Lucent Technologies, Inc. v. Gateway, Inc.

• Decision Date: 11 September 2009
• Docket Number: No. 2008-1487.,No. 2008-1485.,No. 2008-1495.,2008-1485.,2008-1487.,2008-1495.
• Citation: 580 F.3d 1301
• Parties: LUCENT TECHNOLOGIES, INC., Plaintiff/Counterclaim Defendant-Cross Appellant, and Lucent Technologies Guardian I LLC, Counterclaim Defendant, and Multimedia Patent Trust, Plaintiff/Counterclaim Defendant, v. GATEWAY, INC., Gateway Country Stores LLC, Gateway Companies, Inc., Cowabunga Enterprises, Inc., and Gateway Manufacturing LLC, Defendants/Counterclaimants, and Dell Inc., Defendant/Counterclaimant, and Microsoft Corporation, Defendant/Counterclaimant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

580 F.3d 1301

LUCENT TECHNOLOGIES, INC., Plaintiff/Counterclaim Defendant-Cross Appellant, and Lucent Technologies Guardian I LLC, Counterclaim Defendant, and Multimedia Patent Trust, Plaintiff/Counterclaim Defendant, v. GATEWAY, INC., Gateway Country Stores LLC, Gateway Companies, Inc., Cowabunga Enterprises, Inc., and Gateway Manufacturing LLC, Defendants/Counterclaimants, and Dell Inc., Defendant/Counterclaimant, and Microsoft Corporation, Defendant/Counterclaimant-Appellant.

No. 2008-1485.

No. 2008-1487.

No. 2008-1495.

United States Court of Appeals, Federal Circuit.

September 11, 2009.

John M. Desmarais, Kirkland & Ellis, LLP, of New York, NY, argued for plaintiff/counterclaim defendant-cross appellant Lucent Technologies, Inc. With him on the brief were Paul A. Bondor and Michael P. Stadnick.

Constantine L. Trela, Jr., Sidley Austin LLP, of Chicago, IL, argued for defendant/counterclaimant-appellant Microsoft Corporation. With him on the brief were Robert N. Hochman and Tacy F. Flint, and Carter G. Phillips, of Washington, DC. Of counsel on the brief were John E. Gartman and John W. Thornburgh, Fish & Richardson, P.C., of San Diego, CA. Of counsel were Juanita Rose Brooks and Joseph P. Reid, Fish & Richardson, P.C. of San Diego, CA; and Thomas Andrew Culbert and Stephen P. McGrath, Microsoft Corporation, of Redmond, WA.

Edward R. Reines, Weil, Gotshal & Manges LLP, of Redwood Shores, CA, for amici curiae Apple Inc., et al. With him on the brief was Sonal N. Mehta.

James W. Dabney, Fried, Frank, Harris, Shriver & Jacobson LLP, of New York, NY, for amici curiae Bank of America Corporation, et al.

Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC, for amici curiae 3M Company, et al. With him on the brief were Don O. Burley and Erik R. Puknys, of Palo Alto, CA. Of counsel on the brief were Hansjorg Sauer, Biotechnology Industry Organization, of Washington, DC; Michael J. Biber, Dolby Laboratories, Inc., of San Francisco, CA; P. Michael Walker and Barry Estrin, E.I. DuPont de Nemours and Co., of Wilmington, DE; Richard F. Phillips, Exxon Mobil Chemical Company, of Houston, TX; Buckmaster de Wolf, General Electric Company, of Fairfield, CT; Philip S. Johnson, Johnson & Johnson, of New Brunswick, NJ; Steven W. Miller, The Procter & Gamble Company, of Cincinnati, OH; Alexander H. Rogers, Qualcomm Inc., of San Diego, CA; and Taraneh Maghamé, Tessera, Inc., of San Jose, CA.

Before MICHEL, Chief Judge, NEWMAN and LOURIE, Circuit Judges.

MICHEL, Chief Judge.

Microsoft Corporation appeals the denial of post-trial motions concerning a jury verdict that U.S. Patent No. 4,763,356 (the "Day patent") was not invalid and that Microsoft indirectly infringed the Day patent. Microsoft also appeals the $357,693,056.18 jury award to Lucent Technologies, Inc. for Microsoft's infringement of the Day patent. Because the validity and infringement decisions were not contrary to law and supported by substantial evidence, we affirm. Because the damages calculation lacked sufficient evidentiary support, we vacate and remand that portion of the case to the district court for further proceedings.

BACKGROUND

In the 1970s, niche groups of hobbyists, including two teenagers in a Los Altos garage, built personal computers from scratch. In the early to mid-1980s, personal computing gained popularity although still in its infancy. In 1982, a fifteen-year-old high school student created the first public computer virus, spreading it among personal computers via floppy disks, most likely the 5¼-inch version, as the 3½-inch disk wasn't introduced until a few years later. Commercially available operating systems at the time were mainly text-based with few, if any, graphical interfaces. In 1984, with its now famous "1984" commercial aired during Super Bowl XVIII on Black Sunday, Apple Computer announced the introduction of its Apple Macintosh, the first widely sold personal computer employing a graphical user interface. The following year, Microsoft introduced its own version of a graphical operating system, Windows 1.0.

In December 1986, three computer engineers at AT & T filed a patent application, which eventually issued as the Day patent. The patent is generally directed to a method of entering information into fields on a computer screen without using a keyboard. A user fills in the displayed fields by choosing concurrently displayed, predefined tools adapted to facilitate the inputting of the information in a particular field, wherein the predefined tools include an on-screen graphical keyboard, a menu, and a calculator. The system may display menus of information for filling in a particular field and may also be adapted to communicate with a host computer to obtain the information that is inserted into the fields. In addition, one of the displayed fields can be a bit-mapped graphics field, which the user fills in by writing on the touch screen using a stylus.

In 2002, Lucent¹ initiated the present action against Gateway, and Microsoft subsequently intervened. The appeal comes from the consolidated action of three separate infringement suits filed in the Eastern District of Virginia, the District of Delaware, and the Southern District of California. The consolidated action was originally before Senior Judge Rudi Brewster. In October 2007, Judge Brewster severed part of the patent infringement case for transfer to Judge Marilyn Huff. The court severed and transferred for further proceedings all matters relating to the Day patent and U.S. Patent Nos. 4,383,272; 4,958,226; 5,347,295; and 4,439,759.

At trial, Lucent charged infringement by Microsoft of claims 19 and 21, among others, of the Day patent. Lucent alleged indirect infringement of claim 19 based on the sales and use of Microsoft Money, Microsoft Outlook, and Windows Mobile. As to claim 21, Lucent asserted that the use of Windows Mobile infringed. Lucent also alleged infringement by Dell and asserted claims of the other patents as well, but those issues are not on appeal.² Microsoft challenged Lucent's infringement contentions, contending among other defenses that the Day patent was invalid for being anticipated or obvious and, even if valid, Microsoft's sales of its products did not infringe the Day patent.

The jury found Microsoft liable on claim 19 as to all three products and on claim 21 as to Windows Mobile but returned a finding of no infringement by Dell as to those two claims. The verdict, without distinguishing among the three products or between inducement and contributory infringement, awarded a single lump-sum against Microsoft for all products involved. The jury awarded $357,693,056.18 for Microsoft's infringement of the Day patent, excluding prejudgment interest.³

The parties filed numerous post-trial motions, including Microsoft's renewed motions seeking judgment as a matter of law that the Day patent was anticipated and obvious and motions challenging the jury's finding of infringement and the jury's award of damages. In particular, Microsoft sought judgment as a matter of law that claims 19 and 21 were anticipated under 35 U.S.C. § 102(b) and (g) or were obvious under § 103. The district court found substantial evidence in the record to support the jury's determination that the defendants had not proven the Day patent to be invalid. The district court also held that neither judgment as a matter of law nor a new trial was appropriate on the jury's finding that Lucent had proven damages in the amount of approximately $358 million. The district court granted only the post-trial motion setting aside the obviousness verdict concerning U.S. Patent No. 4,958,226 but denied all other post-trial motions, including those for the Day patent. See Lucent Techs., Inc. v. Gateway, Inc., 580 F.Supp.2d 1016 (S.D.Cal. 2008). Microsoft has timely appealed the district court's decision. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

ANALYSIS

I. Standards of Review

When reviewing the denial of a motion for judgment as a matter of law ("JMOL") after a jury verdict, we "`appl[y] the same standard of review as that applied by the trial court.'" Wechsler v. Macke Int'l Trade, Inc., 486 F.3d 1286, 1290 (Fed.Cir.2007) (quoting nCube Corp. v. SeaChange Int'l, Inc., 436 F.3d 1317, 1319 (Fed.Cir.2006)). Furthermore, "[t]he grant or denial of a motion for judgment as a matter of law is a procedural issue not unique to patent law, reviewed under the law of the regional circuit in which the appeal from the district court would usually lie." Summit Tech., Inc. v. Nidek Co., 363 F.3d 1219, 1223 (Fed.Cir.2004). In the Ninth Circuit, a district court grants JMOL only "if the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict." Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir.2002). Similarly, a district court in the Ninth Circuit "may grant a new trial only if the verdict is against the clear weight of the evidence." Id.

"Infringement is a question of fact, reviewed for substantial evidence when tried to a jury." Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1332 (Fed.Cir.), cert. denied, ___ U.S. ___, 129 S.Ct. 754, 172 L.Ed.2d 727 (2008). Obviousness is a legal question reviewed de novo. PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1359 (Fed.Cir. 2007), cert. denied, ___ U.S. ___, 128 S.Ct. 1655, 170 L.Ed.2d 355 (2008). The statutory standard requires us to decide whether the subject matter of the claimed invention "would have been obvious at the time the invention was made to a person of ordinary skill in the art to which [the subject matter of the invention] pertains." 35 U.S.C. § 103(a) (2006); see also KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 415-16, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007). "Underpinning that legal issue are factual questions relating to the scope and content of the prior...