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Omega Patents, LLC v. Calamp Corp.

United States Court of Appeals, Federal Circuit

April 8, 2019

OMEGA PATENTS, LLC, Plaintiff-Appellee
v.
CALAMP CORP., Defendant-Appellant

          Appeal from the United States District Court for the Middle District of Florida in No. 6:13-cv-01950-PGB-DCI, Judge Paul G. Byron.

          Brian R. Gilchrist, Allen, Dyer, Doppelt & Gilchrist, PA, Orlando, FL, argued for plaintiff-appellee. Also represented by Ryan Santurri.

          Constantine L. Trela, Jr., Sidley Austin LLP, Chicago, IL, argued for defendant-appellant. Also represented by Stephanie P. Koh, Bryan C. Mulder, Thomas D. Rein.

          Before Prost, Chief Judge, Dyk and Wallach, Circuit Judges.

          Dyk, Circuit Judge.

         CalAmp Corp. appeals from a judgment that U.S. Patent Nos. 6, 346, 876 ('876 patent), 6, 756, 885 ('885 patent), 7, 671, 727 ('727 patent), and 8, 032, 278 ('278 patent) were infringed and are not invalid. We affirm the judgment of no invalidity, affirm-in-part, reverse-in-part, vacate-in-part, and remand the judgment as to direct infringement. We vacate and remand for a new trial on indirect infringement, compensatory damages, willful infringement, enhanced damages, and attorney's fees.

         Background

         This case involves a patent infringement suit brought by Omega Patents, LLC ("Omega") against CalAmp for infringement of claims 1, 3, 4, 5, 12, 14, and 16 of the '876 patent, claims 1, 2, 3, 12, and 14 of the '885 patent, claims 1, 10, and 11 of the '727 patent, and claims 1, 2, 3, 4, 5, 6, 8, 11, 12, 13, 14, 16, 18, 19, and 21 of the '278 patent. Representative claims are set forth in the addendum.

         The patents generally relate to multi-vehicle compatible systems that can remotely control various vehicle functions (for example, remote vehicle starting), see, e.g., '876 patent, col. 3, ll. 34-36; '885 patent, col. 3, ll. 33-35, and read the status of various vehicle devices (for example, battery health), see, e.g., '278 patent, col. 18, ll. 56-57. The systems can also be used to notify the driver, or the driver's employer, if certain conditions occur (for example, speeding). See, e.g., '727 patent, col. 2, ll. 41-45; '278 patent, col. 9, ll. 26-33. In order to be compatible with different vehicles, the controller must determine the appropriate protocol to use in communicating with a particular vehicle data bus (an internal communications network), which is connected to various devices in the vehicle. This process involves the controller's first sending out a series of signals using different protocols to the vehicle's data bus, which relays them to the vehicle's devices. If the vehicle device recognizes one of the signals, it can then respond with its own signal, which travels to the data bus and then back to the controller. The controller relies on this response to determine the appropriate protocol to use for further communication with the vehicle devices. See, e.g., '885 patent, col. 4, ll. 9-23; col. 9, ll. 21-55.

         CalAmp operates in the telematics industry, assisting businesses and government entities monitor and collect data for their assets (for example, a fleet of vehicles). CalAmp sells its Location Messaging Unit ("LMU") products, which are multi-vehicle compatible devices that include a GPS receiver for vehicle tracking. The LMU connects to a vehicle's data communication bus via the onboard diagnostics port and can retrieve information (for example, battery health or vehicle speed) from the vehicle's engine control unit ("ECU") via the vehicle's data bus. Further, the LMU can relay information to CalAmp's servers (for example, in the form of a speeding notification), which enables businesses to remotely monitor various aspects of their vehicles.

         Omega filed suit against CalAmp in the Middle District of Florida on December 20, 2013, for patent infringement based on CalAmp's LMU systems and related products.[1] After a trial, a jury found all asserted claims to be not invalid and infringed, and the jury also found that CalAmp willfully "infringed a valid patent." J.A. 170. The jury awarded Omega approximately $2.98 million in compensatory damages. The district court trebled damages for willful infringement, awarded attorney's fees to Omega, awarded damages for sales made subsequent to the jury verdict, and added pre-judgment interest. The award totaled approximately $15 million with an on-going royalty rate of $12.76 per unit. The district court declined to award a permanent injunction, a determination that is not at issue in this appeal.

         CalAmp appealed the final judgment and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

         Discussion

         I. Invalidity

         CalAmp argues that the district court's claim construction of the terms "transmitter," "receiver," and "data communication bus / vehicle data communications bus / vehicle data bus" were erroneous. Some or all of the terminology appears in each of the various claims of the asserted patents. There is no argument that these constructions had any effect on the jury's findings of infringement. Rather, CalAmp contends that these constructions affected the jury's verdict of invalidity, though there is no claim that these constructions affected invalidity with respect to prior art introduced at trial. The contention is that had the district court adopted CalAmp's proposed constructions, "CalAmp's invalidity defenses would have included additional prior art references." CalAmp, Open. Br. at 17.

         "Federal Rule [of Civil Procedure] 46 requires that a party, at the time the ruling or order of the trial judge is . . . sought, make known to the court the action that he desires the court to take . . . and the grounds therefor," otherwise a claim of error is typically forfeited. 9B Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2472 (3d ed. 2018) ("Wright & Miller"). "This requirement is not a mere technical formality and is essential to the orderly administration of civil justice." Id. At the same time, courts have recognized that the requirement of securing a ruling is "not to be applied in a ritualistic fashion." Wright & Miller § 2472. Context may well reveal an implicit ruling that will suffice to preserve the issue. CalAmp informed the district court during Markman that construction of the terms "transmitter," "receiver," and "data bus" were actually in dispute because additional prior art for CalAmp's invalidity defense may or may not be relevant depending on the court's construction.

         Here CalAmp did nothing in the district court Mark-man proceeding to specifically identify the prior art that would be impacted by the claim construction ruling. At the Markman hearing, there was no identification of any specific prior art references that would be excluded by the district court's claim construction ruling.[2] Instead, the court was presented with only vague claims that there was prior art before August 22, 1995, one year before the earliest priority date of the asserted patents, that would be relevant under CalAmp's proposed construction. To be sure, CalAmp was not required to identify the prior art at the Markman proceeding in order to preserve the argument, but here CalAmp fails to argue the prior art was identified at any time thereafter.

         In its opening brief on appeal, CalAmp argued its "invalidity defenses would have included additional prior art references showing such wired connections." But in its opening brief CalAmp failed to present a developed argument as to why any actions by the district court after the Markman hearing had the effect of excluding or limiting prior art that CalAmp offered to present or even what relevant prior art was excluded by the claim construction ruling. Under these circumstances, CalAmp has failed to properly preserve the issue. See Becton Dickinson & Co. v. C.R. Bard, Inc., 922 F.2d 792, 800 (Fed. Cir. 1990) ("[A]n issue not raised by an appellant in its opening brief . . . is waived.").

         We decline CalAmp's invitation to speculate as to how additional prior art may have been rendered irrelevant under the court's claim construction. Thus, although CalAmp's challenge to the district court's claim construction was preserved under Federal Rule of Civil Procedure 51 for purposes of challenging the jury instructions, Lighting Ballast Control LLC v. Phillips Elecs. N. Am. Corp., 790 F.3d 1329, 1338 (Fed. Cir. 2015), we conclude that CalAmp failed to satisfy the requirements of Federal Rule of Civil Procedure 46 by not seeking admission into evidence of, or at least specifically identifying, the additional prior art. Such a request and specific ruling by the district court is particularly necessary where the prior art concerns a defense of obviousness because a prior art reference need not satisfy every claim element to still be relevant to obviousness.

         For these reasons, we affirm the judgment as to the validity of the asserted patent claims.

         II. Infringement

         We next consider the district court's order denying CalAmp's motion for judgment as a matter of law ("JMOL") or a new trial based on various infringement issues. We review the denial of JMOL de novo, viewing the evidence in the light most favorable to the non-moving party.

         "Where the district court's claim construction relies only on intrinsic evidence, as is the case here, the construction is a legal determination reviewed de novo." In re: Co-paxone Consol. Cases, 906 F.3d 1013, 1022 (Fed. Cir. 2018). When the district court errs in its jury instructions as to the construction of a term central to the infringement dispute, "[t]he error requires at least vacatur of the verdict and a remand for a new trial unless we can conclude that the error was not prejudicial, i.e., was harmless." Avid Tech., Inc. v. Harmonic, Inc., 812 F.3d 1040, 1047 (Fed. Cir. 2016). "[T]he error in the instruction governing this central dispute at trial would be harmless only if a reasonable juror would have been required by the evidence to find []in-fringement even without the error." Id. The jury's determination of infringement is reviewed for substantial evidence.

         A. Infringement of '727 Patent Claim 11

         CalAmp argues that there was insufficient evidence for the jury to find direct infringement by CalAmp of original claim 11, now amended claim 1, of the '727 patent.[3] Omega alleged this device claim was directly infringed by CalAmp's sale and programming of its products as well as indirectly infringed by CalAmp's sale, programming, and advertising that induced customers to infringe.

         CalAmp's sole argument as to why it does not infringe is based on the claim limitation that the device "read[ ] the data related to vehicle speed from the vehicle data communications bus" and use that information to determine when "to send a remote vehicle speed exceeded notification."[4] J.A. 350, col. 7, ll. 13-18. Neither party sought construction of these terms, and the district court instructed the jury to give the terms their plain and ordinary meaning. The claim language above refers to the patented device's ability to send a speed exceedance notification based on vehicle speed information retrieved from the vehicle's data bus. This functionality can be useful for remotely monitoring driver behavior in real-time.

         CalAmp contends that its products do not use vehicle speed from the data bus to send a speed exceedance notification but instead use the GPS receiver on the LMU to make such determinations, and therefore it does not infringe. But the testimony by CalAmp's witnesses could reasonably be interpreted by the jury as indicating that some small percentage, less than 5%, of its devices infringed by being programmed to use vehicle speed data from the data bus to send a speed exceedance notification. See J.A. 14330; J.A. 14335 (CalAmp's witness testifying that "[w]e ran a count, and . . . based on the count that more than 95 percent of the speed thresholds are done by GPS, and this list here [of customer scripts using vehicle bus speed] was less than 5 percent."); 14371 (CalAmp's witness testifying "it would be a subset" of cases that did not infringe (emphasis added)). CalAmp further argues that if there was infringement, it was by CalAmp's customers and not by CalAmp. This argument is belied by CalAmp's response to Omega's interrogatory, where it stated it "has identified the customers for whom it [i.e., CalAmp] has loaded scripts [into devices it sold to customers] related to . . . speed alerts." J.A. 8780; see also J.A. 14271 ("Q. Does CalAmp develop scripts for customers? A. Yes.").

         This is admittedly a close issue, but we conclude that there was sufficient evidence for a reasonable jury to find that CalAmp, at least under some circumstances, directly infringed original claim 11 of the '727 patent and therefore affirm the judgment of infringement. Our conclusion affirming the jury's judgment that CalAmp directly infringed claim 11 of the '727 by selling its products and programming a subset with infringing functionality moots the issue of whether the same acts constituted indirect infringement by CalAmp.

         B. Infringement of '876 Patent Claims and '885 Patent Claims

         CalAmp argues it was entitled to JMOL on (1) no direct infringement as to all of the asserted claims of the '876 patent and '885 patent, and (2) no indirect infringement as to these same claims. If it is not entitled to JMOL for indirect infringement, CalAmp argues that a new trial is required. These systems claims were alleged to be directly infringed by CalAmp's making and selling of the patented systems and indirectly infringed by CalAmp's inducement of its customers to directly infringe the systems claims.

         1. Direct Infringement by CalAmp

         Omega's theory of direct infringement as to the systems claims is based on CalAmp's making and selling its systems to its customers. We assume that a systems claim is infringed by the sale of the system. The question then is whether "all of the elements of the claim . . . [are] present in the accused system[s]" allegedly sold by CalAmp. Net-word, LLC v. Centraal Corp., 242 F.3d 1347, 1353 (Fed. Cir. 2001); see Centillion Data Sys., LLC v. Qwest Commc'ns Int'l, 631 F.3d 1279, 1288 (Fed. Cir. 2011) ("In order to 'make' the system under § 271(a), [defendant] would need to combine all of the claim elements . . . .").

         We agree with CalAmp that there was insufficient evidence for the jury to have found the claim limitation "a transmitter and a receiver for receiving signals from said transmitter" in the claims of the '876 patent and the '885 patent was satisfied by CalAmp's selling its systems. '876 patent, col. 11, ll. 36-37 (emphasis added); '885 patent, col. 11, ll. 16-17. The evidence at trial only showed that the LMU "transmitter" transmits signals to a "receiver" on a cell tower, which can then relay that information to CalAmp's servers, and the LMU "receiver" receives signals from a "transmitter" on the cell tower. But CalAmp is not alleged to provide the cell tower. See, e.g., J.A. 8589; J.A. 16019-20. CalAmp therefore does not provide all the required claim elements, and Omega does not argue that CalAmp directly infringes by "us[ing]" the system. See Omega Response Br. at 29. Thus, CalAmp was entitled to JMOL of no direct infringement by CalAmp for all of the asserted claims of the '876 patent and '885 patent.

         2. Induced Infringement

         We next consider Omega's claims that CalAmp induced direct infringement by CalAmp's customers.

         a. Direct Infringement by CalAmp's Customers

         "[L]iability for inducement must be predicated on direct infringement." Limelight Networks, Inc. v. Akamai Techs., Inc., 572 U.S. 915, 921 (2014); see Enplas Display Device Corp. v. Seoul Semiconductor Co., 909 F.3d 398, 407 (Fed. Cir. 2018). Omega's theory here is that CalAmp's customers directly infringed the systems claims. CalAmp argues three separate theories as to why there were no predicate acts of direct infringement by CalAmp's customers.

         First, CalAmp argues that "Omega failed to identify even one instance of direct infringement" by CalAmp's customers that could support liability for inducement. CalAmp, Open. Br. at 39. Omega's theory of infringement was that the customers directly infringed when they used CalAmp's products. "[T]o use a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it." Centillion, 631 F.3d at 1284. "[A] person must control (even if indirectly) and benefit from each claimed component." Intellectual Ventures I v. Motorola Mobility, 870 F.3d 1320, 1329 (Fed. Cir. 2017). Here, there was evidence from which the jury could infer that customers controlled and used the system and received the required benefits. See, e.g., J.A. 8780-87 (identifying customers using CalAmp products); J.A. 15943-45 (Omega's technical expert testifying the asserted claims would be infringed by customer use of CalAmp's products). Based on the record, we conclude that this theory does not warrant setting aside the jury verdict.

         Second, CalAmp argues that Claim 12 of the '876 patent and all asserted claims of the '885 patent require a "device code." Omega has recognized "[t]he claims . . . require 'communication' using a vehicle device code." Omega Response Br. at 18. The district court defined "device code" to mean a "signal from a vehicle device," but the court improperly declined to define the term "vehicle device." J.A. 148-50. CalAmp seeks reversal or, in the alternative, a new trial for the judgment of infringement as to these claims because the district court's failure to construe the term "vehicle device" in this context allowed Omega to argue infringement under ...


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