PACKET INTELLIGENCE LLC v. NETSCOUT SYSTEMS, INC.

Before Lourie, Reyna, and Hughes. Appeal from U.S. District Court for the Eastern District of Texas

Summary: The defendant’s infringement of method claims through internal use and testing was insufficient to support pre-suit damage that were based on sales of products that infringed separate apparatus claims.

Packet Intelligence sued NetScout for infringement of one patent containing apparatus claims and two patents containing method claims. The claims of all three patents generally recited examining packets sent over a computer network, identifying the “conversational flow” to which the packets belonged, and creating a new entry in a database if the packets belonged to new conversational flow. The jury found NetScout infringed and awarded pre-suit and post-suit damages. In a separate bench trial, the court rejected NetScout’s § 101 defense. NetScout appealed.

The Federal Circuit held that Packet Intelligence failed to satisfy the marking requirement of Section 287(a). NetScout met its initial burden of identifying an unmarked product and Packet Intelligence failed to show that product did not practice the asserted apparatus claims. Packet Intelligence argued pre-suit damages could nonetheless be affirmed based on NetScout’s direct infringement of separate method claims through internal use and testing. While there was sufficient evidence those activities infringed the method claims, there was no evidence of damages based on those activities. Thus, the Federal Circuit reversed the pre-suit damages award.

As for § 101, the Federal Circuit found the claims were not directed to an abstract idea under Alice step one. The court reasoned that the claims meet a challenge unique to computer networks of monitoring disjointed flow of packets in a network. Judge Reyna dissented, arguing that the purported solution of classifying network traffic according to conversational flows is conceptual, not technological, in the absence of a specific means of achieving that classification.

Editor: Paul Stewart

Written by: Suyoung Jang & Adam Powell