IP Law Daily, TOP STORY—Fed. Cir.: Nonprofit licensee of enforcement entity Azure’s wireless network patent lacked standing to sue, (Nov 6, 2014)

By Thomas Long, J.D.

A nonexclusive licensee of a patent for a personal area network for wireless communications lacked standing to assert any rights in the patent and had properly been dismissed as a co-plaintiff in an infringement suit against several device makers, the U.S. Court of Appeals for the Federal Circuit has held (Azure Networks, LLC v. CSR, PLC, November 6, 2014, Chen, R.). The appellate court vacated, however, the district court’s judgment of noninfringement due to the erroneous construction of a key claim term. In a dissenting opinion, Circuit Judge Haldane Robert Mayer expressed disagreement with the majority’s construction of the disputed term.

Parties and patent-in-suit. Azure Networks, LLC (Azure) and Tri-County Excelsior Foundation (Tri-County) sued CSR PLC, Cambridge Silicon Radio International, LLC, Atheros Communications, Inc., Qualcomm Inc., Broadcom Corp., Marvell Semiconductor, Inc., Ralink Technology Corp. (Taiwan), and Ralink Technology Corp. (USA) (“the appellees”) for infringing U.S. Patent No. 7,756,129 (“the ’129 patent”).

The ’129 patent is entitled “Personal Area Network with Automatic Attachment and Detachment.” It describes a network for wireless communications between a central hub device and a number of surrounding peripheral devices in close proximity with the hub device. The specification details the use of “a wireless personal area network [PAN] that permits a host device to communicate with a varying number of peripheral devices with minimal interference from neighboring networks.”

The hub device “orchestrates all communication in the PAN,” including managing the timing of the network, allocating available bandwidth among the peripheral devices, and supporting the attachment, detachment, and reattachment of peripheral devices. The hub and the peripheral devices communicate with one another over a predefined set of streams, or one-way communication links.

Claim 14—which was representative of the patent’s accused claims—specifies that the hub causes a transceiver to send a signal to the first peripheral device that includes a “first peripheral device identifier.” The parties agreed that “peripheral device identifier” in the asserted claims means “an element that identifies the peripheral device.”

Claim 43, which depends from claim 14, discloses “The hub device according to claim 14, wherein the hub device is configured such that a plurality of MAC addresses is capable of being used for identification in association with the first peripheral device.” The proper construction of the term “MAC address” was in dispute.

Tri-County’s license to Azure. The court noted that ownership of the ’129 patent had passed through many hands. Eventually the patent was acquired by Azure, a Texas limited liability company. In order to conduct patent enforcement activities, Azure partnered with Court Appointed Special Advocates (CASA) of Harrison County, Texas, which formed Tri-County, a Texas non-profit corporation. In 2010, Azure donated multiple patents and patent applications—including the application that would issue as the ’129 patent—to Tri-County.

A few weeks later, Tri-County and Azure entered into an “Exclusive Patent License Agreement,” which transferred back to Azure a number of rights in the ’129 patent. These rights included the rights to: (1) make, have made, use, sell, offer to sell, import, and lease any products; (2) use and perform any method, process, and/or services; and (3) otherwise practice any invention in any manner under the ’129 patent. The agreement also granted Azure the full right to enforce and sublicense the ’129 patent, including the right to reach settlements without Tri-County’s consent.

In exchange, Tri-County retained the right to receive 33% of the proceeds from Azure’s litigation or licensing activities for the first five years and 5% thereafter. Tri-County also reserved “a royalty-free, personal, non-transferable, non-exclusive right” to practice the ’129 patent and make Tri-County branded products. Tri-County retained a right to terminate the agreement if Azure breached its obligations or if Tri-County’s obligations under the agreement placed Tri-County’s tax-exempt status at risk. Tri-County also kept reversionary rights in the ’129 patent once the agreement expired.

Litigation. Tri-County and Azure filed suit together against the appellees. The appellees moved to dismiss Tri-County from the case, arguing that the rights transferred to Azure under the agreement constituted an effective assignment for purposes of standing, leaving Tri-County with no rights to sue as co-plaintiff. The district court agreed, finding that Tri-County’s title in the patent and financial and reversionary interests therein were not sufficient to confer standing. Azure and Tri-County appealed.

Standing. The Federal Circuit affirmed the district court’s dismissal Tri-County for lack of standing. Tri-County transferred all substantial rights in the ’129 patent to Azure, including all exclusionary rights. Azure acquired significant rights under the ’129 patent, including the right to enforce, to license, to control the licensing and litigation, to sublicense, to practice exclusively, and to maintain the patent. Tri-County’s economic interests, limited termination rights, and unfixed reversionary interest with only a very limited amount of time remaining on the patent did not demonstrate that it retained ownership, according to the appellate court.

Tri-County served effectively as a nonexclusive licensee, the court said. Although Tri-County retained the right to make, sell, and use products covered by the patent, this factor had little force, in the court’s view, because Tri-County did not, in fact, make or sell any products. In addition, its right was nonexclusive, and a nonexclusive license conferred no standing on the licensee because the licensee did not have a legally protected interest under the Patent Act.

The district court properly concluded that Tri-County lacked standing to bring suit, or to even join the suit. Because Tri-County had no exclusionary rights under the ’129 patent, it lacked standing to join the suit as a co-plaintiff. Tri-County’s standing deficiency could not be cured by adding Azure to the suit. The district court’s dismissal of Tri-County was, therefore, affirmed.

Construction of “MAC address.” The district court construed the term “MAC address” in the ’129 patent as “a device identifier generated by the hub device” and not, as Azure and Tri-County suggested, “an address that uniquely identifies a device or group of devices on a shared communication medium.” Azure stipulated to a judgment of noninfringement under the district court’s construction of “MAC address.”

At the time of invention, the conventional meaning of “MAC address” (that is, a “Media or Medium Access Control address”) was that it operated to uniquely identify a wireless device and could be generated in two ways—by the manufacturer of the device or by the local network. The district court concluded that the patentee acted as his own lexicographer by redefining the claimed “MAC address.” First, a statement in the specification allegedly coined a new “MAC address” term that differed from the traditional MAC address. That statement provided, “Each device is identified by a Media Access (MAC) address.” Second, various statements in the specification discussed the generation and assignment of the MAC address by the hub device. Based on these passages, the district court arrived at its construction of “MAC address” as “a device identifier generated by the hub device.”

The Federal Circuit reviewed the construction of the claim term de novo. The court noted that there was a “heavy presumption” that claim terms carried their accustomed meaning in the relevant community at the relevant time. In the court’s view, this presumption had not been overcome in this case.

The parties did not meaningfully dispute the ordinary and customary meaning of a “Media Access Control” or “Medium Access Control” address to the relevant community at the time of invention, the court noted. The claims used “MAC address” consistently with the well-understood industry meaning: to identify a unique device. Nothing in the claims displaced the customary meaning of “MAC address.” The specification also referred to the term as an identifier for a device, the court said.

Accordingly, the Federal Circuit adopted Azure’s proposed construction of “MAC address” as “an address that uniquely identifies a device or group of devices on a shared communication medium.” The court vacated the judgment of noninfringement and remanded for further proceedings.

Dissenting opinion. Writing in partial dissent, Circuit Judge Haldane Robert Mayer disagreed with the majority’s construction of “MAC address.” According to Judge Mayer, the specification of the ’129 patent” repeatedly and unambiguously indicated that the term “Media Access (MAC) address” referred to an address that is assigned to a peripheral device by a hub device.

“The patent neither contemplates nor enables any other method of network communication,” Judge Mayer wrote. “The court offers no plausible justification for disregarding the unequivocal disclosure in the specification and dramatically expanding the definition of ‘Media Access address’ to cover any address that uniquely identifies a device on a shared communication system.

“The decision to jettison the trial court’s claim construction is predicated almost exclusively on a purported industry definition of the term ‘Media Access Control address,’” stated Judge Mayer, “but that term is found nowhere in the ’129 patent.”

The case is No. 2013-1459.

Attorneys: Michael E. Joffre (Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.) for Azure Networks, LLC. Dominic E. Massa (Wilmer Cutler Pickering Hale and Dorr LLP) for CSR PLC.

Companies: Azure Networks, LLC; Tri-County Excelsior Foundation; CSR PLC; Cambridge Silicon Radio International, LLC; Atheros Communications, Inc.; Qualcomm Inc.; Broadcom Corp.; Marvell Semiconductor, Inc.; Ralink Technology Corp. (Taiwan); Ralink Technology Corp. (USA)

MainStory: TopStory Patent FedCir