Info-Hold, Inc. v. Applied Media Techs. Corp.; Info-Hold, Inc. v. Muzak LLC

In two decisions involving the same plaintiff and patent but different defendants, the U.S. Court of Appeals for the Federal Circuit appliedde novo review after choosing not to classify evidence used below and reversed an award of zero damages despite a lack expert testimony. Info-Hold, Inc. v. Applied Media Techs. Corp., Case No. 13-1528 (Fed. Cir., Apr. 24, 2015) (Reyna, J.); Info-Hold, Inc. v. Muzak LLC, Case No. 14-1167 (Fed. Cir., Apr. 24, 2015) (Reyna, J.) 

Info-Hold sued Applied Media Techs Corp. (AMTC) and Muzak for patent infringement in separate lawsuits. Info-Hold’s patent relates to playing music and advertisements through telephones and public speaker systems, including playing music for telephone callers who are on hold. 

In AMTC’s case, the district court construed the claims to effectively require that communication between a server and playback device be initiated by the server. In so doing, the court expressed interest in a notice of allowance of an unrelated patent, where that unrelated patent was cited on the reexamination certificate of the asserted patent. In this notice of allowance, the examiner stated that prior art music-on-hold patents did not disclose communications initiated by a playback device. After the district court’s construction, Info-Hold stipulated to non-infringement and appealed the construction.

On appeal, the Federal Circuit rejected the construction below. The Court determined that the district court’s decision did not warrant clear error review, despite the district court’s reliance on the notice of allowance. The Court chose not to “classify” such a document as intrinsic or extrinsic evidence. The Court reasoned that such a classification is unnecessary for three reasons. First, the document is a matter of public record about which no factual dispute exists. Second, the lower court did not make any findings about it. Third, its significance, if any, would relate to claim construction, an issue of law. Accordingly, the Federal Circuit decided that a de novo standard of review was appropriate. Applying this standard, the Court concluded that the claimed communication between a server and playback device need not be initiated by a server—as it found no lexicography or disavowal in the intrinsic evidence warranted such a narrow construction.

In the Muzak case, the district court struck Info-Hold’s damages expert report. Info-Hold’s expert improperly relied on the entire market value rule and 25 percent rule of thumb. After striking the report, the court asked Info-Hold to show cause for maintaining the case, because of its inability to prove damages. Because the district court found that Info-Hold was unable to prove a measurable remedy, the court dismissed the case. Info-Hold appealed.

Although the Federal Circuit upheld the decision to strike Info-Hold’s damages expert report, the Court reversed the dismissal. Summary judgment of a zero damages award is only appropriate where there is no genuine issue of material fact that zero is the only reasonable amount of damages. Exclusion of a patentee’s damages evidence alone does not justify summary judgment. Because factual evidence was in the record that the district court could have used as a basis to find at least nominal damages, the Federal Circuit remanded the issue of damages.