## Facts

- ActiveVideo owned patents directed to interactive television and video-on-demand (VoD) systems and accused Verizon’s FiOS-TV VoD service of infringement.
- Verizon counterclaimed that ActiveVideo infringed Verizon patents.
- A jury found Verizon infringed four ActiveVideo patents and awarded damages to ActiveVideo; it also found ActiveVideo infringed two Verizon patents and awarded damages to Verizon.
- Post-trial, the district court entered a permanent injunction against Verizon but delayed its effective date for six months and required Verizon to pay a “sunset royalty” during the delay.
- The district court also granted JMOL on certain invalidity defenses and entered summary judgment invalidating one Verizon patent.
- Verizon appealed the infringement, damages, and equitable relief rulings; ActiveVideo cross-appealed rulings on Verizon’s counterclaims and on the exclusion of some invalidity issues from the jury.

## Issues

1. Whether substantial evidence supported the jury’s infringement and validity findings under the governing claim constructions.
2. Whether ActiveVideo’s reasonable-royalty damages were supported by an expert methodology that properly tied the royalty to the patented features and apportioned value from unpatented features.
3. Whether the permanent injunction and “sunset royalty” satisfied the four-factor test for equitable relief under eBay, including evidentiary support for irreparable harm and a causal connection between infringement and harm.
4. Whether the district court correctly granted JMOL and summary judgment on particular invalidity and non-infringement questions.

## Decision

- The Federal Circuit affirmed in part, reversed in part, vacated in part, and remanded.
- It upheld some claim-specific infringement/validity determinations and set aside others where the record did not supply substantial evidence for the jury’s findings.
- It vacated portions of ActiveVideo’s damages award and remanded because the royalty analysis did not sufficiently isolate the value of the patented inventions from other FiOS-TV functionality.
- It vacated the permanent injunction and remanded for a more rigorous eBay analysis, including a record-based showing of irreparable harm and an adequate explanation of hardships and public-interest findings.
- It directed further proceedings on equitable relief, including reconsideration of the propriety and amount of the sunset royalty tied to the delayed injunction.

## Legal Principles

- Jury findings on infringement and validity are reviewed for substantial evidence, and a verdict cannot stand where the record lacks evidence mapping claim limitations to the accused technology (or to prior art for invalidity).
- Reasonable-royalty damages must rest on sound economic and factual predicates; expert testimony must tie the royalty base and rate to the incremental value of the patented features and apportion away value attributable to unpatented aspects of the product or service.
- Under eBay, a patentee must prove irreparable harm with evidence, not speculation; claimed harms such as lost opportunities or reputational injury require support in the record.
- eBay relief requires a causal nexus between the infringement and the alleged irreparable harm, especially where the patentee primarily licenses technology rather than competes directly in the downstream market.
- The availability of monetary compensation, including substantial past damages and potential ongoing royalties, bears on whether legal remedies are adequate.
- A court must explain, with record support, its conclusions on balance of hardships and public interest when ordering (or justifying) injunctive relief affecting ongoing services.

## Conclusion

The Federal Circuit required tighter proof and explanation for both patent remedies: damages must be apportioned to the patented contribution, and permanent injunctive relief (and any interim royalty tied to delayed enforcement) must satisfy eBay with concrete, causally linked evidence and reasoned findings.


ActiveVideo Networks, Inc. v. Verizon Commc'ns, Inc., 694 F.3d 1312 (Fed. Cir. 2012)