Fed Circuit vacates Ericsson’s $100m patent verdict against TCL

In a victory for Chinese electronics company  TCL, the US Court of Appeals for the Federal Circuit has thrown out a $100 million patent infringement verdict that  Ericsson had won against the Chinese company.

In a  2-1 precedential opinion issued yesterday, April 14, the Federal Circuit concluded that the relevant parts of Ericsson’s computer security patent were ineligible under section 101.

The patent at issue, US number 7,149,510, describes “a system and method for controlling access to a platform for a mobile terminal for a wireless telecommunications system”.

Ericsson had sued TCL for infringement of five patents back in February 2015. Four of the patents were removed from the case following inter partes review proceedings, leaving only the ‘510 patent.

TCL moved for summary judgment that the asserted claims of the ‘510 patent were ineligible for patenting, but the district court denied the motion and the case proceeded to trial.

Subsequently, a jury at the US District Court for the Eastern District of Texas found claims 1 and 5 had been infringed, awarded Ericsson damages, and further found that TCL’s infringement was willful.

Post-trial, TCL moved for renewed judgment as a matter of law and a new trial on damages and willfulness.

The Texas court initially agreed and ordered a new trial on damages, but changed its mind following Ericsson’s motion for reconsideration and reinstated the jury verdict. It also denied TCL’s motion for a new trial and the motion for judgment as a matter of law on willfulness.

TCL appealed against the decision, and yesterday, the Federal Circuit vacated the lower court’s ruling.

Both claims at issue (claims 1 and 5) are directed to the abstract idea of controlling access to, or limiting permission to, resources, according to the Federal Circuit.

“Although written in technical jargon, a close analysis of the claims reveals that they require nothing more than this abstract idea,” said  Chief Judge Sharon Prost, on behalf of the court.

Under the first step of Alice, the court found that the patent was directed to a patent- ineligible concept.

Turning to Alice step two, the court concluded that the asserted patent claims don’t contain an inventive concept that would support patent eligibility.

Prost recited specific elements in the claim, such as “an access controller for controlling access”, before stating: “None of these elements are sufficient to turn the claim into anything more than a generic computer for performing the abstract idea of controlling access to resources.”

The Federal Circuit concluded that claims 1 and 5 were therefore ineligible for patenting, before vacating the district court’s damages verdict.

Majority ‘creates new section 101 law’

Dissenting, Circuit Judge Pauline Newman claimed that the panel majority, in deciding patent eligibility under section 101, “finds facts and applies law without the benefit of district court trial”.

She concluded that the majority “announces new law and disrupts precedent”, as they decided the issue of patentability despite the issue not being available for appeal.

Newman noted that the Federal Circuit has recognised that “denials of summary judgment are not appealable”, but that the court’s departure “defies this classical procedural rule”.

Newman added: “Here, TCL’s pre-trial motion for summary judgment was denied by the district court, no post-trial motion was filed, and section 101 was not mentioned in the district court’s final decision or requested for reconsideration.

“Yet the majority accepts this untried and undecided issue for our appellate decision, and decides it, overriding the judgment entered on the jury verdict. That is not fair and reasonable judicial process.”

Newman went on to conclude that the panel majority doesn’t discuss the district court’s findings, doesn’t apply the Alice criteria or draw on the guidance of precedent.

“Instead, the majority creates new section 101 law,” claimed the judge. She explained that the majority appears to require that “all of the technologic information in the specification must be recited in the claims in order to avoid abstractness of the claims”.

However, according to the judge, this is a new requirement for claims, conflicting with the opportunity to present claims of varying scope and with the principle that claims are intended to be concise statements of the patented invention as distinguished from the prior art.

“It is not the law and is not the practice that every descriptive and distinguishing detail from the specification must be stated in the claims,” said Newman. “The majority’s new law of claim content brings fresh uncertainty to an already strained innovation incentive.”

Lionel Lavenue, partner at Finnegan, Henderson, Farabow, Garrett & Dunner, argued for TCL. Theodore Stevenson, principal at McKool Smith, argued for Ericsson.

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