Petition for Writ of Certiorari — Chrimar Systems, Inc., dba CMS Technologies, Inc., et al., Petitioners v. Ale USA Inc., et al.

Supreme Court briefMar 10, 2020

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No. 19In the

Supreme Court of the United States

CHRIMAR SYSTEMS, INC., DBA CMS

TECHNOLOGIES, INC., CHRIMAR

HOLDING COMPANY, LL C

Petitioners,

ALE USA INC., FKA ALCATEL-LUCENT

ENTERPRISE USA, INC.

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

Robert P. Greenspoon

Counsel of Record

Flachsbart & Greenspoon, LLC

333 North Michigan Avenue,

27th Floor

Chicago, IL 60601

(312) 551-9500

rpg@fg-law.com

Counsel for Petitioners

294939

(800) 274-3321 • (800) 359-6859

QUESTIONS PRESENTED

Chrimar brought an action for infringement against

ALE under four patents. A jury rejected ALE’s invalidity

defenses and awarded past damages. The District Court

then awarded post-judgment ongoing royalties. The U.S.

Court of Appeals for the Federal Circuit affirmed liability

and damages, expressly holding that a partial remand

to reconstrue one patent was “immaterial to damages

because any damages that would result from the alleged

infringement of the [remanded] ’012 patent also results from

the infringement of the ’107 and ’760 patents.” App. 48a.

After the District Court’s entry of the eventually-affirmed

judgment, the Patent Trial and Appeal Board (“PTAB”)

(part of an Executive Branch agency) rendered final decisions

finding unpatentable all asserted claims (a decision later

affirmed). On this basis, the Federal Circuit ordered that

the Article III damages judgment be vacated and remanded

for dismissal. The Federal Circuit reasoned that the later

Executive Branch administrative outcome required vacating

the prior already-affirmed Article III judgment.

The questions presented are:

1. Whether the Federal Circuit may apply a finality

standard for patent cases that conflicts with the

standard applied by this Court and all other circuit

courts in nonpatent cases.

2. Whether a final judgment of liability and damages

that has been affirmed on appeal may be reversed

based on the decision of an administrative agency,

merely because an appeal having nothing to do with

liability, damages or the proper calculation of the

ongoing royalty rate is pending.

RULE 29.6 STATEMENT

Chrimar Systems, Inc. is a wholly owned subsidiary

of Chrimar Holding Company LLC. No publicly held

corporation owns 10% or more of Chrimar Holding

Company LLC.

iii

PARTIES TO THE PROCEEDING

AND RELATED CASES

The parties to this proceeding are listed on the front

cover.

Related cases to this proceeding are:

• Chrimar Systems, Inc. and Chrimar Holding

Company, LLC v. Alcatel-Lucent Enterprise

USA Inc., No. 6:15-CV-00163-JDL, U.S. District

Court for the Eastern District of Texas. Judgment

entered Feb. 27, 2017.

• Chrimar Holding Company, LLC and Chrimar

Systems, Inc. v. ALE USA Inc. f/k/a AlcatelLucent Enterprise USA Inc., Nos. 2017-1848,

2017-1911, U.S. Court of Appeals for the Federal

Circuit. Judgment entered May 8, 2018.

• Chrimar Systems, Inc. and Chrimar Holding

Company, LLC v. Alcatel-Lucent Enterprise USA

Inc., No. 6:15-CV-00163-JDL, U.S. District Court

for the Eastern District of Texas. Amended Final

Judgment entered Aug. 24, 2018.

• Chrimar Holding Company, LLC and Chrimar

Systems, Inc. v. ALE USA Inc. f/k/a AlcatelLucent Enterprise USA Inc., No. 2018-2420,

U.S. Court of Appeals for the Federal Circuit.

Judgment entered Sept. 19, 2019 and rehearing

and rehearing en banc denied Dec. 13, 2019.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . i

RULE 29.6 STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . ii

PA RTIES TO THE PROCEEDING A ND

RELATED CASES . . . . . . . . . . . . . . . . . . . . . . . . . . iii

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . iv

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . . . vi

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . viii

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

CONSTITUTIONAL PROVISION INVOLVED . . . . . 2

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 5

REASONS FOR GRANTING THE PETITION . . . . 12

The Federal Circuit does not apply the

Restatement (Second) of Judgments . . . . . . . . . 13

II. The Fresenius panel that generated the

precedent relied on below incorrectly

believed itself bound by inapposite Supreme

Court authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Table of Contents

Page

III. The “Fresenius / Simmons Preclusion

Principle” deepens a circuit split and

violates separation of powers by allowing

a d m i n ist rat ive out comes t o nu l l i f y

otherwise final Article III judgments . . . . . . . . 23

IV. Cr it icism of Fresenius shou ld lead

to this Court’s review . . . . . . . . . . . . . . . . . . . . . . 27

This case presents an excellent vehicle . . . . . . . 29

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

TABLE OF APPENDICES

Page

A P P E N DI X A — O P I N ION OF T H E

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT, DATED

SEPTEMBER 19, 2019 . . . . . . . . . . . . . . . . . . . . . . . . 1a

APPENDIX B — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF TEXAS, TYLER

DIVISION, FILED SEPTEMBER 7, 2018 . . . . . . 10a

APPENDIXC—AMENDEDFINALJUDGMENT

OF THE UNITED STATES DISTRICT

COURT FOR THE EASTERN DISTRICT

OF TEXAS, TYLER DIVISION, DATED

AUGUST 24, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . 12a

APPENDIX D — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF TEXAS, TYLER

DIVISION, FILED AUGUST 24, 2018 . . . . . . . . . 18a

APPENDIX E — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF TEXAS, TYLER

DIVISION, FILED AUGUST 8, 2018 . . . . . . . . . . 21a

APPENDIX F — OPINION OF THE UNITED

STATES COURT OF APPEALS FOR THE

FEDERAL CIRCUIT, DATED MAY 8, 2018 . . . . 29a

vii

Table of Appendices

Page

APPENDIX G — REDACTED MEMORANDUM

OPINION AND ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF TEXAS, TYLER

DIVISION, FILED FEBRUARY 13, 2017 . . . . . . 60a

A PPENDI X H — J U DGMENT OF THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT, FILED

SEPTEMBER 19, 2019 . . . . . . . . . . . . . . . . . . . . . . . 84a

APPENDIX I — DENIAL OF REHEARING

OF T H E U N I T ED S TA T E S C OU RT

OF A PPE A L S FOR T H E F EDER A L

CIRCUIT, FILED DECEMBER 13, 2019 . . . . . . .85a

viii

TABLE OF CITED AUTHORITIES

Page

CASES

B&B Hardware, Inc. v. Hargis Indus., Inc.,

135 S. Ct. 1293 (2015) . . . . . . . . . . . . . . . . . . . . . . . 13-14

Block v. ITC,

777 F.2d 1568 (Fed Cir. 1985) . . . . . . . . . . . . . . . . . . 17

Chicago & Southern Air Lines, Inc. v.

Waterman S. S. Corp.,

333 U.S. 103 (1948) . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Christo v. Padgett,

223 F.3d 1324 (11th Cir. 2000) . . . . . . . . . . . . . . . . . . 17

Clay v. United States,

537 U.S. 522 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Clements v. Airport Auth. of Washoe County,

69 F.3d 321 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . 17

Cromwell v. County of Sac,

94 U.S. 351 (1877) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Employees Own Fed. Credit Union v.

City of Defiance,

752 F.2d 243 (6th Cir. 1985) . . . . . . . . . . . . . . . . . . . . 16

ePlus, Inc. v. Lawson Software, Inc.,

789 F.3d 1349 (Fed. Cir. 2015), cert denied,

136 S. Ct. 1166 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . 24

Cited Authorities

Page

ePlus, Inc. v. Lawson Software, Inc.,

790 F.3d 1307 (Fed. Cir. 2015) . . . . . . . . . . . . 23, 29, 31

Federated Dep’t Stores, Inc. v. Moitie,

452 U.S. 394 (1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Fresenius USA, Inc. v. Baxter Int’l, Inc.,

721 F.3d 1330 (Fed. Cir. 2013), cert denied

sub nom. Baxter Int’l, Inc. v. Fresenius

USA, Inc., 134 S. Ct. 2295 (2014) . . . . . . . . . . . . passim

Fresenius USA, Inc. v. Baxter Int’l, Inc.,

733 F.3d 1369 (Fed. Cir. 2014) . . . . . . . . . . . . . . . . 4, 17

George v. City of Morro Bay (In re George),

318 B.R. 729 (9th Cir. BAP 2004) . . . . . . . . . . . . . . . 14

Hayburn’s Case,

2 U.S. 409, 1 L. Ed. 436, 2 Dall. 409 (1792) . . . . . . . 24

Henglein v. Colt Indus. Operating Corp.,

260 F.3d 201 (3d Cir. 2001) . . . . . . . . . . . . . . . . . . . . . 16

In re Sims,

479 B.R. 415 (Bankr. S.D. Tex. 2012), aff’d,

548 F. App’x 247 (5th Cir. 2013) . . . . . . . . . . . . . . . . . 13

Interconnect Planning Corp. v. Feil,

774 F.2d 1132 (Fed. Cir. 1985) . . . . . . . . . . . . . . . . . . 17

Cited Authorities

Page

John Simmons Co. v. Grier Bros. Co.,

258 U.S. 82 (1922) . . . . . . . . . . . . . . . . . . . . . . . . passim

Martin v. DOJ,

488 F.3d 446 (D.C. Cir. 2007) . . . . . . . . . . . . . . . . . . . 17

Masssaro v. United States,

538 U.S. 500 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Miller Brewing Co. v. Joseph Schlitz Brewing Co.,

605 F.2d 990 (7th Cir. 1979) . . . . . . . . . . . . . . . . . . 16-17

Moffitt v. Garr,

66 U.S. 273 (1862) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Morrell & Co. v. Local Union 304A of United

Food & Commercial Workers,

913 F.2d 544 (8th Cir. 1990) . . . . . . . . . . . . . . . . . . . . 17

O’Reilly v. Malon,

747 F.2d 820 (1st Cir. 1984) . . . . . . . . . . . . . . . . . . . . 16

Oil States Energy Servs., LLC v.

Greene’s Energy Grp., LLC,

138 S. Ct. 1365 (2018) . . . . . . . . . . . . . . . . . . . . . . 21, 22

Pennsylvania v. Wheeling & Belmont Bridge Co.,

59 U.S. (18 How.) 421 (1856) . . . . . . . . . . . . . . . . . . . . 23

Pharmacia & Upjohn Co. v. Mylan Pharm., Inc.,

170 F.3d 1373 (Fed. Cir. 1999) . . . . . . . . . . . . . . . 13, 15

Cited Authorities

Page

Plaut v. Spendthrift Farm, Inc.,

514 U.S. 211 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Prager v. El Paso Nat’l Bank,

417 F.2d 1111 (5th Cir. 1969) . . . . . . . . . . . . . . . . . . . 13

Pye v. Dep’t of Transp. of State of Ga.,

513 F.2d 290 (5th Cir. 1975) . . . . . . . . . . . . . . . . . 15, 16

Qualcomm, Inc. v. FCC,

181 F.3d 1370 (D.C. Cir. 1999) . . . . . . . . . . . . 25, 26, 27

Recover Edge L.P. v. Pentecost,

44 F.3d 1284 (5th Cir. 1995) . . . . . . . . . . . . . . . . . . . . 13

Robinette v. Jones,

476 F.3d 585 (8th Cir. 2007) . . . . . . . . . . . . . . . . . . . . 17

Smith Mach. Co. v. Hesston Corp.,

878 F.2d 1290 (10th Cir. 1989) . . . . . . . . . . . . . . . . . . 17

Southern Pacific Railroad v. United States,

168 U.S. 1 (1897) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Stoll v. Gottlieb,

305 U.S. 165 (1938) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Swentek v. USAIR, Inc.,

830 F.2d 552 (4th Cir. 1987), abrogated on other

grounds as recognized by Mikels v. City

of Durham, 183 F.3d 323 (4th Cir. 1999) . . . . . . . . . 16

xii

Cited Authorities

Page

Syverson v. Int’l Bus. Machs. Corp.,

472 F.3d 1072 (9th Cir. 2007) . . . . . . . . . . . . . . . . . . . 17

Taylor v. Sturgell,

553 U.S. 880 (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Versata Computer Indus. Sol’ns, Inc. v. SAP AG,

564 Fed. App’x 600 (Fed. Cir. 2014) . . . . . . . . . . . . . 21

Versata Software, Inc. v. SAP Am., Inc.,

No. 2:07cv153-RSP, 2014 U.S. Dist. LEXIS 54640

(E.D. Tex. Apr. 21, 2014) . . . . . . . . . . . . . . . . . . . . . . . 27

Ward v. Dixie Nat’l Life Ins. Co.,

595 F.3d 164 (4th Cir. 2010) . . . . . . . . . . . . . . . . . . . . 26

Zdanok v. Glidden Co.,

327 F.2d 944 (2d Cir. 1964) . . . . . . . . . . . . . . . . . . . . . 16

STATUTES AND OTHER AUTHORITIES

U.S. Const. Art. III . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 31

U.S. Const. Art. III § 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Fed. R. Civ. P. 60(b)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10

xiii

Cited Authorities

Page

K ing & Wolfson, PTA B Rear ranging the

Face of Patent Litigation, 6 Landslide 18

(Nov./Dec. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Michael Greve, Exceptional, After All and

After Oil States: Judicial Review and the

Patent System, Bos. U.J. Sci. & Tech. L.

(forthcoming 2020) . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

P a u l R . G u g l i u z z a , ( In) v a l i d Pa t e n t s ,

92 Notre Dame L. Rev. 271 (2016) . . . . . . . . . . . 19, 27

Peggy P. Ni, Rethinking Finality in the PTAB

Age, 31 Berk. Tech. L.J. 557 (2016) . . . . . . . . . . . . . . 28

Robert M. Masters, Jonathan R. DeFosse and

Kevin A. Ryan, “Intellectual Property Outlook:

Cases and Trends to Follow in 2020—PART 3,”

The National Law Review (March 5, 2020) . . . . . . 30

Restatement (Second) of Judgments § 13 . . . . . . . . 13, 15

Restatement (Second) of Judgments § 13 cmt. a . . . . . 14

Restatement (Second) of Judgments § 13 cmt. b . . . . . 14

Restatement (Second) of Judgments § 13 cmt. c . . . . . 15

Restatement (Second) of Judgments § 13 cmt. e . . . . . 16

xiv

Cited Authorities

Page

Restatement (Second) of Judgments § 13 cmt. f . . . . . . 15

Restatement (Second) of Judgments § 14 cmt. a . . . . . 17

Restatement (Second) of Judgments § 15 . . . . . . . . . . . 17

Restatement (Second) of Judgments § 17 . . . . . . . . . . . 17

Restatement (Second) of Judgments § 27 cmt. l . . . 14, 17

PETITION FOR A WRIT OF CERTIORARI

Chrimar Systems, Inc. and Chrimar Holding

Company, LLC (collectively, “Chrimar”) respectfully

petition for a writ of certiorari to review the judgment

of the United States Court of Appeals for the Federal

Circuit in this case.

OPINIONS BELOW

The opinion affirming Chrimar’s judgment of liability

and the quantum of damages (App. 29a-59a) is unreported,

and may be found at Chrimar Holding Co., LLC v. ALE

USA Inc., Nos. 2017-1848, 2017-1911, 732 F. App’x 876,

2018 U.S. App. LEXIS 12256 (Fed. Cir. May 8, 2018)

(“Chrimar I”).

The decision affirming without opinion the PTAB

final written decisions (App. 84a) is unreported, and may

be found at Chrimar Systems, Inc. v. Juniper Networks,

Inc., Nos. 2018-1499, 2018-1500, 2018-1503, 2018-1984,

2019 U.S. App. LEXIS 28106 (Fed. Cir. Sept. 19, 2019)

(“Chrimar II”).

The opinion under review in this petition (App. 1a-9a) is

unreported, and may be found at Chrimar Systems, Inc. v.

ALE USA Inc., No. 2018-2420, 785 F. App’x 854, 2019 U.S.

App. LEXIS 28105 (Fed. Cir. Sept. 19, 2019) (“Chrimar

III”). The denial of rehearing dated December 13, 2019

(App. 85a) is unreported.

JURISDICTION

The Court of Appeals issued its decision on September

19, 2019. App. 1a. The court denied petitioner’s request for

rehearing and rehearing en banc on December 13, 2019.

App. 85a. This Court has jurisdiction under 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL PROVISION INVOLVED

The judicial power of the United States, shall

be vested in one Supreme Court, and in such

inferior courts as the Congress may from time

to time ordain and establish. The judges, both

of the supreme and inferior courts, shall hold

their offices during good behaviour, and shall,

at stated times, receive for their services, a

compensation, which shall not be diminished

during their continuance in office.

U.S. Const. Art. III sec. 1.

INTRODUCTION

The Federal Circuit since at least 2013 has consistently

applied legal principles that permit litigants to use

Executive Branch action to escape the consequences of

final Article III judgments. These Federal Circuit legal

principles permit administrative agencies to wipe out

final Article III judgments. In dissenting opinions, a slim

minority of Federal Circuit active judges (five of twelve)

has acknowledged that such rules have created a circuit

split, and trigger significant constitutional doubt.1

1. The five active judges expressed their views in panel dissents

and dissents from denial of rehearing en banc in the Fresenius and

ePlus cases (cited infra), and are Judges Newman, Moore, O’Malley,

Reyna and Wallach.

This Court has emphasized that finality is important

in judicial proceedings. E.g., Masssaro v. United States,

538 U.S. 500, 504 (2003) (describing “the law’s important

interest in the finality of judgments”); Federated Dep’t

Stores, Inc. v. Moitie, 452 U.S. 394, 401 (1981) (noting “vital

public interests” served by applying rules of finality); Stoll

v. Gottlieb, 305 U.S. 165, 172 (1938) (“It is just as important

that there should be a place to end as that there should be

a place to begin litigation.”). “[E]nforcement [of judicial

finality] is essential to the maintenance of social order; for

the aid of judicial tribunals would not be invoked for the

vindication of rights of person and property if, as between

parties and their privies, conclusiveness did not attend

the judgments of such tribunals in respect of all matters

properly put in issue, and actually determined by them.

Southern Pacific Railroad v. United States, 168 U.S. 1,

49 (1897) (citations omitted).

The preclusive effect of a judgment is defined by claim

preclusion and issue preclusion, which are collectively

referred to as “res judicata.” Under the doctrine of claim

preclusion, a final judgment forecloses successive litigation

of the very same claim, whether or not relitigation of the

claim raises the same issues as the earlier suit. Issue

preclusion, in contrast, bars successive litigation of an

issue of fact or law actually litigated and resolved in a

valid court determination essential to the prior judgment,

even if the issue recurs in the context of a different claim.

A related doctrine is law of the case and the mandate

rule, under which courts must follow the final decisions of

higher courts in the same proceeding on a given topic. By

precluding parties from contesting matters that they have

had a full and fair opportunity to litigate, these doctrines

protect against the expense and vexation attending

multiple lawsuits, conserve judicial resources, and foster

reliance on judicial action by minimizing the possibility

of inconsistent decisions. Taylor v. Sturgell, 553 U.S. 880,

892 (2008).

In this case, the Federal Circuit deepened an existing

circuit split by applying what it called the “Fresenius /

Simmons preclusion principle.” Under this legal principle,

a judgment that has finally resolved a dispute on a meritsquestion is nearly always open to collateral attack in

administrative agency proceedings that address the same

merits-question. This “principle” deprives final, fullylitigated and fully-affirmed judgments of their finality if

two conditions are met: (1) an administrative agency later

issues a conflicting decision; and (2) the party burdened

under the judgment has preserved a non-“insubstantial”

appellate issue, on anything. The non-“insubstantial” issue

need not bear any relationship to the liability or damages

determinations that were otherwise finally-decided in the

judgment.

This so-called “Fresenius / Simmons preclusion

principle” is the sole invention of the Federal Circuit,

having been adopted by no other court. This legal rule has

earned sharp rebuke from academics and jurists alike. It

is legally incorrect and conflicts with the decisions of all

other circuits and of this Court. The legal rule incentivizes

unfairness against patentees, motivates gamesmanship

by accused infringers, leads to wasted judicial effort by

trial and appeals courts, and disincentivizes innovation by

undermining confidence in the patent system.

A slim minority of the active judges on the Federal

Circuit (five of its twelve) have called for an end to this

mistaken rule of law. Several academics have criticized

the rule. The rule conflicts not only with the finality rule

applied by this Court and all other Courts of Appeals, but

also with the Restatement (Second) of Judgments. This

case thus presents an ideal vehicle for this Court’s review

of its soundness.

STATEMENT OF THE CASE

1. This case arises out of ALE’s infringement of certain

Chrimar patents, which relate to improved Ethernet

equipment that permits detection and classification

of connected equipment, even where the connected

equipment is powered off. Chrimar has asserted that its

patented technology covers equipment that implements

and conforms to the IEEE 802.3af and 802.3at Power

over Ethernet (PoE) standards. App. 31a.

Chrimar is an American company whose President

and CEO (a part-owner) is one of the named inventors

on the patents-in-suit. The patents-in-suit claim priority

ultimately to a 1998 filing, i.e., one submitted to the Patent

Office over a decade before the existence of PTAB patent

trials. Chrimar sued Alcatel-Lucent USA Inc. in 2013 for

infringement of U.S. Patent No. 8,115,012 (’012 Patent).

App. 38a n.3. In 2014, Alcatel-Lucent spun out part of

its business to a new company named Alcatel-Lucent

Enterprise, of which ALE is a part. (See id.) In March 2015,

Chrimar filed a new suit against ALE for infringement of

the ’012 Patent and three related patents (U.S. Patent Nos.

8,942,107; 8,902,760; and 9,019,838), and the parties agreed

to the dismissal of the 2013 action. (See id.)

ALE initially asserted a number of defenses and

counterclaims, including various invalidity defenses

and counterclaims seeking declaratory judgments of

non-infringement for each of the asserted patents. But

as observed in Chrimar I, “ALE dropped many of its

defenses and counterclaims shortly before or during

[the October 2016] trial.” App. 36a. Among the defenses

and counterclaims ALE dropped were the majority of

its invalidity defenses as well as its non-infringement

counterclaims. The only defense ALE tried was invalidity

on the basis that Chrimar allegedly failed to name the

correct inventor, and the only counterclaims it tried were

alleged fraud and breach of contract through Chrimar’s

interactions with the IEEE. App. 38a. ALE stipulated to

infringement of all four patents just before trial. (See id.)

The only “issues submitted to the jury were infringement

damages, invalidity based on improper inventorship,

fraud, and breach of contract.” (See id.)

The jury rejected ALE’s invalidity defense and its

counterclaims, and awarded Chrimar damages for ALE’s

admitted infringement. App. 36a. The district court denied

ALE’s post-trial motions and entered Final Judgment on

February 27, 2017, finding that the asserted patents were

not invalid, and awarding Chrimar $324,558.34 in past

damages plus ongoing royalties in the amount of $1.2067

per PoE port for products sold by ALE after October 1,

2016. App. 60a-83a. The court awarded ongoing royalties

through March 4, 2020 for products covered by the ’012

Patent, and through April 8, 2019 for products covered by

the other three patents. App. 22a.

2. ALE appealed three issues: (i) the district court’s

denial of its motion to exclude certain damages testimony;

(ii) ALE’s fraud counterclaim; and (iii) certain claim

constructions. App. 36a-37a. Importantly, although it had

the opportunity to do so, ALE did not appeal the judgment

that the patents were not invalid, and did not appeal the

ongoing royalty calculation. In other words, ALE did not

contest on appeal the district court’s determination of no

invalidity, nor the district court’s award of (or amount of)

ongoing royalties.

The Federal Circuit rejected ALE’s first two

arguments (damages and fraud, App. 48a-58a), but agreed,

in part, with ALE on the third, holding that one of the

district court’s claim constructions—“adapted” in the

’012 Patent—was incorrect (App. 37a-42a). Nevertheless,

the Court explained that while the revision of the claim

construction required “remand for further proceedings on

infringement of the ’012 [P]atent,” a new trial on damages

was unwarranted:

Given the (affirmed) judgment of infringement

of the ’107 and ’760 patents, the absence of an

infringement judgment on the ’012 patent is

immaterial to damages because any damages

that would result from the alleged infringement

of the ’012 patent also results from the

infringement of the ’107 and ’760 patents.

App. 48a.

3. A s mentioned, Chrimar had sued A LE for

infringement in March 2015. Nevertheless, for the yearand-a-half between the filing of the complaint and trial,

ALE never challenged any of the patents-in-suit through

administrative agency proceedings. But an unrelated

company did: Juniper Networks. Juniper filed multiple

inter partes review (IPR) proceedings on the patents-in-

suit in July 2016, months before the October 2016 trial.

ALE did not request to join those proceedings, nor did

it ask the district court to stay the lawsuit while those

proceedings remained pending. Instead, ALE’s litigation

strategy was to stipulate to infringement of Chrimar’s

patents and proceed to trial asserting no invalidity

defenses other than one for alleged improper inventorship.

The administrative agency (the USPTO, through

the Patent Trial and Appeal Board (PTAB)) instituted

the Juniper IPRs in December 2016 and January 2017,

before the district court entered its Final Judgment on

February 27, 2017. ALE did not ask the district court to

stay entry of the judgment pending the outcome of the

IPRs. Nor did it object to the district court’s award of

ongoing royalties in the Final Judgment for any reason,

including the ongoing IPRs.

ALE submitted its Appellant’s brief in Chrimar I on

July 31, 2017. There, ALE identified the pending IPRs

in the “Statement of Related Cases.” But ALE neither

asked the Federal Circuit to stay the appeal, nor did it

assert that the IPR proceedings should have any impact

on the appeal.

The PTAB issued Final Written Decisions finding

unpatentable certain claims of the patents-in-suit on

December 20, 2017 (’107 Patent); December 29, 2017 (’838

Patent); January 23, 2018 (the ’012 Patent); and April 26,

2018 (the ’760 Patent)— all before the Federal Circuit

issued its May 8, 2018 Chrimar I opinion. The Federal

Circuit was aware of the IPR decisions when it issued that

opinion. App. 34a-35a n.2.

4. Rather than waste judicial resources by requiring

the district court to engage in an academic exercise

to determine infringement of the ’012 Patent where

the appeals court had affirmed the damages award in

full, Chrimar instead moved to voluntarily dismiss its

infringement claims for the ’012 Patent with prejudice,

and asked the district court to enter an Amended Final

Judgment. Only because ALE asked Chrimar to do

so, Chrimar also provided ALE with an unconditional,

irrevocable covenant not to sue ALE for infringement of

the ’012 Patent.

Because infringement of the ’012 Patent was the only

issue remanded by the Federal Circuit in Chrimar I,

Chrimar’s voluntary removal of that patent (and related

stipulation to an earlier expiration of ongoing royalties)

should have ended this case. Remarkably, however,

ALE opposed Chrimar’s motion to dismiss and also

moved to stay enforcement, arguing that ALE still had

counterclaims pending for the ’012 Patent. As the district

court found, it did not. App. 24a.

Accordingly, with the only remanded issue voluntarily

dismissed with prejudice and consideration of all other

issues foreclosed by the Chrimar I mandate, the district

court dismissed the infringement claims for the ’012

Patent and denied ALE’s motion to stay. App. 21a-28a.

ALE asked the court to reconsider, an invitation the court

declined. App. 18a-20a. Instead, the court entered an

Amended Final Judgment removing references to the ’012

Patent in accordance with the parties’ agreement. App.

12a-17a. ALE then renewed its motion to stay, re-urging

the exact same arguments it raised in its first two motions,

but purporting for the first time to bring it under Federal

Rule of Civil Procedure 60(b)(5), which offers relief from

“final judgments”—a motion that omitted any request to

vacate the entire underlying judgment. The court again

denied the motion, ALE’s third in six weeks on the exact

same subject. App. 10a-11a. Within its fusillade of postremand motions, ALE made no request for the district

court to vacate the entire past damages judgment, based

on Juniper’s IPR outcomes or otherwise.

ALE appealed to Federal Circuit, complaining of

the district court’s grant of Chrimar’s request to declare

the case already over through voluntary dismissal with

prejudice of the ’012 Patent, and its refusal to stay the

ongoing-royalties award that ALE did not appeal in

Chrimar I. ALE did not appeal the continued vitality of

the judgment for past damages.

5. Rather, ALE kept alive for appellate review the

nearly irrelevant question of how thoroughly did Chrimar

dismiss the single remanded patent (the ’012 patent) from

a case that was already over. This was the same patent

that the Federal Circuit said did not affect damages, and

that Chrimar forewent pursuing, waiving all relief from

ALE (i.e., waiving the last 11 months of an unchallenged

ongoing royalty amount). As explained below, the Federal

Circuit never reached that question, instead going beyond

appealed issues to address the effect of administrative

agency proceedings. App. 9a (“[W]e do not decide whether

ALE is correct on the merits of the just-discussed

contentions.”).

The Federal Circuit issued two decisions on the same

day. In the Juniper case (Chrimar II), the Federal Circuit

affirmed without opinion. App. 84a. It thus upheld the

Executive Branch determination that Juniper had proved

unpatentability by a preponderance of the evidence.

The other decision (App. 1a-9a) is the one subject

to the present petition. In Chrimar III, the same panel

ordered that the judgment previously affirmed be vacated

and remanded for dismissal. Rather than finding that the

earlier District Court judgment operated as a preclusion

against ALE making invalidity arguments, the Federal

Circuit found that the later administrative outcome

operated as a preclusion against Chrimar asserting that

its patents were valid.

The Federal Circuit applied what it calls the

“Fresenius / Simmons preclusion principle” in evaluating

when a judgment is final enough to be immune from

collateral attack in administrative agency proceedings.

The Fresenius part refers back to a 2013 Federal Circuit

decision. Fresenius USA, Inc. v. Baxter Int’l, Inc., 721

F.3d 1330, 1355-58 (Fed. Cir. 2013), cert denied sub nom.

Baxter Int’l, Inc. v. Fresenius USA, Inc., 134 S. Ct. 2295

(2014). The Simmons part refers back to a 98-year old

decision of this Court. John Simmons Co. v. Grier Bros.

Co., 258 U.S. 82 (1922).

This Federal Circuit “principle” deprives final, fullylitigated and fully-affirmed judgments of their finality,

if two conditions are met: (1) an administrative agency

later issues a conflicting decision; and (2) the party

burdened under the judgment has preserved a non“insubstantial” appellate issue, regardless of whether

its issue has anything to do with the liability or damages

determinations underpinning the judgment. App. 5a-9a.

Under this principle, no final judgment precludes

a losing litigant from pressing lost issues while a case

remains pending, and a case remains pending until all not

“insubstantial” arguments about any issues remaining

in the case have been finally resolved on appeal—even if

those issues are unrelated to a claim previously decided

by the district court in a judgment upheld on appeal. App.

4a-5a.

Chrimar petitioned for rehearing en banc. Forty-one

amici curiae (represented through five amicus briefs)

supported Chrimar’s petition. The Federal Circuit denied

rehearing without opinion. App. 85a.

REASONS FOR GRANTING THE PETITION

The Federal Circuit’s decision extends and deepens

a circuit split on the important issue of when a judicial

decision becomes binding on the parties, and whether

a decree from a different branch of government can

reverse an Article III court judgment. This case presents

an excellent vehicle for the Supreme Court to address

these issues. The so-called “Fresenius / Simmons

preclusion principle” has received sharp criticism from

academics and jurists. It is legally incorrect. And,

this principle incentivizes unfairness for patentees,

motivates gamesmanship by accused infringers, leads

to wasted judicial effort by trial and appeals courts and

prolongation of litigation, and disincentivizes innovation

by undermining confidence in the patent system.

The Federal Circuit does not apply the Restatement

(Second) of Judgments.

The Federal Circuit applied its own unique “Fresenius

/ Simmons preclusion principle” to find that this case

lacked a final-enough judgment because issues outside

the scope of the appellate mandate remained to be

determined. This principle conflicted with the governing

Fifth Circuit standard, under which “a judgment may be

final [for preclusion purposes] even though an appeal is

pending or a lower court has yet to fully dispose of the

matter from which the issue arises.” In re Sims, 479 B.R.

415, 421–22 (Bankr. S.D. Tex. 2012), aff’d, 548 F. App’x 247

(5th Cir. 2013) (citing Prager v. El Paso Nat’l Bank, 417

F.2d 1111, 1112 (5th Cir. 1969)). The Federal Circuit should

have (but did not) apply this Fifth Circuit standard. See

Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d

1373, 1381 n.4 (Fed. Cir. 1999) (“[B]ecause the application

of general collateral estoppel principles, such as finality of

judgment, is not a matter within the exclusive jurisdiction

of this court, we must apply the law of the circuit in which

the district court here sits.”).

Applying Fifth Circuit law, as it should have, the

Federal Circuit would have prevented any further

litigation related to damages or to infringement of three

of the patents-in-suit. The judgment was sufficiently

firm to be accorded conclusive effect, even assuming

other issues remained unresolved. This is because all

federal courts, including the Fifth Circuit, look to the

Restatement to determine a judgment’s preclusive effect,

and related issues of finality. See, e.g., Recover Edge L.P.

v. Pentecost, 44 F.3d 1284, 1295 (5th Cir. 1995) (citing

Restatement (Second) of Judgments, § 13); see also B&B

Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293,

1303 (2015) (stating the Supreme Court “regularly turns

to the Restatement (Second) of Judgments for a statement

of the ordinary elements of [preclusion]”); Clay v. United

States, 537 U.S. 522, 527 (2003) (“[A] federal judgment

becomes final for [] claim preclusion purposes when the

district court disassociates itself from the case, leaving

nothing to be done at the court of first instance save

execution of the judgment.”) (citing Restatement, § 13,

cmt. b); George v. City of Morro Bay (In re George),

318 B.R. 729, 733 (9th Cir. BAP 2004) (“The Supreme

Court treats the Restatement (Second) of Judgments

(“Restatement”) as an authoritative statement of federal

res judicata doctrines . . . .”). Applying the Restatement’s

plain language, an infringer subject to a damages

judgment has no right in any forum to relitigate a lost

invalidity case, except on direct appeal of the judgment

of no invalidity. Restatement (Second) of Judgments, § 17

(claim or defense “extinguished” when within the scope of

a “final personal judgment,” which is “conclusive between

the parties, except on appeal or direct review”).

The Restatement anticipates and resolves the very

situation here—parallel proceedings on the same issue.

Sections 14 and 27 provide that when two pending cases

involve the same claim or issue, it is the “final judgment

first rendered” that controls the parties to the first

proceeding. Restatement (Second) of Judgments § 14 cmt.

a; see also id. § 27 cmt. l (“first final judgment rendered.”).

Here, the first rendered judgment on the issue of patent

validity is that of February 27, 2017 at the district court.

That judgment predated the PTAB decisions rendered

between December 2017 and April 2018.

Nor does the Restatement leave room for deeming

a judgment “nonfinal” for preclusion purposes because

of lingering disputes unrelated to liability or damages.

Section 13 provides that a “‘final judgment’ includes

any prior adjudication of an issue in another action that

is determined to be sufficiently firm to be accorded

conclusive effect.” Restatement (Second) of Judgments,

§ 13. A “sufficiently firm” adjudication is one that is the

“‘last word’ of the rendering court.” Restatement (Second)

of Judgments, § 13, cmt. a. Here, the “last word” was

the 2017 district court judgment that resolved liability,

past damages, and determination of the ongoing royalty.

Appeal from that judgment did not obviate finality.

Restatement (Second) of Judgments, § 13, cmt. f; see also

Pharmacia & Upjohn, 170 F.3d at 1381.

Neither the presence of ongoing royalties, nor the

remand of one issue in Chrimar I that was “immaterial”

to damages, changes the calculus. Continuing litigation

on matters not germane to liability or damages should

not undermine finality. See, e.g., Pye v. Dep’t of Transp.

of State of Ga., 513 F.2d 290, 292 (5th Cir. 1975) (“To be

final a judgment does not have to dispose of all matters

involved in a proceeding.”). For example, a “judgment

concluding an action is not deprived of finality for purposes

of res judicata by reason of the fact that it grants or

denies continuing relief, that is, requires the defendant, or

holds that the defendant may not be required, to perform

acts over a period of time.” Restatement (Second) of

Judgments, § 13, cmt. c.

Under the Fifth Circuit’s final judgment standard,

a final judgment does not have to dispose of all matters

involved in the proceeding. Pye, 513 F.2d at 292. For

example, in Pye, the appellate court affirmed the lower

court’s merits decision but remanded the case on the issue

of damages. Id. The Fifth Circuit held that the lower

court’s continuing jurisdiction on the issue of damages

did not deprive the judgment on the merits of finality for

the purposes of issue preclusion. Id.

And re-opening one part of a judgment does not affect

the preclusive nature of the rest. “A judgment may be final

in a res judicata sense as to a part of an action although the

litigation continues as to the rest.” Restatement (Second)

of Judgments, § 13, cmt. e; see also, Fresenius USA,

Inc. v. Baxter Int’l, Inc., 733 F.3d 1369, 1380 (Fed. Cir.

2014) (O’Malley, dissenting from denial of reh’g en banc)

(finality in modern law applied “less strictly for preclusion

purposes than for purposes of appeal”).

On this point, in her panel dissent in Fresenius, Judge

Newman provided case examples of every single circuit,

including the Federal Circuit itself, respecting the finality

of judgments for preclusion purposes, “for issues that were

litigated and decided.” Fresenius, 721 F.3d at 1355-58

(Newman, J., dissenting, discussing caselaw from First

through Eleventh, D.C. and Federal Circuits). 2 Judge

2. Judge Newman’s non-exhaustive “sampling” of these cases

included the following: O’Reilly v. Malon, 747 F.2d 820, 822-23 (1st

Cir. 1984) (per curiam); Zdanok v. Glidden Co., 327 F.2d 944, 954-55

(2d Cir. 1964); Henglein v. Colt Indus. Operating Corp., 260 F.3d

201, 209-10 (3d Cir. 2001); Swentek v. USAIR, Inc., 830 F.2d 552,

561 (4th Cir. 1987), abrogated on other grounds as recognized by

Mikels v. City of Durham, 183 F.3d 323, 331-33 (4th Cir. 1999); Pye

v. Department of Transp. of Ga., 513 F.2d 290, 292 (5th Cir. 1975);

Employees Own Fed. Credit Union v. City of Defiance, 752 F.2d 243,

245 (6th Cir. 1985); Miller Brewing Co. v. Joseph Schlitz Brewing Co.,

Newman noted that the Fresenius panel majority “insist

that no appellate judgment is final as to any issue finally

decided, if there is a remand on a different aspect of the

case.” Id. at 1358. Judge Newman concluded that such

“doctrinaire approach has been rejected throughout the

federal system,” and stands against “heavy and uniform

weight” among the circuit courts. Id. Certiorari review can

address and eliminate this inter- and intra-circuit split.

Finally, post-judgment administrative invalidation

of a patent should not nullify a prior judgment on the

spurious ground that the later of two inconsistent

judgments has preclusive effect. It is the earlier one that

controls. Restatement (Second) of Judgments § 14 cmt. a;

see also id. § 27 cmt. l (“first final judgment rendered.”).

There does exist an exception that reverses this order,

but to qualify for the exception, there must have been (1)

availability of a preclusion argument in the second (later)

action that the holder does not assert, followed by (2) a

third action. Here, Chrimar did not waive a preclusion

argument at the PTAB (indeed, none was available against

Juniper Networks), nor is this a third proceeding (since

it is still the first one). See Fresenius, 733 F.3d at 1380

n.8 (O’Malley, J., dissenting from denial of reh’g en banc)

(distinguishing Restatement (Second) of Judgments, § 15).

605 F.2d 990, 996 (7th Cir. 1979); Robinette v. Jones, 476 F.3d 585,

589 (8th Cir. 2007); Morrell & Co. v. Local Union 304A of United

Food & Commercial Workers, 913 F.2d 544, 563-64 (8th Cir. 1990);

Syverson v. Int’l Bus. Machs. Corp., 472 F.3d 1072, 1079 (9th Cir.

2007); Clements v. Airport Auth. of Washoe County, 69 F.3d 321,

330 (9th Cir. 1995) Smith Mach. Co. v. Hesston Corp., 878 F.2d 1290,

1293 (10th Cir. 1989); Christo v. Padgett, 223 F.3d 1324, 1338-39

(11th Cir. 2000); Martin v. DOJ, 488 F.3d 446, 455 (D.C. Cir. 2007);

Interconnect Planning Corp. v. Feil, 774 F.2d 1132, 1135 (Fed. Cir.

1985); Block v. ITC, 777 F.2d 1568, 1571-72 (Fed Cir. 1985).

These preclusion principles should apply even though

Chrimar seeks a preclusion holding in the same case

that contains the final judgment. 3 Even the Fresenius

panel majority called it “correct” to use “well-established

principles of res judicata” to inquire when a judgment

becomes final enough to be immune to PTAB cancellation

during a subsequent appeal in the same case. Fresenius,

721 F.3d at 1340-42 (interpreting remand for recalculation

of the ongoing royalty rate as “defeat[ing] preclusion

entirely” to make the judgment insufficiently final). It

is therefore beyond debate that res judicata principles

(embodied in the Restatement) should control what level

of finality a judgment in the same case must have to be

immune to PTAB cancellation. But the Federal Circuit

did not apply this well-established law.

II. The Fresenius panel that generated the precedent

relied on below incorrectly believed itself bound by

inapposite Supreme Court authority.

1. The source of the misguided “Fresenius / Simmons

preclusion principle” is, of course, the Federal Circuit’s

earlier Fresenius case. That is where the Federal Circuit

generated its bright line test that makes federal court

judgments vulnerable to administrative nullification.

Granting cert in this case can expose and correct the

mistakes in the Fresenius majority analysis.

3. All of Chrimar’s arguments supporting certiorari hold force,

regardless of which specific preclusion doctrine applies, whether

it be law of the case, the mandate rule, claim or issue preclusion.

Fresenius, 733 F.3d at 1383 (Newman, J., dissenting from denial of

reh’g en banc) (identifying law of the case and the mandate rule as

the relevant preclusion doctrine).

In particular, the panel majority in Fresenius

incorrectly believed itself bound to apply John Simmons

Co. v. Grier Bros. Co., 258 U.S. 82 (1922). The Fresenius

panel majority believed that the 1922 Simmons decision

“demonstrates that the district court must apply

intervening legal developments affecting the asserted

patent’s validity, even if the court of appeals already

decided the validity issue the other way.” Fresenius, 721

F.3d at 1342 (emphasis added). But one academic has

identified numerous flaws in this conclusion. See Paul

R. Gugliuzza, (In)valid Patents, 92 Notre Dame L. Rev.

271, 313-14 (2016) (“It is a stretch to claim, as the Federal

Circuit has, that Simmons is controlling in modern cases

involving inconsistent validity decisions by a court and the

PTO;” noting several reasons).

Judge O’Malley’s Fresenius dissent from denial

of rehearing en banc ably explains why Simmons

(and another case) should not have led mandatorily to

the Fresenius holding. Those earlier cases involved

interlocutory decisions in which no measure of damages

had been established, rather than appeal from a final

judgment and completed accounting. Judge O’Malley

explained the distinction:

Neither of those cases, however, involved an

appeal from a final judgment and completed

accounting (i.e., in those cases, no measure

of damages had been established). . . .

[I]n Simmons, the Supreme Court noted the

interlocutory nature of the appeal, and stated

that the judgment was not “final” because “an

accounting,” which at the time was the only

procedure by which damages for infringement

were calculated, “was necessary to bring

the suit to a conclusion upon the merits.”

Simmons, 258 U.S. at 89 (emphasis added).

The circumstances here are entirely different.

Final judgment was entered, the calculation

of past damages had occurred, and appellate

review of those determinations had concluded.

Baxter’s right in the judgment had vested.

In other words, unlike in Mendenhall and

Simmons, a true “accounting” had occurred. . . .

Consequently, nothing in either Mendenhall

or Simmons suggests that an administrative

agency’s actions can undermine the conclusive

resolution of rights by the courts.

Fresenius, 733 F.3d at 1378 (O’Malley, J., dissenting from

denial of reh’g en banc). These same observations apply

here. That this Court in Simmons revisited a merits

judgment in a case that was still open without a damages

award does not mandate doing so in a case containing a

truly final judgment, complete with a calculated damages

award. 4

In short, Federal Circuit judges themselves (and at

least one academic) have raised substantial questions

over whether the Simmons decision gives support at all

for the “Fresenius / Simmons preclusion principle.” See

also Fresenius, 721 F.3d at 1360 (Newman, J., dissenting).

This supplies yet further justification for certiorari review.

4. In addition, Simmons related solely to court-to-court

relations and was irrelevant to the constitutional question of whether

an administrative agency can override a prior judicial decision on

the same issue.

2. Though the Federal Circuit did not adopt such

reasoning, ALE has in the past argued that patent

determinations are somehow different and unique. ALE

has argued that ordinary rules of finality do not apply

when PTAB decisions are involved, on grounds that

PTAB outcomes “extinguish” a cause of action, or render

a patent “void ab initio.” (Federal Circuit ECF#114, at

11, 14, citing Moffitt v. Garr, 66 U.S. 273, 283 (1862)).

ALE’s argument goes too far. If ALE were right, then a

judgment could never become final enough to be immune

to an administrative agency unpatentability outcome—a

result even the Fresenius panel decision avoids. That

is why “extinguishment” is not the theory underlying

Fresenius, but rather issue preclusion (or, at least an

incorrect application of issue preclusion). Accord Versata

Computer Indus. Sol’ns, Inc. v. SAP AG, 564 Fed. App’x

600 (Fed. Cir. 2014) (permitting enforcement of judgment

that Federal Circuit deemed final enough, despite parallel

PRAB invalidation) (non-precedential). Indeed, Moffitt

does not support ALE’s argument anyway. It is inapposite.

Moffitt involved a voluntary surrender of patent rights

in order to obtain a reissue patent. 66 U.S. at 283. This

is not a reissue patent case. There was no surrender.

Nothing in Moffitt suggests that PTAB outcomes (which

are involuntary) render a patent “extinguished” or “void

ab initio.”

ALE has also argued that Chrimar’s position is

somehow inconsistent with Oil States Energy Servs.,

LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365

(2018). That decision held that PTAB tribunals do not

assert the “judicial power,” and thus do not structurally

violate separation of powers. If anything, the Oil States

result underscores how anomalous it is that government

employees who do not assert the judicial power render

decisions that can wipe out final Article III judgments.

More pointedly, Oil States did not address what level of

finality makes Article III judgments immune to later

administrative agency unpatentability decisions—a

different type of separation of powers issue.

ALE has also argued that Chrimar’s effort to preserve

its Article III judgment reflects an improper request for

an award of damages on invalid patent claims. But such

rhetoric sidesteps the Federal Circuit’s departure from

legal norms. The standards governing finality have always

existed in the shadow of a potentially meritorious “second

bite” from a losing litigant. Even so, the law has already

balanced the competing policy concerns, coming down in

favor respecting finality by means of tying the hands of a

litigant who “shot and missed” in a first proceeding.

Chrimar’s position is in harmony with patent policy. A

PTAB-canceled patent is no threat to the general public.

Only the losing litigant who had due process in a first

fair proceeding must bear the burden of its having lost a

validity contest that it had every chance to win. Applying

longstanding rules of finality and preclusion would in

no way threaten the general public’s right to practice

invalidated patent claims.

Indeed, that a second proceeding resulted in

invalidity only cements that this case is a proper

vehicle, starkly presenting the particular issue of two

inconsistent decisions on the same issue, whereupon

courts must respect the finality of the first one. This

Court’s longstanding precedent reveals that the Federal

Circuit approach is in error, and that this case does not

raise any substantial question of improper rent-seeking

under invalid patents. Having won a damages judgment,

Chrimar’s right to collect those damages from a single

party arises directly from the judgment and no longer

depends on the underlying patent. Cromwell v. County

of Sac, 94 U.S. 351, 353 (1877) (“Such demand or claim,

having passed into judgment, cannot again be brought

into litigation between the parties in proceedings at law

upon any ground whatever.”); Pennsylvania v. Wheeling

& Belmont Bridge Co., 59 U.S. (18 How.) 421, 431 (1856)

(“[I]f the remedy in this case had been an action at law, and

a judgment rendered in favor of the plaintiff for damages,

the right to these would have passed beyond the reach of

the power of congress.”).

III. The “Fresenius / Simmons Preclusion Principle”

deepens a circuit split and violates separation of

powers by allowing administrative outcomes to

nullify otherwise final Article III judgments.

Judges of the Federal Circuit have also correctly

identified a intrinsic constitutional violation. The

“Fresenius / Simmons preclusion principle” raises

implicit constitutional concerns over a rule that allows

an administrative agency decision to nullify a court

judgment that has otherwise resolved the merits and

damages of a patent infringement suit. See ePlus, Inc. v.

Lawson Software, Inc., 790 F.3d 1307, 1315 (Fed. Cir. 2015)

(O’Malley, J., joined by Wallach, J., dissenting from denial

of reh’g en banc) (noting “the constitutional concerns

raised by both this case and [Fresenius]”); Fresenius,

733 F.3d at 1373 n.1 (O’Malley, J., joined by Rader, J.

and Wallach, J.) (agreeing there are “constitutional

implications” identified by the panel dissent); Fresenius,

721 F.3d at 1352-53 (Newman, J., dissenting) (“My

colleagues endorse administrative abrogation of final

judicial decisions, despite the constitutional prohibition as

explained from the earliest days of the nation in Hayburn’s

Case, 2 U.S. 409, 1 L. Ed. 436, 2 Dall. 409 (1792) (the federal

judiciary will not render judgments subject to revision,

suspension, modification or other review by executive or

legislative branches).”). This case presents a proper vehicle

for the Court to address these constitutional questions.

Permitting an administrative ruling to vacate the binding

effect of an Article III judgment under Chrimar III

transforms the decision in Chrimar I into an advisory

opinion that could be “revised and controlled” by the

Executive Branch in violation of centuries of this Court’s

separation of powers rulings to the contrary. Hayburn’s

Case, 2 U.S. (2 Dall.) 409, 411 (1792).

In particular, the Federal Circuit decision here

expanded Fresenius and thus deepened a circuit split.

Whereas in Fresenius, a panel of the Federal Circuit

found finality lacking because of an appellate command to

recalculate post-judgment ongoing royalties, the instant

Chrimar III decision found finality lacking even though

ongoing royalties were not subject to a rate recalculation.

As noted before, the Chrimar I panel found it “immaterial”

to royalty calculations that claim interpretation under one

of four adjudged patents required a remand. App. 48a.

This expansion of Fresenius deepens the circuit split

already identified by several Federal Circuit judges.

See, e.g., ePlus, Inc. v. Lawson Software, Inc., 789 F.3d

1349, 1370 (Fed. Cir. 2015), cert denied, 136 S. Ct. 1166

(2016) (O’Malley, J., dissenting) (“[T]he majority opinion

further deepens the circuit split between our court’s

approach to finality and that of our sister circuits, as

identified by Judge Newman in her dissent in Fresenius

II, 721 F.3d at 1355-59 (Newman, J., dissenting).”). This

expansion of Fresenius also deepens the circuit split on

the constitutional Separation of Powers question.

The case that exemplifies a proper treatment of the

issue is Qualcomm, Inc. v. FCC, 181 F.3d 1370, 1372

(D.C. Cir. 1999). Qualcomm held that after the merits

of a suit have been decided by a court of appeals and the

appellate mandate issues, another branch of government

cannot negate the merits ruling, even while a remand to

determine the appropriate remedy is still pending. Id. at

1376, 1378-79. Qualcomm had applied for an FCC license,

but was rebuffed. Id. at 1372. The D.C. Circuit vacated

that portion of the FCC ruling, and remanded for further

proceedings on the proper remedy. Id. at 1373. After the

mandate, Congress removed statutory authority for the

FCC to grant such a license. Id. at 1373-74. The agency

on remand then dismissed the license proceedings on the

basis that it “no longer had authority to act on it.” Id. at

1375. Thus in Qualcomm, the legislative branch acted

through legislation to subvert an earlier appellate court

remand order to the FCC.

But the Qualcomm court ruled that constitutional

separation of powers forbade another branch’s interference

with a final appellate court judgment. Id. at 1376. The FCC

had “no discretion on remand” to reconsider the merits

of the license application, holding that the intervening

legislation did not deprive the FCC of authority because

the court determination of Qualcomm’s entitlement to

relief no longer depended on the underlying statute but

rather on the court’s mandate. Id. Hence, the D.C. Circuit’s

rule, if applied here, would have led to the opposite

outcome in the instant proceedings.

Qualcomm, but not Fresenius, is consistent with this

Court’s precedent. This Court’s decisions have recognized

several kinds of “unconstitutional restriction[s] upon the

exercise of judicial power.” Plaut v. Spendthrift Farm,

Inc., 514 U.S. 211, 218 (1995). Two concern the effect of

judgments once they have been rendered: “Congress

cannot vest review of the decisions of Article III courts

in officials of the Executive Branch,” id., because to do

so would make a court’s judgment merely “an advisory

opinion in its most obnoxious form,” Chicago & Southern

Air Lines, Inc. v. Waterman S. S. Corp., 333 U.S. 103, 113

(1948). And Congress cannot “retroactively command[] the

federal courts to reopen final judgments,” because Article

III “gives the Federal Judiciary the power, not merely to

rule on cases, but to decide them, subject to review only

by superior courts in the Article III hierarchy.” Plaut,

514 U.S., at 218-219 (emphasis in original).

The unifying constitutional principle among these

restrictions is that neither branch—whether legislative

or executive—can properly interfere with or nullify an

Article III final judgment. 5 Yet that is what the “Fresenius

/ Simmons preclusion principle” allows. Under Chrimar

5. Cf. Ward v. Dixie Nat’l Life Ins. Co., 595 F.3d 164, 178 (4th

Cir. 2010) (“Were we to accept [defendant’s] argument” that the state

legislature’s enactment of a statutory change after the mandate had

issued on a Fourth Circuit ruling adopting the opposite definition

required the Fourth Circuit’s decision to be overturned, “we would be

forced to decide whether the legislature’s action was unconstitutional

under Plaut on the ground that our decision in Ward I constituted

a ‘final judgment.’”).

III, a court’s merits ruling can be vacated even after the

mandate has issued, as long as any aspect of the case

remains on appeal. Under Qualcomm, a merits ruling

is final once the mandate has issued, regardless of later

developments in another branch of government. This

Court should therefore grant certiorari to end the circuit

split, and evaluate the “Fresenius / Simmons preclusion

principle” against important constitutional limits.

IV. Criticism of Fresenius should lead to this Court’s

review.

Judges of the Federal Circuit and elsewhere, and

academics, have all sharply criticized the Fresenius

decision—the legal principle applied in the present

Chrimar III decision addressed by this petition. See e.g.,

Versata Software, Inc. v. SAP Am., Inc., No. 2:07cv153RSP, 2014 U.S. Dist. LEXIS 54640, at *10 (E.D. Tex.

Apr. 21, 2014) (“To hold that later proceedings before

the PTAB can render nugatory that entire [judicial]

process, and the time and effort of all of the judges and

jurors who have evaluated the evidence and arguments

would do a great disservice to the Seventh Amendment

and the entire procedure put in place under Article III

of the Constitution.”); Michael Greve, Exceptional, After

All and After Oil States: Judicial Review and the Patent

System, Bos. U.J. Sci. & Tech. L., at 32-33 (forthcoming

2020) (available at http://dx.doi.org/10.2139/ssrn.3381076)

(criticizing Fresenius “absolute finality” rule as “doubly

problematic,” and noting that “[i]nfringement actions

threaten to become a farce if the Article III action is merely

a trial run for subsequent administrative proceedings”);

Gugliuzza, (In)valid Patents, 92 Notre Dame L. Rev. at 308

(Fresenius’s “absolute finality rule encourages wasteful

procedural maneuvering, allows an adjudged infringer

a second chance at proving invalidity, and threatens

separation of powers by permitting an administrative

agency to effectively nullify court judgments.”); Peggy

P. Ni, Rethinking Finality in the PTAB Age, 31 Berk.

Tech. L.J. 557 (2016) (“[T]he incentive to prolong district

court litigation so that alleged infringers may potentially

receive a favorable PTO decision of invalidity increases

gamesmanship, a result that harms the public and patent

holder.”). A commentator writing for the magazine of

the ABA’s Intellectual Property Section noted that the

Fresenius decision “is far out of step with well-established

[finality] principles in the regional circuits” and is “unlikely

to be the last word on inconsistent judgments” between

the Executive Branch and the courts. See King & Wolfson,

PTAB Rearranging the Face of Patent Litigation, 6

Landslide 18, 22 (Nov./Dec. 2013).

Judge Moore also explained why a dual track system of

parallel validity litigation that permits PTAB nullification

of final judgments encourages “gamesmanship” by

infringement defendants. Defendants can (and do) seek

administrative outcomes absolving them of their patent

infringement liabilities under final Article III judgments.

More generally, there are problems with a

system which permits defendants to snatch

victory from the already closed jaws of defeat.

Whether these problems are to be resolved

by the Supreme Court through its precedent

on finality or through Congress, this sort of

gamesmanship ought to be curtailed. I have no

problem with the dual track system Congress

has created, but for at least a subset of cases,

defendants are abusing the process by doing

both. This is wasteful of judicial, executive,

and party resources, and it is just plain unfair.

Congress intended the IPR/CBM/reexam route

to be an alternative to district court litigation of

certain validity issues, not duplicative of them.

ePlus, 790 F.3d at 1315 (Moore, J., dissenting from denial

of reh’g en banc, joined by O’Malley, J., Reyna, J., and

Wallach, J.). This case exemplifies the same problems.

Unless the Court intervenes, ALE and others like

it in the future will be allowed to make contentions

otherwise precluded under the Restatement that a

post-judgment patent cancellation decision abates their

previously-adjudged Article III liability. The Federal

Circuit will continue to deviate from the otherwise wellsettled federal common law of preclusion that applies in

every other circuit. As numerous Judges of the Federal

Circuit recognize, the time has come to harmonize the

Federal Circuit with Supreme Court precedent and the

Restatement, unsplit the circuits, restore constitutional

validity to our system of parallel track patentability

litigation, and eliminate the waste and gamesmanship

that current precedent incentivizes.

V. This case presents an excellent vehicle.

1. The issue having percolated through numerous

Federal Circuit decisions in recent years, now is the

time and this is the case for this Court’s review. A recent

published analysis about the present case concludes that

“the frequency of inconsistent district court and PTAB

judgments [will] increase as the number of parallel

proceedings increases.” Robert M. Masters, Jonathan

R. DeFosse and Kevin A. Ryan, “Intellectual Property

Outlook: Cases and Trends to Follow in 2020—PART

3,” The National Law Review (March 5, 2020), available

at https://www.natlawreview.com/article/intellectualproperty-outlook-cases-and-trends-to-follow-2020-part-3

(last viewed March 7, 2020). This analysis also warns

that, absent this Court’s review, there will be increasing

Federal Circuit deployment of the rule and testing of its

limits: “We also expect to see litigants test the boundaries

of so-called Fresenius preclusion in 2020. On the patent

owner side, we expect calls for the Supreme Court to

intervene and hold that the PTAB cannot override prior

infringement and validity determinations rendered as

part of an Article III court proceeding.” Id. The authors

also wryly note the instability of legal rights under the

rule: “the result reached in Chrimar [III] seems to be

dependent on the wording of the order the Federal Circuit

issues in connection with its remand decisions.” Id.

Chrimar recognizes that the parties presented nearly

the same issue to this Court in the Fresenius (2014) case,

but that the Court denied certiorari. At that time, the issue

had not yet fully percolated within the Federal Circuit.

Even though Fresenius had earned strong dissents from

numerous Federal Circuit judges, it would not have been

clear at the time how far the Federal Circuit would go

with its errant doctrine. Now we know.

On the facts, Fresenius reflected a more “nonfinal”

situation than here. In Fresenius, the post-judgment

royalty rate had yet to be recalculated at the moment

when the agency canceled the patent. 721 F.3d at 1331.

Those alterations of an underlying infringement judgment

were arguably closer to appellate reopening of a whole

judgment on appeal, a scenario that retrospectively

negates finality under traditional principles. In addition,

the respondent in those cert proceedings argued against

the grant of certiorari because the rise of IPRs “renders

highly unlikely a repetition of this fact pattern or anything

resembling it.” Brief in Opposition in No. 13-1071, at

28-29. Time has proven that the respondent there was

simply wrong. As Chrimar III shows, the Federal Circuit

has named an entire legal principle after the Fresenius

legal rulings. The rise of IPRs has, in fact, multiplied the

quantity and types of cases that apply the legal principles

announced in Fresenius. The ePlus decision, also cited

supra, stands as another such example.

It is now clear that the Federal Circuit believes that

matters wholly settled in final, no-longer-appealable

judgments can be reopened by extraneous Executive

Branch actions. For the Federal Circuit, this can happen

even in cases where damages and ongoing royalty

calculations are long settled. This expansion of Fresenius

merits this Court’s review, even if the Fresenius case did

not.

2. The uncertainty about “finality” under the Federal

Circuit’s approach has given accused infringers an

incentive to engage in dilatory actions to keep otherwise

final judgments of an Article III court from becoming

“final” “in the hope that they will fare better with the

PTO and then be able to unravel the district court

judgment against them.” ePlus, 790 F.3d at 1314 (Moore,

J., dissenting from denial of en banc rehearing petition).

It has encouraged litigants to “scrap and fight” when they

should no longer do so, creating perverse and wasteful

litigation strategies. Id. This case illustrates that the

Federal Circuit lets final judgments become unwound

based on (i) a bright-line rule that there can be no final

judgment while a case remains pending, and (ii) a vague

corollary rule that a case remains pending until every

not “insubstantial” argument raised by a defendant with

respect to any question in the case has been fully litigated

through appeal.

By injecting such uncertainty into the framework

under which all federal litigation proceeds, the Federal

Circuit has all but destroyed the finality of those Article

III judgments and jury verdicts subject to its jurisdiction.

In so doing, it has unwittingly endorsed unnecessary

protraction of litigation and pervasive waste of judicial

resources. A patent is only as valuable as the ability to

enforce it. But under the Federal Circuit’s framework, one

can litigate a patent for years through multiple courts,

only to have those decisions and jury verdicts erased by

the Executive Branch. Uncertainty undermines confidence

in and stability of the patent system, and thus subverts

the legal structures that exist to encourage investment

in new technologies.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

Robert P. Greenspoon

Counsel of Record

Flachsbart & Greenspoon, LLC

333 North Michigan Avenue,

27th Floor

Chicago IL 60601

(312) 551-9500

rpg@fg-law.com

Counsel for Petitioners

APPENDIX

APPENDIX A — Appendix

OPINIONAOF THE UNITED

STATES COURT OF APPEALS FOR THE

FEDERAL CIRCUIT, DATED

SEPTEMBER 19, 2019

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

2018-2420

CHRIMAR SYSTEMS, INC., DBA CMS

TECHNOLOGIES, INC., CHRIMAR

HOLDING COMPANY, LLC,

Plaintiffs-Appellees

ALE USA INC., FKA ALCATEL-LUCENT

ENTERPRISE USA, INC.,

Defendant-Appellant

Appeal from the United States District Court for

the Eastern District of Texas in No. 6:15-cv-00163-JDL,

Magistrate Judge John D. Love.

September 19, 2019, Filed

Before Taranto, Clevenger, and Hughes, Circuit

Judges.

Taranto, Circuit Judge.

Appendix A

Chrimar Systems, Inc., owns four related patents,

U.S. Patent Nos. 8,155,012, 8,942,107, 8,902,760, and

9,019,838, that address the identification and tracking of

electronic equipment over an Ethernet network. In 2015,

Chrimar sued ALE USA Inc., alleging infringement of

those patents. After claim construction, ALE stipulated to

infringement of the asserted claims of all four patents but

pressed several defenses and counterclaims. A jury trial

returned a verdict in favor of Chrimar, and the district

court entered a judgment awarding Chrimar damages

and post-verdict ongoing royalties.

ALE appealed to this court. We affirmed on all issues

presented to us except for the construction of a claim term

in the ’012 patent, which we reversed, and we remanded for

further proceedings. Chrimar Holding Co., LLC v. ALE

USA Inc., 732 F. App’x 876 (Fed. Cir. 2018). We noted in

our opinion (as amended on June 1, 2018) that the Patent

Trial and Appeal Board of the Patent and Trademark

Office had recently issued final written decisions deeming

un-patentable all the claims at issue in this case, but we

did not address any issue that those decisions might raise.

Id. at 881 n.2.

On remand, both parties filed motions with the district

court in July 2018. ALE sought certain relief based on the

Board’s unpatentability decisions—which Chrimar was in

the process of appealing to this court. As relevant here,

ALE moved variously for a stay of the ongoing royalties,

for a stay of the proceedings as a whole, and for relief from

the judgment under Federal Rule of Civil Procedure 60(b)

(5). Chrimar, for its part, moved to dismiss the count of

Appendix A

its complaint that alleged infringement of the ’012 patent

(which Chrimar had narrowed to claim 31 and possibly

also claims 35, 43, and 60), and it provided ALE a covenant

not to sue ALE on that patent. ALE opposed Chrimar’s

motion on the ground that ALE had an unadjudicated,

live counterclaim for noninfringement of the ’012 patent

because the covenant did not extend to ALE’s customers

and distributors.

In August 2018, the district court ruled as follows

on the motions presented. It dismissed Chrimar’s ’012infringement count, and it ruled that ALE no longer had

any counterclaim left, which, in any event, was mooted by

the covenant not to sue and could not be considered in light

of this court’s mandate. And the court concluded that, with

the ’012 patent out of the case, there was nothing left in

the case to stay, which, in any event, could not be done in

light of this court’s mandate. The court’s amended final

judgment included the continuing order to pay ongoing

royalties, but only on the three remaining patents (having

expiration dates in April 2019), not the ’012 patent (having

an expiration date in March 2020). We were informed at

oral argument that, pursuant to the parties’ agreement,

ALE has not paid any money under the judgment—neither

damages nor ongoing royalties nor any other amount.

ALE timely appealed to this court. In May 2019, after

briefing was complete, Chrimar moved to terminate the

appeal. It attached to the motion (a) a formal disclaimer

of claims 31, 35, 43, and 60 of the ’012 patent, dated May

12, 2019, and filed in the PTO under 35 U.S.C. § 253,

and (b) a new declaration from Chrimar’s president,

Appendix A

dated May 14, 2019, that now included ALE’s suppliers,

customers, and distributors within the covenant not to

sue for infringement of the ’012 patent.

Meanwhile, Chrimar’s appeals of the Board’s decisions

proceeded. We heard those appeals the same day as we

heard ALE’s appeal in this case. In a separate order

issued today, we have affirmed the Board’s determination

of un-patentability of all the claims of the ’012, ’107, ’838,

and ’760 patents relevant to this case. Chrimar Systems,

Inc. v. Juniper Networks, Inc., Nos. 2018-1499, 2018-1500,

2018-1503, 2018-1984, 777 Fed. Appx. 518, 2019 U.S. App.

LEXIS 28106 (Fed. Cir. Sept. 19, 2019).

Our affirmance of the Board’s decisions of unpatentability of the patent claims at issue in the present case has

“an immediate issue-preclusive effect on any pending or

co-pending actions involving the patent[s].” XY, LLC v.

Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018).

This is such a case under Fresenius USA, Inc. v. Baxter

Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013), and related

cases. It does not involve the special circumstance of a

“fully satisfied and unappealable final judgment” like the

one in WesternGeco L.L.C. v. ION Geophysical Corp., 913

F.3d 1067, 1072 (Fed. Cir. 2019).

A case is “pending,” XY, LLC, 890 F.3d at 1294,

when it is not yet final in the sense that “the litigation [is]

entirely concluded so that [the] cause of action [against the

infringer] was merged into a final judgment . . . one that

ends the litigation on the merits and leaves nothing for the

court to do but execute the judgment,’’ Fresenius, 721 F.3d

Appendix A

at 1341. Such finality generally does not exist when a direct

appeal is still pending. Mendenhall v. Barber-Greene Co.,

26 F.3d 1573, 1579-80 (Fed. Cir. 1994) (invalidity judgment

may be raised “at any stage of the affected proceedings”);

id. at 1583-84; see WesternGeco, 913 F.3d at 1070-72; Dow

Chemical Co. v. Nova Chemicals Corp. (Canada), 803 F.3d

620, 628 (Fed. Cir. 2015); ePlus, Inc. v. Lawson Software,

Inc., 789 F.3d 1349, 1358 (Fed. Cir. 2015); Fresenius, 721

F.3d at 1344, 1347.

A case is generally to be considered as a whole in

judging its pendency. In John Simmons Co. v. Grier

Bros. Co., 258 U.S. 82, 42 S. Ct. 196, 66 L. Ed. 475, 1923

Dec. Comm’r Pat. 669 (1922), the patent claims had been

held invalid in a completed appeal and the case had been

remanded only for proceedings on a separate, state-law

claim. While the state-law proceedings were pending, the

Supreme Court held the patent claims valid in another

case. The Court then ruled that this new holding had to

be applied to the first case, reviving the patent claims.

Id. at 88-91. Simmons involved applying a decision that

upheld validity to revive a patent claim that had been

adjudicated invalid in another, still-pending case. But

its understanding of the finality principle applies as well

in the more familiar situation presented in this case and

in the line of authorities cited above, where the issue is

application of a holding of invalidity (unpatentability)

to patent claims that had been upheld in another, stillpending case.

This case is still pending. And we cannot say that

its pendency rests on the assertion of only insubstantial

Appendix A

arguments. We therefore have no occasion to address

questions that might arise about application of the

Fresenius/Simmons preclusion principle to a case that

has been kept alive only on insubstantial grounds.

ALE asked the district court to modify the ongoing

royalty portion of the judgment, at least by staying the

running of the obligation. A district court has authority and

discretion to modify continuing relief when circumstances

change. See System Federation No. 91, Ry. Employees’

Dept., AFL-CIO v. Wright, 364 U.S. 642, 646-47, 81 S.

Ct. 368, 5 L. Ed. 2d 349 (1961); ePlus, 789 F.3d at 1355

(“[A] continuing decree of injunction directed to events

to come is subject always to adaptation as events may

shape the need.”) (quoting United States v. Swift & Co.,

286 U.S. 106, 114-15, 52 S. Ct. 460, 76 L. Ed. 999 (1932)).

We have not been shown any authority declaring that,

if asked, a district court may not or should not at least

consider staying ongoing royalties in light of new Board

unpatentability decisions like the ones at issue here. ALE

could reasonably request this relief.

For similar reasons, ALE also could reasonably

request a stay of the case in light of the Board’s decisions.

As a general matter, a district court has a range of

discretion about whether to stay a case before it in light

of other proceedings that might simplify resolution of

the case. See, e.g., Murata Machinery USA v. Daifuku

Co., 830 F.3d 1357, 1361 (Fed. Cir. 2016); Landis v. North

American Co., 299 U.S. 248, 254-55, 57 S. Ct. 163, 81 L.

Ed. 153 (1936) (holding that a decision to stay proceedings

“calls for the exercise of judgment, which must weigh

Appendix A

competing interests and maintain an even balance”). ALE

does not contend that the Board’s decisions themselves

have preclusive effect before judicial review has occurred

or the time for judicial review has run without a request for

judicial review. But it does contend that, even before that

time, the Board’s decisions should at least be considered

in an equitable determination whether to stay the case—

presumably along with other considerations, such as the

stage of the case and ALE’s own choices about where to

challenge the patent claims at issue. Without addressing

the ultimate merits of that contention, we conclude that, at

least under present case law, there is nothing insubstantial

about ALE’s argument for a stay of the case.

The district court denied the relief requested. It did

not, for example, terminate the royalties and leave Chrimar to recover damages for the period at issue through

a follow-on lawsuit if the patent claims survived judicial

review. ALE was reasonable in appealing the district

court’s denial of relief. It had a substantial argument that

the district court did not exercise available discretion

because, in denying the requested stay, it did not recognize

that it had discretion. In these circumstances, we do not

decide whether ALE would have had a reasonable basis to

appeal had the district court recognized its discretion and

exercised it upon consideration of relevant circumstances

and policies.

In addition, ALE had a substantial argument to

the district court that it still had a counterclaim for

nonin-fringement of the ’012 patent even if Chrimar’s

affirmative count asserting infringement of that patent

Appendix A

was to be dismissed. The procedural history presented

to us provides a substantial basis for ALE’s contention

that it had not dropped or forfeited its counterclaim,

and the limited record presented to us provides a

substantial basis for uncertainty about whether no case

or controversy remained in light of the covenant not to sue

that Chrimar gave to ALE in the district court. Without

declaring ALE’s contention meritorious, we think that

ALE could reasonably press those contentions both in

the district court and on appeal. We note that only after

the briefing was complete on appeal did Chrimar take

additional steps—filing a statutory disclaimer and a

broader covenant not to sue—to strengthen its argument

that there was no longer a case or controversy over

infringement of the ’012 patent.

Finally, in all of the foregoing respects, we see nothing

insubstantial about ALE’s contention that our 2018

mandate did not foreclose the district court’s consideration

of the arguments ALE made. The Board’s unpatentability

decisions had not existed at the time of the rulings that

were challenged on appeal, and we were not asked to

rule on the effect of those intervening decisions. In these

circumstances, ALE had a substantial argument when

the case returned to the district court that any effect of

the Board’s decisions, in the respects ALE invoked them,

was for the district court to decide, with consideration of

the issue not foreclosed by our mandate. See Standard

Oil Co. of Cal. v. United States, 429 U.S. 17, 18-19, 97

S. Ct. 31, 50 L. Ed. 2d 21 (1976); Engel Industries, Inc.

v. Lockformer Co., 166 F.3d 1379, 1383 (Fed. Cir. 1999);

Prism Technologies LLC v. Sprint Spectrum L.P., 757 F.

App’x 980, 982-83 (Fed. Cir. 2019).

Appendix A

We reiterate that we do not decide whether ALE is

correct on the merits of the just-discussed contentions.

We decide only that this case remains pending and that

its pending status is not the result of an abuse of the

judicial process in the form of presentation of insubstantial

arguments. As a result, the now-affirmed unpatentability

determinations by the Board as to all claims at issue must

be given effect in this case. Accordingly, the motion to

terminate the appeal is denied, the final judgment and

award of costs are vacated, and the case is remanded to

the district court for dismissal.

Each party shall bear its own costs.

VACATED & REMANDED FOR DISMISSAL

10a

B the united

Appendix B —Appendix

order of

states district court for the eastern

district of texas, tyler division,

filed september 7, 2018

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

CIVIL ACTION NO. 6:15-CV-00163-JDL

CHRIMAR SYSTEMS, INC.,

CHRIMAR HOLDING COMPANY, LLC,

Plaintiffs,

ALCATEL-LUCENT ENTERPRISE USA INC.,

Defendant.

ORDER

Before the Court is Defendant ALE USA Inc.’s

(“ALE”) Renewed Motion to Stay and/or Sever Ongoing

Royalties Pending Resolution of the Invalidity of the

Asserted Patents pursuant to Rule 60(b)(5) of the Federal

Rules of Civil Procedure. (Doc. No. 482.) Plaintiffs

Chrimar Holding Company, LLC and Chrimar Systems,

Inc. (“Chrimar”) have filed a response. (Doc. No. 483.)

On August 24, 2018, the Court entered an Amended

Final Judgment in this matter pursuant to the Federal

11a

Appendix B

Circuit’s mandate after the Court denied ALE’s request

to sever and stay ongoing royalties. (Doc. Nos. 476, 480,

481.) ALE now renews its motion for the sole purpose of

foreclosing procedural arguments on appeal that ALE

failed to seek relief under Rule 60(b)(5) after entry of the

Amended Final Judgment, and incorporates by reference

its prior arguments. (Doc. No. 482.)

For the reasons previously stated, the Court DENIES

ALE’s Renewed Motion (Doc. No. 482).

So ORDERED and SIGNED this 7th day of

September, 2018.

/s/

JOHN D. LOVE

UNITED STATES MAGISTRATE

JUDGE

12a

Appendix CFINAL JUDGMENT

APPENDIX C — AMENDED

OF THE UNITED STATES DISTRICT COURT FOR

THE EASTERN DISTRICT OF TEXAS, TYLER

DIVISION, DATED AUGUST 24, 2018

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

CIVIL ACTION NO. 6:15-CV-00163-JDL

CHRIMAR SYSTEMS, INC.,

CHRIMAR HOLDING COMPANY, LLC,

Plaintiffs,

ALCATEL-LUCENT ENTERPRISE USA INC.,

Defendant.

AMENDED FINAL JUDGMENT

A jury trial regarding the claims of Plaintiffs

Chrimar Systems, Inc. and Chrimar Holding Company

(collectively, “Chrimar”) against Defendant ALE USA

Inc. (“ALE”), and regarding ALE’s legal defenses and

counterclaims, commenced on October 3, 2016. The jury

returned its unanimous verdict on October 7, 2016. (Doc.

No. 349). The Court ruled on the parties’ post-trial motions

and ultimately entered a final judgment in this matter in

accordance with the jury’s verdict. (Doc. No. 423). ALE and

Chrimar appealed certain issues to the Federal Circuit.

13a

Appendix C

The Federal Circuit rejected the claim construction of the

term “adapted” as set forth in claim 31 of the ’012 Patent

but otherwise affirmed the verdict in its entirety, including

the infringement damages award, the Court’s ruling on

fees, and the fraud judgment. (Doc. No. 463). The only

issue remanded to this Court was ALE’s liability as to

Claim 31 of the ’012 Patent based on a revised construction

of the claim term “adapted” found therein. Upon remand,

Chrimar moved to dismiss the ’012 Patent from this action

and provided ALE with a covenant not to sue on the ’012

Patent. (Doc. No. 469.) The Court subsequently granted

Chrimar’s Motion to Dismiss, which resolved the only

remaining issue. (Doc. No. 476.) The Court also denied

reconsideration of this ruling.

Based on the jury’s verdict, the entirety of the record

available to the Court, the Court’s rulings on the parties’

respective post-trial motions, and the Federal Circuit’s

opinion, the Court enters this Amended Final Judgment

fully and finally disposing of all claims by and between

Chrimar and ALE.

The Court ORDERS, ADJUDGES, DECREES, and

DECLARES as follows:

• ALE stipulated that the accused PoE Products

infringe the following claims, as construed by

the Court, based on Chrimar’s PoE Standards

compliance-based theory of infringement:

claims 1, 5, 72, and 103 (across claims 1, 5, and

72) of U.S. Patent Number 8,942,107 (“the ’107

Patent”);

14a

Appendix C

claims 1, 59, 69, 72 (across claims 1, 59, and 69),

and 145 of U.S. Patent Number 8,902,760 (“the

’760 Patent”); and

claims 1, 7, and 26 of U.S. Patent Number

9,019,838 (“the ’838 Patent”).

• Consistent with the jury’s verdict, ALE did not meet

its burden of proof with respect to invalidity and

unenforceability for the following patent claims:

claims 1, 5, 72, and 103 (across claims 1, 5, and

72) of the ’107 Patent;

claims 1, 59, 69, 72 (across claims 1, 59, and 69),

and 145 the ’760 Patent;

and

claims 1, 7, and 26 of the ’838 Patent.

• The Court awards actual damages to Chrimar for

ALE’s infringement of the ’107 Patent, the ’760

Patent, and the ’838 Patent in the amount of

$324,558.34 for damages as of September 30, 2016.

• Chrimar is f u rther awarded pre-judgment

interest on the actual damages found by the jury

($324.558.34), from the date of July 1, 2015 through

the day before entry of the Final Judgment (Doc.

No. 423), calculated at the prime rate, compounded

quarterly, in the amount of $18,918.98.

15a

Appendix C

• Chrimar is awarded post-judgment interest on the

actual damages, pre-judgment interest, and costs

awarded herein, at the rate of 0.83%, compounded

annually, as provided by 28 U.S.C. § 1961, from the

date of entry of the Final Judgment (Doc. No. 423)

through the date upon which Chrimar receives from

ALE full payment of the amounts ordered herein.

• The following terms have the following meanings:

The term “PoE Standards” shall mean the

IEEE 802.3af standard, and any amendment to

that standard that uses the same detection or

classification protocols, and shall also specifically

include the IEEE 802.3at standard, and any

amendment to that standard that uses the same

detection or classification protocols;

The term “PoE PDs” shall mean Powered Devices

that implement the PoE Standard(s), including

PoE wireless access points, VoIP phones, and IP

cameras, and any other devices that are capable

of automatically receiving operational power over

an Ethernet network in compliance with the PoE

Standard(s);

The term “PoE PSEs” shall mean Power

Sourcing Equipment that implement the PoE

Standard(s), including PoE switches, routers,

hubs, and repeaters, and any other devices that

are capable of automatically providing operational

power over an Ethernet network in compliance

with the PoE Standards;

16a

Appendix C

The term “PoE Products” shall mean PoE PDs

and PoE PSEs; and

• Chrimar is further awarded — for so long as ALE’s

infringement of the ’107 Patent, the ’760 Patent, and

the ’838 Patent continues — post-verdict ongoing

royalties in the amount of $1.2067 per Power over

Ethernet (“PoE”) port per PoE Product 1 sold

beginning on October 1, 2016, and continuing:

As to PDs, through April 8, 2019 (the date of the

expiration of the last to expire of the ’107 and ’760

patents); and

As to PoE PSEs, through April 8, 2019 (the date

of the expiration of the last to expire of the ’838

and ’760 patents).

• All relief not granted in this Final Judgment is

DENIED.

• All pending motions not previously resolved are

DENIED.

• Chrimar is the prevailing party, and as the

prevailing party, Chrimar shall recover its costs

from ALE in the amount of $100,020.58 (Doc. No.

442).

1. For avoidance of doubt, in no event will there be more than

one royalty assessed per PoE port.

17a

Appendix C

• This is a final judgment.

So ORDERED and SIGNED this 24th day of August,

2018.

/s/

JOHN D. LOVE

UNITED STATES MAGISTRATE

JUDGE

18a

Appendix D —Appendix

ORDER D

of the UNITED

STATES DISTRICT COURT FOR THE EASTERN

DISTRICT OF TEXAS, TYLER DIVISION, FILED

AUGUST 24, 2018

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

CIVIL ACTION NO. 6:15-CV-00163-JDL

CHRIMAR SYSTEMS, INC., CHRIMAR HOLDING

COMPANY, LLC,

Plaintiffs,

ALCATEL-LUCENT ENTERPRISE USA INC.,

Defendant.

ORDER

Before the Court is Defendant A lcatel-Lucent

Enterprise USA, Inc.’s (“ALE”) Motion to reconsider

the Court’s Order (Doc. No. 476) denying ALE’s Motion

to Stay (Doc. No. 470) and granting Plaintiffs’ Motion to

Dismiss (Doc. No. 469). Plaintiffs Chrimar Systems Inc.

and Chrimar Holdings Company, LLC (“Chrimar”) filed

a response (Doc. No. 479). For the reasons stated herein,

ALE’s Motion (Doc. No. 477) is DENIED.

19a

Appendix D

The Federal Rules of Civil Procedure do not

specifically provide for motions for reconsideration.

Shepherd v. Int’l Paper Co., 372 F.3d 326, 328 n.1 (5th

Cir. 2004). Motions to reconsider are considered rare

and filed only for the limited purpose: “to permit a party

to correct manifest errors of law or fact, or to present

newly discovered evidence.” Krim v. pcOrder.com, Inc.,

212 F.R.D. 329, 331 (W.D. Tex. 2002) (citations omitted).

Mere disagreement with an order of the Court does not

warrant reconsideration of that order. Id. at 332. A party

should not restate, recycle, or rehash arguments that were

previously made. Id.

Here, A LE arg ues that the Cour t’s Order is

“fundamentally unfair” and that it makes mistakes of

fact and law. (Doc. No. 477, at 4.) Specifically, ALE argues

that the Court improperly dismissed ALE’s counterclaims

and mischaracterized what those counterclaims were. Id.

While ALE contends that the Court made a manifest error

in these determinations perhaps to bolster its motion, these

arguments actually elucidate ALE’s mischaracterization

of the Court’s Order. As an initial matter, the Court did

not dismiss any counterclaims of ALE’s; rather, the Court

determined that “there are no counterclaims of ALE’s that

remain pending for the Court to adjudicate.” (Doc. No.

476, at 4.) This conclusion remains correct and unchanged

in view of the trial in this case and the Federal Circuit’s

mandate. Id. Further, perhaps prompted by the Court’s

order explaining that ALE had failed to explain any basis

for reviving a counterclaim, ALE now confuses what it

alleges is a counterclaim versus what was indisputably

presented as a defense to infringement at trial—namely

20a

Appendix D

the issues of derivation and improper inventorship. See

Doc. No. 476, citing Doc. No. 350 at 10–14 (identifying

invalidity as a defense to patent infringement with no

objection). Simply put, ALE did not present a counterclaim

of invalidity to the jury during the trial of this case. Thus,

there is no open issue with respect to any counterclaim

and such consideration would ultimately be inappropriate

in view of the Federal Circuit’s mandate. As to the Court’s

ruling on the motion to stay, ALE has not met the exacting

standards required for reconsideration. Indeed, ALE

raises the same arguments already considered by the

Court. (Doc. No. 477, at 10–11.) These rehashed arguments

do not form a basis for reconsideration of the Court’s

denial of a stay.

Having considered these arguments, the Court finds

that ALE does not establish that the Court committed any

manifest errors of law in its prior decision. The remainder

of ALE’s arguments were already raised and considered

by the Court. The Court finds no reason to reconsider

those arguments now. Accordingly, ALE’s Motion for

reconsideration (Doc. No. 477) is DENIED.

So ORDERED and SIGNED this 24th day of

August, 2018.

/s/

JOHN D. LOVE

UNITED STATES MAGISTRATE JUDGE

21a

E the united

Appendix E —Appendix

ORDER of

states DISTRICT COURT FOR THE EASTERN

DISTRICT OF TEXAS, TYLER DIVISION,

FILED AUGUST 8, 2018

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

CIVIL ACTION NO. 6:15-CV-00163-JDL

CHRIMAR SYSTEMS, INC.,

CHRIMAR HOLDING COMPANY, LLC,

Plaintiffs,

ALCATEL-LUCENT ENTERPRISE USA INC.,

Defendant.

ORDER

On October 3–7, 2016 the Court held a five-day jury

trial in this matter involving U.S. Patent Nos. 8,115,012

(“the ’012 Patent”), 8,902,760 (“the ’760 Patent”),

8,942,107 (“the ’107 Patent”), and 9,019,838 (“the ’838

Patent”) (collectively “the patents-in-suit”). Defendant

Alcatel-Lucent Enterprise USA Inc. (“ALE”) stipulated

to infringement of the patents-in-suit. The jury found

the asserted claims valid and awarded a lump sum of

$324,558.34. (Doc. No. 349.) The jury also found that

ALE did not prove its counterclaims by a preponderance

22a

Appendix E

of the evidence that Plaintiffs Chrimar Systems Inc. and

Chrimar Holding Company, LLC (“Chrimar”) committed

fraud against ALE or that Chrimar breached a contract

with the IEEE. Id. The Court ruled on the parties’ posttrial motions and ultimately entered a final judgment in

this matter in accordance with the jury’s verdict. (Doc.

Nos. 412, 413, 414, 423.) Of relevance, the Court awarded

actual damages to Chrimar for ALE’s infringement of

the ’012 Patent, the ’107 Patent, the ’760 Patent, and the

’838 Patent in the amount of $324,558.34 for damages as

of September 30, 2016, as well as pre-judgment and postjudgment interest. (Doc. No. 423.) The Court also issued

post-verdict ongoing royalties in the amount of $1.2067

per Power over the Ethernet (“PoE”) port beginning on

October 1, 2016 and continuing: (1) as to PoE Powered

Devices (“PDs”) that are not ’012 Patent Excluded PDs,

through March 4, 2020 (the date of the expiration of the

last to expire of the ’012, ’107, and ’760 Patents); (2) as to

’012 Patent Excluded PDs, through April 8, 2019 (the date

of the expiration of the last to expire of the ’107 and ’760

Patents); and (3) as to PoE Power Sourcing Equipment

(“PSEs”), through April 8, 2019 (the date of the expiration

of the last to expire of the ’838 and ’760 Patents). Id.

The Court’s final judgment was subsequently appealed

to the Federal Circuit. The Federal Circuit affirmed the

verdict in its entirety, but rejected the claim construction

of the term “adapted” as set forth in claim 31 of the ’012

Patent. (Doc. No. 463.) Specifically, the Federal Circuit

rejected the Court’s construction of the claim term

“adapted” as “designed, configured, or made” and adopted

ALE’s proposed construction that “adapted” means

23a

Appendix E

“modified.” Id. The remainder of the Court’s rulings were

affirmed, including the infringement damages award, the

Court’s ruling on fees, and the fraud judgment. Id. The

case was remanded for further proceedings consistent

with that opinion and the corresponding mandate

subsequently issued. (Doc. No. 465.)

On July 10, 2018, the Court held a status conference

to discuss how to proceed with the case on the sole issue

before the Court—liability as to claim 31 of the ’012 Patent

based upon the Federal Circuit’s modified construction

of the term “adapted” found therein. (Doc. No. 467.)1 At

that time, Chrimar offered to dismiss the ’012 Patent and

ALE raised, for the first time, an argument that it should

not have to pay any damages, including ongoing royalties,

because the patents-in-suit had since been found invalid

by the Patent Trial and Appeal Board (“PTAB”). The

Court ordered the parties to meet and confer and submit

subsequent briefing on these issues. (Doc. No. 468.)

In response, the Court first received Chrimar’s motion

to voluntarily dismiss Count I of the First Amended

Complaint related to infringement of the ’012 Patent.

(Doc. No. 469.) ALE opposed this motion. (Doc. No.

473.) From the Court’s perspective, Chrimar should be

allowed to dismiss Count I of its live complaint related

to infringement of the ’012 Patent. Elbaor v. Tripath

1. Because the other three patents-in-suit support the lump

sum damages award, which was affirmed, and do not contain the

term “adapted,” the only issue before the Court concerns liability

with respect to the ’012 Patent and the difference of 11 months of

ongoing royalties with respect to that patent.

24a

Appendix E

Imaging, Inc., 279 F.3d 314, 317 (5th Cir. 2002) (“As a

general rule, motions for voluntary dismissal should be

freely granted unless the non-moving party will suffer

some plain legal prejudice other than the mere prospect

of a second lawsuit.”). Rule 41(a)(2) provides that “an

action may be dismissed at the plaintiff’s request only

by court order, on terms that the court considers proper.

If a defendant has pleaded a counterclaim before being

served with the plaintiff’s motion to dismiss, the action

may be dismissed over the defendant’s objection only if

the counterclaim can remain pending for independent

adjudication.” Fed.R.Civ.P. 41(a)(2). Chrimar has agreed

to dismiss this claim with prejudice and provide ALE a

covenant not to sue. (Doc. No. 469.) ALE claims prejudice

because Chrimar has not agreed to a covenant not to sue

ALE’s customers and distributors and also contends that

the covenant does not divest the Court of jurisdiction over

ALE’s counterclaims. (Doc. No. 473, at 5.)

Here, Chrimar’s covenant not to sue and dismissal

with prejudice relieves any potential prejudice to ALE,

and ALE’s customers and distributors who are not

parties to this suit do not create a controversy or cause

prejudice to ALE such that the Court should not grant

Chrimar’s voluntary dismissal. Compare Plains Growers

By & Through Florists’ Mut. Ins. Co. v. Ickes-Braun

Glasshouses, Inc., 474 F.2d 250, 255 (5th Cir. 1973)

(finding that a third-party claim would not bar a voluntary

dismissal of plaintiff’s action.). Indeed, ALE can only cite

the mere speculation of future litigation against customers

and distributors on a patent that it acknowledges has been

25a

Appendix E

found invalid by the PTAB. 2 The speculation of bringing

a future suit on an invalid patent simply does not create

prejudice that would outweigh the interest in granting

Chrimar’s voluntary dismissal of that patent with a

covenant not to sue ALE.

Additionally, there are no counterclaims of ALE’s

that remain pending for the Court to adjudicate. Prior

to trial, ALE dropped all counterclaims but for its

counterclaims of fraud and breach of contract. ALE had

a full trial on those counterclaims and the judgment as to

those claims was affirmed by the Federal Circuit. Indeed,

those counterclaims of fraud and breach of contract were

not implicated by the single point of remand related to

the meaning of the term “adapted” in claim 31 of the

’012 Patent and ALE did not pursue a counterclaim of

invalidity as to claim 31 of the ’012 Patent at trial. See Doc.

No. 350 at 6–7, 20–21 (final jury instructions identifying

ALE’s only counterclaims for fraud and breach of contract

with no objection) and id. at 10–14 (identifying invalidity as

a defense to patent infringement with no objection). ALE

now provides a conclusory assertion that it has pending

counterclaims of non-infringement and invalidity with

respect to the ’012 Patent. (Doc. No. 473, at 12 n. 12.) Even

if the Federal Circuit’s remand somehow revived these

2. While ALE cites to the potential of continued suits based on

the Court’s decision related to a license agreement with Defendant

Accton, that decision was simply an interpretation of an already

existing license agreement that resulted from the settlement of

ongoing litigation. It does not support the potential of customers

being sued in the future on a patent that has since been held invalid

by the PTAB.

26a

Appendix E

claims, which it did not, the question of infringement is

of course mooted by Chrimar’s willingness to dismiss the

’012 Patent and provide ALE a covenant not to sue. As to

any invalidity counterclaim possibly being revived, the

question of invalidity was only raised as one of improper

inventorship, which did not implicate the meaning of the

term “adapted.” ALE has not now identified any prior art

or any defense that would merit reviving a counterclaim

of invalidity based on the Federal Circuit’s interpretation

of the term “adapted,” and indeed this burden rests with

ALE. See Dow Jones & Co. v. Ablaise Ltd., 606 F.3d 1338,

1345 (Fed. Cir. 2010) (“[s]ubject matter jurisdiction in a

declaratory judgment suit depends upon the existence

of a substantial controversy, between the parties having

adverse legal interests, of sufficient immediacy and reality

to warrant the issuance of a declaratory judgment, and

the plaintiff bears the burden of proving the existence of

such a controversy throughout the litigation.”) (internal

quotations omitted) citing MedImmune, Inc. v. Genentech,

Inc., 549 U.S. 118, 127 (2007).

Finally, a voluntary dismissal of that claim avoids the

expenditure of further Court and party resources in a

matter that has already seen a five-day trial, significant

post trial rulings by this Court, and an appeal resulting in

a full opinion. As noted above, the narrow issue remanded

to this Court was whether ALE infringes the ’012 Patent

based on a revised construction of a claim term. That

question implicates only 11 months of the ongoing royalty,

the remainder of the ongoing royalty is intact due to the

Federal Circuit’s affirmance of the judgment as to the

other patents-in-suit.

27a

Appendix E

For these reasons, Chrimar’s Motion to Dismiss

(Doc. No. 469) is GRANTED and Count I of the First

Amended Complaint for infringement of the ’012 Patent

is DISMISSED with PREJUDICE.

Having dismissed the ’012 Patent from this action

with prejudice, there is nothing left for the Court to

resolve. ALE has filed a motion to stay and/or sever the

ongoing royalties pending appeal of the PTAB’s decision

on invalidity (Doc. No. 470), but given that the sole basis

for this Court’s jurisdiction on remand has been resolved

via voluntary dismissal of the claim, there is nothing to

stay. Indeed, the ongoing royalties were affirmed by

the Federal Circuit with the Circuit Court’s express

knowledge that the PTAB had invalidated at the patentsin-suit. See Doc. No. 463, at 6 n. 1 (“The claims of the

’107, ’838, ’012, and ’760 patents to which ALE stipulated

infringement in this case were all determined to be

unpatentable by the Patent Trial and Appeal Board in four

final written decisions.”). Despite ALE’s awareness of the

PTAB’s decisions, to the Court’s knowledge, ALE never

raised the issue with the Federal Circuit that any ongoing

royalties should be stayed. Indeed, despite the Federal

Circuit’s express knowledge of these decisions, the case

was not remanded to this Court for a determination of

whether any of the affirmed ongoing royalties should

be stayed given the PTAB’s decisions. As discussed

above, this case was remanded for the sole purpose of

adjudicating Chrimar’s claim on the ’012 Patent with

a new construction of the term “adapted.” Because the

’012 Patent has been dismissed with prejudice, there is

nothing left for this Court to resolve. See Samsung Elecs.

28a

Appendix E

Co. v. Rambus, Inc., 523 F.3d 1374, 1380 (Fed. Cir. 2008)

(“[a]fter [declaratory plaintiff] offered the entire amount

of attorney fees in dispute, the case became moot…[t]he

district court had no case or controversy to continue to

consider.”) citing Chathas v. Local 134 IBEW, 233 F.3d

508, 512 (7th Cir. 2000) (“if the defendant has thus thrown

in the towel there is nothing left for the district court to

do except enter judgment…”). Thus, ALE’s Motion (Doc.

No. 470) is DENIED as moot.

Within 7 days of this Order the parties shall submit

an amended final judgment to the Court consistent with

this opinion and the mandate of the Federal Circuit.

So ORDERED and SIGNED this 8th day of August,

2018.

/s/John D. Love

John D. Love

UNITED STATES MAGISTRATE

JUDGE

29a

Appendix F — Appendix

opinionFof the UNITED

STATES COURT OF APPEALS FOR THE

FEDERAL CIRCUIT, DATED MAY 8, 2018

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

May 8, 2018, Decided

2017-1848, 2017-1911

CHRIMAR HOLDING COMPANY, LLC, CHRIMAR

SYSTEMS, INC., DBA CMS TECHNOLOGIES, INC.,

Plaintiffs-Cross-Appellants

ALE USA INC., FKA ALCATEL-LUCENT

ENTERPRISE USA, INC.,

Defendant-Appellant

Judges: Before PROST, Chief Judge, WALLACH and

TARANTO, Circuit Judges.

Opinion

Taranto, Circuit Judge.

Chrimar Systems, Inc., filed a patent infringement

suit against ALE USA Inc. (formerly known as AlcatelLucent Enterprise USA Inc.). In response, ALE asserted

30a

Appendix F

numerous defenses and counterclaims, including a claim

of fraud under Texas law. As relevant here, a jury found

infringement by ALE and awarded damages to Chrimar,

and it rejected ALE’s fraud claim. The court entered

judgment in favor of Chrimar on those issues. The court

also denied Chrimar’s post-trial motion for attorney fees

under 35 U.S.C. § 285. Both parties appeal. We reject one

of the claim constructions adopted by the district court,

but we affirm the damages award, the judgment on ALE’s

fraud claim, and the denial of fees.

Chrimar owns four related patents—U.S. Patent

Nos. 8,155,012; 8,942,107; 8,902,760; and 9,019,838—

whose specifications are materially the same for present

purposes. We treat the ’012 patent’s specification as

representative. The specification describes the use of

devices that connect to a wired network, such as Ethernet,

and that manage or track remote electronic equipment,

such as a personal computer, on that network. ’012 patent,

col. 1, lines 23-26, 37-39. In the arrangement described,

such equipment, called an “asset,” has a tracking device,

called a “remote module,” attached internally or externally

to it. Id., col. 1, line 66 through col. 2, line 2. The asset can

be managed, tracked, or identified by using the remote

module to communicate a unique identification number,

port identification, or wall jack location to the network

monitoring equipment, or “central module.” Id., col. 3,

lines 22-27; see id., col. 8, line 58 through col. 9, line 23;

31a

Appendix F

see also id., col. 6, lines 48-67 & Fig. 4. Asset identification

may be done without using existing network bandwidth,

because the remote module can convey information about

the asset to the central module through the same wiring

or cables that convey the high-frequency data on the

network, without adversely affecting the high-frequency

data. See id., col. 3, lines 10-12; id., col. 11, line 64 through

col. 12, line 1 (“The system transmits a signal over

preexisting network wiring or cables without disturbing

network communications by coupling a signal that does

not have substantial frequency components within the

frequency band of network communications.”). And asset

identification does not require that the asset be powered

on. Id., col. 4, lines 65-67; id., col. 12, lines 48-50.

According to Chrimar, all four patents are standardessential patents in that they cover features required

by the Institute of Electrical and Electronics Engineers

(IEEE) Power over Ethernet (PoE) 802.3af standard

(ratified in 2003) and 802.3at amendments to the IEEE

PoE 802.3 standard (ratified in 2009). Those standards

address detection, classification, power-on, operating

power, and removal of power. Chrimar’s patents cover

the first three features (detection, classification, and

power-on).

A Power over Ethernet controller chip controls

the activities addressed in the standard relevant here.

Products with such a controller chip interact with other

products to enable the safe delivery of power from powersourcing equipment (e.g., switches) to powered devices

(e.g., wireless access points and voice over internet protocol

32a

Appendix F

(VoIP) phones). ALE sells VoIP phones, wireless access

points, and switches that implement the IEEE PoE

802.3af/at standard.

The IEEE ratified the PoE 802.3af standard in 2003.

That ratification followed a series of meetings convened

by the IEEE regarding adoption of the standard. John

Austermann, Chrimar’s Chief Executive Officer and

listed inventor on the patents, participated in several such

meetings in 2000.

Under the then-applicable bylaws of the IEEE

Standards Association Board (2000)—which have since

been changed—if the IEEE knew of an essential patent,

the IEEE could adopt a standard that includes the

known use of that patent or patent application “if there

is technical justification in the opinion of the standardsdeveloping committee and provided the IEEE receives

assurance from the patent holder that it will license

under reasonable terms and conditions for the purpose

of implementing the standard.” J.A. 10548. The bylaws

also stated that the letter of assurance “shall be provided

without coercion,” J.A. 10548; and the IEEE Standards

Association operations manual required that the working

group “shall request that known patent holders submit

statements” but that the working group refrain from

coercing the patent holders to do so, J.A. 6711. According

to Chrimar’s expert Clyde Camp, who served as Chair of

the IEEE Patent Committee, the IEEE’s patent policy at

the time was one of “request and encourage,” J.A. 6706,

33a

Appendix F

consisting of sending letters to owners of patents that

may be essential and requesting (without requiring) that

the patent owner return a “Letter of Assurance,” J.A.

6705-09; see also J.A. 6713-14 (IEEE 2002 statement

submitted to FTC: “Disclosure of patents is based on

the willingness of the individual participants to disclose

any known patents whose use would be required in the

practice of the standard.”). Mr. Camp also testified that

patent holders did not always provide a letter of assurance

in response to such requests. J.A. 6712.1

In October 2001, while the relevant IEEE component

was considering the adoption of the PoE 802.3af standard,

Chrimar expressed its belief to the IEEE that the

Chrimar-owned U.S. Patent No. 5,406,260—not asserted

in this case—was an essential patent for that standard.

Chrimar submitted a “letter of assurance” agreeing to

license the ‘260 patent upon request “to all applicants at

royalty rates that [Chrimar] deems reasonable in light of

the specific circumstances of this particular situation.”

J.A. 10559. The IEEE never requested, and Chrimar did

not submit, any similar letter regarding the four patents

asserted in this case.

In 2015, Chrimar sued ALE in the Eastern District

of Texas for direct and indirect infringement of the ’012,

’107, ’838, and ’760 patents under 35 U.S.C. §§ 271(a), (b).

1. In 2004, the IEEE changed its policy regarding the

submission of letters of assurance. See J.A. 6512-13, 6716-17, 6725-26.

34a

Appendix F

ALE asserted defenses of, inter alia, noninfringement,

invalidity (including anticipation, obviousness, lack of

enablement, lack of sufficient written description, and

lack of proper inventorship), unenforceability based on

unclean hands and inequitable conduct, prosecution laches,

equitable estoppel, waiver, and implied license. ALE also

asserted counterclaims of, inter alia, breach of contract

with the IEEE (with ALE as a third-party beneficiary),

fraud, and violation of section 2 of the Sherman Act, as well

as declaratory judgment counterclaims corresponding to

several of ALE’s affirmative defenses.

The court issued a claim construction order in late

March 2016. Chrimar Sys., Inc. v. Alcatel-Lucent USA,

Inc., No. 6:15-cv-163, 2016 U.S. Dist. LEXIS 40686, 2016

WL 1228767 (E.D. Tex. Mar. 28, 2016) (Claim Construction

Order I). Two weeks before trial, on September 20, 2016,

ALE stipulated to infringement of claims 1, 5, 72, and

103 of the ’107 patent and claims 1, 7, and 26 of the ’838

patent under the governing claim construction order;

and ALE requested further construction of the claim

terms “adapted” and “physically connect” in the asserted

claims of the ’012 and ’760 patents. A week later, the court

issued a second claim construction order construing those

terms. Chrimar Sys., Inc. v. Alcatel-Lucent USA, Inc.,

No. 6:15-cv-163, 2016 U.S. Dist. LEXIS 131816, 2016 WL

5393853 (E.D. Tex. Sept. 27, 2016) (Claim Construction

Order II). In light of that order, ALE, on September 30,

2016, stipulated to infringement of claims 31, 35, 43, and

60 of the ’012 patent and claims 1, 59, 69, 72, and 145 of

the ’760 patent. 2

2. The claims of the ’107, ’838, ’012, and ’760 patents to which

ALE stipulated infringement in this case were all determined to

35a

Appendix F

In late June 2016, ALE moved to strike the expert

report and exclude the testimony of Chrimar’s damages

expert, Robert Mills, arguing that, in his damages

calculation, he did not properly limit compensation to the

value of the patented features of ALE’s products, i.e.,

he did not adequately separate the value of the patented

features from the value of nonpatented features and the

value associated with the IEEE standardization. In August

2016, the court granted the motion only in part. The court

concluded that, for admissibility, Mr. Mills had adequately

separated patented from nonpatented features. But the

court concluded that Mr. Mills improperly stated in his

report that there was no need even to assess the value of

standardization because, when the IEEE standard was

adopted, there were no noninfringing alternatives to the

features at issue; the court struck that statement. Mr.

Mills then submitted a supplemental report, as authorized,

addressing the value of standardization. When ALE again

moved to strike and exclude, the court again granted

ALE’s motion only in part, striking from the supplemental

report one sentence about the lack of noninfringing

alternatives at the time the standard was adopted.

be unpatentable by the Patent Trial and Appeal Board in four final

written decisions. Appeals from the final written decisions for the

first three patents have been filed with this court. Notice of Appeal,

Chrimar Sys., Inc. v. Juniper Networks, Inc., No. 18-1499 (Fed. Cir.

Feb. 1, 2018), ECF No. 1; Notice of Appeal, Chrimar Sys., Inc. v.

Juniper Networks, Inc., No. 18-1500 (Fed. Cir. Feb. 1, 2018), ECF

No. 1; Notice of Appeal, Chrimar Sys., Inc. v. Juniper Networks,

Inc., No. 18-1503 (Fed. Cir. Feb. 1, 2018), ECF No. 1. ALE has not

yet appealed the final written decision regarding the ’760 patent,

entered by the Board on April 26, 2018.

36a

Appendix F

A jury trial was held in early October 2016. ALE

dropped many of its defenses and counterclaims shortly

before or during trial and, as mentioned previously,

stipulated to infringement under the governing claim

constructions shortly before trial. The issues submitted

to the jury were infringement damages, invalidity based

on improper inventorship, fraud, and breach of contract.

On October 7, 2016, the jury returned a verdict in favor of

Chrimar on all issues and awarded Chrimar a royalty of

$324,558.34. The defenses of equitable estoppel, waiver,

prosecution laches, and inequitable conduct were left to

the court, which ruled for Chrimar on all issues.

After the jury trial, Chrimar filed a motion for

attorney fees under 35 U.S.C. § 285, and ALE moved

for judgment as a matter of law or a new trial. The court

denied both motions. Chrimar Sys., Inc. v. Alcatel-Lucent

Enter. USA Inc., No. 6:15- cv-163, 2017 U.S. Dist. LEXIS

19587, 2017 WL 568712 (E.D. Tex. Feb. 13, 2017) (JMOL

Order); Mem. Op. & Order, Chrimar Sys., Inc. v. AlcatelLucent Enter. USA Inc., No. 6:15-cv-163, 2017 U.S. Dist.

LEXIS 220804 (E.D. Tex. Jan. 23, 2017), ECF No. 412

(Fees Order), J.A. 20001-05. On February 27, 2017, the

court entered final judgment.

ALE timely appealed. Chrimar timely cross-appealed.

We have jurisdiction under 28 U.S.C. § 1295(a)(1).

ALE appeals three of the district court’s claim

constructions, the denial of its motion to exclude Mr.

37a

Appendix F

Mills’s damages testimony, and the jury instruction on

ALE’s state-law fraud claim.

We review de novo a district court’s claim construction,

while reviewing for clear error any underlying factual

findings. Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S.

Ct. 831, 840-42, 190 L. Ed. 2d 719 (2015). ALE challenges

the district court’s construction of (1) “adapted,” as used

in the relevant claims of the ’012 patent; (2) a series of

infinitive phrases in the relevant claims of the ’107, ’760,

and ’838 patents; and (3) “physically connect,” as used in

the relevant claims of the ’760 patent. We agree on the

first issue, not the others.

ALE objects to the court’s construction of “adapted”

in claim 31 of the ’012 patent (on which claims 35, 43, and

60 directly or indirectly depend). That claim reads:

31. An adapted piece of Ethernet data terminal

equipment comprising:

an Ethernet connector comprising a plurality

of contacts; and

at least one path coupled across selected

contacts, the selected contacts comprising at

least one of the plurality of contacts of the

Ethernet connector and at least another one

38a

Appendix F

of the plurality of contacts of the Ethernet

connector,

wherein distinguishing information about the

piece of Ethernet data terminal equipment is

associated to impedance within the at least one

path.

’012 patent, col. 18, line 62 through col. 19, line 5 (emphasis

added).

In this case, the district court, at the parties’ request,

adopted the construction of “[a]n adapted piece of

Ethernet data terminal equipment” from an earlier case

in which the same court construed the preamble in claim

31 of the ’012 patent. See Claim Construction Order II,

2016 U.S. Dist. LEXIS 131816, 2016 WL 5393853, at *1,

*3 (referring to ChriMar Sys., Inc. v. Alcatel-Lucent,

Inc., No. 6:13-cv-880, 2015 U.S. Dist. LEXIS 1801, 2015

WL 233433, at *7-9 (E.D. Tex. Jan. 8, 2015) (6:13-cv-880

Claim Construction Order)). In the claim construction

order entered in the earlier case, the court construed

the preamble as “limiting” and stated that its “plain and

ordinary meaning” should govern its scope, a construction

with which both parties to that case agreed. 3 6:13-cv-880

Claim Construction Order, 2015 U.S. Dist. LEXIS 1801,

3. That case, filed in 2013, involved Chrimar and Alcatel-Lucent.

(The present case involves Chrimar and ALE USA Inc., which was

spun off from Alcatel-Lucent in 2014.) With the parties’ agreement,

the 2013 case was dismissed without prejudice in June 2015. Chrimar

Sys., Inc. v. Alcatel-Lucent, Inc., No. 6:13-cv-880, 2015 U.S. Dist.

LEXIS 1801 (E.D. Tex. Jan. 8, 2015), ECF No. 140.

39a

Appendix F

2015 WL 233433, at *9. While acknowledging that the

parties continued to dispute the meaning of the term

“adapt,” id., the court in that order reasoned:

The “adapting” requirement in the claims

of the ’012 Patent is essential to address the

problem confronted by the inventors taking

existing networks and adapting them to make

equipment distinguishable. Thus, the word

“adapting” must have some meaning.

Id. The court did not say more about what that “meaning”

is. See id.

Two weeks before trial in the present case, ALE asked

for further claim construction of the term “adapted.”

Claim Construction Order II, 2016 U.S. Dist. LEXIS

131816, 2016 WL 5393853, at *1. According to ALE, the

term should be construed as a “modification of preexisting

equipment.” See 2016 U.S. Dist. LEXIS 131816, [WL] at

*3. The court disagreed with that narrowing construction.

2016 U.S. Dist. LEXIS 131816, [WL] at *4. Instead, the

court construed the term “consistently with its plain

and ordinary meaning to mean ‘designed, configured, or

made.’” 2016 U.S. Dist. LEXIS 131816, [WL] at *3-4.

In light of the parties’ agreement in this case that the

preamble is limiting, both before the district court and on

appeal, see ALE Br. 12; Chrimar Br. 18 n.5, we disagree

with the district court’s claim construction. Generally,

every apparatus may be described as “designed,

configured, or made,” and Chrimar has not explained

40a

Appendix F

how that construction in any way limits the scope of

claim 31. Chrimar also contends that “piece of Ethernet

data terminal equipment,” rather than “adapted,” is the

limiting term in the preamble, but it does not explain how

the former is limiting. Chrimar Br. 20-21. The district

court did not adopt that position. See Claim Construction

Order II, 2016 U.S. Dist. LEXIS 131816, 2016 WL

5393853, at *3-4; see also 6:13-cv-880 Claim Construction

Order, 2015 U.S. Dist. LEXIS 1801, 2015 WL 233433, at

*9 (assuming that “the word ‘adapting’ must have some

meaning”).

The specification is consistent with giving “adapted”

a meaning tied to existing equipment to avoid stripping

the concededly limiting claim language of meaning. The

specification describes the invention generally as designed

to operate on a preexisting network connected to pieces

of networked terminal equipment. See ’012 patent, col.

3, lines 18-22 (“In accordance with the teachings of the

present invention, a communication system is provided

for generating and monitoring data over a pre-existing

wiring or cables that connect pieces of networked

computer equipment to a network.”); id., col. 1, line

67 through col. 2, line 2 (“[A] method for permanently

identifying an asset by attaching an external or internal

device to the asset and communicating with that device

using existing network wiring or cabling is desirable.”).

As the district court noted, moreover, the specification

states that “[t]his invention is particularly adapted to be

used with an existing Ethernet communications link or

equivalents thereof,” ’012 patent, col. 3, lines 35-37, and

that “[t]he communication system 15 and 16 described

41a

Appendix F

herein is particularly adapted to be easily implemented

in conjunction with an existing computer network 17 while

realizing minimal interference to the computer network,”

id., col. 4, lines 56-60. Claim Construction Order II, 2016

U.S. Dist. LEXIS 131816, 2016 WL 5393853, at *3; see

also 6:13-cv-880 Claim Construction Order, 2015 U.S.

Dist. LEXIS 1801, 2015 WL 233433, at *9 (stating that

“[t]he ‘adapting’ requirement in the claims of the ’012

Patent is essential to address the problem confronted by

the inventors taking existing networks and adapting them

to make equipment distinguishable” and therefore “must

have some meaning”).

Chrimar does not dispute that the specification

describes embodiments that require modification of a

preexisting piece of Ethernet data terminal equipment.

Nor does it dispute that “adapted” appears only in the

claims of the ’012 patent, not the other patents involving

essentially the same specification, suggesting that the

claim scope chosen for the asserted claims in this patent

is only a subset of what the specification may support.4 It

is hardly unknown for one set of claims to use language

that picks out one among several embodiments, especially

4. The district court noted that the patent describes at least

one embodiment in which the invention is implemented at the

manufacturing stage, rather than through a modification of alreadymanufactured equipment. Claim Construction Order II, 2016 U.S.

Dist. LEXIS 131816, 2016 WL 5393853, at *4 (citing ’012 patent,

col. 11, lines 16-19 (“It is also envisioned that the electronics of the

network identification circuitry can be placed on a motherboard

within the computer or as part of the circuitry on the NIC [network

interface controller] card.”)).

42a

Appendix F

where other claims (perhaps in the same or related patents)

claim more broadly or focus on other embodiments. E.g.,

Advanced Cardiovascular Sys. v. Medtronic, Inc., 265

F.3d 1294, 1305-06 (Fed. Cir. 2001) (refusing to apply

limitations expressed in prosecution histories of related

patents where relevant claim term was not included

in claims of the asserted patent and “[t]he patentee’s

whole point in filing the application that resulted in

the [asserted patent] was to secure broader claims”);

see also, e.g., Haemonetics Corp. v. Baxter Healthcare

Corp., 607 F.3d 776, 782 (Fed. Cir. 2010) (construing term

“centrifugal unit” differently in two separate claims in

the same patent where language in each claim tracked

different embodiments described in the specification).

The claim language here, to be meaningful, requires such

a construction of “adapted.” We therefore adopt ALE’s

proposed construction of “adapted” to mean “modified.”

ALE also objects to the constructions of the infinitive

phrases “to detect,” “to control,” “to provide,” and “to

distinguish” in the relevant claims of the ’838 patent;

“to draw,” “to result,” and “to convey” in the relevant

claims of the ’107 patent; and “to draw,” “to detect,” “to

control,” and “to distinguish” in the relevant claims of the

’760 patent. E.g., ’838 patent, col. 17, lines 17, 19-20; ’107

patent, col. 17, lines 18, 20, 23; ’760 patent, col. 17, lines

28, 33-35. ALE argues that those terms should have been

construed as means-plus-function elements subject to

35 U.S.C. § 112, ¶ 6 because they do not recite sufficient

43a

Appendix F

structure to perform the required function. 5 The district

court rejected that argument. So do we.

The district court properly recognized the presumption

against application of § 112, ¶ 6 where, as here, the word

“means” is not used in the claim and properly asked

whether the terms preceding the infinitive phrases—

”central piece of equipment,” “Ethernet terminal

equipment” (or “BaseT Ethernet terminal equipment”),

and “end device”—identify structures or instead are, like

“means,” essentially place-holder nonce words. Claim

Construction Order I, 2016 U.S. Dist. LEXIS 40686,

2016 WL 1228767, at *5; see Williamson v. Citrix Online,

LLC, 792 F.3d 1339, 1349 (Fed. Cir. 2015) (en banc) (For

functional terms lacking the word “means,” the challenger

arguing for the application of § 112, ¶ 6 must satisfy “[t]he

standard[, which] is whether the words of the claim are

understood by persons of ordinary skill in the art to have

a sufficiently definite meaning as the name for structure.”).

ALE did not dispute before the district court, and has

not disputed on appeal, that those terms refer to known

structures in the art. Claim Construction Order I, 2016

U.S. Dist. LEXIS 40686, 2016 WL 1228767, at *5-6; see

also 2016 U.S. Dist. LEXIS 40686, [WL] at *5 n.2 (noting

that ALE’s “expert repeatedly discusses the ‘Ethernet

terminal equipment’ and ‘end device’ interchangeably

and without any question as to the understanding of these

5. Paragraph 6 of 35 U.S.C. § 112 was replaced with 35 U.S.C.

§ 112(f) when the Leahy-Smith America Invents Act (AIA), Pub. L.

No. 112-29, 125 Stat. 284 (2011), took effect on September 16, 2012.

Because the applications resulting in the asserted patents were filed

before that date, we refer to the pre-AIA version of § 112.

44a

Appendix F

terms in the art”). ALE therefore has not met its burden

to overcome the presumption against applying § 112, ¶ 6

for those infinitives. A claim term that has an understood

meaning in the art as reciting structure is not a nonce

word triggering § 112, ¶ 6. Williamson, 792 F.3d at 1349;

see, e.g., Skky, Inc. v. MindGeek, s.a.r.l., 859 F.3d 1014,

1019-20 (Fed. Cir. 2017) (even including use of the word

“means,” “wireless device means” was not a means-plusfunction term because “’wireless device’ is used in common

parlance . . . to designate structure”) (ellipsis in original).

ALE argues that the district court erred in construing

“physically connect”—as used in claim 1 of the ’760 patent

(on which claims 59, 69, and 72 depend) and claim 73 of the

’760 patent (on which claim 145 depends). Claim 1 reads:

1. A BaseT Ethernet system comprising:

a piece of central BaseT Ethernet equipment;

a piece of BaseT Ethernet terminal equipment;

and

data signaling pairs of conductors comprising

first and second pairs used to carry BaseT

Ethernet communication signals between the

piece of central Ethernet BaseT Ethernet

equipment and the piece of BaseT Ethernet

terminal equipment, the first and second pairs

physically connect between the piece of BaseT

45a

Appendix F

Ethernet terminal equipment and the piece

of central BaseT Ethernet equipment having

at least one DC supply, the piece of BaseT

Ethernet terminal equipment having at least

one path to draw different magnitudes of

current flow from the at least one DC supply

through a loop formed over at least one of

the conductors of the first pair and at least

one of the conductors of the second pair, the

piece of central BaseT Ethernet equipment to

detect at least two different magnitudes of the

current flow through the loop and to control the

application of at least one electrical condition to

at least two of the conductors.

’760 patent, col. 17, lines 15-36 (emphasis added).

The district court considered dependent claim 71

(not asserted in this case), in which the only additional

limitation is that “the first and second pairs are physically

connected between the piece of BaseT Ethernet terminal

equipment and the piece of central BaseT Ethernet

equipment.” Id., col. 21, lines 28-30 (emphasis added). In

light of that dependent claim and the presumption of claim

differentiation, the court stated that the term “physically

connect” in claim 1 requires only that the components

be configured (have the ability) to physically connect,

rather than actually be physically connected (as in claim

71). Claim Construction Order II, 2016 U.S. Dist. LEXIS

131816, 2016 WL 5393853, at *4-5.

On appeal, ALE argues that the district court’s

construction renders the term “physically connect”

46a

Appendix F

meaningless and that, w ithout an actual physical

connection, the system would be inoperable. But requiring

that a system be configured to physically connect is a

meaningful limitation (it imports a meaningful capability),

and such a system is operable (upon action by a user, the

system makes the physical connection needed for actual

operation). Not surprisingly, it is hardly uncommon for

an apparatus or system claim, as a claim to a product

rather than a process (or a forbidden mix), to be directed

to capability, instead of actual operation. Finjan, Inc.

v. Secure Computing Corp., 626 F.3d 1197, 1204 (Fed.

Cir. 2010) (“[W]e have held that, to infringe a claim that

recites capability and not actual operation, an accused

device need only be capable of operating in the described

mode.” (citation and quotation marks omitted)); see, e.g.,

Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1217

(Fed. Cir. 2014) (affirming infringement verdict based

on claims directed to components “reasonably capable

of ‘arranging information for transmission . . . which

identifies a type of payload information’” (quoting U.S.

Patent No. 6,466,568, col. 13, lines 12-18)); Finjan, 626

F.3d at 1204-05 (affirming infringement verdict for “nonmethod claims describ[ing] capabilities without requiring

that any software components be ‘active’ or ‘enabled’”

because “software for performing the claimed functions

existed in the products when sold—in the same way that

an automobile engine for propulsion exists in a car even

when the car is turned off”). Chrimar cites no authority

barring a claim to a component “configured to” work and

capable of operation by a user, where the user’s actual

operation is unclaimed. See Versata Software, Inc. v.

SAP Am., Inc., 717 F.3d 1255, 1262-63 (Fed. Cir. 2013)

47a

Appendix F

(affirming infringement verdict based on evidence that

the system would operate in an infringing manner if a

user followed the accused infringer’s instructions, and

explaining that “[w]hile a device does not infringe simply

because 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 capable of

satisfying the claim limitation” (citation and quotation

marks omitted)). Thus, ALE has not provided any

reason that overcomes the presumption in favor of claim

differentiation. See Phillips v. AWH Corp., 415 F.3d 1303,

1315 (Fed. Cir. 2005) (en banc).

We affirm the judgment of infringement of the ’107,

’838, and ’760 patents. Because we agree with ALE as

to the term “adapted” in the ’012 patent, we vacate the

district court’s claim construction order as to that term.

We remand for further proceedings on infringement of the

’012 patent under the proper construction of “adapted.”

That result does not call for a new trial on damages.

ALE did not ask for a new trial on damages based on our

adoption of its construction of “adapted.” See ALE Br. 21

(requesting only reversal of the infringement judgment);

ALE Reply Br. 11 (requesting that the court either

“reverse or vacate the infringement judgment . . . so that

the fact finder may assess whether the accused products

infringe the asserted claims of the ’012 patent under a

proper construction”). And a new trial on damages is

not warranted on that basis. Chrimar’s technical expert

48a

Appendix F

Dr. Vijay Madisetti testified that all four patents “cover

the PSE [power sourcing equipment] and the PD [power

device] aspects of classification, detection, and controlling

the power,” J.A. 5892—a proposition that ALE agrees

with on appeal, ALE Br. 8. Dr. Madisetti also testified that

the smallest saleable patent-practicing units are ALE’s

power sourcing equipment, which infringe the ’760 and

’838 patents, and ALE’s power devices, which infringe

the ’012, ’107, and ’760 patents, J.A. 5921—a proposition

ALE does not dispute on appeal. Given the (affirmed)

judgment of infringement of the ’107 and ’760 patents,

the absence of an infringement judgment on the ’012

patent is immaterial to damages because any damages

that would result from the alleged infringement of the

’012 patent also results from the infringement of the ’107

and ’760 patents. We therefore proceed to consider ALE’s

independent arguments directed to damages.

ALE challenges the damages award by attacking

the testimony of Mr. Mills, Chrimar’s damages expert.

According to ALE, Mr. Mills, in calculating a reasonable

royalty, (1) relied on licenses not comparable to the

hypothetical negotiation for the present case; (2) did not

adequately separate the value of patented features from

the value of standardization and the value of nonpatented

features; and (3) prejudicially referred to ALE’s total net

revenue and profit. The challenge is most naturally viewed

as a challenge to the admission of Mr. Mills’s testimony,

reviewable for abuse of discretion. See Gen. Elec. Co. v.

Joiner, 522 U.S. 136, 138-39, 118 S. Ct. 512, 139 L. Ed.

49a

Appendix F

2d 508 (1997); Versata, 717 F.3d at 1261 (applying Fifth

Circuit law); Snap-Drape, Inc. v. Commissioner, 98 F.3d

194, 197 (5th Cir. 1996). Our conclusion would not change

even if we viewed ALE’s argument as challenging the

denial of judgment as a matter of law, reviewed de novo

for compliance with the deferential standard for such

challenges to jury verdicts, see Mirror Worlds, LLC

v. Apple Inc., 692 F.3d 1351, 1356-57 (Fed. Cir. 2012)

(applying Fifth Circuit law), or the denial of a new trial,

reviewed for an abuse of discretion, see LaserDynamics,

Inc. v. Quanta Computer, Inc., 694 F.3d 51, 66 (Fed. Cir.

2012) (applying Fifth Circuit law).

There is no reversible error based on Mr. Mills’s

reliance on certain licenses to come to a range for a

reasonable royalty rate and his selection of a rate in the

low end of that range—i.e., $2.50 per PoE port. See J.A.

6223-28 (Mills’s trial testimony); see also J.A. 6164-89

(testimony of Chrimar CEO Austermann going through

30 licenses). To the extent that ALE argues that those

licenses were not sufficiently comparable to be reliable

indicators of what would have occurred in a hypothetical

negotiation between it and Chrimar, ALE failed to

make that challenge when seeking to exclude Mr. Mills’s

testimony or when that testimony was presented at trial.

See JMOL Order, 2017 U.S. Dist. LEXIS 19587, 2017 WL

568712, at *6 & n.7. In addition, ALE was able to—and

did—attack any discrepancies in the license-comparison

approach by presenting extensive contrary testimony

from its expert. J.A. 6807-27. This court has approved

50a

Appendix F

reliance on licenses, which often will not be in identical

circumstances, as long as reasonable adjustments for

differences in contexts are made. See, e.g., Prism Techs.

LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1368-70 (Fed.

Cir. 2017) (citing cases). ALE has not persuasively shown

either an unreasonable methodology or prejudicial error

under that standard.

Nor has ALE shown reversible error regarding Mr.

Mills’s testimony as to apportionment—separating the

patented features’ value from other elements of value in

the accused products. Mr. Mills explained at trial that

he accounted for the products’ non-PoE functionality

(nonpatented functionality outside the PoE standard), the

products’ nonpatented PoE functionality (two nonpatented

features of the PoE standard: operating power and removal

of power), and the value of standardization (generally

requiring practice of a standard-essential patent rather

than noninfringing alternatives). J.A. 6239. For the first,

he calculated the “profit premium” of the PoE functionality,

comparing ALE’s products that differ only in the addition

of that functionality. See J.A. 6240-42. In apportioning the

value of that profit premium to each of the nonpatented and

patented features of the PoE standard, Mr. Mills relied on

the testimony of the technical expert, Dr. Madisetti, who

stated that the patents “are fundamental to the provision

of PoE under the standards” and “relate to the majority

and the most critical aspects of the standard”; that “the

standards would not be successful without Chrimar’s

inventions”; and that “the standards would not have

51a

Appendix F

gained widespread adoption without Chrimar’s patented

inventions.” J.A. 6243-44; see also J.A. 4642-43 (Mills

expert report relying on Dr. Madisetti’s explanation); J.A.

5878, 5887-88, 5892 (Madisetti testimony). Mr. Mills also

testified that, although there was some value attributable

to the nonpatented features of the PoE standard and to

standardization, he adopted a conservative estimate of the

profit premium attributable to the patented features ($2.50

per PoE port), which did not include those values. J.A.

6244-45 (relying on Dr. Madisetti’s testimony regarding

the value of standardization and the nonpatented features

of the PoE standard, and stating that the testimony

“ultimately tells me that $2.50 per port is inherently

reasonable”).

Mr. Mills’s opinion that his conservative estimate of the

portion of the profit premium attributable to the patented

features did not encompass the value of standardization

and nonpatented features does not flunk standards of

reliability and reasonableness. See Aqua Shield v. Inter

Pool Cover Team, 774 F.3d 766, 771 (Fed. Cir. 2014) (noting

that royalty calculations often involve “approximation

and uncertainty”); VirnetX, Inc. v. Cisco Sys., Inc., 767

F.3d 1308, 1328 (Fed. Cir. 2014) (stating that “absolute

precision” is not required in the task of apportionment,

as “it is well-understood that this process may involve

some degree of approximation and uncertainty”). Nor is

unreliability or unreasonableness established by the fact

that Mr. Mills’s proposed royalty rate did not change in

his supplemental report, after he was directed to take into

account the value of noninfringing alternatives. Mr. Mills

assumed, based on Dr. Madisetti’s testimony, that the

52a

Appendix F

value of nonpatented features of the PoE standard and the

value of standardization were not large, and he selected

a figure toward the low end of the range of royalty rates

from comparable licenses, see J.A. 6223-28, including a

license that covered comparable technology and in which

ALE was the licensee, J.A. 6227-28, to reach a royalty rate

for the patented features. In light of those assumptions and

his initially conservative estimate, the unchanged royalty

rate does not prove his method unreliable or unreasonable.

Mr. Mills’s assumptions underlying his damages

theory were the subject of cross-examination. ALE used

that process to suggest that he had neither adequately

appreciated the value of nonpatented features and

standardization nor quantified such value. See, e.g.,

J.A. 6273-84. ALE also provided contrary testimony

from its own expert about the value of standardization

and noninfringing alternatives available at the time

the standard was adopted (leading to ALE’s proposed

royalty rate of $0.05 per PoE port). J.A. 6824-27. The

jury was given instructions regarding apportionment (not

challenged here), including a specific instruction regarding

the need to factor out the value of standardization and of

nonpatented features. J.A. 349-50. ALE has not shown

reversible error in leaving the damages dispute in this

case to that process.

ALE’s final challenge regarding damages is that the

district court improperly allowed Mr. Mills to refer to

ALE’s total revenue and profit, a reference that, according

53a

Appendix F

to ALE, “skewed” the damages inquiry. ALE Br. 62. The

district court, however, allowed that testimony only after

concluding that ALE had opened the door to it by soliciting

testimony from its own witness that relied on ALE’s net

revenue to estimate the very large amount that would

go to Chrimar at ALE’s proposed rate of $0.05 per PoE

port. J.A. 6316-18. We have no basis for disturbing the

district court’s determination that ALE opened the door

and that the now-challenged reference was accordingly

permissible. See United States v. Keith, 582 F. App’x 300,

302 (5th Cir. 2014) (no abuse of discretion in “allow[ing]

the government to elaborate more fully on th[e] line of

questioning” opened by the defendant) (citing United

States v. Walker, 613 F.2d 1349, 1353 (5th Cir. 1980)).

ALE challenges the district court’s instruction to the

jury on the law of fraud under Texas law. “[W]e review the

district court’s determination of state law de novo, though

the district court still has ‘wide discretion’ in formulating

the jury charge.” EMJ Corp. v. Hudson Specialty Ins. Co.,

833 F.3d 544, 550 (5th Cir. 2016).

The jury instruction at issue is as follows (challenged

portions emphasized):

To prove f r aud, A LE must show by a

preponderance of the evidence that Chrimar:

(1) made a misrepresentation of material fact to

ALE, (2) with knowledge of its falsity, (3) with

the intent to defraud ALE, (4) which induced

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justifiable reliance by ALE, and (5) which

resulted in damage to ALE. . . .

In order to prove fraud by omission, ALE must

show by a preponderance of the evidence that:

(1) Chrimar concealed or failed to disclose a

material fact within its knowledge from ALE;

(2) Chrimar had a duty to disclose that fact; (3)

Chrimar knew that ALE was ignorant of the

fact and ALE did not have an equal opportunity

to discover the truth; (4) Chrimar intended to

induce ALE to take some action by concealing

or failing to disclose the fact; (5) ALE relied

on Chrimar’s non-disclosure; and (6) ALE

was injured as a result of acting without that

knowledge.

J.A. 351-52 (emphases added).

ALE argues that the instruction improperly excluded

the possibility that Chrimar’s alleged misrepresentations

or omissions to the IEEE, in failing to submit a Letter of

Assurance regarding the four asserted standard-essential

patents, could support ALE’s fraud claim.6 ALE relies

on Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d

194 (Tex. 2011), for the proposition that common-law

6. ALE has not disputed Chrimar’s contention on appeal that

ALE “provided no evidence at trial regarding its predecessor’s

interest and involvement in the IEEE or the PoE standard-setting

process.” Chrimar Br. 52 n.19 (emphasis omitted) (quoting Chrimar

Sys., Inc. v. Alcatel-Lucent Enter. USA Inc., No. 6:15-cv-163, 2017

U.S. Dist. LEXIS 9819, 2017 WL 345991, at *3 (Jan. 24, 2017)).

55a

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fraud under Texas law “does not require proof that the

entity committing the fraud—here, Chrimar—intended

to defraud the specific party that is making the fraud

allegation.” ALE Br. 68. We see no reversible error in

the district court’s decision to give the instruction it gave.

The district court’s instruction mirrors a statement

of the law in an intermediate Texas court of appeals

decision, 7979 Airport Garage, L.L.C. v. Dollar Rent A

Car Sys., Inc., 245 S.W.3d 488, 507 n.27 (Tex. App. 2007)

(reciting elements of a Texas state law fraud claim in

materially identical terms). That decision post-dates the

Texas Supreme Court’s decision in Ernst & Young, L.L.P.

v. Pac. Mutual Life Ins. Co., 51 S.W.3d 573 (Tex. 2001),

which announced the fraud standard later applied by

Exxon, 348 S.W.3d at 218-19. And after Exxon, the

Fifth Circuit itself recited (in an unpublished decision)

that same statement of the elements of a fraud claim from

the 7979 Airport Garage decision. Shaver v. Barrett Daffin

Frappier Turner & Engel, L.L.P., 593 F. App’x 265, 271

(5th Cir. 2014). Unless Exxon clearly showed those rulings

to be incorrect, the district court permissibly followed

them.

Exxon does not clearly show those rulings to be

incorrect. In Exxon, the court addressed the “intent to

induce” element of fraud. 348 S.W.3d at 217-18 (affirming

principle announced in Ernst & Young, 51 S.W.3d at

580-82). Emerald, a lessor of the O’Connor oil well field,

presented evidence that Exxon, the previous lessor,

filed public plugging reports with the Texas Railroad

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Commission with false representations regarding the

amount of reserves in the oil field, as well as evidence

that “the first place subsequent operators turn is to those

very filings at the Railroad Commission when deciding

whether redevelopment can be economically undertaken.”

Id. at 216-17. The Texas Supreme Court stated that

whether a party “might or should rely on statements” in

such reports “alone is not sufficient to establish an intent

to induce reliance.” Id. at 218. Rather, as in § 531 of the

Restatement (Second) of Torts (1977), “[o]ne who makes

a fraudulent misrepresentation is subject to liability to

the persons or class of persons whom he intends or has

reason to expect to act or to refrain from action in reliance

upon the misrepresentation, for pecuniary loss suffered

by them through their justifiable reliance in the type of

transaction in which he intends or has reason to expect

their conduct to be influenced.” Id. at 218-19 (quoting

Restatement § 531). As explained by the court:

[The] “reason-to-expect standard requires more

than mere foreseeability; the claimant’s reliance

must be ‘especially likely’ and justifiable, and

the transaction sued upon must be the type the

defendant contemplated.” Ernst & Young, 51

S.W.3d at 580 . . . . Even an obvious risk that a

misrepresentation might be repeated to a third

party is not sufficient to satisfy the reason-toexpect standard. A plaintiff must show that

“[t]he maker of the misrepresentation [has]

information that would lead a reasonable man to

conclude that there is an especial likelihood that

it will reach those persons and will influence

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their conduct.” [Restatement] § 531, cmt. d . . . ,

quoted in Ernst & Young, 51 S.W.3d at 581.

Id. at 219. As a matter of law, the court said, it is not enough

that Exxon “knew” that subsequent lessors would rely on

its reports; Exxon must have known that there was “an

especial likelihood that Emerald specifically would rely

on the plugging reports in a transaction being considered

at the time [Exxon] filed the plugging reports.” Id. The

Exxon court therefore ruled that the misrepresentation,

even in a public filing, must be directed at the defrauded

party. That court’s language can fairly be viewed in

the terms (intent even with some constructive aspect)

articulated before Exxon in 7979 Airport Garage (adopted

after Exxon by the Fifth Circuit in Shaver).

It is true that Texas law “does not require proof that

a misrepresentation be made to the defrauded party”

in the sense ALE suggests—in substance, directly to.

ALE Br. 68. But the jury instructions did not require

that the misrepresentation or omission be made “directly

to” ALE. The instructions permitted liability if the

misrepresentation or omission was made to ALE, whether

directly or indirectly. See Neuhaus v. Kain, 557 S.W.2d

125, 138 (Tex. Civ. App. 1977) (“We recognize the rule

that a fraudulent representation may be either direct or

indirect”). Perhaps the instruction would have benefited

from specifying that the fraudulent statement could be

made “directly or indirectly” to ALE; but ALE made no

request for inclusion of words to that effect. ALE objected

to the instruction on the ground that “[w]e think that the

evidence has shown that the - Chrimar has committed

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fraud on the IEEE in general and that it’s not necessary

to show fraud against ALE in this case.” J.A. 6919. The

district court could reasonably reject that proposal as

incorrectly suggesting that neither a direct nor indirect

misrepresentation is required. In these circumstances,

ALE lacks a meritorious argument on appeal for vacatur

of the fraud verdict based on erroneous instructions.

III

Chrimar cross-appeals the district court’s denial of its

motion for attorney fees under 35 U.S.C. § 285, which we

review for abuse of discretion. Highmark Inc. v. Allcare

Health Mgmt. Sys., Inc., 572 U.S. 559, 134 S. Ct. 1744,

1747, 188 L. Ed. 2d 829 (2014).

Chrimar’s argument relies chiefly on the ground

that ALE pressed a large number of defenses and

counterclaims for years, only to drop most of them (e.g.,

concerning antitrust, inequitable conduct, and some

invalidity grounds) late in the litigation, even during

trial. Chrimar does not meaningfully show that those

dropped claims were objectively meritless. It focuses on

the contention that ALE never truly intended to try them.

The district court did not abuse its discretion in

making what here was a case-specific judgment that it was

distinctively well-positioned to make. The court denied

summary judgment as to a number of the claims ALE

later dropped, allowing them to proceed. And the court

determined that ALE’s litigation decisions fell within

the range of ordinary practices involving the narrowing

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of claims for trial. Fees Order, 2017 U.S. Dist. LEXIS

220804 at *9.

We have considered Chrimar’s arguments that this

was an exceptional case as a matter of law and find them

unpersuasive. We therefore affirm the district court’s

ruling on ALE’s § 285 motion.

We vacate in part the district court’s second claim

construction order—the part adopting a construction of

“adapted” in claim 31 of the ’012 patent, a construction

we reject. We affirm the district court’s remaining claim

constructions and the infringement damages award and

the fraud judgment. We remand for further proceedings

consistent with this opinion.

Each party shall bear its own costs.

AFFIRMED IN PART, VACATED IN PART, AND

REMANDED

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Appendix G memorandum

Appendix g — redacted

opinion and order of the united

states district court for the eastern

district of texas, tyler division, filed

february 13, 2017

United States District Court

for the Eastern District of Texas

Tyler Division

CIVIL ACTION NO. 6:15-CV-00163-JDL

CHRIMAR SYSTEMS, INC., CHRIMAR

HOLDING COMPANY, LLC,

Plaintiffs,

ALCATEL-LUCENT ENTERPRISE USA INC.,

Defendant.

February 3, 2017, Decided

February 13, 2017, Filed

REDACTED MEMORANDUM OPINION

AND ORDER

Before the Court is: (1) Defendant Alcatel-Lucent

Enterprises USA, Inc. (“ALE”) Motion for Judgment

as a Matter of Law and Motion for A New Trial (Doc.

No. 378); and (2) Plaintiffs’ Chrimar Systems, Inc. d/b/a

CMS Technologies and Chrimar Holding Company

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Appendix G

LLC (“Chrimar” or “Plaintiffs”) Motion for Judgment

as a Matter of Law on ALE’s IEEE-related Equitable

Defenses and Counterclaims (Doc. No. 379). The Motions

have been fully briefed. For the reasons stated below,

Defendant’s Motion for Judgment as a Matter of Law

and Motion for a New Trial (Doc. No. 378) is DENIED.

Plaintiffs’ Motion for Judgment as a Matter of Law (Doc.

No. 379) is DENIED.

BACKGROUND

On March 9, 2015, Plaintiffs Chrimar Systems, Inc.

d/b/a CMS Technologies and Chrimar Holding Company

LLC (“Chrimar”) filed the instant action against ALE.

(Doc. No. 3.) In this action, Chrimar alleges infringement

of U.S. Patent Nos. 8,115,012 (“the ’012 Patent”), 8,902,760

(“the ’760 Patent”), 8,942,107 (“the ’107 Patent”), and

9,019,838 (“the ’838 Patent”) (“patents-in-suit”))1 .

Chrimar maintains that each of the patents-in-suit are

standard essential patents (“SEP”). Specifically, Chrimar

maintains that the patents-in-suit are SEPs for Power over

the Ethernet (“PoE”) standards IEEE 802.3af-2003 and

IEEE 803.3at-2009. This case proceeded through claim

construction, dispositive motions and pretrial, and the

trial between Chrimar and ALE commenced on October

3, 2016. The following claims, defenses, and counterclaims

were presented to the jury: damages, invalidity based on

derivation and improper inventorship, fraud, and breach

of contract. (Doc. No. 350.)

1. Prior to trial, ALE stipulated to infringement of all of the

asserted claims of the patents-in-suit. (Doc. Nos. 298, 337.)

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Appendix G

At the conclusion of Plaintiffs’ case-in-chief, ALE

moved pursuant to Rule 50(a) for judgment as a matter of

law on Plaintiffs’ allegations of willfulness and damages.

Trial Transcript “Tr.” at 612:17-616:3. The Court denied

ALE’s motion as to Plaintiffs’ damages model (Tr. at

616:8-9), and granted ALE’s motion as to willfulness

(Tr. at 624:4-7). At the close of Defendant’s case-in-chief,

Plaintiffs moved pursuant to Rule 50(a) on the following

issues: (1) infringement; (2) invalidity; (3) derivation;

(4) antitrust; (5) implied license; (6) fraud; (7) breach of

contract; and (8) damages reduction by noninfringing

alternatives. (Tr. at 964:14-984:14.) The Court denied all

of these motions, but granted as to written description

and enablement, the antitrust claim, and implied license.

(Tr. at 965:17-20; 966:12-18; 969:14; 969:25-970:1; 984:14;

986:4-9.) Additionally, at the close of evidence, the Court

also provided ALE an opportunity to present additional

evidence pertaining to ALE’s equitable defenses.

On October 7, 2016, the trial concluded and the jury

returned a verdict as follows: (1) Claims 31, 35, 43, and 60

of the ’012 Patent were not invalid; Claims 1, 5, 72, and 103

of the ’107 Patent were not invalid; Claims 1, 59, 69, 72,

and 145 of the ’760 Patent were not invalid, and Claims 1,

7, and 26 of the ’838 Patent were not invalid; (2) the sum

of money that would fairly and reasonably compensate

Chrimar for ALE’s infringement was $324,558.34; (3)

ALE did not prove by a preponderance of the evidence that

Chrimar committed fraud against ALE; and (4) ALE did

not prove by a preponderance of the evidence that Chrimar

breached a contract with the IEEE. (Doc. No. 349.) Both

Chrimar and ALE have now moved to renew their motions

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Appendix G

for judgment as a matter of law pursuant to Rule 50(b).

Specifically, ALE moves to renew its motion on damages

(Doc. No. 378); and Chrimar moves on all IEEE-related

claims and defenses, including (1) estoppel; (2) unclean

hands; (3) waiver; (4) implied license; (5) patent misuse;

(6) unenforceability; (7) breach of contract; (8) fraud; (9)

antitrust. (Doc. No. 379.)

LEGAL STANDARDS

Judgment as a Matter of Law

A renewed motion for judgment as a matter of law

(“JMOL”) is a challenge to the legal sufficiency of the

evidence supporting the jury’s verdict. Power-One, Inc.

v. Artesyn Techs., Inc., 556 F. Supp. 2d 591, 593 (E.D.

Tex. 2008) (citing Flowers v. S. Reg’l Physician Servs.,

247 F.3d 229, 235 (5th Cir. 2001)). Rule 50 provides that

judgment as a matter of law is appropriate if the court

finds that a reasonable jury would not have a legally

sufficient evidentiary basis to find for the party on that

issue. Fed.R.Civ.P. 50(a)(1). In ruling on a renewed motion

for JMOL, the court may allow judgment on the verdict,

if the jury returned a verdict; order a new trial; or direct

the entry of judgment as a matter of law. Fed.R.Civ.P.

50(b). 2 A post-trial motion for JMOL should be granted

only when the facts and inferences so conclusively favor

one party “that reasonable jurors could not arrive at a

2. In order to advance a renewed motion for judgment as a

matter of law under Rule 50(b), the movant must raise the same

arguments during trial, in a Rule 50(a) motion for judgment as a

matter of law. Fed.R.Civ.P. 50 (a)-(b).

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Appendix G

contrary verdict.” TGIP, Inc. v. AT&T Corp., 527 F. Supp.

2d 561, 569 (E.D. Tex. 2007) (citing Tol-O-Matic, Inc. v.

Proma Produkt-Und Mktg. Gesellschaft m.b.H, 945 F.2d

1546, 1549 (Fed. Cir. 1991)). “If reasonable persons in

the exercise of impartial judgment could differ in their

interpretations of the evidence, then the motion should be

denied.” Id. Thus, a jury’s verdict may be overturned if,

viewing the evidence and inferences therefrom in the light

most favorable to the party opposing the motion, there is

no legally sufficient evidentiary basis for a reasonable jury

to find as the jury did. 3 Guile v. United States, 422 F.3d

221, 225 (5th Cir. 2005) (citing Delano-Pyle v. Victoria

County, 302 F.3d 567, 572 (5th Cir. 2002)). The court

may not make credibility determinations, nor weigh the

evidence. Power-One, 556 F. Supp. 2d at 594 (citing Reeves

v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150,

120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000)).

II. New Trial

Under Federal Rule of Civil Procedure 59, a new trial

may be granted to any party to a jury trial on any or all

issues “for any reason for which a new trial has heretofore

been granted in an action at law in federal court.”

Fed.R.Civ.P. 59. “A new trial may be granted, for example,

if the district court finds the verdict is against the weight

3. Because a motion for judgment as a matter of law is a

procedural matter not unique to patent law, the law of the regional

circuit governs under Rule 50(b). See SynQor, Inc. v. Artesyn Techs.,

709 F.3d 1365, 1373 (Fed. Cir. 2013) (“This court reviews the grant

or denial of a motion for JMOL under the law of the regional circuit

. . . .”).

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Appendix G

of the evidence, the damages awarded are excessive, the

trial was unfair, or prejudicial error was committed in its

course.” Smith v. Transworld Drilling Co., 773 F.2d 610,

612-13 (5th Cir. 1985). The Court is required to view the

evidence “in a light most favorable to the jury’s verdict,

and [] the verdict must be affirmed unless the evidence

points so strongly and overwhelmingly in favor of one

party that the court believes that reasonable persons could

not arrive at a contrary conclusion.” Dawson v. Wal-Mart

Stores, Inc., 978 F.2d 205, 208 (5th Cir. 1992).

ALE’S MOTION FOR JUDGMENT AS A MATTER

OF LAW AND MOTION FOR NEW TRIAL ON

DAMAGES

ALE moves for JMOL, a vacatur of the damages

verdict, or in the alternative, a new trial, on grounds

that Chrimar failed to prove damages. Specifically, ALE

claims that: (1) Chrimar’s damages expert, Mr. Mills,

improperly based his opinions on the Entire Market Value

Rule (“EMVR”); (2) Mr. Mills failed to properly apportion;

(3) the Court erred in its instruction on smallest saleable

unit; (4) the Court erred in allowing Chrimar to present

evidence of and rely on settlement agreements; and (5)

the Court erred in allowing Chrimar to present evidence

on Georgia-Pacific Factors 8, 9, and 10. (Doc. No. 378).

a. Applicable Law

The damages statute, 35 U.S.C. § 284, sets the

floor for “damages adequate to compensate for [patent]

infringement” at “a reasonable royalty for the use

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Appendix G

made of the invention by the infringer.” The burden of

proving damages falls on the patentee. Dow Chem. Co.

v. Mee Indus., Inc., 341 F.3d 1370, 1381 (Fed. Cir. 2003).

Calculation of a reasonable royalty requires determination

of two separate and distinct amounts: (1) the royalty base,

or the revenue pool implicated by the infringement; and (2)

the royalty rate, or the percentage of that pool “adequate

to compensate” the plaintiff for the infringement. See

Cornell Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d

279, 286 (N.D.N.Y. 2009). A reasonable royalty is based

on a hypothetical negotiation that takes place between

the patentee and the infringer on the date infringement

began. Unisplay, S.A. v. American Electronic Sign Co.,

Inc., 69 F.3d 512, 517 (Fed. Cir. 1995). “Although this

analysis necessarily involves an element of approximation

and uncertainty, a trier of fact must have some factual

basis for a determination of a reasonable royalty.” Id.

The trial court has discretion to discern the reliability

of methods used to arrive at a reasonable royalty. See

SmithKline Diagnostics, Inc. v. Helena Labs. Corp., 926

F.2d 1161, 1164 (Fed. Cir. 1991) (“[D]ecisions underlying a

damage theory are discreti

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