Ericsson, Inc. v. D-Link Systems, Inc.

United States Court of Appeals

for the Federal Circuit

______________________

ERICSSON, INC., TELEFONAKTIEBOLAGET LM

ERICSSON, AND WI-FI ONE, LLC,

Plaintiffs-Appellees,

v.

D-LINK SYSTEMS, INC., NETGEAR, INC., ACER,

INC., ACER AMERICA CORPORATION, AND

GATEWAY, INC.,

Defendants-Appellants,

AND

DELL, INC.,

Defendant-Appellant,

AND

TOSHIBA AMERICA INFORMATION SYSTEMS,

INC. AND TOSHIBA CORPORATION,

Defendants-Appellants,

AND

INTEL CORPORATION,

Intervenor-Appellant,

AND

BELKIN INTERNATIONAL, INC.,

Defendant.

______________________

2 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

2013-1625, -1631, -1632, -1633

______________________

Appeals from the United States District Court for the

Eastern District of Texas in No. 10-CV-0473, Judge

Leonard Davis.

______________________

Decided: December 4, 2014

______________________

DOUGLAS A. CAWLEY, McKool Smith, P.C., of Dallas,

Texas, argued for plaintiffs-appellees Ericsson Inc., et al.

With him on the brief were THEODORE STEVENSON, III and

WARREN LIPSCHITZ, and JOHN B. CAMPBELL and KATHY H.

LI, of Austin, Texas. Of counsel on the brief was JOHN M.

WHEALAN, of Chevy Chase, Maryland.

WILLIAM F. LEE, Wilmer Cutler Pickering Hale and

Dorr LLP, of Boston, Massachusetts, argued for defend-

ants-appellants and intervenor-appellant. With him on

the brief for intervenor-appellant Intel Corporation were

JOSEPH J. MUELLER, MARK C. FLEMING, and LAUREN B.

FLETCHER, of Boston, Massachusetts; and JAMES L.

QUARLES, III, of Washington, DC. Of counsel on the brief

were GREG AROVAS, Kirkland & Ellis LLP, of New York,

New York, ADAM R. ALPER, of San Francisco, California,

and JOHN C. O’QUINN, of Washington, DC. On the brief

for defendants-appellants D-Link Systems, Inc., et al.,

were ROBERT A. VAN NEST, STEVEN A. HIRSCH, EUGENE M.

PAIGE and MATAN SHACHAM, Keker & Van Nest LLP, of

San Francisco, California; CHRISTINE M. MORGAN, DOYLE

B. JOHNSON, JONAH D. MITCHELL, SCOTT D. BAKER, Reed

Smith LLP, of San Francisco, California; and JAMES C.

MARTIN, of Pittsburgh, Pennsylvania. On the brief for

defendants-appellants Toshiba Corporation, et al., were

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 3

JOHN J. FELDHAUS and PAVAN K. AGARWAL, Foley &

Lardner LLP, of Washington, DC.

MICHAEL J. NEWTON, Alston & Bird LLP, of Dallas,

Texas, argued for defendant-appellant, Dell, Inc. With

him on the brief were DWAYNE C. NORTON and SHAUN W.

HASSETT; and FRANK G. SMITH, III, of Atlanta, Georgia.

MICHAEL A. LINDSAY, Dorsey & Whitney LLP, of Min-

neapolis, Minnesota, for amicus curiae The Institute of

Electrical and Electronics Engineers, Incorporated. Of

counsel on the brief was EILEEN M. LACH, IEEE, General

Counsel and Chief Compliance Officer, of New York, New

York.

RICHARD M. BRUNELL, for amicus curiae American

Antitrust Institute, of Washington, DC.

JEFFREY BLUMENFELD, Lowenstein Sandler LLP, of

New York, New York, for amici curiae, Cisco Systems,

Inc., et al. Of counsel on the brief was MARTA BECKWITH,

Cisco Systems, Inc., San Jose, California. On the brief for

amicus curiae Hewlett-Packard Company was BARRY K.

SHELTON, Bracewell & Giuliani, of Austin, Texas.

T. ANDREW CULBERT, Microsoft Corporation, of Red-

mond, Virginia, for amicus curiae Microsoft Corporation.

With him on the brief was DAVID E. KILLOUGH.

DAN L. BAGATELL, Perkins Coie LLP, of Phoenix, Ari-

zona, for amici Broadcom Corporation. With him on the

brief was AMANDA TESSAR, of Denver, Colorado. On the

brief for Marvell Semiconductor, Inc. was DONALD M.

FALK, Mayer Brown LLP, of Palo Alto, California. On the

brief for Media Tek Inc. was STEVEN C. HOLTZMAN, Boies,

Schiller & Flexner LLP, of Oakland, California.

4 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

RICHARD S. TAFFET, Bingham McCutchen LLP, of New

York, New York, for amicus curiae Dolby Laboratories,

Inc. On the brief was PATRICK STRAWBRIDGE, of Boston,

Massachusetts.

ROGER G. BROOKS, Cravath, Swaine & Moore LLP, of

New York, New York, for amicus curiae Qualcomm Incor-

porated.

DARYL L. JOSEFFER, King & Spalding LLP, of Wash-

ington, DC, for amici curiae Nokia Corporation, et al.

With him on the brief was ETHAN P. DAVIS.

______________________

Before O’MALLEY, TARANTO, and HUGHES, Circuit Judges.

Opinion for the court filed by Circuit Judge O’MALLEY.

Opinion dissenting in part filed by Circuit Judge

TARANTO.

O’MALLEY, Circuit Judge.

Ericsson, Inc. & Telefonaktiebolaget LM Ericsson (col-

lectively, “Ericsson”) brought suit against D-Link Sys-

tems, Inc.; Netgear, Inc.; Acer, Inc.; Acer America Corp.;

Gateway, Inc.; Dell, Inc.; Toshiba America Information

Systems, Inc.; and Toshiba Corp., with Intel Corp. inter-

vening (collectively, “D-Link”), in the United States

District Court for the Eastern District of Texas, alleging

infringement of, inter alia, certain claims from U.S.

Patent Nos. 6,424,625 (“the ’625 patent”); 6,466,568 (“the

’568 patent”); and 6,772,215 (“the ’215 patent”). All of the

patents at issue generally relate to Wi-Fi technology

employed by electronic devices to wirelessly access the

Internet. Ericsson alleged that all of the patents at issue

were essential to the Wi-Fi standard, which would mean

that all Wi-Fi-capable devices infringe Ericsson’s patents.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 5

The case progressed to a jury trial, where the jury

found that D-Link infringed the asserted claims of the

three patents and assigned roughly $10 million in damag-

es—approximately 15 cents per infringing device. After

post-trial motions, the district court upheld the jury’s

infringement and validity findings and refused to grant a

new trial based on an alleged violation of the “entire

market value rule” (“EMVR”) and allegedly deficient jury

instructions regarding the standard-setting context and

Ericsson’s “reasonable and non-discriminatory” licensing

obligations derived from that context. For the reasons

explained below, we affirm-in-part, reverse-in-part, va-

cate-in-part, and remand.

I. BACKGROUND

A. Technology and Standards Background

Interoperability is an essential requirement for many

electronic devices. For example, if a user brings her

laptop to a local coffee shop, she expects that her laptop

will charge when she plugs it in and that she will be able

to access the Internet when she connects to the coffee

shop’s wireless network. For the user to be able to charge

her laptop, the plug must be in the correct shape and the

laptop charger must be able to accept the voltage output

of the outlet. For the user to be able to connect to the

Internet, her laptop must know, inter alia, what frequen-

cy to search for the wireless signal, what messages to

send to the network to set up a connection, and how to

interpret the messages sent from the network. Though

most users take for granted that their electronic devices

will be able to charge and connect to the wireless Internet

anywhere, interoperability does not happen automatical-

ly. Because of the multitude of devices, device designers,

and manufacturers, there must be an established stand-

ard mode of operation to ensure compatibility among all of

these different devices.

6 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

Standards development organizations (“SDOs”) pub-

lish standards, which are lists of technical requirements.

Compliance with these technical requirements ensures

interoperability among compliant devices. Of course, at

least a critical mass of device developers must adopt the

standard in order to ensure mass interoperability. 1

Relevant to this case, the Institute of Electrical and

Electronics Engineers, Inc. (“IEEE”) publishes the 802.11

standards, more commonly known as “Wi-Fi.” Br. of

Amici Curiae Institute of Electrical and Electronics

Engineers, Inc. (“IEEE Br.”) at 1–2. The 802.11 standard

is the prevailing wireless internet standard and has

already reached widespread adoption. A device is consid-

ered 802.11-compliant if it adheres to the IEEE’s techno-

logical requirements stated in the 802.11 standard.

Requiring all 802.11-compliant devices to operate in a

certain way ensures that every compliant device can

communicate with all other 802.11-compliant devices. 2

For example, an 802.11-compliant laptop will be able

to establish a connection with an 802.11-compliant router.

The 802.11 standards also govern how subsequent data is

passed between the laptop and the router once that

1 A single standard will often emerge even if initial-

ly there are competing standards. For example, the Blu-

ray standard won out over the HD DVD standard in the

high-definition optical disc war. Martin Fackler, Toshiba

Acknowledges Defeat as Blu-ray Wins Format Battle, N.Y.

TIMES, February 20, 2008, at C1.

2 The 802.11 standard is not a static set of require-

ments. Indeed, it has been updated multiple times.

When the 802.11 standard is updated, it is given a letter

to indicate the version of the standard, e.g., 802.11(g).

Devices are typically compliant with a specific version of

the 802.11 standard, indicated by the letter. This case

specifically addresses the 802.11(n) standard.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 7

connection is established. This includes, inter alia, data

formatting, prioritization, error handling, and flow con-

trol.

Importantly for this case, data files are not sent be-

tween a router and a laptop in a single transmission. For

example, if a laptop user wants to download a video, the

router does not send the entire file in a single huge

transmission. Instead, each data file is broken into

“packets,” where each packet is sent in a different trans-

mission. Small files may only require a single packet,

whereas large files, e.g., video and sound, may require

thousands of packets. The receiving device then reassem-

bles the file out of the packets. The data from the file in

the packet is called the “payload.” Because packets may

be lost or arrive out of order, the 802.11 standard provides

ways to handle these errors. For example, each packet

has a “header” that is sent to the receiving device with the

packet. The header contains, inter alia, a sequence num-

ber so the receiving device knows the order in which to

reassemble the payload of the packets.

Creating some standards, like IEEE’s 802.11 stand-

ard, is a complicated process that involves the collabora-

tion and can involve cooperation of a number of interested

parties. IEEE Br. 4–12. Due to the collaborative nature

of this process, the chosen standard may include technol-

ogy developed by a number of different parties. Some-

times that technology is covered by patents. Because the

standard requires that devices utilize specific technology,

compliant devices necessarily infringe certain claims in

patents that cover technology incorporated into the

standard. These patents are called “standard essential

patents” (“SEPs”). IEEE Br. 13–14.

SEPs pose two potential problems that could inhibit

widespread adoption of the standard: patent hold-up and

royalty stacking. Patent hold-up exists when the holder

of a SEP demands excessive royalties after companies are

8 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

locked into using a standard. Royalty stacking can arise

when a standard implicates numerous patents, perhaps

hundreds, if not thousands. If companies are forced to

pay royalties to all SEP holders, the royalties will “stack”

on top of each other and may become excessive in the

aggregate. To help alleviate these potential concerns,

SDOs often seek assurances from patent owners before

publishing the standard. IEEE, for example, asks SEP

owners to pledge that they will grant licenses to an unre-

stricted number of applicants on “reasonable, and non-

discriminatory” (“RAND”) terms. IEEE Br. at 16–18.

B. Ericsson’s SEPs

Ericsson has asserted that all of the patents at issue

are SEPs for IEEE’s 802.11(n) standard. Ericsson prom-

ised to offer licenses for all of its 802.11(n) SEPs at a

RAND rate via letters of assurance to the IEEE. In its

letters, Ericsson pledged to “grant a license under reason-

able rates to an unrestricted number of applicants on a

worldwide basis with reasonable terms and conditions

that are demonstrably free of unfair discrimination.”

Joint Appendix (“J.A.”) 17253. The parties agree that this

commitment is binding on Ericsson. See also IEEE Br.

19–20.

1. The ’568 Patent

The ’568 patent, titled “Multi-Rate Radio-

communication Systems and Terminals,” describes priori-

tizing packets based on the type of payload in the packet.

The prioritization of packets is important because net-

works all have a bandwidth limitation. Bandwidth refers

to the amount of data that can be sent across the network

at one time. When a network receives multiple requests

at the same time, it must be able to respond to all of the

requests in a timely fashion. Due to the network’s band-

width limitation, however, the messages cannot be sent

all at once. Though networks can deal with the band-

width limitation problem in different ways, each method

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 9

involves dividing the available bandwidth among the

outstanding requests.

The ’568 patent explains that networks transmit a va-

riety of different types of payloads, including “voice, video,

and data.” According to the ’568 patent, networks in the

prior art did not have the ability to prioritize certain types

of data over others. Because certain types of transmis-

sions are less preferable when delayed—e.g., voice call-

ing—the ’568 patent discloses transmitting the type of

transmission as part of the header. This would allow the

network to dedicate more bandwidth to the higher priori-

ty transmission types, thereby sending those packets

more quickly.

Claims 1 and 5 are at issue in this appeal. Claim 1 is

representative:

1. A communications station comprising:

a processor for arranging information for trans-

mission including providing at least one first field

in which payload information is disposed and

providing at least one second field, separate from

said first field, which includes a service type iden-

tifier which identifies a type of payload infor-

mation provided in said at least one first field; and

a transmitter for transmitting information re-

ceived from said processor including said at least

one first field and said at least one second field.

’568 patent col. 13 ll. 11–21 (emphasis added).

2. The ’215 Patent

As described above, files are broken into packets,

which are sent to the receiving device with sequence

numbers so the receiving device can reassemble the

payload in the correct order. Packets, however, are often

lost or corrupted during transmission. To ensure that the

receiver receives the payload in those lost or corrupted

10 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

packets, the transmitter will have to resend those pack-

ets. For the transmitter to know which packets need to be

resent, the receiving device must tell the transmitting

device which packets it did not receive or are corrupted.

This may be done using an “Automatic Repeat Request”

(“ARQ”) protocol. In an ARQ protocol, the receiving

device will send a “feedback response” to the transmitting

device. Though feedback response messages can be in

different formats, the feedback response will generally

indicate which packets, if any, are missing or corrupted.

The transmitting device will then retransmit those miss-

ing packets.

Although ARQ protocols existed in the prior art, the

’215 patent, titled “Method for Minimizing Feedback

Responses in ARQ Protocols,” asserts that those prior art

ARQ protocols wasted bandwidth because they were

“static” and not adaptable. By making the feedback

response type dynamic, the ’215 patent discloses that the

response could be formatted in the most efficient response

type. For example, if 1 packet out of 100 is missing, just

the missing packet number could be sent. Conversely, if

50 out of 100 packets are missing, the response could be a

bitmap with a bit set to one to indicate the missing pack-

ets, instead of a list of all 50 missing packet numbers. To

solve this alleged deficiency in the prior art, the ’215

patent discloses adding a “type identifier field” (“TIF”) to

the feedback response that identifies the format of that

feedback response. This would allow the receiver to

choose dynamically between different types of feedback

responses based on which response would be most effi-

cient, e.g., a list of packet numbers or a bitmap.

Claim 1 is the independent claim at issue:

1. A method for minimizing feedback responses in

an ARQ protocol, comprising the steps of:

sending a plurality of first data units over a com-

munication link;

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 11

receiving said plurality of first data units; and

responsive to the receiving step, constructing a

message field for a second data unit, said message

field including a type identifier field and at least

one of a sequence number field, a length field, and

a content field.

’215 patent col. 10 ll. 19–28 (emphasis added).

3. The ’625 Patent

Due to technical limitations, prior art receiving devic-

es used a limited “reception window” for keeping track of

which packets it had received. Because this reception

window was finite, if the receiving device received a

packet outside of the window, it would not accept the

packet. The window would not move forward until it

received all of the packets in the current window. This

process ensures that the receiver will receive all of the

missing packets. For certain “delay sensitive applica-

tions,” however, a 0% packet loss rate is not required and

significantly delayed packets provide no benefit—e.g.,

“telephony, video conferencing, and delay sensitive control

systems.” ’625 patent col. 3 ll. 51–53.

According to the ’625 patent, prior art transmitting

devices had no way to tell the receiving device to ignore

unnecessary, missing packets and shift the receiving

window forward. The ’625 patent discloses adding a way

for the transmitting device to force the receiving device to

accept packets that may be out of its reception window.

This will also shift the reception window forward and the

receiving device will forget about the delayed or lost

packets that would no longer provide any benefit.

Claim 1 is at issue in this appeal:

1. A method for discarding packets in a data net-

work employing a packet transfer protocol includ-

12 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

ing an automatic repeat request scheme, compris-

ing the steps of:

a transmitter in the data network commanding a

receiver in the data network to a) receive at least

one packet having a sequence number that is not

consecutive with a sequence number of a previous-

ly received packet and b) release any expectation of

receiving outstanding packets having sequence

numbers prior to the at least one packet; and

the transmitter discarding all packets for which

acknowledgment has not been received, and which

have sequence numbers prior to the at least one

packet.

’625 patent col. 10 ll. 13–26 (emphases added).

C. The Accused Products

The accused infringers in this case produce a variety

of electronic devices, including laptop computers and

routers (“the end products”), which incorporate 802.11(n)

wireless chips made by Intel. Because all of these end

products incorporate 802.11(n)-compliant chips, they

must be capable of the functionality mandated by the

802.11(n) standard.

For example, the standard requires that, in the head-

er of an 802.11(n)-compliant packet, there must be a

traffic identifier (“TID”) field that indicates the priority of

the data. This TID field has a value from 0–7, which

indicates its priority. Packages with higher priority

typically will be sent more quickly or given more band-

width than those with lower priority. And the standard

explains that one use of this TID identifier is to associate

particular values with particular types of information

inside packages—to correspond to a particular kind of

payload—as indicated in the following table giving an

example:

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 13

J.A. 15781. In this table, each priority is given an in-

formative “Designation.” For example, priority levels 4

and 5 are given the designation “Video.”

For further examples of required functionality, the

802.11(n) standard also requires feedback response head-

ers to include information about the type of feedback

response in the BlockAck field:

J.A. 16778. The 802.11(n) standard allows three different

types of feedback responses: Basic BlockAck, Compressed

BlockAck, and Multi-TID BlockAck. Sending this infor-

mation as part of the header is mandatory for interopera-

bility between devices.

14 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

All 802.11(n)-compliant devices, moreover, must be

capable of accepting any packets they receive. In other

words, 802.11(n)-compliant devices do not use a limited

reception window. The receiver is just programmed to

receive automatically all packets, regardless of the pack-

et’s sequence number.

D. The Dell-Ericsson AB Agreement

Dell argues on appeal that it has a license to practice

the patents at issue based on its prior agreement with

Ericsson AB. Ericsson AB is a Swedish manufacturing

and development subsidiary of LM Ericsson. LM Ericsson

is the Swedish parent corporation of Ericsson AB and

owns the patents-in-suit. LM Ericsson and its North

American subsidiary, Ericsson, Inc., are the two plaintiffs-

appellees in the suit.

On February 13, 2008, Ericsson AB and Dell executed

a Master Purchase Agreement (“MPA”), under which

Ericsson AB would provide Dell with mobile broadband

products for three years from the date of execution of the

MPA. Ericsson AB is the only named “supplier” listed in

the MPA, as well as the only signatory to the MPA aside

from Dell. The MPA also separately defined Ericsson

AB’s “Affiliates.” At issue in this appeal, Section 12.1 of

the MPA, entitled “Dispute Resolution,” stated that

“[s]upplier will not commence any lawsuit or seek any

judicial order affecting Dell or add Dell as a party to any

pending legal or administrative proceeding that is not

directly related to Dell’s purchase of Products or that may

prevent Dell from shipping any Dell or third-party prod-

ucts.” J.A. 6348 (emphasis added).

E. Procedural History

On September 14, 2010, Ericsson filed suit in the

United States District Court for the Eastern District of

Texas, accusing D-Link of infringing nine patents that,

according to Ericsson, were essential to the 802.11(n)

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 15

wireless standard. Intel, the wireless internet chip sup-

plier for the accused products, intervened. On March 8,

2013, the magistrate judge issued a claim construction

order, which the district court judge adopted. Ericsson

Inc. v. D-Link Corp. (“Claim Construction Order”), No.

6:10-cv-473, 2013 WL 949378 (E.D. Tex. Mar. 8, 2013).

Shortly before trial, the trial judge denied D-Link’s mo-

tion to exclude the testimony of Ericsson’s damages

expert, over D-Link’s argument that the testimony violat-

ed the EMVR. Prior to trial, the court also granted sum-

mary judgment against Dell, rejecting its argument that

it had a license based on the MPA.

Although the parties were forced to narrow the case

for trial, Ericsson still accused D-Link of infringing 5

different patents at trial. On June 13, 2013, after a 7-day

jury trial, the jury found that D-Link infringed the assert-

ed claims in three of Ericsson’s patents—the ’568, ’215,

and ’625 patents. The jury also found that the ’625 patent

was valid over a prior art publication (“the Petras refer-

ence”). As past damages for that infringement, the jury

awarded Ericsson approximately $10 million—roughly 15

cents per infringing device. After the jury trial, the trial

court conducted a separate bench trial regarding several

RAND issues. 3

3 At the bench trial, D-Link asked the district court

to: (1) determine an appropriate RAND rate, (2) find that

Ericsson breached its RAND agreement by refusing to

license Intel, and (3) find that Ericsson is not entitled to

an injunction. D-Link concedes that it proffered evidence

to the trial court regarding Ericsson’s RAND obligations

that it did not offer to the jury, despite its argument to

the jury that any royalty rate chosen must be reflective of

those RAND obligations. It is unclear why D-Link made

this choice, particularly because D-Link refused to be

bound by any court-determined royalty rate. Once the

16 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

Following the bench trial, D-Link filed a motion for

judgment as a matter of law (“JMOL”) and a new trial,

arguing that the jury’s findings of infringement and no

invalidity, as well as its damages award, were not sup-

ported by substantial evidence. D-Link further contended

that Ericsson’s expert violated the EMVR by relying on

licenses that were based on the value of the end products.

D-Link asserted, moreover, that the jury was inadequate-

ly instructed regarding Ericsson’s RAND obligation.

The trial court denied D-Link’s post-trial motions,

finding that substantial evidence supported: (1) the jury’s

findings of infringement; (2) the validity of the ’625 pa-

tent; and (3) the jury’s $10 million award. The judge also

concluded that Ericsson’s damages testimony was not

inconsistent with the EMVR and that the jury instruction

regarding Ericsson’s RAND obligations was adequate.

The judge further found that, based on the jury’s award,

15 cents per product was an appropriate ongoing RAND

rate for the three infringed patents. Ericsson Inc. v. D-

Link Corp. (“JMOL Order”), No. 6:10-cv-473, 2013 WL

4046225 (E.D. Tex. Aug. 6, 2013). According to the trial

court, moreover, Ericsson did not violate its RAND obliga-

tions by offering Intel a license at the rate of 50 cents per

unit. In fact, the court concluded that it was Intel that

violated its obligation to negotiate a royalty rate in good

faith. Id. at *16.

D-Link timely appealed to this court. We have juris-

diction under 28 U.S.C. § 1295(a)(1) (2012).

jury had set the RAND rate, the judge rejected D-Link’s

invitation to separately determine the award at the bench

trial. D-Link does not appeal that ruling, arguing only

that the jury was not adequately instructed about Erics-

son’s RAND obligations, not that the court should have

made that decision.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 17

II. DISCUSSION

On appeal, D-Link raises a number of issues: (1)

whether the jury had substantial evidence to find that D-

Link infringed claims 1 and 5 of the ’568 patent; (2)

whether the district court properly construed the term

“responsive to the receiving step, constructing a message

field for a second data unit, said message field including a

type identifier field” in the ’215 patent, and, if the district

court correctly construed that term, whether the jury had

substantial evidence to find that D-Link infringed claims

1 and 2 of the ’215 patent; (3) whether the jury had sub-

stantial evidence to find that D-Link infringed claim 1 of

the ’625 patent and that the Petras reference did not

anticipate the ’625 patent; (4) whether Ericsson’s damag-

es theory was presented in violation of the EMVR; (5)

whether the jury was instructed properly regarding

Ericsson’s RAND obligations; and (6) whether Dell had a

license to practice the patents at issue based on its

agreement with Ericsson AB. We address each issue in

turn.

A. Infringement

We first address D-Link’s challenges to the infringe-

ment findings. We review the trial court’s decision on a

motion for JMOL under the law of the regional circuit, in

this case, the Fifth Circuit. Verizon Servs. Corp. v. Cox

Fibernet Va., Inc., 602 F.3d 1325, 1331 (Fed. Cir. 2010).

The Fifth Circuit reviews the denial of a motion for JMOL

de novo, but the “jury’s verdict can only be overturned if

there is no legally sufficient evidentiary basis for a rea-

sonable jury to find as the jury did.” Miller v. Raytheon

Co., 716 F.3d 138, 144 (5th Cir. 2013). We review issues

of patent law applying this court’s case law. Claim con-

struction is an issue of law reviewed de novo. Lighting

Ballast Control LLC v. Philips Elecs. N. Am. Corp., 744

F.3d 1272, 1276–77 (Fed. Cir. 2014) (en banc). Infringe-

ment and anticipation are issues of fact reviewed for

18 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

substantial evidence. 01 Communique Lab., Inc. v. Log-

MeIn, Inc., 687 F.3d 1292, 1296 (Fed. Cir. 2012); In re

Montgomery, 677 F.3d 1375, 1379 (Fed. Cir. 2012).

1. The ’568 Patent

D-Link contends that the jury did not have substan-

tial evidence to find infringement of the asserted claims of

the ’568 patent, specifically with respect to the “service

type identifier which identifies a type of payload infor-

mation” limitation. Neither party challenges the district

court’s construction of that limitation as “an identifier

that identifies the type of information conveyed in the

payload. Examples of types of information include, but

are not limited to, video, voice, data, and multimedia.”

Claim Construction Order, 2013 WL 949378, at *11.

To prove literal infringement, the patentee must show

that the accused device contains each and every limitation

of the asserted claims. Presidio Components, Inc. v. Am.

Tech. Ceramics, Corp., 702 F.3d 1351, 1358 (Fed. Cir.

2012).

Before the jury, Ericsson relied on the TID field value

in the 802.11(n) standard to meet the service type identi-

fier limitation. Ericsson’s expert testified that each TID

field contains an integer that establishes a priority of

service. According to Ericsson’s expert, each TID value

may be assigned an “informative” designation: Back-

ground, Best Effort, Video, or Voice. Ericsson’s expert

further stated that devices need to implement the TID

field in order to be compliant with the 802.11(n) standard.

Ericsson’s expert pointed to several programs that “take

advantage” of the “informative” use of the TID capability

to assign TID values to payloads of a particular type. J.A.

1395–96 (testifying that CSipSimple, Skype, Ekiga, and

Windows Media take advantage of the TID capability).

Ericsson also presented an Intel document, recommend-

ing that developers utilize the TID field based on the

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 19

informative designation categories described by the

802.11(n) standard.

D-Link’s expert, on the other side, countered that the

TID designations are used to prioritize packets, but do not

identify the type of information contained in the payload’s

packet, e.g., a text email can be sent using the Video

designation. D-Link’s expert testified that the he ran

tests on video and voice programs that did not assign

different TID numbers for video and voice data. In other

words, the program assigned a TID designation of zero,

regardless of the type of data in the payload. On cross

examination, however, D-Link’s expert admitted that he

also observed some traffic in which the TID designation

did correspond to the content of the payload. Indeed,

when presented with his own expert report, D-Link’s

expert admitted that at least one program—Ekiga, a video

conferencing program—used the video TID designation

for its packets with a video payload. In fact, D-Link’s own

expert testified that Ekiga was “using the [’568] inven-

tion.” J.A. 1568 (“A. Ekiga is using the invention, you

said? Q. Yes. That’s what you tested, right? A. Yes.”).

The jury, using the district court’s construction for

service type identifier, found that D-Link infringed claims

1 and 5 of the ’568 patent. The district court denied D-

Link’s subsequent JMOL motion, explaining that D-Link’s

evidence that the TID designation does not always corre-

spond to the payload is, “[a]t best, . . . evidence show[ing]

[its] products can be configured in a non-infringing man-

ner.” JMOL Order, 2013 WL 4046225, at *6.

On appeal, D-Link first argues that, under the district

court’s proper construction, the service type identifier

must “identif[y] the type of information conveyed in the

payload.” Claim Construction Order, 2013 WL 949378, at

*11 (emphasis added). D-Link insists that the TID field

relates only to priority and does not identify the payload

of the packet. D-Link asserts that Ericsson’s infringe-

20 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

ment contentions for the ’568 patent are thus premised on

the mere “capability of infringement.” According to D-

Link, it was an error for the judge to instruct the jury that

“[a]n accused system or product directly infringes a claim

if it is reasonably capable of satisfying the claim elements

even though it may also be capable of non-infringing

modes of operation.” Appellants’ Br. 35. D-Link argues

that mere capability does not constitute infringement

unless the claim language is “drawn to capability.” Appel-

lants’ Br. 36 (citing Finjan, Inc. v. Secure Computing,

Corp., 626 F.3d 1197, 1204 (Fed. Cir. 2010); Ball Aerosol

& Specialty Container, Inc. v. Limited Brands, Inc., 555

F.3d 984, 994 (Fed. Cir. 2009)). D-Link asserts, moreover,

that Ericsson failed to show any programs that actually

assign TID values according to their informative designa-

tions, e.g., voice and video.

Ericsson responds that the jury’s finding of infringe-

ment of the asserted claims of the ’568 patent was sup-

ported by substantial evidence, including testimony by

Ericsson’s expert and the chart showing the informative

designations presented to the jury. Ericsson further

contends that D-link’s own technical expert’s tests re-

vealed traffic that corresponded to the correct TID desig-

nations. Ericsson also points to Intel’s instruction

manual that urges developers to use the correct TID

designations for the various types of data. According to

Ericsson, moreover, this court has repeatedly held that a

product infringes if it is reasonably capable of satisfying

the claimed elements. For example, Ericsson argues that,

in Finjan, this court “held that where an apparatus claim

is styled as a component ‘for’ performing some function,

the claim is drawn to capability and the reasonable capa-

bility test applies.” Appellees’ Br. 33 (citing Finjan, 626

F.3d at 1204–05).

We are unpersuaded by D-Link’s argument that the

jury did not have substantial evidence to find infringe-

ment of claims 1 and 5 of the ’568 patent. We recognize

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 21

that the evidence showed that the TID field does not

always identify its payload type. Indeed, D-Link’s ex-

pert’s testimony that many programs did not utilize the

TID field according to the informative designations was

unchallenged. D-Link’s expert, however, also admitted

that at least one video calling program “us[ed] the inven-

tion.” J.A. 1568. Furthermore, Ericsson’s expert testified

as to several examples of programs running on the ac-

cused devices where the TID field indicated the type of

payload.

We understand that the TID field may be inherently

only a priority field. But that field necessarily has the

capability to be used to identify the payload type, as

shown by the informative example in the standard and by

the proof that it was in fact so used by some device users.

Crucially, this capability satisfies the patent claim lan-

guage here, which means all accused devices could be

found by the jury to infringe.

In Fantasy Sports Properties, Inc. v. Sportsline.com,

Inc., 287 F.3d 1108 (Fed. Cir. 2002), we held that software

for playing fantasy football could infringe a claim covering

a “computer for playing football.” 287 F.3d at 1118.

Though a user must install and activate functions in the

software to infringe the claims, the Fantasy Sports opin-

ion explained that the user is only activating means that

are already present in the underlying software. Id. In

Ball Aerosol, on the other hand, the patent claimed an

apparatus arranged in a certain manner. We reversed a

grant of summary judgment of infringement because the

claims were not drawn to capability and there was no

evidence that the accused device “was ever placed in the

infringing configuration.” 555 F.3d at 995.

In Finjan, we found that the system claims at issue

described “capabilities,” without describing any software

components that must be “active” or “enabled.” For

example, the claim language in Finjan required “a logical

22 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

engine for preventing execution” and “a communications

engine for obtaining a Downloadable.” Finjan, 626 F.3d

at 1204–05 (emphases added in opinion). In Finjan, we

found that, in order for the accused system to infringe, the

logical engine only needed to be reasonably capable of

“preventing execution” and the communications engine

only needed to be reasonably capable of “obtaining a

Downloadable.” Id. Our court explained further in Versa-

ta, that, “[w]hile ‘a device does not infringe simply be-

cause it is possible to alter it in a way that would satisfy

all the limitations of a patent claim,’ . . . an accused

product ‘may be found to infringe if it is reasonably capa-

ble of satisfying the claim limitation.’” Versata Software,

Inc. v. SAP Am., Inc., 717 F.3d 1255, 1262 (Fed. Cir. 2013)

(quoting Finjan, 626 F.3d at 1204). In Versata, we found

that the patentee presented evidence that, if a user fol-

lowed the accused infringer’s own instructions, the system

would operate in an infringing manner. Id. at 1263. In

sum, when the asserted claims recite capability, our case

law supports finding infringement by a “reasonably

capable” accused device on a case-by-case basis particular-

ly where, as here, there is evidence that the accused

device is actually used in an infringing manner and can be

so used without significant alterations. See J.A. 1568 (“A.

Ekiga is using the invention, you said? Q. Yes. That’s

what you tested, right? A. Yes.”); see also Ball Aerosol,

555 F.3d at 995.

The asserted claims of the ’568 patent are most simi-

lar to the claim at issue in Finjan. Both use language

reciting capability, as opposed to actual operation. Com-

pare Finjan, 626 F.3d at 1204–05 (system claims reciting

“a logical engine for preventing execution” and “a commu-

nications engine for obtaining a Downloadable” (empha-

ses added)), with ’568 patent col. 13 ll. 12–18 (“a processor

for arranging information for transmission . . . which

identifies a type of payload information . . . .” (emphasis

added)). Accordingly, just as the accused system in Fin-

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 23

jan only needed to have components that are reasonably

capable of “preventing execution” and “obtaining a Down-

loadable” to infringe, Finjan, 626 F.3d at 1204–05, D-

Link’s products only need to have a component that is

reasonably capable of “arranging information for trans-

mission . . . which identifies a type of payload information

. . . .” ’568 patent col. 13 ll. 12–18. Furthermore, similar

to the evidence the patentee presented in Versata, Erics-

son presented evidence that Intel—the 802.11-compliant

chip producer—instructed developers to use the TID field

in an infringing manner. See Versata, 717 F.3d at 1263.

We therefore find that the jury could properly base its

infringement finding on the reasonable capability of the

unmodified accused devices.

For the foregoing reasons, we hold that substantial

evidence supports the jury’s finding that D-Link infringed

claims 1 and 5 of the ’568 patent.

2. The ’215 Patent

D-Link challenges the district court’s construction of

the term “responsive to the receiving step, constructing a

message field for a second data unit, said message field

including a type identifier field” in the ’215 patent. Even

if we affirm the district court’s construction of that term,

according to D-Link, the jury did not have substantial

evidence to find infringement of claims 1 and 2 of the ’215

patent. We first consider the proper scope of the claims

before comparing the construed claims to the accused

devices. See Absolute Software, Inc. v. Stealth Signal,

Inc., 659 F.3d 1121, 1129 (Fed. Cir. 2011).

a. Claim Construction

Generally, claim terms should be given their ordinary

and customary meaning to a person having ordinary skill

in the art at the time of the effective date of the patent

application. Phillips v. AWH Corp., 415 F.3d 1303, 1312–

13 (Fed. Cir. 2005) (en banc). To ascertain the scope and

24 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

meaning of the asserted claims, we look to the words of

the claims themselves, the specification, the prosecution

history, and any relevant extrinsic evidence. Id. at 1315–

17. This inquiry typically begins and ends with the

intrinsic evidence. In fact, the specification is the single

best guide to the meaning of the claim terms; it is usually

dispositive. Id. at 1318 (“[T]he specification ‘is always

highly relevant to the claim construction analysis. Usual-

ly, it is dispositive . . . .” (internal citations omitted)).

D-Link challenges the district court’s construction of

“responsive to the receiving step, constructing a message

field for a second data unit, said message field including a

type identifier field” as “responsive to the receiving step,

generating a message field including a field that identifies

the message type of the feedback response message from a

number of different message types.” Claim Construction

Order, 2013 WL 949378, at *4–6. D-Link argues that the

district court should have adopted its proposed construc-

tion: “responsive to the receiving step, generating a mes-

sage field including a field identifying the type of feedback

response that is selected from multiple available feedback

responses in order to minimize the size or number of

feedback responses.” Id. at *4 (emphasis added). In

essence, D-Link contends that the “type identifier field”

must be used to “select[] from multiple available feedback

responses” and “minimize the size or number of feedback

responses.” Id.

D-Link asserts that, because the entire specification

of the ’215 patent emphasizes that the point of the inven-

tion is to select the feedback response that minimizes the

size or number of feedback responses, we must limit the

scope of the claims to capture the scope of the actual

invention. Ericsson responds that the district court

properly excluded the two extraneous limitations—

selecting and minimizing—in its construction. Because

none of the language cited by D-Link amounts to a clear

disavowal of the claim scope, Ericsson contends that we

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 25

should not read limitations from the specification into the

claims.

We agree with Ericsson that D-Link’s proposed con-

struction improperly reads limitations from the specifica-

tion into the claims. Although the claims must be read in

light of the specification, it is important that we “avoid

importing limitations from the specification into the

claims.” Phillips, 415 F.3d at 1323. We recognize that

there is a fine distinction between these two concepts, but

we must, as always, draw this distinction from the point

of a view of a person of ordinary skill in the art. Id.

Although the ’215 patent envisions that the type identifier

field be used to select the most efficient format of feed-

back response, the specification never requires the selec-

tion of the feedback response type that minimizes the size

or number of feedback responses. See id. at 1326–27

(“The fact that the written description of the [] patent sets

forth multiple objectives to be served by the baffles recited

in the claims confirms that the term ‘baffles’ should not be

read restrictively to require that the baffles in each case

serve all of the recited functions.”). The type identifier

field actually serves another purpose—one distinct from

the proposed selecting and minimizing functions—it must

identify the type of feedback response. This purpose is

encompassed by the district court’s construction. Alt-

hough the type identifier field may be used to select and

minimize, a person of ordinary skill would not read those

limitations into the claims when the field has another

purpose as well.

D-Link relies on Metabolite Laboratories, Inc. v. La-

boratory Corp. of America Holdings, 370 F.3d 1354 (Fed.

Cir. 2004) to argue that we should use the preamble of the

asserted claim to limit our construction. In Metabolite, we

stated that “[a] preamble may provide context for claim

construction, particularly, where as here, that preamble’s

statement of intended use forms the basis for distinguish-

ing the prior art in the patent’s prosecution history.” 370

26 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

F.3d at 1362 (emphasis added). D-Link omits the itali-

cized part of the Metabolite quote in its briefs, likely

because the selection and minimization requirements

were not used as the basis for distinguishing the prior art

in the prosecution history of the ’215 patent. Indeed, the

addition of the type identifier field, which identifies the

type of feedback response, is a sufficient basis for distin-

guishing the prior art. This is reflected in the district

court’s correct construction because the message field

must “includ[e] a field that identifies the message type of

the feedback response message from a number of different

message types.” Claim Construction Order, 2013 WL

949378, at *4 (emphasis added).

We therefore hold that the district court correctly did

not read the additional limitations D-Link identifies into

the “type identifier field” term of the ’215 patent; we adopt

the district court’s construction.

b. Infringement

D-Link argues that, even under the district court’s

construction, the jury did not have substantial evidence to

find that the accused devices met the “responsive to the

receiving step, constructing a message field for a second

data unit, said message field including a type identifier

field” step in the asserted claims of the ’215 patent.

A method claim is directly infringed when someone

practices every step of the patented method. Cardiac

Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348,

1359 (Fed. Cir. 2009). In order to prove induced in-

fringement, the patentee must show that the alleged

infringer performs, or induces another party to perform,

every single step in the method. Limelight Networks, Inc.

v. Akamai Techs., Inc., 572 U.S. __, 134 S. Ct. 2111, 2117

(2014). Inducement requires that the alleged infringer

“knowingly induced infringement and possessed specific

intent to encourage another’s infringement.” DSU Med.

Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006).

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 27

At trial, Ericsson presented evidence in the form of

expert testimony that all 802.11(n)-compliant products,

including the accused products, must send an appropriate

response in the BlockAck field. Furthermore, Ericsson

presented evidence that the BlockAck field must indicate

one of three different feedback response types. D-Link, to

the contrary, presented evidence that, although the

accused devices send messages that contained the Block-

Ack field, the accused products only use one type of feed-

back response type. D-Link argued that, because its

products only use a single feedback response, the accused

product could not satisfy the “from a number of different

message types” limitation.

The jury found that D-Link infringed claims 1 and 2

of the ’215 patent. In denying D-Link’s subsequent JMOL

motion, the district court explained that whether the use

of a single feedback response meets the “from a number of

different message types” limitation is precisely the type of

factual question that is to be resolved by a jury. The

district court clarified that the jury was authorized to find

direct infringement of a method claim by D-Link if its

products automatically perform the disputed steps with-

out user modification. JMOL Order, 2013 WL 4046225,

at *9 (citing SiRF Tech., Inc. v. Int’l Trade Comm’n, 601

F.3d 1319, 1331 (Fed. Cir. 2010)). The district court

reasoned that, because the accused products performed

the claimed method when operated by D-Link’s customers

without any modification, a finding of direct infringement

was justified. Regarding indirect infringement, the

district court found that Ericsson had presented substan-

tial evidence that D-Link possessed the requisite intent

because they continued to sell 802.11(n)-compliant devices

even after receiving notice of the patents.

On appeal, D-Link argues that, under the district

court’s construction, the feedback response message type

must be generated “from a number of different message

types.” Claim Construction Order, 2013 WL 949378, at *4

28 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

(emphasis added). According to D-Link, because the

accused products always send a single type of feedback

response, a jury did not have substantial evidence to find

infringement. D-Link further asserts that, under Federal

Circuit law, a party that sells a product containing in-

structions to perform a patented method does not directly

infringe the method. Appellants’ Br. 46–47 (citing Aristo-

crat Techs. Australia Pty Ltd. v. Int’l Game Tech., 709

F.3d 1348, 1362 (Fed. Cir. 2013); Ricoh Co. v. Quanta

Comp. Inc., 550 F.3d 1325 (Fed. Cir. 2008)). Regarding

induced infringement, moreover, D-Link contends that

Ericsson did not present sufficient facts from which a jury

could conclude that it knew the induced acts constituted

infringement. According to D-Link, knowledge of the

patents plus advertising compliance with 802.11(n) is not

enough evidence upon which to base a finding of induced

infringement.

Ericsson responds that the claim language does not

require that the accused products send multiple types of

feedback responses, only that they have a field that

“identifies the message type.” According to Ericsson,

because the accused products must utilize the BlockAck

field to be compliant with the 802.11(n) standard, the jury

had substantial evidence to find infringement. According

to Ericsson, moreover, the Ricoh case relied on by D-Link

applies only to software, not to “hard-wired” devices that

will automatically perform the infringing steps. Ericsson

asserts that, like the accused products in SiRF, D-Link

designs the accused products to perform the method steps

automatically whenever the products are used. According

to Ericsson, substantial evidence supports the finding of

induced infringement, including evidence that D-Link

advertises 802.11(n) compliance and submits its products

for interoperability testing and certification.

We must address two different issues: (1) whether the

jury had substantial evidence to find that the BlockAck

field was selected “from a number of different message

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 29

types” and (2) whether the jury had substantial evidence

to find direct or indirect infringement by D-Link. First,

we agree with the district court and Ericsson that the jury

had substantial evidence to find that using the BlockAck

field meets the “from a number of different message

types” step. Claim Construction Order, 2013 WL 949378,

at *4. Nothing in the court’s proper construction requires

that multiple different feedback response types actually

be used. Indeed, we have already rejected D-Link’s

proposed construction that would have added this re-

quirement. At trial, Ericsson presented evidence that the

802.11(n) standard allows multiple types of feedback

responses. It is undisputed, moreover, that the accused

devices send the code identifying the feedback response

type in the BlockAck field, as required by the 802.11(n)

standard. Although the accused devices only use one type

of feedback response, the jury had substantial evidence to

find that the accused devices can perform the method

claimed in the ’215 patent. Indeed, this is precisely the

type of factual dispute that a jury should be resolving.

Because the asserted claim is a method claim, howev-

er, the accused devices must also actually perform that

method. See Cardiac Pacemakers, 576 F.3d at 1359.

Although the jury was instructed on both direct and

indirect infringement, the verdict form only indicated that

the jury found that D-Link infringed claims 1 and 2 of the

’215 patent. In other words, the verdict did not distin-

guish between direct and indirect infringement. For the

reasons explained below, we must address both D-Link’s

direct and indirect infringement arguments.

The district court relied on SiRF to conclude that the

jury properly found that D-Link directly infringed the

method claim by selling the accused products. In SiRF,

this court affirmed the International Trade Commission’s

finding that the manufacturer of GPS systems directly

infringed the asserted method claims. SiRF, 601 F.3d at

1331. The method claims at issue in SiRF required some,

30 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

but not all, of the steps of the claim to be executed by a

satellite, which was controlled by the accused infringers.

The remaining steps were then automatically performed

by the accused GPS products, which were in possession of

the end users. Id. at 1329–30. In SiRF, accordingly, we

concluded that, on these facts, it was the accused infring-

ers that performed all the steps required for direct in-

fringement, not the customers who possessed the GPS

products. Id. at 1331.

In Ricoh, on the other hand, we held “that a party

that sells or offers to sell software containing instructions

to perform a patented method does not infringe the patent

under § 271(a).” Ricoh, 550 F.3d at 1335. The Ricoh

court explained that there is a difference between the

instructions contained in software and the process within

the meaning of § 271(a). Our other decisions echo the

idea from Ricoh that the direct infringer must actually

perform the steps in the method claim. See, e.g., Aristo-

crat Techs., 709 F.3d at 1362 (noting that to prove direct

infringement the patentee must show “each and every

step of the method or process was performed” by either

the accused infringer personally or “through another

acting under [the accused infringer’s] direction or con-

trol”); Akamai Techs., Inc. v. Limelight Networks, Inc.,

692 F.3d 1301, 1307 (Fed Cir. 2012) (“[F]or a party to be

liable for direct patent infringement under 35 U.S.C.

§ 271(a), that party must commit all the acts necessary to

infringe the patent, either personally or vicariously.”),

overruled on other grounds, 134 S. Ct. 2111; Travel Sen-

try, Inc. v. Tropp, 497 F. App’x 958, 965 (Fed. Cir. 2012)

(holding that a party is liable for direct infringement of a

method claim only if that party exercises “control or

direction” over the performance of each step of the claim,

including those the party does not itself perform); Lucent

Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1317 (Fed.

Cir. 2009) (finding sale of software alone does not directly

infringe method claims of patent and seller can only be

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 31

liable for infringement as contributor and/or inducer);

Ormco Corp. v. Align Tech., Inc., 463 F.3d 1299, 1311

(Fed. Cir. 2006) (“Method claims are only infringed when

the claimed process is performed, not by the sale of an

apparatus that is capable of infringing use.”).

Contrary to Ericsson’s assertions, our decision in

SiRF did not create direct infringement liability whenever

an alleged infringer sells a product that is capable of

executing the infringing method. Our decision in SiRF is

not applicable here because all of the steps of the method

in claims 1 and 2 of the ’215 patent are performed on the

end product, which is controlled by a third party. See

SiRF, 601 F.3d at 1331. Unlike the method in SiRF,

there are no steps automatically performed by equipment

controlled by D-Link. In fact, none of our decisions have

found direct infringement of a method claim by sales of an

end user product which performs the entire method, and

we decline to do so here. Because Ericsson cannot point to

any evidence in the record that D-Link performed the

infringing steps, or that any of its customers were under

its direction or control, the jury did not have substantial

evidence to find direct infringement of claims 1 and 2 of

the ’215 patent.

Importantly, however, the district court did not in-

struct the jury that D-Link could directly infringe a

method claim if the accused products were used to execute

the patented steps. D-Link does not dispute the legal

propriety of the direct infringement instructions. This

means that, if the jury found direct infringement, it was a

factual error, not a legal error. Although we think that it

would have been a factual error for the jury to find direct

infringement of the method claims by D-Link itself, that

error is not enough to set aside the jury verdict because

the jury’s finding also could have been premised on indi-

rect infringement. See i4i Ltd. P’ship v. Microsoft Corp.,

598 F.3d 831, 849 (Fed. Cir. 2010) (stating that a general

verdict will not be set aside “‘simply because the jury

32 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

might have decided on a ground that was supported by

insufficient evidence,’” but rather jury verdict should be

upheld if there is sufficient evidence to support any of the

plaintiff’s alternative factual theories) (quoting Walther v.

Lone Star Gas Co., 952 F.2d 119, 126 (5th Cir. 1992)); cf.

Griffin v. United States, 502 U.S. 46 (1991) (holding that a

general verdict should be invalidated when one of the

possible bases was based on legal error).

We agree with the district court and Ericsson that the

jury had substantial evidence to find that D-Link induced

infringement of claims 1 and 2 of the ’215 patent. Erics-

son presented evidence that D-Link knew about the

patents and knew that the patents potentially were

essential to the 802.11(n) standard—a standard with

which D-Link intentionally complied. D-Link countered

by presenting evidence that it did not think its actions

constituted infringement of any of the claims of the ’215

patent. Making findings of fact by weighing evidence—

such as the evidence presented by the parties regarding

induced infringement—is the role of the jury. Questions

of intent are quintessential jury questions. See Allen

Organ Co. v. Kimball Int’l, Inc., 839 F.2d 1556, 1567 (Fed.

Cir. 1988) (“Intent is a factual determination particularly

within the province of the trier of fact.”). We cannot say

that the jury did not have substantial evidence to find

induced infringement and we decline to supplant the

jury’s factual findings with our own. E.g., Lucent, 580

F.3d at 1323 (“Having perused the evidence, we agree

with Microsoft that the evidence is not strong, but we are

not persuaded that the jury was unreasonable in finding

that Microsoft possessed the requisite intent to induce at

least one user of its products to infringe the claimed

methods.”).

For these reasons, we affirm the jury’s finding of in-

fringement of claims 1 and 2 of the ’215 patent.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 33

3. The ’625 Patent

D-Link argues on appeal that the jury did not have

substantial evidence to find that the accused devices

infringed claim 1 of the ’625 patent or find the patent

valid over the Petras prior art reference. We examine

each of the jury’s findings in turn.

a. Infringement

At trial, Ericsson argued that every transmitted data

packet acts as its own “command to receive” from the

transmitter. Ericsson’s expert testified that all 802.11(n)-

compliant receivers automatically accept all packets, even

if those packets are out of order. Ericsson contended that

this was just like an embodiment of the ’625 patent where

every packet is commanding the receiver to accept an out-

of-order packet. D-Link countered that, because the

normal operation of 802.11(n)-compliant receivers is to

accept all packets, there is no “command to receive” from

the transmitter. D-Link insisted that Ericsson failed to

present any evidence that a normal packet will release

the receiver from expectations of receiving outstanding

packets.

The jury found that D-Link infringed claim 1 of the

’625 patent. The district court refused to grant D-Link’s

request for a JMOL, explaining that the jury was entitled

to credit Ericsson’s expert over D-Link’s expert.

D-Link argues on appeal that the accused products

are already programmed to accept all valid data packets

and do not need to be commanded by the transmitter to

accept out-of-order packets. D-Link contends that this

means the jury’s finding is not supported by substantial

evidence. According to D-Link, Ericsson’s expert admit-

ted that regular packet transmissions could not act as a

command to receive because the receivers already had the

ability to receive the packets. D-Link explains that,

34 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

because the receiver already had the ability to receive, the

transmitter did not command the receiver to do anything.

Ericsson responds that its expert testified at trial that

the accused products met each and every limitation of the

claims in the ’625 patent. According to Ericsson, the fact

that a receiver must receive a packet from the transmit-

ter, even if out of order, qualifies the message as a “com-

mand to receive.” Ericsson emphasizes that the patent

conceived of an embodiment where the “command to

receive” is sent with every single message.

We agree with D-Link that the jury did not have sub-

stantial evidence to find that the accused products in-

fringe claim 1 of the ’625 patent. The asserted claim of

the ’625 patent requires that “a transmitter . . . com-

mand[] a receiver . . . to a) receive at least one packet . . .

and b) release any expectation of receiving outstanding

packets. . . .” ’625 patent col. 10 ll. 16–21 (emphases

added). But there is no evidence in the record that it is

the transmitter in the accused devices that commands the

receiver to receive the out-of-order packets and release

expectations of receiving earlier packets. Instead, all of

Ericsson’s evidence confirms that the receiver automati-

cally handles out-of-order packets. In other words, the

transmitter does not command the receiver to do any-

thing. The receiver just operates as programmed to

handle out-of-order packets, regardless of the messages

that the transmitter sends. Indeed, Ericsson’s expert

admitted that the receivers already have the ability to

accept all packets. J.A. 1412–13 (“Question: If a receiver

could receive a packet that a transmitter was sending to

it, is it correct that you would not need the command to

receive in the ’625 patent to command or force the receiv-

er to receive the packet? Answer: I mean, that almost

seems like a tautology. If it could receive, then would you

need to insist that it receives it? No, because it could

already receive it.”). In other words, the transmitter does

not command the receiver to accept the packets.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 35

Because no reasonable jury could have found that the

accused products meet each and every limitation of claim

1 of the ’625 patent, we reverse the district court’s refusal

to grant JMOL of no infringement as to that patent.

b. Invalidity

D-Link argued at trial that the Petras reference, a

prior art publication, anticipated claim 1 of the ’625

patent. A claim is anticipated only if each and every

limitation is found either expressly or inherently in a

single prior art reference. Whitserve, LLC v. Computer

Packages, Inc., 694 F.3d 10, 21 (Fed. Cir. 2012). Because

patents are presumed valid, anticipation must be proven

by clear and convincing evidence. Id.

The Petras reference discloses one type of ARQ proto-

col where the transmitter can send a “discard message” to

the receiver. The discard message informs the receiver

that a message will not be resent. The following figure

from Petras is illustrative:

J.A. 15041. In this figure, the transmitter first sends

packets 0–3 to the receiver before the receiver sends back

its first feedback responses. Due to delay and packet loss,

when the transmitter is first notified that the receiver did

not receive packet number 2—the second I(X)-SREJ(2)

message—the transmitter has already deleted packet 2.

The transmitter will then inform the receiver that it can

ignore packet number 2 by sending the discard packet

message—the I(5)-DISCARD(2) message.

36 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

At trial, D-Link argued that a discard message acts as

the “command to receive” from the transmitter. Erics-

son’s expert testified against this theory, explaining that

the discard messages were not commands to receive;

discard messages were merely notifications that the

transmitter had discarded a packet. The jury found that

Petras did not anticipate the ’625 patent, and the district

court refused to overturn that finding.

On appeal, D-Link argues that Petras discloses send-

ing a discard message, which “commands” the receiver to

stop waiting for delayed packets and shift its reception

window forward to receive later packets. Ericsson re-

sponds that substantial evidence supports the jury’s

finding of no anticipation, pointing to its expert’s testimo-

ny that packet discard messages were well known in the

prior art. Ericsson also asserts that D-Link’s expert

testimony was inconsistent, so the jury was correct to

discredit his testimony.

We agree with the district court and Ericsson that

substantial evidence supports the jury’s finding that

Petras did not anticipate the ’625 patent. D-Link’s argu-

ments on appeal essentially ask us to credit its position on

discard messages over Ericsson’s. We decline to do so.

Both parties presented expert testimony regarding

whether Petras anticipates the ’625 patent, and we see no

reason why the jury was not entitled to credit Ericsson’s

evidence over D-Link’s evidence. We therefore see no

reason to disturb the jury’s verdict.

B. Damages

Having affirmed infringement with respect to two pa-

tents, we must also address the damages issues raised by

D-Link. As explained below, we vacate the jury’s damag-

es award and remand for further proceedings consistent

with this opinion.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 37

We review decisions on motions for a new trial and

the admission of expert testimony under the law of the

regional circuit. Verizon, 602 F.3d at 1331. The Fifth

Circuit reviews the denial of a new trial motion for abuse

of discretion, reversing only if there is an “an absolute

absence of evidence to support the jury’s verdict.” Duff v.

Werner Enters., Inc., 489 F.3d 727, 729 (5th Cir. 2007).

The Fifth Circuit reviews the trial court’s admission or

exclusion of expert testimony for an abuse of discretion.

Snap-Drape, Inc. v. Comm’r, 98 F.3d 194, 197 (5th Cir.

1996).

We review de novo the legal sufficiency of a jury in-

struction on an issue of patent law. Sulzer Textil A.G. v.

Picanol N.V., 358 F.3d 1356, 1363 (Fed. Cir. 2004). A

jury verdict will be set aside only if the jury instructions

were “legally erroneous” and the “errors had prejudicial

effect.” Id.

1. Admissibility of License Evidence

Before trial, D-Link moved to exclude certain testi-

mony by Ericsson’s damages expert, arguing that it

violated the EMVR. Specifically, D-Link argued that,

because the damages calculations were, in part, based on

licenses which were themselves tied to the entire value of

the licensed products, even though the technology being

licensed related to only a component of those products, the

testimony was impermissible as a matter of law. In

denying that motion, the district court explained that

Ericsson’s expert’s reference to those prior licenses was

not improper because the expert properly apportioned

any damages calculations based on those licenses to

account for the value of the patents at issue. D-Link

noted its objection to this line of testimony at trial by

entering a continuing objection to Ericsson’s expert’s

testimony to the extent it was predicated on or made any

reference to these licenses. J.A. 1437–38 at 4:37–5:13. At

trial, both Ericsson and D-Link then referred to the value

38 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

of laptops generally. J.A. 1325 at 11:24–12:21; J.A. 1332

at 37:22–38:11. After the jury found infringement and

awarded Ericsson 15 cents per infringing device, D-Link

moved for JMOL and for a new trial, arguing that the

admission of this expert testimony violated the EMVR.

The district court denied both motions.

On appeal, D-Link argues that the district court prej-

udicially erred by: (1) not excluding Ericsson’s damages

expert’s testimony on the challenged licenses, and (2)

allowing Ericsson’s counsel to compare the cost of the end

product to the requested royalty at trial. According to D-

Link, because Ericsson did not dispute that the asserted

claims are practiced entirely by the Wi-Fi chips—not by

other components of the accused end products—Ericsson

should never have been allowed to base its damages

award or its arguments at trial on the price of the end

products.

Ericsson responds that the jury award of 15 cents per

infringing product is consistent with comparable Ericsson

licenses, insisting that our court has found comparable

licenses to be the best evidence of a reasonable royalty

rate. Ericsson further argues that the jury award is

consistent with “industry norms” and in accord with its

damages expert’s testimony. According to Ericsson, its

expert conducted a rigorous analysis, which separated the

value of the patents at issue from any other patents

covered by the licenses he referenced. Because of this

apportionment, Ericsson asserts that neither its damages

calculation nor its expert’s reference to actual industry

licenses was improper, under the EMVR or otherwise.

With respect to counsel’s reference to the cost of laptops at

trial, Ericsson argues that D-Link never objected to these

references, and made similar references itself.

We conclude that the district court properly admitted

evidence of the licenses to which D-Link objects and that

any objection to counsel’s references to the cost of items

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 39

incorporating the allegedly infringing chips was waived.

While a number of our cases have referred to the concept

of an entire market value “rule,” the legal standard actu-

ally has two parts, which are different in character.

There is one substantive legal rule, and there is a sepa-

rate evidentiary principle; the latter assisting in reliably

implementing the rule when—in a case involving a per-

unit royalty—the jury is asked to choose a royalty base as

the starting point for calculating a reasonable royalty

award.

As we explained recently in VirnetX, Inc. v. Cisco Sys-

tems, Inc., 767 F.3d 1308 (Fed. Cir. 2014), where multi-

component products are involved, the governing rule is

that the ultimate combination of royalty base and royalty

rate must reflect the value attributable to the infringing

features of the product, and no more. 767 F.3d at 1326

(citing Garretson v. Clark, 111 U.S. 120, 121 (1884)). As a

substantive matter, it is the “value of what was taken”

that measures a “reasonable royalty” under 35 U.S.C.

§ 284. Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235

U.S. 641, 648 (1915). What is taken from the owner of a

utility patent (for purposes of assessing damages under

§ 284) is only the patented technology, and so the value to

be measured is only the value of the infringing features of

an accused product.

When the accused infringing products have both pa-

tented and unpatented features, measuring this value

requires a determination of the value added by such

features. Indeed, apportionment is required even for non-

royalty forms of damages: a jury must ultimately “appor-

tion the defendant’s profits and the patentee’s damages

between the patented feature and the unpatented fea-

tures” using “reliable and tangible” evidence. Garretson,

111 U.S. at 121. Logically, an economist could do this in

various ways—by careful selection of the royalty base to

reflect the value added by the patented feature, where

that differentiation is possible; by adjustment of the

40 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

royalty rate so as to discount the value of a product’s non-

patented features; or by a combination thereof. The

essential requirement is that the ultimate reasonable

royalty award must be based on the incremental value

that the patented invention adds to the end product.

Our cases have added to that governing legal rule an

important evidentiary principle. The point of the eviden-

tiary principle is to help our jury system reliably imple-

ment the substantive statutory requirement of

apportionment of royalty damages to the invention’s

value. The principle, applicable specifically to the choice

of a royalty base, is that, where a multi-component prod-

uct is at issue and the patented feature is not the item

which imbues the combination of the other features with

value, care must be taken to avoid misleading the jury by

placing undue emphasis on the value of the entire prod-

uct. It is not that an appropriately apportioned royalty

award could never be fashioned by starting with the

entire market value of a multi-component product—by,

for instance, dramatically reducing the royalty rate to be

applied in those cases—it is that reliance on the entire

market value might mislead the jury, who may be less

equipped to understand the extent to which the royalty

rate would need to do the work in such instances. See

LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d

51, 67, 68 (Fed. Cir. 2012) (barring the use of too high a

royalty base—even if mathematically offset by a “‘low

enough royalty rate’”—because such a base “carries a

considerable risk” of misleading a jury into overcompen-

sating, stating that such a base “‘cannot help but skew the

damages horizon for the jury’” and “make a patentee’s

proffered damages amount appear modest by comparison”

(quoting Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d

1292, 1320 (Fed. Cir. 2011))). Thus, where the entire

value of a machine as a marketable article is “properly

and legally attributable to the patented feature,” the

damages owed to the patentee may be calculated by

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 41

reference to that value. Id. Where it is not, however,

courts must insist on a more realistic starting point for

the royalty calculations by juries—often, the smallest

salable unit and, at times, even less. VirnetX, 767 F.3d at

1327–28.

We apply these concepts to a challenge to expert tes-

timony regarding licenses in which royalties were set by

reference to the value of an end product. We conclude

that the expert testimony about which D-Link complains

violated neither the rule from Garretson regarding appor-

tionment, nor the evidentiary principle demanding an

appropriate balance between the probative value of ad-

mittedly relevant damages evidence and the prejudicial

impact of such evidence caused by the potential to mis-

lead the jury into awarding an unduly high royalty. We

find, accordingly, that the district court did not err by

failing to exercise its discretion under Federal Rule of

Evidence 403 to exclude the license testimony at issue

here. Uniloc, 632 F.3d at 1320; see LaserDynamics, 694

F.3d at 77–78 (finding that the district court abused its

discretion by failing to exclude a license under Federal

Rule of Evidence 403).

This court has recognized that licenses may be pre-

sented to the jury to help the jury decide an appropriate

royalty award. See, e.g., Monsanto Co. v. McFarling, 488

F.3d 973, 978 (Fed. Cir. 2007) (“An established royalty is

usually the best measure of a ‘reasonable’ royalty for a

given use of an invention . . . .”); Georgia-Pacific Corp. v.

U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y.

1970) (finding that “royalties received by the patentee for

the licensing of the patent in suit” is a relevant factor for

the jury to consider). Prior licenses, however, are almost

never perfectly analogous to the infringement action.

VirnetX, 767 F.3d at 1330. For example, allegedly compa-

rable licenses may cover more patents than are at issue in

the action, include cross-licensing terms, cover foreign

intellectual property rights, or, as here, be calculated as

42 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

some percentage of the value of a multi-component prod-

uct. Testimony relying on licenses must account for such

distinguishing facts when invoking them to value the

patented invention. Recognizing that constraint, howev-

er, the fact that a license is not perfectly analogous gener-

ally goes to the weight of the evidence, not its

admissibility. See Apple Inc. v. Motorola, Inc., 757 F.3d

1286, 1326 (Fed. Cir. 2014) (“Here, whether these licenses

are sufficiently comparable such that Motorola’s calcula-

tion is a reasonable royalty goes to the weight of the

evidence, not its admissibility.”); accord ActiveVideo

Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312,

1333 (Fed. Cir. 2012) (“Although we may not have decided

these evidentiary issues the same way had we presided

over the trial, the district court did not abuse its discre-

tion.”). In each case, district courts must assess the

extent to which the proffered testimony, evidence, and

arguments would skew unfairly the jury’s ability to ap-

portion the damages to account only for the value at-

tributable to the infringing features.

As the testimony at trial established, licenses are

generally negotiated without consideration of the EMVR,

and this was specifically true with respect to the Ericsson

licenses relating to the technology at issue. Making real

world, relevant licenses inadmissible on the grounds D-

Link urges would often make it impossible for a patentee

to resort to license-based evidence. Such evidence is

relevant and reliable, however, where the damages testi-

mony regarding those licenses takes into account the very

types of apportionment principles contemplated in Gar-

retson. In short, where expert testimony explains to the

jury the need to discount reliance on a given license to

account only for the value attributed to the licensed

technology, as it did here, the mere fact that licenses

predicated on the value of a multi-component product are

referenced in that analysis—and the district court exer-

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 43

cises its discretion not to exclude such evidence—is not

reversible error. 4

We do conclude, however, that, when licenses based

on the value of a multi-component product are admitted,

or even referenced in expert testimony, the court should

give a cautionary instruction regarding the limited pur-

poses for which such testimony is proffered if the accused

infringer requests the instruction. The court should also

ensure that the instructions fully explain the need to

apportion the ultimate royalty award to the incremental

value of the patented feature from the overall product. As

to the first, while D-Link did ask for a generic instruction

on the EMVR, it did not ask for an instruction specifically

referencing the licenses or the testimony relating thereto

about which it objected. On the second, while the court

told the jury about the Georgia-Pacific factors—which do

take the concepts of apportionment into account to some

extent—it did not separately caution the jury about the

importance of apportionment. 5 As explained in Section

B.2 below, we need not determine whether D-Link pre-

served its objections to these instructions or, if it did,

whether it was prejudiced by the instructions actually

given on these issues, because we vacate the damages

award for other reasons.

As noted, D-Link also argues that the district court

prejudicially erred by allowing Ericsson’s counsel to

4 Because D-Link does not challenge the methodol-

ogy used by Ericsson’s damages expert, we need not

consider the propriety of his apportionment analysis. See

Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597

(1993).

5 While factors 9 and 13 of the Georgia-Pacific fac-

tors allude to apportionment concepts, we believe a sepa-

rate instruction culled from Garretson would be preferable

in future cases.

44 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

reference the total cost of a laptop when discussing the

requested royalty rate. We find that D-Link waived this

argument. D-Link’s continuing objection only applied to

Ericsson’s expert’s reference to the prior licenses. See J.A.

1437–38 at 4:37–5:13. Nowhere in the record does D-Link

object to counsel’s reference to the market value of a

laptop at trial. In fact, D-Link actually referred to the

value of its own end products on crossexamination. And

D-Link failed to raise this issue in its post-trial motions.

See J.A. 1332 at 37:22–38:11. We see no prejudice or

injustice that would require us to address this issue for

the first time on appeal and we therefore decline to do so.

See Novo Nordisk A/S v. Becton Dickinson & Co., 304

F.3d 1216, 1220 (Fed. Cir. 2012) (“Although appellate

tribunals are not prohibited from taking remedial action

when it is apparent that prejudice or unfairness entered

the trial and the interest of justice requires, ‘counsel for

the defense cannot as a rule remain silent, interpose no

objections, and after a verdict has been returned seize for

the first time on the point that the comments to the jury

were prejudicial.’” (quoting United States v. Socony-

Vacuum Oil Co., 310 U.S. 150, 238–39 (1940))).

2. The District Court’s RAND Jury Instruction

Because Ericsson was obligated to license the patents

at issue on RAND terms, D-Link asked the district court

to instruct the jury on that RAND obligation. Among

other things, D-Link requested that the district court

instruct the jury regarding the dangers of patent hold-up

and royalty stacking in RAND-related contexts. Rather

than adopt the language D-Link proposed, the district

court granted D-Link’s request only in part. The court

added a sixteenth factor to the 15 Georgia-Pacific factors

on which it instructed the jury, telling the jury that it

“may consider . . . Ericsson’s obligation to license its

technology on RAND terms.” J.A. 226. After the jury

returned its infringement verdict and assigned damages,

the district court denied D-Link’s motions for JMOL and a

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 45

new trial based on its failure to provide more detailed

instructions on RAND issues.

On appeal, D-link argues that enforcing RAND com-

mitments is critical to preserving the benefits of stand-

ards and must be considered in any damages award.

According to D-Link, the district court reversibly erred by

giving the jury the customary Georgia-Pacific factors

because many of those either are not applicable, or may

be misleading, in the RAND context. D-Link further

contends that the district court erred by refusing to

instruct the jury to consider patent hold-up and royalty

stacking.

Ericsson responds that the district court did not err in

refusing to instruct the jury about patent hold-up and

royalty stacking because the Georgia-Pacific factors

already encompassed these concerns, and to the extent

they did not, the inclusion of a “sixteenth” factor referring

to Ericsson’s RAND obligations was sufficient. According

to Ericsson, a jury instruction regarding patent hold-up or

royalty stacking would have been inappropriate because

D-Link failed to present any evidence regarding either

patent hold-up or royalty stacking to the jury. We agree

with both D-Link and Ericsson, to some extent.

This is an issue of first impression for us. To our

knowledge, only three other courts have considered the

issue of appropriate RAND royalty rates—all district

courts. See Realtek Semiconductor, Corp. v. LSI Corp.,

No. C-12-3451, 2014 WL 2738216, at *5–6 (N.D. Cal. June

16, 2014); In re Innovatio IP Ventures, LLC Patent Litig.,

No. 11 C 9308, 2013 WL 5593609 (N.D. Ill. Oct. 3, 2013);

Microsoft Corp. v. Motorola, Inc., No. C10-1823JLR, 2013

WL 2111217 (W.D. Wash. Apr. 25, 2013). 6

6 The issue in Microsoft was whether Motorola had

breached its contractual obligation to offer a RAND

46 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

license to Microsoft. Because the jury needed to deter-

mine whether Motorola’s offer letters were in fact RAND

offers, the Microsoft court analyzed the facts to find a

range of appropriate values. In doing so, the court creat-

ed a modified set of Georgia-Pacific factors to consider

when the patents are encumbered by RAND contracts,

noting that a number of the unmodified factors do not

adequately address the RAND situation. Microsoft, 2013

WL 2111217, at *18–20.

In Innovatio, the parties asked the district court to

calculate the appropriate RAND royalty rate for a group

of 802.11 SEPs. The Innovatio court largely adopted the

methodology used in Microsoft, but made a few modifica-

tions. Innovatio, 2013 WL 5593609, at *6–7. The Innova-

tio court presented the concepts relevant to a RAND rate,

including patent hold-up, royalty stacking, and incentiviz-

ing inventors to participate in the standard-setting pro-

cess. The court then explained that, based on these

considerations, the royalty rate: (1) must distinguish

between the intrinsic value of the technology and the

value of the standardization of that technology; (2) take

into account what part of the standard the patent actually

covers; and (3) must be high enough to ensure that inno-

vators have appropriate incentive to invest in future

developments and contribute their inventions to the

standard-setting process. Id. at *8–12.

In Realtek, the district court upheld the jury’s patent

infringement damages award in a RAND patent case,

explaining that the jury’s award was supported by sub-

stantial evidence. Realtek, 2014 WL 2738216, at *5–6.

The Realtek court’s jury instruction informed the jury it

“should not consider LSI’s advantage resulting from the

standard’s adoption, if any. However, you may consider

any advantage resulting from the technology’s superiori-

ty.” Realtek Semiconductor, Corp. v. LSI Corp. (“Realtek

Jury Instruction”), No. C-12-3451, ECF No. 267, 21 (N.D.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 47

a. The district court’s use of the Georgia-Pacific factors

Although we have never described the Georgia-Pacific

factors as a talisman for royalty rate calculations, district

courts regularly turn to this 15-factor list when fashioning

their jury instructions. Indeed, courts often parrot all 15

factors to the jury, even if some of those factors clearly are

not relevant to the case at hand. And, often, damages

experts resort to the factors to justify urging an increase

or a decrease in a royalty calculation, with little explana-

tion as to why they do so, and little reference to the facts

of record. See WhitServe, LLC v. Computer Packages,

Inc., 694 F.3d 10, 31–32 (Fed. Cir. 2012) (“We do not

require that witnesses use any or all of the Georgia-

Pacific factors when testifying about damages in patent

cases. If they choose to use them, however, reciting each

factor and making a conclusory remark about its impact

on the damages calculation before moving on does no

more than tell the jury what factors a damages analysis

could take into consideration.”). In this case, the district

court included all 15 Georgia-Pacific factors in its damag-

es instruction—over objection—without considering their

relevance to the record created at trial.

In a case involving RAND-encumbered patents, many

of the Georgia-Pacific factors simply are not relevant;

many are even contrary to RAND principles. See Br. of

Amici Curiae American Antitrust Institute (“AAI Br.”)

11–20 (arguing that the Georgia-Pacific factors are not

Cal. February 10, 2014). The Realtek court further in-

structed the jury to use a two-step approach to determine

the RAND royalty rate: (1) “compar[e] the technical

contribution of the two LSI patents to the technical con-

tributions of other patents essential to the standard” and

(2) “consider the contribution of the standard as a whole

to the market value of Realtek’s products utilizing the

standard.” Id. at 23.

48 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

appropriate for determining RAND royalties). For exam-

ple, factor 4 is “[t]he licensor’s established policy and

marketing program to maintain his patent monopoly by

not licensing others to use the invention or by granting

licenses under special conditions designed to preserve

that monopoly.” Georgia-Pacific, 318 F. Supp. at 1120.

Because of Ericsson’s RAND commitment, however, it

cannot have that kind of policy for maintaining a patent

monopoly. See Microsoft, 2013 WL 2111217, at *18.

Likewise, factor 5—“[t]he commercial relationship be-

tween the licensor and licensee”—is irrelevant because

Ericsson must offer licenses at a non-discriminatory rate.

Georgia-Pacific, 318 F. Supp. at 1120; see Microsoft, 2013

WL 2111217, at *18.

Several other Georgia-Pacific factors would at least

need to be adjusted for RAND-encumbered patents—

indeed, for SEP patents generally. For example, factor 8

accounts for an invention’s “current popularity,” which is

likely inflated because a standard requires the use of the

technology. Georgia-Pacific, 318 F. Supp. at 1120. Factor

9—“utility and advantages of the patented invention over

the old modes or devices,” J.A. 225—is also skewed for

SEPs because the technology is used because it is essen-

tial, not necessarily because it is an improvement over the

prior art. Factor 10, moreover, considers the commercial

embodiment of the licensor, which is also irrelevant as the

standard requires the use of the technology. Other factors

may also need to be adapted on a case-by-case basis

depending on the technology at issue. Consequently, the

trial court must carefully consider the evidence presented

in the case when crafting an appropriate jury instruction.

In this case, the district court erred by instructing the

jury on multiple Georgia-Pacific factors that are not

relevant, or are misleading, on the record before it, includ-

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 49

ing, at least, factors 4, 5, 8, 9, and 10 of the Georgia-

Pacific factors. 7

Trial courts should also consider the patentee’s actual

RAND commitment in crafting the jury instruction.

Ericsson agrees that it is under a binding obligation to

license the patents at issue on the RAND terms it pledged

to the IEEE. The district court should have turned to the

actual RAND commitment at issue to determine how to

instruct the jury. In this case, Ericsson promised that it

would “grant a license under reasonable rates to an

unrestricted number of applicants on a worldwide basis

with reasonable terms and conditions that are demon-

strably free of unfair discrimination.” J.A. 17253. Rather

than instruct the jury to consider “Ericsson’s obligation to

license its technology on RAND terms,” J.A. 226, the trial

court should have instructed the jury about Ericsson’s

actual RAND promises. “RAND terms” vary from case to

case. A RAND commitment limits the market value to

(what the patent owner can reasonably charge for use of)

the patented technology. The court therefore must inform

the jury what commitments have been made and of its

obligation (not just option) to take those commitments

into account when determining a royalty award.

To be clear, we do not hold that there is a modified

version of the Georgia-Pacific factors that should be used

for all RAND-encumbered patents. Indeed, to the extent

D-Link argues that the trial court was required to give

instructions that mirrored the analysis in Innovatio or

Microsoft, we specifically reject that argument. See Oral

Argument at 16:16, Ericsson, Inc. v. D-Link Sys., Inc.,

7 Reference to irrelevant Georgia-Pacific factors

would not—in most instances—be sufficiently prejudicial

to warrant reversal. Here, however, we find the combina-

tion of errors in the jury instructions merit the remand we

order.

50 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

2013-1625, available at http://oralarguments.cafc.

uscourts.gov/default.aspx?fl=2013-1625.mp3 (“Our argu-

ment was the following on RAND and it doesn’t rely upon

any of the evidence that went in during the two hour jury

wave portion. It relies upon the request for instructions,

basically building on the Innovatio decision by Judge

Holderman and the Microsoft decision by Judge Robart . .

. .”). 8 We believe it unwise to create a new set of Georgia-

Pacific-like factors for all cases involving RAND-

encumbered patents. Although we recognize the desire

for bright line rules and the need for district courts to

start somewhere, courts must consider the facts of record

when instructing the jury and should avoid rote reference

to any particular damages formula.

b. Apportionment analysis for SEPs

As with all patents, the royalty rate for SEPs must be

apportioned to the value of the patented invention.

Garretson, 111 U.S. at 121; see also Westinghouse Elec. &

Mfg. Co. v. Wagner Elec. & Mfg. Co., 225 U.S. 604, 617

(1912) (“[Plaintiff] was only entitled to recover such part

of the commingled profits as was attributable to the use of

its invention.”). When dealing with SEPs, there are two

special apportionment issues that arise. First, the pa-

tented feature must be apportioned from all of the unpat-

ented features reflected in the standard. Second, the

patentee’s royalty must be premised on the value of the

patented feature, not any value added by the standard’s

8 We express no opinion on the methodologies em-

ployed in these district court cases—which may yet come

before this court—or on their applications to the facts at

issue there. The facts in those cases, and the decision-

makers involved, differ from those at issue here. We

address only the record before us and what a jury must be

instructed when RAND-encumbered patents are at issue

and the jury is asked to set a RAND royalty rate.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 51

adoption of the patented technology. These steps are

necessary to ensure that the royalty award is based on the

incremental value that the patented invention adds to the

product, not any value added by the standardization of

that technology. 9

Just like modern electronic devices, technological

standards include multiple technologies. We know that

patents often claim only small portions of multi-

component products and we have precedent which covers

apportionment of damages in those situations. See, e.g.,

Garretson, 111 U.S. at 121; Uniloc, 632 F.3d at 1318;

Lucent, 580 F.3d at 1336. Similarly, SEPs can, and, often

do, claim only limited aspects of the overall standard.

For example, the 802.11 standard encompasses nu-

merous technologies to enable devices to communicate

with each other via wireless network connection. This

includes, among many other things, technologies on link

establishment, security protocols, error control, and flow

control. By way of example, the ’568 patent, at best, only

covers the ability of the system to prioritize time-sensitive

payloads by informing the system what type of data is in

each transmission. This is only a small aspect of the

802.11(n) standard. Indeed, based on the record in this

case, it is undisputed that some programs do not even

take advantage of this 802.11(n) standard capability. The

’215 patent, moreover, at best covers the ability to send

different feedback response types. Again, based on the

9 As we recognized in VirnetX, these tasks are not

always easy and would be difficult to do with precision.

We accept the fact that the jury should be told of its

obligation to approximate the value added by the patent-

ed invention and that a degree of uncertainty in setting

that value is permissible. VirnetX, 767 F.3d at 1328

(citing Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512,

517 (Fed. Cir. 1995)).

52 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

undisputed record, some 802.11(n) standard products do

not use more than one type of feedback message.

Just as we apportion damages for a patent that covers

a small part of a device, we must also apportion damages

for SEPs that cover only a small part of a standard. In

other words, a royalty award for a SEP must be appor-

tioned to the value of the patented invention (or at least

to the approximate value thereof), not the value of the

standard as a whole. A jury must be instructed accord-

ingly. Our decision does not suggest that all SEPs make

up only a small part of the technology in the standard.

Indeed, if a patentee can show that his invention makes

up “the entire value of the” standard, an apportionment

instruction probably would not be appropriate. Garretson,

111 U.S. at 121.

Turning to the value of a patent’s standardization, we

conclude that Supreme Court precedent also requires

apportionment of the value of the patented technology

from the value of its standardization. In Garretson, the

Supreme Court made clear that, “[w]hen a patent is for an

improvement, and not for an entirely new machine or

contrivance, the patentee must show in what particulars

his improvement has added to the usefulness of the ma-

chine or contrivance. He must separate its results dis-

tinctly from those of the other parts, so that the benefits

derived from it may be distinctly seen and appreciated.”

Garretson, 111 U.S. at 121 (emphases added). In other

words, the patent holder should only be compensated for

the approximate incremental benefit derived from his

invention.

This is particularly true for SEPs. When a technology

is incorporated into a standard, it is typically chosen from

among different options. Once incorporated and widely

adopted, that technology is not always used because it is

the best or the only option; it is used because its use is

necessary to comply with the standard. In other words,

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 53

widespread adoption of standard essential technology is

not entirely indicative of the added usefulness of an

innovation over the prior art. Id. This is not meant to

imply that SEPs never claim valuable technological

contributions. We merely hold that the royalty for SEPs

should reflect the approximate value of that technological

contribution, not the value of its widespread adoption due

to standardization.

Because SEP holders should only be compensated for

the added benefit of their inventions, the jury must be

told to differentiate the added benefit from any value the

innovation gains because it has become standard essen-

tial. Although the jury, as the fact finder, should deter-

mine the appropriate value for that added benefit and

may do so with some level of imprecision, we conclude

that they must be told to consider the difference between

the added value of the technological invention and the

added value of that invention’s standardization. Indeed,

Ericsson admitted at oral argument that the value of

standardization should not be incorporated into the

royalty award. Oral Argument at 55:25 (“Q: You agree

that it is error to allow [the jury] to include the value from

the standardization? A: In the rate, not in the base. . . .

The rate must be attributable to the value of the inven-

tion.”). By way of example, the Realtek court instructed

the jury that it “should not consider LSI’s advantage

resulting from the standard’s adoption, if any. However,

you may consider any advantage resulting from the

technology’s superiority.” Realtek Jury Instruction, ECF

No. 267, 21.

c. Instructions on patent hold-up and royalty stacking

D-Link argues that the jury should have been in-

structed on the concepts of patent hold-up and royalty

stacking because it argues that the jury should know the

mischief that can occur if RAND royalty rates are set too

high. Many of the amicus briefs echo D-Link’s concerns.

54 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

See AAI Br. 4–9; Br. of Amici Curiae Cisco Sys., Inc., et al.

(“Cisco Br.”) 14–19; Br. of Amici Curiae Broadcom Corp.,

et al. (“Broadcom Br.”) 10–14.

In deciding whether to instruct the jury on patent

hold-up and royalty stacking, again, we emphasize that

the district court must consider the evidence on the record

before it. The district court need not instruct the jury on

hold-up or stacking unless the accused infringer presents

actual evidence of hold-up or stacking. Certainly some-

thing more than a general argument that these phenome-

na are possibilities is necessary. Indeed, “a court should

not instruct on a proposition of law about which there is

no competent evidence.” See Nestier Corp. v. Menasha

Corp.-Lewisystems Div., 739 F.2d 1576, 1579–80 (Fed. Cir.

1984); see also Br. of Amici Curiae Nokia Corp., et al.

(“Nokia Br.”) 9–12. Depending on the record, reference to

such potential dangers may be neither necessary nor

appropriate.

In this case, we agree with the district court that D-

Link failed to provide evidence of patent hold-up and

royalty stacking sufficient to warrant a jury instruction.

JMOL Order, 2013 WL 4046225, at *25–26 (“Defendants

failed to present any evidence of actual hold-up or royalty

stacking.” (emphasis in original)). If D-Link had provided

evidence that Ericsson started requesting higher royalty

rates after the adoption of the 802.11(n) standard, the

court could have addressed it by instructing the jury on

patent hold-up or, perhaps, setting the hypothetical

negotiation date before the adoption of the standard. 10 D-

10 One amicus suggests that the jury always should

be told to place the date of the hypothetical negotiation as

of the date of the adoption of the standard (if that date

predates the infringement) so as to discount any value

added by the standardization. See, e.g., AAI Br. 13–16;

see also Microsoft, 2013 WL 2111217, at *19 (“[T]he

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 55

Link, however, failed to provide any such evidence.

Absent evidence that Ericsson used its SEPs to demand

higher royalties from standard-compliant companies, we

see no error in the district court’s refusal to instruct the

jury on patent hold-up or to adjust the instructions ex-

pressly to take patent hold-up into account. Indeed, as

noted above, the court found that Ericsson complied with

its RAND obligations and did not demand an unreasona-

ble royalty for use of its technology.

A jury, moreover, need not be instructed regarding

royalty stacking unless there is actual evidence of stack-

ing. The mere fact that thousands of patents are declared

to be essential to a standard does not mean that a stand-

ard-compliant company will necessarily have to pay a

royalty to each SEP holder. In this case, D-Link’s expert

“never even attempted to determine the actual amount of

royalties Defendants are currently paying for 802.11

patents.” JMOL Order, 2013 WL 4046225, at *18. In

other words, D-Link failed to come forward with any

evidence of other licenses it has taken on Wi-Fi essential

patents or royalty demands on its Wi-Fi enabled products.

Because D-Link failed to provide any evidence of actual

royalty stacking, the district court properly refused to

instruct the jury on royalty stacking.

We therefore hold that the district court did not err by

refusing to instruct the jury on the general concepts of

patent hold-up and royalty stacking.

parties to a hypothetical negotiation under a RAND

commitment would consider alternatives that could have

been written into the standard instead of the patented

technology.”). D-Link did not request any such instruc-

tion, however. Accordingly, we do not address whether

shifting the timing of the hypothetical negotiation is

either appropriate or necessary.

56 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

* * *

In sum, we hold that, in all cases, a district court

must instruct the jury only on factors that are relevant to

the specific case at issue. There is no Georgia-Pacific-like

list of factors that district courts can parrot for every case

involving RAND-encumbered patents. The court should

instruct the jury on the actual RAND commitment at

issue and must be cautious not to instruct the jury on any

factors that are not relevant to the record developed at

trial. We further hold that district courts must make

clear to the jury that any royalty award must be based on

the incremental value of the invention, not the value of

the standard as a whole or any increased value the pa-

tented feature gains from its inclusion in the standard.

We also conclude that, if an accused infringer wants an

instruction on patent hold-up and royalty stacking, it

must provide evidence on the record of patent hold-up and

royalty stacking in relation to both the RAND commit-

ment at issue and the specific technology referenced

therein.

As explained above, in this case, we find that the dis-

trict court committed legal error in its jury instruction by:

(1) failing to instruct the jury adequately regarding Erics-

son’s actual RAND commitment; (2) failing to instruct the

jury that any royalty for the patented technology must be

apportioned from the value of the standard as a whole;

and (3) failing to instruct the jury that the RAND royalty

rate must be based on the value of the invention, not any

value added by the standardization of that invention—

while instructing the jury to consider irrelevant Georgia-

Pacific factors. We think that these errors collectively

constitute prejudicial error. See Eviron Prods., Inc. v.

Furon Co., 215 F.3d 1261, 1265 (Fed. Cir. 2000) (“Prejudi-

cial error is an error that, in the words of the Federal

Rules of Civil Procedure, ‘appears to the court incon-

sistent with substantial justice.’” (quoting Fed. R. Civ. P.

61)). We therefore vacate the jury’s damages award and

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 57

remand for further proceedings consistent with this

opinion. On remand, the court should also be careful to

assure that the jury is properly instructed on the appor-

tionment principles laid out in Garretson and on the

proper evidentiary value of licenses tied to the entire

value of a multi-component product. Because we vacate

the jury’s damages award, moreover, we also vacate the

court’s ongoing royalty award.

C. The Dell Agency Issue

Finally, Dell argues that the district court erred by

granting summary judgment on Dell’s claim that it was

licensed under the MPA to practice the claims asserted

against it. Because the MPA says it is governed by New

York law, both Ericsson and Dell agree that New York

agency law governs. The parties further agreed that, in

order for Dell to have a license to practice the patents at

issue based on the MPA, LM Ericsson, the parent compa-

ny, must have been acting as an agent of its subsidiary,

Ericsson AB, when it filed this lawsuit. The district court

granted summary judgment because it found that this

agency relationship did not exist as a matter of law.

The Fifth Circuit reviews summary judgment deci-

sions de novo. United States v. Caremark, Inc., 634 F.3d

808, 814 (5th Cir. 2011). Summary judgment is appropri-

ate if, in viewing the evidence in a light most favorable to

the non-moving party, the court finds that “there is no

genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a).

The existence of an agency relationship—where one

party has legal authority to act for another—is a mixed

question of law and fact. See Cabrera v. Jakabovitz, 24

F.3d 372, 385–86 (2d Cir. 1994) (applying New York law).

In order to establish an agency relationship, the facts

must show that: (1) the principal manifested intent to

grant authority to the agent, and (2) the agent agreed or

58 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

consented to the agency relationship. See Commercial

Union Ins. Co. v. Alitalia Airlines, S.p.A., 347 F.3d 448,

462 (2d Cir. 2003) (citations omitted) (applying New York

law). Further, the principal must retain control and

direction over key aspects of the agent’s actions. See In re

Shulman Transport Enters., Inc., 744 F.2d 293, 295 (2d

Cir. 1984) (applying New York law); Meese v. Miller, 436

N.Y.S.2d 496, 499 (N.Y. App. Div. 1981). A principal

cannot, moreover, grant authority to an agent if the

principal does not itself possess the power granted. See

Mouawad Nat’l Co. v. Lazare Kaplan Int’l Inc., 476 F.

Supp. 2d 414, 423 (S.D.N.Y. 2007) (applying New York

Law).

On appeal, Dell argues that it presented sufficient ev-

idence that Ericsson AB directed LM Ericsson to sue Dell,

pointing to the fact that, even though the patents were

assigned to LM Ericsson, the inventors of the patents

were primarily Ericsson AB employees. Dell further

contends that it presented evidence that Ericsson AB

maintained control over key aspects of this litigation.

Finally, Dell asserts that the district court improperly

made factual inferences regarding the strength of Dell’s

arguments in favor of Ericsson, pointing to an alleged

decision to sue Dell made by an Ericsson AB employee.

Ericsson responds that there is no material dispute of

fact that LM Ericsson—the parent company and patent

owner—is not an agent of Ericsson AB—the subsidiary

company and signatory to the MPA. Ericsson asserts that

Ericsson AB never had authority to sue Dell for infringe-

ment of these patents on its own. Ericsson insists that

this means the alleged principal never had the authority

it allegedly granted. According to Ericsson, even if an

Ericsson AB employee helped make the decision to file the

law suit, there is no evidence that he had the authority to

file those suits.

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 59

We agree with Ericsson that Dell has failed to raise

genuine issues of material fact regarding whether LM

Ericsson is an agent of Ericsson AB. It is undisputed that

LM Ericsson is the owner of the patents in suit. As the

owner, it is LM Ericsson that has the authority to sue for

infringement; no other entity need grant it the authority

to sue. See 35 U.S.C. § 281 (“A patentee shall have reme-

dy by civil action for infringement of his patent.”). Even

assuming that an Ericsson AB employee suggested suing

Dell for infringement, LM Ericsson indisputably had that

authority prior to any suggestion. See Mouawad, 476 F.

Supp. 2d at 423 (“[T]he principal itself must possess the

power that it is attempting to confer on the agent.” (citing

3 Am. Jur. 2d Agency § 9 (2014))). Because LM Ericsson

is not a signatory to the MPA, any license Dell might have

thereunder does not excuse any acts of infringement

involving the patents in suit.

For the foregoing reasons, we affirm the district

court’s conclusion that Dell does not, as a matter of law,

have a license to practice the patents at issue under the

MPA.

III. CONCLUSION

For the foregoing reasons, we affirm the infringement

findings relating to the ’568 and ’215 patents, but reverse

the infringement finding with respect to the ’625 patent.

We also affirm the jury’s finding that the ’625 patent was

not invalid over the Petras reference. We vacate the

jury’s damages award and the ongoing royalty award and

remand for proceedings consistent with this decision.

With respect to Dell’s appeal, we affirm the district court’s

grant of summary judgment to Ericsson on Dell’s license

defense.

Accordingly, we affirm-in-part, reverse-in-part, va-

cate-in-part, and remand for further proceedings.

60 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

AFFIRMED IN PART, REVERSED IN PART,

VACATED IN PART, AND REMANDED

United States Court of Appeals

for the Federal Circuit

______________________

ERICSSON, INC., TELEFONAKTIEBOLAGET LM

ERICSSON, AND WI-FI ONE, LLC,

Plaintiffs-Appellees,

v.

D-LINK SYSTEMS, INC., NETGEAR, INC., ACER,

INC., ACER AMERICA CORPORATION, AND

GATEWAY, INC.,

Defendants-Appellants,

AND

DELL, INC.,

Defendant-Appellant,

AND

TOSHIBA AMERICA INFORMATION SYSTEMS,

INC. AND TOSHIBA CORPORATION,

Defendants-Appellants,

AND

INTEL CORPORATION,

Intervenor-Appellant,

AND

BELKIN INTERNATIONAL, INC.,

Defendant.

______________________

2 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

2013-1625, -1631, -1632, -1633

______________________

Appeals from the United States District Court for the

Eastern District of Texas in No. 10-CV-0473, Chief Judge

Leonard Davis.

______________________

TARANTO, Circuit Judge, dissenting-in-part.

I join all of the court’s opinion except part II.A.2,

which upholds the judgment of infringement of the ’215

patent. I conclude that the district court incorrectly

construed the ’215 patent’s claim language pertaining to

the invention’s message field. And there is no infringe-

ment under the construction that I think is correct. On

this one issue, I respectfully dissent.

The dispute over the proper construction of claim 1 of

the ’215 patent involves two related issues. The first is

whether the phrase “responsive to the receiving step,

constructing a message field for a second data unit, said

message field including a type identifier field” requires

that the device “select” a message type depending on the

received data—which requires that it have at least two

message-type options it can select from. The second is

whether the message field must be constructed specifical-

ly to minimize either the size or the quantity of feedback

responses. It is undisputed that if the claims are read to

require either selection or minimization, the accused

devices do not infringe.

Selecting. I begin with the claim language. See Phil-

lips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005)

(en banc). Claim 1 requires the act of “constructing a

message field” to be “responsive to the receiving step”—

that is, responsive to “receiving said plurality of first data

units.” ’215 Patent, col. 10, lines 23–26. At a minimum,

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 3

the “responsive” language allows, indeed suggests, selec-

tion or choice about what to include in the constructed

message field, based on potentially varying characteristics

of the data received. And the specification and Ericsson’s

own assertions during litigation not only confirm the

requirement of choice but make clear what the choice is: it

is a choice from a range of possible message types.

Claims must be interpreted in the context of the pa-

tent as a whole, and the specification is central to per-

forming the interpretive task. See Phillips, 415 F.3d at 21

(“[T]he specification is the single best guide to the mean-

ing of a disputed term . . . .”) (internal quotation omitted).

The specification of the ’215 patent pervasively describes

what Ericsson had invented as optimizing feedback

responses through the receiver’s choice among feedback-

response message types—specifically to minimize the size

of the responses and thereby increase efficiency. Even

without regard to the more specific objective of minimiz-

ing, the receiver’s optimizing task requires selecting.

Thus, the abstract describes constructing feedback re-

sponses “so as to optimize performance in accordance with

certain criteria,” with those criteria consisting of minimiz-

ing size and maximizing efficiency of the feedback re-

sponses. ’215 Patent, abstract. The summary of the

invention similarly teaches that the receiver constructs

feedback response data units “so as to optimize system

performance,” with the optimization consisting of “mini-

mizing [] size” while “maximizing the number of [sequence

numbers]” included in a smaller-sized data unit. Id. col.

4, lines 48–53. Neither of the two stated optimization

criteria may be met unless the receiver makes choices

among a plurality of message types. Further, the specifi-

cation describes the patent’s advance over the prior art as

reducing the “waste of bandwidth” and “unnecessary

overhead” resulting from Automatic Repeat Request

(ARQ) protocols that are “static in construction,” i.e., not

varying as a function of the incoming data. Id. col. 3,

4 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

lines 46–47. And the four technical advantages specifical-

ly enumerated—saving bandwidth, minimizing overhead,

increasing system capacity, and minimizing the number

of feedback responses—derive from the invention’s opti-

mizing of feedback responses. Id. col. 4, lines 54–62. The

specification nowhere discloses any contrary embodiment.

The claim language thus suggests a requirement of

selecting, and the specification pervasively indicates that

what is required is selecting among message types.

Construing the claim to require receiver selecting is “the

correct construction” because it “stays true to the claim

language and most naturally aligns with the patent’s

description of the invention.” Renishaw PLC v. Marposs

Societa’ per Azioni, 158 F.3d 1243, 1250 (Fed. Cir. 1998),

adopted by Phillips, 415 F.3d at 1316.

Ericsson’s own statements about the invention con-

firm that the receiver’s choosing among message types, in

response to incoming data, is essential. During claim

construction, in an apparent effort to prevent the addi-

tional “minimizing” requirement from being read into the

claim, Ericsson conceded—indeed, repeatedly insisted in

clear terms—that selecting among message types by the

receiver was a required element of the invention. See J.A.

6473 (“[T]he invention is to build in choice at the receiver

side of a type of feedback response.”); J.A. 6475 (Given

“the advantage . . . gained from incorporating this mes-

sage field that allows a choice, does the advantage of

minimizing the size or number of feedback responses

necessarily have to be read in when it doesn’t appear in

the claim element[?]”); J.A. 6478 (“[T]he invention is, as

expressed in the claims, giving the receiver a choice and

constructing a message field that has a type identifier so

it can express what it has chosen to use as a format for

communicating the packets that have been dropped.”).

For those reasons, I conclude, the method of claim 1 of

the ’215 patent claim requires that the receiver engage in

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 5

selection among message types in response to receipt of

data. It is undisputed that the accused devices do not do

so. Ericsson did not argue otherwise in its brief, and it

conceded the point at oral argument, stating: “[I]f the

court concludes that the receiver must make a choice, [the

’215 patent is] not infringed.” Oral Argument at 34:45–

35:00, Ericsson, Inc. v. D-Link Sys., Inc., No. 2013-1625.

Minimizing. Claim 1 of the ’215 patent also requires

“minimizing feedback responses,” as expressly stated in

the preamble. ’215 Patent, col. 10, line 19. The presence

of that language indirectly reinforces the requirement of

selection: to minimize, choices must be made. But it also

adds to the selection requirement and independently

requires a judgment of non-infringement.

The “minimizing” language is a claim limitation un-

less the fact that it appears in the preamble makes it non-

limiting, as sometimes is true for preamble language. See

Catalina Mktg. Int’l, Inc. v. Coolsavings.com, Inc., 289

F.3d 801, 808 (Fed. Cir. 2002). For claim 1, however, the

preamble must be limiting, as only the preamble gives

content to what the constructed message field is. See

Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298,

1306 (Fed. Cir. 1999) (preamble is limiting when neces-

sary to “give life, meaning, and vitality” to the claim)

(internal quotation and citation omitted). The claim

recites constructing a “message field,” but only in the

preamble does the claim indicate that the message field is

to be understood as a “feedback response[] in an ARQ

protocol.” ’215 Patent, col. 10, lines 19–20, 24–27. The

phrase “feedback response,” appearing nowhere but the

preamble, is crucial to making sense of the rest of the

claim. See Griffin v. Bertina, 285 F.3d 1029, 1033 (Fed.

Cir. 2002) (holding as limiting a method claim’s preamble

reciting “diagnosing an increased risk for thrombosis,”

where claim covering nucleic-acid tests performed on a

“test subject” was meaningless without understanding

that “[d]iagnosis is . . . the essence of [the] invention”).

6 ERICSSON, INC. v. D-LINK SYSTEMS, INC.

The construction proposed by Ericsson and adopted by

the district court implicitly recognizes that the preamble

is limiting. The adopted construction of the “responsive”

step requires “including a field that identifies the message

type of the feedback response message.” Ericsson, Inc. v.

D-Link Corp., No. 6:10-cv-473, 2013 WL 949378, at *5

(E.D. Tex. Mar. 8, 2013) (emphasis added). The phrase

“feedback response,” in the adopted claim construction,

comes from nowhere in the claim except the preamble.

Where the district court erred was in parsing the pream-

ble to include only one phrase as limiting—“feedback

responses”—while excluding the word “minimizing” that

appears immediately before the phrase “feedback re-

sponses.” I see no sound basis for that distinction.

Indeed, the specification, as described above, shows

that the invention is centrally about minimizing such

responses—which can be done either by minimizing the

size of individual response messages (status protocol data

units) or by minimizing the number of such messages by

packing more information, i.e., sequence numbers, into

messages of fixed size. ’215 Patent, col. 4, lines 49–54

(summary of the invention identifying precisely those two

ways of “optimiz[ing] system performance”). Ericsson’s

only specific argument against the “minimizing” construc-

tion is to note the two ways of minimizing the specifica-

tion identifies. Ericsson Br. at 39. But that is not an

argument against D-Link’s proposed construction—which

covers both of those ways of minimizing. J.A. 5084 (“se-

lected from multiple available feedback responses in order

to minimize the size or number of feedback responses”). I

conclude, therefore, that it was error for the district court

to reject D-Link’s “minimizing” claim construction.

It is undisputed that if claim 1 requires “minimizing,”

the accused devices do not infringe. Ericsson never ar-

gues otherwise in its brief. Ericsson Br. at 38–40. This is

an additional ground for reversing the judgment of in-

ERICSSON, INC. v. D-LINK SYSTEMS, INC. 7

fringement of the ’215 patent, and requiring judgment of

non-infringement instead.