On February 4, 2022, the Court of Appeals for the Federal Circuit published its decision on the appeal by Apple and Broadcom of the District Court for the Central District of California’s decision in California Institute of Technology v. Broadcom Limited, et al. (Case No. 2:216-cv-03714-GW-AGR). In its decision, the Federal Circuit affirmed Apple’s and Broadcom’s infringement of two of Caltech’s patents-in-suit, affirmed the validity of the patents-in-suit, remanded for a new trial on the infringement of the third patent-in-suit, vacated the jury’s $1.1 billion damage award, and remanded for a new trial on damages.
On May 26, 2016, Caltech sued Broadcom and Apple for patent infringement, alleging certain Broadcom Wi-Fi chips and Apple devices containing those chips infringed three of Caltech’s patents relating to Wi-Fi technology. The patents-in-suit were U.S. Patents No. 7,116,710 (“the ’710 Patent”), No. 7,421,032 (“the ’032 Patent”), and No. 7,916,781 (“the ’781 Patent”). Specifically, Caltech identified two encoders within the accused Broadcom chips as the infringing products. In the trial, the jury determined Broadcom and Apple infringed all three of the patents-in-suit.
Apple and Broadcom filed post-trial motions for JMOL and a new trial, challenging the jury’s determination of infringement of the ’710 and ’032 Patents, which motions the district court denied, concluding the verdict was supported by substantial evidence. Apple and Broadcom also filed a post-trial JMOL motion and a motion for a new trial on the infringement of the ’781 Patent, arguing the district court erred by refusing Apple’s and Broadcom’s requested instruction to the jury regarding claim construction determination and that JMOL, of noninfringement, was appropriate because a requirement of the asserted claim was not satisfied. The district court denied these motions as well, concluding it was within its discretion to not issue the requested instruction to the jury.
Because of Apple’s and Broadcom’s infringement of its patents, Caltech presented a two-tier damages theory. Caltech’s damages calculation was based on the theory that it would have negotiated two different royalty rates from each of Broadcom (at the chip level) and Apple (at the device level) in December 2009, despite the infringement involved the same technology in the same chips. Caltech’s argument for this damages model was based upon the premise that the negotiations with Broadcom and Apple would have happened separately, and there would be no “cross-talk” between Apple and Broadcom. Furthermore, the damages model relied on the premise that any Broadcom chips included in Apple devices would have been excluded from Broadcom’s hypothetical chip license and would have been subject to Apple’s separate hypothetical device license, which would have been at a higher rate than the royalty rate in Broadcom’s hypothetical chip license.
After hearing Caltech’s expert testimony, the jury awarded Caltech $270.2 million in damages from Broadcom for its infringement, and $837.8 million from Apple for its infringement of the patents-in-suit. After considering pre-judgment interest, post-judgment interest, and an ongoing royalty at a rate set per the jury’s verdict, the district court found damages from Broadcom to be $288.2 million and damages from Apple to be $885.4 million, for a total damage award of over $1.1 billion.
Apple and Broadcom appealed this decision, and on the appeal, the Federal Circuit reviewed claim construction, infringement and damages, patent-eligibility, and the district court’s order denying JMOL, among other proceedings and rulings.
Regarding the ’710 and ’032 Patents, the Federal Circuit affirmed the district court’s claim construction of the term “repeat” and agreed there was substantial evidence of infringement, and further affirmed the district court’s denial of the JMOL motion related to these two patents.
Regarding the ’781 Patent, Apple and Broadcom argued the asserted patent claim is not patent-eligible because it depends on mathematical operations. However, the Federal Circuit upheld the patent-eligibility, but in its review of infringement of this patent, the Federal Circuit determined the district court erred by refusing Apple’s and Broadcom’s request to instruct the jury of the interpretation of the claim reached in summary judgment. As a result of this error, the Federal Circuit remanded the alleged infringement of the ’781 patent for a new trial.
In its review of damages, the Federal Circuit found the district court was correct to instruct the jury that it was Caltech’s burden to prove infringement occurred within the U.S. and that substantial activities of a sales transaction occurring outside of the U.S. would not constitute a U.S. sale.
However, the Federal Circuit determined Caltech’s two-tier damages model was legally unsupportable. The Federal Circuit’s primary basis for this conclusion was that even though Broadcom and Apple are separate infringers at different levels of the supply chain, the absence of additional facts that would support the separate and different treatment of the same chips at each level makes the two-tier damages model unsupported, and so the model was unjustifiably submitted to the jury. Moreover, the Federal Circuit held that “a reasonably royalty is not to be separately calculated against each successive infringer. Once full recovery is obtained from one infringer with respect to a particular infringing device, at most nominal additional damages may be awarded against another with respect to the same device,” citing Stickle v. Heublein, Inc., 716 F.2d 1550, 1562 (Fed. Cir. 1983). The Federal Circuit concluded that no facts were presented to suggest Broadcom and Apple would have been willing to negotiate in the manner proposed by Caltech and would more likely have conventionally negotiated a single license at a single rate for the infringing chips.
Link to court opinion: https://cafc.uscourts.gov/opinions-orders/20-2222.OPINION.2-4-2022_1903268.pdf
