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Shareholders of ParkerVision (PRKR) received good news last week. ParkerVision's "big-ticket" patent case, currently pending in Jacksonville, Florida, against Qualcomm (QCOM) is going to trial. The trial is currently scheduled to start on October 7, 2013. On May 23rd, 2013, in a preliminary move common in patent cases, pursuant to the court's scheduling order, the parties filed cross-motions for summary judgment. Summary judgment motions are used to try and have certain issues decided as a matter of law, and therefore taken off the table for trial. Parties can file for summary judgment on all or some of the legal issues in a case, including patent cases. In this case, neither party filed for summary judgment on all the pending legal issues. Instead, ParkerVision moved for summary judgment of no invalidity, but more importantly, Qualcomm moved only for partial summary judgment of non-infringement. As detailed below, absent settlement, the limited nature of these motions are fairly conclusive proof that this case will be going to trial.

ParkerVision's suit against Qualcomm has been described by Qualcomm as a "bone-crushing burden." (See Qualcomm's Motion for Partial Summary Judgment at 2). There is good reason for this description. ParkerVision has accused approximately 71 Qualcomm products of infringing approximately 86 claims among six different patents. It is not unusual for patent-holders to join multiple patents, claims and products in the same action against a single defendant. Yet, the sheer scope of ParkerVision's infringement allegations is noteworthy. The strategy is clear: ParkerVision has cast a wide net. The more patents and claims ParkerVision can stack in its arsenal against Qualcomm, then the more Qualcomm products ParkerVision can accuse, and the more likely ParkerVision can tag Qualcomm with infringement.

ParkerVision's wide net has been one of the facts underpinning a long position in PRKR. And it is an important one. ParkerVision has followed the path of other distressed technology companies seeking to tap a revenue stream when their core product has failed to capture sustainable market share. ParkerVision's current patent monetization strategy appears to be integral for returning its share price to its levels it witnessed in the late-1990s and early-2000s. Therefore, the fact that the case will not be dismissed on summary judgment, and is in fact going to trial, is good news in the short term for those going long on PRKR.

Company Background

The patents at issue in ParkerVision's case against Qualcomm pertain to technologies used in wireless cellular telephones. However, ParkerVision opened its doors long before the cell-phone revolution. The company was first incorporated in 1989 in Florida, and at the time its core business was designing and developing video cameras that could automatically track subjects being filmed - this way, a video camera filming a person giving a presentation could automatically pan to follow that person if he or she moved. ParkerVision relied upon conventional RF (radio frequency) techniques to track its subjects. Existing RF techniques, however, proved insufficient, and ParkerVision set out to improve these RF techniques to be more effectively deployed within its video-tracking technology. Along the way, ParkerVision stumbled onto the technology that, it now claims, has acted as the backbone behind the revolution in wireless cell phones witnessed over the past decade. It is also the technology at the heart of its "bone-crushing" patent litigation against Qualcomm.

ParkerVision claims to have invented a new RF technology called "energy sampling." This technology is used to "down-convert" a cellular telephone signal. Put simply, cell phones send and receive wireless signals through the air. That is, effectively, how the words that we hear and speak into our cell phones are sent back and forth. Those words are converted into baseband signals, i.e., signals that carry information. Then, those baseband signals are transmitted on carrier waves, which act like buses or trains that carry those baseband signals. To transmit the carrier wave through the air effectively, a high-frequency signal must be used. When this high-frequency signal is received by your cell phone, it must be "down-converted." That means, the high-frequency components must be removed so that the baseband signal-i.e., the voice of your friend with whom you are speaking - can be deciphered.

ParkerVision's allegedly inventive RF technology applies to a fundamentally novel way of down-converting high-frequency signals for wireless receivers. In the late-1990s, when many of the cellular phone techniques that are in use today were being developed, down-converting technologies existed. However, they came with many drawbacks that reduced their feasibility. ParkerVision has claimed to invent a down-converting technology that reduced many of these drawbacks - including the number of required components and the power consumption while at the same time increasing signal-to-noise ratios. In exchange for the disclosure of these inventions, the United States Patent and Trademark Office awarded ParkerVision numerous patents. ParkerVision has sued Qualcomm on six of them, including U.S. Patent Nos. 6,601,551; 6,266,518; 6,370,371; 6,963,734; 7,496,342; and 7,724,854.

The Summary Judgment Motions

In a patent litigation, the accused infringer has the opportunity to avoid going to trial by moving for summary judgment. Patent trials are typically jury trials. And juries can be uncertain and hard to predict. Worse, they statistically favor patent holders. For example, win rates at trial for patentees in many districts (including the one encompassing Jacksonville) exceed 80%. All of this means, if a case goes to trial, the likelihood of a defendant paying damages increases substantially. Defendants, therefore, frequently wish to dispose of the case without going to trial.

When a defendant moves for summary judgment, the defendant is effectively arguing to the court - based on the evidence produced by both parties - there is no genuine issue of any material fact that remains unresolved and the defendant is entitled to judgment as a matter of law. FRCP Rule 56. In other words, the jury doesn't even need to hear this issue because no reasonable juror could possibly find that the defendant's products infringe the plaintiff's patents - the plaintiff's case is legally weak, and therefore, there is no need for a trial.

The way to dismiss a case before trial is to move for summary judgment. And in patent cases, a critical hearing that always precedes summary judgment is the Markman hearing. During Markman hearings, the court construes the meaning of disputed terms, thereby setting forth the boundaries of what the asserted claims cover. Markman hearings are typically the defendant's game. In other words, they create an offensive play for the accused infringer. The goal, for the defendant, is to narrow the claims terms as much as possible. By doing so, the defendant hopes to narrow the scope of the claim so that it cannot read upon the defendant's accused product. If successful at a Markman hearing, the defendant can tee-up a clean non-infringement argument that can be used to summarily dispose of the case without the need for a trial.

Qualcomm pursued this strategy during the Markman hearing in its case against ParkerVision. However, it did not really succeed. In August 2012, the court conducted a Markman hearing, and in February of this year, the court issued its Markman order. The court rejected the majority of Qualcomm's proposed claim constructions, which resulted in leaving the claims fairly broad. More importantly, the result of the Markman order was that Qualcomm had very few clean non-infringement arguments capable of disposing of this case without going to trial.

Qualcomm's dearth of strong non-infringement arguments capable of avoiding trial was reflected in its summary judgment brief, filed on May 22. Notably, Qualcomm has moved for partial summary judgment. It has effectively attempted to narrow the scope of issues that will be argued at trial, but the take-away from Qualcomm's filing is clear - this case is still going to trial.

Qualcomm's brief makes three arguments.

First, Qualcomm argues that 14 or 15 specific products accused by ParkerVision should be excluded from the trial. ParkerVision has accused approximately 71 different Qualcomm products of infringing six of its patents. Those products derive from three different sources - products developed by Qualcomm itself, products developed out of technology acquired from Berkana Wireless Inc. in the mid-2000s, and products acquired from Atheros Communications in 2011. The latter products are the ones that Qualcomm has moved to exclude from trial. Shortly before ParkerVision sued Qualcomm for patent infringement, Qualcomm acquired Atheros Communications. ParkerVision has accused fourteen or fifteen products previously developed and sold by Atheros as infringing its patents. Yet, in its latest brief to the court, Qualcomm argued that these products should be dismissed from the case. Qualcomm's reasons are, simply, that ParkerVision failed to submit sufficient expert testimony required to prove the Atheros products are infringing.

Qualcomm's argument appears fairly strong. Yet, the bottom line remains clear - with 71 outstanding accused products, even if the 14 or 15 Atheros products are dismissed, the case is still going to trial.

Second, Qualcomm argues that ParkerVision's allegations of indirect infringement of four of the six patents must also be dismissed. Indirect infringement is an actionable cause of action that asserts, in effect, even though the defendant may not have actually infringed the claim, the defendant induced, contributed or somehow facilitated other parties' direct infringement of the claim. Yet, to prove indirect infringement requires proof that the defendant (in this case, Qualcomm) had knowledge of the patent-at-issue before the lawsuit and that its customers' acts constituted patent infringement. Here, Qualcomm's argument is fairly straightforward. For four of the six patents, Qualcomm had no pre-suit knowledge that they existed. And ParkerVision's evidence comes up short trying to prove that it did.

Again, Qualcomm's argument appears fairly strong. It will be necessary to read ParkerVision's response, which will be filed in a few weeks. Yet, even if Qualcomm wins, allegations of indirect infringement will only be dismissed against four of the six patents in the case. This may impact a sizable portion of potential damages that can be collected by ParkerVision. To the extent that Qualcomm's chips are made overseas, and no chips are made, used or sold by Qualcomm in the U.S., then ParkerVision may need to rely upon indirect infringement for the balance of its pursued damages. Nevertheless, Qualcomm has moved to dismiss less than all of the patents on the indirect infringement grounds. Clearly, two more patents stand, which means the case is going to trial.

Third, Qualcomm makes an argument attempting to exclude another category of products from the case. Specifically, Qualcomm argues that its accused products that use a 50% duty cycle cannot infringe. The argument is fairly technical, and it is based upon confidential Qualcomm diagrams that have been publicly redacted. But the outcome will be the same as the foregoing arguments. Somewhere between 37 and 49 accused products use the 50% duty cycle. Other accused products apparently do not. That means, even if Qualcomm wins its argument that, as a matter of law, the 50% duty cycle products do not infringe any of ParkerVision's patents, this case is still going to trial.


ParkerVision won the majority of disputed claim terms in the Court's Markman order. On the one hand, that improved ParkerVision's hand because it kept the claims broad, making it easier to prove infringement against Qualcomm. Yet, on the other hand, broad claims may have strengthened Qualcomm's invalidity case. Broad claims are easier to invalidate. Accordingly, though the Markman order may have made it harder for Qualcomm to prove infringement, it may have made it easier for Qualcomm to invalidate ParkerVision's patents. If Qualcomm has a strong invalidity case, strengthened by the Markman order, then it can avoid paying one cent even if its non-infringement arguments are weak.

Previous writers on Seeking Alpha (see here) have argued that ParkerVision's allegedly novel down-converting technology has existed for years. They have also argued that, with such broad claims, thanks to the Markman order, Qualcomm should not have too much difficulty invalidating ParkerVision's patents. That is a fair argument. A thorough investigation of the existing prior art and whether any of these references are strong anticipatory or obviousness references is beyond the scope of this article.

Nevertheless, it bears emphasis that Qualcomm's opportunity to move for summary judgment on invalidity just passed. If Qualcomm had very strong prior art, and Qualcomm believed it could convince a judge that ParkerVision's patents are invalid in the face of this prior art as a matter of law, the time to make that argument was last week. Yet, Qualcomm chose not to move for summary judgment of invalidity. Presumably, it still has an invalidity case, but is choosing to reserve that case for trial. That does not mean invalidating the patents is impossible, but it is typically harder to convince a jury that a patent is invalid than a judge. That is why, typically, when a defendant has a strong invalidity case, it files a motion for summary judgment of invalidity. We find Qualcomm's choice not to move for summary judgment of invalidity particularly telling with respect to the strength of its invalidity case.

Some commenters (see here) have also pointed out that they have found scores of invalidating prior art. That may be true. However, in our experience, it is very difficult to discern that without looking at the prior art patents. There may in fact exist a plethora of prior art references covering "passive mixers" and the general field of down-converting technologies disclosed in ParkerVision's patents. Yet, determining whether those patents disclose the precise elements and limitations required by ParkerVision's patents requires rigorous analysis. Patents can be very, very narrow, and cover only a very narrow improvement over the prior art, but still be valid.

ParkerVision's motion for summary judgment highlights the critical invalidity issue between the parties. ParkerVision has moved for summary judgment of no invalidity. Even if ParkerVision wins this motion, the case will still go to trial, because ParkerVision will still be required to prove infringement.

Specifically, one of the key invalidity issues highlighted in ParkerVision's summary judgment motion is whether any of the cited prior art disclose the "generating" step. The asserted claims of some of the patents require a transfer step, where the energy from a carrier signal is transferred to a storage device, as well as a generating step, where the lower frequency or baseband signal is generated from that transferred energy. ParkerVision has taken the position that the generating step - i.e., the generation of the baseband signal - must be done by discharging the transferred energy from the storage device. This interpretation appears to be consistent with the claim (i.e., Claim 1 of the '551 patent), which states, "generating a lower frequency signal from the transferred energy." (emphasis added). (U.S. Patent No. 6,601,551). It also appears to be consistent with the court's claim construction order, which states that "the transferred energy is the source of the energy used to generate the down-converted signal." (Markman order at 40).

What is not clear, however, is whether the claim, in view of the Markman order, requires that the storage device must be discharged for the transferred energy to be the source of the energy used to generate the down-converted signal. Undoubtedly, Qualcomm's response to ParkerVision's summary judgment motion will set forth Qualcomm's position on this matter.

Nevertheless, from the perspective of investors in PRKR in the short-term, the following bears remembering. At worst, ParkerVision can lose its summary judgment of no invalidity, which means that this entire argument will go to the jury. This issue is fairly technical, and it involves issues over which experts will most likely find grounds to disagree. (For instance, at issue in ParkerVision's argument is whether, and to what extent, voltage and energy are or are not the same.) Given the technical and convoluted nature of this invalidity issue, putting this issue to the jury creates risk for Qualcomm, which is a potential upside for ParkerVision. It will be important to assess the response briefs filed by both parties in a few weeks.

Last week's summary judgment briefs are only the first round. We look forward to reporting on the next round. Nevertheless, at this point, it appears that, absent settlement, ParkerVision will have the opportunity to mount its case against Qualcomm in front of a jury.

Source: ParkerVision's Case Against Qualcomm Going To Trial