In a recent opinion impacting a broad range of industries, the Federal Circuit addressed head on the role that standards play in patent infringement analysis. In Fujitsu Ltd. v. Netgear, Inc.,1 the Federal Circuit held that “a district court may rely on an industry standard in analyzing infringement” instead of requiring proof of infringement for each individually accused device.
As quickly as the court established new precedent, however, it softened its impact, stating that “[o]nly in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.”Id. at 9. So while the decision crystallizes the role standards play in assessing infringement, the Federal Circuit stopped short of a blockbuster ruling.
Three appellants – U.S. Philips Corporation, Fujitsu Limited and LG Electronics, Inc. – asserted claims against Netgear based on individual patents. Each patent at issue claims a different feature of wireless communications technologies. Id. at 3. Appellants alleged that Netgear infringed the patents by implementing wireless networking protocols for sending and receiving messages between a base station and a mobile station. The infringement allegations implicated two standards: the Institute of Electrical and Electronics Engineers 802.11 2007 Standard (802.11) and the Wi-Fi Alliance Wireless Multi-Media Specification, Version 1.1 (WMM). Id. The appellants were part of a licensing pool purporting to include patents that any manufacturer of 802.11 and WMM compliant products must license. Id.
When does complying with a standard mean infringing ?
At the district court, the plaintiffs’ motion for summary judgment argued that by simply complying with the standard, Netgear infringed the asserted claims. In denying the motion, the district court found that the plaintiffs must provide evidence of infringement related to each accused product. Fujitsu Ltd. v. Netgear, Inc., No. 07-CV-0710, 2009 WL 36636, at *1 (W.D. Wis. Jan. 6, 2009). Subsequently, the district court denied the plaintiffs’ additional motions for summary judgment of infringement and granted Netgear’s cross motion for summary judgment of noninfringement. Fujitsu Ltd. v. Netgear, Inc., No. 07-CV-0710, 2009 WL 3047616, at *1 (W.D. Wis. Sept. 18, 2009). On appeal, the plaintiffs challenged the district court’s claim construction and its summary judgment rulings.
Netgear asked the Federal Circuit to establish a rule prohibiting the use of industry standards in assessing infringement, arguing that adopting a “claim to standard”comparison in place of a “claim to accused product” comparison would lead to an “automatic conclusion of infringement against all future accused infringers.”Fujitsu, slip op. at 6-7. The Association of Corporate Counsel (ACC) expressed similar concerns in its amicus brief, stating:
Using an industry standard as a proxy for infringement is overinclusive – there can be a “significant gulf” between a technical standards document and how the technology is implemented
Many standard provisions are optional – a device can comply without actually practicing a particular requirement, and
As with the accused Netgear products, many users configure purchased equipment so it is never used in compliance with a standard’s technical requirements
In contrast, Philips asserted that a “claim to standard” analysis would be more efficient for the courts and would reduce the fact-finding burden.
In its September decision, the Federal Circuit substantially “split the baby.” On one hand, the court established new precedent, conclusively holding “that a district court may rely on an industry standard in analyzing infringement… If a court determines that all implementations of a standard infringe the claims of a patent, then it would be a waste of judicial resources to separately analyze every accused product that undisputedly practices the standard.” Fujitsu Ltd., slip op. at 8. On the other hand, the court gave credence to the concerns expressed by the ACC, recognizing that many times an industry standard does not provide “the specificity required to establish that practicing that standard would always result in infringement.” Id. Other times, “the relevant standard section is optional, and standards compliance alone would not establish that the accused infringer chooses to implement the optional section.” Id. at 8-9. In these situations, the court held that patent owners must compare products or prove the accused products implement relevant optional standards sections. Id.
As to Philips’ infringement claim, the court concluded that the relevant patent covered optional “fragmentation” portions of the standard and that a more detailed infringement assessment was required to determine whether the accused technology fell within the ambit of the patent.
The impact of Fujitsu will best be observed retrospectively. From a plaintiff’s point of view, in the right case, the difficulty and cost of proving infringement could substantially decrease. Instead of establishing that accused products satisfy the “all elements” test, a patent owner could simply point to the standard. At the same time, however, it is uncertain how often the industry standard will be specific enough to establish that practicing that standard would always result in infringement or that the relevant section of the standard is mandatory. Both patent holders and implementers of standardized technology need to take heed of this new precedent because it has the potential to simplify complicated and prohibitively expensive patent cases.
For more information about this decision, please contact:
Nicholas G. Papastavros
1 No. 2010-1045, slip op. (Fed. Cir. Sept. 20, 2010).