Last week, the United States Court of Appeals for the Federal Circuit issued an opinion in SRI International, Inc. v. Cisco Systems, Inc., 2017-2223 (March 20, 2019). SRI sued Cisco for infringing patents related to hierarchical event monitoring and analysis within an enterprise network. The district court denied Cisco’s motion for summary judgment of patent ineligibility and entered summary judgment sua sponte of no anticipation. A jury found the asserted claims valid and infringed, and further found the infringement willful. The district court denied Cisco’s post-trial JMOL motion of no willfulness, doubled the damages award, awarded attorneys’ fees, and imposed ongoing royalties. Cisco appealed.
The Federal Circuit, in a split opinion, affirmed the summary judgment rulings and the imposition of ongoing royalties, and vacated and remanded on willfulness and enhanced damages. Concerning patent eligibility, the Court held the claims were not directed to an abstract idea, but rather to “an improvement in computer network technology.” They were, therefore, patent eligible under Alice step one. Concerning anticipation, the Court determined the asserted prior art reference did not expressly disclose “directly examining network packets,” which was an element of all asserted claims. The Court further concluded the expert testimony submitted to support inherent disclosure was “both inconsistent and ‘based on [] multiple layers of supposition.’” As for the sua sponte nature of the ruling, the Court found the notice requirement satisfied in view of Cisco’s motion for summary judgment of no anticipation. Concerning willfulness, the Court concluded the jury’s verdict could not be supported insofar as it found Cisco willfully infringed the patents beginning in 2000, when it is undisputed Cisco first had notice of the patents in 2012. Concerning attorneys’ fees, the Court found the district court’s decision to award fees was proper. However, because some of the time entries for which fees were awarded should have been excluded, the Court vacated and remanded for recalculation. Concerning ongoing royalties, the Court concluded the district court’s award—at the same rate the jury applied for past infringement—was proper.
Judge Lourie dissented, explaining his belief that all asserted claims were directed to patent ineligible subject matter. Citing Electric Power Group v. Alstom S.A., Judge Lourie noted the Court previously held “’collecting information, including when limited to particular content (which does not change its character as information)’ was an abstract idea,” and that the claims asserted by SRI were no different.