The U.S. Court of Appeals for the Federal Circuit continues to have differences of opinion over patent eligibility.
On Wednesday another three-judge panel split over Section 101 of the Patent Act, handing a win worth at least $30 million to SRI International Inc. in hard-fought litigation with Cisco Systems Inc. over network security technology.
The asserted patent claims are eligible for patent protection because they solve a technical problem: “providing a network defense system that monitors network traffic in real-time to automatically detect large-scale attacks,” Judge Kara Stoll wrote for the 2-1 majority in SRI International v. Cisco Systems.
Judge Alan Lourie dissented, saying SRI’s patents “do not recite a specific way of enabling a computer to monitor network activity,” but instead are “result-focused, functional claims.”
The upshot is that SRI will hold onto at least about $30 million of $55 million awarded in a 2016 trial, plus ongoing royalties.
Jurors awarded $23.7 million, finding that Cisco had willfully infringed two patents that stem from SRI’s EMERALD project. The patents describe the use of multiple monitors to detect network intrusion attempts that might otherwise go unnoticed. The Department of Defense funded the project in the 1990s, calling it a “gem in the world of cyber defense.”
U.S. District Judge Sue Robinson of the District of Delaware doubled the award, saying Cisco and its attorneys at Kirkland & Ellis and Morris, Nichols, Arsht & Tunnell had “pursued litigation about as aggressively as the court has seen in its judicial experience” and “crossed the line in several regards.” That included, in one example, maintaining 19 invalidity theories until the eve of trial but then presenting only two, both of which the jury rejected.
She also tacked on $8 million in attorney fees and expenses under Section 285 of the Patent Act, and awarded an ongoing 3.5 percent royalty.
Before the Federal Circuit, Wilmer Cutler Pickering Hale and Dorr partner William Lee argued for Cisco that the asserted claims are broad, general and generic. Much like the claims in 2016′s Electric Power Group v. Alstom, they’re directed to “an abstract idea: collecting and reporting data” but without specifying what gets done with it.
Stoll disagreed. “Contrary to Cisco’s assertion, the claims are not directed to just analyzing data from multiple sources to detect suspicious activity,” she wrote. Rather the claims recite “using network monitors to detect suspicious network activity based on analysis of network traffic data, generating reports of that suspicious activity, and integrating those reports using hierarchical monitors.”
That represents an improvement in the functionality of computers and computer networks themselves, she ruled. Judge Kathleen O’Malley concurred.
In dissent Lourie said the claims are clearly abstract. “In fact, they differ very little from the claims in Electric Power Group,” he wrote.
“The detecting of the suspicious activity is based on ‘analysis’ of traffic data, but the claims add nothing concerning specific means for doing so,” Lourie wrote. “The claims only recite the moving of information. The computer is used as a tool, and no improvement in computer technology is shown or claimed.”
The Federal Circuit has struggled at times to maintain unanimity while interpreting the Supreme Court’s 2014 Alice decision on patent eligibility. Senior Judge Haldane Mayer recently described the environment as “guerrilla warfare” during a recent oral argument.
Sen. Thom Tillis, R-North Carolina, chairman of the Senate Subcommittee on Intellectual Property, recently called the state of Section 101 jurisprudence “a mess.” He and ranking member Sen. Chris Coons, D-Delaware, have promised legislation that would overrule the Supreme Court’s eligibility decision by this summer.
Wednesday’s win goes to a Fish & Richardson team led by partner Frank Scherkenbach, who argued the appeal for SRI.
There were some silver linings for Cisco. The Federal Circuit ordered the case back to the district court for reconsideration of the willfulness enhancement, saying there was no substantial evidence that Cisco acted willfully before suit was filed in 2012, and not a whole lot after. While mostly affirming the fee award, the appellate court also ordered that a few obviously mistaken billing entries be excluded on remand.