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Ultratec, Inc. v. Sorenson Communications, Inc.

United States District Court, W.D. Wisconsin

September 30, 2016

ULTRATEC, INC. and CAPTEL, INC., Plaintiffs,

          OPINION & ORDER

          JAMES D. PETERSON District Judge

         Plaintiffs Ultratec, Inc. and CapTel, Inc. asserted U.S. Patent No. 7, 660, 398 (the '398 patent) against defendants Sorenson Communications, Inc. and CaptionCall, LLC. Defendants stipulated to infringement, Dkt. 602, at 3:11-4:20, and the case went to trial on validity and damages. The jury found that the asserted claims were not obvious, Dkt. 564, and it awarded damages of $5, 443, 484.61 for infringement, Dkt. 575. The court entered judgment on October 15, 2016. Dkt. 580.

         Post-trial motions from both sides are now before the court. Plaintiffs ask to seal portions of the trial transcript to protect competitively sensitive information. Dkt. 616. The court will grant this motion. Plaintiffs also have submitted a bill of costs, Dkt. 591, and they seek a permanent injunction or an enhanced ongoing royalty, Dkt. 609, an award of supplemental damages, pre-judgment interest, post-judgment interest, and an accounting of defendants' minutes of use, Dkt. 612. These are reasonable requests from a prevailing plaintiff that the court would likely grant, at least in part. But the court will deny these requests, because the court will grant defendants' motion for judgment as a matter of law that the '398 patent is invalid as obvious. Dkt. 606. Defendants also move for judgment as a matter of law on damages. Dkt. 605. Although this motion could be regarded as moot, the court will deny it on the merits because doing so will allow the issue to be addressed on appeal.


         The court will not repeat here the general background to the '398 patent, which is set out in the court's decision on summary judgment. Dkt. 478.

         One development after that decision is important to the damages issue, because it affects the number of captioned calls that infringe the '398 patent. After summary judgment, the court clarified its decision to give the claim term “cancel the voice of the assisted user from the second telephone line so that the relay does not hear the voice of the assisted user, so the relay can caption all the words on the second telephone line” its plain meaning. Dkt. 507. At trial, the court instructed the jury that the “claim limitation is satisfied so long as a call assistant with normal hearing would not hear the words spoken by the assisted user while captioning a call.” Dkt. 567, at 8.

         Another development affects the invalidity issue. The court determined during trial that the one-line CapTel trials were a commercial use of that technology, and thus the one-line CapTel trials are prior art to the '398 patent.


         A. Defendants' motions on validity and damages

         Defendants move for judgment as a matter of law under Federal Rule of Civil Procedure 50 and for a new trial under Rule 59.[1] They contend that the patent is invalid as obvious, Dkt. 606, and that the basis for plaintiffs' damages calculations is speculative, Dkt. 605.

         The standards applicable to these motions are not matters unique to patent law, so the court applies the law of its regional circuit. ABT Sys., LLC v. Emerson Elec. Co., 797 F.3d 1350, 1354 (Fed. Cir. 2015). “In deciding a Rule 50 motion, the court construes the evidence strictly in favor of the party who prevailed before the jury and examines the evidence only to determine whether the jury's verdict could reasonably be based on that evidence.” Passananti v. Cook County, 689 F.3d 655, 659 (7th Cir. 2012). The court reviews the entire record but does not reweigh the evidence, make credibility determinations, or consider evidence favorable to the moving party that the jury was not required to believe. Id. Thus, defendants are entitled to judgment as a matter of law only if the jury did not have a “legally sufficient evidentiary basis” to find in plaintiffs' favor. Id.; Fed.R.Civ.P. 50(a)(1).

         A new trial is appropriate under Rule 59 “if the verdict is against the weight of the evidence, the damages are excessive, or if for other reasons the trial was not fair to the moving party.” Tapia v. City of Greenwood, 965 F.2d 336, 338 (7th Cir. 1992). Likewise, a motion to amend the judgment under Rule 59(e) “will be successful only where the movant clearly establishes: ‘(1) that the court committed a manifest error of law or fact, or (2) that newly discovered evidence precluded entry of judgment.'” Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 954 (7th Cir. 2013) (quoting Blue v. Hartford Life & Accident Ins. Co., 698 F.3d 587, 598 (7th Cir. 2012)). “A ‘manifest error' is not demonstrated by the disappointment of the losing party. It is the ‘wholesale disregard, misapplication, or failure to recognize controlling precedent.'” Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (quoting Sedrak v. Callahan, 987 F.Supp. 1063, 1069 (N.D. Ill. 1997)).

         1. Validity

         Defendants move for judgment as a matter of law that the '398 patent is invalid as obvious. Dkt. 606.

         The standard applicable to determining patent validity is governed by Federal Circuit law. ABT Sys., 797 F.3d at 1354. A patent is invalid if a person of ordinary skill in the art would have found the invention obvious in light of the prior art at the time of the filing date. 35 U.S.C. § 103. Defendants “must ‘demonstrate by clear and convincing evidence that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.'” Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1360 (Fed. Cir. 2012) (quoting Procter & Gamble Co. v. Teva Pharm. USA, Inc., 566 F.3d 989, 994 (Fed. Cir. 2009)).

         Obviousness is ultimately a question of law, based on underlying facts. Ohio Willow Wood Co. v. Alps S., LLC, 735 F.3d 1333, 1343 (Fed. Cir. 2013). The inquiry is guided by the familiar Graham factors: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the prior art and the claims at issue; and (4) the objective indicia of non-obviousness. Id. After a jury verdict on the issue of obviousness, the court will review the jury's explicit and implicit factual findings for substantial evidence. Then the court will consider the legal conclusion of obviousness in light of the factual findings that are adequately supported. ABT Sys., 797 F.3d at 1354.

         a. Scope and content of prior art

         In this case, defendants presented five pieces of prior art: U.S. Patent Publication No. 2002/0085685 to Engelke et al. (the '685 publication), U.S. Patent No. 6, 504, 910 to Engelke et al. (the '910 patent), U.S. Patent No. 6, 141, 415 to Tandhoni S. Rao (the Rao patent), a textbook titled Advanced Signal Processing and Noise Reduction by Saeed V. Vaseghi (the Vaseghi reference), and the CapTel trials.

         The parties had only immaterial disputes about the content of the prior art. Plaintiffs contend that the '910 patent does not disclose a two-line captioned telephone. But this position is belied by the text of the specification, which has a full paragraph discussing a two-line arrangement. 7:22-46.

         In defendants' reply brief, they contend that the obviousness of the '398 patent is demonstrated with a single combination: the '685 publication with the CapTel trials. The court agrees that this combination is sufficient, and, accordingly, its analysis here will focus on those two pieces of prior art. The other references, especially the Rao patent and the Vaseghi reference, demonstrate that echo cancellation and other noise-cancelling technologies were widely known and available to one of skill in the art. The other references would be helpful to the obviousness case, but they are not necessary.

         The '685 publication discloses a two-line caption telephone arrangement in which a call assistant revoices the words of the remote user to a text-recognition device so the assisted user can see the captions in nearly real time. In the two-line arrangement, the assisted user is connected by one phone line directly to the ...

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