Prism Techs. LLC v. Sprint Spectrum L.P.

• Decision Date: 06 March 2017
• Docket Number: 2016-1456, 2016-1457
• Citation: 849 F.3d 1360
• Parties: PRISM TECHNOLOGIES LLC, Plaintiff–Cross–Appellant v. SPRINT SPECTRUM L.P., dba Sprint PCS, Defendant–Appellant
• Court: U.S. Court of Appeals — Federal Circuit

849 F.3d 1360

PRISM TECHNOLOGIES LLC, Plaintiff–Cross–Appellant

v.SPRINT SPECTRUM L.P., dba Sprint PCS, Defendant–Appellant

2016-1456, 2016-1457

United States Court of Appeals, Federal Circuit.

Decided: March 6, 2017

Paul J. Andre , Kramer Levin Naftalis & Frankel LLP, Menlo Park, CA, argued for plaintiff-cross-appellant. Also represented by Lisa Kobialka ; Mark Baghdassarian, Jonathan Caplan, Aaron M. Frankel, Cristina Martinez , New York, NY; Andre J. Bahou , Secure Axcess, LLC, Plano, TX.

Carter Glasgow Phillips , Sidley Austin LLP, Washington, DC, argued for defendant-appellant. Also represented by Jennifer J. Clark, Ryan C. Morris ; Michael J. Bettinger, Irene Yang , San Francisco, CA.

Before Taranto, Linn, and Chen, Circuit Judges.

Taranto, Circuit Judge.

The jury in this case found Sprint Spectrum L.P. liable to Prism Technologies LLC for infringement of U.S. Patent Nos. 8,127,345 and 8,387,155. The jury awarded Prism $30 million in reasonable-royalty damages under 35 U.S.C. § 284. The district court denied Sprint's post-trial motions, and it also denied Prism's motion for additional monetary relief for times after the period Prism said was covered by the jury verdict. Sprint appeals, and Prism cross-appeals. We affirm.

I

Prism owns the '345 and '155 patents, which claim and describe methods and systems for managing access to protected information provided over certain networks that, the parties agree, must be "untrusted" networks. The technology involves an access server, an authentication server, and a client. '345 patent, col. 1, line 60, through col. 2, line 21. The access server forwards client requests for protected information to the authentication server. Id. If the authentication server, using stored identity data, successfully authenticates the client, the client receives authorization to access the information. Id. The patents issued from continuations of U.S. Patent Application No. 08/872,710 and have similar specifications.

Claim 1 of the '345 patent is representative of the claims at issue in this appeal. That claim recites:

1. A method for controlling access, by at least one authentication server, to protected computer resources provided via an Internet Protocol network, the method comprising:

receiving, at the at least one authentication server from at least one access server, identity data associated with at least one client computer device, the identity data forwarded to the at least one access server from the at least one client computer device with a request from the at least one client computer device for the protected computer resources;

authenticating, by the at least one authentication server, the identity data received from the at least one access server, the identity data being stored in the at least one authentication server;

authorizing, by the at least one authentication server, the at least one client computer device to receive at least a portion of the protected computer resources requested by the at least one client computer device, based on data associated with the requested protected computer resources stored in at least one database associated with the at least one authentication server; and

permitting access, by the at least one authentication server, to the at least the portion of the protected computer resources upon successfully authenticating the identity data and upon successfully authorizing the at least one client computer device.

'345 patent, col. 34, lines 17–42. The other asserted claims are similar. The parties do not identify any material differences between the claims.

Sprint offers wireless telecommunications services that employ technologies complying with 3G, 4G LTE, and 4G WiMAX standards. As part of its operations, Sprint transports data to and from its base stations, which communicate with customers' wireless devices, and its data centers, further in the core of the network. In doing so, Sprint often uses Ethernet backhaul network services purchased from third parties. Each third-party provider, or alternative access vendor (AAV), owns, operates, and controls the network leg on which it provides its backhaul transport service to Sprint. Sprint sometimes also uses other arrangements to move data, including femtocells and picocells, which, according to Sprint, do not rely on the third-party backhaul networks.¹

In April 2012, Prism sued Sprint in the District of Nebraska for infringing the '345 patent and U.S. Patent No. 7,290,288. The same day, Prism sued AT&T Mobility LLC, for infringement of those patents. See Prism Techs. LLC v. AT&T Mobility, Inc. , No. 8:12–cv–122–LES–TDT, 2012 WL 1338497 (D. Neb. filed Apr. 4, 2012). Prism filed three other suits, against other companies, making similar allegations. See Prism Techs. LLC v. T–Mobile USA Inc. , No. 8:12–cv–124–LES–TDT, 2012 WL 1338498 (D. Neb. filed Apr. 4, 2012) ; Prism Techs. LLC v. U.S. Cellular Corp. , No. 8:12–cv–125–LES–SMB, 2012 WL 1338499 (D. Neb. filed Apr. 4, 2012) ; Prism Techs. LLC v. Cellco P'ship , No. 8:12–cv–126–LES–SMB, 2012 WL 1338500 (D. Neb. filed Apr. 4, 2012). In March 2013, after the '155 patent issued, Prism amended its complaint against Sprint to allege infringement of that patent.

The district court consolidated some of the pre-trial proceedings in Prism's suits. In July 2013, the court issued its claim-construction order, in which it construed "Internet Protocol network" and similar limitations as "an untrusted network using any protocol of the Internet Protocol Suite including at least one of IP, TCP/IP, UDP/IP, HTTP, and HTTP/IP." J.A. 45. The court further defined an "untrusted" network as "a public network with no controlling organization, with the path to access the network being undefined and the user being anonymous." Id.

In March 2014, Prism notified Sprint and the other defendants that it was withdrawing its claims regarding the '288 patent"to further streamline the issues." See Index of Evid. Ex. 5, at 1, Prism Techs. , No. 8:12–cv–122–LES–TDT (D. Neb. June 27, 2014), ECF No. 243–5. The district court acknowledged that Prism had "dropped" its assertion of the '288 patent from the action, leaving only the '345 and '155 patents asserted in the case. J.A. 86.

In July 2014, Sprint moved to exclude the testimony of Prism's expert, John Minor. Sprint argued that Mr. Minor's proposed testimony—that Sprint's backhaul networks constitute an "Internet Protocol network" because "no single organization" controls them in the aggregate—impermissibly modified the district court's construction of that term. J.A. 91–92. The court denied Sprint's motion. The court concluded that Mr. Minor's proposed testimony was not contrary to the adopted claim construction because it was consistent with the '345 and '155 patents' disclosure of the Internet itself as the preferred embodiment of an "Internet Protocol network." J.A. 94. The court permitted the jury to decide whether the backhaul networks "constitute a public, uncontrolled, undefined pathway, anonymous-user internet like the aggregated internet." Id.

The district court tried Prism's cases separately. In October 2014, after two and a half years of litigation, the case against AT&T proceeded to trial. On the last day of that trial, just before closing arguments, Prism and AT&T settled, and the court dismissed the parties' claims. See Order, Prism Techs. , 8:12–cv–122–LES–TDT (D. Neb. Dec. 29, 2014), ECF No. 498.

Sprint asked the district court in the present case to refuse to admit the AT&T Settlement Agreement into evidence, arguing that it was not comparable to the hypothetical license relevant here and that its admission would be unfairly prejudicial under Federal Rule of Evidence 403. The court denied the motion on June 8, 2015, and the Agreement was ultimately admitted. The court also denied Sprint's motion to exclude the testimony of James Malackowski, Prism's damages expert.

In June 2015, a jury found that Sprint infringed claims 1 and 33 of the '345 patent and claims 7 and 37 of the '155 patent. The jury also awarded Prism reasonable-royalty damages of $30 million. In July 2015, Sprint moved for judgment as a matter of law (JMOL) and a new trial, and Prism moved for (as relevant here) additional damages and an ongoing royalty for infringement postdating the period (ending in 2014) that Prism said was covered by the jury award. The district court denied those motions. Sprint and Prism each appeal. We have jurisdiction under 28 U.S.C. § 1295(a)(1).²

II

Sprint argues that the district court erred in denying its motion for a new trial. Specifically, Sprint contends, the court erred by (1) allowing Prism to modify its claim construction, (2) admitting the AT&T Settlement Agreement, (3) applying the wrong legal standard in deciding its motion for a new trial, and (4) admitting Prism's cost-savings damages evidence. We reject Sprint's challenges.

A

Sprint argues that the district court erred by allowing Prism's expert, Mr. Minor, to modify the court's construction of "Internet Protocol network." In particular, Sprint criticizes Mr. Minor's testimony that Sprint's backhaul networks constitute an "untrusted" network (as required by the claim construction) because (1) the networks have no single controlling organization (as opposed to no controlling organization) and (2) the path through the networks (as opposed to the path to access the networks) is undefined. We see no legal error or other abuse of discretion in the district court's allowing of Mr. Minor's testimony. See Gen. Elec. Co. v. Joiner , 522 U.S. 136, 141–43, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) (evidentiary rulings reviewed for abuse of discretion); Highmark Inc. v. Allcare Health Mgt. Sys., Inc. , –––U.S. ––––, 134 S.Ct. 1744, 1748 n.2, 188 L.Ed.2d 829 (2014) (decision based on legal error is abuse of discretion); Harris v. Chand , 506 F.3d 1135, 1139 (8th Cir. 2007) (evidentiary rulings reviewed for abuse of discretion).

The district court correctly concluded that Mr. Minor's testimony...