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Infringement of two claims and $74 million in damages affirmed, injunction reinstated
February 05, 2008

In a decision last week, the Federal Circuit affirmed-in-part and reversed-in-part a jury verdict of infringement of a patent owned by Tivo relating to its DVR technology. The ruling was based on claim construction, with the court finding that, based on the correct construction of claims directed to the DVR hardware, there was no infringement of those claims. However, the claims directed to the software were correctly construed and infringed, and as a result, the jury's award of nearly $74 million in damages was affirmed.

In addition, the district court's permanent injunction had been stayed pending appeal. Based on the court's disposition, that stay was dissolved, and the case was remanded for a determination of the amount of damages to be assessed for infringement while the case was on appeal.

In an interesting footnote, the Federal Circuit acknowledged that perhaps, in some cases, claim construction is more appropriately considered a question of fact. In this case, the district court's construction was "largely based on the court's assessment of extrinsic evidence." As a result, the court noted that "there is substantial force to the proposition that such a conclusion is indistinguishable in any significant respect from a conventional finding of fact, to which [the court] typically accord[s] deference." Perhaps this signals that the court may be willing to revisit its en banc decision in Cybor that determined claim construction was a pure issue of law reviewed without deference in all cases.

Tivo owns a patent (commonly called the "time warp" patent) relating to "time shifting" television signals both during and after they are recorded. The claims of the patent are divided into two types, "hardware" claims and "software" claims. As the monikers imply, the hardware claims generally relate to the DVR hardware that permits the time shifting, whereas the software claims cover the software used to accomplish the time shifting. Tivo asserted two hardware claims, claims 1 and 32, and two software claims, claims 31 and 61.

Claims 1 and 31 are reproduced below, with the relevant claim language emphasized:

1. A process for the simultaneous storage and play back of multimedia data, comprising the steps of:
accepting television (TV) broadcast signals, wherein said TV signals are based on a multitude of standards, including, but not limited to, National Television Standards Committee (NTSC) broadcast, PAL broadcast, satellite transmission, DSS, DBS, or ATSC;
tuning said TV signals to a specific program;
providing at least one Input Section, wherein said Input Section converts said specific program to an Moving Pictures Experts Group (MPEG) formatted stream for internal transfer and manipulation;
providing a Media Switch, wherein said Media Switch parses said MPEG stream, said MPEG stream is separated into its video and audio components;
storing said video and audio components on a storage device;
providing at least one Output Section, wherein said Output Section extracts said video and audio components from said storage device;
wherein said Output Section assembles said video and audio components into an MPEG stream;
wherein said Output Section sends said MPEG stream to a decoder;
wherein said decoder converts said MPEG stream into TV output signals;
wherein said decoder delivers said TV output signals to a TV receiver; and
accepting control commands from a user, wherein said control commands are sent through the system and affect the flow of said MPEG stream.

. . .

31. A process for the simultaneous storage and play back of multimedia data, comprising the steps of:
providing a physical data source, wherein said physical data source accepts broadcast data from an input device, parses video and audio data from said broadcast data, and temporarily stores said video and audio data;
providing a source object, wherein said source object extracts video and audio data from said physical data source;
providing a transform object, wherein said transform object stores and retrieves data streams onto a storage device;
wherein said source object obtains a buffer from said transform object, said source object converts video data into data streams and fills said buffer with said streams;
wherein said source object is automatically flow controlled by said transform object;
providing a sink object, wherein said sink object obtains data stream buffers from said transform object and outputs said streams to a video and audio decoder;
wherein said decoder converts said streams into display signals and sends said signals to a display;
wherein said sink object is automatically flow controlled by said transform object;
providing a control object, wherein said control object receives commands from a user, said commands control the flow of the broadcast data through the system; and
wherein said control object sends flow command events to said source, transform, and sink objects.

Tivo sued EchoStar, who operates the Dish Network satellite TV service, for infringement of its patent based on its sales of two types of DVRs, the 50X DVR and the Broadcom DVR. After the district court construed the disputed claim limitations, the case went to a jury, who found both the hardware and software claims infringed, and awarded nearly $74 million in damages. EchoStar appealed. While the appeal was pending, the USPTO confirmed the patentability of Tivo's claims during a reexamination proceeding.

EchoStar argued that it did not infringe the hardware claims for several reasons. First, it argued that the "multitude of standards" limitation required that the unit be capable of receiving at least both digital and analog signals, and because its DVRs could only accept digital signals, this limitation was not met. While noting the limitation was "not very precise," the Federal Circuit agreed with the district court that this limitation did not require the DVR to be capable of receiving both digital and analog signals, holding that this definition was the "least problematic" of those proposed.

EchoStar next argued that its units did not meet the "tuning" limitation, as it argued the "tuning" should be limited to the context of the 6MHz portion of a broadcast band containing a particular program. The court disagreed, finding nothing in the specification to support this narrow construction, as the description in the specification with the 6MHz language was characterized as just an embodiment of the invention. Accordingly, the court affirmed the finding that EchoStar's DVRs met this limitation.

The next term in dispute was "converts." EchoStar argued that the conversion step further indicated that the claims required the ability to process analog signals, as the "conversion" must be from an analog signal to an MPEG signal. The court once again disagreed, finding that converting a digital signal to an MPEG stream was covered under this term. This was based on disclosure in the specification that regardless of how the signal is received, it is converted into an internally transferable and manipulable MPEG format. Accordingly, this element was also present in the accused DVRs.

The next limitation in dispute in the hardware claims was the "separation" limitation, requiring that the MPEG stream be "separated into its video and audio components." Here, the court sided with EchoStar. While Tivo argued that logical separation should be included in the scope of this claim, as opposed to physical separation, the court was unpersuaded. The court noted that the specification states "[t]he invention parses the . . . MPEG stream and separates it into its video and audio components. It then stores the components into temporary buffers." Because this was described as "the invention," rather than an embodiment of the invention, the court held that the "separation" limitation required physical separation. As a result, the accused Broadcom DVRs did not infringe the hardware claims, and the finding of infringement of those claims by the Broadcom DVRs was reversed.

Finally, EchoStar argued the 50X DVRs did not meet the "assembles" limitation, because while those DVRs separate the MPEG stream into its video and audio components (as required by the "separation" limitation), they are not reassembled into a single stream. Tivo argued that this limitation covered the assembly of each component into its own stream. Interestingly, this limitation came down to the definition of "an" in the claim, specifically whether "an" meant "one or more," or just "one." The Federal Circuit addressed this very issue in a decision less than a month ago (blogged here), noting that the "general rule" is that "a" or "an" means one or more, unless there was "clear intent to limit 'a' or 'an' to 'one.'" Interestingly, the Federal Circuit found such "clear intent" in this case. This was based on the claims and written description, which "clearly describe the separation of a single stream into two components and then reassembly of the components into a single stream for conversion into television signals." The court also found it persuasive that while the claim as a whole is an open-ended "comprising" claim, the specific limitation itself did not contain "comprising." As a result, the court held that "an" in this instance meant "one," and therefore the 50X DVRs also did not infringe the hardware claims. While Tivo argued there was sufficient evidence for infringement under the doctrine of equivalents, the court refused to consider this argument in the first instance, instead opting to let Tivo pursue the issue on remand if it chose to do so.

Tivo fared better, however, on the software claims. The first disputed term was "object," used in the terms "source object," "transform object," "sink object," and "control object." EchoStar argued that using the term "object" necessarily meant that the claims required use of an object-oriented programming language, such as C++. Tivo disagreed, and argued that "object" meant "a software term that describes a collection of data or operations," and that an object-oriented language was not necessary. Tivo cited a technical dictionary in support of its position. The district court adopted Tivo's proposed construction, and the Federal Circuit affirmed. The court noted that while there was an example in the specification using C++, there was nothing in the specification that required use of an object-oriented language. The court also affirmed the district court's definitions of the individual terms listed earlier.

Even with the construction affirmed, EchoStar still attacked the sufficiency of the evidence of infringement of the software claims. Each of the "object" limitations described above, as defined by the court, required a "collection of data and operations" of some king. EchoStar argued in order to meet this definition, all data and operations constituting the "collection" must be grouped together either in the software code or in a single file. As described the Tivo's expert, EchoStar's DVRs met this limitation because "the relevant subroutines are part of the same program and are 'able to interact and get access to the data they need to.'" The Federal Circuit held the jury's verdict supported by substantial evidence, as there was no objective evidence supporting EchoStar's expert's contrary opinion.

Finally, EchoStar argued its devices did not meet the portion of the "source object" limitation requiring the object to "extract[] video and audio data from said physical data source." The court likewise rejected this position. While Tivo's expert only testified in detail regarding one of the two accused devices, the court held that this was proper where the substantive analysis for the two devices was essentially the same. In fact, EchoStar's expert likewise did not differentiate between the two devices. The court further held that the jury's decision on this limitation was supported by substantial evidence, as the jury could have rejected EchoStar's expert testimony and credited Tivo's expert. Accordingly, the jury's finding of infringement of the software claims was affirmed.

The jury found all accused devices infringed both the hardware and software claims, and did not differentiate the amount of damages awarded based on which claims were infringed. As a result, because the Federal Circuit affirmed the verdict as to the software claims, the court also affirmed the jury's damages award. Because the district court's permanent injunction had been stayed pending appeal, the court lifted the stay when the appeal becomes final, and remanded the case for a determination of the amount of additional damages due Tivo based on infringement that took place while the injunction was stayed on appeal.

In perhaps the most interesting portion of the opinion, and one that had virtually nothing to do with the merits, the court acknowledged that, in some cases at least, claim construction may be more akin to an issue of fact rather than an issue of law. This comment is in footnote 2, which is reproduced below in its entirety:

As noted, the district court based its construction of the software claims on its conclusion as to what the critical claim terms would mean to a person of skill in the art. That conclusion in turn was largely based on the court’s assessment of extrinsic evidence. Although we have characterized claim construction as a question of law even when it involves competing presentations of extrinsic evidence, Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en banc), we recognize that there is substantial force to the proposition that such a conclusion is indistinguishable in any significant respect from a conventional finding of fact, to which we typically accord deference. See Amgen Inc. v. Hoechst Marion Rousel, Inc., 469 F.3d 1039, 1041 (Fed. Cir. 2006) (Michel, C.J., dissenting from denial of rehearing en banc); id. at 1043 (Newman, J., dissenting from denial of rehearing en banc); id. at 1044 (Rader, J., dissenting from denial of rehearing en banc); id. at 1045 (Gajarsa, J., concurring in denial of rehearing en banc); id. at 1046 (Moore, J., dissenting from denial of rehearing en banc). Applying our governing non-deferential standard of review, we uphold the district court’s conclusion in this case. If we were to treat that ruling as a finding of fact, we would uphold the district court’s ruling a fortiori in light of the more deferential “clear error” standard applicable to factual findings.

Based on this language, it appears that the court may be willing to reconsider its Cybor decision at some point in the near future, if the proper case presents itself.

To read the full decision in Tivo, Inc. v. Echostar Commc'ns Corp., click here.

As an interesting aside, Tivo holds a trademark registration on its "popping" sound when the fast forward or rewind buttons are pressed. You can listen to the sound at the USPTO's "for kids" webpage here.

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