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Apple, Broadcom allowed to press Ctrl-Z on billion-dollar Wi-Fi patent payout to Caltech

Appeals court orders do-over for damages calculation

Apple and Broadcom won a new trial to recalculate damages arising from a six-year-old legal battle over Wi-Fi patents developed by the California Institute of Technology (Caltech).

The US Court of Appeals for the Federal Circuit on Friday upheld the 2020 verdict that Apple and Broadcom infringed two Caltech patents. But it vacated an infringement finding for a third patent, which will be retried, and also vacated $1.1bn in damages levied against the two companies.

In 2016, Caltech sued Apple and Broadcom, which made Wi-Fi chips used in Apple iPhones at the time. The university accused the two companies of infringing three US patents (7,116,710, 7,421,032 and 7,916,781).

Apple tried to have the patents invalidated but failed. The company was unable to convince the Patent Trial and Appeal Board that Caltech's technology – techniques for Wi-Fi error correction – was unpatentable and obvious.

When the trial concluded in January 2020, the jury found the companies had violated the patents at issue and imposed a penalty of $837m on Apple and $270m on Broadcom.

Efforts to reduce or undo the damages ended up in appeals court and now the two companies, or at least their attorneys, have been rewarded with further litigation.

In The California Institute of Technology v. Broadcom Limited [PDF], the appeals court concluded that the district court had adopted a legally unsupportable two-tiered damages scheme to penalize the two firms. And the jury's finding that Caltech's '781 patent had been infringed will now be retired.

One of the three judges on the appeals panel would have gone further and invalidated the patents altogether, based in part on an infringement theory presented at trial describing AND gates that generate additional bits for error correction.

"But the record does not support a theory that the branched wires generate additional bits," said Judge Timothy Dyk in his dissenting opinion. "Caltech’s experts testified merely that the bits are 'connected to' the AND gates by branched wires, without explaining whether or how that connection generated additional bits."

"Apple and Broadcom presented unrefuted expert testimony that the branched wire connection involves simultaneously sending the same bit – not an additional bit – to the inputs of AND gates. Caltech’s expert did not testify to the contrary, and in fact declined to testify that branching generates additional bits."

Apple did not immediately respond to requests for comment.

"We are pleased that the Federal Circuit has affirmed the validity and infringement of Caltech’s patents," said Shayna Chabner, chief communications officer for Caltech, in an emailed statement.

"This is recognition of Caltech’s inventions in the field of data communications, which are now widely used in WiFi products because they significantly improve the quality, bandwidth, and range of wireless data transmission. We are confident that the value of the patents will be fully recognized at the damages retrial."

In an unrelated legal battle against patent licensing firm Wi-LAN, Apple also got a reprieve from a $85m infringement verdict. A different three-judge panel gave Apple a new trial.

Apple initiated the legal battle in May 2014 against Wi-LAN, a subsidiary of Quarterhill, in the Southern District of California to obtain a declaratory judgment that iPhones did not infringe the firm's LTE patents.

Wi–LAN countersued and in 2018 won $145.1m in damages. Apple challenged the award and the district court hearing the case agreed, so there was a new trial and in 2020 the damages were reduced to $85.23m.

Those damages may be reduced further still. In its ruling on Apple, Inc. v. Wi-LAN, Inc. [PDF], the appeals court took issue with Wi-LAN’s damages expert, David Kennedy, and said his damages testimony should be excluded because "methodological and factual errors in analyzing the comparable license agreements render his opinion untethered to the facts of this case."

"We conclude the district court abused its discretion in denying Apple’s motion for a new trial on damages," the appeals court said. ®

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