IP Law Daily, PATENT—S.D.N.Y.: Barnes & Noble fails to overturn infringement verdict, but new trial on damages ordered, (Feb 25, 2016)

By Cheryl Beise, J.D.

Barnes & Noble has failed to persuade the federal district court in New York City to overturn a jury verdict finding that its Nook product infringed an ebook information selection patent or that the patent was valid. However, a new trial on damages was warranted because the jury’s $1.33 million damages award was not allocated between two patents, one of which was later found invalid (Adrea, LLC v. Barnes & Noble, Inc., February 24, 2016, Rakoff, J.).

Adrea, LLC sued Barnes & Noble, Inc., Barnesandnoble.com LLC, and NOOK Media LLC (collectively, “BN”) for infringement of three of its patents: U.S. Patent Nos. 7,298,851 (the ’851 patent), 7,299,501 (the ’501 patent) and 7,620,703 (the ’703 patent). Following trial, on November 4, 2014, the jury returned a verdict that the ’851 patent was not infringed but that the ’501 and ’703 patents were valid and infringed, and awarded Adrea $1.33 million in compensatory damages. The court, however, subsequently found that the ’501 patent was invalid under Section 101 for failure to claim patent eligible subject matter.

BN moved for judgment as a matter of law under Fed. R. Civ. P. 50 to overturn the jury’s verdict on infringement and validity with respect to the ’703 patent. Alternatively, BN requested a new trial under Fed. R. Civ. P. 59. Adrea moved for reconsideration of the court’s earlier grant of partial summary judgment to BN dismissing Adrea’s claim of induced infringement of claim 1 of the ’851 patent. In addition, because the jury did not allocate the $1.33 million award between the ’501 and ’703 patents, the parties submitted letter briefing regarding the allocation the damages award and whether a new trial on damages was necessary.

Infringement of ’703 patent. The ’703 patent, titled “Electronic book selection and delivery system having encryption and security features,” describes devices and methods for retrieving information related to the usage context of devices and discusses embodiments where the device is configured to retrieve context use information without a web browser. The accused BN Nook e-reader handheld device allows readers to shop online for books, download them, and read them on the device. The jury found that BN infringed five claims of the ’703 patent: independent claim 1, plus dependent claims 2 and 3, and independent claim 13, plus dependent claim 15.

BN argued that no reasonable jury could find that the Nook product met the key limitation of claim 1 that a user does not need to access a web browser for the device to retrieve the relevant data. While some evidence from the trial supported the view that the BN Shop application included on Nook devices was a web browser, there was ample evidence cutting the other way, the court said. BN’s own witness described the Shop application as a “special browser” rather than a fully functional web browser. Adrea presented evidence that pressing the Nook's Shop button immediately initiated retrieval of data, namely, the storefront webpage, from the BN server. Adrea also presented evidence that Nooks have a dedicated web browser, separate from the Shop application. The jury could have reasonably concluded that the Shop application was not a web browser, the court reasoned.

Regarding claim 13, contrary to BN’s assertion, evidence showing that pressing the Nook's Shop button initiated retrieval of information from a server satisfied the “single user input” limitation. Claim 13 also requires a device send “a request with the identifier representative of a type of the consumer appliance to a server on the Internet” and that , “based on the identifier, the server initiat[e] access to a web page.” Adrea claimed that when a user pressed the Nook Shop button, the device would transmit a model number to BN's servers that would initiate access to the Nook storefront webpage. A reasonable jury could have concluded that the storefront webpage the server transmitted to the Nook after receiving the model number was “based on the model number,” the court said.

Validity of ’703 patent. BN argued that the ’703 patent was invalid for obviousness and as anticipated by prior art. Because BN’s witnesses testified about anticipation, not obviousness, BN relied on the testimony of the inventor of the ’703 patent to show obviousness. However, the inventor’s testimony did not address in any real depth the elements of an obviousness inquiry—such as the scope and content of the prior art, the differences between the prior art and the claims at issue, the level of ordinary skill in the pertinent art—or secondary considerations, such as commercial success.

To show that a patent is invalid as anticipated, the accused infringer must establish by clear and convincing evidence that a single prior art reference discloses each and every element of a claimed invention. To show anticipation of claims 1, 2, and 3, BN relied U.S. Patent No. 5,761,485 (the “Munyan” patent), describing a “Personal Electronic Book System,” which allows users to read e-books and other electronic media on a handheld device that downloads such materials from a server. Based on the testimony of Adrea’s expert witness, the jury could have concluded that the security identification code in the Munyan reference merely terminates or sustains the connection between the device and the server and is not involved with transmitting any recommendations or “content information about the context of usage of the consumer appliance,” the court explained. To show anticipation of claims 13 and 15, BN cited U.S. Patent No. 6,389,463 (the “Bolas” patent) described an Internet radio that displays information about the song and station the user is listening to. Again, Adrea’s expert explained why the Bolas patent does not disclose specific elements present in claim 13.

BN failed to meet the “high burden” of demonstrating that no reasonable jury could fail to find obviousness or anticipation. BN’s motion for JMOL or, alternatively, a new trial, was denied in full.

Induced infringement. Ardea moved for reconsideration of the court’s summary dismissal of its claim of induced infringement of claim 1 of the ’851 patent. The Federal Circuit has held that induced infringement liability requires evidence of specific intent to induce another's infringement. DSU Med Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1306 (Fed. Cir. 2006). In Limelight Networks, Inc. v. Akamai Technologies, 134 S. Ct. 2111 (2014), the Supreme Court clarified that induced infringement liability under § 271(b) cannot not exist where no direct infringement under § 271(a) has occurred. DSU remains good law after the Supreme Court’s Limelight decision, the court observed. Adrea did not raise any new questions of fact regarding BN’s specific intent to induce Akamai's infringement.

Moreover, the Federal Circuit’s subsequent decision in Akamai Technologies, Inc. v. Limelight Technologies, Inc., 797 F.3d 1020 (Fed. Cir. 2015) (en banc) (per curiam), concerned § 271 (a) claims of direct infringement, not § 271(b) claims of induced infringement. Although Adrea now also sought permission to assert § 271(a) claim in lieu of § 271(b), the court found that this request was previously waived because Adrea did not raise it after the court issued its summary judgment decision.

New trial on damages. The jury awarded $1.33 million in damages but did not allocate these damages between the ’703 patent and the ’501 patent, which the court subsequently held invalid. In situations where the jury renders a single verdict on damages, without breaking down the damages attributable to each patent, the normal rule is to require a new trial as to damages. The court decided that a limited new trial will be held to determine damages on the remaining valid claims as to which liability has been established.

The case is No. 1:13-cv-04137-JSR.

Attorneys: Amy Crafts (Proskauer Rose LLP) and Colin Gene Cabral (Fitzpatrick, Cella, Harper & Scinto) for Adrea, LLC. Ali R. Sharifahmadian (Arnold & Porter LLP) for Barnes & Noble, Inc., Barnesandnoble.Com LLC and Nook Media LLC.

Companies: Barnes & Noble, Inc.; Barnesandnoble.Com LLC; Nook Media LLC

Cases: Patent NewYorkNews