Appeal from the United States District Court for the Southern District of Ohio in No. 1:11-cv-00283, Judge Timothy S. Black.
DANIEL JOSEPH WOOD, Info-Hold, Inc., Cincinnati, OH, JAMES L. KWAK, Standley Law Group LLP, Dublin, OH, argued for plaintiff-appellant.
BARRY EASTBURN BRETSCHNEIDER, Baker & Hostetler LLP, Washington, DC, argued for defendant-appellee. Also represented by MICHAEL EDWARD ANDERSON, BRIDGET SPRINGER MERRITT; JOHN FRANK MURPHY, Philadelphia, PA; KEVIN W. KIRSCH, Cincinnati, OH.
Before REYNA, WALLACH, and TARANTO, Circuit Judges.
Reyna, Circuit Judge.
This case comes before us on appeal of numerous rulings unfavorable to Info-Hold, Inc. (" Info-Hold" ), owner of U.S. Patent No. 5,991,374 (the " '374 patent" ), the sole patent in the dispute. Info-Hold asserted the '374 patent against Muzak LLC (" Muzak" ) and Applied Media Technologies Corporation (" AMTC" ) in separate
lawsuits before the same judge in the United States District Court for the Southern District of Ohio. Those suits led to separate appeals, which were argued on the same day before the same panel. We address the issues raised in Info-Hold's appeal in the AMTC suit in a separate opinion.
Following claim construction, the district court granted summary judgment to Muzak that, notwithstanding infringement, Info-Hold was not entitled to reasonable royalty damages, and that Muzak did not induce infringement of the '374 patent. For the reasons set forth below, we reverse the grant of summary judgment of no damages for infringement, we vacate the summary judgment of no induced infringement, and we affirm the district court's construction of the sole claim term in dispute.
The '374 patent is directed to systems, apparatuses, and methods for playing music and messages (e.g., advertisements) through telephones and public speaker systems. Playback order of the music and message tracks is set on a remote server. The remote server generates and sends control signals to message playback devices, telling them to access and play back tracks in a specified order. One use of the disclosed technology involves directing the output of the message playback devices to a public address system at retail stores, so customers can hear the music and advertisements while shopping. The output of the message playback device can also be directed to a music-on-hold (" MOH" ) system, which plays the tracks over the telephone to callers who are on hold. The inventor of the patent, Joey C. Hazenfield, assigned the patent to Info-Hold in exchange for a 5 percent royalty on sales of products embodying the patent's technology. (" Hazenfield Assignment" ).
Prior to the filing of the suit against Muzak, a thir-party requester initiated an ex parte reexamination of the '374 patent. To overcome prior art during reexamination, Info-Hold amended several independent claims by adding the limitation " when a caller is placed on hold" to specify the timing of track playback. Info-Hold argued to the examiner that, after the addition of the limitation " when a caller is placed on hold," the claims were patentable because the prior art " fails to teach, or even suggest, a music-on-hold-compatible telephone system or playing messages or generating signals when callers are placed on hold . . . ." J.A. 473. The examiner allowed the claims on the basis of Info-Hold's argument. J.A. 361. Independent claim 7 is representative of the technology claimed in the '374 patent and recites:
7. A programmable message delivery system for playing messages on message playback devices at one or more remote sites comprising:
a communication link;
a plurality of message playback devices, each of said message playback devices communicating with a respective telephone system and comprising a storage device for storing messages and for playing selected ones of said messages through an output of said message playback device when a caller is placed on hold; and a computer remotely located from said plurality of message playback devices and operable to generate and transmit control signals via said communication link for controlling at least one of said plurality of message playback devices;
each of said plurality of message playback devices being adapted to receive said control signals via said communication link and being programmable
to access at least one of said messages from said storage device and to provide said accessed message to said output in accordance with said control signals when a caller is placed on hold;
wherein said computer comprises a display device and is programmable to generate screens on said display device that include user selectable menu items for selection by an operator to define relationships between said plurality of message playback devices and said messages, the screens guiding an operator to make choices selected from the group consisting of which of said messages are to be played, which of said plurality of message playback devices are to play said selected messages, a time of day when said control signals are to be transmitted to said message playback devices, a date on which said control signals are to be transmitted to said message playback devices, a sequence in which said selected messages are to be played, and how many times to repeat at least one of said selected messages in said sequence, and to generate said control signals to implement said choices via said message playback devices.
'374 patent reexamination certificate, col. 1 ll. 28-67 (emphasis added).
The parties in this case make and sell MOH systems. Info-Hold sells a product called " Info-Link" that purportedly embodies the features of the '374 patent, including remote programming capabilities and the ability to select messages for playback at particular locations. Muzak makes and sells two music and messaging delivery devices, the ...