Federal Circuit’s Ruling in Storage Management Appeal a Mixed Bag for Intellectual Discovery Plaintiff

April 14, 2023

A recent Federal Circuit decision may prove to be bittersweet for plaintiff Sequoia Technology LLC. On April 12, the appellate court issued a precedential ruling that overturned the District of Delaware’s construction of a key claim term, as a result overturning the invalidation of the asserted storage management patent claims under Alice. However, the Federal Circuit affirmed another claim construction that formed the basis of a judgment of noninfringement for defendant Red Hat and several of its customers.

Sequoia kicked off this campaign in summer 2018 with four complaints against those customers in Delaware—suing Dell (EMC) (1:18-cv-01127), Hitachi (1:18-cv-01129), and HP Enterprise (HPE) (1:18-cv-01128) in July and hitting Super Micro (1:18-cv-01307) the following month. Each customer was alleged to infringe through the provision of products and services offering Logical Volume Manager (LVM) dynamic resizing (which allows the dynamic resizing of storage partitions), including server hardware running Red Hat Enterprise Linux (RHEL) version 4 and later. Red Hat then filed a declaratory judgment (DJ) complaint that same December, seeking a judgment that neither it nor its customers infringe the sole asserted patent (6,718,436), which generally relates to logical volume management. That patent is held by the Electronics and Telecommunications Research Institute (ETRI), with Sequoia pleading that it is the patents’ exclusive licensee. The plaintiff initially disclosed no corporate parent, but in August 2019 it filed amended Rule 7.1 disclosures that listed its parent as Golden Wave Partners Co., Ltd., which has been identified as a subsidiary of Intellectual Discovery Co., Ltd. (a sovereign patent fund established by the government of Korea in 2010). The following month, the cases were then consolidated for all pretrial purposes under the lead action against Dell.

The parties disputed the construction of multiple claim terms from the ‘436 patent. Magistrate Judge Christopher J. Burke construed those terms in an October 2020 Markman order, which was adopted in May 2021 without modification, over the objections of Sequoia and ETSI, by then-District Judge Leonard P. Stark (who has since joined the Federal Circuit and did not sit on the panel that decided this case). Among the disputed terms was the “computer-readable recording medium” used to store volume management instructions as described in claim 8. While Sequoia argued that no construction was needed, Judge Burke agreed with Red Hat that certain language in the specification describing a “computer readable medium” as “including” certain nontransitory media (such as CD-ROMs and RAM) does not exclude transitory media. He therefore held that the term “computer-readable recording medium” should be construed to include transitory media, which encompasses “signals and waves” such as “carrier waves”. The parties stipulated that since the Federal Circuit has held “carrier waves” to be unpatentable in Mentor Graphics v. EVE-USA (2017) (internal citation omitted), claims 8-10 are invalid under Section 101.

Two other terms were also in dispute: certain “disk partition[s]” used to form a “logical volume”. The district court construed a “disk partition” to mean a “section of a disk that is a minimum unit of a logical volume” and a “logical volume” to mean an “extensible union of more than one disk partition, the size of which is resized in disk partition units”. As summarized by the Federal Circuit on appeal, this “construction thus requires that a logical volume is constructed by whole disk partitions, not subparts of disk partitions such as extents”. Additionally, the district court construed the phrase “used or not used” in the limitation “extent allocation table for indicating whether each extent in the disk partition is used or not used” to mean that an extent “is or is not storing information”.

Since the accused products “can form logical volumes utilizing units smaller than ‘whole’ or ‘entire’ disk partitions, such as an ‘extent,’ as a minimum unit of the alleged logical volume”, the parties stipulated to noninfringement as to any asserted claim (claims 1-3 and 8). Moreover, since for the accused products “the logical volume is not the ‘extensible union of more than one disk partition, the size of which is resized in disk partition units’”, while “logical volumes in the Accused Products can be resized from sub-portions of a disk partition”, the parties stipulated to noninfringement on that basis as well. Their stipulation did not refer to the construction of the phrase “used or not used”, though as noted by the Federal Circuit, “its interpretation affects the construction of ‘disk partition’ and ‘logical volume’”.

Ruling on appeal on April 12, the Federal Circuit began by holding that the district court erred in its construction of “computer-readable recording medium” as including transitory media. The appellate court instead agreed with Sequoia that the term excluded transitory media as shown by the intrinsic evidence. In particular, the Federal Circuit observed that the claim language does not actually include the “computer readable medium” language from the specification that the district court had relied upon; rather, the claim language “more narrowly recites ‘computer-readable recording medium storing instructions’” (emphasis in opinion). The court found that, “[a]s Sequoia asserts, a person of ordinary skill would not understand transitory signals, such as carrier waves, to record or store instructions in memory systems. This is because transitory signals, by their very nature, are fleeting and do not persist over time”.

That interpretation is further supported by other claim elements that “confirm that the claim is directed to hardware as opposed to transitory waves or signals”, the court continued, determining as a result that the claim language “demonstrates that claim 8 is not directed to a transient signal, but rather to a non-transient storage medium”. The Federal Circuit also found support for this reading from the specification, which it characterized as “disclos[ing] only non-transitory media” because it listed only hardware devices as examples.

While it acknowledged that the term “including” is open-ended, as highlighted by Red Hat, the Federal Circuit held that a construction encompassing transitory media would not “make[] sense in the context of the disclosed invention”, and declined to look beyond the intrinsic evidence in rejecting that argument. The Federal Circuit explained that it was “left with a definite and firm conviction that the district court erred in relying on extrinsic evidence that was clearly at odds with the intrinsic evidence”. Having reversed the district court’s construction of “computer-readable recording medium”, the Federal Circuit then overturned its invalidation of claims 8-10 as ineligible under Section 101.

However, the Federal Circuit agreed with Red Hat as to the claim constructions underpinning the judgment of noninfringement: Rather, it held that the terms “disk partition” and “logical volume” cannot “allocate less than an entire disk partition to a logical volume”. The court reached this conclusion because “[t]he intrinsic evidence supports constructing a logical volume using only entire disk partitions”. More specifically, the court emphasized that the relevant claim language recites “creating the logical volume by gathering disk partitions”. The Federal Circuit added that “the claims repeatedly identify ‘disk partitions’ as the construction unit for a logical volume—i.e., ‘forming the logical volume’”—and that they do not recite the logical volume as being formed by “extents or groups”. Here, the court rejected Sequoia’s argument to the contrary, which depended on the fact that the claims did not include the qualifier “whole” in front of “disk partition”—noting that by the plaintiff’s own admission, the words “parts” or “portions” were not included, either. “This claim language thus more reasonably suggests that the logical volume is constructed by disk partitions, not portions of disk partitions”.

This construction is further supported by the specification, the Federal Circuit continued. The specification describes an “express purpose” of the claimed invention as being to minimize metadata, and explains that it achieves this goal by using a disk partition as the “volume construction unit” to construct a “logical volume”. That language from the specification is the only explanation for how “metadata is minimized”, the court underscored; as a result, it held that Sequoia’s argument “that metadata is minimized even if portions of the disk partition are used to construct logical volumes . . . is untethered to the language of the patent”. Moreover, the Federal Circuit noted that the specification includes several examples of language treating the “[t]he disk partition [as] a minimum unit of the logical volume” or otherwise as the unit of construction. While the court conceded that claims should not be limited to their preferred embodiment, it also “recognize[d] that ‘[a] claim construction exclud[ing] a preferred embodiment is rarely, if ever correct’” (citing its 2022 decision from Kaufman v. Microsoft).

The Federal Circuit drew additional support for its construction from the prosecution history, here focusing on statements made by patent owner ETRI in response to an inter partes review (IPR) petition filed by Red Hat that was ultimately not instituted. ETRI distinguished two pieces of prior art as gathering extents or physical partitions, “both subsets of disk drives”, to form a physical volume (emphasis in opinion). In contrast, ETRI stated with respect to the invention claimed in the ‘436 patent that “[w]hile the logical volume [in the ’436 patent] is formed from extents, extents are added or removed from the logical volume at the level of the disk partitions” (emphasis in opinion). Per the Federal Circuit, “[t]hese statements are consistent with the understanding that a logical volume in the present invention is only constructed at the level of disk partitions, not sub-portions of disk partitions”.

Finally, the Federal Circuit addressed Sequoia’s argument that the proper construction of the term “used or not used”, referring to an extent in the claimed extent allocation table, supports its own construction of “disk partition” and “logical volume”. According to Sequoia, “used or not used” refers to whether an extent is used to construct the logical volume, which would make the district court’s construction that “extents—not partitions—are the minimum unit forming the logical volume” incorrect, whereas Red Hat argued that the term refers to whether an extent is used for storage.

Here, the Federal Circuit found that while the claim language read “in isolation” does not “clearly” answer this question, the intrinsic evidence shows “that logical volumes are constructed from entire disk partitions”. As a result, the panel determined, “the extent allocation table must point to whether extents are used or not used for storage”. Additionally, the court noted again that the specification both refers to disk partitions as a “minimum unit of the logical volume” but also has an “extent allocation table”. This, per the court, “suggests that ‘used’ does not mean used in the logical volume; rather, it means used for storage. Were it otherwise, the extent allocation table in the preferred embodiment would be superfluous”. The Federal Circuit also found that the district court properly relied on a paper authored by the inventors of the ‘436 patent as supporting this construction, agreeing with Sequoia that the paper described a different invention but holding that nevertheless it may still be used to show that an extent’s “use” can be for storage.

Having thus affirmed the district court’s construction of “disk partition” and “logical volume”, the Federal Circuit concluded by affirming the judgment of noninfringement as to Red Hat, parent company IBM, and customers Dell and EMC, HPE, Hitachi, and Super Micro.

While Sequoia and its fellow Intellectual Discovery plaintiffs Kaifi, LLC and Throop, LLC have not recently filed any new litigation, another entity controlled by the sovereign patent fund has just launched a new litigation campaign. In early March, Intellectual Discovery’s Wireless Alliance, LLC, filed its inaugural complaints against AT&T (AT&T Mobility), Deutsche Telekom (T-Mobile), and Verizon (Verizon Wireless), again asserting patents owned by ETRI—here, alleging infringement through the provision of the defendants’ respective 4G and/or 5G cellular networking services. Public records indicate that the plaintiff has launched this campaign with the backing of a prominent litigation funder.

For details, see “Intellectual Discovery-Managed Texas Plaintiff Opens Up Funded Cell Network Campaign” (March 2023).