Lesson for Defendant-Appellee's: Provide Responsive Arguments on Appeal
By Joseph Herndon --
On January 29, 2016, the Federal Circuit issued an Opinion in Avid Technology, Inc. v. Harmonic, Inc. in which the judgment of the District Court was vacated, and the case was remanded for a new trial on infringement. Avid asserted two patents against Harmonic, U.S. Patent No. 6,760,808 and No. 7,487,309. Both patents concern data storage systems that allow users to store and retrieve large files, such as movies. The main focus of the error in the District Court's judgment, as found by the Federal Circuit, was reliance on prosecution history statements for a disclaimer of claim scope. The Federal Circuit thus remanded for a new trial based on a different claim construction. More importantly, however, due to defendant Harmonic's failure to make certain arguments on appeal, Harmonic effectively has lost the opportunity to argue for non-infringement during the new trial.
Turning to the asserted patents, in the system described by Avid's patents, when a client wishes to store ("write") a file, such as a movie, the system splits the file into "segments." The segments are distributed among various storage units and stored in duplicate at different units (one primary unit and one backup). The system creates and updates segment tables listing file segments and their storage-unit locations. The segment tables may be stored together, as a catalog, and the catalogs may be stored on a catalog manager, at individual clients, at a central database, or may be distributed among several databases or clients. When a client wishes to retrieve ("read") a file, the client determines which storage units have the needed segments, and sends a request for a given segment to a storage unit, which transmits it to the client.
Claim 1 of the '808 patent is illustrative of the claims:
1. A distributed data storage system for allowing one or more client systems to access data, comprising:
a plurality of independent storage units for storing the data;
wherein the data is stored on the plurality of storage units in files, wherein each file includes segments of data and redundancy information for each segment, wherein each segment has an identifier, and wherein, for each file, the segments and the redundancy information for each segment are distributed among the plurality of storage units;
wherein each storage unit comprises: means for maintaining information associating the identifier of each segment stored on the storage unit with the location of each segment on the storage unit; means for receiving a request from one of the client systems for a segment of a file, wherein a request includes the identifier of the segment of the file; and
means, operative in response to a request from one of the client systems for a segment of a file, for retrieving the requested segment of the file from the storage unit using the information associating the identifier of each segment stored on the storage unit with the location of each segment on the storage unit; and
means for sending the requested segment to the client system.
The italicized phrases are the focus of this case. The District Court gave the jury a claim construction of the "independent storage unit" claim element, basing that construction on statements Avid made in the prosecution history.
The second italicized claim element at issue went to the jury without a clarifying construction, over neither party's objection. The jury rejected Harmonic's validity challenge to Avid's patents, but found that Harmonic did not infringe. Avid challenged the non-infringement judgment by post-trial motions and argued that the District Court's claim construction regarding the "independent storage unit" element was incorrect and that, under a correct claim construction, that claim element is clearly met. Avid appealed the non-infringement judgment.
Prosecution History Estoppel – Disclaimer?
The District Court ruled that, during prosecution, Avid had disclaimed a system in which the central controller tells the client which storage unit the client should deal with during read and write operations. On that basis, the District Court instructed the jury that "independent storage units" means "storage units which are not centrally controlled and whose memory addresses are not globally allocated" and that "systems with independent storage units cannot use a central controller to access data, and, in particular, cannot use a central controller that identifies the storage unit on which data is stored in response to client requests."
The Federal Circuit found that the District Court erred with this claim construction because the standard for finding a disclaimer was not met. The Federal Circuit noted that "for prosecution disclaimer to attach, our precedent requires that the alleged disavowing actions or statements made during prosecution be both clear and unmistakable." But, where the alleged disavowal is ambiguous, or even "amenable to multiple reasonable interpretations," the Federal Circuit has declined to find prosecution disclaimer.
The District Court relied on two passages from an Avid submission during the prosecution history including:
[T]he claimed system, by virtue of the independent storage units, avoids using a central controller to access data. In particular, storage units "receiv[e] . . . request[s] from one of the client systems for a segment of a file." Clients do not issue requests to a central controller that in turn identifies storage units that store the data and issues requests to storage units.
The Federal Circuit found that the District Court misread this passage. In the Federal Circuit's opinion, the first portion does not itself say what exactly "access[ing] data" entails; it is the second portion that identifies what Avid means. What that portion says, by its terms, is that a central controller is excluded if it performs both of two functions: it "identifies storage units that store the data and issues requests to storage units." The language on its face does not exclude a central controller that performs only one or the other of the two stated functions -- which would have been the meaning if the phrase had used "or" rather than "and." In any event, it does not do so clearly, as would be required to find a disclaimer of a central controller that merely identifies the storage units.
In short, the Federal Circuit found no clear and unmistakable disclaimer of central controllers that provide storage-unit location information for retrieving segments. The jury instruction limiting "independent storage units" in that way was incorrect.
Vacate Judgment, New Trial, Judgment of Infringement?
Now that the Federal Circuit found such an error, what action is necessary? The error, undisputedly preserved for review, concerned the legal standard (claim construction) for evaluating a central element of the infringement dispute. The error requires at least vacatur of the verdict and a remand for a new trial unless the Federal Circuit can conclude that the error was not prejudicial, i.e., was harmless.
Because there was no separate jury determination of non-infringement on a distinct ground, the error in the instruction governing this central dispute at trial would be harmless only if a reasonable jury would have been required by the evidence to find non-infringement even without the error.
But Harmonic did not even argue for that conclusion. The Federal Circuit noted that nowhere in its brief did Harmonic argue that the jury was required to find non-infringement -- on any ground -- even if the "independent storage units" element permits a central component that supplies storage-unit-location information to a client wishing to retrieve data from storage units. In particular, Harmonic did not argue that the evidence required a non-infringement finding based on the other claim element in dispute; its only argument regarding the second at-issue element was that the jury could reasonably find that element not to be met by the infringing product. That is not enough, because the Federal Circuit cannot infer that the jury did so find. Similarly as to the "independent storage units" element itself: Harmonic nowhere argued that, even if the construction given to the jury was wrong, the evidence still required a finding that the infringing product lacks the required independent storage units.
In short, the Federal Circuit found that Harmonic made no argument under the proper legal standard to answer Avid's argument that the instructional error was prejudicial, requiring a new trial. Thus, the Federal Circuit was at least required to remand for a new trial.
Avid actually took its argument one step further to contend that, once the legally erroneous narrowing of the claim construction is reversed, the evidence not only permits but requires a finding that Harmonic's system meets the "independent storage units" claim element. And, Harmonic still presented no argument to the contrary!!
Given that, in response to Avid's argument, Harmonic has simply not suggested an alternative claim construction on this point, or argued that any such alternative claim construction could be found not to reach the alleged product, satisfaction of this claim requirement is now settled. The Federal Circuit thus stated that infringement as a whole is to be retried, but Harmonic's assertion of non-infringement based on this claim element is not, thus narrowing the scope of issues for the new trial on remand.
Thus, because Harmonic did not properly present arguments for non-infringement in the alternative using the suggested claim construction, or even provide responsive arguments to Avid's position of infringement in view of their proposed claim construction, Harmonic effectively waived the opportunity to do so at the new trial. Thus, the error on this central trial issue required setting aside the non-infringement verdicts, which were general verdicts as to each patent, but because Harmonic did not argue that the evidence compels a finding of non-infringement independently of the construction error, satisfaction of this particular claim element is now settled.
With respect to the second claim term at issue, the Federal Circuit rejected the contention that the evidence allows a reasonable finding of infringement. The case went to the jury without a construction of the key claim language, and Avid did not meet its burden of showing that it has the only reasonable view of the claim element as long as it is un-construed. As a result, the Federal Circuit stated that Avid has not shown entitlement to more than a new trial, and thus, no entry of a judgment of infringement was made by the Federal Circuit. But, Avid received a vacatur of the judgment and a new trial in which infringement of a central claim element is satisfied providing for a second opportunity to convince another jury that Harmonic infringes.
Avid Technology, Inc. v. Harmonic, Inc. (Fed. Cir. 2016)
Panel: Circuit Judges Reyna, Taranto, and Stoll
Opinion by Circuit Judge Taranto