Toshiba Corp. v. Imation Corp.

• Decision Date: 11 June 2012
• Docket Number: No. 2011–1204.,2011–1204.
• Citation: 681 F.3d 1358,103 U.S.P.Q.2d 1097
• Parties: TOSHIBA CORPORATION, Plaintiff–Appellant, v. IMATION CORP., Moser Baer India Ltd., Glyphics Media, Inc., CMC Magnetics Corp., Hotan Corp., Khypermedia Corp., Ritek Corp., and Advanced Media, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

681 F.3d 1358

103 U.S.P.Q.2d 1097

TOSHIBA CORPORATION, Plaintiff–Appellant,

v.IMATION CORP., Moser Baer India Ltd., Glyphics Media, Inc., CMC Magnetics Corp., Hotan Corp., Khypermedia Corp., Ritek Corp., and Advanced Media, Inc., Defendants–Appellees.

No. 2011–1204.

United States Court of Appeals, Federal Circuit.

June 11, 2012.

Deanne E. Maynard, Morrison & Foerster LLP, of Washington, DC, argued for plaintiff-appellant. With her on the brief were G. Brian Busey, Brian R. Matsui, Marc A. Hearron and Adam A. Eltoukby; and Karl J. Kramer, of Palo Alto, California.

Alan D. Smith, Fish & Richardson P.C., of Boston, MA, argued for defendants-appellees. With him on the brief were Christopher Dillon, Stephen A. Marshall, Samuel Sherry and Maureen M. Brenner.

Before DYK, SCHALL, and MOORE, Circuit Judges.

Opinion for the court filed by Circuit Judge MOORE. Opinion concurring-in-part and dissenting-in-part filed by Circuit Judge DYK.

MOORE, Circuit Judge.

Toshiba Corporation accused Imation Corporation et al. (collectively, Appellees) of infringing claims of U.S. Patent nos. 5,892,751 ('751 patent) and 5,831,966 ('966 patent) relating to optical disc technology. The district court granted summary judgment of non-infringement for the asserted claims under both patents except for a de minimis claim of direct infringement that was later dismissed. For the reasons set forth below, we affirm-in-part and vacate-in-part the grant of summary judgment of non-infringement and remand.

Background

DVDs are optical discs used to store data or digital content such as movies. DVDs are made in several formats, which are governed by technical standards that allow for compatibility among DVD players and recorders. Appellees manufacture or sell recordable blank DVDs that comply with these standards. The DVD standards generally organize a disc into three areas: a “lead-in area” which contains information about the DVD's structure and properties; a “data area” where data is recorded and stored; and a “lead-out area” which indicates the functional end of the data area. E.g., J.A. 2356.

There are two methods to record data onto DVDs: disc-at-once mode and multisession mode. The disc-at-once mode writes all of the data to the disc in a single session, including the lead-in area containinga test pattern and the lead-out area. Multisession mode allows a user to record some data in one session and then later record additional data to the DVD in another session. Once a user records all of the data on the DVD, the user may choose to “finalize” the DVD, which writes the test pattern in the lead-in area and writes the lead-out area. Prior to finalization, the DVD does not contain the test pattern or the lead-out area. The district court identified as an undisputed fact that a recordable DVD “can be played in the drive in which it was recorded without finalization, but not on other recorders or conventional DVD players.” Toshiba Corp. v. Imation Corp., No. 09–cv–305–slc, slip op. at 13 (W.D.Wis. Dec. 28, 2010). A finalized DVD, however, can be played on any standardized DVD player or drive.

Toshiba accused Appellees of infringing claims of the '751 and '966 patents. Appellees moved for summary judgment that they did not indirectly infringe the '751 patent. The district court granted the motion, concluding that the use of unfinalized DVDs was a substantial noninfringing use. The court held that “[b]oth theories of ‘indirect infringement’—that is, contributory and inducing infringement—fail if there are any ‘substantial’ noninfringing uses.” Toshiba Corp., No. 09–cv–305–slc, slip op. at 25–26 (citing Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1275 (Fed.Cir.2004)).

Appellees also moved for summary judgment that they did not infringe the ' 966 patent. Asserted claim 1 of the '966 patent requires that the lead-in area contain information identifying the structure of the recording medium. The district court construed terms of claim 1 to require that such information have the purpose of identifying information for the entire recording medium. Toshiba Corp., No. 09–cv–305–slc, slip op. at 22. Because the district court held that the identifying information on the accused DVDs did not have the purpose of providing information for the entire recording medium, the court granted summary judgment of non-infringement as to the '966 patent. Id. at *22, 24.

The parties stipulated to dismissal of the remaining de minimis claim of direct infringement. J.A. 22246. Toshiba appeals from the district court's grant of summary judgment of non-infringement for both patents and its construction of certain '966 patent claim terms. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Discussion

We review a district court's grant of summary judgment de novo. Fujitsu Ltd. v. Netgear Inc., 620 F.3d 1321, 1325 (Fed.Cir.2010). Summary judgment is appropriate when, drawing all justifiable inferences in the non-movant's favor, there exists no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

I. '751 Patent

The '751 patent is directed to how data is written onto DVDs. The claims of the '751 patent, like the DVD standards, require a lead-in area, data area, and lead-out area. E.g., '751 patent c1.1. The asserted claims also require that the optical discs (e.g., DVDs) have a test pattern included in the lead-in area. Id. DVD players may use the test pattern to ensure data is read properly from the DVD, and to make adjustments if not. Id. abstract & col.2 ll.34–44. The test pattern and the lead-out area are only written when the disc is recorded in disc-at-once mode or finalized; unfinalized DVDs do not contain the test pattern or the lead-out area. Toshiba does not dispute that unfinalized DVDs do not infringe the '751 patent. See Appellant's Br. 10.

The district court concluded “the evidence establishes that recording DVDs without finalizing them is a noninfringing use, and there is no evidence that this use is not substantial.” Toshiba Corp., No. 09–cv–305–slc, slip op. at 26. The district court noted that there is evidence of a “commonsensical and efficient” reason not to finalize a disc: a user may continue recording new material on the disc, and as long as the user keeps the disc in the same machine, the user can read all of the recorded material without finalizing the disc. Id. at *27. The court also noted that although manuals and other marketing materials recommended finalizing DVDs, they do not suggest that finalization is the only proper way to use DVDs or that use of unfinalized DVDs is “aberrant” or “occasional.” Id. at *28. The materials, according to the district court, simply explain that finalization is required for using DVDs in a different recorder or player. Id. Finally, the court noted that Toshiba failed to introduce evidence showing that playback in other recorders or players is a use preferred over playback in the same DVD recorder, which does not require finalization. Id. The district court thus held that Toshiba failed to introduce any evidence to create a genuine issue of material fact that using unfinalized DVDs is not a substantial non-infringing use. Id. at *29.

The court granted summary judgment of noninfringement for Toshiba's contributory and induced infringement allegations, holding that both infringement theories “fail if there are any ‘substantial’ non-infringing uses.” Id. at *26, 30. Toshiba appeals the ruling that there is a substantial non-infringing use and that a substantial non-infringing use precludes liability for induced infringement.

A. Contributory Infringement

To establish contributory infringement liability, the patent owner must show, among other things, that there are no substantial non-infringing uses. 35 U.S.C. § 271(c). “[N]on-infringing uses are substantial when they are not unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental.” Vita–Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1327 (Fed.Cir.2009). In assessing whether a use is substantial, the fact-finder may consider “the use's frequency, ... the use's practicality, the invention's intended purpose, and the intended market.” i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 851 (Fed.Cir.2010).

Toshiba argues that the intended use of DVDs is the long-term storage of data that may be accessed on any industry-standard DVD player or recorder, and that Appellees instruct their users that finalization is necessary to accomplish this. Appellant's Br. 29, 31–33. For example, the accused DVDs are advertised as compliant with industry standards, which, according to Toshiba, require that the DVDs be finalized. Id. at 30–31. Toshiba contends that unfinalized DVDs recorded in multisession mode are merely an interim step in the process of recording data, and that finalization is necessary to achieve the intended result. Id. at 35. Toshiba argues that the use of unfinalized DVDs is “unintended” and “impractical,” and thus not substantial.

Appellees contend there is no evidence that the recording and playing of unfinalized DVDs is not a substantial non-infringing use. Appellees' Br. 41. Appellees argue that the evidence shows that users choose not to finalize the DVDs so that they can continue recording data to the disc and that the standards support the use of unfinalized DVDs. Id. at 42–43. Appellees also argue there are good reasons not to finalize: finalization prevents users from adding more data; it takes time; and it is not necessary in order to use the DVD in the device in which it was recorded. Id. at 43. Appellees claim that even if it were true that they recommended finalizing DVDs, recommending...