ITUS Corp. (ITUS), the patent monetization company run by CEO Robert Berman, said its wholly owned subsidiary, Secure Web Conference Corp. has filed a notice of appeal with the U.S. District Court in Brooklyn, N.Y.
The Melville, N.Y-based company said the notice is the first step of the process of filing its appeal in the U.S. Court of Appeals for the Federal Circuit, in connection with the October 3, 2014 claims construction ruling in its patent infringement lawsuit against Microsoft Corp.
The case involves two patents U.S. Patent No. 6,856,686 B2 describing a method and apparatus for securing e-mail attachments and 6,856,687 B2 describing a portable telecommunication security device.
Judge John Gleeson, of the U.S. District Court in Brooklyn, N.Y., mostly sided with Microsoft on claims construction issues in ruling among other things that the term “‘security device’ is best read to mean a device that is separate from and external to the ‘microprocessor based devices.”
Secure Web had argued for a broader interpretation that would encompass hardware with a primary function of encryption and decryption.
In the lawsuit, Secure Web alleged that certain calls made using Microsoft’s Skype and Lync web conferencing services are covered by Secure Web’s Key Based Web Conferencing Encryption patents.
“We believe that the District Court interpreted our patent in a limited manner that was not intended by the inventors, and is contrary to the tenets of claim construction adopted by the Federal Circuit,” Berman said in a statement.
Berman said without this limitation, Secure Web believes “its patents would cover modern iterations of our security technology, which are widely used to encrypt audio video communications between computers, and hand held devices.”
Appeals of claims construction decisions to the Federal Circuit are common, and are successful in about 50% of appealed cases.
Many IP market watchers including Erich Spangenberg, the founder and owner of IP Navigation Group, have said recently that claims construction reversals have become too common at the Federal Circuit.
That may be changing, however after the U.S. Supreme Court on Tuesday vacated a Federal Circuit decision on claims construction in a dispute between Teva Pharmaceuticals and Sandoz Inc. The high court said that on claims construction issues the Federal Circuit should show more deference to district courts.
In this case, however, ITUS is hoping the Federal Circuit will review the decision on a de novo basis, meaning without deference to the lower court decision, because of the absence of any factual dispute between the parties on claim construction issues.
In an interview, Berman said it always seemed strange to him that the Federal Circuit didn't have to give greater deference to district courts with regard to fact based claims construction issues.
"They were acting like the district courts didn't exist," Berman said. "In my view that never made sense, so I agree with the Supreme Court."
The Secure Web v. Microsoft case, however, "is not really fact dispositive. It's an issue of the law for the court to decide."
Berman noted that the patents at issue in the dispute with Microsoft were invented by people inside the former CopyTele Corp. "This isn't your typical troll case, though that shouldn't matter."
"Our inventor many years ago created a security device. In the old days, security device had to be separate from the microprocessor. What used to be done in separate devices is now done with separate chips."
While the court agreed with Microsoft's definition for the term security device that it had to be separate from the microprocessor, "our position is there was no disclaimer in the patent that it had to be separate. It's my understanding that the Federal Circuit believes patents should be interpreted in the broadest way and unless there's a disclaimer it would be improper to read it in a limited way. We are hopeful the Federal Circuit will agree with us."
"As technology advances things get smaller and the invention gets miniaturized," he said. "It doesn't mean the same technology isn't being used."
Berman declined to discuss how much ITUS has riding on the case, saying handicapping lawsuits is inappropriate because lawsuits are so uncertain.
ITUS recently won a $9 million settlement from AU Optronics, as well as the termination of AU's rights to ITUS's nano field emission display patents.
The company, which has initiated 47 lawsuits and reached 33 licensing or settlement agreement, still has six active cases.
David Cuddy, a Microsoft spokesman, declined comment.
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