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SRI International, Inc. v. Cisco Systems, Inc.

Patent-Eligibility Confirmed for Network Intrusion Detection Claims

SRI International, Inc. v. Cisco Systems, Inc., __ F.3d __, 2019 WL 3060974 (Fed Cir modified July 12, 2019) (Lourie (dissenting), O’MALLEY, Stoll) (D. Del.: Robinson) (3 of 5 stars)

Fed Cir part-affirms, part-vacates judgment determining that Cisco is liable for infringement of SRI’s patents. SRI’s patents relate to network intrusion detection.

Subject-matter eligibility: The district court did not err in rejecting Cisco’s § 101 challenge. SRI’s claims are not directed to an abstract idea. As in Enfish, 822 F.3d 1327 (Fed. Cir. 2016), they are “directed to using a specific technique—using a plurality of network monitors that each analyze specific types of data on the network and integrating reports from the monitors—to solve a technological problem arising in computer networks[.]” Op. at 8–9. The opinion distinguishes Electric Power Group, 830 F.3d 1350 (Fed. Cir. 2016), because that case did not relate to improving the functionality of computers/computer networks themselves. It also rejects Cisco’s attempt to distinguish Enfish, noting that these claims are not merely “automating a conventional idea on a computer” but rather improve technical operation of computers. And it rejects Cisco’s argument that the claims are invalid because they are performable in the human mind.

Claim construction: The district court did not err in rejecting Cisco’s narrow interpretation of a key term. The opinion describes how the specification specifically contemplates activities that would fall outside Cisco’s interpretation, and rejects Cisco’s contention that there was a clear surrender of subject matter in the prosecution history.

Summary judgment of no anticipation: The district court did not err in rejecting Cisco’s anticipation attack. The opinion describes how the reference (an overview of an SRI network intrusion design) was too general to disclose “directly examining network packets as required by the claims[.]” Op. at 16. The district court also did not err by entering summary judgment on this point sua sponte after Cisco filed a summary judgment motion of its own. “By filing its own motion for summary judgment, Cisco was on notice that anticipation was before the court, and Cisco had the opportunity to put forth its best evidence.” Op. at 17.

Willful infringement: The evidence did not support the jury’s finding of willful infringement prior to Cisco receiving notice of SRI’s patents, and the district court erred in denying Cisco’s JMOL motion. The opinion describes how the record was insufficient to establish “wanton, malicious, and bad-faith behavior” by Cisco, as Halo, 136 S. Ct. 1923 (2016), requires, during the period before Cisco received notice of SRI’s patents. It leaves it for the district court “to decide in the first instance whether the jury’s presumed finding of willful infringement after [notice] is supported by substantial evidence.” Op. at 21. In a footnote, the opinion notes that the issue of when willful infringement began “would have been best presented to the jury in a special verdict form with appropriate jury instructions.” Id. at 21 n.6.

§ 285 fee award: The district court erred in granting all of SRI’s fees. While there was no abuse of discretion in the exceptional case determination, the determination rested in part on the willfulness finding as support for the award of fees and costs. On remand the district court can reconsider the issue. The opinion also notes that on remand the district court “should have reduced SRI’s total hours to eliminate clear mistakes,” citing an expressly problematic time entry.

Ongoing royalty: The district court did not abuse its discretion in denying Cisco’s motion to supplement its post-trial briefing with declarations describing redesigns it was pursuing (which Cisco contended should not be subject to an ongoing royalty). “Cisco did not redesign its products until after trial, and Cisco did not file its motion to supplement until after post-trial briefing.” Op. at 24. The opinion emphasizes that any ongoing royalty should be “limited to products actually found to infringe and products that are not colorably different.” Id. at 25. Cisco can pursue its design-around arguments in a future proceeding.

Dissent: Judge Lourie would have found SRI’s claims patent-ineligible as abstract, as in Electric Power Group.

KEYWORDS: PATENT-ELIGIBLE SUBJECT MATTER; CLAIM CONSTRUCTION; ANTICIPATION (NO); WILLFULNESS; ATTORNEY FEES; EXCEPTIONAL CASE; ONGOING ROYALTY