Infringement of two claims and $74 million in damages affirmed, injunction reinstatedFebruary 5, 2008

In a decision last week, the Federal Circuit affirmed-in-part and reversed-in-part a jury verdict of infringement of a patent owned by Tivo relating to its DVR technology. The ruling was based on claim construction, with the court finding that, based on the correct construction of claims directed to the DVR hardware, there was no infringement of those claims. However, the claims directed to the software were correctly construed and infringed, and as a result, the jury's award of nearly $74 million in damages was affirmed.

In addition, the district court's permanent injunction had been stayed pending appeal. Based on the court's disposition, that stay was dissolved, and the case was remanded for a determination of the amount of damages to be assessed for infringement while the case was on appeal.

In an interesting footnote, the Federal Circuit acknowledged that perhaps, in some cases, claim construction is more appropriately considered a question of fact. In this case, the district court's construction was "largely based on the court's assessment of extrinsic evidence." As a result, the court noted that "there is substantial force to the proposition that such a conclusion is indistinguishable in any significant respect from a conventional finding of fact, to which [the court] typically accord[s] deference." Perhaps this signals that the court may be willing to revisit its en banc decision in Cybor that determined claim construction was a pure issue of law reviewed without deference in all cases.

Tivo owns a patent (commonly called the "time warp" patent) relating to "time shifting" television signals both during and after they are recorded. The claims of the patent are divided into two types, "hardware" claims and "software" claims. As the monikers imply, the hardware claims generally relate to the DVR hardware that permits the time shifting, whereas the software claims cover the software used to accomplish the time shifting. Tivo asserted two hardware claims, claims 1 and 32, and two software claims, claims 31 and 61.

Claims 1 and 31 are reproduced below, with the relevant claim language emphasized:

1. A process for the simultaneous storage and play back of multimedia data, comprising the steps of: accepting television (TV) broadcast signals, wherein said TV signals are based on a multitude of standards, including, but not limited to, National Television Standards Committee (NTSC) broadcast, PAL broadcast, satellite transmission, DSS, DBS, or ATSC; tuning said TV signals to a specific program; providing at least one Input Section, wherein said Input Section converts said specific program to an Moving Pictures Experts Group (MPEG) formatted stream for internal transfer and manipulation; providing a Media Switch, wherein said Media Switch parses said MPEG stream, said MPEG stream is separated into its video and audio components; storing said video and audio components on a storage device; providing at least one Output Section, wherein said Output Section extracts said video and audio components from said storage device; wherein said Output Section assembles said video and audio components into an MPEG stream; wherein said Output Section sends said MPEG stream to a decoder; wherein said decoder converts said MPEG stream into TV output signals; wherein said decoder delivers said TV output signals to a TV receiver; and accepting control commands from a user, wherein said control commands are sent through the system and affect the flow of said MPEG stream.

. . .

31. A process for the simultaneous storage and play back of multimedia data, comprising the steps of: providing a physical data source, wherein said physical data source accepts broadcast data from an input device, parses video and audio data from said broadcast data, and temporarily stores said video and audio data; providing a source object, wherein said source object extracts video and audio data from said physical data source; providing a transform object, wherein said transform object stores and retrieves data streams onto a storage device; wherein said source object obtains a buffer from said transform object, said source object converts video data into data streams and fills said buffer with said streams; wherein said source object is automatically flow controlled by said transform object; providing a sink object, wherein said sink object obtains data stream buffers from said transform object and outputs said streams to a video and audio decoder; wherein said decoder converts said streams into display signals and sends said signals to a display; wherein said sink object is automatically flow controlled by said transform object; providing a control object, wherein said control object receives commands from a user, said commands control the flow of the broadcast data through the system; and wherein said control object sends flow command events to said source, transform, and sink objects.

Tivo sued EchoStar, who operates the Dish Network satellite TV service, for infringement of its patent based on its sales of two types of DVRs, the 50X DVR and the Broadcom DVR. After the district court construed the disputed claim limitations, the case went to a jury, who found both the hardware and software claims infringed, and awarded nearly $74 million in damages. EchoStar appealed. While the appeal was pending, the USPTO confirmed the patentability of Tivo's claims during a reexamination proceeding.

EchoStar argued that it did not infringe the hardware claims for several reasons. First, it argued that the "multitude of standards" limitation required that the unit be capable of receiving at least both digital and analog signals, and because its DVRs could only accept digital signals, this limitation was not met. While noting the limitation was "not very precise," the Federal Circuit agreed with the district court that this limitation did not require the DVR to be capable of receiving both digital and analog signals, holding that this definition was the "least problematic" of those proposed.

EchoStar next argued that its units did not meet the "tuning" limitation, as it argued the "tuning" should be limited to the context of the 6MHz portion of a broadcast band containing a particular program. The court disagreed, finding nothing in the specification to support this narrow construction, as the description in the specification with the 6MHz language was characterized as just an embodiment of the invention. Accordingly, the court affirmed the finding that EchoStar's DVRs met this limitation.

The next term in dispute was "converts." EchoStar argued that the conversion step further indicated that the claims required the ability to process analog signals, as the "conversion" must be from an analog signal to an MPEG signal. The court once again disagreed, finding that converting a digital signal to an MPEG stream was covered under this term. This was based on disclosure in the specification that regardless of how the signal is received, it is converted into an internally transferable and manipulable MPEG format. Accordingly, this element was also present in the accused DVRs.

The next limitation in dispute in the hardware claims was the "separation" limitation, requiring that the MPEG stream be "separated into its video and audio components." Here, the court sided with EchoStar. While Tivo argued that logical separation should be included in the scope of this claim, as opposed to physical separation, the court was unpersuaded. The court noted that the specification states "[t]he invention parses the . . . MPEG stream and separates it into its video and audio components. It then stores the components into temporary buffers." Because this was described as "the invention," rather than an embodiment of the invention, the court held that the "separation" limitation required physical separation. As a result, the accused Broadcom DVRs did not infringe the hardware claims, and the finding of infringement of those claims by the Broadcom DVRs was reversed.

Finally, EchoStar argued the 50X DVRs did not meet the "assembles" limitation, because while those

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