Prism Technologies LLC v. Sprint Spectrum L.P. ( 2019 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
PRISM TECHNOLOGIES LLC,
Plaintiff-Appellant
v.
SPRINT SPECTRUM L.P., DBA SPRINT PCS,
Defendant-Appellee
______________________
2018-1108
______________________
Appeal from the United States District Court for the
District of Nebraska in No. 8:12-cv-00123-LES-TDT,
Senior Judge Lyle E. Strom.
______________________
Decided: February 1, 2019
______________________
PAUL J. ANDRE, Kramer Levin Naftalis & Frankel
LLP, Menlo Park, CA, argued for plaintiff-appellant. Also
represented by LISA KOBIALKA; MARK BAGHDASSARIAN,
JONATHAN CAPLAN, AARON M. FRANKEL, CRISTINA
MARTINEZ, New York, NY.
CARTER GLASGOW PHILLIPS, Sidley Austin LLP, Wash-
ington, DC, argued for defendant-appellee. Also repre-
sented by JENNIFER J. CLARK, RYAN C. MORRIS,
2 PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P.
KATHERINE L. OLSON; MICHAEL J. BETTINGER, IRENE
YANG, San Francisco, CA.
______________________
Before NEWMAN, TARANTO, and CHEN, Circuit Judges.
TARANTO, Circuit Judge.
Prism Technologies, LLC is the owner of two related
patents, U.S. Patent Nos. 8,127,345 and 8,387,155, that
address access to information over networks that are
“untrusted.” In 2012, Prism brought suits in the District
of Nebraska against several cellphone carriers, among
them Sprint Spectrum L.P. and T-Mobile USA, Inc.,
alleging infringement of those patents (plus one other
patent that is not at issue and so is not further mentioned
here). We have before us an appeal (the second appeal) in
the suit against Sprint. The issue presented is the effect
on this case of this court’s invalidation of various claims of
the two patents in the suit against T-Mobile. We hold
that the district court did not abuse its discretion in
applying our invalidation ruling in the case against T-
Mobile to set aside the judgment against Sprint in this
case. We therefore affirm.
I
In early 2015, Prism and Sprint went to trial. Before
trial, the parties stipulated that “Sprint may not argue
that Sprint does not infringe because the claims are
allegedly invalid.” J.A. 5. Prism tried four patent claims
against Sprint: claims 1 and 33 of the ʼ345 patent, and
claims 7 and 37 of the ʼ155 patent. The jury found that
Sprint had infringed those claims and awarded $30
million. The district court entered a judgment for Prism
and against Sprint for that amount, plus costs, in June
2015. This court affirmed. Prism Tech., LLC v. Sprint
Spectrum L.P., 849 F.3d 1360 (Fed. Cir. Mar. 6, 2017),
cert. denied, 138 S. Ct. 429 (Nov. 6, 2017).
PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P. 3
After this court denied rehearing but before Sprint
filed a petition for a writ of certiorari in the Sprint case,
this court decided Prism Technologies, LLC v. T-Mobile
USA, Inc., 696 F. App’x 1014 (Fed. Cir. June 23, 2017),
cert. denied, 138 S. Ct 689 (2018). That decision ad-
dressed an appeal by Prism and a cross-appeal by T-
Mobile from the judgment in Prism’s unsuccessful case
against T-Mobile based on the same two patents. We held
that all the claims before us are invalid under 35 U.S.C.
§ 101 (while rejecting T-Mobile’s challenge to the denial of
attorney’s fees).
Less than a week later, Sprint sought relief from the
June 2015 judgment under Rule 60(b) of the Federal
Rules of Civil Procedure. Relying on Blonder-Tongue
Laboratories, Inc. v. University of Illinois Foundation, 402
U.S. 313, 349–50 (1971), Mendenhall v. Barber-Greene
Co., 26 F.3d 1573 (Fed. Cir. 1994), and other authorities,
Sprint argued that this court’s T-Mobile invalidity ruling
required the district court to set aside the judgment in
Sprint’s case, a judgment whose execution had been
stayed pending completion of appeals (which had not
occurred, given that Sprint’s petition for certiorari was
still pending). When Prism suggested to the district court
that this court’s May 2017 mandate (issued after denial of
rehearing) precluded any such relief, Sprint asked this
court to recall the mandate. This court denied the re-
quest, stating that the relief was “unnecessary to give
effect to the preclusion law that Sprint invokes in support
of its recall motion and in support of its Rule 60(b) motion
in district court.” J.A. 35165. We added:
To avoid any doubt, this court here confirms
that the May 2017 mandate does not alter how
the district court should decide the preclusive ef-
fect of the T-Mobile ruling, which did not exist in
May 2017. The district court must consider
Sprint’s preclusion motion—including any issues
about what patent claims were actually the sub-
4 PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P.
ject of this court’s T-Mobile ruling—by applying
the standards of Mendenhall . . ., its successors,
and any other relevant law. . . . [T]he May 2017
mandate should not be treated by the district
court as altering whatever conclusion it would
otherwise reach about Sprint’s Rule 60(b) motion.
J.A. 35165–66.
The district court granted Sprint’s motion for relief
from the judgment on August 8, 2017. The court conclud-
ed that the patent claims at issue in the T-Mobile appeal
included those on which Sprint had been found liable in
this case. On that basis, the court set aside the June 2015
judgment against Sprint.
On September 27, 2017, the court denied Prism’s mo-
tion to alter the August 8, 2017 judgment. Prism ap-
pealed on October 9, within the 30 days allowed under 28
U.S.C. § 2107 and Rule 4 of the Federal Rules of Appel-
late Procedure. We have jurisdiction to hear the appeal.
See 28 U.S.C. § 1295(a). We review the district court’s
grant of Sprint’s Rule 60(b) motion, and refusal to modify
that grant, for an abuse of discretion. See Harley v.
Zoesch, 413 F.3d 866, 870 (8th Cir. 2005); Innovative
Home Health Care, Inc. v. P.T.-O.T. Assocs. of the Black
Hills, 141 F.3d 1284, 1286 (8th Cir. 1998).
II
The principal issue before us is whether the four pa-
tent claims on which Sprint was held liable in this case
were among the claims held invalid in the T-Mobile case.
As to two of the claims—claim 1 of the ’345 patent and
claim 37 of the ’155 patent—there is no dispute. There is
a dispute as to the other two—claim 33 of the ’345 patent
and claim 7 of the ’155 patent. We conclude that those
two claims, like the other two, were the subject of this
court’s T-Mobile invalidity decision.
PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P. 5
A
We begin by describing what occurred in the district
court in Prism’s case against T-Mobile. When T-Mobile
answered the operative complaint, it stated an affirmative
defense of invalidity of the patents at issue “for failing to
comply with the conditions for patentability set forth in
Title 35, United States Code § 101 et seq., including,
without limitation, §§ 102, 103 and/or 112.” J.A. 2487. It
also stated “a counterclaim for declaratory judgment of
noninfringement, and/or invalidity arising under the
patent laws of the United States, 35 U.S.C. §§ 1 et seq.,”
J.A. 2490, and asked for a “declaration that each of the
claims of the [three patents then at issue] is invalid,” J.A.
2498. In its separately numbered counterclaims for each
patent, T-Mobile asserted that the claims are “invalid for
failing to satisfy one or more of the conditions of patenta-
bility set forth in Title 35, United States Code, including
§§ 102, 103 and/or 112.” J.A. 2495, 2496. Although § 101
is not there expressly mentioned, the counterclaims use
“including” language, and this court has ruled that § 101,
like §§ 102, 103, and 112, states “conditions of patentabil-
ity.” Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1330 n.3
(Fed. Cir. 2012); see also J.A. 2487 (T-Mobile itself, in its
affirmative defense, using the similar phrase “conditions
for patentability” to cover § 101). T-Mobile’s responsive
pleading can be read as encompassing § 101 counter-
claims, though that characterization is hardly inevitable. 1
1 Under any local rules on pleading specificity and
cases applying the Federal Rules of Civil Procedure, it is
possible that T-Mobile’s responsive pleading may not have
sufficiently pleaded a counterclaim. See, e.g., Ashcroft v.
Iqbal, 556 U.S. 662 (2009); Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007); In re Bill of Lading
Transmission and Processing System Patent Litigation,
681 F.3d 1323 (Fed. Cir. 2012); McZeal v. Sprint Nextel
6 PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P.
On July 17, 2015, T-Mobile moved for summary
judgment of patent ineligibility of what were then the
“asserted claims.” J.A. 34808. Specifically, as of July
2015, the claims being asserted by Prism were claims 1,
33, 39, 50, 57, 70, 77, and 87 of the ’345 patent and claims
7, 11, 32, 37, 50, 56, 74, 75, 76, and 93 of the ’155 patent.
We note that all four of the claims that are the basis of
the judgment in the Sprint case are on that list. T-
Mobile’s motion did not clarify whether affirmative de-
fenses or counterclaims or both were at issue.
Prism responded on August 21, 2015, by opposing T-
Mobile’s motion for summary judgment and, by cross-
motion, seeking summary judgment of eligibility of the
then-asserted claims. Prism contended that T-Mobile had
not timely presented an eligibility challenge, discussing
the issue only as a defense. Prism also argued eligibility
on the merits.
On September 22, 2015, the district court granted
Prism’s motion for summary judgment of eligibility and
denied T-Mobile’s motion for summary judgment of ineli-
gibility. J.A. 30671–78. The court said nothing to suggest
that it thought that T-Mobile had not properly presented
the § 101 issue; the court discussed only the merits. The
Corp., 501 F.3d 1354 (Fed. Cir. 2007); see also K-Tech
Telecommunications, Inc. v. Time Warner Cable, Inc. 714
F.3d 1277 (Fed. Cir. 2013) (summarizing standards as of
April 2013); Schwendimann v. Arkwright, Inc., 2008 WL
2901691 (D. Minn. 2008) (applying McZeal standards to
counterclaims). The parties’ actions, however, sufficiently
establish that both T-Mobile and Prism ultimately recog-
nized the § 101 challenge as a counterclaim. In these
circumstances, we do not consider whether T-Mobile’s
pleading would be adequate under the standards applica-
ble in or around March 2013 or under the standards
applicable today.
PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P. 7
court did not say whether affirmative defenses, counter-
claims, or both were at issue. Nor did the court limit
which patent claims were covered by its ruling to only a
subset of the “asserted claims” listed in T-Mobile’s motion
for summary judgment—even though on September 11,
2015, Prism had narrowed its elected claims to just eight,
namely, claims 1, 77, and 87 of the ’345 patent and claims
11, 37, 56, 74, and 75 of the ’155 patent. That list ex-
cludes two of the claims in Prism’s case against Sprint
(the present case): claim 33 of the ’345 patent and claim 7
of the ’155 patent.
In the second half of October 2015, Prism and T-
Mobile went to trial. Prism narrowed the claims it asked
the jury to address still further, dropping claims 74 and
75 of the ’155 patent. On October 30, 2015, the jury found
that T-Mobile had not infringed the six claims it was
charged with addressing and, pursuant to the instruction
on the verdict form, did not reach the questions of invalid-
ity under §§ 102, 103, and 112 on the verdict form.
After trial, T-Mobile filed a motion for judgment as a
matter of law, under Rule 50(b) of the Federal Rules of
Civil Procedure. In addition to seeking judgment in its
favor of invalidity under §§ 102 and 112, T-Mobile argued
that “the asserted claims are ineligible under 35 U.S.C.
§ 101.” J.A. 34228 (capitalization omitted). T-Mobile
“incorporate[d] by reference” its motion for summary
judgment and declared that it “maintains that the claims
were ineligible based on the pre-trial summary judgment
record alone.” Id. at 34228 n.1. It argued that, in any
event, “the evidence at trial prove[d] that there is nothing
inventive in the asserted claims that could confer eligibil-
ity.” Id. at 34228.
As to that argument, T-Mobile concentrated on testi-
mony by Prism’s witnesses about use of a “hardware
identifier” to “identify a person requesting access to
resources over the Internet,” id. at 34229, and it gave two
8 PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P.
answers to that testimony. First, it said, “the concept of a
hardware identifier is not inventive.” Id. at 34230.
Second, it added, a hardware identifier “is not even recit-
ed in the asserted claims.” Id. In making that point, T-
Mobile cited only the six tried claims. Id. at 34230–31.
On the other hand, it introduced that citation with a non-
limiting “e.g.,” and when it noted that other claims call for
a hardware identifier, it did not point to any of the claims
on the longer list that were the subject of the summary
judgment ruling. Id. at 34231.
The district court denied the post-trial motions, in-
cluding T-Mobile’s request for attorney’s fees, on April 6,
2016. The court did not identify what claims of the pa-
tents were at issue in the Rule 50(b) motion.
B
Prism appealed, and T-Mobile cross-appealed. In the
notice of cross-appeal, T-Mobile stated that it was appeal-
ing from the April 6, 2016 judgment that denied its Rule
50(b) motion and request for fees
and from any and all other judgments, orders,
opinions, rulings, and findings that merge therein
or are pertinent or ancillary to the foregoing, in-
cluding, without limitation, the Order entered on
September 22, 2015 (Dkt. 428), denying T-Mobile’s
Motion for Summary Judgment of Patent Ineligi-
bility (Dkt. 309).
J.A. 34612.
In its opening brief as cross-appellant, T-Mobile de-
scribed the district court’s ruling on summary judgment
and stated: “While Prism subsequently narrowed its case
at trial, T-Mobile maintains that all of the claims ad-
dressed in its motion are patent-ineligible.” Corrected
Principal and Response Brief for Defendant/Cross-
Appellant T-Mobile USA, Inc. at 10 n.4. T-Mobile re-
ferred to its § 101 challenge as a “request for declaratory
PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P. 9
judgment,” not as a mere affirmative defense. Id. at 33.
T-Mobile did not limit its challenge to the district court’s
§ 101 ruling to the six claims tried to the jury. To the
contrary, it stated its request for relief as to § 101 more
broadly: “The Court should reverse the district court’s
eligibility rulings on T-Mobile’s summary judgment and
Rule 50(b) motions, and hold that the claims addressed
therein are not patent-eligible.” Id. at 67; see id. at 76
(“The Court should . . . reverse the district court’s rulings
that Prism’s claims are directed to patent-eligible subject
matter . . . .”). That request, naturally read, challenges
the summary judgment ruling in its full scope, covering
all the claims the court there held eligible for patenting.
In its cross-appeal, T-Mobile attacked a broader set of
claims than what had been asserted by Prism at trial; the
necessary implication is that T-Mobile sought to prevail
on a counterclaim of invalidity, not just obtain relief
under an affirmative defense.
In responding to T-Mobile’s argument on the cross-
appeal, Prism did not assert that T-Mobile’s cross-appeal
was actually or necessarily limited to the six tried claims.
To the contrary, Prism treated the full summary judg-
ment ruling as before this court. See Plaintiff-Appellant
Prism Technologies LLC’s Reply and Cross-Appeal Re-
sponse Brief at 4–5, 23–50. Indeed, to show the inventive
concepts that went beyond the abstract idea at issue,
Prism expressly discussed a number of claims other than
the six that were tried. Id. at 33–34.
That fact is significant enough, but two particular as-
pects of Prism’s discussion are worth highlighting. First,
Prism specifically discussed claim 33 of the ’345 patent
and claim 7 of the ’155 patent. Id. Those are the two
claims, among the four on which Sprint was held liable in
this case, that Prism argues were not before this court in
the T-Mobile case. Id. Second, Prism specifically argued
that, “as discussed further below, the inclusion of hard-
ware identity limitations in the Asserted Claims repre-
10 PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P.
sents a specific and novel solution to a real problem and
provides real benefits.” Id. at 24 (emphasis added). It
then elaborated on what claims it meant, describing
various claims that “provide additional specificity on the
identity data used for authentication, including that they
are generated from an internal hardware component,
unique or unique to the client computer device, and come
from an external device, an external object inserted into a
reader associated with the client computer or a SIM card.”
Id. at 34 (citing claims 57, 69, and 70 of the ’345 patent
and claims 6, 7, and 75 of the ’155 patent). Not one of
those claims is among the six tried in Prism’s case against
T-Mobile. And Prism wrapped up its eligibility discussion
with a reference back to “hardware identity” claim limita-
tions. Id. at 50.
On June 23, 2017, this court agreed with T-Mobile
that “the asserted claims recite ineligible subject matter
because they: (1) are directed to the abstract idea of
controlling access to resources; and (2) are non-inventive
because they recite generic computer hardware running
generic computer software that performs the abstract
functions routine to the process of restricting access.” 696
F. App’x at 1017. The court did not limit its ruling to the
six tried claims. Rather, following Prism’s own presenta-
tion, it addressed other claims. Of particular note, the
court discussed, and rejected on the merits, Prism’s
argument relying on “the recited ‘identity data’ (such as a
hardware identifier)” and “hardware identity data.” Id. at
1017–18 (citing pages 24 and 50 of the relevant Prism
brief). As we have just observed, Prism, in making that
argument, was addressing claims other than the six that
were tried. 2
2 This court addressed the merits of Prism’s argu-
ment about identity data and hardware, which T-Mobile
continued to address on the merits in its final brief. Reply
PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P. 11
C
In the circumstances presented, we conclude that this
court’s T-Mobile decision is properly understood as cover-
ing, and invalidating, all the claims that were the subject
of the district court’s eligibility ruling on summary judg-
ment—which undisputedly included all four of the claims
on which Sprint was held liable to Prism in this case. The
parties’ filings in this court in T-Mobile, including the
presentation by Prism itself, strongly so indicate.
We do not see enough in the proceedings at the dis-
trict court level in T-Mobile to override what the record at
the appellate level strongly indicates. There is no dispute
that, if T-Mobile’s § 101 challenge is viewed as a counter-
claim, the rejection of the challenge on summary judg-
ment—covering all claims then at issue—was appealable
after final judgment. As we have described, T-Mobile’s
responsive pleading, though not clear, can be read as
including counterclaims for a declaratory judgment of
§ 101 ineligibility. And at the appellate level, both par-
ties, and this court, effectively treated the § 101 challenge
as a counterclaim: the § 101 discussion clearly extended
beyond the tried claims. We see no sufficient reason to
decline to give effect to that treatment of the character of
the § 101 challenge as a counterclaim, given that Prism,
before this court’s decision on appeal, never contested the
scope of T-Mobile’s cross-appeal, and our T-Mobile deci-
sion must be read as deciding the eligibility question for
all of the claims addressed in the district court’s sum-
mary-judgment ruling.
Brief for Defendant/Cross-Appellant T-Mobile USA, Inc.
at 11–13. We note that, in a footnote attached to that
brief’s textual discussion of the merits of the argument, T-
Mobile stated that this feature is not in the tried claims.
Id. at 12 n.1. This court did not rely on that statement,
but addressed this feature on the merits.
12 PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P.
In any event, Prism is now in no position to insist that
a formal alteration of the responsive pleading was needed
to further clarify the counterclaim status of the § 101
challenge. In T-Mobile, the only reason that there was an
appealable final judgment, despite the absence of a ruling
on other counterclaims of invalidity (which mention
§§ 102, 103, and 112), was that Prism and T-Mobile
agreed to treat those counterclaims of invalidity as af-
firmative defenses, without a formal pleading change. See
J.A. 35269. Nor has there been any suggestion that a
formal alteration of T-Mobile’s pleading was any more
required for present purposes, where the parties effective-
ly treated T-Mobile’s § 101 challenge as a counterclaim
when the matter was presented to this court.
III
Having concluded that this court’s decision in T-
Mobile held invalid all four claims on which Sprint was
held liable to Prism in this case, we also conclude that the
district court properly set aside the judgment against
Sprint. The courts have long recognized a strong federal
patent policy against enforcing an unexecuted judgment
of patent liability at least where all of the following cir-
cumstances are present: the patent claims underlying
that judgment have been held invalid by another decision
having sufficient finality for this purpose; proceedings on
direct review of the judgment have not yet been complet-
ed; and no agreement exists making portions of the judg-
ment final. See Blonder-Tongue, 402 U.S. at 349–50;
Mendenhall, 26 F.3d at 1579–80 (invalidity judgment may
be raised “at any stage of the affected proceedings”); id. at
1583–84; see also WesternGeco LLC v. Ion Geophysical
Corp., Nos. 2013-1527, 2014-1121, -1526, -1528, 2019 WL
166173 at *2–3 (Fed. Cir. Jan. 11, 2019); ePlus, Inc. v.
Lawson Software, Inc., 789 F.3d 1349, 1358 (Fed. Cir.
2015); Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d
1330, 1344, 1347 (Fed. Cir. 2013). The district court
properly relied on that principle in this case. The liability
PRISM TECHNOLOGIES LLC v. SPRINT SPECTRUM L.P. 13
judgment in this case was still subject to direct review
when this court, in T-Mobile, invalidated the claims on
which the judgment rests. The judgment had not been
executed, and no portion had been carved out as final by
agreement. And Sprint invoked the T-Mobile invalidity
ruling within a week of that ruling’s issuance.
Prism notes that, in this case, Sprint had dropped its
invalidity challenges just before trial in 2015 and did not
raise such challenges on appeal of the judgment against
it. But Prism has identified no precedent that limits the
above-stated federal patent policy based on those facts.
Nor has Prism provided a persuasive reason why the T-
Mobile invalidity ruling is properly viewed as less than
“an act which, in judgment of law, extinguishes the pa-
tent” claims, akin for present purposes to a cancellation of
those claims, after which they “can no more be the foun-
dation for the assertion of a right.” Moffitt v. Garr, 66
U.S. (1 Black) 273, 283 (1861). We conclude that Prism
has given us no basis to conclude that the district court
abused its discretion in setting aside the judgment
against Sprint based on the invalidation in T-Mobile of
the claims on which the judgment rests.
IV
We affirm the Order and Judgment of August 8, 2017.
No costs.
AFFIRMED