CALIFORNIA INSTITUTE OF TECHNOLOGY V. BROADCOM LTD. 2022 U.S.P.Q.2d 130 (Fed. Cir. 2022)

Broadcom Limited, Broadcom Corporation, and Avago Technologies Ltd. (collectively “Broadcom”) and Apple, Inc. (“Apple”) appealed to the United States Court of Appeals for the Federal Circuit (“CAFC”) from an adverse decision in the District Court for the Central District of California in an infringement suit filed by the California Institute of Technology (“Caltech”) for infringement of U.S. Patents No. 7,116,710 (“the ‘710 patent”), No. 7,421,032 (“the ‘032 patent”), and No. 7,916,781 (“the ‘781 patent”).

On February 4, 2022, the CAFC affirmed in part, vacated in part, and remanded to the district court.

Background

On May 26, 2016, Caltech sued Broadcom and Apple alleging infringement under 35 USC 271 by Broadcom’s wireless chips and Apple’s products which included Broadcom’s chips.

The Caltech patents at issues related to circuits that generate and receive irregular repeat and accumulate (“IRA”) codes, which are error correction codes that improve speed and reliability of data transmissions.  In the ‘710 and ‘032 Caltech patents, the IRA codes are encodable and decodable in linear time rather than in quadratic time.  Such linear time encoding/decoding minimizes the number of calculations that must be performed and leads to smaller, more efficient and lower power chips.

Caltech alleged that Broadcom and Apple infringed claims 20 and 22 (reciting a “coder”) of Caltech’s ‘710 patent, and claims 11 and 18 (respectively reciting “an encoder” and “a decoder”) of Caltech’s ‘032 patent.  These claims require irregular repetition, that is repetition of groups of information bits an irregular number of times.

In its brief, Broadcom presented an example of an operation of an AND gate, in which input 1 is an information bit at logic 0 or 1, input 2 is a parity-check bit at logic 0 or 1, and the output is logic 0 in all cases except when both the information bit and the parity-check bit are logic 1 (in which case the output is logic 1).

Pre-trial Proceedings

In pre-trial proceedings, Apple filed inter partes review (IPR) petitions which challenged the validity of the claims at issue, and the U.S. Patent Trial and Appeal Board (“PTAB”) decided that Apple failed to show that the claims were unpatentable as obvious.

Also in pre-trial proceedings, the district court conducted a Markman hearing, in which the district court construed the claim limitation “repeat” to have its plain and ordinary meaning and “noted that the repeated bits ‘are a construct distinct from the original bits from which they are created,’ but that they need not be generated by storing new copied bits in memory”.

Trial at the District Court

The district court found infringement by Broadcom and Apple of claims 20 and 22 of the Caltech ‘710 patent and claims 11 and 18 of the Caltech ‘032 patent.  During trial, the district court clarified and instructed the jury that the term “repeat” meant “’generation of additional bits, where generation can include, for example, duplication or reuse of bits’”.  Broadcom and Apple argued that the chips “did not repeat information bits at all, much less irregularly” and, thus, did not infringe the Caltech ‘710 and ‘032 patents.  The jury found infringement of the asserted claims; Broadcom and Apple filed post-trial motions for JMOL and a new trial.  The district court denied JMOL based on the district court finding no error in its claim construction ruling and concluding that the verdict was supported by substantial evidence.

In addition, Caltech accused Broadcom and Apple of infringing claim 13 of Caltech’s ‘781 patent, which claims a method for “creating codewords in which ‘information bits appear in a variable number of subsets’”.  The district court did not instruct the jury that “the claim term ‘variable number of subsets’ requires irregular information bit repetition” as determined at the summary judgment stage.  The jury determined that Broadcom and Apple infringed claim 13 of Caltech’s ‘781 patent. Broadcom and Apple filed JMOL and new trial motions, asserting that “the district court erred in refusing their requested instruction and that JMOL of noninfringement was appropriate because the irregular repetition requirement was not satisfied”.

Further, Caltech proposed a two-tier damages theory in which Caltech would be awarded different amounts of damages by Broadcom and by Apple for their respective infringement.

At issue on appeal before the CAFC were the following:

• • claim construction of the term “repeat” recited in claims of the ‘710 and ‘032 patents;
  • patent-eligibility and infringement of claim 13 of the ‘781 patent
  • validity and IPR estoppel;
  • inequitable conduct;
  • damages, including extraterritoriality

Arguments

Claim Construction of the term “repeat” of the ‘710 and ‘032 patents

Broadcom and Apple argued that the accused AND gates do not “repeat” information bits as claimed in the ‘710 and ‘032 patents, but instead combine the information bits with parity-check bits to output new bits from the AND gates.  Moreover, Broadcom and Apple argued that the district court erroneously construed “repeat”.  In addition, Broadcom and Apple argued that the AND gates output the same number of bits for every information bit and, thus, do not generate bits “irregularly”.

In response, Caltech argued that every information bit is repeated an irregular number of times in that ”every bit in the stream of information bits is fed by wire simultaneously to the information inputs of all 972 AND gates and that at any time, at least 3 and up to 12 of those AND gates will be enabled to repeat that bit at the output of the AND gates.”

The CAFC agreed with Caltech that “the plain claim language requiring repeating information bits does not require generating new, distinct bits and that the district court was correct in constructing the term to not exclude the reuse of bits.”   The CAFC also affirmed the district court’s denial of JMOL.

Patent eligibility and infringement of claim 13 of the ‘781 patent

Broadcom and Apple argued that claim 13 of Caltech’s ’781 patent was not patent eligible under 35 U.S.C. 101 because it depends on mathematical operations.

In response, Caltech argued that claim 13 recites a patent eligible method of performing error correction and detection encoding with the requirement of irregular repetition as the claim limitation “variable number of subsets” requires irregular information bit repetition.

The CAFC held that claim 13 claims more than a mathematical formula because “it is directed to an efficient, improved method of encoding data that relies in part on irregular repetition”.  The CAFC remanded the issue of infringement of claim 13 of the ‘781 patent to the district court and further held that “the district court must instruct the jury as to the proper construction of the claim limitation ‘variable number of subsets’”.

Validity and IPR estoppel

At the district court, Broadcom and Apple were barred from presenting an invalidity case at trial on the ground of statutory estoppel.  Broadcom and Apple attempted to challenge the validity of the patents by relying on grounds that the PTAB did not address in its IPR decisions.  The district court barred by estoppel the Broadcom and Apple challenges because “Broadcom and Apple were aware of prior art references at the time they filed their IPR petitions and reasonably could have raised the prior art references in their IPR petitions even if they could not have been raised in the proceedings post-institution.”

The CAFC overruled a prior CAFC decision in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016) and clarified that “estoppel applies not just to claims and ground asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not in the IPR but which reasonably could have been included in the petition”.  The CAFC affirmed the district court’s decision barring Broadcom and Apple from raising invalidity challenged based on prior art references which could have been raised in the their IPR petitions.

Inequitable Conduct

The CAFC affirmed the district court’s grant of summary judgment of no inequitable conduct based on undisclosed prior art as “inequitable conduct requires a showing that undisclosed prior art was but-for material to the PTO’s decision of patentabilty” (Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1291 (Fed. Cir. 2011).

Damages, including extraterritoriality

The CAFC vacated the damages award by the district court and remanded for a new trial on damages as the CAFC asserted that Caltech’s two-tier damages theory is legally unsupportable on the record.  Moreover, Broadcom and Apple argued that the damages verdict had improperly included extraterritorial sales from Broadcom’s international affiliates.  However, the CAFC asserted that the dispute between the parties is whether the relevant transactions were domestic or extraterritorial, not whether infringement applies domestically or extraterritorially.  The CAFC further asserted that “he district court’s jury instruction emphasized the key question of whether there were such substantial activities in the United States, an instruction that Apple and Broadcom do not contest.”

Decision by the CAFC

The CAFC affirmed the district court’s construction of the claim limitation “repeat”, affirmed the district court’s denial of a JMOL (Judgement as a Matter of Law) on infringement of the asserted patent claims of the ‘710 and ‘032 patents, affirmed the district court’s conclusion that claim 13 of the ‘781 patent is patent-eligible, vacated the jury’s verdict of infringement of claim 13 of the ‘781 patent and remanded to the district court for a new trial, affirmed the district court’s summary judgement findings of no invalidity based on IPR estoppel and no inequitable conduct, affirmed the district court’s jury instructions relating to extraterritoriality, and vacated the jury’s damage award and remanded to the district court for a new trial on damages.

Analysis

Care should be exercised to raise all prior art references in an IPR petition and to consider carefully infringement based on plain claim language.