Alexsam, Inc. v. Idt Corporation, 715 F.3d 1336

IDT appeals district court ruling that certain IDT activation systems infringe claims 57 and 58 of the '608 patent and that those claims are not invalid.
Alexsam cross-appeals the district court’s license determination, challenging the SafeNet/system licensing status.
Four accused activation systems are at issue: Walgreens, EWI, SafeNet, and miscellaneous systems (Sears, InComm, Blackhawk, PaySpot).
The district court sanctioned IDT for discovery violations, deeming the miscellaneous systems infringing for purposes of invalidity and damages.
Jury found Walgreens, EWI, and SafeNet infringed claims 57 and/or 58, and awarded royalties; miscellaneous systems infringement was decided by sanction.
The district court later found SafeNet licensed under the Alexsam–MasterCard agreement and reduced damages accordingly.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Walgreens and EWI infringe claim 57 (and 58) under unmodified POS device	Alexsam contends the systems use unmodified POS terminals as of 1997.	IDT argues the proof fails that terminals were unmodified in software.	Infringement not proven; JMOL for noninfringement affirmed.
Whether the district court properly sanctioned the miscellaneous systems as infringing	Alexsam asserts sanctions were warranted for discovery failures.	IDT contends sanctions were excessive or improper.	Sanction affirmed; deemed miscellaneous systems infringing.
Whether SafeNet activations are sublicensed under the Alexsam–MasterCard agreement	Alexsam argues SafeNet activations are licensed transactions.	IDT contends no license extends to SafeNet.	JMOL affirmed; SafeNet activations sublicensed under MasterCard agreement.
Whether claims 57 and 58 are invalid as obvious under 35 U.S.C. § 103	Alexsam contends Levine or combinations render claims obvious.	IDT argues obviousness with Levine (and others) as motivation.	Not invalid; substantial evidence supports nonobviousness.
Whether the invention is patent-eligible subject matter under § 101	Alexsam argues claims are patent-eligible as a technical activation system.	IDT asserts the claims preempt an abstract idea without inventive concept.	Dissenting view; majority holds claims are not invalid for § 101, but this issue is addressed in dissent.

Batson v. Neal Spelce Assocs., 765 F.2d 511 (5th Cir. 1985) (standard for Rule 37 sanctions factors)
Chilcutt v. United States, 4 F.3d 1313 (5th Cir. 1993) (less-severe sanctions require substantial relationship and deterrence goals)
ClearValue, Inc. v. Pearl River Polymers, Inc., 560 F.3d 1291 (Fed. Cir. 2009) (abuse-of-discretion review for sanctions)
Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340 (Fed. Cir. 2012) (standard for reviewing JMOL and factual findings on infringement)
Microsoft Corp. v. i4i Ltd. P'ship, 131 S. Ct. 2238 (U.S. 2011) (clear-and-convincing standard for proving invalidity; standard of proof)
Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (U.S. 2012) (subject-matter eligibility; abstract ideas and inventive concept)
Bilski v. Kappos, 130 S. Ct. 3218 (U.S. 2010) (abstract ideas patentability; preemption concerns)
Flook, 437 U.S. 584 (U.S. 1978) (limits on post-solution activity transforming unpatentable ideas)
Diamond v. Diehr, 450 U.S. 175 (U.S. 1981) (continuous processes and inventive concept in invention)
Gottschalk v. Benson, 409 U.S. 63 (U.S. 1972) (basic tools; abstract ideas not patentable)
Tessera, Inc. v. International Trade Commission, 646 F.3d 1357 (Fed. Cir. 2011) (implied sublicenses; licensing transaction interpretation)