TecSec, Inc. v. Adobe Inc., et al.
Docket No. 2019-2192, -2258
PROST, REYNA, TARANTO
October 23, 2020
Brief Summary: DC incorrectly excluded evidence of induced infringement (“subjective bad faith”) but correctly found patent eligibility (“directed to improving a basic function of a computer”).
Summary: TecSec appealed DC finding direct infringement of its US 5,369,702; 5,680,452; 5,717,755; and 5,898,781 (“DCOM patents”, expired in October 2013) relating to multi-level security systems and its reduction of the jury’s damages award ($1.75 million) “to zero on the ground that there was no proof of any damages from direct infringement and the jury had rejected induced infringement” (section 271(b)) relating to the use of PDF document, including the exclusion of certain deposition testimony regarding induced infringement after March 3, 2011 (the date the DC stayed the case as to all defendants except IBM which was found not to infringe (affirmed by FC in 2012)). Adobe cross-appealed the DC’s ruling that the asserted claims are patent eligible under section 101. It is noted that in TecSec I (TecSec, FC 2013), an earlier DC decision was reversed and remanded due to its erroneous construction of “multimedia”, and another reversed for an erroneous grant of summary judgment (SJ) of noninfringement (TecSec II, FC 2016).
Regarding induced infringement, the DC “explained that the March 3, 2011 claim construction and stipulation of noninfringement made it legally impossible for Adobe to have had, after that date, the knowledge-of the infringing character of the allegedly induced customer actions-required for inducement” (Global-Tech, US 2011 (“intent element…can be established by…‘willful blindness’”); Power Int., FC 2016) and “allowing either party to present evidence would substantially prejudice the other party and would confuse the jury.” The FC panel reversed the DC’s decision to exclude evidence of inducement of infringement after March 3, 2011, explaining that “Adobe may have had the requisite knowledge of infringement if it believed (as we ultimately held in 2013) that the March 3, 2011 claim construction was incorrect, even if that construction was objectively reasonable” (Halo, US 2016 (“finding of willfulness may rest on the subjective bad faith of the infringer”); Smith & Nephew, FC 2015 (non-precedential, subject intent proven in view of DC’s prior “objectively weak” decision); Sanofi, FC 2017; AstraZeneca, FC 2010; Cheek, US 1991 (“legally unreasonable view that no tax was due”); “The Global-Tech inducement standard…can be met by proof of what Adobe in fact subjectively believed.”) The FC panel also reversed the DC’s decision precluding “TecSec from introducing its evidence of post-March 3, 2011 inducement of infringement”. The FC panel also found no error with the DC’s reduction of damages to zero since “TecSec presented no evidence of damages caused by Adobe’s direct infringement, which was the only form of infringement that the jury found Adobe to have committed.”
Regarding patentability (section 101), the FC panel concluded “that the claims are directed to improving a basic function of a computer data-distribution network, namely, network security” and affirmed the DC decision of patent eligibility (SRI, FC 2019; Solutran, FC 2019 (Alice Step 1 focuses on “the claimed advance over the prior art”)).