55 F.4th 900
Fed. Cir.2022Background:
- The ’967 patent claims an RFID transponder whose serial-number data structure uses a predefined set of most-significant bits (MSBs) that uniquely correspond to an allocated block, enabling decentralized, quasi-autonomous commissioning without continuous connection to a central database.
- ADASA sued Avery Dennison for infringement of claim 1 (and others); the district court granted summary judgment that claim 1 is patent-eligible under § 101 and not invalid under §§ 102/103, and later tried infringement of claim 1 to a jury, which found infringement and awarded a running royalty.
- After trial Avery Dennison disclosed >2 billion additional RFID tags it had not produced in discovery; it stipulated those late-disclosed tags infringed and agreed to additional damages; ADASA moved for Rule 37 sanctions and the district court imposed a per-tag monetary sanction, producing a large sanction award.
- Avery Dennison moved for a new trial, arguing (inter alia) the court erred by refusing a lump-sum damages instruction and by excluding certain licenses/expert testimony; the district court denied the new-trial motion and upheld the evidentiary exclusions.
- On appeal the Federal Circuit: affirmed the § 101 eligibility ruling for claim 1; reversed the district court’s summary-judgment holdings that RFID for Dummies and Kuhno do not anticipate or render claim 1 obvious (remanding those validity issues for trial); affirmed denial of a new trial; vacated the sanctions award in part and remanded to recalculate a remedy tied only to harm caused by the discovery violation.
Issues:
| Issue | Plaintiff's Argument (ADASA) | Defendant's Argument (Avery Dennison) | Held |
|---|---|---|---|
| Subject-matter eligibility (§101) of claim 1 | Claim 1 is a hardware-based data-structure improvement to RFID commissioning and thus patent eligible | Claim 1 is an abstract mental/data-organization idea lacking inventive concept | Affirmed: claim 1 directed to a specific hardware-based RFID data structure enabling technological improvement; eligible at Alice step one |
| Validity — RFID for Dummies (anticipation/obviousness) | RFID for Dummies does not disclose MSBs as claimed | RFID for Dummies discloses hierarchical allocation (facility/line/subserial) that maps to MSBs and thus anticipates/suggests claim 1 | Reversed: genuine factual dispute exists whether RFID for Dummies discloses MSBs; remand for trial on validity |
| Validity — Kuhno (anticipation) | Kuhno does not disclose MSBs or object-class field as claimed | Kuhno’s predetermined number/production-line fields and RFID Printer Data can map to MSBs and object-class information | Reversed: genuine dispute exists whether Kuhno discloses the claimed elements; remand for trial |
| New trial — lump-sum instruction & license evidence | Lump-sum instruction required because ADASA’s admitted licenses reflect lump-sum payments | Avery Dennison failed to present a lump-sum theory or expert support; licenses were not shown comparable | Affirmed denial of new trial: no lump-sum theory presented and district court did not abuse discretion excluding non-comparable-license evidence |
| Sanctions under Rule 37(c)(1) for late disclosure | Sanctions appropriate for discovery misconduct; remedy may deter future violations | Argued lack of notice/opportunity and that sanctions improperly tied to all infringing tags | Partly vacated: sanctions were warranted but the district court erred by tying the monetary award to timely-disclosed tags; remanded to fashion a remedy proportionate to harm from the discovery violation |
Key Cases Cited
- Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (Sup. Ct. 2014) (two-step framework for patent-eligibility analysis)
- Mayo Collaborative Servs. v. Prometheus Labs., 566 U.S. 66 (Sup. Ct. 2012) (limits on patenting laws of nature, natural phenomena, abstract ideas)
- Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) (data-structure claims can be directed to a technological improvement and be eligible)
- Uniloc USA, Inc. v. LG Elecs. USA, Inc., 957 F.3d 1303 (Fed. Cir. 2020) (adding a data field can confer eligibility where it improves system performance)
- Eli Lilly & Co. v. Zenith Goldline Pharms., 471 F.3d 1369 (Fed. Cir. 2006) (anticipation requires every claim element in a single prior reference)
- In re Gleave, 560 F.3d 1331 (Fed. Cir. 2009) (anticipatory reference need not use identical terms)
- Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) (proponent of license evidence must show comparability)
- Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197 (Fed. Cir. 2010) (must account for technological and economic differences when using licenses)
- LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51 (Fed. Cir. 2012) (vague comparability of licenses is insufficient)
- SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365 (Fed. Cir. 2013) (sanction size must reasonably relate to the harm caused)
- Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d 1364 (Fed. Cir. 2002) (discovery-sanction review under regional-circuit law)
- BMW of N. Am. v. Gore, 517 U.S. 559 (Sup. Ct. 1996) (excessive punitive awards must relate to harm; guidepost for proportionality)