Federal Circuit reverses damages award against Cisco Systems


On December 28, 2015, the United States Court of Appeals for the Federal Circuit reversed a $63.7 million jury verdict against Cisco Systems. The Court, in an opinion by Chief Judge Prost (pictured), concluded that substantial evidence did not support the jury’s finding that Cisco’s devices, when used, perform the “running” step of the asserted claims.

Commil owns U.S. Patent No. 6,430,395, which relates to a method of providing faster and more reliable handoffs of mobile devices from one base station to another as a mobile device moves throughout a network area. In 2007, Commil brought a patent infringement action against Cisco, which makes and sells wireless networking equipment. In a first jury trial, Commil alleged that Cisco directly infringed the ’395 patent by making and using networking equipment, and also that Cisco induced its customers to infringe by selling them the infringing equipment. The jury concluded that Commil’s patent was valid, that Cisco was liable for direct but not induced infringement, and awarded $3.7 million in damages. Commil then filed a motion for a new trial on induced infringement and damages, which the district court granted. The second jury concluded that Cisco was liable for induced infringement and awarded $63.7 million in damages.

Cisco thereafter appealed to the Federal Circuit, raising a number of issues. A split panel affirmed in part, vacated in part, and remanded for a new trial. Because the court remanded for a new trial, it did not reach certain of Cisco’s arguments on non-infringement and damages. Following that decision, Commil sought certiorari on the limited question of whether a defendant’s belief that a patent is invalid is a defense to induced infringement. The Supreme Court granted certiorari, reversed the majority’s decision on that issue, and vacated and remanded back to the Federal Circuit.

Upon remand to the Federal Circuit, the court then considered Cisco’s non-infringement arguments, which a majority of this panel previously had declined to decide. Cisco contended that Commil could not prevail on its infringement charges because neither Cisco nor its customers directly infringe by performing both method steps.

Claim 1, the sole independent claim of the ’395 patent, contains two steps: a “dividing” step and a “running” step. Specifically, Claim 1 reads:

In a wireless communication system comprising at least two Base Stations, at least one Switch in communication with the Base Stations, a method of communicating between mobile units and the Base Stations comprising:

dividing a short-range communication protocol into a low-level protocol for performing tasks that require accurate time synchronization and a high-level protocol which does not require accurate time synchronization; and

for each connection of a mobile unit with a Base Station, running an instance of the low-level protocol at the Base Station connected with the mobile unit and running an instance of the high-level protocol at the Switch.

Cisco argued that the “running” step is never performed when its system is used, because its system employs a single copy of the protocol to support all the connected devices. More specifically, Cisco’s engineer testified that Cisco’s system runs only one copy of the protocol to support multiple connected mobile devices. Specifically, he testified that Cisco’s system “needs and uses only one copy of the protocol to support all 2,000 of those mobile devices… The standard was written in a fashion that only one copy of the protocol is necessary to implement the standard.” Commil’s expert similarly conceded that Cisco’s system supports multiple connected devices at the same time, but only runs one copy of the protocol at any one time.

The Federal Circuit had little trouble agreeing with Cisco and reversing the district court damages award.

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