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4 December 2015Patents

CAFC vacates $16m Cisco Wi-Fi SEP fine

Technology company Cisco has been handed a second chance to combat a $16 million standard-essential patent (SEP) damages award after the US Court of Appeals for the Federal Circuit vacated an earlier ruling.

Yesterday, December 3, the federal circuit ruled 3-0 to vacate damages awarded to the Commonwealth Scientific and Industrial Research Organisation (CSIRO), a research organisation for the Australian government, which had been involved in a dispute with Cisco.

The disputed patent concerns the correcting of wireless signal problems, commonly referred to as the 'multipath problem', and was issued to CSIRO in 1996.

Radiata, an entity set up by professionals within CSIRO to sell microchips containing the patented technology, entered into a licensing agreement with the research organisation in 1996. In 2000, Cisco acquired Radiata.

In 1999, the Institute of Electrical and Electronics Engineers had deemed the patented technology standard-essential.

Following the adoption of the patented technology as standard-essential, CSIRO approached a number of organisations to license the patent, Cisco included, based on its 'rate card'.

Both parties, ho wever, failed to agree new terms for the new licensing rate.

In 2011, CSIRO filed a patent lawsuit at the US District Court for the Eastern District of Texas. Cisco declined to contest CSIRO’s infringement claim or the validity of the patent.

The trial proceeded to discuss the damages award. CSIRO requested $30 million, whereas Cisco calculated the cost to be $1.1 million.

The district court settled on awarding CSIRO $16.2 million in damages.

But yesterday that ruling was thrown into doubt after the federal circuit ordered the Texas court to review the damages award.

Judge Sharon Prost, writing the opinion, said the district court incorrectly included the fact that the technology has been widely adopted across the industry as a factor in determining the value of the SEP.

“Damages awards for SEPs must be premised on methodologies that attempt to capture the asserted patent’s value resulting from the value added by the standard’s widespread adoption, but only from the technology’s superiority.

“It seems quite possible, then, that CSIRO’s rate card rates attempt to capture at least some value resulting from the standard’s adoption,” she said.

The case will now return to the Texas court.

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