The Software IP Report

Federal Circuit Affirms Eligibility of RFID Transponder Claims But Reverses Summary Judgment on Validity Based on RFID FOR DUMMIES  

By David Hannon

Categories: Patent Eligibility, The Software IP Report

In its December 16, 2022, precedential decision in ADASA, Inc. v. Avery Dennison Corp., the Federal Circuit addressed a range of issues, remanding the matter for resolution of facts relating to validity and for redetermination of the amount of a sanction. 

The relevant claims of the patent-in-suit, USPN 9798967, are directed to an RFID transponder. At the district court, the patent owner won summary judgment of patent eligibility, no anticipation, and non-obviousness. At trial, the patent owner won a judgment of infringement and over $26 million in damages. A sanctions issue based on post-trial discovery of a significant amount of infringing sales more than doubled the amount in controversy. 

The Federal Circuit first affirmed the eligibility of the claimed subject matter. Given that the claimed RFID transponder used existing hardware, eligibility was challenged on the assertion that “claim 1 is directed to nothing more than mentally ascribing meaning to a pre-existing data field.” The court rejected this position, concluding that “claim 1 is not directed to an abstract idea. Rather, it is directed to a specific, hardware-based RFID serial number data structure designed to enable technological improvements to the commissioning process.”  

The Federal Circuit reversed the summary judgments on no anticipation and non-obviousness that were in favor of the patent owner. The court considered two references, RFID FOR DUMMIES and a prior patent. The common issue identified by the court was there were triable issues of fact as to whether, despite differences in terminology, each reference would be understood to disclose the subject matter of the claims. 

The opinion further addressed an omission of a damages theory excluded from the jury instructions, as well as the significant sanctions imposed on the accused infringer for the post-trial disclosure of a large volume of accused sales. The court affirmed the district court’s ruling on the jury instruction and the imposition of sanctions. 

The Federal Circuit vacated the damages award, however, citing the fact that the award was calculated based on all accused sales, not just the ones only disclosed after trial. The court made explicit that the ruling was not to be interpreted to condition a sanctions award on a finding of infringement, as the sanctionable conduct was the accused infringer’s “discovery failures and litigation misconduct.” 

The matter is ADASA Inc. v. Avery Dennison Corp., Fed. Cir. Case No. 2022-1092.