Patent Case Summaries December 21, 2022

Patent Case Summaries | Week Ending December 16, 2022

A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.

ADASA Inc. v. Avery Dennison Corp., No. 2022-1092 (Fed. Cir. (D. Or.) Dec. 16, 2022). Opinion by Moore, joined by Hughes and Stark.

ADASA sued Avery Dennison for infringement of a patent directed to methods and systems for commissioning radio-frequency identification (RFID) transponders, also known as RFID tags. Prior to trial, Avery Dennison moved for summary judgment of noninfringement or, in the alternative, that the asserted claims were ineligible for patenting under 35 U.S.C. § 101. At the same time, ADASA moved for summary judgment of infringement and no invalidity over certain prior art references. The court denied Avery Dennison’s motions and awarded ADASA summary judgment of eligibility and no invalidity.

The case then proceeded to trial as to infringement of claim 1 and damages. The jury returned a verdict of infringement and awarded ADASA a running royalty of $0.0045 per infringing RFID tag. Avery Dennison then moved for a new trial. Avery Dennison also revealed that it had discovered more than two billion additional, previously undisclosed RFID tags. The district court denied the motion for a new trial and sanctioned Avery Dennison for the late disclosure. The court imposed a financial sanction “attached to the number of infringing RFID tags” at a rate of $0.0025 per tag. Avery Dennison appealed.

The Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded.

First, the court rejected Avery Dennison’s contention under § 101 that “claim 1 is directed to the abstract idea of mentally assigning meaning to a sub-section of a data field.” Applying the Alice framework, the Federal Circuit concluded that claim 1 is not directed to an abstract idea. “Rather, it is directed to a specific, hardware-based RFID serial number data structure designed to enable technological improvements to the commissioning process.” Thus, the Federal Circuit affirmed the district court’s judgment that claim 1 is directed to eligible subject matter.

Turning to the district court’s grant of summary judgment of no invalidity, the Federal Circuit reversed. The Federal Circuit concluded that two prior art references, viewed in the light most favorable to Avery Dennison, could be reasonably interpreted as disclosing the elements of claim 1. The Federal Circuit explained that the cited pages of the references were sufficient to warrant submitting the issue to the jury, particularly in view of a witness’s corroborating testimony. Thus, the Federal Circuit remanded for a trial limited to claim 1’s validity.

Next, the Federal Circuit affirmed the district court’s denial of Avery Dennison’s motion for a new trial. First, the district court did not commit reversible error by declining to instruct the jury on lump-sum damages. Avery Dennison “did not advance a lump-sum damages theory before the jury or offer any testimony that lump-sum damages were appropriate.” Second, the district court acted within its discretion in excluding certain allegedly comparable licenses from evidence. Avery Dennison’s technical expert offered “conclusory opinions” regarding comparability, and those opinions “were inadequate to carry Avery Dennison’s burden to establish comparability.”

Lastly, the Federal Circuit vacated and remanded the sanctions award. The court found no abuse of discretion in the district court’s decision to impose monetary sanctions, but determined that “the sanction award cannot stand.” The district court had tied the monetary award to the number of infringing tags, which the Federal Circuit held was inappropriate because it “includes in the sanction the timely disclosed RFID tags, for which there was no discovery violation and no established harm to ADASA.” Thus, the Federal Circuit remanded for determination of the appropriate remedy.

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