Trading Technologies International, Inc. v. Espeed, Inc. ( 2010 )

United States Court of Appeals for the Federal Circuit
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TRADING TECHNOLOGIES INTERNATIONAL, INC.,
Plaintiff-Appellant,
v.
ESPEED, INC., ECCO LLC,
ECCOWARE LTD., and ESPEED INTERNATIONAL, LTD.,
Defendants-Cross Appellants.
Steven F. Borsand, Trading Technologies International, Inc., of Chicago, Illinois, argued
for plaintiff-appellant. Of counsel on the brief were Paul H. Berghoff, Leif R. Sigmond, Jr.,
Matthew J. Sampson, Michael D. Gannon, S. Richard Carden, Jennifer M.Kurcz and Paul A.
Kafadar, McDonnell Boehnen Hulbert & Berghoff LLP, of Chicago,
Illinois. Of counsel was George I. Lee.
Gary A. Rosen, Law Offices of Gary A. Rosen, P.C., of Philadelphia, Pennsylvania,
argued for defendants-cross appellants. Of counsel on the brief were George C. Lombardi,
Raymond C. Perkins and James M. Hilmert, Winston & Strawn, LLP, of Chicago, Illinois. Of
counsel were Ivan M. Poullaos, of Chicago, Illinois and John K. Hsu, of Washington, DC.
Lora A. Moffatt, Salans LLP, of New York, New York, for amici curiae GL Trade SA, et al.
With her on the brief was Walter Scott, Alston & Bird LLP, of New York, New York.
Appealed from: United States District Court for the Northern District of Illinois
Senior Judge James B. Moran
United States Court of Appeals for the Federal Circuit
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TRADING TECHNOLOGIES INTERNATIONAL, INC.,
Plaintiff-Appellant,
v.
ESPEED, INC.,
ECCO LLC, ECCOWARE LTD., and ESPEED INTERNATIONAL, LTD.,
Defendants-Cross Appellants.
Appeals from the United States District Court for the Northern District of Illinois
in case no. 04-CV-5312, Senior Judge James B. Moran.
___________________________
DECIDED: February 25, 2010
___________________________
Before LOURIE, RADER, Circuit Judges, and CLARK, District Judge. 1
Opinion for the court filed by Circuit Judge RADER, in which District Judge CLARK
joins. Circuit Judge LOURIE concurs in the result. Concurring opinion filed by District
Judge CLARK.
RADER, Circuit Judge.
The United States District Court for the Northern District of Illinois held that
eSpeed, Inc., Ecco LLC, Eccoware Ltd., and eSpeed International Ltd. (collectively,
“eSpeed”) infringed the asserted claims of U.S. Patent No. 6,772,132 (“’132 patent”)
and U.S. Patent No. 6,766,304 (“’304 patent”) with one accused service product, but not
1
Honorable Ron Clark, District Judge, United States District Court for the Eastern
District of Texas, sitting by designation.
willfully. The district court further held that the two other accused products did not
literally infringe and then precluded Trading Technologies International, Inc. (“TT”) from
asserting infringement under the doctrine of equivalents. After giving the patents-in-suit
a filing date back to the provisional application, the district court found that the on-sale
bar of 35 U.S.C. § 102(b) did not apply. The district court also found no indefiniteness
problem in the asserted claims. Finally the district court detected no inequitable
conduct during the prosecution of the patents-in-suit. Because this record discloses no
reversible error, this court affirms.
I.
TT is the owner by assignment of the ’132 and ’304 patents. Both patents share
a common provisional application filed on March 2, 2000. The United States Patent and
Trademark Office (“PTO”) issued the ’132 patent on August 3, 2004, based on a June 9,
2000 application. The PTO issued the ’304 patent on July 20, 2004, based on a June
27, 2001 application. The ’304 patent is a divisional of the ’132 patent. The
specifications of the patents are, for all relevant purposes, identical.
The patents claim software for displaying the market for a commodity traded in
an electronic exchange. ’132 patent col.3 ll.11-16. The software’s graphical user
interface (“GUI”) includes “a dynamic display for a plurality of bids and for a plurality of
asks in the market for the commodity and a static display of prices corresponding to the
plurality of bids and asks.” Id. The claimed invention facilitates more accurate and
efficient orders in this trading environment. Id. col.3 ll.21-24.
Prior art computer trading displays showed the best bid price and the best ask
price (together, “the inside market”) in fixed, predetermined grids. The best bid price is
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the highest price at which there is an offer to buy the contract. The best ask price is the
lowest price at which there is an offer to sell the contract. The inside market is the focal
point of trading activity because these offers most accurately reflect the current price of
the commodity.
Returning to the prior art, these displays had grids for the inside market that
never changed. As the market fluctuated, however, the prices listed in those grids
changed—often times very rapidly. To buy at the inside market, a trader, for example,
placed the mouse cursor on the grids for the inside market and clicked the mouse. Of
course, as traders sent bids and offers to the market, the price and quantity of the
traded commodity changed. These changes altered the inside market. In the prior art
era with fixed grids for the inside market, traders had a problem. A trader who wished
to place an order at a particular price would miss that market opportunity if the inside
market moved as the trader tried to enter an order. In a fast moving market, missing an
intended price could happen often and have very significant economic consequences.
The invention addressed the problem by implementing static price levels.
Figures 3 and 4 of the ’132 patent illustrate the invention.
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’132 patent, figs.3, 4. The figures display the bids and offers for a certain commodity in
an electronic exchange. Column 1005 labeled “Prc” shows the contract prices. Id. col.7
ll.36-38. Column 1003 labeled “BidQ” and column 1004 labeled “AskQ” respectively
show the bid quantities and the ask quantities for the associated price. Id. col.7 ll.35-36.
In Figure 3, the inside market labeled 1020 indicates the best bid price of 89 and the
best ask price of 90. Id. col.7 ll.40-42. A trader may enter an order by clicking in the
bid or ask grid corresponding to the trader’s price. Id. col.4 ll.9-19.
Figure 4 displays the same market at a later time. The bid and ask quantities
dynamically change in response to market fluctuations. Id. col.7 ll.48-51. In Figure 4,
the inside market has shifted upward such that the best bid price is now 92 and the best
ask price is 93. Id. col.8 ll.38-48. While the inside market has changed, the values in
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the price column remained fixed. Id. col.8 ll.44-48. Over time, the inside market could
shift to prices not currently displayed on the trader’s screen. Id. col. 8 ll.49-51. In this
case, the price column must be re-centered to keep the inside market in view. Id. col.8
ll.49-60.
The claimed invention features static price levels. These unmoving figures have
numerous advantages over the prior art. First, a trader can visually follow the market
movement as the inside market shifts up and down along the price column. Id. col.5
ll.58-65. Second, and perhaps most important, a trader has confidence in making an
offer at the intended price. Id. col.3 ll.3-4. Because the invention has static price levels,
the order entry region will remain associated with the same price. Therefore, the trader
does not need to worry about “clicking on” or entering an order at the instant after a
price change. Thus, the invention prevents accidental orders at an unintended price.
The patents tout that these improvements ensure fast and accurate execution of trades.
Id. col.3 ll.21-24.
eSpeed, Inc. provides an electronic exchange for trading commodities. It also
designs and sells trading platforms for use with its electronic exchange. On August 12,
2004, TT initiated this suit against eSpeed, Inc., alleging that eSpeed, Inc.’s trading
platforms infringed TT’s patents. After eSpeed, Inc. acquired Ecco LLC in October
2004, TT joined Ecco LLC in the suit. In December 2005, TT amended its complaint to
join the subsidiaries eSpeed International, Inc. and EccoWare Ltd. This opinion refers
to all defendants collectively as “eSpeed.” TT asserts the following claims against
eSpeed: claims 1, 2, 7, 14, 15, 20, 23-25, 27, 28, 40, 45, 47, 48, 50, and 52 of the ’132
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patent; and claims 1, 11, 14, 15, and 26 of the ’304 patent. Claim 1 is the
representative claim for both patents.
Claim 1 of the ’132 patent:
A method of placing a trade order for a commodity on an electronic
exchange having an inside market with a highest bid price and a lowest
ask price, using a graphical user interface and a user input device, said
method comprising:
setting a preset parameter for the trade order;
displaying market depth of the commodity, through a dynamic
display of a plurality of bids and a plurality of asks in the
market for the commodity, including at least a portion of the
bid and ask quantities of the commodity, the dynamic display
being aligned with a static display of prices corresponding
thereto, wherein the static display of prices does not move in
response to a change in the inside market;
displaying an order entry region aligned with the static display
prices comprising a plurality of areas for receiving
commands from the user input devices to send trade orders,
each area corresponding to a price of the static display of
prices; and
selecting a particular area in the order entry region through single
action of the user input device with a pointer of the user input
device positioned over the particular area to set a plurality of
additional parameters for the trade order and send the trade
order to the electronic exchange.
’132 patent col.12 ll.1-27 (emphases added).
Claim 1 of the ’304 patent:
A method for displaying market information relating to and facilitating
trading of a commodity being traded in an electronic exchange having an
inside market with a highest bid price and a lowest ask price on a
graphical user interface, the method comprising:
dynamically displaying a first indicator in one of a plurality of
locations in a bid display region, each location in the bid
display region corresponding to a price level along a
common static price axis, the first indicator representing
quantity associated with at least one order to buy the
commodity at the highest bid price currently available in the
market;
dynamically displaying a second indicator in one of a plurality of
locations in an ask display region, each location in the ask
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display region corresponding to a price level along the
common static price axis, the second indicator representing
quantity associated with at least one order to sell the
commodity at the lowest ask price currently available in the
market;
displaying the bid and ask display regions in relation to fixed price
levels positioned along the common static price axis such
that when the inside market changes, the price levels along
the common static price axis do not move and at least one of
the first and second indicators moves in the bid or ask
display regions relative to the common static price axis;
displaying an order entry region comprising a plurality of locations
for receiving commands to send trade orders, each location
corresponding to a price level along the common static price
axis; and
in response to a selection of a particular location of the order entry
region by a single action of a user input device, setting a
plurality of parameters for a trade order relating to the
commodity and sending the trade order to the electronic
exchange.
’304 patent col.12 ll.35-col.13 ll.3 (emphases added).
TT accuses the following categories of eSpeed software of infringement: (1)
Futures View, Autospeed Basis, and Price Ladder (collectively, “Futures View”); (2)
Dual Dynamic and Ecco Scalper (“Dual Dynamic”); and (3) eSpeedometer and Ecco
eSpeedometer (“eSpeedometer”). These accused products are identical in all relevant
aspects. eSpeed concedes that Futures View satisfies all claim limitations. The parties
dispute whether Dual Dynamic and eSpeedometer have a “static display of prices” or
“static price axis.” This dispute turns on the way that the accused products re-center
the price levels when the inside market moves away from the center of the display.
eSpeed sold Futures View before the patents-in-suit issued. Dual Dynamics is a
redesign of Futures View. Dual Dynamic has two re-centering features. First, a trader
can click a mouse to manually re-center the price levels. Second, Dual Dynamic
automatically and instantaneously re-centers the price levels so as to move the inside
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market back to the field of the trader’s view if the inside market shifted a pre-determined
number of ticks from the center of the display. Traders could not disable this automatic
re-centering feature. eSpeedometer is the second redesign of Futures View.
eSpeedometer has an automatic re-centering feature only. Unlike Dual Dynamic, the
entire display slowly drifts towards the center of the trader’s screen after each and every
change in the inside market.
eSpeed manufactured and sold the accused products at different times during
the suit. eSpeed began selling Futures View long before TT’s patents-in-suit issued in
August 2004. Just before the hearing for a preliminary injunction in this case in
December 2004, eSpeed pulled Futures View off the market and replaced it with Dual
Dynamic. After the district court found that Dual Dynamic likely infringed the patents-in-
suit, eSpeed launched eSpeedometer.
In this case, the district court entered numerous orders on claim construction,
motions for summary judgment, motions in limine, and motions for a judgment as a
matter of law (“JMOL”). After holding a three-day claim construction hearing, the district
court issued a claim construction order. Of particular importance to this appeal, the
district court construed the word “static” in the limitation “static display of prices” in the
’132 patent and in the limitation “common static price axis” in the ’304 patent. Based on
the claim construction, eSpeed moved for summary judgment of non-infringement for
Dual Dynamic and eSpeedometer.
The district court found that neither product literally infringed. The district court
also found that Dual Dynamic did not infringe under the doctrine of equivalents because
finding otherwise would vitiate the claim element “static.” The district court held that
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prosecution history estoppel precluded application of the doctrine of equivalents as to
eSpeedometer. Therefore, the district court granted summary judgment of non-
infringement as to both the Dual Dynamic and eSpeedometer redesigns.
In September and October 2007, the district court held a four-week jury trial.
During the trial, the district court granted TT’s motion in limine to preclude eSpeed from
asserting an on-sale bar defense at trial. The district court also granted-in-part TT’s
motion in limine to preclude expert testimony that the construction of “single action of a
user input device” was indefinite. On October 10, 2007, the jury found that Futures
View willfully infringed the patents-in-suit. The jury also awarded the patents-in-suit the
benefit of their provisional application’s filing date. Based on that finding, the jury
determined that the prior art did not anticipate or render obvious the claimed invention.
The jury awarded TT $3,500,000 in damages based on a reasonable royalty.
After the jury trial, the district court held a two-day bench trial on inequitable
conduct. Based on that record, the trial court ruled that eSpeed did not show that TT
engaged in inequitable conduct. The district court also denied eSpeed’s JMOL motions
on validity, indefiniteness, priority date, and the patent misuse defense, but vacated the
jury’s finding of willful infringement and remitted the damages award to $2,539,468.
The district court further denied TT’s motions for enhanced damages and for attorney
fees.
The district court entered its final judgment on May 22, 2008. Both eSpeed and
TT appealed to this court on May 27, 2008. The judgment on which TT based its
appeal was not final at that time. The district court then re-entered its final judgment
nunc pro tunc on June 13, 2008. Because this court ruled that appellate jurisdiction
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ripened upon the entry of the judgment nunc pro tunc, it has jurisdiction under 28 U.S.C.
§ 1295(a).
II.
Both TT and eSpeed raise numerous issues on appeal. TT’s appeal focuses on
patent infringement. First, TT appeals the claim construction of “common static price
axis” and “a static display of price.” Second, TT argues that Dual Dynamic and
eSpeedometer infringe the patents-in-suit based on TT’s proposed claim construction.
Third, TT asserts that a finding that Dual Dynamic infringes under the doctrine of
equivalents would not vitiate the claim element “static.” Fourth, TT argues that
prosecution history estoppel does not preclude showing that eSpeedometer infringes
under the doctrine of equivalents. Finally, TT claims that the district court incorrectly
granted eSpeed’s JMOL motion on willful infringement.
eSpeed’s cross-appeal focuses on patent validity. First, eSpeed argues that the
patents-in-suit do not deserve priority back to March 2, 2000—the filing date of the
provisional application. Second, eSpeed claims that the patents-in-suit are invalid
under the on-sale bar because Harris Brumfield, one of the inventors of the patents-in-
suit, entered into a sales contract with TT more than one year before March 2, 2000.
Third, eSpeed argues that the term “single action of a user input device” is indefinite.
Finally, eSpeed claims that TT engaged in inequitable conduct by failing to submit
Brumfield’s custom software embodying the patented invention to the PTO during the
prosecution of the patents-in-suit.
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III.
A.
The district court granted summary judgment of non-infringement for the Dual
Dynamic and eSpeedometer products. This court reviews a grant of summary judgment
without deference. O2 Micro Int’l, Ltd. v. Monolithic Power Sys., 467 F.3d 1355, 1359
(Fed. Cir. 2006). Evaluation of summary judgment of non-infringement requires two
steps—proper claim construction and comparison of those claims to the accused
product. Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282, 1288 (Fed. Cir. 2009). Because
the parties dispute the meaning of terms in the asserted claims, this court reviews the
district court’s claim construction order under the requirements of Markman v. Westview
Instruments, Inc., 517 U.S. 370 (1996).
The Supreme Court in Markman held that “the construction of a patent, including
terms of art within its claim, is exclusively within the province of the court.” Id. at 372.
The Supreme Court recognized that claim construction “falls somewhere between a
pristine legal standard and a simple historical fact.” Id. at 388 (quoting Miller v. Fenton,
474 U.S. 104, 114 (1985)). Although claim construction is not a purely legal matter, the
Supreme Court found “sufficient reason to treat construction of terms of art like many
other responsibilities that we cede to a judge in the normal course of trial,
notwithstanding its evidentiary underpinnings.” Id. at 390.
Nevertheless, in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir.
1998) (en banc), this court interpreted Markman as holding that claim construction was
solely a question of law, which this court should review without deference. Id. at 1451.
The question presented before the Supreme Court was “whether the interpretation of a
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so-called patent claim . . . is a matter of law reserved entirely for the court, or subject to
a Seventh Amendment guarantee that a jury will determine the meaning of any disputed
term of an art about which expert testimony is offered.” Markman, 517 U.S. at 372.
Although the Supreme Court addressed only the role of the trial court in claim
construction, this court understood that “the Supreme Court was addressing under
which category, fact or law, claim construction should fall.” Cybor, 138 F.3d at 1455.
This court concluded that “[n]othing in the Supreme Court’s opinion supports the view
that the Court endorsed a silent, third option—that claim construction may involve
subsidiary or underlying questions of fact.” Id.An examination of the Supreme Court’s ruling in Markman shows multiple
references to factual components of claim construction:
• “[C]onstruing a term of art following receipt of evidence” is “a
mongrel practice.” Id. at 378.
• Claim construction “falls somewhere between a pristine legal
standard and a simple historical fact.” Id. at 388.
• “We accordingly think there is sufficient reason to treat construction
of terms of art like many other responsibilities that we cede to a
judge in the normal course of trial, notwithstanding its evidentiary
underpinnings.” Id. at 390.
These references in the Supreme Court opinion leaves this court stranded
between the language in the Court’s decision and the language in this court’s Cybor
decision.
In order to resolve this case, this court must confront findings by the trial court
about the meaning of the disputed claim term “static.” In reaching the meaning of that
term, the trial court explored and made findings about the technical background of the
invention—the inventive features and the timing of those features against the backdrop
of the prior art. In addition, the district court determined the meaning that an artisan of
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ordinary skill in this discipline would assign the term “static.” The trial court also made
findings about the understanding of such an ordinary artisan about the metes and
bounds of the asserted claims. In still another factual setting, the district court
determined the way that the ordinary artisan would interpret the patent applicant’s
statements made to the PTO examiner during the prosecution of the patents-in-suit.
These factual determinations about the timing and nature of the history of the patent
acquisition process also informed the trial court’s claim construction. In sum, claim
construction involves many technical, scientific, and timing issues that require full
examination of the evidence and factual resolution of any disputes before setting the
meaning of the disputed terms.
Of course, as the Supreme Court repeatedly clarified in Markman, the trial court
occupies the best vantage point and possesses the best tools to resolve those
evidentiary questions:
• “[A] jury’s capabilities to evaluate demeanor to sense the
mainsprings of human conduct or to reflect community standards
are much less significant than a trained ability to evaluate the
testimony in relation to the overall structure of the patent.” Id. at
389-90 (citations and internal quotation marks omitted).
• “The decisionmaker vested with the task of construing the patent is
in the better position to ascertain whether an expert’s proposed
definition fully comports with the specification and claims and so will
preserve the patent’s internal coherence.” Id. at 390.
Despite the Supreme Court’s emphasis on the trial court’s central role for claim
construction, including the evaluation of expert testimony, this court may not give any
deference to the trial court’s factual decisions underlying its claim construction. This
court’s prior en banc decision requires a review of the district court’s claim construction
without the slightest iota of deference. See Cybor, 138 F.3d at 1451.
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B.
To construe a claim, courts must determine the meaning of disputed terms from
the perspective of one of ordinary skill in the pertinent art at the time of filing.
Chamberlain Group, Inc. v. Lear Corp., 516 F.3d 1331, 1335 (Fed. Cir. 2008). The
claim terms “are generally given their ordinary and customary meaning.” Phillips v.
AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc) (quoting Vitronics Corp. v.
Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)). “[T]he claims themselves
provide substantial guidance as to the meaning of particular claim terms.” Id. at 1314.
But the claims “must be read in view of the specification, of which they are a
part.” Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en
banc), aff’d, 517 U.S. 370 (1996). A patent’s specification “is always highly relevant to
the claim construction analysis.” Phillips, 415 F.3d at 1315 (quoting Vitronics, 90 F.3d
at 1582 (Fed. Cir. 1996)). When consulting the specification to clarify the meaning of
claim terms, courts must not import limitations into the claims from the specification.
Abbot Labs., 566 F.3d at 1288. Therefore, when the specification uses a single
embodiment to enable the claims, courts should not limit the broader claim language to
that embodiment “unless the patentee has demonstrated a clear intention to limit the
claim scope using ‘words or expressions of manifest execution or restriction.’” Liebel-
Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 905 (Fed. Cir. 2004) (quoting Teleflex, Inc.
v. Ficosa N. Am. Corp., 299 F.3d 1313, 1327 (Fed. Cir. 2002)). In addition, “other
claims of the patent . . . can also be valuable sources of enlightenment as to the
meaning of a claim term.” Id. (citing Vitronics, 90 F.3d at 1582).
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In claim construction “a court ‘should also consider the patent’s prosecution
history . . . .’” Phillips, 415 F.3d at 1318 (quoting Markman, 52 F.3d at 980). “[T]he
prosecution history can often inform the meaning of the claim language by
demonstrating how the inventor understood the invention and whether the inventor
limited the invention in the course of prosecution, making the claim scope narrower than
it would otherwise be.” Id. (citing Vitronics, 90 F.3d at 1582-83). For example, “a
patentee may, through a clear and unmistakable disavowal in prosecution history,
surrender certain claim scope to which he would otherwise have an exclusive right by
virtue of the claim language.” Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317,
1324 (Fed. Cir. 2009) (citations omitted). At the same time, because prosecution
history represents an ongoing negotiation between the PTO and the inventor, “it often
lacks the clarity of the specification and thus is less useful for claim construction
purposes.” Netcraft Corp. v. eBay, Inc., 549 F.3d 1394, (Fed. Cir. 2008).
TT disputes the construction of the word “static” in the phrase “static display of
prices” in the ’132 patent and in the phrase “common static price axis” in the ’304
patent. All asserted claims of the ’132 patent include the limitation “static display of
prices.” Likewise, all asserted claims of the ’304 patent include the limitation “common
static price axis.” TT and eSpeed agree that the difference in terminology between
“static display of prices” and “common static price axis” is immaterial.
The district court construed “static display of prices” in the ’132 patent as “a
display of prices comprising price levels that do not change positions unless a manual
re-centering command is received.” Trading Techs. Int’l, Inc. v. eSpeed, Inc., 2006 U.S.
Dist. LEXIS 80153, at *11 (N.D. Ill. Oct. 31, 2006) (emphasis added). The district court
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similarly construed “common static price axis” as “a line comprising price levels that do
not change positions 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.” Id. (emphasis
added). A “price level” is “a level on which a designated price or price representation
resides.” Id. at *15. The district court later clarified that “a static condition – requires
permanency” and, thus, “the price axis never changes positions unless by manual re-
centering or re-positioning.” Trading Techs. Int’l, Inc. v. eSpeed, Inc., 2007 U.S. Dist.
LEXIS 12965, at *20, 22 (N.D. Ill. Feb. 21, 2007) (emphasis added). Under the district
court’s construction, the patents-in-suit only cover software with a manual re-centering
feature and without automatic re-centering feature. Given that Dual Dynamic and
eSpeedometer automatically re-center the price columns in response to changes in the
inside market, TT argues for a broader construction of the word “static” (i.e., “static”
does not mean immovable).
The inventors acted as their own lexicographers and defined the word “static:”
The values in the price column are static; that is, they do not normally
change positions unless a re-centering command is received (discussed in
detail later).
’132 patent col.7 ll.46-48; ’304 patent col.7 ll.65-67. The district court made two
important changes to this express definition in construing the word “static.” First, the
district court added the word “manual” in front of the term “re-centering command.”
Second, it deleted the word “normally.” The district court’s definition may seem
narrower than the inventors’ express definition at first glance. However, the claims, the
rest of the specification, and the prosecution history support the district court’s
definition. Therefore, this court, after reconstruing this term based on its own
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understanding of the claims, specification, prosecution history, and record, agrees with
the district court’s claim construction of the word “static.”
In the first place, the “re-centering command” must indeed occur as a result of a
manual entry. The specification shows that the inventors defined the term “static” in the
specification. Notably, that definition expressly promises to discuss “a re-centering
command . . . later” in the specification. Id. From that point forward, the specification
only discusses manual re-centering commands. The specification contains no
reference to automatic re-centering. Perhaps in response to the promise to discuss re-
centering later, the patents describe the invention as follows:
As the market ascends or descends the price column, the inside market
might go above or below the price column displayed on a trader’s screen.
Usually a trader will want to be able to see the inside market to assess
future trades. The system of the present invention addresses this problem
with a one click centering feature.
’132 patent col.8 ll.49-54; ’304 patent col.9 ll.14-19 (emphasis added). This 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”).
This court recognizes that this interpretation relies heavily on the specification
and risks reading improperly a preferred embodiment into the claim. See Saunders
Group, Inc. v. Comfortrac, Inc., 492 F.3d 1326, 1332 (Fed. Cir. 2007) (holding that claim
scope is not limited to the disclosed embodiments “unless the patentee has
demonstrated a clear intention to [do so]”). This court takes some comfort against this
2008-1392, -1393, -1422 17
risk from the inventors’ use of the term “the present invention” rather than “a preferred
embodiment” or just “an embodiment.” The inventors’ own specification strongly
suggests that the claimed re-centering feature is manual.
Because an inventor must evince a “clear intention” to limit the claim terms to a
specification embodiment, this court examines other claims to detect any contrary
intentions. In that respect, this court observes that all claims of the ’132 patent have a
“wherein” clause explaining that “the static display of prices does not move in response
to a change in the inside market.” ’132 patent col.12 l.1–col.16 l.57. Although the
“wherein” clause does not exclude automatic re-centering from the claim scope (it does
not exclude software that automatically re-centers whenever the trader enters an order,
for example), it expressly excludes software that automatically re-centers when the
inside market changes. These clauses thus support the district court’s claim
construction.
TT argues that even if this court construes the “re-centering command” as
manual, this court cannot limit the claims to only the enumerated elements (i.e., manual
re-centering command). According to TT, because the claims use the transitional
phrase “comprising,” they also cover un-recited features such as automatic re-centering.
To the contrary, automatic re-centering is not an additional feature, but rather negates a
claimed requirement that the price level remains static and does not move. See
Spectrum Int’l v. Sterilite Corp., 164 F.3d 1372, 1380 (Fed. Cir. 1998) (“‘Comprising’ is
not a weasel word with which to abrogate claim limitations.”). A price level that only
moves in response to a manual re-centering command cannot also move in response to
2008-1392, -1393, -1422 18
an automatic re-centering command. Thus, this court construes the claims to require a
manual re-centering command.
The claims also contain a limitation that “the price axis never changes positions
unless by manual re-centering or re-positioning.” Trading Techs., 2007 U.S. Dist.
LEXIS 12965, at *22. The district court found that the ordinary and customary meaning
of “static” was “motionless: not moving or changing, or fixed in position.” Trading
Techs., 2006 U.S. Dist. LEXIS 80153, at *11. TT did not present evidence or dispute
that a person of ordinary skill in the art would understand the word “static” differently.
Moreover, allowing the price axis to automatically change positions would defy the
invention’s goal to “ensure[] fast and accurate execution of trades.” ’132 patent col.3
ll.5-6. The invention would present the same problem as the prior inventions if the price
axis moved automatically even in rare instances. The “static display of prices” could
automatically re-center just as the trader was getting ready to execute a trade, causing
the trader to miss the intended price.
Also, the inventors jettisoned the word “normally” during prosecution. The PTO
examiner initially rejected the claims because the term “‘static display’ [was] vague and
indefinite.” The examiner requested the applicants “to claim ‘to what extent’, ‘to what
degree’, and ‘on what basis’ the displays ‘change.’” In response, the applicants
explained that “the values in the price column . . . do not change (unless a re-centering
command is received).” The examiner allowed the claims at least partly based on the
understanding that the price column did not re-center itself automatically. The manual
re-centering feature also avoided the possibility of mistakes when the price column
moved automatically at the same time a trader wished to make a purchase. Of course,
2008-1392, -1393, -1422 19
traders might make mistakes despite precautions built into the software. Nonetheless,
to “provide the trader with improved efficiency and versatility in placing,” ’132 patent
col.3 ll.21-24, the price column cannot shift unexpectedly.
This court also addresses claim 55 of the ‘132 patent, a dependent claim from
claim 1:
The method of claim 1 wherein the market depth is based on an exchange
order book and the static display of prices never moves in response to a
price change in the exchange order book relating to a price which is
displayed.
Id. col.16 ll.52-55 (emphasis added). TT argues that construing “static” to mean the
price axis never moves would render dependent claim 55 superfluous. To the contrary,
claim 55 adds another limitation to claim 1, namely, that the market depth is based on
“an exchange order book.” Moreover, problems with any overlapping claim scope “will
be overcome by a contrary construction dictated by the written description or
prosecution history.” Regents v. Dakocytomation, 517 F.3d 1367, 1375 (Fed. Cir.
2008). The 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 the
disputed word “static.”
Because Dual Dynamic and eSpeedometer systems have mandatory re-
centering features, these products do not infringe the patents-in-suit based on the
district court’s construction of the word “static.” With that feature, these products lack
“price levels that do not change positions unless a manual re-centering command is
received.” This court affirms the district court’s finding that Dual Dynamic and
eSpeedometer do not literally infringe the patents-in-suit.
2008-1392, -1393, -1422 20
IV.
The district court prevented TT from relying on the doctrine of equivalents. The
trial court reasoned that claim vitation barred assertion of infringement by equivalents
against the Dual Dynamic system. The trial court reasoned that prosecution history
estoppel barred TT from asserting equivalents against the eSpeedometer system. The
Supreme Court discussed these “legal limitations on the application of the doctrine of
equivalents” in Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17,
39 n.8 (1997). Under the “all-elements rule,” a patentee may not assert “a theory of
equivalen[ce] [that] would entirely vitiate a particular claim element.” Id. Under
prosecution history estoppel, a patentee may not seek to recapture as an equivalent
subject matter surrendered during prosecution. Id. This court reviews both legal
limitations without deference. Lockheed Martin Corp. v. Space Sys./Loral, Inc., 324
F.3d 1308, 1318 (Fed. Cir. 2003).
The all-elements rule requires this court 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 limitation meaningless.” Freedman Seating Co. v. Am. Seating Co., 420 F.3d
1350, 1359 (Fed. Cir. 2005). In other words, this rule empowers a court to perform
again the standard “insubstantial variation” test for equivalency, but this time as a
question of law. 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.
2008-1392, -1393, -1422 21
In this case, the trial court considered whether an occasional automatic re-
centering of the price axis in Dual Dynamic is equivalent to “never chang[ing] positions
unless by manual re-centering or re-positioning.” The court determined that the
automatic re-centering would render the claim limitation “static”—synonymous with only
manual re-centering—meaningless. The trial court’s construction of the claim limitation
“static” specifically excludes any automatic re-centering. See SciMed Life Sys. v.
Advanced Cardiovacsular Sys., 242 F.3d 1337, 1347 (Fed. Cir. 2001) (“[I]f a patent
states that the claimed device must be ‘non-metallic,’ the patentee cannot assert the
patent against a metallic device on the ground that a metallic device is equivalent to a
non-metallic device.”).
On appeal, this court observes that the Dual Dynamic system may only
automatically re-center its price axis once or twice per trading day. Still this occasional
automatic re-centering is not a “subtle difference of degree” because the claim forbids
all automatic re-centering. This court concludes that the occasional automatic re-
centering is not merely an insubstantial variation. The relevant standard for measuring
the difference in this instance is not the frequency of automatic re-centering. Instead
this court must detect the difference between a price axis that moves only in response
to the trader’s instruction and a price axis that adjusts itself without prompting. This
difference is not subtle. Rather, as discussed above, this difference lies at the heart of
the advantages of the patented invention over prior art. Specifically the invention
“ensures fast and accurate execution of trades.” ’132 patent col.3 ll.5-6. Dual
Dynamic’s automatic re-centering feature still presents the potential problem of the prior
art that allowed the inside market price to move while a trader was trying to secure a
2008-1392, -1393, -1422 22
deal. Thus Dual Dynamic’s automatic re-centering feature is substantially different from
the claimed invention and cannot fall within the scope of the claims under the doctrine of
equivalents without doing violence to the “static” claim element. Accordingly, this court
affirms the trial court’s judgment that TT cannot rely on the doctrine of equivalents to
show that Dual Dynamic infringes.
This court further agrees with the district court that prosecution history estoppel
precludes TT from relying on the doctrine of equivalents to prove the eSpeedometer
system infringes. After the USPTO issued a notice of allowance, TT submitted for the
first time a prior art reference that described a static price display and petitioned to have
the application withdrawn from issuance. TT then amended claim 22 of the ’132 patent,
which ultimately issued as claim 1, as follows (deletions marked in brackets, additions
underlined):
displaying [the] market depth of [a] the commodity [traded in a market],
through a dynamic display of a plurality of bids and a plurality of asks in
the market for the commodity, including at least a portion of the bid and
ask quantities of the commodity, the dynamic display being aligned with a
static display of prices corresponding thereto, wherein the static display of
prices does not move in response to a change in the inside market;
Similarly, TT amended claim 41 of the ’304 patent, which ultimately issued as claim 1,
as follows:
displaying the bid and ask display regions in relation to fixed price levels
positioned along the common static price axis such that when the inside
market changes, the price levels along the common static price axis do
not move and at least one of the first and second indicators [can] moves in
the bid [and] or ask display regions relative to the common static price axis
[when the inside market changes];
The PTO examiner then allowed the claims. The amendments clarified that the claimed
price levels “do not move” when the inside market changes. Therefore, the applicants
2008-1392, -1393, -1422 23
clearly surrendered a GUI with price levels that move in response to inside market
changes.
TT argues that amending the claims to require that the price levels “do not move”
did not narrow the claim scope, because the claims already included the term “static,”
which the district court has construed to mean that the price levels “do not move.” This
contention, however, is circular. Placed in the proper context of the timing for claim
construction and prosecution history estoppel, the district court properly prevented the
recapture of surrendered subject matter. The trial court construed the claims as
amended and properly limited the claims to manual re-centering. Prosecution history
estoppel applies at the time of infringement to determine whether the applicant
surrendered claim scope during prosecution. See Warner-Jenkinson, 520 U.S. at 39
n.8. TT’s argument assumes that the trial court and this court would have construed
“static” the same without the full prosecution history. This court need not engage in this
conjecture because the inventors narrowed the claim scope during prosecution. Thus,
both claim construction and prosecution history estoppel operate in this case with
similar limited results. The first limits the claims to manual re-centering. The latter
prevents TT from asserting that eSpeedometer is an equivalent, because its price level
automatically drifts towards the center of the display after every change in the inside
market. Thus, during prosecution, the inventors surrendered any subject matter that
moves automatically. Accordingly, this court affirms as a matter of law the district
court’s finding that Dual Dynamic and eSpeedometer do not infringe the patents-in-suit
under the doctrine of equivalents.
2008-1392, -1393, -1422 24
V.
The district court granted eSpeed’s motion for JMOL that it did not willfully
infringe the patents-in-suit. This court reviews a district court’s grant of a motion for
JMOL under the law of the regional circuit, in this case the United States Court of
Appeals for the Seventh Circuit. Harris Corp. v. Ericsson Inc., 417 F.3d 1241, 1248
(Fed. Cir. 2005). The Seventh Circuit reviews a district court’s grant of a JMOL motion
without deference, while viewing all the evidence in the light most favorable to the
nonmoving party. Harper v. Albert, 400 F.3d 1052, 1061 (7th Cir. 2005). JMOL is
proper when “a party has been fully heard on an issue and there is no legally sufficient
evidentiary basis for a reasonable jury to find for that party on that issue." Fed. R. Civ.
P. 50(a).
In In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en
banc), this court held that “proof of willful infringement permitting enhanced damages
requires at least a showing of objective recklessness.” “[A] patentee must show by
clear and convincing evidence that the infringer acted despite an objectively high
likelihood that its actions constituted infringement of a valid patent.” Id. The patentee
must also show that the infringer knew or should have known of this objectively high
likelihood. Id.TT’s argument focuses on eSpeed’s post-issuance activities from August to
December 2004, during which eSpeed’s customers continued to use Futures View to
trade on its electronic exchange. The parties do not dispute that eSpeed began
redesigning Futures View immediately after this suit commenced and replaced Futures
View with the redesigned Dual Dynamic by the end of December 2004. Prompt
2008-1392, -1393, -1422 25
redesign efforts and complete removal of infringing products in a span of a few months
suggest that eSpeed was not objectively reckless.
Also, TT offered no evidence that eSpeed sold Futures View to new customers
during the contested time period. Nor did TT offer any evidence that eSpeed could
have disabled the infringing feature or removed Futures View that was already installed
on the customers’ computers. eSpeed replaced Futures View with Dual Dynamic via a
mandatory software update in December 2004; however, this does not prove that
eSpeed could have updated its software before this date. The record shows that some
customers paid monthly license fees on Futures View after August 2004. Nonetheless,
eSpeed was merely receiving monthly installments on licenses that it had previously
sold. Moreover, eSpeed could not have terminated these licenses without providing
three months advance notice.
Because the record shows no objective recklessness during the contested period
of time, no reasonable jury could have found that eSpeed willfully infringed the patents-
in-suit. Therefore, this court affirms the district court’s grant of JMOL motion on willful
infringement.
VI.
The parties dispute whether the limitation “single action of a user input device” is
indefinite as construed. A patent specification must “conclude with one or more claims
particularly pointing out and distinctively claiming the subject matter which the applicant
regards as his invention.” 35 U.S.C. § 112, ¶ 2. “The statutory requirement of
particularity and distinctness in claims is met only when [the claims] clearly distinguish
what is claimed from what went before in the art and clearly circumscribe what is
2008-1392, -1393, -1422 26
foreclosed from future enterprise.” United Carbon Co. v. Binney & Smith Co., 317 U.S.
228, 236 (1942). However, absolute clarity is not required. Datamize, LLC v. Plumtree
Software, Inc., 417 F.3d 1342, 1347 (Fed. Cir. 2005). Only claims “not amenable to
construction” or “insolubly ambiguous” are indefinite. Id. (citation omitted). This court
reviews definiteness without deference. AllVoice Computing v. Nuance Commc’ns, 504
F.3d 1236, 1240 (Fed. Cir. 2007).
This court agrees with the district court that the claim term as construed is
sufficiently definite. The district court construed “single action of a user input device” to
mean “an action by a user within a short period of time that may comprise one or more
clicks of a mouse button or other input device.” Trading Techs., 2006 U.S. Dist. LEXIS
80153, at *11. In this context, the word “an action” means one user action. An action
may include multiple sub-elements as long as the user views all sub-elements as one
user action (e.g., double-click comprising of two single-clicks is “an action”). The
invention is different from prior art inventions that required a trader to click on multiple
locations before submitting the order. The district court’s construction correctly sets
objective boundaries by distinguishing the invention from multiple-action systems found
in the prior art.
Moreover, one of ordinary skill in the art would distinguish user actions as
singular or multiple. The claim construction provides an example of a singular action—
one or more clicks of a mouse button. Importantly, the district court’s construction
requires that the “action” must be done in a “short period of time.” Although a “short
period of time” may vary slightly from one circumstance to the next, an artisan of
ordinary skill would not find the term insolubly ambiguous. In fact, eSpeed’s expert
2008-1392, -1393, -1422 27
agreed that the following actions are all single actions: a single mouse click, double
mouse clicks, a single key press, and a modal shift on the keyboard (such as
combination of the Control key or the Alt key with another key). eSpeed’s expert also
agreed that other actions, such as a right click followed by a left click, and pressing two
keys in sequential order, constituted multiple actions. Given the record and the trial
court’s definition of the term “single action,” this court agrees that the claim terms set
forth the boundaries of the claim scope.
VII.
The jury found that the patents-in-suit claimed priority to their provisional
application, which was filed on March 2, 2000. Every claim of the patents-in-suit recites
use of a “single action of a user input device.” In contrast, the provisional application
never refers to a “single action of a user input device,” but instead refers solely to “a
single click of a computer mouse.”
Claims enjoy the earlier filing date only if the provisional application provided
adequate written description under 35 U.S.C. § 112, ¶ 1. New Railhead Mfg. v.
Vermeer Mfg., 298 F.3d 1290, 1294 (Fed. Cir. 2002). The “prior application itself must
describe an invention . . . in sufficient detail that one skilled in the art can clearly
conclude that the inventor invented the claimed invention as of the filing date sought.”
Lockwood v. Am. Airlines, 107 F.3d 1565, 1572 (Fed. Cir. 1997). Therefore, the
provisional application must describe the invention in such a way that one of ordinary
skill in the art “would understand that the genus that is being claimed has been
invented, not just the species of a genus.” Carnegie Mellon Univ. v. Hoffman-La Roche,
Inc., 541 F.3d 1115, 1124 (Fed. Cir. 2008).
2008-1392, -1393, -1422 28
eSpeed alleges that the district court erred in finding that one of ordinary skill in
the art would understand the provisional application to mean that traders could enter
orders through a “single action of a user input device.” Specifically, eSpeed disputes
the district court’s summary judgment ruling, jury instruction, decision to admit expert
testimony, and JMOL ruling on priority date.
First, eSpeed argues that the district court incorrectly denied its motion for
summary judgment on the ground that there was a triable issue as to whether the
provisional application’s disclosure was adequate. This court reviews a denial of a
motion for summary judgment for an abuse of discretion. Cross Med. Prods. v.
Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1302 (Fed. Cir. 2005). On 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.”
Harris Brumfield, one of the inventors of the patents-in-suit, suggested that “one click of
a mouse” is merely one way of entering orders on the exchange. Therefore, the parties
created 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.” The district court did not abuse its discretion by
determining that the parties’ irreconcilable testimony created a dispute of material fact,
precluding a grant of summary judgment on this issue.
Second, eSpeed also argues that the court incorrectly instructed the jury on the
law of written description. This court reviews “the legal sufficiency of jury instructions on
an issue of patent law without deference to the district court." Amgen Inc. v. F.
Hoffmann-La Roche, Ltd., 580 F.3d 1340, 1368 (Fed. Cir. 2009) (citation omitted). In its
2008-1392, -1393, -1422 29
brief, eSpeed quotes one sentence from the jury instruction. The district court’s jury
instruction was much longer and included the following sentence:
To provide adequate support you must find that the Provisional Application
shows that one reasonably skilled in the art, reading the Provisional
Application that explicitly calls for “single-click” user entry, would have
known that patentee had possession of a broader “single action of a user
input device.”
This jury instruction comports with this court’s law on written description. Moreover this
instruction gave the jury adequate information to make a decision based on the
possession standard of this court. This court finds that the jury instruction was not
legally erroneous.
eSpeed argues as well that the testimony of TT’s expert, Larry Nixon, was
improper. This court reviews a district court’s decision to admit expert testimony under
regional circuit law. Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1391 (Fed. Cir.
2003). The Seventh Circuit reviews such evidentiary rulings for abuse of discretion.
Liquid Dynamics Corp. v. Vaughan Co., Inc., 449 F.3d 1209, 1218 (Fed. Cir. 2006).
Larry Nixon testified generally about the written description requirement and did not
offer legal conclusions as to the adequacy of the provisional application’s disclosure.
While offering general opinions on patent practices, he did not usurp the district court’s
role of instructing the jury on the law. Therefore, the district court did not abuse its
discretion by permitting his testimony.
Finally, eSpeed contests the district court’s denial of its Rule 50(b) motion for
JMOL. This court reverses a denial of a JMOL motion “only if the jury’s factual
determinations are not supported by substantial evidence or the legal conclusions
2008-1392, -1393, -1422 30
implied from the verdict cannot be supported in law by those findings.” Tronzo v.
Biomet, Inc., 156 F.3d 1154, 1157 (Fed. Cir. 1998).
eSpeed did not submit its Rule 50(a) JMOL motion at the close of evidence. This
case, however, is not an instance where the district court entertained a Rule 50(b)
JMOL motion that was not preserved before the jury verdict. Instead, the district court
explicitly permitted each party to preserve JMOL motions by offering “placeholders” with
“the details to be filled in later.” Albeit in abbreviated form, the district court found that
eSpeed had presented and preserved its Rule 50(a) JMOL motion. This court is “not
disposed to override” a district court’s determination of non-waiver. Gaus v. Conair
Corp., 363 F.3d 1284, 1287 (Fed. Cir. 2004).
Turning to the merits, the record shows substantial evidence to support the jury’s
verdict that the provisional application’s written description was adequate. TT’s expert,
Craig Pirrong explained that the provisional application distinguished between order
entries performed in a single action and multiple-step actions. He did not distinguish a
single-click from other types of single actions. Therefore, one of ordinary skill in the art
could read the provisional application to encompass any single actions.
Moreover, the parties’ experts did not dispute that one of ordinary skill in the art
would have known about other forms of “single action” such as a double-click or
pressing a key. Considering the undisputed knowledge of those skilled in the art,
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. Accordingly, the
patents-in-suit are entitled to claim priority to the provisional application.
2008-1392, -1393, -1422 31
VIII.
eSpeed also appeals the district court’s grant of motion in limine precluding it
from alleging the on-sale bar defense. The facts relevant to the on-sale bar defense are
fairly simple. In September 1998, Harris Brumfield, one of the inventors of the patents-
in-suit and an avid trader on electronic exchanges, conceived an idea that formed the
basis of the invention. Brumfield hired TT to build trading software based on his idea.
On September 29, 1998, TT and Brumfield entered into Individual Consulting
Agreement #2 (“ICA2”), which provided that “TT will build a new trading window
according to specifications provided to TT by Harris Brumfield.” In mid-February 1999,
TT delivered a “market depth trader workstation” to Brumfield. On March 2, 1999,
Brumfield agreed to pay TT for the custom software.
An on-sale bar under 35 U.S.C. § 102(b) applies when the invention was both the
subject of a commercial sale and ready for patenting before the critical date. Pfaff v.
Wells Elecs., Inc., 525 U.S. 55, 67 (1998). The transaction at issue must be a “sale” in
a commercial law sense. Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1352
(Fed. Cir. 2002). “[A] sale is a contract between parties to give and to pass rights of
property for consideration which the buyer pays or promises to pay the seller for the
thing bought or sold.” In re Caveney, 761 F.2d 671, 676 (Fed. Cir. 1985). The invention
is ready for patenting, inter alia, if there is “proof of reduction to practice before the
critical date.” Plumtree Software, Inc. v. Datamize, LLC, 473 F.3d 1152, 1161 (Fed. Cir.
2006). The district court granted TT’s motion in limine to preclude eSpeed from arguing
a prior sale of the invention. TT characterizes this as a de facto summary judgment
dismissing eSpeed’s on-sale bar defense under 35 U.S.C. § 102(b).
2008-1392, -1393, -1422 32
This court affirms the district court’s de facto summary judgment that ICA2 was
not a sales transaction for a product embodying the patented invention. Under ICA2,
TT promised to develop trading software for Brumfield because he lacked the technical
expertise to do so. ICA2 was a contract for providing hourly programming services to
Brumfield—not a computer software license. Brumfield did not sell or offer for sale
anything embodying the invention. Therefore, the trial court properly determined that
the invention had not been offered for a commercial sale.
eSpeed’s reliance on Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 182 F.3d
888 (Fed. Cir. 1999), to characterize ICA2 as a commercial software license is
misplaced. In Brasseler, the buyer and the seller of the contract each employed some
inventors of the patented invention. Id. at 890. This court found a commercial sale
because the seller manufactured over 3,000 products embodying the invention and sold
it solely to the buyer. Id. at 890. Thus, the transaction in this 1999 Federal Circuit case
is far more than occurred here. No product was ever sold to Brumfield. Also, this court
in Brasseler in dicta suggested that the outcome would be different in “a case in which
an individual inventor takes a design to a fabricator and pays the fabricator for its
services in fabricating a few sample products.” Id. at 891. Inventors can request
another entity’s services in developing products embodying the invention without
triggering the on-sale bar. Brumfield’s request to TT to make software for his own
secret, personal use could not constitute a sale under 35 U.S.C. § 102(b).
IX.
A patent may be rendered unenforceable for inequitable conduct if an applicant,
with intent to mislead or deceive the examiner, fails to disclose material information or
2008-1392, -1393, -1422 33
submits materially false information to the PTO during prosecution. Digital Control Inc.
v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006) (citation omitted).
Where a judgment regarding inequitable conduct follows a bench trial, as it did here,
this court reviews the district court’s findings of materiality and intent for clear error and
its ultimate conclusion for an abuse of discretion. ACCO Brands, Inc. v. ABA Locks
Mfg. Co., 501 F.3d 1307, 1314 (Fed. Cir. 2007). The district court held that TT did not
engage in inequitable conduct by not disclosing Brumfield’s custom software to the PTO
because the software was not material to the question of patentability. This court
agrees.
The first issue this court addresses is whether the use of Brumfield’s software
between March 2 and June 9, 1999 was material. The district court found that TT relied
on the March 2, 1999 priority date in good faith, and that TT did not need to disclose
Brumfield’s use of software past this priority date. The record also suggests that the
examiner never questioned the March 2, 1999 priority date. In submitting a brochure for
MD_Trader, one of TT’s commercial embodiments of the patents-in-suit, TT stated to
the examiner that the brochure was disclosed to the public no earlier than March 2,
1999. This disclosure would have triggered a request for further information if the
examiner had detected a priority date issue. Instead, the examiner did not perceive any
issue and allowed the claims. The district court did not clearly err by finding that
Brumfield’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. See Reactive
Metals & Alloys Corp. v. Esm, Inc., 769 F.2d 1578, 1583 (Fed. Cir. 1985) (“[T]here is no
point in bringing sales activities to the examiner's attention which, for example, did not
2008-1392, -1393, -1422 34
occur before the one-year grace period simply to have the examiner ‘decide’ that the
sales were not early enough to trigger the time bar.”)
The second issue is whether TT should have disclosed any pre-March 2, 1999
activities to the PTO. eSpeed argues that TT should have disclosed TT’s “sale” of the
custom software to Brumfield. However, as discussed above, ICA2 was not a
commercial transaction; a reasonable examiner would not have regarded ICA2 as
material to the issue of patentability. eSpeed also argues that TT should have disclosed
Brumfield’s testing of the custom software before March 2, 1999. Experimental uses of
the patented invention may in some instances give rise to an issue of patentability. See
Manville Sales Corp. v. Paramount Sys, Inc., 917 F.2d 544, 552 (Fed. Cir. 1990). In this
case, however, the record shows that Brumfield tested the software for his own
confidential, personal purposes. See Elizabeth v. Am. Nicholson Pavement Co., 97
U.S. 126, 134-35 (1878). The district court did not clearly err by finding that a
reasonable examiner similarly would not have regarded such experimental use as
material. Brumfield kept the software secret until TT and Brumfield decided to file a
provisional application. Accordingly, the district court did not abuse its discretion in
finding that the TT did not engage in inequitable conduct.
X.
For the above-stated reasons, this court affirms on all issues presented on
appeal.
AFFIRMED.
LOURIE, CIRCUIT JUDGE, concurs in the result.
2008-1392, -1393, -1422 35
United States Court of Appeals for the Federal Circuit
2008-1392, -1393, -1422
TRADING TECHNOLOGIES INTERNATIONAL, INC.,
Plaintiff-Appellant,
v.
ESPEED, INC.,
ECCO LLC, ECCOWARE LTD., and ESPEED INTERNATIONAL, LTD.,
Defendants-Cross Appellants.
Appeals from the United States District Court for the Northern District of Illinois
in Case No. 04-CV-5312, Senior Judge James B. Moran.
CLARK, District Judge, concurring.
Believing that the judgment is correct and that the opinion correctly analyzes the
issues in this case in light of current law, I concur. I write separately to respectfully
suggest that the current de novo standard of review for claim construction may result in
the unintended consequences of discouraging settlement, encouraging appeals, and, in
some cases, multiplying the proceedings.
Determination of the meaning that would have been attributed to a claim term by
one of ordinary skill in a sophisticated field of art on the date of filing often requires
examination of extrinsic evidence—a determination of crucial facts underlying the
dispute, as outlined by Judge Rader in the majority opinion. On some occasions, a
determination will be made based, in part, on the weight to be given to conflicting
extrinsic evidence or even to an evaluation of an expert’s credibility.
The standard of review that will be applied by a higher court sets one of the
important benchmarks against which competent counsel evaluates decisions regarding
settlement and appeal. The importance is highlighted by the fact that every brief must
state the standard of review. See Fed. R. App. P. 28(a)(9)(B), (b)(5); Fed. Cir. R.
28(a)(10),(b).
The de novo review standard has at least two practical results, neither of which
furthers the goal of the “just, speedy, and inexpensive determination of every action and
proceeding.” Fed. R. Civ. P. 1. First, rejection of settlement is encouraged, and a
decision to appeal is almost compelled, where counsel believes the client’s position is
valid, even if debatable, depending on the view taken of extrinsic evidence. It is a
natural reaction upon receiving an unfavorable claim construction from a trial court to
conclude that one’s own view of complicated facts will be better understood by the
judges of the Federal Circuit, who generally have more experience with patent cases,
and who, by their own authoritative rule, review the claim construction without regard to
any determination the lower court has made.
A patentee has the opportunity to write clearly enough so that the meaning of
the claims can be determined from the specification. What public policy is advanced by
a rule requiring the determination of underlying facts by more than one court, especially
when the likely result is that another group of citizens will be required to “volunteer” for
lengthy jury duty on remand?
A second, although less common, consequence of the de novo review standard
is the opportunity it offers to the party that presents a case with an eye toward appeal
rather than the verdict. Skilled counsel who believes a client may not be well received
by a jury is tempted to build error into the record by asking for construction of additional
terms, and/or presenting only a skeleton argument at the claim construction stage.
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This is risky, but it would be unusual for this Court to consider a point waived if a
particular claim construction had been requested of the trial court and some argument
made, but the clearest explanation was presented on appeal. An appellate court
normally does not consider an unpreserved point of error, but a more sharply focused
argument regarding points presented on appeal, from among those that are technically
preserved, is actually the goal of the appellate specialist. This tactic would be less
inviting if claim construction was officially accorded some measure of deference, even if
it was applied only in those cases in which resort to extrinsic evidence was necessary.
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