Federal Circuit Finds Reference to “Present Invention” Limits Scope of Claims and No Willful Infringement Where Commercially Reasonable Time is taken to Change Infringing Product to Non-Infringing Product

In Trading Technologies Int’l, Inc. (TT) v. Ecco LLC, Eccoware Ltd., and eSpeed Int’l, Ltd. (eSpeed), 595 F.3d 1340;93 U.S.P.Q.2D 1805 (Fed. Cir. 2010), TT owns both U.S. Pat. No. 6,772,132 (‘132 patent) and U.S. Pat. No. 6,766,304 (‘304 patent).  The ‘132 and the ‘304 patents share a common provisional filing date of March 2, 2000.  The ‘132 patent was filed on June 9, 2000 and issued on August 3, 2004.  The ‘304 patent, which is a divisional patent of the ‘132 patent, was filed on June 27, 2001 and issued on July 20, 2004.  Both patents relate to software displaying an electronic commodity market.  The market consists of bids, or offers to purchase, and asks, or offers to sell.  The software has a graphical user interface (GUI) having a dynamic display for the bids and asks and a static display for prices corresponding to the bids and asks.  Prior art software displayed an “inside market” which was the best or highest bid price and the best or lowest ask price, which reflect the current price of the commodity.

However, the prior art displayed grids for the inside market that did not move. Thus, if a trader saw a price on the inside market on which they wanted to act, the trader could mistakenly click on the wrong price while a new price in the inside market appeared before they clicked on their intended price.  In contrast, TT’s software had a static price column, and thus, the best bid and best ask would move up and down along the price column to reflect the current state of the market.  As such, a trader could click on the intended price box and know that a transaction at the clicked price would occur, while not worrying that an accidental order at an incorrect price occurred because the inside market had changed before the order was processed.

TT filed suit in the U.S. District Court for the Northern District of Illinois alleging that eSpeed’s products, which are trading platforms and software for trading commodities on eSpeed’s electronic exchanges, infringed TT’s patents.

The accused eSpeed products include Futures View, Dual Dynamic, and eSpeedometer, with the accused products being the same in all relevant aspects, as the latter products are redesigns of the original product.  Also, eSpeed acknowledged that Futures View satisfied all claim limitations of the patents in suit.  eSpeed was sold before the ‘132 and ‘304 patents were issued.  However, TT and eSpeed disagreed on whether Dual Dynamic and eSpeedometer use a “static display of prices” or a “static price axis,” which are recited by the ‘132 and ‘304 patents, respectively.  Dual Dynamic re-centered price levels by either a manual operation by a user or by an automatic operation if the inside market shifted by a predetermined amount, however, the automatic operation could not be disabled by users.  eSpeedometer, on the other hand, only had an automatic re-centering operation, wherein the entire market display would adjust after each change in the inside market.

The products were variously sold during the suit, with Futures View being sold before the TT’s patents issued, and replaced with Dual Dynamic in December 2004 before a hearing for a preliminary injunction in the case.  eSpeedometer replaced Dual Dynamic after the District Court found that Dual Dynamic likely infringed TT’s patents.  After trial, the District Court held that Futures View still infringed asserted claims of the ‘132 patent and the ‘304 patent.  The District Court also held that other accused products were not literally infringing TT’s ‘132 and ‘304 patents, and that TT was barred from using doctrine of equivalents to assert infringement.  Furthermore, the District Court found there to be no on-sale bar under 35 U.S.C. §102(b) by giving the ‘132 patent and the ‘304 patent filing dates corresponding to a common provisional application.  Additionally, the District Court found that there was no indefiniteness with respect to the asserted claims of the ‘132 and ‘304 patents.

Specifically, the District Court found that neither Dual Dynamic nor eSpeedometer literally infringed on the ‘132 or ‘304 patents.  As per infringement under the doctrine of equivalents, the District Court held that Dual Dynamic did not infringe under the doctrine of equivalents because finding infringement would obviate the term “static” and that prosecution history estoppel prevented application of doctrine of equivalents to eSpeedometer.  As such, the District Court granted summary judgment of non-infringement with respect to Dual Dynamics and eSpeedometer.

With respect to eSpeed’s Future View, the District Court, during a jury trial, granted several of TT’s motions, including barring eSpeed from asserting an on-sale bar defense, and barring expert testimony asserting that the claim construction of “single action of a user input device” was indefinite.  The jury found that Futures View willfully infringe the ‘132 and ‘304 patents, however, the District Court vacated the jury’s finding of willful infringement and reduced the damages awarded to TT.  Additionally, the District Court found that TT did not engage in inequitable conduct and denied eSpeed’s motions on validity, indefiniteness, priority date, and patent misuse defense.  Both TT and eSpeed appealed the District Court’s holding.

On appeal Federal Circuit, while noting that numerous issues were raised by both parties on appeal, stated that TT’s appeal focuses on patent infringement, while eSpeed’s appeal focuses on patent validity.  TT appealed the District Court’s claim construction as per “common static price axis” and “a static display of price,” and argued that Dual Dynamic and eSpeedometer infringe under TT’s claim construction.  Additionally, TT asserted that Dual Dynamic infringes under the doctrine of equivalents without obviating the word “static,” and that prosecution history estoppel does not preclude eSpeedometer from infringing the TT patents under the doctrine of equivalents.  eSpeed, in the appeal, asserted:  (1) that the ‘132 and ‘304 patents should not be dated back to the provisional application dates; (2) that the patents are invalid under the on-sale bar; (3) that the term “single action of a user input device” is indefinite; and (4) that TT engaged in inequitable conduct.

Narrow Claim Construction in View of “Present Invention” And Only One Embodiment

The Federal Circuit reviewed the grant of summary judgment of non-infringement with respect to Dual Dynamic and eSpeedometer with out deference, and reviewed the District Court’s claim construction order under Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).  TT asserted that the District Court’s construction of “static” in the limitations of “static display of prices” and “common static price axis” in the ‘132 and ‘304 patents to be incorrect.  The District Court construed “static display of prices” to mean “a display of prices comprising price levels that do not change positions unless a manual re-centering command is received.”  Similarly, the District Court construed “common static price axis” to mean “a line comprising price levels that do not change unless a manual re-centering command is received and where the line of prices corresponds to at least one bid value and one ask value,” with the District Court noting that “a static condition – requires permanency” so that “the price axis never changes positions unless by manual re-centering or re-positioning.”

Thus, the Federal Circuit noted that under the District Court’s interpretation, the ‘132 and the ‘304 patent only cover manual re-centering without automatic re-centering.  However, the Dual Dynamic and eSpeedometer include automatic re-centering corresponding to changes in the inside market.  The specifications of both the ‘132 and ‘304 patents state that “The values in the price column are static; that is, the do not normally change positions unless a re-centering command is received.”  The Federal Circuit noted that although the District Court’s construction may seem narrower than the inventor’s definition of “static” because the District Court added that the re-centering command is to be manual, the claims, specification and prosecution history estoppel support the District Court’s definition.  Thus, the Federal Circuit agreed with the District Court’s claim construction.

While elaborating on the support for the claim construction found in the specification, the Federal Circuit stated that they recognize that relying on the specification heavily may lead to an improper risk of reading a preferred embodiment into the claim, unless the patentee evinces a clear intention that the preferred embodiment represents the claim.  (See Saunders Group, Inc. v. Comfortrac, Inc., 492 F.3d 1326, 1332 (Fed. Cir. 2007)).  In reviewing the specification, the Federal Circuit found that the “reference to ‘the present invention’ strongly suggests that the claimed re-centering command requires a manual input, specifically, a mouse click. See Honeywell Int’l, Inc. v. ITT Indus., 452 F.3d 1312, 1318 (Fed. Cir. 2006) (concluding that the invention was limited to a fuel filter because the specification referred to the fuel filter as ‘this invention’ and ‘the present invention’).”  The Federal Circuit further noted that the specification did not disclose alternate embodiments, such as automatic re-centering.  As such, the Federal Circuit stated that “[t]his court takes some comfort against this risk from the inventors’ use of the term “the present invention” rather than “a preferred embodiment” or just “an embodiment.”

The Federal Circuit went on to detect any contrary intentions as per the embodiment, and noted that all claims of the ‘132 patent include a “wherein” clause stating that “the static display of prices does not move in response to a change in the inside market.”  As such, the claims of the ‘132 patent excludes automatic re-centering upon a change in the inside market.

TT further argued that even if the “re-centering command” is interpreted as manual in the ‘132 patent, the District Court cannot limit the claims to only recited elements because the claims use a transitional phrase “comprising.”  Thus, TT asserts that the claims also cover features not recited, such as automatic re-centering.  The Federal Circuit responded by stating that “automatic re-centering is not an additional feature, but rather negates a claimed requirement that the price level remains static and does not move….Thus, this court construes the claims to require a manual re-centering command.”  The Federal Circuit also pointed to the prosecution history in noting that the Examiner initially rejected the claims because “static display” was indefinite.  The Federal Circuit stated that the Examiner allowed the claims, in part, based upon the applicant’s explanation that “the values in the price column…do not change (unless a re-centering command is received).”    Furthermore, the Federal Circuit also noted that a manual re-centering of the price column may avoid mistakes that may arise from an automatic re-centering of the price column, as found in the prior art.  Thus, the Federal Circuit stated that:

[t]he invention’s contribution to the prior art, its specification, and its prosecution history show that the static display of prices cannot move without a manual re-centering command from the trader.  Accordingly, the District Court correctly construed disputed word “static.”

Thus, the Federal Circuit found that eSpeed’s Dual Dynamic and eSpeedometer do not literally infringe on the ‘132 and ‘304 patents because eSpeed’s products have mandatory re-centering features.

No Doctrine of Equivalents Due to Claim Vitiation and Prosecution History Estoppel

With respect to the doctrine of equivalents, the Federal Circuit noted that, under the all-elements rule, it is required to consider “the totality of circumstances of each case and determine whether the alleged equivalent can be fairly characterized as an insubstantial change from the claimed subject matter without rendering the pertinent litigation meaningless.”  Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1359 (Fed. Cir. 2005).  As per the claim vitiation if doctrine of equivalents is found, the Federal Circuit stated that claim vitiation “applies when there is a ‘clear, substantial difference or a difference in kind’ between the claim limitation and the accused product. Id. at 1360.  It does not apply when there is a ‘subtle difference in degree.’  Id.

The Federal Circuit stated that occasional automatic re-centering, as may occur with Dual Dynamic, is not an insubstantial difference, and that they must surmise the difference between a price axis that moves only in response to a trader’s command and one that moves without prompting.  In noting that Dual Dynamic’s automatic re-centering allows for the problems of the prior art, wherein an inside market price may move while a trader was executing a deal, the automatic re-centering is substantially different than the invention of the ‘132 and ‘304 patents.  Therefore, the Federal Circuit affirmed the District Court’s holding that the doctrine of equivalents does not show that Dual Dynamic infringes.

The Federal Circuit also agreed with the District Court’s decision that prosecution history estoppel bars TT from asserting doctrine of equivalents to show that eSpeedometer infringes the patents in suit.  The Federal Circuit noted that TT submitted a prior art reference describing a static price display after the USPTO issued a notice of allowance, and requested that the application be withdrawn from issuance.  TT amended claims that issues as claim 1 of their respective patents, with similarly recited limitations stating that price displays do not move in response to the inside market changing.  TT argued that “do not move” being amended into the claims did narrow the claims because they already recite “static.”  However, the Federal Circuit noted that TT’s argument is circular because the District Court has construed “static” to mean not moving, and thus, the claims of the ‘142 and ‘304 patents would still be limited to manual re-centering.  Thus, the Federal Circuit found that the inventors surrendered any subject matter that moves automatically during prosecution, and affirmed the District Court’s holding that Dual Dynamic and eSpeedometer don not infringe the ‘132 and ‘304 patents under the doctrine of equivalents.

No Willful Infringement

As per TT’s appeal on the District Court finding no willful infringement, the Federal Circuit noted that they, in In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007), held that “proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness.”  The Federal Circuit went on to note that neither party disputes that eSpeed began redesigning Futures View immediately after TT commenced the infringement suit.  The Federal Circuit then stated that “[p]rompt redesign efforts and complete removal of infringing products in a span of a few months suggest that eSpeed was not objectively reckless.”  Furthermore, TT could not show that eSpeed sold Future View to new customers, or that they delayed in updating Future View with the non-infringing Dual Dynamic.  Thus, the Federal Circuit affirmed the District Court’s grant of JMOL motion on willful infringement that no reasonable jury could have found eSpeed to be willfully infringing the ‘132 and ‘304 patents.

“Single Action” Claim Term Definite and Supported by Provisional Application

As per the contention on whether the limitation of “single action of a user input device” is indefinite, the Federal Circuit upheld the District Court’s ruling that the term, as construed, is sufficiently definite.  The Federal Circuit stated that “[t]he district’s court’s construction correctly sets objective boundaries by distinguishing the invention from multiple-action systems found in the prior art.”  The District Court found that “an action” means one user action, even including sub-elements such as two separate clicks of a double-click, if the user views all sub-elements as one action.  Additionally, the Federal Circuit stated that one of ordinary skill in the art would find a non-ambiguous difference between singular and multiple user actions, even with the District Court’s construction that a single action be executed in a “short period of time.”

With respect to eSpeed’s contention of the patents in suit having a priority date of the provisional applications filed on March 2, 2000, the Federal Circuit looked to the provisional application as an adequate written description under 35 U.S.C. §112, par. 1.  At contention was the fact that all claims recite a “single action of a user input device,” whereas the provisional application only recites “a single click of a computer mouse.”  The Federal Circuit states that “[o]n summary judgment, the parties’ experts disagreed that the provisional application showed possession of forms of order entry other than “a single click of a computer mouse”,”…and thus, there was “a dispute of material fact about whether the disclosure of a species, i.e., “one click of a mouse,” was sufficient to show that the inventors possessed the genus, i.e., “single action of a user input device.”  Thus, the Federal Circuit held that the District Court did not abuse its discretion in determining there was a dispute of material fact and precluding a grant of summary judgment on the issue.

The Federal Circuit also found that the District Court’s jury instruction was not legally erroneous, and that the District Court did not abuse its discretion by allowing TT’s expert witness to testify generally about the written description requirement.   Lastly, the Federal Circuit looked at the merits and found that the jury’s verdict was supported by substantial evidence on record showing that the written description was adequate.  The Federal Circuit noted that “the parties’ experts did not dispute that one of ordinary skill in the art would have know about other forms of “single action” such as a double-click or pressing a key,” and thus, “disclosure of a species in this case provides sufficient written description support for a later filed claim directed to a very similar and understandable genus.”  Therefore, the Federal Circuit found that the ‘132 and ‘304 patents were entitled to claim priority to the provisional application.

No On Sale bar for Service Contract to Build Invention

The District Court granted a motion in limine precluding eSpeed from alleging the on-sale bar defense, and eSpeed appealed the decision.  eSpeed relied upon the fact that Harris Brumfield, one of the inventors, hired TT to build trading software according to his idea.  TT and Brumfield entered into a contract, Individual Consulting Agreement #2 (ICA2), in which TT would build trading software according to Brumfield’s specifications.  TT delivered the software to Brumfield in February 1999, and Brumfield paid TT for the custom software on March 2, 1999.  The Federal Circuit affirmed the District Court’s de facto decision that ICA2 was not a sales transaction for a product embodying the patented invention, as is required for an on-sale bar under 35 U.S.C. §102(b).

The Federal Circuit stated that the ICA2 was a contract for hourly programming services, and not a computer software license, as eSpeed contended, and that Brumfield did not sell or offer anything for sale that would embody the invention.   Additionally, no product was ever sold to Brumfield.  Thus, the Federal Circuit stated that “[i]nventors can request another entity’s services in developing products embodying the invention without triggering the on-sale bar,” and that Brumfield’s contract with TT did not constitute a sale under 35 U.S.C. §102(b).

With respect to TT’s alleged inequitable conduct, the Federal Circuit found that the District Court was correct in finding that TT did not engage in such by not disclosing Brumfield’s custom software to the USPTO because the software wasn’t material to the question of patentability.  Brumfield used the software after March 2, 1999, however, the Federal Circuit stated that the “District Court did not clearly err by finding that Brumsfield’s software was immaterial given that his use of the software after the priority date would not have changed the examiner’s analysis of the patent.”  eSpeed further alleges that TT should have disclosed the “sale” of the software from TT to Brumfield, and Brumfield’s testing of the software to the USPTO.  The Federal Circuit noted that the ICA2 contract was not a sale under 35 U.S.C. §102(b) and that Brumfield tested the software for his own personal purposes, confidentially, and that he kept the software secret until he and TT filed the provisional application.  Thus, the Federal Circuit found no inequitable conduct on the part of TT.

Summary

In summary, the Federal Circuit upheld the District Court on all matters decided by the District Court.  Particularly, the Federal Circuit noted that the use of “the present invention” rather than “a preferred embodiment” or just “an embodiment” in the specification can be used to support the Federal Circuit Court’s use of the specification’s embodiment as reflecting the claims.  Additionally, the Federal Circuit found that, in the present case, prosecution history estoppel can be used to bar the use of doctrine of equivalents.  The Federal Circuit also stated that “disclosure of a species in this case provides sufficient written description support for a later filed claim directed to a very similar and understandable genus,” in finding the provisional application an adequate written description for the ‘132 and ‘402 patents.  Also, the Federal Circuit held that “[i]nventors can request another entity’s services in developing products embodying the invention without triggering the on-sale bar.”  Therefore, the Federal Circuit found no reversible error and affirmed the District Court’s decision.

Significance for Patent Owners and Applicants

In Trading Technologies Int’l, the Federal Circuit again emphasizes the importance of the specification in defining claim terms using the specification.  The Federal Circuit scoured the specification looking for a more expansive definition given to a particular claim term, and were unable to find alternative embodiments which would have allowed such an expansive interpretation.  Indeed to the contrary, the Federal Circuit found that the applicants had not even indicated that the claim term was only an embodiment, and instead emphasized that the claim term was part of the present invention, as opposed to only an embodiment of the present invention.  Therefore, when drafting claims and specifications, it is important that the specification include multiple embodiments for each claim term and avoid characterizing any particular embodiment as being the invention as opposed to an example of that invention.

Federal Circuit Finds Opinion Letter Does Not Provide Defense To Charge Of Willful Infringement Where Important Technical Document Is Withheld From Legal Counsel

In nCube Corp. v. SeaChange International, Inc., 436 F.3d 1317; 77 U.S.P.Q.2D (Fed. Cir. 2006), a panel of the Court of Appeals for the Federal Circuit affirmed the trial court’s upholding of the jury’s finding of infringement, damages and partial attorney’s fees and granting infringer’s JMOL motion on infringement under the doctrine of equivalents.  J. Rader, writing the opinion for the Court, found the trial court correctly construed the claims of nCube’s patent (U.S. Patent No. 5,805,804, hereinafter referred to as the ’804 patent) to encompass SeaChange’s systems used by cable TV networks.  Continue reading