August 6, 2019

Monte Falcoff Interviewed by Bloomberg Law on ATEN v. Uniclass Case

Harness Dickey Principal Monte Falcoff spoke to Bloomberg Law about a new precedential ruling at the Federal Circuit that would make good fodder for a course on patent law.

On August 6, the Federal Circuit upheld a jury decision finding that Uniclass Technology Co. did not infringe two patents on computer technology belonging to ATEN International Co. ATEN sued Uniclass and some of its customers in the U.S. District Court for the Central District of California.

At appeal, ATEN argued that Uniclass’s expert testimony regarding interpretation of patent claim terms confused jurors. The Court of Appeals for the Federal Circuit ruled that ATEN had the opportunity to object at trial, though, and in missing that opportunity, they also lost the right to argue the same grounds at appeal. Thus, the Federal Circuit reiterated that it was improper for the expert to testify at trial on claim interpretation (which the district court had previously decided was simply to be given its “plain and ordinary meaning”), but essentially stated that “you snooze, you lose” if no objection was raised during the trial. This outcome is not a great surprise.

On a positive note for ATEN, the Federal Circuit did reverse the jury’s decision that axed some of the claims in one of its patents. Uniclass was unable to prove that one of the two prior art references they submitted actually predated the claims, while the other did not properly disclose all of the necessary patent claim limitations, the ruling stated.

“This would be a great case to use in a patent law 101 class on invalidity,” says Falcoff. “If you don’t meet your burden of proof, you don’t go on to win.

“The reversal also serves as a good reminder that if you can’t establish the date of the reference, then you have not met the prior art standards,” he added.

While Uniclass overcame the infringement challenge, the Federal Circuit did, however, uphold the denial of attorneys’ fees.

In a separate decision in the same case on August 6, 2019, the Federal Circuit also affirmed the district court ruling that this was not an exceptional case justifying the award of attorney fees. In a refreshingly blunt statement, the Federal Circuit noted that “there is no per se rule that a case is exceptional if litigation costs exceed the potential damages.” The appellate court noted that injunctions and ITC 337 actions may be worthwhile aims in a patent lawsuit even though potential monetary damages may not be large. Nevertheless, Falcoff notes that it can be extremely frustrating in a patent lawsuit when a party causes everyone to incur extreme legal fees when the damages or injunctive value (or lack thereof) is disproportionate, especially when the defendant releases a new design that clearly does not infringe. In those situations, the district court judges, the attorneys for both parties, and the parties themselves need to set emotions aside and make rational business decisions keeping the return on investment end-game in mind.

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