| Warning
`|
`As of: February 17, 2015 12:39 PM EST
`
`Uniloc USA, Inc. v. Microsoft Corp.
`
`United States District Court for the District of Rhode Island
`
`September 29, 2009, Decided
`
`C.A. No. 03-440 S
`
`Reporter
`640 F. Supp. 2d 150; 2009 U.S. Dist. LEXIS 89813
`
`UNILOC USA, INC. and UNILOC SINGAPORE PRIVATE
`LIMITED, Plaintiffs, v. MICROSOFT CORPORATION,
`Defendant.
`
`Subsequent History: Affirmed in part and reversed in part
`by, Vacated by, in part, Remanded by Uniloc USA, Inc. v.
`Microsoft Corp., 632 F.3d 1292, 2011 U.S. App. LEXIS 11
`(1st Cir. R.I., 2011)
`Stay lifted by, Motion granted by Uniloc USA, Inc. v.
`Microsoft Corp., 2011 U.S. App. LEXIS 15304 (Fed. Cir.,
`July 25, 2011)
`
`Prior History: Uniloc USA, Inc. v. Microsoft Corp., 632 F.
`Supp. 2d 147, 2009 U.S. Dist. LEXIS 24136 (D.R.I., 2009)
`
`Core Terms
`
`infringement, patent, software, algorithm, licensee, user,
`license, activation, generating, summation, output, inputs,
`registration, digital,
`invention,
`remote, damages, hash,
`willfulness, equivalents, copying, new trial, parties, jury’s,
`matter of law, mathematical, products, identifier, discloses,
`issues
`
`Case Summary
`
`Procedural Posture
`
`A jury found that defendant software company’s product
`activation system (PA) infringed a claim describing a
`remote registration station incorporating remote licensee
`unique ID (LUID) generating means. The jury found that
`plaintiff patent holder’s patent was valid, that defendant’s
`infringement was willful, and that plaintiff was entitled to $
`388,000,000 in damages. Defendant filed a post-verdict
`motion for judgment as a matter of law (JMOL).
`
`Overview
`
`by locking the software to a user and allowing it to run in a
`use mode on a platform if and only if an appropriate
`licensing procedure had been followed. Defendant’s PA was
`intended to limit
`the number of computers on which
`software was installed by enforcing the limits specified in
`an end user
`license agreement. The court held that
`defendant’s PA did not directly infringe the patent claim
`under 35 U.S.C.S. § 271(a) because plaintiff’s LUID
`generating means structure was an algorithm that combined
`inputs by addition, and the algorithm used in defendant’s PA
`performed addition and other operations and was not a
`summation algorithm or an equivalent thereof under 35
`U.S.C.S. § 112, para. 6; the compressive, circular shifting
`and mixing functions of defendant’s algorithm fundamentally
`created a more secure result compared to an algorithm based
`in summation. The court also held that defendant’s PA was
`not a registration system as disclosed by the patent because
`the licensing of defendant’s products took place separate
`from and before activation.
`
`Outcome
`
`The court granted JMOL of non-infringement in favor of
`defendant, set aside the jury’s finding of willfulness, declined
`to override the jury’s finding of patent validity, conditionally
`granted defendant’s motion for a new trial, vacated the
`jury’s verdict, and entered judgment for defendant. The
`parties’ motions to correct the judgment and plaintiff’s
`motion for enhanced damages and a permanent injunction
`were denied as moot.
`
`LexisNexis® Headnotes
`
`Patent Law > Infringement Actions > General Overview
`
`HN1 Federal Circuit precedent applies on substantive patent
`law issues. On procedural issues not unique to patent law,
`the district court applies the standard of review of the
`regional circuit.
`
`intended to deter
`Plaintiff’s patented invention was
`unauthorized copying by a purchaser of a piece of software
`
`Civil Procedure > Trials > Judgment as Matter of Law >
`Postverdict Judgment
`
`Patent Owner Ex. 2005 Page 1
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`640 F. Supp. 2d 150, *150; 2009 U.S. Dist. LEXIS 89813, **89813
`
`Page 2 of 24
`
`HN2 Judgment as a matter of law (JMOL) is appropriate
`when a party has been fully heard on an issue during a jury
`trial and the court finds that a reasonable jury would not
`have a legally sufficient evidentiary basis to find for the
`party on that issue. Fed. R. Civ. P. 50(a). Post-trial, JMOL
`is called for under Fed. R. Civ. P. 50(b) when the facts and
`inferences are one-sided and point so strongly and
`overwhelmingly in favor of the movant that a reasonable
`jury could not have returned the verdict. The court must not
`evaluate the credibility of witnesses, resolve conflicts in
`testimony, or evaluate the weight of evidence, but rather
`view the evidence in the light most favorable to the party in
`whose favor the jury found, giving it all fair and reasonable
`inferences. Review of the jury’s verdict is also affected by
`the applicable burden of proof.
`
`Civil Procedure > Trials > Judgment as Matter of Law > General
`Overview
`
`Patent Law > Infringement Actions > General Overview
`
`law governs
`HN3 Although in general regional circuit
`procedural aspects of a motion for judgment as a matter of
`law (JMOL), where the precise issue pertains uniquely to
`patent law, Federal Circuit authority controls. The requisite
`pre-verdict specificity varies with the circumstances of each
`case, and the key inquiry is whether the motion fairly
`informs the opposing party of
`its alleged evidentiary
`deficiencies.
`
`Patent Law > Infringement Actions > Infringing Acts > General
`Overview
`
`HN4 See 35 U.S.C.S. § 271(a).
`
`Patent Law > Subject Matter > General Overview
`
`HN5 To infringe an apparatus claim, the device must meet
`all of the structural limitations. Apparatus claims cover what
`a device is, not what a device does.
`
`Patent Law > Infringement Actions > Burdens of Proof
`
`HN6 Each element of a patent claim is material and
`essential, and in order for a court to find infringement, a
`plaintiff must show the presence of every element or its
`substantial equivalent in the accused device.
`
`Patent Law > Infringement Actions > Burdens of Proof
`
`HN8 The absence of even one limitation defeats an action
`for literal patent infringement.
`
`Patent Law > ... > Specifications > Definiteness > General
`Overview
`
`HN9 A patent claim is indefinite if reasonable efforts at
`claim construction prove futile.
`
`Patent Law > ... > Specifications > Description Requirement >
`Means Plus Function
`
`Patent Law > Infringement Actions > Claim Interpretation >
`Means Plus Function Clauses
`
`HN10 A means-plus-function term shall be construed to
`cover the corresponding structure, material, or acts described
`in the specification and equivalents thereof. 35 U.S.C.S. §
`112, para. 6. To determine whether a claim limitation is met
`literally, where expressed as a means for performing a stated
`function, the court must compare the accused structure with
`the disclosed structure, and must find equivalent structure as
`well as identity of claimed function for that structure. As to
`an equivalent structure, the test is whether the differences
`between the structure in the accused device and any
`disclosed in the specification are insubstantial. 35 U.S.C.S.
`§ 112, para. 6 equivalence is a question of fact. Although a
`patentee may use generic claim language it does not enjoy
`unfettered latitude. To obtain the benefit of broad claim
`terms, a patentee must recite within the specification, and
`with sufficient definiteness, some structure that performs
`the function, so one skilled in the art can ascertain the
`claim’s scope.
`
`Patent Law > Infringement Actions > Doctrine of Equivalents >
`Fact & Law Issues
`
`Patent Law > Infringement Actions > Summary Judgment >
`General Overview
`
`HN11 Although equivalence is a factual matter normally
`reserved for a fact finder,
`the trial court should grant
`summary judgment in any case where no reasonable fact
`finder could find equivalence.
`
`Patent Law > ... > Specifications > Description Requirement >
`Means Plus Function
`
`Patent Law > Infringement Actions > Claim Interpretation >
`Means Plus Function Clauses
`
`HN7 Patent infringement is a question of fact reviewed for
`substantial evidence, and a plaintiff bears the burden of
`proof by a preponderance of evidence.
`
`HN12 The scope of means-plus-function claim language is
`sharply limited to the structure disclosed in the specification
`and its equivalents.
`
`Patent Law > Infringement Actions > General Overview
`
`Evidence > Weight & Sufficiency
`
`Patent Owner Ex. 2005 Page 2
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`640 F. Supp. 2d 150, *150; 2009 U.S. Dist. LEXIS 89813, **89813
`
`Page 3 of 24
`
`HN13 Substantial evidence is more than a mere scintilla and
`is such relevant evidence as a reasonable mind might accept
`as adequate to support a conclusion.
`
`Evidence > ... > Testimony > Expert Witnesses > General
`Overview
`
`Patent Law > Infringement Actions > General Overview
`
`HN14 While there is no per se requirement of expert
`testimony to prove patent infringement when the art is
`complex, typically it is necessary.
`
`Patent Law > Infringement Actions > Doctrine of Equivalents >
`Equivalence Limits
`
`HN15 The doctrine of equivalents is not a license to ignore
`or erase structural limitations of a claim on which the public
`is entitled to rely in avoiding infringement.
`
`Patent Law > Infringement Actions > Burdens of Proof
`
`HN16 Proof of willful infringement requires at least a
`showing of objective recklessness. A patentee must show by
`clear and convincing evidence that
`the infringer acted
`despite an objectively high likelihood that
`its actions
`constituted infringement of a valid patent. If this showing is
`made, a patentee must also demonstrate that
`this
`objectively-defined risk (determined by the record developed
`in the infringement proceeding) was either known or so
`obvious that it should have been known to the accused
`infringer.
`
`HN20 Anticipation is a question of fact requiring that the
`four corners of a single, prior art document describe every
`element of
`the claimed invention, either expressly or
`inherently, such that a person of ordinary skill in the art
`could practice the invention without undue experimentation.
`To anticipate, a reference must disclose all elements arranged
`as in the claim.
`
`Patent Law > Anticipation & Novelty > General Overview
`
`HN21 A jury’s finding of no anticipation is reviewed for
`substantial evidence.
`
`Patent Law > Anticipation & Novelty > General Overview
`
`Patent Law > Infringement Actions > Claim Interpretation >
`General Overview
`
`HN22 That which would literally infringe if later in time
`anticipates if earlier than the date of invention. Claims may
`not be construed one way in order to obtain their allowance
`and in a different way against accused infringers.
`
`Patent Law > Nonobviousness > Elements & Tests > General
`Overview
`
`HN23 A claim is obvious if the differences between the
`subject matter sought to be patented and the prior art are
`such that the subject matter as a whole would have been
`obvious at the time the invention was made to a person
`having ordinary skill in the art to which said subject matter
`pertains. 35 U.S.C.S. § 103(a).
`
`Patent Law > Infringement Actions > Defenses > General
`Overview
`
`Patent Law > Nonobviousness > Evidence > Fact & Law Issues
`
`HN17 Legitimate defenses to infringement claims and
`credible invalidity arguments demonstrate the lack of an
`objectively high likelihood that a party took actions
`constituting infringement of a valid patent.
`
`HN24 Although the question of whether a patent claim is
`obvious is ultimately a question of law, underlying factual
`determinations are reviewed for substantial evidence.
`
`Patent Law > Infringement Actions > General Overview
`
`HN18 An accused infringer’s knowledge of a patent
`application alone does not demonstrate willfulness.
`
`Patent Law > ... > Defenses > Patent Invalidity > Presumption
`of Validity
`
`HN19 Pursuant to 35 U.S.C.S. § 282, a patent claim is
`presumed valid and the burden of proving otherwise, by
`clear and convincing evidence,
`rests with the party
`challenging validity.
`
`Patent Law > Anticipation & Novelty > Elements
`
`Civil Procedure > Judgments > Relief From Judgments >
`Motions for New Trials
`
`HN25 A new trial is appropriate if the court believes that the
`outcome is against the clear weight of the evidence such that
`upholding the verdict will result in a miscarriage of justice.
`Discretion must be exercised with due regard to the rights of
`both parties to have questions which are fairly open resolved
`finally by the jury at a single trial.
`
`Civil Procedure > Judgments > Relief From Judgments >
`Motions for New Trials
`
`HN26 A party is not entitled to a new trial because the court
`may have reached a different result if sitting as fact-finder.
`
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`640 F. Supp. 2d 150, *150; 2009 U.S. Dist. LEXIS 89813, **89813
`
`Page 4 of 24
`
`Yet a second go-around may be in the cards if the court
`believes the result is manifestly unjust, and has some hope
`of a different outcome on retrial. The court may weigh the
`evidence itself, and need not always view it in the light most
`favorable to the prevailing party. A party may deserve a new
`trial based on a cumulation of events if multiple errors
`synergistically achieve the critical mass necessary to cast a
`shadow upon the integrity of the verdict.
`
`For Uniloc USA, Inc, Uniloc Singapore Private Limited,
`Counter Defendants: Francis A. Connor, III, Sheri L. Pizzi,
`LEAD ATTORNEYS, Taylor, Duane, Barton
`[**2] &
`Gilman, LLP, Providence, RI; Paul J. Hayes, LEAD
`ATTORNEY, Eugene A. Feher, Mintz, Levin, Cohn, Ferris,
`Glovsky & Popeo, P.C., Boston, MA.
`
`Judges: William E. Smith, United States District Judge.
`
`Civil Procedure > ... > Relief From Judgments > Additur &
`Remittitur > Remittiturs
`
`Opinion by: William E. Smith
`
`HN27 A jury’s award is entitled to deference if it is not
`grossly excessive or monstrous, clearly not supported by the
`evidence, or based only on speculation or guesswork.
`
`Opinion
`
`[*155] DECISION AND ORDER
`
`Patent Law > Remedies > Damages > Measure of Damages
`
`WILLIAM E. SMITH, United States District Judge.
`
`HN28 The entire market value rule allows a patentee to
`recover damages based on the value of an entire apparatus
`containing several features only where the feature at issue
`constitutes the basis for customer demand or substantially
`creates the value of the component parts.
`
`[**1] For Uniloc USA, Inc, Uniloc Singapore
`Counsel:
`Private Limited, Plaintiffs: Andria Coletta, Francis A.
`Connor, III, Sheri L. Pizzi, LEAD ATTORNEYS, Taylor,
`Duane, Barton & Gilman, LLP, Providence, RI; Dean G.
`Bostock, Paul
`J. Cronin, Paul
`J. Hayes, LEAD
`ATTORNEYS, Eugene A. Feher, Mintz, Levin, Cohn,
`Ferris, Glovsky & Popeo, P.C., Boston, MA.
`
`For Microsoft Corporation, Defendant, Counter Claimant:
`Frank E. Scherkenbach, Kurt L. Glitzenstein, LEAD
`ATTORNEYS, Fish & Richardson, P.C., Boston, MA;
`Isabella E. Fu, LEAD ATTORNEY, Microsoft Corporation,
`Redmond, WA; Joseph V. Cavanagh, Jr., LEAD ATTORNEY,
`Mary C. Dunn, Blish & Cavanagh, LLP, Providence, RI;
`John W. Thornburgh, PRO HAC VICE, Fish & Richardson
`P.C., San Diego, CA; Sheri L. Pizzi, Taylor, Duane, Barton
`& Gilman, LLP, Providence, RI.
`
`For over six years Plaintiffs Uniloc USA, Inc. and Uniloc
`Singapore Private Limited (Uniloc) and Defendant Microsoft
`Corporation (Microsoft) have battled in a high stakes patent
`dispute in this Court. It has taken them to the Federal Circuit
`once, and finally to trial where Uniloc scored a massive jury
`verdict (purportedly the fifth largest patent verdict
`in
`history). Before the Court are numerous post-trial motions.
`After careful consideration of
`the arguments and the
`evidence, and mindful of the limitations placed upon the
`Court in ruling upon a post-trial motion for judgment as a
`matter of
`law (JMOL),
`the Court grants JMOL of
`non-infringement
`in Microsoft’s favor. And while this
`holding on non-infringement arguably renders moot many,
`if not all, of the remaining issues raised by these motions,
`the Court believes it is both reasonable and potentially
`useful in the long run, given the breadth and complexity of
`the issues
`[**3] raised,
`to tackle a number of other
`important issues raised by the parties’ motions, including
`willfulness and invalidity.
`
`I. Background 1
`
`A. The ’216 Patent
`
`For Uniloc USA, Inc, Uniloc Singapore Private Limited,
`Counter Defendants: Francis A. Connor, III, Sheri L. Pizzi,
`LEAD ATTORNEYS, Taylor, Duane, Barton & Gilman,
`LLP, Providence, RI; Eugene A. Feher, Mintz, Levin, Cohn,
`Ferris, Glovsky & Popeo, P.C., Boston, MA.
`
`is U.S. Patent No. 5,490,216 (’216
`The patent-in-suit
`patent) entitled ″System for Software Registration,″ issued
`on February 6, 1996. The inventor is Mr. Ric Richardson, an
`Australian citizen who founded Uniloc and made the
`
`1 The reader in search of more detail should consult the prior decisions in this case: 447 F. Supp. 2d 177 (D.R.I. 2006) (claim
`construction); No. 03-cv-440, 2007 U.S. Dist. LEXIS 97491 (D.R.I. Oct. 19, 2007) (summary judgment); 290 Fed. Appx. 337, 2008 WL
`3539749 (Fed. Cir. 2008) (reversal-in-part and remand); 632 F. Supp. 2d 147, 2009 U.S. Dist. LEXIS 24136, 2009 WL 691204 (D.R.I.
`Mar. 16, 2009) (Daubert and motions in limine).
`
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`640 F. Supp. 2d 150, *155; 2009 U.S. Dist. LEXIS 89813, **3
`
`Page 5 of 24
`
`claimed invention in Australia in or around 1991 or 1992. 2
`In broad terms,
`the patent
`is directed to a method of
`reducing unlicensed use of software through casual copying.
`The technology is intended to deter unauthorized copying
`by a purchaser of a piece of software by locking the
`software to a user and allowing it ″to run in a use mode on
`a platform if and only if an appropriate licensing procedure
`has been followed.″ ’216 patent, col. 2, 11. 53-55.
`[**4] Claim 19, the sole independent claim at issue, reads as
`follows:
`
`A remote registration station incorporating remote
`licensee unique ID generating means, said station
`forming part of a registration system for licensing
`execution of digital data in a use mode, said digital
`data executable on a platform, said system including
`
`registration system
`
`licensee unique ID
`
`use mode
`
`local licensee unique ID generating means, said
`system further including mode switching means
`operable on said platform which permits use of
`said digital data in said use mode on said platform
`only if a licensee unique ID generated by said local
`licensee unique ID generating means has matched
`a licensee unique ID generated by said remote
`licensee unique ID generating means; and wherein
`said remote licensee unique ID generating means
`comprises software executed on a platform which
`includes the algorithm utilized by said local licensee
`unique ID generating means to
`[*156]
`produce said licensee unique ID.
`
`The relevant terms (all of which are in play at this stage)
`were construed as follows:
`
`a system that allows digital data or
`software to run in a use mode on a
`platform if and only if an
`appropriate licensing procedure has
`been followed
`
`a unique identifier associated with a
`licensee
`
`a mode that allows full use of the
`digital data or software in
`accordance with the license
`
`local licensee unique ID generating
`means
`
`in functional terms, to generate a
`local licensee unique ID
`
`the structure to perform this
`function must be a summation
`algorithm or a summer or an
`equivalent
`
`remote licensee unique ID generating
`means
`
`in functional terms, to generate a
`remote licensee unique ID
`
`mode switching means
`
`The structure to perform this
`function must be a summation
`algorithm or a summer or an
`equivalent
`
`in functional terms, to permit the
`digital data or software to run in a
`use mode if the locally generated
`licensee unique ID matches with the
`remotely generated licensee unique ID
`
`2 Mr. Richardson founded Uniloc Australia and assignee Uniloc Singapore to develop and sell his invention. Uniloc USA holds the
`exclusive right to the invention in the United States.
`
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`640 F. Supp. 2d 150, *156; 2009 U.S. Dist. LEXIS 89813, **4
`
`Page 6 of 24
`
`the structure to perform this
`function must be program code which
`performs a comparison of two numbers
`or a comparator or an equivalent of
`such program code or comparator
`
`a comparison between the locally
`generated licensee unique ID and the
`remotely generated licensee unique ID
`shows that the two are the same
`
`includes the identical algorithm used
`by the local licensee unique ID
`generating means to produce the
`licensee unique ID
`
`a set of instructions that can be
`followed to carry out a particular
`task
`
`has matched
`
`includes the algorithm utilized by
`said local licensee unique ID
`generating means to produce said
`licensee unique ID
`
`algorithm
`
`B.
`
`[**5] Product Activation
`
`The accused technology is Microsoft’s patented Product
`Activation system (PA). This feature is contained in software
`products sold through retail distribution worldwide, including
`the accused Microsoft Office XP, Windows XP and Office
`2003 products. 3 According to Aiden Hughes, the writer of
`the original code for Microsoft in 1997 that evolved into PA,
`the goal of the feature was to limit the number of computers
`on which software was installed by enforcing the limits
`specified in the applicable product license agreement, or
`EULA (End User License Agreement). (Trial Ex. Z-2 (″This
`technology is geared towards reducing software piracy
`occurring today when end users pass along a copy of their
`[*157] or install software
`floppies or CDs to a neighbor
`products off of original CDs onto several machines.″).)
`
`There is no dispute as to how the PA system [**6] operates.
`Printed on each jewel box of a retail software product is a
`25-character alphanumeric string called a Product Key (e.g.,
`MQ9WT-3D8PY-6VF76-GMHVX-DCXFM). No two pieces
`of software have the same Product Key. A user types the
`Product Key into a computer to install a piece of software.
`If the Product Key is valid and the user agrees to the EULA
`
`that appears on his or her computer screen, the software is
`then installed but not yet activated. 4 Also at this stage, a
`Product ID (PID) is created on the user’s computer from a
`combination of data sources, including the typed-in Product
`Key, Microsoft Product Code (from ″bits″ on the software
`CD) and a random number derived from the user’s computer.
`A hardware identifier (HWID) is also generated on the
`user’s machine using components of that computer.
`
`Activation of the software is only achieved when and if a
`user elects
`to activate. At
`that
`time,
`the software
`communicates the following information via the internet 5
`to the remote Microsoft Clearinghouse server located in
`Redmond, Washington:
`the PID;
`the HWID; and other
`[**7] activation-specific data generated by Microsoft. 6
`this sequence of data (described as ″one big
`Together,
`string″ by Microsoft’s expert Dr. Dan Wallach) forms a
`″digital license″ request sent to the remote Clearinghouse.
`Once this data (also called the ″license object″) arrives at
`the Clearinghouse and is confirmed as valid,
`it
`is put
`through a software algorithm. The algorithm used depends
`on the product: for Office it is the MD5 (message digest)
`algorithm, and for Windows the SHA-1 (secure hash)
`algorithm. After processing by the algorithm, the result is a
`
`3 PA is bypassed for original equipment manufacturer (OEM) licenses whereby, for example, a person purchases a Dell laptop with
`Windows or Office software already installed, and also for high volume license agreements with corporations. Thus, only about 10-20%
`of total sales of the accused software involve the activation at issue here.
`
`4 The allowed use during this ″grace period″ is an important issue and the details are discussed infra at Section IV(D).
`
`5 Uniloc dropped its theory regarding telephone activation.
`
`6 Uniloc’s expert referred to this data as ″X″: activation date, expiration date, and so forth.
`
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`640 F. Supp. 2d 150, *157; 2009 U.S. Dist. LEXIS 89813, **7
`
`Page 7 of 24
`
`(what Microsoft deems the
`shortened fixed-bit output
`″license digest″ and Uniloc tags the ″remote licensee unique
`ID″). The output is encrypted with a secret, private key
`known only to Microsoft. The result of the encryption, or
`the digital signature,
`is concatenated with the original
`license data and sent back to the user’s computer.
`
`the digital
`The software uses a public key to decrypt
`signature and recover the hashed license. The user side
`software also inputs the concatenated [**8] original license
`data into the same MD5 or SHA-1 algorithm as was used on
`the data at
`the Clearinghouse. Those two values,
`the
`decrypted signature (what Microsoft describes as the ″license
`digest″ and Uniloc deems the ″remote licensee unique ID″)
`and output of the user side algorithm (what Microsoft also
`describes as the ″license digest″ and Uniloc deems the
`″local licensee unique ID″) are compared. If they are the
`same, the software accepts the digital license as genuine and
`the software is activated. 7
`
`[*158] [SEE DIAGRAMS IN ORIGINAL]
`
`[*159] II. Procedural Travel
`
`Uniloc sued on September 26, 2003. Following discovery,
`briefing, a technical tutorial and a Markman hearing the
`parties submitted, and the Court construed, 24 claims.
`Uniloc contended approximately eight aspects of PA
`infringed five independent (and multiple dependent) claims
`of the ’216 patent, under a handful of assorted theories. In
`October of 2007, this Court granted summary judgment in
`Microsoft’s favor on non-infringement. On appeal, Uniloc
`narrowed its case to Claims 12 and 19, contending the
`output of the PA algorithm [**9] constituted a ″licensee
`unique ID.″ In 2008,
`the Federal Circuit affirmed this
`Court’s claim construction but found a genuine issue of
`material fact as to whether PA uses the same algorithm on
`both the user and server side to generate licensee unique
`
`IDs, finding this Court erred in concluding that it did not. 8
`See Uniloc USA, Inc. v. Microsoft Corp., 290 Fed. Appx.
`337, 342-43 (Fed. Cir. 2008). 9
`
`[*160] Following remand, with the case narrowed and
`theories [**10] more defined, Microsoft sought leave once
`again to move pursuant to Rule 56 on several remaining
`issues of non-infringement and invalidity (some of which
`this Court did not reach the first time around and some
`newly raised). Uniloc opposed this second bite at
`the
`summary judgment apple and pressed for a trial date. The
`Court agreed with Uniloc but urged Microsoft to preview its
`arguments in its pretrial memorandum and, if appropriate,
`raise them at the Rule 50 stage. 10 Following motions in
`limine and Daubert challenges to damages experts, Uniloc
`withdrew its claim for infringement of Claim 12 the evening
`before trial began. After ten days of trial with ten live
`witnesses and ten witnesses by deposition, the jury found:
`(1) Microsoft infringed Claim 19; (2) Claim 19 was valid;
`(3) infringement was willful; and (4) Uniloc was entitled to
`$ 388,000,000 in damages.
`
`Microsoft seeks a judgment that it does not infringe Claim
`19, or alternatively that Claim 19 is invalid either because it
`is anticipated or obvious. It further contends no jury could
`reasonably have found infringement was willful, or award
`such excessive damages. Microsoft’s overall theme is that
`the jury failed to grasp the complexity of the case (and
`Microsoft’s defenses) due to Uniloc’s ″ceaseless rhetoric
`and innuendo″; Uniloc defends its verdict with vigor, saying
`Microsoft’s motions are nothing but a pitch for a ″do-over″
`in the form of a bench trial, while all this Court needs is its
`rubber stamp. For its part, Uniloc seeks enhanced damages,
`prejudgment and postjudgment interest and a permanent
`injunction.
`
`III. Judgment As a Matter of Law (JMOL) Standard of
`Review
`
`7
`
`(Trial Ex. M-9 and N-9A (DDX-69).) Though some details are disputed, these diagrams fairly represent the system.
`
`8
`
`In dissent, Chief Judge Michel would have affirmed judgment under Microsoft’s construction of licensee unique ID that this Court
`and the majority rejected: that the inputs must include at least one piece of personal information (PA uses no such inputs).
`
`9 On this point (the use of the same algorithm) there seems to be no dispute that PA does use the same algorithm on both sides of the
`system. This Court clearly made a mistake on this point, which even Microsoft acknowledged at oral argument before the Circuit. The
`parties skirmish over this in another context discussed below, but one wonders why Uniloc did not simply file a motion for
`reconsideration at the time. Perhaps time, money and aggravation could have been avoided if it had done so.
`
`10 This background gives some needed context to one of the dominant themes of Uniloc’s argument -- that Microsoft’s contentions fail
`because the jury rejected them. While this is correct as to some issues and arguments, the Court always intended to address some of
`Microsoft’s arguments for judgment as a matter of law at the appropriate [**11] time. Having been strongly opposed to allowing these
`
`arguments to be heard before trial, Uniloc’s attempt to use the verdict as a shield to Microsoft’s legitimate summary judgment motions
`
`is somewhat overreaching.
`
`Patent Owner Ex. 2005 Page 7
`
`

`

`640 F. Supp. 2d 150, *160; 2009 U.S. Dist. LEXIS 89813, **14
`
`Page 8 of 24
`
`First Circuit standards define the procedural contours of the
`instant review; HN1 Federal Circuit precedent applies on
`substantive patent law issues. See Go Med. Indus. Pty., Ltd.
`v. Inmed Corp., 471 F.3d 1264, 1272 (Fed. Cir. 2006)
`[**12] (″On procedural issues not unique to patent law, we
`apply the standard of review of the regional circuit.″).
`
`HN2 JMOL is appropriate when ″a party has been fully
`heard on an issue during a jury trial and the court finds that
`a reasonable jury would not have a legally sufficient
`evidentiary basis to find for the party on that issue.″ Fed. R.
`Civ. P. 50(a). Post-trial, JMOL is called for under Fed. R.
`Civ. P. 50(b) when the facts and inferences are one-sided
`and ″point so strongly and overwhelmingly in favor of the
`movant that a reasonable jury could not have returned the
`verdict.″ Acevedo-Diaz v. Aponte, 1 F.3d 62, 66 (1st Cir.
`1993) (internal citation omitted); see Soto-Lebron v. Fed.
`Express Corp., 538 F.3d 45, 56 (1st Cir. 2008). The Court
`must not evaluate ″the credibility of witnesses, resolve
`conflicts in testimony, or evaluate the weight of evidence,″
`but rather view the evidence in the light most favorable to
`Uniloc, giving it all fair and reasonable inferences. Gibson
`v. City of Cranston, 37 F.3d 731, 735 (1st Cir. 1994). Of
`course, review of the jury’s verdict is also affected by the
`applicable burden of proof. See Mentor [*161] H/S, Inc. v.
`Med. Device Alliance, Inc., 244 F.3d 1365, 1375 (Fed. Cir.
`2001) [**13] (noting in context of invalidity based on clear
`and convincing evidence that courts grant JMOL for the
`party bearing the burden of proof only in extreme cases).
`
`IV. Non-infringement
`
`Microsoft first asserts that there is no evidence to support
`the conclusion that it directly infringed Claim 19. It then
`argues no reasonable jury could find infringement by a
`preponderance of evidence as to four of the elements Uniloc
`was required to prove infringed: (i) ″licensee unique ID″;
`(ii) ″licensee unique ID generating means″; (iii) ″registration
`system″; and (iv) ″mode switching means.″
`
`A. Direct Infringement
`
`For reasons that will become obvious in the discussion that
`follows, the issue of direct versus indirect infringement
`received no attention at trial. In its pretrial memorandum,
`Uniloc discussed the law of direct infringement and indirect
`infringement under 35 U.S.C. § 271(b). The parties submitted
`agreed upon jury instructions on both theories. At trial, it
`was not clear which theory (or theories) Uniloc was actually
`
`pressing. Following most of the evidence, and after Microsoft
`orally summarized its Rule 50 motions, Uniloc dropped its
`request that the jury be instructed on indirect infringement.
`[**14] (See Stip. regarding Pl.’s Claims for Infringement of
`Claim 12 and for Indirect Infringement (Doc. No. 365).)
`Uniloc therefore was required to prove Microsoft directly
`infringed Claim 19. Microsoft contends that Uniloc has
`failed to prove the statutory requirements of direct
`infringement.
`
`Before confronting the substance of the dispute, there is a
`waiver hurdle to clear. Microsoft did not make this precise
`argument either before or during trial; rather, it made broad
`noninfringement arguments (literal and equivalents) at all
`stages, with limitation-specific details. HN3 Although in
`general regional circuit law governs procedural aspects of a
`JMOL motion, where (as here) the ″precise issue pertains
`uniquely to patent law″ Federal Circuit authority controls.
`Duro-Last, Inc. v. Custom Seal, Inc., 321 F.3d 1098,
`1105-06 (Fed. Cir. 2003) (holding that pre-verdict JMOL
`motion on inequitable conduct and on-sale bar did not
`preserve right to make post-verdict motion on obviousness
`where defenses required different elements of proof). The
`requisite pre-verdict specificity varies with the circumstances
`of each case, and the key inquiry is whether the motion
`fairly informs the opposing party of its
`[**15] alleged
`e