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Azure Networks, LLC v. CSR PLC

United States Court of Appeals, Federal Circuit

November 6, 2014


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[Copyrighted Material Omitted]

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Appeal from the United States District Court for the Eastern District of Texas in No. 11-CV-0139, Judge Michael H. Schneider.

MICHAEL E. JOFFRE, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., of Washington, DC, argued for plaintiffs-appellants. With him on the brief was ANNA D. MAYERGOYZ. Of counsel on the brief were ERIC M. ALBRITTON and MICHAEL BENEFIELD, Albritton Law Firm, of Longview, Texas; and DANNY L. WILLIAMS and CHRISTOPHER N. CRAVEY, Williams, Morgan & Amerson, P.C., of Houston, Texas.

DOMINIC E. MASSA, Wilmer Cutler Pickering Hale and Dorr LLP, of Boston, Massachusetts, argued for all defendants-appellees. With him on the brief for defendant-appellee Broadcom Corporation were LOUIS W. TOMPROS, JASON H. LISS and DANA O. BURWELL. On the brief for defendants-appellees Atheros Communications, Inc., et al., were TIMOTHY TETER, LORI R. MASON and MATTHEW J. BRIGHAM, Cooley LLP, of Palo Alto, California. On the brief for defendants-appellees CSR PLC, et al., were JEFFREY E. OSTROW and JONATHAN C. SANDERS, Simpson Thacher & Bartlett LLP, of Palo Alto, California; and KERRY L. KONRAD, of New York, New York.

Before REYNA, MAYER, AND CHEN, Circuit Judges. OPINION filed by Circuit Judge Chen. Dissenting-in-part opinion filed by Circuit Judge Mayer.


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Chen, Circuit Judge

Plaintiffs Azure Networks, LLC (Azure) and Tri-County Excelsior Foundation (Tri-County) sued CSR PLC, Cambridge Silicon Radio International, LLC, Atheros Communications, Inc., Qualcomm Inc., Broadcom Corp., Marvell Semiconductor, Inc., Ralink Technology Corp. (Taiwan), and Ralink Technology Corp. (USA) (collectively, Appellees) for alleged infringement of U.S. Patent No. 7,756,129 (the '129 patent). The district court granted the Appellees' motion to dismiss Tri-County for lack of standing, finding that Tri-County had effectively assigned Azure the '129 patent. Because we agree that the agreement between Tri-County and Azure constituted an effective assignment for purposes of standing, we affirm the dismissal of Tri-County.

The district court also construed the term " MAC address" in the '129 patent as " a device identifier generated by the hub device" and not, as Azure and Tri-County suggested, " an address that uniquely identifies a device or group of devices on a shared communication medium." Azure stipulated to a judgment of noninfringement under the district court's construction of " MAC address." Because the district court improperly construed the term, we vacate the judgment of noninfringement and remand.


A. The '129 Patent

The '129 patent, entitled " Personal Area Network with Automatic Attachment and Detachment," describes a network for wireless communications between a central hub device and a number of surrounding peripheral devices in close proximity with the hub device. The specification details the use of " a wireless personal area network [PAN] that permits a host device to communicate with a varying number of peripheral devices with minimal interference from neighboring networks." '129 patent, 2:66-3:3. To do so, the hub device " orchestrates all communication in the PAN," including managing the timing of the network, allocating available bandwidth among the peripheral devices, and supporting the attachment, detachment, and reattachment of peripheral devices. Id. at 3:33-39. The hub and the peripheral devices communicate with one another over a predefined set of streams, or one-way communication links. Id. at 3:53-56.

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Claim 14 is representative of the accused claims to a hub device:

14. A hub device for use within a personal area network, comprising:
circuitry, and
a transceiver in communication with the circuitry, the hub device configured to cause the transceiver to
i) send a message to indicate the availability of the hub device for peripheral device attachment,
ii) receive, from a first peripheral device, a message indicating the availability of the first peripheral device for communication with the hub device,
iii) send, to the first peripheral device, a signal including a first peripheral device identifier,
iv) receive, from the first peripheral device, a response,
v) send a hub response to the first peripheral device, and
vi) receive, from the first peripheral device, a second peripheral response including the first peripheral device identifier.

Id. at claim 14 (emphasis added).

The parties agree that " peripheral device identifier" in the asserted claims means " an element that identifies the peripheral device." Joint Appendix (J.A.) 1446. Claim 43 depends from claim 14 and introduces the disputed " MAC address" term:

43. The hub device according to claim 14, wherein the hub device is configured such that a plurality of MAC addresses is capable of being used for identification in association with the first peripheral device.

'129 patent, claim 43.

At the time of invention, the conventional meaning of " MAC address," i.e., a Media or Medium Access Control address, was that it operated to uniquely identify a wireless device and could be generated in two ways--by the manufacturer of the device or by the local network. The district court concluded that the patentee acted as his own lexicographer by redefining the claimed " MAC address." In so doing, the district court relied on the specification in two ways. First, a statement in the specification allegedly coined a new " MAC address" term that differs from the traditional MAC address as known to a person of ordinary skill in the art. That statement provided: " Each device is identified by a Media Access (MAC) address." '129 patent, 3:31-32. And second, various statements in the specification discussed the generation and assignment of the MAC address by the hub device. See Azure Networks, LLC v. CSR PLC, No. 6:11CV139 LED-JDL, 2013 WL 173788, at *4 (E.D. Tex. Jan. 15, 2013). Based on these passages, it construed " MAC address" as " a device identifier generated by the hub device." Id. at *5.

B. Tri-County's License to Azure

The '129 patent has passed through many hands of ownership, but it was eventually acquired by Azure, a Texas limited liability company located in the Eastern District of Texas. Azure then sought local charities to join in its patent enforcement activities. Ultimately, it partnered with Court Appointed Special Advocates (CASA) of Harrison County,[1] which formed Tri-County, a Texas nonprofit corporation

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with its principal place of business in the Eastern District of Texas. In 2010, Azure donated multiple patents and patent applications, including the application that would issue as the '129 patent, to Tri-County.[2]

A few weeks after the donation, Tri-County and Azure entered into an " Exclusive Patent License Agreement" (hereinafter, Agreement), which transferred back to Azure a number of rights in the '129 patent. In particular, the Agreement granted Azure the exclusive, worldwide, transferable right to (i) make, have made, use, sell, offer to sell, import, and lease any products, (ii) use and perform any method, process, and/or services, and (iii) otherwise practice any invention in any manner under the '129 patent. It also granted Azure the " full right to enforce or and/or sublicense" the '129 patent, J.A. 1201 § 1.2, including the authority to reach settlements without Tri-County's consent. Specifically, the Agreement provided that " Azure will have the exclusive right, but not the obligation, to maintain, enforce, or defend" the '129 patent, but has the " obligation to exercise good faith business judgment to monetize" the '129 patent, " including but not limited to licensing [it] to third parties." J.A. 1204 § 4.4. Azure also received the right to assign the entire Agreement or any of Azure's rights under the Agreement, without Tri-County's consent, to any Azure affiliate in connection with the sale of a material portion of any Azure business unit. And, finally, the Agreement gave Azure, not Tri-County, the exclusive right, but not the obligation, to control future prosecution or pay maintenance fees related to the '129 patent family.

In exchange, Tri-County retained the right to receive 33% of the proceeds from Azure's litigation or licensing activities for the first five years and 5% thereafter. Azure must pay Tri-County the respective percentages within thirty days after each calendar quarter in which Azure receives the proceeds. Tri-County also reserved " a royalty-free, personal, non-transferable, non-exclusive right" to practice the '129 patent and make Tri-County branded products. J.A. 1201-02 ยง 2.3. Additionally, Tri-County retained a right to terminate the Agreement if Azure breached its obligations or if Tri-County's obligations under the Agreement placed Tri-County's tax-exempt status at risk. Tri-County also reserved reversionary rights in the '129 patent once the Agreement expires. In particular, the Agreement automatically expires on March 27, 2018, with two years remaining on the patent term, but Tri-County has the option to renew in ...

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