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France Telecom S.A. v. Marvell Semiconductor Inc.
Citations: 82 F. Supp. 3d 987; 2015 U.S. Dist. LEXIS 25932; 2015 WL 925892Docket: Case No. 12-cv-04967-WHO
Court: District Court, N.D. California; March 1, 2015; Federal District Court
The court issued an order denying France Telecom's motion for a new trial and granting Marvell Semiconductor's motion for judgment as a matter of law, while also denying Marvell's motion for judgment of invalidity. A jury previously found Marvell liable for direct infringement of France Telecom's U.S. patent 5,446,747 ('747 patent) and awarded $1.7 million in damages. However, the jury ruled that Marvell was not liable for contributory infringement, inducing infringement, or willful infringement, and rejected Marvell's invalidity defenses.
France Telecom's motion for a new trial was based on various grounds, but the court determined none were meritorious. Marvell's motion for judgment claimed there was no direct infringement because France Telecom failed to prove the method was used in the U.S. Consequently, the court granted Marvell's motion for judgment of no direct infringement. The court also reviewed other arguments presented by Marvell but found them unpersuasive.
The '747 patent pertains to error correction methods in telecommunications, specifically turbo coding. France Telecom filed the lawsuit in June 2012, asserting that Marvell's chips were adapted for use in devices like BlackBerry that require the patented method for 3G data transmission. The trial occurred from September 16 to September 30, 2014, focusing only on claim 1 of the patent. Following the jury's verdict on September 30, 2014, the court heard additional testimony on October 20, 2014.
The court applied relevant legal standards for new trials and judgments as a matter of law, emphasizing that new trials are granted only in cases of clear evidence errors or to prevent miscarriages of justice, while judgments as a matter of law are appropriate where only one reasonable conclusion can be drawn from the evidence.
Marvell Semiconductor's motion for judgment as a matter of law under Rule 50(b) is primarily focused on the argument that there was insufficient evidence for a reasonable jury to conclude that it used the accused method within the United States, which is a decisive point. The court agrees with Marvell Semiconductor on this issue, determining that the jury's finding of direct infringement is unsupported by evidence. France Telecom failed to provide proof that Marvell Semiconductor practiced the patented method domestically. Consequently, the court finds that Marvell Semiconductor is entitled to a directed verdict of no direct infringement under 35 U.S.C. § 271(a), which requires that every step of a method claim be performed within the U.S.
France Telecom did present evidence of Marvell Israel conducting field tests of the accused chips in the U.S., but Marvell Semiconductor argues that these actions cannot be attributed to it since Marvell Israel is a separate entity. Furthermore, Marvell contends that simply selling devices with its chips does not equate to using the method. France Telecom’s claim that Marvell Semiconductor is liable for Marvell Israel's actions under theories of ratification and agency was not presented to the jury, nor were any relevant instructions requested or given, thus weakening France Telecom's position.
The jury was instructed that France Telecom must demonstrate Marvell Semiconductor engaged in infringing conduct within the U.S. regarding the '747 patent. During closing arguments, France Telecom emphasized the need for the jury to determine if Marvell Semiconductor used the patented method in the U.S. They did not assert that Marvell Israel's actions could be attributed to Marvell Semiconductor through agency or ratification theories, nor did they introduce this theory during their opening statement or through witness testimony. Consequently, since France Telecom did not present the agency/ratification theory of direct infringement to the jury, it cannot support the verdict. Relevant case law indicates that a theory not presented at trial is waived, regardless of its potential legal merit. France Telecom’s failure to request jury instructions on joint infringement further precludes this theory, as the jury did not consider it. Counsel’s assertion that the agency/ratification theory was obvious does not excuse the lack of presentation to the jury.
France Telecom's argument regarding the necessity of jury instruction on 'obvious' theories of liability lacks supporting authority. The court emphasizes that a verdict cannot rely on theories not presented to the jury, and disputes the claim that Marvell Semiconductor’s agency or ratification of Marvell Israel was so clear as to obviate the need for jury instruction. An agency relationship requires a principal to manifest assent for the agent to act on their behalf, and similarly, ratification necessitates that the ratifying entity has the capacity to act as a principal. France Telecom failed to provide evidence or arguments demonstrating that Marvell Semiconductor and Marvell Israel had agreed on such an agency relationship. The cases cited by France Telecom do not apply, as they either do not concern unpresented theories or lack sufficient similarity in facts. Notably, while the cited patent infringement case allowed for allegations of direct control to survive a motion to dismiss, France Telecom did not establish any comparable integration or control between Marvell Semiconductor and Marvell Israel. The remaining cited cases involved instances where parent corporations were held liable for their subsidiaries, which is not applicable here since France Telecom did not prove that Marvell Semiconductor is a parent entity with control over Marvell Israel. Evidence presented only indicated that Marvell Semiconductor claimed compliance testing by Marvell Israel, without establishing a controlling relationship.
Marvell Semiconductor's benefit from testing by Marvell Israel does not establish an agency relationship, as there is no evidence of control or direction by Marvell Semiconductor over Marvell Israel. Corporate law principles state that a parent corporation is not liable for its subsidiary's actions unless under exceptional circumstances. France Telecom asserts that circumstantial evidence of third-party infringement in the U.S. exists, but this cannot support a verdict against Marvell Semiconductor since only it is the defendant, and the jury found no indirect infringement. Citing case law, France Telecom's claims regarding circumstantial evidence do not apply as Marvell Semiconductor was found liable for direct infringement, not indirect. The argument that circumstantial evidence could sustain the jury's verdict is dismissed, as no evidence was presented showing Marvell Semiconductor itself used the accused method. Speculation or assumptions cannot substitute for substantive evidence.
Direct infringement of a method claim requires concrete proof, not speculation or inference. Mirror Worlds failed to demonstrate that Apple practiced the accused features, despite the burden of proof resting on them. The jury was informed that users could operate a device with an accused chip on a 3G network in a non-infringing manner (e.g., making calls instead of sending pictures), undermining circumstantial evidence of infringement by Marvell Semiconductor. To establish direct infringement, a patentee must provide specific instances or demonstrate that the accused device necessarily infringes the patent. Distinguishing between circumstantial evidence of a class of infringers (like the defendant's customers) and direct infringement by the defendant is crucial. Previous cases cited by France Telecom relate to the former scenario, not the latter. Since France Telecom did not prove that Marvell Semiconductor used the claimed method in the U.S., the jury's verdict of direct infringement is unsupported by evidence, warranting a directed verdict for Marvell.
Regarding the '747 patent, the jury could reasonably determine that the accused method infringes Claim 1, which involves a method for error-correction coding of digital data elements through two independent coding steps providing parallel outputs. Marvell contends the jury could not find infringement based on two criteria: the accused method allegedly does not output multiple coded data elements from each coding step and fails to output current input data alongside coded data as required. However, the jury's conclusion that the accused method provides parallel outputs of coded data elements aligns with the claim's requirements.
Neither party requested clarification on the term "parallel outputs," leading the jury to interpret it based on its plain and ordinary meaning to a skilled person in the field. Marvell Semiconductor contends that "parallel outputs" necessitates at least two coded data elements from each coding step, asserting that the accused method, which outputs only one coded data element per step, does not meet this criterion and therefore cannot be deemed infringing. However, it is argued that the jury could reasonably interpret "parallel outputs" as requiring that the outputs of each coding step be parallel to one another, rather than stipulating multiple outputs from each step. Evidence presented by Professor Mitzenmacher supported this interpretation, illustrating that each coding step produces distinct series of coded data elements that are parallel, as depicted in the patent's figures.
Furthermore, Professor Mitzenmacher indicated that the accused method outputs two series of coded data elements, which could satisfy the requirement of parallel outputs, even if the limitation implied producing multiple outputs per step. Additionally, the jury could reasonably conclude that the method fulfills the criteria for "systematic convolutional coding," which is defined as coding that includes both coded and current input data. Marvell Semiconductor argues that the accused chips operate at a coding rate of 1/3, outputting three bits for each input bit, conflicting with the requirement for a minimum output of four bits per input under the claim. This presents a factual dispute regarding the coding rates between the parties.
France Telecom's evidence and arguments, particularly those presented by technical expert Professor Mitzenmacher, were deemed sufficient for a jury to reasonably accept over those of Marvell Semiconductor. Professor Mitzenmacher testified that "RSC" in the accused method refers to "recursive systematic convolutional" coding, asserting that the two RSC Encoders depicted are identical and both output the current input data. He explained a branching point in the first encoder where data is directly passed out, labeled as X, and similarly for the second encoder, labeled as X prime. Furthermore, Marvell’s own technical witness confirmed that their RSC Encoders were "identical" and "run in parallel."
While Marvell Semiconductor provided opposing evidence, it was concluded that their position was not the only reasonable interpretation. France Telecom differentiated between the coding rates of the steps and the overall turbo encoder, with Mitzenmacher clarifying that the turbo encoder operates at a 1/3 rate, while the coding steps output at a 1/4 rate. This distinction is critical to the infringement analysis, focusing on the outputs of the coding steps, which include four outputs. A concession from Marvell’s witness, stating there is no "switch" to prevent the second RSC Encoder from outputting data, supports France Telecom's claim regarding the output mechanism.
Consequently, the jury could reasonably determine that the accused method maintains a coding rate of 1/4, aligning with claim 1, despite Marvell’s turbo encoder having a 1/3 rate overall. Additionally, the jury could find that Alain Glavieux was properly excluded as a named inventor on the '747 patent. Patent validity requires correct inventor naming, with a presumption favoring the listed inventors. Marvell argues that significant contributions from Glavieux were evident, suggesting that a reasonable jury could not find his omission justified.
Marvell Semiconductor's case hinges on testimony from Professor Berrou, the named inventor, who stated that Mr. Glavieux introduced the Viterbi and BCJR algorithms to him and was identified as a co-author on journal articles regarding turbo codes. However, it is established that Mr. Glavieux did not invent the Viterbi algorithm, which was already known. The jury could reasonably conclude that Mr. Glavieux’s suggestion to study this known algorithm did not contribute to co-inventorship. Furthermore, since the BCJR algorithm was not part of the '747 patent but merely improved its performance, his suggestions regarding it also did not qualify him as a co-inventor. Testimony indicated that the articles cited by Marvell Semiconductor pertained to improvements to the '747 patent rather than the original invention claimed. Mr. Johnson from Spectra Licensing acknowledged that while Berrou and Glavieux were identified as co-inventors of turbo codes technology, Berrou alone invented what was disclosed in the '747 patent. There was no evidence that Mr. Glavieux claimed co-inventorship of the '747 patent, leading the jury to reasonably conclude he was not a co-inventor.
Regarding the validity of claim 1 of the '747 patent, Marvell Semiconductor argued it was rendered obvious by the Kasahara prior art article in combination with other sources. However, for judgment of invalidity based on obviousness to be granted, it must be shown that no reasonable jury could disagree with Marvell’s position, which the record did not support. France Telecom demonstrated that the Kasahara article lacked essential features of the '747 patent, including the transmission of all source data to encoders and the use of systematic convolutional coding and an interleaver. This evidence allowed the jury to reasonably conclude that the Kasahara article alone did not render claim 1 obvious. Marvell's assertion that a person skilled in the art would combine elements from Berlekamp and Kasahara was undermined by the fact that Berlekamp's description of interleaving does not align with the requirements of claim 1, which specifies interleaving on uncoded source data elements.
Marvell Semiconductor failed to provide clear and convincing evidence that a skilled artisan would be motivated to combine the teachings of Berlekamp and Kasahara to achieve the claimed method, as required to invalidate a patent based on obviousness. The court highlighted that a party must demonstrate both motivation to combine prior art references and a reasonable expectation of success. Marvell's argument was weakened by the absence of Berlekamp in their combination assertion.
Marvell Semiconductor also moved for judgment under Rule 52, claiming that claim 1 of the ’747 patent is not patent-eligible under 35 U.S.C. Section 101, asserting it merely describes a mathematical algorithm. The court conducted a bench trial and denied Marvell’s motion. It reiterated that claim 1 represents a specific application of a mathematical algorithm rather than the algorithm itself, countering Marvell's position that the claim lacks structural requirements. The court referenced its prior denial of Marvell’s summary judgment motion, stating that claim 1 includes substantial limitations beyond a mere algorithm, such as parallel encoders and interleaver processes.
The court distinguished the present case from the Federal Circuit ruling in Digitech Image Techs. LLC v. Electronics for Imaging, Inc., asserting that the method in question includes additional limitations that qualify it for patent eligibility. The court reaffirmed the principle that applying a mathematical formula to a known structure or process can warrant patent protection, confirming that claim 1 meets this standard.
Claim 1 of the ’747 Patent outlines a method for error-correction coding of source digital data elements, which includes two independent and parallel steps of systematic convolutional coding. Each step considers all source data elements and produces distinct outputs of coded data elements. The claim also involves temporally interleaving source data elements to alter their order for at least one coding step.
Key points include:
1. The method is not merely a mathematical algorithm, but a unique and detailed error-correction process with concrete steps.
2. It specifies a particular arrangement of steps that constitute a defined structure, arising from specific design choices rather than abstract ideas or mathematical formulas.
3. The method includes inventive concepts that surpass prior art and is specifically tailored to address the real-world issue of noise in transmissions, enhancing effectiveness and efficiency.
4. Claim 1 does not preempt all other error-correction methods or fundamental mathematical equations and is confined to a specific implementation.
5. It encompasses signal processing and the construction of circuits for implementing the method in hardware.
6. The method cannot be performed by a human being but can be emulated partially; however, convolutional coding on a necessary scale for noisy environments cannot be emulated by humans.
7. The method alters the state of the data being encoded and involves a specialized process for transforming source data into code words, making it more suitable for error-prone transmission environments.
Overall, Claim 1 is characterized by its concrete implementation and structural limitations, which enhance its efficacy as an error-correction coding technique.
Claim 1 describes a process that is deemed not an abstract idea, thus qualifying as patent-eligible subject matter under 35 U.S.C. § 101. France Telecom seeks a new trial, citing four main arguments: (i) exclusion of rebuttal evidence on infringement, (ii) exclusion of pre-suit correspondence under Rule 408, (iii) insufficiency of evidence supporting the jury's $1.7 million award, and (iv) exclusion of rebuttal evidence on damages. The court finds none of these arguments valid.
Specifically, the court upholds its decision to limit rebuttal evidence, stating that France Telecom was permitted the opportunity to present rebuttal evidence concerning non-infringement or lack of willfulness. France Telecom claims an abuse of discretion regarding the exclusion of rebuttal evidence on two points introduced by Marvell Semiconductor's expert, Professor Min. However, the court asserts that Professor Min’s testimony did not introduce new theories but rather addressed issues already explored during direct and cross-examinations. The court further notes that Professor Min’s assertion about the significance of specific source code lines and the placement of a comma in claim 1 of the ’747 patent had been adequately discussed earlier in the trial. Consequently, the court finds that Professor Min’s theories were already part of the evidence presented, and France Telecom had the chance to counter them during cross-examination without raising objections.
The testimony of Professor Min revealed that he did not include specific lines of source code (lines 478 to 483) in his expert report, which were critical to the case. During cross-examination, he acknowledged that these lines contradicted his opinion regarding the output of X prime. As a result, France Telecom, which had the burden to prove that the accused products met the claim limitations, was aware of Professor Min's stance that parallel outputs required more than one coded data bit from each encoder. His analysis indicated that the presence of a comma in claim 1 suggested that the phrase about providing parallel outputs pertained to each coding step, necessitating four coded outputs. France Telecom argued for an opportunity to rebut this testimony; however, the court found no need for additional rebuttal since the opinion was already disclosed in Professor Min's report. The court deemed the alleged errors harmless, noting that France Telecom effectively challenged Professor Min's opinions and secured a jury finding of direct infringement. The court exercised its discretion to manage trial proceedings, including the exclusion of communications protected under Rule 408.
France Telecom argues that the court incorrectly excluded certain documents under Federal Rule of Evidence 408, claiming these documents pertain to licensing discussions rather than negotiations of a disputed claim. They assert that, even if Rule 408 applies, the documents should be admissible to demonstrate Marvell Semiconductor's knowledge of its patent infringement and the potential for inducing others to infringe. The court reaffirmed that the documents were properly excluded, citing that they fell under Rule 408, which prohibits their use to prove or disprove the validity of a disputed claim. However, the court conceded that documents could be admitted for other purposes, such as negating claims of undue delay, and allowed evidence of France Telecom notifying Marvell in August 2008 of the alleged infringement. This notification is relevant to counter Marvell's laches defense and supports France Telecom's willfulness claim, but the specifics of the negotiations remain inadmissible as they pertain to the validity of the infringement claim.
Additionally, the court admitted France Telecom's initial letter to Marvell to establish Marvell's knowledge of the patent. Testimony from France Telecom's licensing agent supported this knowledge, allowing the jury to conclude that Marvell was aware of its infringement. The jury's award of $1.7 million in damages, based on substantial evidence and expert testimony from Marvell’s damages expert, was deemed appropriate and did not warrant a new trial. The expert's opinion was grounded in comparisons to prior licensing agreements and addressed relevant Georgia-Pacific factors, despite France Telecom's disagreement with the valuation. Ultimately, the jury accepted the expert's assessment.
The jury's decision is upheld as it is not contrary to the weight of evidence presented. France Telecom's objection to the admission of actual sales evidence, referred to as the "book of wisdom," was previously addressed and rejected. The court confirms that the Georgia-Pacific factor #11 allows consideration of the infringer's use of the invention and any related evidence, enabling Marvell to argue that a running royalty should not exceed a specified amount. Evidence of usage post-infringement can aid in evaluating a reasonable royalty if admissibility criteria are met. However, this is just one of many factors in determining royalty rates, and France Telecom will have opportunities to contest Marvell's claims at trial.
Additionally, France Telecom's claim that it was improperly barred from rebutting Marvell's damages case is dismissed. France Telecom chose not to present its alternative running royalty theories during its case-in-chief, despite these theories being disclosed in their expert's report. During cross-examination, their expert, Professor Bradford Cornell, acknowledged having alternative running royalty calculations but did not pursue them in court. The jury was informed of these alternative figures during France Telecom’s case. On rebuttal, Professor Cornell testified against the adjustments made by Marvell's expert, Ms. Davis, regarding the geographic limitations impacting the royalty calculation.
Testimony indicated that if all factors were considered during a hypothetical negotiation, a lump sum of $7.5 million would be a suitable royalty. France Telecom did not present its own expert's running royalty theories initially but allowed cross-examination that included those theories. The rebuttal from France Telecom's damages expert critiqued Marvell Semiconductor’s running royalty theory. The court denied France Telecom's motion for a new trial under Rule 59(a), granted its motion to seal, and granted Marvell Semiconductor's motion for judgment as a matter of law under Rule 50(b), concluding no reasonable jury could find that Marvell Semiconductor used the claimed method in the U.S. Other motions from Marvell Semiconductor regarding judgment were denied. The court previously ruled that a party cannot infringe method claims merely by selling or importing products embodying the method, necessitating proof of direct use. France Telecom did not provide sufficient evidence of direct use by Marvell Semiconductor, nor did it argue for liability under an alter-ego theory. The agency/ratification theory was not presented during the trial, and the court noted that France Telecom’s argument was that Marvell Israel performed the accused method independently.
The legal issue at hand is whether the actions of the bidder and the auctioneer can be combined to establish direct infringement by the auctioneer, referencing the case of StrikeForce Technologies involving parent and subsidiary corporations. France Telecom argues that the turbo encoder in Marvell's accused 3G chips operates solely in an infringing manner, yet it acknowledges that devices with these chips can function on a 3G network without utilizing the turbo encoder. Marvell presented evidence that while the RSC Encoders share identical hardware, their operational functions differ. The court's definition of “systematic convolutional coding” as including both coded data and current input data does not clarify whether "output" pertains to each coding step or the overall encoder output.
Under 35 U.S.C. Section 101, any inventor of a new and useful process or machine may obtain a patent, subject to established conditions. Marvell sought judgment under Rule 52 to bar pre-suit damages due to alleged laches, citing France Telecom's unreasonable delay and the resultant evidentiary prejudice to Marvell. The court found insufficient evidence to support a conclusion of unreasonable delay, particularly in light of ongoing negotiations since 2008, and denied Marvell's motion on laches. Additionally, the court rejected Marvell's assertion that limitations discussed in trial constituted part of a mathematical algorithm, stating that Marvell failed to provide clear evidence of this claim.
France Telecom's request to seal parts of its motion for a new trial was granted, while it was noted that the expert Dr. Min did not discuss grammatical nuances in his report, but the court concluded that there was no obligation for him to explain his grammatical basis for the "plain reading" of claim language. His opinion indicated that more than one coded data bit is output by each encoder. Lastly, the Federal Rule of Evidence 408 outlines the inadmissibility of certain evidence in legal proceedings.
Evidence related to compromise negotiations, including offers of valuable consideration, is generally inadmissible to prove or disprove a disputed claim or to impeach a witness, except in criminal cases or when involving public office claims. However, courts may admit such evidence for other purposes, like demonstrating a witness's bias or addressing undue delay in proceedings.
In the case at hand, the jury's damage award for France Telecom was supported by substantial evidence, and even if infringement had been proven, the request to increase the award under 35 U.S.C. Section 284 would be denied. The entitlement of France Telecom to prejudgment interest is moot following the granting of Marvell Semiconductor's motion for judgment as a matter of law. Nonetheless, had France Telecom proven infringement, it would have been entitled to prejudgment interest, which is typically awarded to ensure the patent owner is compensated as if a reasonable royalty agreement had been made. The court noted some discretion in awarding prejudgment interest but affirmed that it should usually be granted unless undue delay by the patent owner is evident.
Marvell Semiconductor argued against awarding prejudgment interest citing delays by France Telecom; however, the court found no undue delay. Consequently, France Telecom is entitled to prejudgment interest starting from November 2008, the date Marvell first sold 3G chips in the U.S. Marvell claimed this interest amounted to $86,827, a figure not disputed by France Telecom, despite France Telecom's claim for earlier interest based on acquisitions of Intel’s assets being rejected.