Z4 Technologies, Inc. v. Microsoft Corp.

United States Court of Appeals for the Federal Circuit

2006-1638

Z4 TECHNOLOGIES, INC.,

Plaintiff-Appellee,

v.

MICROSOFT CORPORATION,

Defendant-Appellant,

and

AUTODESK, INC.,

Defendant.

Frank A. Angileri, Brooks Kushman P.C., of Southfield, Michigan, argued for
plaintiff-appellee. With him on the brief were Ernie L. Brooks, Thomas A. Lewry, and
John S. Le Roy.

John E. Gartman, Fish & Richardson P.C., of San Diego, California, argued for
defendant-appellant. With him on the brief were Matthew C. Bernstein, Seth M. Sproul,
and John M. Bustamante. Also on the brief were Robert E. Hillman and John A.
Dragseth, of Boston, Massachusetts. Of counsel on the brief was Isabella Fu, Microsoft
Corporation, of Redmond, Washington.

Appealed from: United States District Court for the Eastern District of Texas

Judge Leonard Davis
 United States Court of Appeals for the Federal Circuit

2006-1638

Z4 TECHNOLOGIES, INC.,

Plaintiff-Appellee,
v.

MICROSOFT CORPORATION,

Defendant-Appellant,
and

AUTODESK, INC.,

Defendant.

__________________________

DECIDED: November 16, 2007
__________________________

Before LOURIE and LINN, Circuit Judges, and BUCKLO, District Judge. *

LINN, Circuit Judge.

Microsoft Corporation (“Microsoft”) appeals from a final judgment of the United

States District Court for the Eastern District of Texas, z4 Techs., Inc. v. Microsoft Corp.,

No. 06-cv-142 (E.D. Tex. Aug. 18, 2006). The district court denied Microsoft’s renewed

motion for judgment as a matter of law (“JMOL”) following a jury trial in which the jury

found that Microsoft had infringed z4 Technologies, Inc.’s (“z4’s”) U.S. Patents No.

6,044,471 (“the ’471 patent”) and No. 6,785,825 (“the ’825 patent”) and had failed to

*
Honorable Elaine E. Bucklo, District Judge, United States District Court for
the Northern District of Illinois, sitting by designation.
prove these patents invalid. z4 Techs., Inc. v. Microsoft Corp., No. 06-cv-142 (E.D. Tex.

Aug. 18, 2006) (“JMOL Opinion”). Because substantial evidence supports the jury’s

verdict, and because the district court did not abuse its discretion in denying Microsoft’s

motion for a new trial, we affirm.

I. BACKGROUND

z4 is the assignee of two patents related to the prevention of software piracy.

The inventor of these patents, David Colvin (“Colvin”), founded and owns z4. The ’825

patent claims priority to the ’471 patent through continuation applications, and thus

shares an effective filing date of June 4, 1998. Because these patents also share a

common specification, we will refer generically to “the specification” in reference to both

the ’471 and ’825 patents. These patents are directed specifically to the problem of

“illicit copying and unauthorized use” of computer software. ’825 patent col.1 ll.21-25.

The patent specification explains that “[t]he advent of the Internet has contributed to the

proliferation of pirated software, known as ‘warez’, which is easily located and readily

downloaded.” Id. col.1 ll.33-35. Prior art solutions to this problem were either easily

circumvented or imposed substantial burdens on the consumer. For example, requiring

the entry of a serial number was “easily defeated by transferring the serial number . . .

to one or more unauthorized users.” Id. col.1 ll.45-51. Similarly, the use of “hardware

keys,” which must be physically present to enable the software, proved “relatively

expensive for the developer and cumbersome for the authorized user.” Id. col.1 ll.36-

44.

z4’s invention “controls the number of copies of authorized software by

monitoring registration information,” and by “[r]equiring authorized users to periodically

2006-1638 2
update a password or authorization code provided by a password administrator.” ’471

patent col.3 ll.15-24. More particularly, the patents disclose a multi-step user

authorization scheme whereby an initial password or authorization code grants the user

a “grace period” for a fixed number of uses or period of time. Users must then submit

registration information to a representative of the software developer to receive a

second password or authorization code, which is required to enable the product for use

beyond this grace period. In the patented system, users are able to choose between a

manual registration mode and an automatic or electronic registration mode. Upon

receipt of the registration information, the software representative compares the

submitted information to previously-stored registration information, and determines

whether the user is authorized. If the user is not authorized, the software representative

may disable the software.

On September 22, 2004, z4 sued Microsoft and Autodesk, Inc. (“Autodesk”) 1

alleging infringement of claim 32 of the ’471 patent and claims 44 and 131 of the ’825

patent. Claim 32 of the ’471 patent reads as follows, with disputed portions highlighted:

32. A computer readable storage medium having data stored therein
representing software executable by a computer, the software including
instructions to reduce use of the software by unauthorized users, the
storage medium comprising:

instructions for requiring a password associated with the software;

instructions for enabling the software after the password has been
communicated to the software;

instructions for subsequently requiring a new password to be
communicated to the software for continued operation of the software; and

1
Autodesk was found to have willfully infringed two of the asserted claims
by the jury, but entered into a settlement with z4 prior to the close of briefing in this
appeal.

2006-1638 3
 instructions for automatically contacting an authorized representative of
the software to communicate registration information and obtaining
authorization for continued operation of the software.

Claims 44 and 131 of the ’825 patent are identical for purposes of this appeal.

They differ only in their definition of the “initial authorization period,” or grace period.

Claim 44 reads as follows, with disputed portions highlighted:

44. A method for reducing unauthorized software use, the method
comprising:

providing a representative to monitor software license compliance;

associating a first authorization code with the software, the first
authorization code enabling the software on a computer for use by a user
for an initial authorization period, the initial authorization period being
based on usage of the software;

supplying the first authorization code with the software;

requiring the user to enter the first authorization code to at least partially
enable the software on the computer for use by the user during the initial
authorization period;

requiring the user to contact the representative for retrieval of at least one
additional authorization code to repeat the enablement of the software on
the computer for use by the user during a subsequent authorization period
beyond the initial authorization period and allowing the repeat of the
enablement of the software to be performed prior to the expiration of the
initial authorization period so the enablement of the software can be
continuous from the initial authorization period to the subsequent
authorization period, the software being enabled on the computer for use
by the user during the subsequent authorization period beyond the initial
authorization period requiring without further communication with the
representative following entry of the at least one additional authorization
code;

requiring the user to selectively choose either manual or electronic
registration and provide registration information to the representative prior
to retrieval of the at least one additional authorization code, the
registration information including computer specific information;

2006-1638 4
 comparing previously stored registration information related to at least one
of the software, the user, and the computer with the registration
information provided by the user to the representative to determine if the
user is an authorized or an unauthorized user; and

at least partially disabling, the software if the user [sic] an unauthorized
user.

In the litigation, z4 alleged that Microsoft’s “Product Activation” feature, as

implemented in its “Office” group of software applications and its “Windows” operating

system, infringed each of the asserted claims, beginning in 2000 and 2001,

respectively. Microsoft countered that it did not infringe z4’s patents, that the ’471 and

’825 patents were invalid for anticipation and obviousness, and that both patents were

unenforceable due to inequitable conduct by Colvin. In particular, Microsoft contended

that it had developed its own technology to reduce software piracy, called the Licensing

Verification Program (“LVP”), which it implemented in its 1998 Brazilian Publisher (“BP

98”) software product. Because this product was released prior to the filing date of z4’s

patents, Microsoft alleged that it constituted a prior invention sufficient to invalidate the

asserted claims.

A magistrate judge held a Markman hearing, and subsequently construed several

disputed claim terms. z4 Techs., Inc. v. Microsoft Corp., No. 06-cv-142 (E.D. Tex. Sep.

20, 2005) (“Claim Construction Opinion”). Later, during the course of the jury trial, the

court construed an additional term, “user,” which had become central to Microsoft’s

litigation arguments. z4 Techs., Inc. v. Microsoft Corp., No. 06-cv-142 (E.D. Tex. Apr.

12, 2006) (“Supplemental Claim Construction Opinion”). The jury returned a verdict of

willful infringement of all three asserted claims against Microsoft and awarded damages

of $115 million.

2006-1638 5
 Following the jury verdict, Microsoft filed various renewed motions for JMOL

under Rule 50(b) and a motion for a new trial under Rule 59(a) of the Federal Rules of

Civil Procedure. The district court denied all of Microsoft’s motions for JMOL and a new

trial, thereby upholding the jury’s verdict in its entirety. The district court also held both

patents to be enforceable. JMOL Opinion at 2. It declined, however, to issue a

permanent injunction against Microsoft. See z4 Techs., Inc. v. Microsoft Corp., 434 F.

Supp. 2d 437 (E.D. Tex. 2006).

Based on the jury’s finding of willful infringement, z4 requested enhanced

damages. Although the district court chose not to enhance damages to the maximum of

three times the jury verdict, it did award an additional $25 million against Microsoft.

JMOL Opinion at 47. It also awarded attorney’s fees to z4 based on the jury’s

willfulness verdict and its own determination of litigation misconduct by Microsoft. Id. at

43. Microsoft timely appealed. We have jurisdiction pursuant to 28 U.S.C.

§ 1295(a)(1).

II. DISCUSSION

A. Standard of Review

We review the denial of a motion for JMOL de novo, Harris Corp. v. Ericsson

Inc., 417 F.3d 1241, 1248 (Fed. Cir. 2005), and thus affirm the jury’s verdict unless “a

reasonable jury would not have a legally sufficient evidentiary basis to find for the

[winning] party,” Fed. R. Civ. P. 50(a)(1). “The denial of a motion for judgment as a

matter of law . . . is a procedural issue not unique to patent law, which we review under

the law of the regional circuit where the appeal from the district court normally would

lie.” Riverwood Int’l Corp. v. R.A. Jones & Co., 324 F.3d 1346, 1352 (Fed. Cir. 2003).

2006-1638 6
“The United States Court of Appeals for the Fifth Circuit describes appellate review of a

JMOL denial as a determination whether ‘the facts and inferences point so strongly and

overwhelmingly in favor of one party that the court concludes that reasonable jurors

could not arrive at a contrary verdict.’” Harris, 417 F.3d at 1248 (quoting Bellows v.

Amoco Oil Co., 118 F.3d 268, 273 (5th Cir. 1997)). “In reviewing the sufficiency of the

evidence . . . we must affirm unless there is no legally sufficient evidentiary basis for the

jury's verdict. In this regard, the evidence, as well as all reasonable inferences from it,

are viewed in the light most favorable to the verdict.” Lane v. R.A. Sims, Jr., Inc., 241

F.3d 439, 445 (5th Cir. 2001) (internal citations omitted). In performing this review, we

are mindful of the fact that “[a]nticipation is a factual determination that is reviewed for

substantial evidence when decided by a jury,” Koito Mfg. Co. v. Turn-Key-Tech, LLC,

381 F.3d 1142, 1149 (Fed. Cir. 2004), as is the jury’s determination of non-infringement,

Acumed LLC v. Stryker Corp, 483 F.3d 800, 804 (Fed. Cir. 2007).

We also review the denial of a motion for a new trial under regional circuit law,

see Riverwood, 324 F.3d at 1352, which, in the Fifth Circuit, provides for reversal only

upon an “abuse of discretion or a misapprehension of the law” by the district court.

Prytania Park Hotel, Ltd. v. Gen. Star Indem. Co., 179 F.3d 169, 173 (5th Cir. 1999).

Claim construction is an issue of law, see Markman v. Westview Instruments,

Inc., 52 F.3d 967, 970-71 (Fed. Cir. 1995) (en banc), aff'd, 517 U.S. 370 (1996), over

which we exercise plenary review, Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448,

1456 (Fed. Cir. 1998) (en banc).

2006-1638 7
 B. Analysis

Microsoft argues that the district court erred as a matter of law by denying JMOL

of non-infringement based on three claim limitations allegedly lacking in the accused

products and by denying JMOL of invalidity under 35 U.S.C. § 102(g) based on

Microsoft’s BP 98 product. Microsoft also requests a new trial based on allegedly

incorrect and prejudicial jury instructions. Microsoft further argues that the Supreme

Court’s recent decision in Microsoft Corp. v. AT&T Corp., 127 S. Ct. 1746 (2007)

(addressing infringement under 35 U.S.C. § 271(f) with respect to software

components), compels a remand for a new trial on damages. We address each of

these arguments in turn.

1. Microsoft’s Motion for JMOL of Non-Infringement

Microsoft disputes the district court’s constructions of the “user” limitation of both

patents, the “automatically” limitation of the ’471 patent, and the “electronic” limitation of

the ’825 patent. It further challenges the jury’s finding that the accused products meet

these limitations as well as the “password” limitation of the ’471 patent and the

“authorization code” limitation of the ’825 patent. z4 responds that Microsoft’s accused

products require the entry of a Product Key, which is a “password” or “activation code,”

that they also allow users to choose Internet activation, which performs all the steps of

the “automatic” or “electronic” claim limitations, and that because Microsoft’s Product

Activation compares stored information regarding the software and the computer to

registration information submitted by the user to activate the software, Microsoft

infringes all of the asserted claims.

2006-1638 8
 a. The “User” Limitation

The district court construed the term “user” to mean “a person, a person using a

computer, a computer, or computers.” Supplemental Claim Construction Opinion at 3.

Microsoft had attempted to limit “users” to “persons,” thereby excluding a computer or

computers, while z4 advocated for the broad interpretation adopted by the district court.

Id. at 1. Under its definition, Microsoft argues that the asserted claims require the

authorization of a “particular user, regardless of what particular computer they are

using,” while the accused products authorize “a particular computer, regardless of who

is using it.” Microsoft thus asserts that there can be no infringement because its

products do not recognize “unauthorized users,” but rather unauthorized computers. In

its reply brief, however, Microsoft concedes a construction of “user” as including both “a

person” and “a person using a computer.” Reply Br. at 4 (“Properly construed, a ‘user’

is a person or a person using a computer. . . . It is only the district court’s elimination of

the person altogether, in allowing a computer by itself to be a ‘user,’ that we ask this

Court to overrule as an error of law.”).

In construing a disputed claim term, we begin with the language of the claims.

Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc). Claims of the

’825 patent include the limitations “enabling the software on a computer for use by a

user,” and “comparing previously stored registration information . . . to at least one of

the software, the user, and the computer.” In these recitations, the “user” and the

“computer” are distinct entities. To construe the term “user” to mean a “computer”

would result in the claim being interpreted to recite, for example, “enabling the software

on a computer for use by a [computer].” The language of the claims does not

2006-1638 9
reasonably or logically permit such a construction. Likewise, the written description

makes clear that the terms “users” and “computers” are distinct and used to describe

different things. E.g., ’471 patent col.1 ll.48-51 (discussing “users who may have a

legitimate need to . . . transfer a copy to a new computer”); id. col.7 ll.7-9 (“[T]he user

installs . . . the software in his computer or computer network.”). Because a

construction that would equate a “user” with a “computer or computers” conflicts with

“both the plain language of the claims and the teachings of the specification,” NeoMagic

Corp. v. Trident Microsystems, Inc., 287 F.3d 1062, 1070 (Fed. Cir. 2002), the district

court’s inclusion of “computer or computers” in its claim construction cannot be

sustained. Because we agree with Microsoft that the district court erred in construing

“user” to include a computer or computers apart from a person, we modify the district

court’s claim construction and hold that a “user” is properly construed as “a person or a

person using a computer.” 2 This construction applies to all of the asserted claims. See

Omega Eng’g, Inc., v. Raytek Corp., 334 F.3d 1314, 1334 (Fed. Cir. 2003) (“[W]e

presume, unless otherwise compelled, that the same claim term in the same patent or

related patents carries the same construed meaning.”).

Notwithstanding our modification of the district court’s claim construction,

however, we find Microsoft’s contention that the asserted claims require the

authorization of a “particular user, regardless of what particular computer they are

using” to be artificial and inconsequential. Although the claims recite “software including

instructions to reduce use of the software by unauthorized users,” ’471 patent claim 32,

2
In so holding, we rely in part on Microsoft’s concession that “user” includes
both “a person” and “a person using a computer.” See Reply Br. at 4. Accordingly, we
express no opinion as to whether “a person” and “a person using a computer” differ
meaningfully.

2006-1638 10
and “determin[ing] if the user is an authorized or an unauthorized user,” ’825 patent

claims 44, 131, both the claims and specification describe methods of making this

determination based on computer-specific information, among other things. This

conclusion is based on relevant language that appears in the claims and not on any

particular construction of the term “user.” Specifically, the claims recite that the

software representative may identify authorized users based on a comparison of

“registration information provided by the user,” with “previously stored registration

information related to at least one of the software, the user, and the computer.” Id.

Because the “[u]se of the phrase ‘at least one’ means that there could be only one or

more than one” of the listed types of previously stored registration information, Rhine v.

Casio, Inc., 183 F.3d 1342, 1345 (Fed. Cir. 1999), the identification called for by the

claims may be accomplished by comparing the registration information with previously-

stored information related: (a) to the software installed by a person on the computer; (b)

to the person using the computer; or (c) to the computer hardware. Microsoft’s

argument that the asserted claims require the authorization of a “particular user,

regardless of what particular computer they are using” ignores the language of the

claims which, as noted above, permits the identification of authorized users based on,

inter alia, “previously stored registration information related [only] to . . . the computer.”

Our construction of the term “user” to mean “a person or a person using a computer”

does not foreclose or in any way affect such a conclusion nor does it preclude a

determination that the accused Microsoft products infringe. Thus, Microsoft’s argument,

while correct as to the construction of the claim term “user,” is not determinative of the

question of infringement.

2006-1638 11
 With respect to infringement, substantial evidence supports the jury verdict, even

under our modified construction. Because the claims explicitly contemplate tracking

authorized users through, inter alia, the identity of the computers on which they install

the software as discussed, supra, and because Microsoft admits that it makes Product

Activation determinations based on registration information related to user’s computers,

see Reply Br. at 2, a reasonable juror could find that Microsoft infringed the asserted

claims notwithstanding our modification of the district court’s construction of the term

user. See Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1328 (Fed. Cir. 2002)

(noting that when we determine that the district court “has misinterpreted a patent claim,

we independently construe the claim to determine its correct meaning,” and that “[w]e

may affirm the jury’s findings on infringement . . . if substantial evidence appears in the

record supporting the jury’s verdict and if correction of the errors in a jury instruction on

claim construction would not have changed the result, given the evidence presented”).

b. The “Password” and “Authorization Code” Limitations

As discussed above, the patents disclose a system wherein an initial password

or authorization code enables a software “grace period” for a fixed number of uses or

period of time. Microsoft and z4 agree that the terms “authorization code” and

“password” are used interchangeably. Claims 44 and 131 of the ’825 patent recite

“associating a first authorization code with the software, the first authorization code

enabling the software . . . for an initial authorization period, . . . supplying the first

authorization code with the software; [and] requiring the user to enter the first

authorization code to [activate the grace period]” (emphases added). Similarly, claim 32

of the ’471 patent recites “requiring a password associated with the software; . . . [and]

2006-1638 12
enabling the software after the password has been communicated to the software”

(emphases added). The parties raise no claim construction issues related to these

limitations, and we review them only for substantial evidence supporting the jury’s

finding of infringement.

Although Microsoft admits that the accused products have a grace period, and

that users are instructed to enter a “Product Key” provided with the software before this

period may begin, it argues that this Product Key cannot be an “authorization code” or

“password” because it is not “associated with the software” as required by the claims.

Specifically, Microsoft asserts that any Product Key can enable the grace period on any

copy of the software, and thus there is no association between a particular copy of

software and the specific Product Key provided with that copy. We disagree. Not only

was the jury presented with evidence that Microsoft directly instructed its users to input

a specific Product Key provided with each copy of the software and that the Product

Key was required as part of product installation, but one of Microsoft’s own witnesses

admitted that unless users enabled the grace period using this specific Product Key,

they would have been unable to complete the Product Activation process (i.e., to enable

the software beyond the grace period).

Thus, substantial evidence supports a finding that in the ordinary course of

activating a copy of the accused software, a user is required to enter an authorization

code—the Product Key—associated with that copy of the software. Even if the potential

use of unassociated Product Keys to enable software grace periods may be framed as

a “non-infringing mode[] of operation,” our conclusion remains the same. See Hilgraeve

Corp. v. Symantec Corp., 265 F.3d 1336, 1343 (Fed. Cir. 2001) (“[I]n determining

2006-1638 13
whether a product claim is infringed, we have held that an accused device may be

found to infringe if it is reasonably capable of satisfying the claim limitations, even

though it may also be capable of non-infringing modes of operation.”). We are likewise

unpersuaded by Microsoft’s related assertion that it does not infringe because a single

copy of the accused software can be installed on an unlimited number of machines

using a single Product Key. As with the previous argument, infringement is not avoided

merely because a non-infringing mode of operation is possible. The fact remains that

Microsoft’s Product Activation process prevents the use of software installations beyond

the grace period unless the associated Product Key is used to enable the grace period.

Microsoft further argues that z4—through criticism of prior art in the patent

specification—disclaimed the use of authorization codes that, like serial numbers in the

prior art, can be used to install multiple copies of the software. It again contends that its

own Product Key cannot be considered an “authorization code” because a single

Product Key can enable the grace period for any copy of the software. See

Astrazeneca AB v. Mut. Pharm. Co., 384 F.3d 1333, 1340 (Fed. Cir. 2004) (discussing

disavowal of claim scope through criticism of other products in the general summary or

description of the invention). We find this argument disingenuous at best because the

patent language cited by Microsoft distinguishes prior art systems relying on a single

authorization code, such as a serial number, from the disclosed invention, which utilizes

a dual authorization code scheme. It is undisputed that Microsoft’s Product Activation,

like the claimed invention, requires dual authorization codes and that the Product Key

enables only a limited grace period.

2006-1638 14
 For all of these reasons, we affirm the jury’s verdict of infringement as to these

limitations.

c. The “Automatic” and “Electronic” Limitations

The parties also dispute the level of user interaction required by the claims to

complete the registration step and to enable the software beyond the grace period

previously enabled by the initial authorization code. This dispute implicates two related

limitations recited in the asserted claims. Claims 44 and 131 of the ’471 patent recite

“requiring the user to selectively choose either manual or electronic registration”

(emphasis added), while claim 32 of the ’825 patent recites “instructions for

automatically contacting an authorized representative . . . to communicate registration

information and obtaining authorization for continued operation” (emphasis added).

Despite the difference in the language of the claims, the parties agree that for purposes

of this appeal, the terms “automatic” and “electronic” may be analyzed together.

At the district court, Microsoft suggested a construction of the term

“automatically” to be “without user discretion or intervention.” The district court

disagreed and instead construed the term to mean “instructions (i.e. a computer code)

that enable a user’s computer to contact an authorized representative of the software.”

Claim Construction Opinion at 6-8. The court did not construe the term “electronic,” but

noted that “[i]n open court, the parties agreed to use the claim language for this term.”

Id. at 8. Microsoft further agreed that it would not argue at trial “that ‘electronic’ means

‘without user intervention’ without leave of Court.” Id.

2006-1638 15
 On appeal, Microsoft contends that once users choose the electronic or

automatic registration mode (as contrasted with the manual mode), the initiation of the

registration communication must commence without any user interaction.

We find Microsoft’s claim construction arguments to be without merit. As the

district court carefully observed, the claims are silent as to the initiation of the

registration process, although the claims and specification “clearly contemplate[] a user

choice as to whether registration will be automatic or manual.” Id. at 6 (citing ’471

patent col.7 ll.7-18 (“The user is allowed to choose between automatic or manual

registration.”)); see also ’825 patent claims 44 & 131 (“requiring the user to selectively

choose either manual or electronic registration”). Although the specification discloses

that automatic registration is performed “without user intervention,” ’471 patent col.4

ll.50-54 (emphasis added), the claims require at least a minimal level of user interaction

to select this registration mode. Indeed, nothing in the claims or specification precludes

user interaction in the selection or initialization of the automatic registration. Thus, the

district court correctly rejected Microsoft’s attempt to exclude any user interaction from

the claims, and we affirm its construction of this term. Microsoft makes no effort to

argue non-infringement under this construction, and its own product documentation,

which was presented to the jury, characterizes the Internet option as “automatically

activating the [accused product].”

Moreover, even under Microsoft’s proposed construction, its sole non-

infringement argument is artificial at best. Specifically, Microsoft argues that although

the accused products allow users to choose between Internet (i.e., automatic or

electronic) or phone (i.e., manual) activation, if the user chooses the Internet option,

2006-1638 16
“nothing happens after that manual choice until the user additionally manually presses

the ‘next’ button . . . .” Microsoft Br. at 23. Thus, even under Microsoft’s construction, a

reasonable juror could find that “manually press[ing] the ‘next’ button” is merely part of

the selection process. Therefore, we affirm the judgment of infringement with respect to

these limitations as well.

2. Microsoft’s Motion for JMOL of Invalidity by Anticipation

Before the district court, Microsoft argued a number of points in support of its

motion for JMOL of invalidity based on anticipation by its BP 98 product. The district

court denied the motion based solely on its conclusion that in light of “the evidence

presented at trial, a reasonable jury could have concluded that BP 98 did not work for its

intended purpose, to stop piracy.” JMOL Opinion at 7. On appeal, Microsoft repeats

many of the arguments it raised before the district court. Because we agree with the

district court’s determination on the point it considered and find it dispositive, we discuss

only that point and need not and do not address Microsoft’s other contentions.

Microsoft argues that the LVP feature of its BP 98 software product anticipates

the asserted claims under section 102(g)(2). That section provides that a patent is

invalid if “before such person’s invention thereof, the invention was made in this country

by another inventor . . . .” 35 U.S.C. § 102(g)(2). “This court has interpreted § 102(g) to

provide that ‘priority of invention goes to the first party to reduce an invention to practice

unless the other party can show that it was the first to conceive the invention and that it

exercised reasonable diligence in later reducing that invention to practice.’” Monsanto

Co. v. Mycogen Plant Sci., Inc., 261 F.3d 1356, 1362 (Fed. Cir. 2001) (quoting

Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1577 (Fed. Cir. 1996)).

2006-1638 17
 Microsoft bore the burden of demonstrating by clear and convincing evidence

that BP 98 constituted an actual reduction to practice of the invention claimed in z4’s

patents. See, e.g., SRAM Corp. v. AD-II Eng’g, Inc., 465 F.3d 1351, 1357 (Fed. Cir.

2006) (“Under the patent statutes, a patent enjoys a presumption of validity, see 35

U.S.C. § 282, which can be overcome only through facts supported by clear and

convincing evidence.”). “In order to establish an actual reduction to practice, the

inventor must prove that: (1) he constructed an embodiment or performed a process

that met all the limitations . . . and (2) he determined that the invention would work for its

intended purpose.” Cooper v. Goldfarb, 154 F.3d 1321, 1327 (Fed. Cir. 1998). “Testing

is required to demonstrate reduction to practice in some instances because without

such testing there cannot be sufficient certainty that the invention will work for its

intended purpose.” Slip Track Sys., Inc. v. Metal-Lite, Inc., 304 F.3d 1256, 1267 (Fed.

Cir. 2002). Because the necessity and sufficiency of such testing are factual issues,

see id. at 1268, substantial evidence in the record supporting a finding that Microsoft’s

LVP software did not work for its intended purpose will suffice to support the jury’s

verdict that z4’s patents are not invalid for anticipation, see Eli Lilly & Co. v. Aradigm

Corp., 376 F.3d 1352, 1362 (Fed. Cir. 2004) (noting that when we review the denial of a

post-verdict JMOL “on a mixed question of law and fact . . . we must sustain the jury's

conclusion unless the jury was not presented with substantial evidence to support any

set of implicit findings sufficient under the law to arrive at its conclusion”); Taskett v.

Dentlinger, 344 F.3d 1337, 1339 (Fed. Cir. 2003) (noting that reduction to practice is a

question of law predicated on subsidiary factual findings).

2006-1638 18
 As an initial matter, Microsoft contends that the district court incorrectly defined

the “intended purpose” of the invention as “to stop piracy,” and thus erred in holding that

a prior invention must “stop piracy” to qualify as invalidating art under § 102(g). See

JMOL Opinion at 7. We agree. z4’s patents do not disclose a method or apparatus to

completely eliminate software piracy, and the claim language indicates that the purpose

of the invention is merely the reduction, rather than the elimination, of such piracy. See

’471 patent claim 32 (claiming “instructions to reduce use of the software by

unauthorized users” (emphasis added)); ’825 patent claims 44 & 131 (claiming “[a]

method for reducing unauthorized software use” (emphasis added)).

We agree with z4, however, that the record contains substantial evidence for a

reasonable jury to conclude that the anti-piracy feature of BP 98 did not work even to

reduce piracy. For example, a reasonable juror could have relied upon the internal

Microsoft presentation of April 28, 1998, which indicated that “effectiveness” was not

known, and that Microsoft “[could] only measure [effectiveness] once enabled fully in a

country w/ [sic] a real product.” The testimony of Microsoft’s own witness, Mr. Hughes,

indicates that the anti-piracy software found in the accused products was “virtually a

complete rewrite” of the software in BP 98. Additionally, an internal Microsoft e-mail

dated November 18, 1998—more than five months subsequent to z4’s filing date—

indicated a problem with the LVP software and documented an instance of the “same

CD being installed in almost 40 different machines with different user names.” It also

noted that one user had registered 34 times, and others had registered more than 15

times. z4’s expert testified at trial that this e-mail “affirm[ed] [his] opinion that Brazilian

Publisher 98 is not prior art because there was no recognition or appreciation that it

2006-1638 19
worked for its intended purpose.” We also note that Microsoft failed to produce the

document containing the e-mail until the day before the trial started, and then only

because z4 uncovered it during a last-minute deposition, see JMOL Opinion at 40,

resulting in the district court sanctioning Microsoft by instructing the jury that

z4 has offered [the document containing the e-mail] into evidence to show
that Brazilian Publisher 98 did not work for its intended purpose . . . . You
are instructed that Microsoft, although it had knowledge of this document,
did not produce it to z4 as it was required to do under controlling discovery
rules. You’re instructed that . . . under the law and rules of this Court, that
Microsoft improperly withheld this document and you may infer, although
you are not required to do so, that Microsoft improperly withheld the
document because it was harmful to the positions it has taken in this case.

Microsoft has not appealed this sanction.

Collectively, this evidence comprises “more than a mere scintilla” and is “such

relevant evidence as a reasonable mind might accept as adequate to support a

conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938) (discussing

substantial evidence review); see also Teleflex, 299 F.3d at 1323-24. Because

substantial evidence supports the jury verdict, we affirm the district court’s denial of

Microsoft’s motion for JMOL of invalidity by anticipation.

3. Microsoft’s Request for a New Trial

Microsoft requests a remand for a new trial based on three allegedly erroneous

jury instructions and an intervening change in law concerning infringement under 35

U.S.C. § 271(f). We do not find these arguments persuasive.

a. Jury Instructions

Under the law of the Fifth Circuit, two requirements must be met before a new

trial will be granted based on an erroneous jury instruction: “First, the challenger must

demonstrate that the charge as a whole creates substantial and ineradicable doubt

2006-1638 20
whether the jury has been properly guided in its deliberations. Second, even if the jury

instructions were erroneous, we will not reverse if we determine, based upon the entire

record, that the challenged instruction could not have affected the outcome of the case.”

Hartsell v. Doctor Pepper Bottling Co., 207 F.3d 269, 272 (5th Cir. 2000).

i. Jury Instruction Regarding “Single Document” Corroboration

The district court instructed the jury that “[a]n inventor’s testimony of conception

must be corroborated in a single document.” It later conceded that this instruction was

“improper,” but nonetheless held that it did not “constitute harmful error under the

circumstances” because Microsoft never presented, much less relied, on the testimony

of an individual inventor. Instead, Microsoft represented to the court that “‘[f]or its §

102(g) defense, Microsoft did not need to name a particular person . . . . Microsoft

corporately both conceived and reduced to practice before Mr. Colvin.’” JMOL Opinion

at 26 (quoting Microsoft’s JMOL motion) (emphasis added). The district court

expressed reservations concerning the propriety of asserting corporate conception, but

it expressly declined to decide this issue, and simply held that because Microsoft

admitted that it “never presented oral testimony of an individual inventor who allegedly

conceived the anti-piracy portion of BP 98,” this instruction was simply not relevant to

the verdict. Id. at 27 & n.10. Because we agree that this instruction was not relevant,

we need not and do not address the merits of Microsoft’s claims regarding corporate

conception.

On appeal, Microsoft now contends that the jury could have assumed that one of

its witnesses, Mr. Hughes, was an inventor. This argument is not persuasive. Microsoft

cannot argue below that it did not and need not name an individual inventor, see id. at

2006-1638 21
26-27, yet now assert that the jury would have concluded precisely the opposite.

Therefore, as the district court correctly concluded, “whether such testimony must be

corroborated by a ‘single document’ was not an issue in the case.” Thus, “the improper

instruction could not create sufficient error to warrant a new trial on the issue of

anticipation.” Id. at 27-28. Furthermore, this instruction “could not have affected the

outcome of the case,” Hartsell, 207 F.3d at 272, in light of the substantial evidence

supporting the conclusion that Microsoft’s BP 98 was not a reduction to practice of the

asserted claims as discussed supra.

ii. Jury Instruction Regarding Burden of Proof on Invalidity

Although the district court properly instructed the jury that Microsoft had the

burden of proving invalidity by clear and convincing evidence, see SRAM, 465 F.3d at

1357, Microsoft contends that the district court abused its discretion by refusing to

further instruct the jury that Microsoft’s “burden is more easily carried when the

references on which the assertion is based were not directly considered by the

examiner during prosecution.” We disagree. See Uniroyal, Inc. v. Rudkin-Wiley Corp.,

837 F.2d 1044, 1050 (Fed. Cir. 1988) (“The burden of proof is not reduced when prior

art is presented to the court which was not considered by the PTO.”); Bio-Red Labs.,

Inc. v. Nicolet Instruments Corp., 739 F.2d 604, 615 (Fed. Cir. 1984) (“The introduction

of prior art not considered by the PTO does not change the burden of proof or the

requirement that evidence establish the presumption-defeating facts clearly and

convincingly.”), abrogated on other grounds by Markman, 52 F.3d 967. Despite

Microsoft’s reliance on cases indicating that a party may more easily meet this clear and

convincing evidence burden when the references at issue were not before the

2006-1638 22
examiner, see, e.g., Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350,

1359-60 (Fed. Cir. 1984), it cites no authority compelling courts to provide such an

instruction, and we agree with the district court that “it might lead the jury to believe that

the burden of proof is less than clear and convincing when prior art was not considered

by the PTO.” JMOL Opinion at 22. Accordingly, we hold that the district court did not

abuse its discretion in refusing to provide the jury with Microsoft’s requested instruction.

iii. Jury Instruction Regarding Obviousness

Microsoft also requests a remand in light of the Supreme Court’s decision in KSR

Int’l Co. v. Teleflex Inc., 127 S. Ct. 1727 (2007), based on the district court’s instruction

to the jury that “to find an asserted claim obvious, you must find that there was some

teaching, suggestion or incentive to combine the items in the prior art into the particular

claimed combination.” z4 responds that Microsoft would not be entitled to a new trial

regardless of the outcome in KSR 3 because the only direct evidence of obviousness

introduced by Microsoft was the conclusory testimony of its expert. See Upjohn Co. v.

Mova Pharm. Corp., 225 F.3d 1306, 1311 (Fed. Cir. 2000) (noting that “there must be

factual support for an expert’s conclusory opinion”); see also JMOL Opinion at 10

(noting that it was “questionable whether Defendants even established a prima facie

case of obviousness”). Although Microsoft asserts that “the jury certainly could have

reached a conclusion of obviousness on this record,” Reply Br. at 30, it fails to identify

specific evidence or arguments establishing even a prima facie case of obviousness

under the factors outlined in Graham v. John Deere Co., 383 U.S. 1, 17 (1966).

Therefore, we find no abuse of discretion here by the district court.

3
The parties completed briefing in this case prior to the Supreme Court’s
decision in KSR.

2006-1638 23
 b. Damages Based On Foreign Sales Under § 271(f)

Finally, Microsoft requests a remand for a new trial on damages in light of

Microsoft v. AT&T, because the jury made its damages determination based on

worldwide sales of the accused products. Although the Supreme Court issued the

Microsoft v. AT&T opinion after the parties had filed their briefs in this case, Microsoft

argues that it preserved its right to argue damages under 35 U.S.C. § 271(f) by moving

in limine to exclude evidence of foreign sales of the accused products. See Micro

Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1391 (Fed. Cir. 2003) (holding that under

Rule 103(a) of the Federal Rules of Evidence, once a court makes a definitive

evidentiary ruling on the record, a party need not renew an objection to preserve appeal

rights). z4 counters that Microsoft has no basis to argue damages based on global

sales because it failed to renew its motion in limine on this issue, see Fed. R. Civ. P.

50(b); Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 404 (2006) (holding

that “a party is not entitled to pursue a new trial on appeal unless that party makes an

appropriate postverdict motion in the district court”), and because Microsoft failed to

properly present the issue on appeal by mentioning it only in a footnote in its opening

brief. See SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312 (Fed. Cir. 2006)

(holding that arguments raised only in footnotes are not preserved).

We reject Microsoft’s request for a retrial on damages because we find no

properly-defined § 271(f) issue in the record. While we question the merits of

Microsoft’s reliance on its denied motion in limine to preserve this argument for appeal

in light of the district court’s admonition that its “rulings on the pre-trial motions in limine

were not definitive rulings,” JMOL Opinion at 17; Fed R. Evid. 103(a) (requiring a

2006-1638 24
“definitive ruling” to preserve a claim of error for appeal without renewing an objection),

we need not decide whether Microsoft properly preserved any § 271(f) arguments. This

is because the jury did not and could not have relied on § 271(f) in determining its

damages award. The complaint alleged infringement using only language from § 271(a)

(“[W]hoever without authority makes, uses, offers to sell, or sells any patented invention,

within the United States or imports into the United States any patented invention during

the term of the patent therefor, infringes the patent.”). The jury instructions similarly

only paralleled the language of § 271(a):

Any person or business entity that, without the patent owner’s permission,
makes, uses, offers for sale, or sells within the United States any product
or method that is covered by at least one claim of a patent, before the
patent expires, infringes the patent.

At oral argument, Microsoft asserted that Microsoft v. AT&T is relevant because this

case involves accused products that were identical to those of the Microsoft v. AT&T

case and distributed using the same “golden master” distribution system discussed in

that opinion. See Oral Arg. at 36:05-36:46, available at http://www.cafc.uscourts.gov/

oralarguments/mp3/2006-1638.mp3. While that may be true, the asserted claims in this

case differ significantly from those at issue in Microsoft v. AT&T, and thus raise different

infringement issues. Moreover, Microsoft points to nothing in the record to establish

that z4 ever argued that Microsoft

supplie[d] or cause[d] to be supplied in or from the United States all or a
substantial portion of the components of a patented invention, where such
components are uncombined in whole or in part, in such manner as to
actively induce the combination of such components outside of the United
States in a manner that would infringe the patent if such combination
occurred within the United States.

2006-1638 25
35 U.S.C. § 271(f)(1). Because no § 271(f) issues were presented to the jury, and

because the jury instructions communicated the requirements for finding infringement

only under § 271(a), we must assume that the jury properly confined its analysis and

ultimate finding of liability to the instructions given under § 271(a). See, e.g., Shannon

v. United States, 512 U.S. 573, 585 (1994) (declining “to depart from the almost

invariable assumption of the law that jurors follow their instructions”). Without more, a

damages award based in part on global sales does not necessarily implicate § 271(f).

Microsoft may or may not have legitimate arguments regarding the propriety of

considering specific foreign sales in a damages calculation for infringement under

§ 271(a), but it raised no such arguments here. Additionally, we find no evidence in the

record that Microsoft presented any evidence to the district court segregating domestic

and foreign sales. Therefore, we find no merit in Microsoft’s request for a remand on

these grounds. Because Microsoft failed to explain what § 271(f) issues it defined

below, let alone preserved, we deny Microsoft’s request for a new trial on damages.

CONCLUSION

For the above reasons, we conclude that the district court properly denied

Microsoft’s motions for JMOL and a new trial, and thus its judgment is

AFFIRMED.

2006-1638 26