raster image. Thus, the RAM holds at least one "bit" of data for each position in the memory "map" of the raster. Accordingly, this video display system is called "bit-mapping." The advantage of this system, as disclosed in the patent, is that it provides for the representation of every image within the raster RAM, or display RAM, and thereby provides greater control of the display for the manipulation of complex images and symbols. To achieve this flexibility, however, bit-mapping requires the construction of each image within the display RAM before display, a process that requires the microprocessor to erase and rewrite each image. Because the microprocessor must refresh the display RAM for each frame to show the movement of images, the operation of the system is slowed down.

The accused NES with its game cartridges is also an apparatus for producing video signals by means of storage positions corresponding to discrete positions of the raster for a standard television receiver. A trial exhibit illustrates the NES:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The video display system for the NES does not include RAM with storage positions corresponding to each discrete position of the raster. Instead, the NES utilizes a patented picture processing unit, or PPU, to perform the generation of images on the screen. The PPU receives pre-formed, horizontal slices of data and places each slice in one of eight shift registers, each of which can store a maximum of 8 pixels. These slices of data are then processed directly to the screen. The PPU repeats this process to assemble the initial image on the screen. Thereafter it repeats the process as necessary to form changes in images throughout the progression of the game. Nintendo refers to the PPU as an "on-the-fly" system. It is undisputed that the NES video display system, using shift registers to process slices of images (as opposed to entire screens), is a faster means of displaying movement of images on the video screen than the bit-mapping of the RAM-based system of the '555 patent.

The claims at issue are 12 and 13 of the '555 patent:

12. Apparatus for playing games by displaying and manipulating player and ball image devices on the screen of a display tube, comprising

first means for generating a video signal representing a linear player image device aligned in a first direction,

second means for generating a video signal representing a ball image device,

manually operable game control means, and

means responsive to said manually operable game control means for causing said first means to generate a video signal representing the player image device rotated so that it is aligned in a second direction different from said first direction.

13. Apparatus according to claim 12, wherein said means for causing includes programmed microprocessor means and a replaceable memory having program game instructions stored therein for controlling said microprocessor means, whereby different games may be played with said apparatus by replacing said replaceable memory.

The parties dispute the proper claim construction of independent claim 12 (and thus dependent claim 13) and specifically the meaning and scope of "means for generating a video signal."

III.

Claim construction is a matter of law, which we review de novo. Markman v. Westview Instruments, Inc., 52 F.3d 967, 988, 34 USPQ2d 1321, 1337 (Fed.Cir.1995) (in banc), aff'd, --- U.S. ----, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996). Here, the district court submitted the issue of claim construction to a special master. The special master construed the pertinent means-plus-function claims of the '555 patent based on the disclosed structure contained in the patent specification and drawings. See 35 U.S.C. § 112, p 6 (1994). The following jury instruction with regard to the video display system claimed in the '555 patent was proposed by the special master:

The structure corresponding to the elements of claims 12 and 13 for generating a video signal is the Figure 2 components without the television receiver and the keyboard. These components cooperate together to create a video signal as follows: The linear player image device and the ball image device to be displayed on the video unit 30 are stored as data within ROM 42A. The "intelligence" of the system is provided by micro-processor 40. The operation of the micro-processor 40 is under the control of a program stored in ROM 42A. Micro-processor 40 causes this information in ROM 42A to be...