Rejection of proposal did not obviate requirement to disclose inventions to standard setting body

On Thursday, August 16th, the Court of Appeals for the Federal Circuit issued a precedential decision in Core Wireless Licensing S.A.R.L. v. Apple Inc. , affirming in part, reversing in part and vacating in part various decisions made by the district court. The Federal Circuit panel of Circuit Judges William Bryson (who authored the opinion), Jimmie Reyna,  and Todd Hughes reversed the finding of infringement relating to one patent and upheld the infringement finding against Apple on the second patent. The panel also vacated the finding of no unenforceability for the patent and remanded for further proceedings.

The patents asserted by Core Wireless against Apple include:

• U.S. Patent No. 6477151, titled Packet Radio Telephone Services and issued in November 2002. Asserted claim 14 of this patent covers a mobile station for use in a radio telephone network comprising a base station subsystem and a plurality of mobile stations communicating with the base station using radio transmission signal slots which are synchronized to account for a propagation delay between the mobile and base stations.
• U.S. Patent No. 6633536, titled Signalling in a Digital Mobile Communications Systems and issued in October 2003. Asserted claim 19 of this patent claims a receiver for receiving information and messages in a digital telecommunications system including a receiving means for a signal via a transmission channel with frames being either in a good state or a bad state, a user information decoder coupled to the receiving means, a replacing means for replacing a bad state frame and a message decoder for decoding different messages each having a unique bit pattern.

On appeal from the Northern District of California, Apple challenged the jury’s findings of infringement and no invalidity of the ‘151 patent, as well as the trial judge’s finding of no unenforceability. The Federal Circuit panel affirmed the lower court’s findings of infringement and no invalidity. However, the appellate court vacated the no unenforceability finding on Apple’s theory of implied waiver based on the actions of Nokia, the original owner of the ‘151 patent.

Nokia had prepared an invention report regarding the technology covered by the ‘151 patent for submission to the European Telecommunications Standards Institute (ETSI) in 1998, when ETSI was developing proposals to address the technological problem of propagation delays in networks. Nokia’s proposal was rejected in favor of a competing proposal from Ericsson and four years later, in 2002, Nokia disclosed the ‘151 patent to ETSI. Apple argued that Nokia’s breach of its obligation to disclose the original Finnish patent application to ETSI when proposing a revision to the standard, and by failing to disclose the Finnish patent thereby waived its right to enforce the ‘151 patent.

Apple presented testimony from former ETSI chairman Dr. Michael Walker to speak on ETSI’s intellectual property rights policy, which required ETSI members to disclose rights to patents which may become essential to the developed standard. The district court rejected the implied waiver argument because Nokia’s proposal was rejected and the patent claims weren’t finalized until 2002.

The Federal Circuit, however, found the district court’s enforceability finding to be unsupported by evidence. The rejection of Nokia’s proposal did not obviate Nokia’s requirement to disclose inventions that might be essential to the standard. Dr. Walker’s uncontroverted testimony explained that patent applications are to be disclosed at the time proposals are presented. “[A]n ETSI member’s duty to disclose a patent application on particular technology attaches at the time of the proposal and is not contingent on ETSI ultimately deciding to include that technology in an ETSI standard,” Bryson explained.

Notwithstanding, the Federal Circuit elected to vacate this ruling rather than electing to reverse the district court because the existence of an implied waiver is an equitable defense. “Equitable defenses seek to prevent a party from unfairly benefiting from its wrongful actions, and in some circumstances courts have held that an equitable defense will not be recognized if the offending party did not gain a benefit from its wrongdoing,” Judge Bryson wrote.”[I]t may be that, despite breaching its duty to dis- close its application, Nokia (and Core Wireless, its successor-in-interest) did not obtain any unjust advantage, because Nokia’s proposal was not adopted.” Of course, Judge Bryson also recognized that the opposite is possible as well, which is why the matter requires further consideration from the district court on remand.

The Federal Circuit did, however, reverse the district court on the findings of infringement of the ‘536 patent, finding that Core Wireless’ theory of infringement was inadequate to support a judgment in its favor. Core Wireless had accused Apple’s implementation of the Robust Adaptive Multi-Rate Traffic Synchronized Control Channel (RATSCCH) protocol of infringing claim 19 of the ‘536 patent. The RATSCCH protocol uses eight receive types to determine how received frames are to be handled; Core Wireless’ expert testimony argued that these eight types treated frames in one of two ways, as either a good state or a bad state. However, Apple argued that one receive type identifier, “SPEECH_DEGRADED,” indicated that the frame may be corrupted, introducing a third state. Core Wireless argued that “SPEECH_DEGRADED” identifier indicates that the Apple phone has decided to treat the frame as if it isn’t error-free, and therefore a “bad state,” but the Federal Circuit determined that expert testimony supporting this argument didn’t satisfy the claim as construed.

In rejecting the finding of infringement of the ‘536 patent, the appellate court also accepted Apple’s argument that no reasonable jury could determine that its products met the limitation of a “bit pattern.” Because every 212-bit RATSCCH message is preceded by 16 coded mode indication bits and a 212-bit RATSCCH identification marker, the protocol didn’t infringe on the claimed invention which requires detecting a message based only on individual messages.