On June 4, 2010, the United States Court of Appeals for the Federal Circuit issued a stern warning to litigants that it is “a claimant’s burden to keep the district court clearly apprised of what parts of its claim . . . it wishes to reserve for another day,” or else there will be no “second bite at [those parts of its claim] on remand.” The result of such a failure in this case was that the accused infringer – who had won in the district court on summary judgment of noninfringement – was barred from challenging the validity of the asserted claims after the summary judgment of noninfringement was vacated and the case remanded. Silicon Graphics, Inc. v. ATI Technologies, Inc., No. 2008-1334, -1353, 2010 WL 2228442 (Fed. Cir. Jun. 4, 2010).

Background

Patentee Silicon Graphics, Inc. (“SGI”) brought an action in the Western District of Wisconsin against ATI Technologies and Advanced Micro Devices (collectively “ATI”) alleging infringement of, inter alia, U.S. Patent No. 6,650,327 (“the ‘327 patent”). The ‘327 patent is related to computer graphics systems, such as the type used to animate the Pixar Animation Studios movies, e.g., Toy Story. SGI asserted infringement of claims 1-6, 9-12, 15-18, and 21-24 of the ‘327 patent. ATI counterclaimed for a judgment of patent invalidity.  

In the district court, ATI moved for summary judgment of noninfringement on two independent grounds: (1) that the accused computer graphics systems did not satisfy the claims under the district court’s claim construction; and (2) that the accused systems were licensed under a license between SGI and Microsoft (“the Microsoft license”). The district court granted summary judgment on both grounds with respect to claims 1-6, 9-12, and 15-16. Subsequently, SGI voluntarily dismissed the rest of its infringement case (i.e., claims 17, 18, and 21-24) and moved to dismiss ATI’s invalidity counterclaims. The district court allowed ATI to proceed with its counterclaims.  

At trial, however, ATI presented evidence challenging the validity of only claims 17, 18, 22, and 23. The jury rejected ATI’s contentions that those claims were invalid. The district court then ruled that entry of judgment was appropriate since “all of the claims and counterclaims have been addressed, withdrawn or abandoned.” Apparently surprised that the district court considered its invalidity counterclaims with respect to the other claims withdrawn or abandoned, ATI moved to delete any reference to abandonment of the invalidity counterclaims not pursued at trial. The district denied that motion, and both parties appealed.

Judgment of Noninfringement Vacated

The Federal Circuit, in an opinion by Chief Judge Rader, joined by Judges Lourie and Prost, first turned to claim construction. The district court had based its summary judgment of noninfringement for claims 1-6 (all independent) on its construction of the phrase, “a rasterization process which operates on a floating point format.” The district court construed this phrase to require that the rasterization “process as a whole operates on a floating point format.” Slip op. at 10-11 (emphasis in original). The Federal Circuit disagreed, noting that “the ‘327 patent explicitly teaches that rasterization consists of multiple processes” and “[i] t is well settled that the term ‘a’ or ‘an’ ordinarily means ‘one or more.’” Id. at 11. Accordingly, the Federal Circuit held that the phrase requires that only “one or more of the rasterization processes (e.g., scan converting, color, texture, fog, shading) operate on a floating point format.” Id. (emphasis added).

SGI also challenged the district court’s construction of the term “scan conversion” in asserted claims 1, 9-12, and 15-16, and the term “s10e5” in claims 3 and 11. Id. at 9. The Federal Circuit affirmed the district court’s construction of “scan conversion” and reversed the construction of “s10e5.” See id. at 12-17. Accordingly, the district court’s judgment that the accused systems did not satisfy claims 1, 9-12, and 15-16 was affirmed, and the judgment that the accused systems did not satisfy claims 2-6 was reversed.

Next, the Federal Circuit turned to the district court’s second independent basis for summary judgment of noninfringement—the Microsoft license. The license states that users of Microsoft products (e.g., Windows) are immune from suit from SGI if certain requirements are satisfied. Specifically, Microsoft’s “Authorized Licensees” are immune from liability

under [the ‘327 patent] for the formation, use, sale, license, importation or other distribution or transfer of any combination of third party products with a Subject Product originally provided by MICROSOFT, but only to the extent that (i) for any given patent claim of [the ‘327 patent], such claim would not be directly infringed by the third party product separate and apart from the combination with the Subject Product. . . .

Id. at 17-18 (emphasis by the court). The district court concluded that because the Microsoft Windows operating system was required to use the accused products, the license applied and there was no direct infringement to support SGI’s theory of indirect infringement. Id. at 18. The Federal Circuit disagreed:  

The district court erred in assuming that direct infringement requires the performance of all of the elements in these apparatus claims. In addition to the actual use of the product described, infringement of an apparatus claim occurs when the invention is, among other things, made or sold in the United States. 35 U.S.C. § 271. Thus, even absent its use (or performance), this court has held that an apparatus claim directed to a computer that is claimed in functional terms is nonetheless infringed so long as the product is designed “in such a way as to enable a user of that [product] to utilize the function ... without having to modify [the product].” Fantasy Sports Props., Inc. v. Sportsline.com, Inc., 287 F.3d 1108, 1118 (Fed. Cir. 2002). Where, as here, a product includes the structural means for performing a claimed function, it can still infringe “separate and apart” from the operating system that is needed to use the product.

Id. at 19. Here, “[n]othing in the record suggests that the Microsoft Windows operating system provides anything other than a way to activate the accused product.” Id. at 20 (emphasis added). “Even if the [accused] products cannot rasterize or store absent [Microsoft Windows] operating system, they may include a rasterization circuit and a frame buffer for doing so.” Id. “If they do, they infringe separate and apart from the operating system, and the Immunity Provision does not apply.” Id. Accordingly, the Federal Circuit vacated the summary judgment of noninfringement based on the Microsoft license.

Defendant Barred From Challenging Validity On Remand

Having cleared the way for the patentee SGI to attempt to prove infringement of claims 2-6 under a corrected claim construction on remand, the Federal Circuit went on to address whether accused infringer ATI had waived or abandoned its invalidity counterclaims with respect to those claims. This required a review of the procedural history in the district court.

Following the district court’s summary judgment of noninfringement with respect to claims 1-6, 9-12, and 15-16, the district court ruled that ATI’s invalidity counterclaims as to those claims were moot. At a final pretrial conference held the day after the district court issued its summary judgment ruling, the patentee voluntarily dismissed the remaining part of its infringement case, i.e., its contentions of infringement under claims 17, 18, and 21-24, and requested that the district court dismiss ATI’s invalidity counterclaims. ATI opposed the dismissal of its invalidity counterclaims, but was unclear as to whether it opposed dismissal with respect to the invalidity of all claims, or only certain of the claims that had been voluntarily dismissed from the case by the patentee (claims 17, 18, 22, and 23). The Federal Circuit noted that “ATI vacillated between addressing its ‘invalidity counterclaims’ generally. . . and claims 17, 18, 22, and 23 in particular. . . .” Slip op. at 31.

At trial, however, ATI attempted to prove invalidity of claims 17, 18, 22, and 23 only. It made no attempt to prove invalidity of the claims that had been the subject of the district court’s summary judgment of noninfringement, including claims 2-6. Under these circumstances, the Federal Circuit held that ATI had waived its right to challenge the validity of those claims on remand. The court reasoned: “It is a claimant’s burden to keep the district court clearly apprised of what parts of its claim it wishes to pursue and which parts, if any, it wishes to reserve for another day.” Id. at 32. “If ATI wished to reserve its right to pursue some of its invalidity counterclaims later, it was incumbent on ATI to expressly request that the district court dismiss those counterclaims without prejudice rather than ask the district court to infer an implicit request based on ambiguous statements.” Id. “It failed to do so, and it has not established that it deserves a second bite at invalidity on remand.” Id. at 33. Thus, the patent holder is free to prove infringement of claims 2-6 on remand, but ATI will be barred from asserting that those claims are invalid.