Constellation Designs v. LG Electronics — Federal Circuit Vacates § 101 Eligibility for Functional “Optimization” Claims, Affirms Eligibility for Specific Non-Uniform Constellation Claims

Background

Constellation Designs, LLC sued LG Electronics and two LG affiliates in the Eastern District of Texas (Judge Gilstrap) for willful infringement of seven patents covering non-uniform symbol constellations used in digital communications. The accused products were LG televisions compatible with the Advanced Television Systems Committee broadcasting standard ATSC 3.0, specifically protocol A/322 governing the physical layer of broadcast signals. By trial, Constellation had narrowed its case to nine claims across four patents.

The patents fall into two groups, a distinction that proved decisive on appeal:

• The “optimization claims” — claims 17, 21, 24, and 28 of the ‘761 patent and claim 5 of the ‘700 patent — recite a digital communication system using a geometrically spaced QAM symbol constellation “optimized for capacity” using parallel-decode (PD) capacity, providing improved capacity at a reduced signal-to-noise ratio compared to conventional QAM constellations that maximize the minimum distance between points.
• The “constellation claims” — claims 21 and 23 of the ‘509 patent and claims 24 and 44 of the ‘922 patent — recite specific non-uniform constellations. The ‘922 patent in particular discloses hundreds of specific constellation point arrangements (PAM-8, PAM-16, PAM-32) tied to specific signal-to-noise ratios.

The district court granted Constellation summary judgment of patent eligibility on all asserted claims under § 101, holding the claims directed to a technical solution to a technical problem — specifically, the loss of data in over-the-air digital transmission — with the claimed solution being a constellation optimized for PD capacity to provide improved capacity at reduced signal-to-noise ratio relative to conventional QAM constellations. A jury then found all asserted claims not invalid, infringed by LG televisions (with semiconductor chips manufactured by LG or third-party Realtek), and willfully infringed. The jury awarded $1,684,469.00 in past damages based on a $6.75 per-television royalty. The court denied LG’s post-trial JMOL motions for non-infringement and no damages, denied LG’s motion to exclude Constellation’s damages expert, and entered an amended final judgment with an ongoing royalty.

LG appealed three issues: (1) summary judgment of § 101 eligibility, (2) denial of JMOL of non-infringement, and (3) denial of JMOL of no damages and the related ruling on Constellation’s damages expert.

The Court’s Holding

The Federal Circuit, in a precedential opinion by Judge Stoll, vacated in part, affirmed in part, and remanded.

Section 101 eligibility — vacated for the optimization claims. The Court vacated summary judgment of § 101 eligibility for claims 17, 21, 24, and 28 of the ‘761 patent and claim 5 of the ‘700 patent. The optimization claims recite an abstract result — a constellation “optimized for capacity using parallel-decode capacity” providing improved capacity at reduced SNR compared to conventional QAM — without reciting a specific way of achieving that result. The district court treated the eligibility question as a one-step technical-problem-and-technical-solution exercise, but the Federal Circuit held that approach insufficient where the claim language captures the goal rather than the means. The case must return to the district court for full Alice Step 1 / Step 2 analysis on a properly developed record, including consideration of whether the recited functional outcome is itself an abstract idea and whether the claim’s elements add an inventive concept beyond the abstract optimization goal.

Section 101 eligibility — affirmed for the constellation claims. The Court affirmed summary judgment of § 101 eligibility for claims 21 and 23 of the ‘509 patent and claims 24 and 44 of the ‘922 patent. These claims recite specific constellation-point arrangements (unique point locations, unequal spacing, specific overlapping-point configurations) rather than abstract optimization goals. Specific point-location and spacing limitations move the claim from “the abstract goal of optimization” to “a particular concrete configuration that achieves a technical effect,” which the Court held sufficient to clear § 101.

JMOL of non-infringement — affirmed. The Court rejected LG’s argument that Constellation’s mixed evidentiary approach — relying on the ATSC 3.0 standard for some claim limitations and direct product comparison for other limitations of the same claim — was improper. Citing the district court’s reasoning, the Federal Circuit held that nothing prevents a plaintiff from performing both a standard-based read and a direct comparison of a limitation to an accused product. Substantial trial evidence supported the jury’s infringement findings on each asserted claim.

JMOL of no damages and damages expert — affirmed. The Court affirmed the district court’s denial of LG’s JMOL of no damages and its ruling on Constellation’s damages expert (Dr. Sullivan). LG’s challenge was procedurally improper to the extent it challenged admissibility under the guise of sufficiency. On the merits, substantial evidence in the record supported the comparability of the licenses on which the expert relied for the hypothetical reasonable-royalty negotiation. The willful infringement finding stood.

Key Takeaways

• The Federal Circuit drew a clear line between claims that recite an abstract optimization goal (“optimized for capacity”) and claims that recite specific concrete configurations (specific constellation points, specific spacings, specific overlapping arrangements). The former are vulnerable on § 101; the latter are not.
• Functional claim language that captures the desired result without specifying the means of achieving it remains a § 101 risk — even in software-and-communications patents that have generally fared well after Enfish and DDR Holdings. Constellation’s optimization claims now go back to the district court for fresh Alice analysis.
• For patent prosecutors, the lesson is to draft claims at multiple levels of granularity: file functional/optimization-style claims for breadth, but pair them with specific structural claims (concrete point locations, specific configurations) that are more clearly directed to non-abstract subject matter.
• Standards-based infringement reads remain a permissible litigation strategy. Defendants cannot defeat infringement by attacking a plaintiff’s mixed evidentiary approach — the standard read for some elements plus direct product comparison for others is allowed.
• Damages-expert Daubert challenges packaged as sufficiency-of-evidence challenges face procedural hurdles. Defendants must clearly bring admissibility challenges as Daubert motions and sufficiency challenges as JMOL motions; mixing them invites the procedural-impropriety ruling the district court applied here.
• The willful-infringement finding stands and supports the ongoing $6.75-per-television royalty going forward, even though the § 101 ruling for the optimization claims has been vacated. The constellation claims (which the Federal Circuit affirmed as eligible) are sufficient to support liability and damages.

Why It Matters

This decision is the Federal Circuit’s most pointed § 101 ruling of 2026 to date and significantly affects the broadcast-standards patent landscape. ATSC 3.0 is the technical foundation for next-generation U.S. over-the-air television, and Constellation Designs’ patent portfolio is asserted broadly across television manufacturers. The Court’s holding that the optimization-style claims must return to the district court for full Alice analysis introduces meaningful uncertainty about the scope of Constellation’s enforceable patent position, even though the constellation-style claims survived.

For the broader software/communications patent ecosystem, the decision clarifies a recurring tension. Functional-result claims (“optimized for X,” “configured to maximize Y,” “adaptive to Z”) continue to attract § 101 attacks because they capture a goal rather than a structure. Specific-configuration claims (“the constellation comprises points at locations [a, b, c] with spacing [d]”) are doctrinally safer. Patent owners who have built portfolios around purely functional optimization claims should review their claim sets and consider continuation strategies that add specific-configuration claims.

The case also reinforces that ATSC 3.0 and other industry-standard implementations are litigation magnets — the standard read of accused products against standard specifications remains an effective infringement-proof strategy that the Federal Circuit will not disturb. Standards-essential patent holders should expect increased litigation; implementer defendants should focus their post-trial challenges on substantive validity and § 101 grounds rather than on the form of the plaintiff’s proof.

On remand, the district court will need to conduct a full Alice analysis of the optimization claims, including whether “optimized for capacity” is itself an abstract idea and whether the claim elements add an inventive concept beyond that abstraction. Given the procedural posture — a final judgment supported by the affirmed constellation claims — the practical impact may be limited to apportionment of the royalty between the two claim groups, but the doctrinal effect for similar cases will be much broader.