Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., N (Fed. Cir. Nov. 17, 2016) (Before Newman, Chen, and Hughes, J.) (Opinion for the court, Hughes, J.) (Opinion concurring in part and dissenting in part filed by Newman, J.)
In a November 17, 2016, decision concerning indefiniteness and willful infringement, the Federal Circuit affirmed in part and reversed in part the district court’s decision finding all but one patent claim invalid for indefiniteness, granting a JMOL of no willful infringement, and granting a motion for a new trial on damages.
Alfred E. Mann Foundation for Scientific Research (“The Foundation”) sued Cochlear Corporation and Cochlear Ltd. (“Cochlear”) for infringement of claims 1 and 10 of the Foundation’s ’616 patent and claims 6-7 of the Foundation’s ’691 patent. The patents are directed to an ear implant with telemetry functionality for testing purposes, and generally describe a two-part system comprising an external wearable system with a wearable processor and headpiece, and an internal implantable cochlear stimulator. A jury trial and bench trial were held. The jury found willful infringement of all asserted claims, that none of the claims were invalid, and awarded $131 million in damages. The district court held during the bench trial that all of the asserted claims except for claim 10 of the ’616 patent were invalid for indefiniteness. The court also denied Cochlear’s JMOL of noninfringement as to claim 10 of the ’616 patent, granted Cochlear’s JMOL of no willful infringement, and granted Cochlear’s motion for a new trial on damages. Both parties appealed.
The Court first addressed the district court’s denial of Cochlear’s motion for JMOL of noninfringement. Cochlear argued that the district court erred in construing claim 10 because the claim requires an infringing system to display the voltage between two electrodes, which Cochlear’s system did not do. The Court found no intrinsic evidence for this claim construction and rejected the argument. Cochlear also argued that the “whereby” clause in claim 10 is material, such that voltage must be made available for display. The Court again disagreed, because claim 10 makes clear that the processed status-indicating signals only have to convey information about the voltage measurements, not necessarily the voltage itself. The Court also rejected this argument because it conflicted with the specification and prosecution history. Next, Cochlear argued that even under the district court’s construction, its accused system did not infringe because a voltage value is not “made known” as required by claim 10. However, the Court found substantial evidence of infringement because the voltage could “made known” by using Ohm’s law, where voltage = current x impedance.
The Court then turned to the Foundation’s cross-appeal on the district court’s indefiniteness determinations. To satisfy the definiteness requirement, a means-plus-function claim requires sufficient disclosure of the underlying structure. The Foundation argued that claims 6-7 of the ’691 patent are not indefinite because the “microprocessor implements a logarithmic conversion algorithm to generate data indicative of an audio signal.” The Court agreed with the district court and found the claims to be indefinite. The patent did not disclose which component performs the logarithmic conversion function. Thus, the specification did not disclose “with sufficient particularity the corresponding structure for performing the claimed function.” The Court also found that the claims were indefinite because the logarithmic conversion may be implemented through various unspecified algorithms. While the Foundation argued that a person of ordinary skill in the art would know of potential logarithmic conversion functions to implement, the Court found that this did not create structure in the patent where there was none to begin with.
The Court then disagreed with the district court’s finding that claim 1 of the ’616 patent was indefinite. The district court held this claim to be indefinite because the patent did not explicitly identify Ohm’s law and there are multiple ways of calculating impedance. The Court found that both parties’ experts testified that a person of ordinary skill would know to apply Ohm’s law to voltage and current to yield impedance values. This provided “adequate defining structure to render the bounds of the claim understandable to one of ordinary skill in the art.”
Next, the Court vacated and remanded the district court’s grant of Cochlear’s motion for JMOL of no willful infringement. The district court determined that the Foundation failed to satisfy the subjective prong of Seagate because (1) the Foundation did not provide pre-suit notice regarding the ’691 patent and (2) Cochlear responded with reasonable infringement defenses after being notified of the ’691 patent. However, the Supreme Court rejected the Seagate test for willful infringement as “unduly rigid” and “impermissibly encumber[ing] the statutory grant of discretion to district courts.” The Court held that the district court must be mindful of Halo’s preponderance of the evidence standard and consider whether Cochlear’s infringement “constituted an ‘egregious case of misconduct beyond typical infringement’ meriting enhanced damages.”
Finally, the Court held that it lacked jurisdiction to consider whether the district court abused its discretion in granting Cochlear’s motion for a new trial on damages and vacating the jury’s damages award. The Court found that there was no final decision on the damages issue. As a result, it could not consider the issue under 18 U.S.C. § 1295(a)(1) or Fed. R. Civ. P. 54(b).
Judge Newman dissented with the majority’s finding that claims 6 and 7 of the ’691 patent were indefinite. She argued that experts for both sides agreed that logarithmic conversion is well-known, and that persons of skill in the field of the invention would understand the description of the logarithmic conversion in the claimed system. Contrary to the majority’s view, Judge Newman reasoned that it is not necessary for well-known formulas to be stated in the specification when they are known in the relevant art. Judge Newman also disagreed with the majority’s finding that the Court lacked jurisdiction to decide the damages issue.
In an indefiniteness analysis, particularly for a “means plus function” claim, the patent must particularly disclose the corresponding structure for performing the claimed function. It is not enough that a person of ordinary skill in the art would likely know what structure to implement. The Court also clarifies that in a willful infringement analysis, the preponderance of the evidence standard implemented in Halo should be used, rather than the clear and convincing evidence standard used in Seagate.