Federal Circuit Affirms Exclusion and Cease-and-Desist Orders against GPS Chipmaker
By Gary Pong – Edited by Dmitriy Tishyevich
SiRF Tech., Inc. v. ITC, Appeal 2009-1262 (Fed. Cir., Apr. 12, 2010).
The Federal Circuit affirmed a decision by the International Trade Commission (“ITC”), which found that SiRF Technology, Inc. (“SiRF”) violated 19 U.S.C. § 1337 by unlawfully importing and selling Global Positioning System (“GPS”) devices that infringed upon patents owned by Global Locate, Inc. and Broadcom Corp. (collectively, “Global Locate”).
The Federal Circuit held that: (1) Global Locate had standing to sue for infringement, even though one of the patents in question had been automatically assigned to the inventors’ previous employer under an employment agreement; (2) SiRF’s GPS chips had directly infringed the patents in question; and (3) the asserted method claims were directed to patentable subject matter under the In re Bilski “machine-or-transformation” test because it was tied to a particular machine – the GPS receiver.
SiRF argued that Global Locate lacked standing to assert U.S. Patent No. 6,606,346 (the “346 Patent”) because Magellan Corp. was a co-owner of the 346 Patent and was not a party to the lawsuit. Although the Patent and Trademark Office (“PTO”) records listed Global Locate as the assignee of the 346 Patent, SiRF argued that one of Global Locate’s inventors, Abraham, had previously assigned his interest in the patent to his former employer, Magellan. Abraham conceived of the invention prior to joining Global Locate, while he was employed by Magellan. Under the terms of Abraham’s prior employment contract, patent rights were automatically assigned to Magellan for “all inventions . . . which are related to or useful in the business of the Employer.” However, the court noted that the recording of a patent assignment with the PTO “creates a presumption of validity as to the assignment and places the burden to rebut such a showing on one challenging the assignment.” The court applied California state law to determine whether the invention was “related to or useful in the business” of Magellan within the meaning of the employment agreement. It found that SiRF had failed to make that showing, in part because Magellan had been aware of the patent but failed to assert ownership of the invention. The court then concluded that Global Locate was the sole owner of the 346 Patent and therefore had standing to bring suit.
SiRF also argued that the patented claims were only infringed through actions taken by its customers and end users of the GPS receiver. SiRF’s customers operate intermediary servers that relay data between SiRF servers and the end users’ GPS receivers. SiRF asserted that its liability, if any, would be as a joint infringer, and that the requirements for joint infringement could not be satisfied because it lacked control over its customers and end users. The court rejected this argument and held that SiRF was a direct infringer because the claims in question did not specifically require action by its customers or end users. Though the claims required that data be “communicat[ed]” or “transmit[ed]” to the GPS receiver, the court held that there was no limitation requiring this action to be direct, and found that indirect communication involving intermediaries forwarding data from SiRF servers to the GPS receiver was within the scope of the claims. Thus, by initiating the process of communicating and transmitting, SiRF directly infringed Global Locate’s patents.
SiRF also asserted that the method patents were invalid because the claims did not involve patentable subject matter. The court rejected this argument and found that the claimed methods were tied to a particular machine (the GPS receiver), and satisfied the Bilski machine-or-transformation test. The GPS receiver was essential to the method and was not merely a device to speed up computations. The court emphasized that the methods determined the position of a particular GPS receiver that an end user used to receive satellite signals and that the “methods at issue could not be performed without the use of a GPS receiver.”
This case is helpful in showing how the Federal Circuit interprets employee contracts that provide for automatic assignment of patent rights to the employer. Such clauses are standard within the technology industry and this opinion provides some guidance on the issue. The case also clarifies a method for distinguishing between direct and joint infringement in cases involving a third party.
Gary Pong is a 1L at Harvard Law School.