• Mar 20 2019
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  • Category: CAFC Updates

SRI sued Cisco for infringement of patents relating to computer-automated methods of hierarchical event monitoring and analysis within an enterprise network. In view of the district court’s final judgment, Cisco appeals the: (1) denial of its motion for summary judgment of patent ineligibility under § 101, (2) construction of the claim term “network traffic data,” (3) grant of summary judgment of no anticipation, (4) denial of judgment as a matter of law of no willful infringement, and (5) grant of enhanced damages, attorneys’ fees, and ongoing royalties. With respect to patent eligibility, because the CAFC finds that a) the claimed technology “overrides the routine and conventional sequence of events” by detecting suspicious network activity, generating reports of suspicious activity, and receiving and integrating the reports using one or more hierarchical monitors, b) that the claims are not directed to using a computer as a tool, but rather recite a specific technique for improving computer network security, and c) that the human mind is not equipped to detect suspicious activity by using network monitors and analyzing network packets as recited by the claims, the CAFC affirms the finding of patent eligibility. The CAFC also affirms the district court’s claim construction, finding that Cisco’s proposed construction goes too far in limiting the amount of preprocessing encompassed by the claim, and rejecting Cisco’s argument-based estoppel theory because SRI’s statements in the prosecution history do not invoke a clear and unmistakable surrender of all preprocessing, including decryption, decoding, and parsing. Regarding anticipation, the CAFC finds that the prior art does not expressly disclose directly examining network packets as required by the claims, and finds no error in the sua sponte nature of the district court’s order,  and therefore affirms the summary judgment of no anticipation. The CFAC however,vacates and remands the district court’s denial of Cisco’s renewed motion for JMOL of no willful infringement because the record is insufficient to establish that Cisco’s conduct rose to the level of wanton, malicious, and bad-faith behavior required for willful infringement, and while the jury heard evidence that Cisco was aware of the patents in May 2012, before filing of the lawsuit, the CAFC does do not see how the record supports a willfulness finding going back to 2000. In addition, Cisco’s decision not to seek an advice-of-counsel defense is legally irrelevant under 35 U.S.C. § 298. While taking no issue with the district court’s award of attorneys’ fees generally, the CAFC vacates and remands the district court’s award of attorneys’ fees under § 285 solely for recalculation for removal of attorney hours clearly included by mistake. Finally, Cisco argues that the district court abused its discretion in awarding the 3.5% ongoing royalty on “all post-verdict sales” without considering Cisco’s design-arounds. The CAFC acknowledges that the district court has not yet determined whether products and services that were not accused (that is, changed after the jury verdict) are colorably different for purposes of ongoing royalty calculations. Judge Lourie dissents from the majority’s decision up-holding the eligibility of the claims, because in his view, they are clearly abstract and thus would not reach the remaining issues in the case.

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