The Software IP Report

Patent-Ineligibility in Collateral Case Kills Damage Award

By Charles Bieneman

Categories: The Software IP Report

After a jury found infringement of claims of two patents, and awarded damages, the Federal Circuit held the patent claims invalid under 35 U.S.C. § 101 in another case, whereupon the court in Prism Technologies, LLC v. Sprint Spectrum, LP, No. 8-12-cv-00123 (D. Neb. Aug. 8, 2017), granted Sprint’s motion under FRCP 60 for relief from the judgment.

The defendant had appealed to the Federal Circuit, and lost.  Validity was not at issue in the appeal because before trial the defendant had stipulated in motions in limine that it would not contest the validity of the patents.  After the Federal Circuit agreed the patent claims were invalid under the Alice case and 35 U.S.C. § 101 in the other case, in which T-Mobile was the defendant, Sprint asked the Federal Circuit to withdraw its mandate in its appeal.  But the Federal Circuit declined to do so, because the judgment against Sprint was stayed, and because Sprint had indicated it would appeal to the U.S. Supreme Court.  But the Federal Circuit also stated that the district court “must” consider the preclusive effect of the T-Mobile ruling.

The district court found that the T-Mobile ruling was preclusive.  The plaintiff’s argument that by its terms Sprint’s supersedeas bond had expired and funds must be released to the plaintiff was to no avail.  If the Rule 60 motion was to be granted, the bond was moot.  Further, the patent claims at issue and invalidated in the T-Mobile case were the very claims at issue here.  Under Mendenhall v. Barber-Greene Co., 26 F.3d 1573 (Fed. Cir. 1994), there was “no just reason why such a judgment ought to stand when the claims ‘are predicated on a nullity’ and unenforceable to the rest of the world.”