Federal Circuit Reverses Apple's $500 Million Patent Infringement Liability

Author:Mr Edward A Pennington
Profession:Smith Gambrell & Russell LLP

Not all decisions from the Court of Appeals for the Federal Circuit make national news, but last week the appellate court threw out a half a billion dollar win for the patent licensing wing of the University of Wisconsin called WARF - Wisconsin Alumni Research Foundation. WARF's patent covered how computer processors execute program instructions, in a way to speed up processing. While a Wisconsin jury found the patent to be valid and infringed by Apple, the Federal Circuit agreed on validity, but found the jury had no reasonable basis for its verdict that Apple infringed.

Over the course of four years of litigation, WARF seemed to be winning at every stage. WARF defeated Apple's efforts to institute Inter Partes Review (IPR), thus depriving Apple of perhaps its best prior art defense and a stay of litigation had the IPR been initiated. Next, WARF obtained the claim construction it sought and won on summary judgment to defeat other prior art defenses and a challenge based on indefiniteness. WARF had even won a motion to exclude a defense of inequitable conduct. After two weeks of trial, WARF won a verdict of infringement, validity, and damages just north of $500 million. Following trial, WARF also won on all Motions for Judgment as a Matter of Law (JMOL), whereby the trial judge upheld the jury verdict on the merits and its assessment of damage.

A year after the JMOL motions were decided in favor of WARF, the Federal Circuit issued its decision reversing the jury's infringement verdict, causing half a billion dollars to disappear. While no doubt heartbreaking to the University, the Federal Circuit's decision is unusual on a couple of different levels. First, the amount of money at stake is staggering. Half a billion dollars to any University would have validated its tech transfer efforts, contributed to future R&D, funded faculty staffing, student scholarships, and frankly, any number of "public good" projects upon which large state Universities embark. To Apple, which recently surpassed the trillion dollar mark in stock holder equity, half a billion dollars is hardly a blip on their bottom line. Aside from the pecuniary aspects, the case is also unusual in that reversal did not turn on a reversal of the lower court's claim construction. Instead, the Federal Circuit focused on the word "particular" and whether under its ordinary meaning, a "particular instruction" referred to a single instruction. The Federal Circuit opined that "particular"...

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