Digest of Info-Hold, Inc. v. Muzak LLC, No. 2014-1167, (Fed. Cir. Apr. 24, 2015) (precedential). On appeal from S.D. Ohio. Before Reyna, Wallach, and Taranto.

Procedural Posture: Plaintiff, patent holder, appealed several rulings rendered by the district court, including those on claim construction, summary judgment that Info-Hold was not entitled to reasonable royalty damages, and summary judgment that Muzak did not induce infringement. CAFC reversed with respect to damages, vacated with respect to inducement, and affirmed with respect to claim construction.

  • Damages: The district court erred in granting summary judgment for a purported lack of damages evidence. The district court did not point to any evidence of record supporting a zero royalty and failed to consider the Georgia-Pacific factors in determining a reasonable royalty. Patentee’s damages evidence was excluded for being fundamentally flawed, but this did not leave the court without any evidence to consider. In particular, the CAFC pointed to several potential pieces of record evidence including an assignment, a license agreement, and evidence relied upon by both experts that could have been used to find a non-zero royalty under theGeorgia-Pacific factors. Therefore, the CAFC determined that there was a genuine issue of material fact as to whether zero is the only reasonable royalty. Grant of summary judgment awarding a zero reasonable royalty was reversed and remanded for further proceedings.
  • Induced Infringement: The district court erred in granting summary judgment that Muzak did not induce infringement. The district court based its conclusion on the finding that Muzak did not have actual knowledge that the acts it allegedly induced constituted infringement. The district court erred in that it did not consider whether the inducement knowledge requirement was satisfied by a showing of willful blindness.
  • Willful Blindness: The record showed that Info-Hold contacted Muzak in an effort to put Muzak on notice of the patent-in-suit and infringement by Muzak’s products. In particular, Muzak was alerted that the patent also related to the playback and control of music. This record raises issues of material fact as to whether Muzak may have subjectively believed there was a high probability its products infringed and took deliberate steps to avoid learning whether it actually infringed. Grant of summary judgment that Muzak did not induce infringement was vacated and remanded for further consideration regarding willful blindness.
  • Claim Construction: The district court did not err in limiting the meaning of the phrase “when a caller is placed on hold” to the moment the caller is placed on hold. The patentee argued that the phrase means the period of time the caller is on hold. The phrase in the context of the claim influenced whether music or message playback was required to begin at the moment the caller was placed on hold, or whether it could begin at any point before, up to and including the moment the caller was placed on hold. The court reviewed the two competing constructions and decided that the patentee’s construction read out the word “placed” out of the claims. Further, during reexamination of the patent-in-suit, the limitation “when a caller is placed on hold” was added to overcome prior art, along with statements that the prior art did not teach control signals that are caused by the caller being placed on hold and that result in music or message playback. According to these statements, music or message playback would not occur prior to the generation of the control signals. Therefore, the claim language and the prosecution history both support the district court’s construction of the phrase and the CAFC affirmed.