On June 4th, 2010, the Court of Appeals for the Federal Circuit decided a computer hardware and method patent case between Silicon Graphics (“SGI”) and ATI Technologies (“ATI”).[1] The technology at issue comprised computer graphics hardware and methods of the type used to create movies such as Toy Story or Wall-E.[2] At the District Court, plaintiff SGI alleged that defendant ATI infringed three of its patents, but after litigation, only U.S. Patent No. 6,650,327 (the “327 patent”) was raised on appeal. Due to the District Court’s claim construction and an interpretation of a license agreement that SGI had with Microsoft Corp., no genuine dispute of facts on infringement was found, and summary judgment was granted to ATI.[3] However, a jury trial was then held to determine the validity of the ‘327 patent.[4] ATI made several post-trial motions. Denial of those motions was appealed by ATI. SGI cross-appealed the claim construction and the interpretation of the Microsoft license agreement.[5] The Appeals Court vacated two of the three claim constructions in question as well as the Microsoft license interpretation, but affirmed with respect to all other issues including ATI’s post-trial motions.[6]

The ‘327 patent teaches a system and a method to utilize floating point calculations in the computation of computer graphics.[7] The implementation of this system is carried out through hardware. While previous approaches had used floating point calculations through software emulations to render graphics, the ‘327 patent used “some portions or even the entire rasterization[8] process by hardware in a floating point format.”[9]

SGI raised the issues of claim construction and the Microsoft license interpretation on appeal. The District Court had interpreted three claim terms: “a rasterization process,” “scan conversion,” and “s10e5.”[10] ATI’s products used both fixed point and floating point values, but the District Court defined “a rasterization process” to be a single process utilizing floating point values. Alternatively, the Appeals Court held that the interpretation of “a rasterization process” defining a single process was incorrect, and; therefore, since it encapsulated potentially more than one process, it did include processes done with both fixed point and floating point values.[11] Additionally, the Appeals Court, referring to the ‘327 patent’s specification, held that the interpretation of “s10e5” to only include an exponent bias of 16 was incorrect (ATI’s devices use a bias of 15).[12] Lastly, the interpretation of “scan conversion” was held to be valid.[13]

Furthermore, SGI appealed the decision of the District Court in regards to the Microsoft license. The District Court had determined that direct infringement does not occur from licensed use, which resulted in the inability to find indirect infringement.[14] ATI had argued that end-users of the Microsoft OS are licensed. The Appeals Court held that the Windows OS only provides an avenue to activate the alleged infringing product, but infringement of an apparatus claim is not dependent on activation.[15] It hinges on merely being made or sold in the U.S.[16] The Appeals Court vacated the summary judgment ruling predicated on this error.

In concluding its analysis, the Appeals Court affirmed the District Courts decisions on issues raised on appeal by ATI. These decisions included ATI’s denied motions for judgment as a matter of law[17] and a motion for a new trial,[18] ATI’s waived/abandoned counter claims,[19] and ATI’s request to be awarded costs.[20] The case was remanded for consideration on the newly adopted claim term interpretations.[21]