Furnace Brook LLC v. Aeropostale, Inc. , 447 F. App'x 165 ( 2011 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
__________________________
FURNACE BROOK LLC,
Plaintiff-Appellant,
v.
AEROPOSTALE, INC., DICK’S SPORTING GOODS,
INC.,
AND LEVI STRAUSS & COMPANY,
Defendants-Appellees,
and
BOSTON PROPER, INC.,
Defendant-Appellee,
and
NIKE, INC.,
Defendant-Appellee,
and
HICKORY FARMS, INC.,
Defendant-Appellee,
and
THOMASVILLE FURNITURE INDUSTRIES, INC.,
Defendant-Appellee.
__________________________
2011-1025
__________________________
FURNACE BROOK v. AEROPOSTALE 2
Appeal from the United States District Court for the
Northern District of Illinois in case No. 09-CV-4310,
Judge Virginia M. Kendall.
___________________________
Decided: July 22, 2011
___________________________
GEORGE C. SUMMERFIELD, Stadheim & Grear Ltd, of
Chicago, Illinois, argued for plaintiff-appellant. With him
on the brief were ROLF O. STADHEIM, JOSEPH A. GREAR,
KEITH A. VOGT and STEVEN R. PEDERSEN.
R. DAVID DONOGHUE, Holland & Knight LLP, of Chi-
cago, Illinois, argued for all defendants-appellees. With
him on the brief for defendants-appellee Boston Proper
was MICHAEL GRILL. On the brief for defendant-appellees
Aeropostale, Inc., et al, were SCOTT J. BORNSTEIN and
JAMES J. DECARLO, Greenberg Traurug, LLP, of New
York, New York; and for defendant-appellee Nike, Inc.,
CHRISTOPHER J. RENK, AUDRA C. EIDEM HEINZE and
TIMOTHY C. MEECE, Banner & Witcofe, Ltd, of Chicago,
Illinois; and for defendant-appellee Hickory Farms, Inc.,
BURTON S. EHRLICH and JOHN P. LUTHER, Ladas & Parry,
of Chicago, Illinois; and for defendant appellee, Thomas-
ville Furniture Industries, Inc., GEORGE PAZUNIAK, Rat-
nerPrestia, of Wilmington, Delaware.
__________________________
Before BRYSON, MOORE, and O’MALLEY, Circuit Judges
Opinion for the court filed by Circuit Judge MOORE.
Circuit Judge O’MALLEY dissents.
3 FURNACE BROOK v. AEROPOSTALE
MOORE, Circuit Judge
Furnace Brook LLC (Furnace Brook) appeals the dis-
trict court’s grant of summary judgment that collateral
estoppel prevents it from asserting the claims of U.S.
Patent No. 5,721,832 (’832 patent) against Aeropostale,
Inc., et al. (Defendants) in this case. Because our prior
decision held that accessing a catalog website over the
Internet using a computer or cellular phone does not meet
the “telephone terminal” limitation present in the as-
serted claims, we affirm.
BACKGROUND
This is not the first time Furnace Brook has appealed
a decision involving the ’832 patent to our court. In a
prior litigation, Furnace Brook sued Overstock.com for
infringing claims of the ’832 patent. Furnace Brook LLC
v. Overstock.com, Inc., 230 F. App’x 984, 986 (Fed. Cir.
2007) (Overstock). In Overstock, as in the present litiga-
tion, Furnace Brook accused websites accessed over the
Internet by computers and cellular phones of infringing
the ’832 patent. Id. The district court in Overstock
granted summary judgment of noninfringement because,
inter alia, the “telephone terminal” limitation, present in
claim 1 (and dependent claims 2-4 asserted in this suit),
was not met by the accused products. Id.In the Overstock appeal, Furnace Brook argued that
the district court erroneously limited the construction of
the term “telephone terminal” to exclude personal com-
puters and cellular phones. We agreed with Furnace
Brook that the claimed “telephone terminal” could theo-
retically include a personal computer or cellular phone,
since these devices “are capable” of “communicating over
a telephone network.” Id. We explained, however, that a
“telephone terminal” also “requires a dial-up connection to
the catalog server at the other end of the connection.” Id.FURNACE BROOK v. AEROPOSTALE 4
As a result, we held that the telephone terminal limita-
tion, as used in the claim, “requires that the communica-
tion link be established over a telephone network by
dialing the computer system directly.” Id. at 987.
We agreed that simply accessing a website on the
Internet—without actually dialing a computer system
directly—does not meet the “telephone terminal” limita-
tion. Id. We held that “[t]he district court was therefore
correct to hold that those [accused] devices fall outside the
literal scope of the claim 1 limitation.” Id. Furnace Brook
also argued “that the accused devices, when used to access
the Internet, are captured by the doctrine of equivalents,
even if they are not within the literal scope of claim 1.”
Id. We noted, however, that Furnace Brook’s evidence
“did not explain why accessing a computer server over the
Internet is equivalent to dialing a computer server over a
telephone network.” Id. As a result, we held the evidence
was insufficient “to create a genuine issue of material fact
as to that question” of infringement. Id.Undeterred by the unfavorable outcome in Overstock,
Furnace Brook asserted the ’832 patent against Defen-
dants in this case, again espousing a theory that Defen-
dants’ online ordering sites infringe claim 1 of the ’832
patent. Furnace Brook also asserted claims 2-4 of the
’832 patent, all of which depend on claim 1. Of particular
importance for this litigation, each of the asserted claims
requires the use of a “telephone terminal.” The relevant
portion of claim 1 is reproduced below (emphasis added):
1. An improved interactive computerized catalog
process comprising the steps of:
***
generating a menu of catalog products and ser-
vices comprising catalog data available for selec-
5 FURNACE BROOK v. AEROPOSTALE
tive viewing at any user’s telephone associated
terminal screen,
establishing a selective communication link initi-
ated by a user between said user’s telephone ter-
minal and said computer system,
***
The parties brought cross-motions for summary
judgment on whether our decision in Overstock barred
Furnace Brook from relitigating the issue of whether
online ordering sites accessed through the Internet in-
fringed the ’832 patent. After analyzing the Seventh
Circuit’s collateral estoppel law, the district court noted
that “the parties agree that the issue in both [Overstock
and this] case[] is whether the accused ordering systems
meet the ‘telephone terminal’ limitation in claim 1 . . . .”
J.A. 8. Furnace Brook, however, argued that collateral
estoppel did not bar its present claims because it believed
our holding of noninfringement in Overstock was based on
a construction of the “selective communication link”
limitation, which it claims was not previously litigated.
The district court, after considering our prior holding
in Overstock, concluded that our determination of nonin-
fringement in that case was based on the “telephone
terminal” limitation. It explained that “Furnace Brook
admits that the limitation ‘telephone terminal’ was actu-
ally litigated before the Federal Circuit.” J.A. 10. The
district court also “found that the Federal Circuit’s con-
struction of ‘telephone terminal’ and its determination
that the accused online ordering system did not satisfy
that claim limitation either literally or under the doctrine
of equivalents was essential to its decision [in Overstock].”
Id. The court noted that “Furnace Brook does not suggest
that the online ordering websites in this [instant] case are
materially different from the websites at issue in Over-
FURNACE BROOK v. AEROPOSTALE 6
stock.com.” Id. In light of its findings and Furnace
Brook’s concessions, the district court held that Furnace
Brook was barred from relitigating the issue of whether
accessing a website catalog through the Internet using a
cellular phone or personal computer met the “telephone
terminal” limitation in the present litigation.
Furnace Brook appeals the district court’s decision.
We have jurisdiction pursuant to 28 U.S.C. § 1295.
DISCUSSION
We apply the law of the regional circuit when review-
ing a district court’s application of collateral estoppel.
Applied Med. Res. Corp. v. U.S. Surgical Corp., 435 F.3d
1356, 1359-60 (Fed. Cir. 2006). “Collateral estoppel,
which is also known as issue preclusion, generally pre-
vents a party from relitigating an issue the party has
already litigated and lost.” Ferrell v. Pierce, 785 F.2d
1372, 1384 (7th Cir. 1986). In the Seventh Circuit, collat-
eral estoppel requires four elements: “‘1) the issue sought
to be precluded must be the same as that involved in the
prior action, 2) the issue must have been actually liti-
gated, 3) the determination of the issue must have been
essential to the final judgment, and 4) the party against
whom estoppel is invoked must be fully represented in the
prior action.’” La Preferida, Inc. v. Cerveceria Modelo,
S.A. de C.V., 914 F.2d 900, 905-06 (7th Cir. 1990) (quoting
Klingman v. Levinson, 831 F.2d 1292, 1295 (7th Cir.
1987)). “In determining whether an issue has been liti-
gated in an earlier case, a full trial on the merits in the
earlier action is not an absolute prerequisite.” Id. at 906.
“We review a trial court's application of issue preclusion,
also known as collateral estoppel, de novo.” Shell Petro-
leum, Inc. v. United States, 319 F.3d 1334, 1338 (Fed. Cir.
2003); see also United States v. Thyfault, 579 F.3d 748,
7 FURNACE BROOK v. AEROPOSTALE
750 (7th Cir. 2009) (determinations of issue preclusion
reviewed de novo).
Furnace Brook is not appealing the lower court’s de-
termination that if our decision in Overstock was indeed
based on the “telephone terminal” limitation, it is es-
topped from relitigating the issue of whether a catalog
website accessed over the Internet meets the “telephone
terminal” limitation. In fact, Furnace Brook expressly
admitted that in Overstock it had the opportunity to
address the issue of the construction of “telephone termi-
nal” and whether that limitation was “satisfied literally or
under the doctrine of equivalents” by the accused web-
sites. J.A. 129. Furnace Brook also admits that it “actu-
ally litigated” both the construction and infringement of
the “telephone terminal” limitation in Overstock, and that
it had the chance to submit “substantial evidence” of
equivalence in that case. Id. Finally, Furnace Brook
admits it was fully represented in Overstock and that the
websites in this case are not materially different from the
website in Overstock. J.A. 10, 129.
Furnace Brook, however, disputes that our prior hold-
ing of noninfringement in Overstock was based on the
“telephone terminal” limitation. Instead, it argues that
our prior holding of noninfringement was based on a sua
sponte construction of the “selective communication link”
limitation. In fact, Furnace Brook explains that “[t]he
sole dispute in this appeal is whether this Court affirmed
the district court’s summary judgment of non-
infringement based upon the absence of the ‘telephone
terminal’ limitation (which had been fully litigated), or
upon the absence of the ‘selective communication link’
limitation (which had not).” Appellant Reply Br. at 1
(emphasis added). Furnace Brook claims that because “it
had not had an opportunity to litigate the ‘selective com-
munication link’ limitation in the Overstock matter, as a
FURNACE BROOK v. AEROPOSTALE 8
matter of law, it cannot be collaterally estopped from now
asserting infringement against the Appellees.” Id.We disagree with Furnace Brook’s reading of Over-
stock. Although we noted that claim 1 requires establish-
ing a “selective communication link,” Overstock, 230 F.
App’x at 987, our holding in that case was not based on
the “selective communication link” limitation. Instead,
we explained that, in order to actually function as the
claimed “telephone terminal,” a personal computer or
cellular telephone must actually dial up the catalog
computer system directly. Id. While we disagreed with
categorically excluding personal computers and cellular
phones from the “telephone terminal” limitation, we
ultimately agreed with the district court that personal
computers and cellular phones that access a catalog over
the Internet fall outside the scope of the “telephone ter-
minal” limitation. Id. We affirmed the holding of nonin-
fringement because the record on appeal “contain[ed] no
evidence that the personal computers or cellular tele-
phones of Overstock’s customers place such a [direct] call
when accessing Overstock’s website over the Internet.”
Id.In coming to this conclusion in Overstock, we ex-
pressly rejected Furnace Brook’s arguments “that any
embodiment described as a ‘terminal’ in the specification
must be a ‘telephone terminal’ within the meaning of
claim 1.” Id. We held that even if a computer had the
capability to act as a telephone terminal in certain cir-
cumstances, a computer accessing a website over the
Internet was not a “telephone terminal” as that term was
used in the claim. Contrary to Furnace Brook’s argu-
ments in this case, the holding of noninfringement in
Overstock was based on the “telephone terminal” limita-
tion and was therefore essential to our decision in that
case.
9 FURNACE BROOK v. AEROPOSTALE
Furnace Brook had every incentive to present evi-
dence supporting its position that the accused products in
Overstock met the “telephone terminal” limitation. More-
over, Furnace Brook admits it had “sufficient opportunity
to address—and did in fact address . . . whether those
limitations were satisfied literally or under the doctrine of
equivalents.” J.A. 129. In Overstock, we held that Fur-
nace Brook’s evidence “did not explain why accessing a
computer server over the Internet is equivalent to dialing
a computer server over a telephone network.” Overstock,
230 F. App’x at 987. While Furnace Brook claims it could
not have anticipated the need to present this kind of
equivalence evidence in Overstock, we believe it had a full
and fair opportunity to litigate the issue of infringement
of the “telephone terminal” limitation.
The dissent argues that an earlier panel of this court
erred when it affirmed the summary judgment of no
infringement. The dissent believes that panel should
have vacated and remanded. We see no error in the
district court’s conclusion that the issues presented here
were actually litigated in the prior case. We cannot refuse
to apply collateral estoppel because we disagree with the
earlier decision. Earlier decisions of this court are bind-
ing upon later panels. Newell Cos., Inc. v. Kenney Mfg.
Co., 864 F.2d 757, 765 (Fed. Cir. 1988).
We already decided that personal computers and cel-
lular phones do not meet the “telephone terminal” limita-
tion, and there is nothing unjust about preventing
Furnace Brook from relitigating the same issue previously
decided in Overstock. As a result, the district court did
not err in holding collateral estoppel prevented Furnace
Brook from relitigating the issue of infringement in this
case. We have considered Furnace Brook’s additional
arguments on appeal and find them to be without merit.
FURNACE BROOK v. AEROPOSTALE 10
AFFIRMED
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
__________________________
FURNACE BROOK LLC,
Plaintiff-Appellant,
v.
AEROPOSTALE, INC., DICK’S SPORTING GOODS,
INC.,
AND LEVI STRAUSS & COMPANY,
Defendants-Appellees,
and
BOSTON PROPER, INC.,
Defendant-Appellee,
and
NIKE, INC.,
Defendant-Appellee,
and
HICKORY FARMS, INC.,
Defendant-Appellee,
and
THOMASVILLE FURNITURE INDUSTRIES, INC.,
Defendant-Appellee.
__________________________
2011-1025
__________________________
FURNACE BROOK v. AEROPOSTALE 2
Appeal from the United States District Court for the
Northern District of Illinois in case No. 09-CV-4310,
Judge Virginia M. Kendall.
__________________________
O’MALLEY, Circuit Judge, dissenting.
It is common for this court to change on appeal the
claim construction that defines the metes and bounds of
the patent claims at issue and ultimately controls in-
fringement determinations in a case. It is also common,
thankfully less so, for this court to reassess infringement
in light of the new claim construction based only on the
record developed under the, now discarded, construction
employed by the district court.
This latter practice is sometimes appropriate and, in
certain circumstances, works no unfairness to the liti-
gants. For example, a remand is likely unnecessary and
inefficient where a careful examination of the record
reveals that: (1) it was fully developed with the possibility
of this court’s alternative construction in mind; (2) all
parties had full incentive to, and no restrictions upon,
their ability to develop the factual and legal record on all
relevant alternatives; and (3) the trier of fact has had the
opportunity to make all relevant and necessary factual
findings. In such circumstances, this court can rest
assured that the record it faces is the one the parties
would have presented had they known what this court’s
claim construction would be and that an application of
new guiding principles to that record works no unfairness.
Where the record is not so well-developed, however,
the failure to remand for further development deprives
the parties of the ability to fully and fairly litigate the
issues presented. Where, as here, the record was limited
by the narrowness of the trial court’s claim construction,
3 FURNACE BROOK v. AEROPOSTALE
and was further narrowed by the summary procedural
posture in which the issues were presented and resolved,
and where the trial court did not resolve all issues pre-
sented to it, this court should remand after revising the
governing claim construction. Only by doing so in such
circumstances can we be sure that we have not deprived
the parties of the right to fully and fairly litigate their
disputes.
Because the panel in Furnace Brook, LLC v. Over-
stock.com, Inc., 230 F. App’x 984 (Fed. Cir. 2007) did not
remand that action after altering the controlling and
critical claim construction, but should have, and because
the majority in this case fails to recognize the impact of
that earlier failure on the estoppel principles we are to
now apply, I must respectfully dissent. 1
BACKGROUND
The majority does not undertake a careful analysis of
the record in Overstock before reaching its conclusion that
what occurred there should ban further litigation by
Furnace Brook on the ‘832 patent in this case. Instead,
1 The majority discounts the concerns expressed
here by characterizing them as a refusal to be bound by
prior panel opinions. Maj. Op. at 8–9. That response
fundamentally misunderstands both the point of this
dissent and the important doctrine of collateral estoppel
we are to apply here. I do not seek to revisit or revise
what we did in Overstock. I simply suggest that we
recognize the reality of what occurred and acknowledge
that, given the record in that case — both at the trial level
and on appeal — Furnace Brook was deprived of a full
and fair opportunity to actually litigate the issues it seeks
to litigate in this case. Furnace Brook does not ask that
we alter the claim construction we adopted in Overstock;
it only asks for the opportunity to litigate — for the first
time — the question of infringement in the face of that
construction.
FURNACE BROOK v. AEROPOSTALE 4
the majority relies on what it characterizes as Furnace
Brook’s own concessions to define and delimit the issues it
describes as having been litigated in Overstock. By con-
sidering Furnace Brook’s concessions out of the context of
the record of those earlier proceedings, however, the
majority both overstates the scope and import of those
concessions and ignores the extent to which the record is
inconsistent with the majority’s characterization of it. A
careful examination of the prior litigation must be the
starting point for any res judicata inquiry, however. See
County of Cook v. Midcon Corp., 773 F.2d 892, 900 (7th
Cir. 1985) (“[T]he central inquiry is whether the same
question raised in a subsequent suit was actually litigated
and decided in the prior suit, which turns on the determi-
nation whether the issue was properly placed in dispute
and was resolved by the trier of fact.”).
In the previous litigation, Furnace Brook alleged that
Overstock infringed the ‘832 patent. The district court
construed the term “telephone terminal” narrowly, finding
it only meant a “standard telephone landline unit, which
has a standard commercial handset, a touchtone pad, a
display unit and an audio unit, which may have a cordless
handset.” 2 Furnace Brook LLC v. Overstock.com, Inc.,
2006 WL 3078905 at *1 (S.D.N.Y. Oct. 26, 2006), aff’d,
230 F. App’x 984 (Fed. Cir. 2007). The district court held,
moreover, that computers and cellular telephones are not
telephone terminals. Id.As a separate limitation, the court also construed the
term “selective communication link.” Construing this
term, the court stated that “it is evident that the selective
communications link is the telephone line connection
2 As the majority notes, the term telephone termi-
nal is present in claim 1 and dependent claims 2–4 in the
‘832 patent
5 FURNACE BROOK v. AEROPOSTALE
established between the user’s terminal and the retailer-
end computer,” and the term refers “to a dial-up connec-
tion through a telephone exchange or a private branch
exchange to a telephone network.” Furnace Brook LLC v.
Overstock.com, Inc., No. 05-civ-7329, 2006 WL 2792692, at
*7 (S.D.N.Y. Sept. 23, 2009) (Markman hearing order).
After claim construction, Overstock moved for sum-
mary judgment of non-infringement of claims 1 and 5 of
the ‘832 patent. Overstock, 2006 WL 3078905 at *1. For
purposes of the present appeal, Overstock’s arguments
with respect to claim 5 are not relevant. With respect to
claim 1, Overstock asserted that (1) its website did not
literally infringe under the district court’s construction
because it did not employ a “standard telephone landline
unit”; (2) prosecution history estoppel prevented Furnace
Brook from asserting that a computer was an equivalent
of “standard landline unit”; and (3) cellular telephones
could not be considered equivalents of “standard landline
units” because they existed at the time the patent was
drafted and were not mentioned in the patent. Over-
stock’s Mot. Summ. J., No. 05-civ-7329 Doc. 139 at 3, 5–6,
9.
In response to this motion, Furnace Brook conceded
that the district court’s construction of telephone terminal
prevented it from proving literal infringement. Overstock,
2006 WL 3078905 at *6. Furnace Brook argued, however,
that prosecution history did not bar it from establishing
infringement under the doctrine of equivalents. Id.Specifically, Furnace Brook argued that it was not barred
from asserting that both cellular telephones and dial-up
computer connections were equivalents of the land line
described in the district court’s construction. Furnace
Brook’s Op. Mot. Summ. J., No. 05-civ-7329 Doc. 149 at 8-
12. Despite Furnace Brook’s arguments, the district court
held that “prosecution history prevents Furnace Brook
FURNACE BROOK v. AEROPOSTALE 6
from arguing that a computer is encompassed under
telephone terminal under the doctrine of equivalents.”
Overstock, 2006 WL 3078905 at *9. While the district
court did not even address the equivalence of cellular
telephones, it still granted Overstock’s motion for sum-
mary judgment in its entirety with respect to claim 1.
Overstock, 2006 WL 3078905 at *3.
On appeal, we agreed with Furnace Brook that the
district court’s claim construction was too narrow and
that a personal computer or cellular telephone could be a
“telephone terminal” as that term is used in claim 1 of the
‘832 patent. Furnace Brook, LLC v. Overstock.com, Inc.,
230 F. App’x 984, 986 (Fed. Cir. 2007) (“We agree with
Furnace Brook insofar as it suggests that a ‘telephone
terminal’ refers to a device for communicating over a
telephone network: a cellular telephone and a personal
computer are capable of such communication, and to the
extent that they are used to do so, either device can
constitute a ‘telephone terminal.’ ”). We concluded, how-
ever, that the ‘832 patent required more than just com-
munication over a telephone line. We found that “[i]t
requires a dial-up connection to the catalog server at the
other end of the connection.” Id. In light of this require-
ment, we held that “a personal computer and a cellular
telephone . . . must actually be performing that function
in order to be ‘telephone terminals,’ as that term is used
in the ‘832 patent.” Id. at 987. By “that function,” we
meant establishing a communication link over a tele-
phone network by dialing the computer system directly.
Id. Though we both broadened the district court’s claim
construction and added a limitation to it that we found
the specification required, we did not remand the Over-
stock case for consideration of Furnace Brook’s claims in
light of these changes to the standard against which
infringement of the ‘832 patent was to be measured.
7 FURNACE BROOK v. AEROPOSTALE
Instead, we looked to the record developed in the face
of the district court’s construction and concluded that it
did not contain evidence that Overstock’s customers
placed a call, from anywhere, when they accessed Over-
stock’s website over the Internet. Accordingly, we held
that the district court was correct to grant Overstock’s
motion for summary judgment with respect to literal
infringement. Id. Regarding the doctrine of equivalents,
we also found that “Furnace Brook has not introduced
evidence sufficient to create a genuine issue of material
fact as to that question.” Id. Based on these conclusions,
we held that the district court properly granted summary
judgment that Overstock did not infringe claim 1 under
the doctrine of equivalents. Id.Upon this backdrop, the present litigation arose. As
discussed by the majority, the district court held that this
court’s decision in Overstock barred Furnace Brook from
relitigating whether a device which accesses a website
catalog via a cellular telephone or personal computer
meets the “telephone terminal” limitation of claim 1. The
majority wrongly endorses that conclusion.
DISCUSSION
I agree with the majority that the sole issue on appeal
is whether Furnace Brook had a full and fair opportunity
to litigate whether Overstock’s website satisfied the
telephone terminal limitation of claim 1. I disagree,
however, that Furnace Brook had an opportunity to
actually litigate whether: (1) a personal computer met the
construction of that limitation adopted by this court; or (2)
a cellular telephone is an equivalent of the telephone
terminal limitation under either the district court’s or this
court’s construction of the term. I recognize that Furnace
Brook concedes that it had the opportunity to actually
litigate the construction of telephone terminal and to
FURNACE BROOK v. AEROPOSTALE 8
litigate whether Overstock’s products satisfied that limi-
tation. Furnace Brook’s briefs make clear, however, that
its concession is only that it had an opportunity to litigate
whether a telephone terminal can include a personal
computer or cellular telephone — i.e., whether it should
not be limited to only a land line. Furnace Brook does not
concede that it had the opportunity to litigate whether it
was appropriate for this court to read a functional limita-
tion into that term or that it had the opportunity to
litigate the question of infringement under this court’s
unanticipated claim construction. Because Furnace
Brook did not waive this argument, its “concessions” do
not give us grounds to avoid deciding the issues actually
presented in this appeal
As discussed above, the issues on summary judgment
before the district court in Overstock were extremely
narrow. Overstock asserted only that its website did not
satisfy the telephone terminal limitation, which the
district court construed narrowly. As noted, Overstock
asserted only that: (1) its website did not literally infringe
under the district court’s construction; (2) prosecution
history estoppel prevented Furnace Brook from asserting
that a computer was an equivalent of a telephone termi-
nal under the district court’s construction of the term; and
(3) cellular telephones could not be considered equivalents
because they existed during prosecution and were not
mentioned in the patent. Overstock’s Mot. Summ. J., No.
05-civ-7329 Doc. 139 at 3, 5–6, 9. Because Furnace Brook
did not file its own motion for summary judgment of
infringement, it had no incentive to present evidence
proving that Overstock’s website infringed elements of the
asserted claims other than the telephone terminal limita-
tion. In light of this procedural posture, Furnace Brook
only had incentive to present evidence sufficient to estab-
lish that a genuine issue of material fact existed with
9 FURNACE BROOK v. AEROPOSTALE
respect to the narrow arguments raised in Overstock’s
motion, none of which addressed the selective communica-
tion link “function” on which our decision ultimately
turned.
Significantly, the district court separately construed
the term selective communication link, i.e., the type of
connection between the customer’s telephone terminal
and the catalogue server. Because Overstock never
argued that it did not infringe the patent because its
website lacked this limitation, Furnace Brook had no
reason to argue or present record evidence that, in opposi-
tion to a motion for summary judgment of non-
infringement, Overstock’s website met this separate and
distinct limitation.
Despite the foregoing, on appeal in Overstock, this
court construed “telephone terminal” to require a specific
type of connection between the telephone terminal and
the catalogue server. As a result of this construction, we
concluded that summary judgment was appropriate
because there was no evidence in the record to suggest
that a personal computer or a cellular telephone made
this type of connection or an equivalent connection.
Overstock, 230 F. App’x at 987. With respect to literal
infringement, we stated “[t]he record contains no evidence
that the personal computers or cellular telephones of
Overstock’s customers place such a call when accessing
Overstock’s website over the Internet.” Id. Regarding
equivalency, we concluded that Furnace Brook’s expert
reports were insufficient to establish a genuine issue of
material fact because “[Dr. Stevenson] did not explain
why accessing a computer server over the Internet is
equivalent to dialing a computer server over a telephone
network. The deposition testimony of Dr. Richard Nemes
suffers from the same flaw.” Id.FURNACE BROOK v. AEROPOSTALE 10
The evidence we found lacking was only relevant,
however, because this court changed the construction of
telephone terminal to require a function that the district
court construed as a separate limitation. Such evidence
was relevant to a different limitation, and that limitation
was not before the district court because of the limited
nature of Overstock’s summary judgment motion. In the
situation we faced in Overstock, we should have reversed
the district court’s construction of telephone terminal and
remanded the case so the parties could present new
evidence based on our fundamentally different construc-
tion of that term. See Praxair, Inc. v. ATMI, Inc., 543
F.3d 1306, 1324 (Fed. Cir. 2008) (holding that, despite the
occurrence of a five-day jury trial, a new trial was re-
quired “[b]ecause we have adopted a new claim construc-
tion on appeal, and this is not a case in which it is clear
from the record that the accused device does or does not
infringe”); Bowers v. Baystate Techs., Inc., 320 F.3d 1317,
1334 (Fed. Cir. 2003) (following trial “a change in the
claim construction at the appellate level generally neces-
sitates a remand to the district court to consider new
factual issues unless the record on appeal supplies sub-
stantial evidence to support the jury verdict under the
new claim construction.”); cf. Neely v. Martin K. Eby
Const. Co., 386 U.S. 317, 326 (1967) (“[A]n appellate court
may not order judgment n.o.v. . . . where the record re-
veals a new trial issue which has not been resolved.”).
Because we did not remand Overstock, we cannot ap-
ply collateral estoppel in this case. Furnace Brook never
had an opportunity to present evidence of literal in-
fringement under our construction of the telephone ter-
minal limitation, a construction which, for the first time,
incorporated a selective communication link function. See
County of Cook, 773 F.2d at 900 (noting that whether an
issue was actually litigated “turns on the determination
11 FURNACE BROOK v. AEROPOSTALE
[of] whether the issue was properly placed in dispute and
was resolved by the trier of fact”); 18 Charles Alan
Wright, Arthur R. Miller & Edward H. Cooper, Federal
Practice and Procedure § 4419 at 495 (2d ed. 2002) (“It is
conceivable that a court may actually decide an issue that
has not actually been litigate by the parties. Preclusion
can be denied in such circumstances on a variety of
grounds . . . it may be found in fact that the issue was not
actually litigated.”). Because we cut off the record in
Overstock before it was fully developed on what we found
to be the governing issue, we should not now prohibit
Furnace Brook from having the opportunity to develop a
full record in this case.
We also must not foreclose Furnace Brook’s opportu-
nity to pursue its claims under the doctrine of equiva-
lents. In Overstock, we noted that “Dr. Stevenson stated
that a personal computer and a cellular telephone can
perform the same functions as a standard telephone set,
and that those devices can also access the Internet.”
Overstock, F. App’x at 987. This very evidence was actu-
ally more than Furnace Brook needed to proffer to defeat
Overstock’s motion for summary judgment because Over-
stock never argued that personal computers were not
equivalents of the telephone terminal limitation. Over-
stock argued only that prosecution history estoppel barred
Furnace Brook from asserting that a personal computer
was an equivalent. It did not contend that, assuming
these arguments failed, personal computers were not
equivalents. And the district court did not rule on that
question. Because the issue was never raised before the
district court, we cannot say that Furnace Brook had an
opportunity to litigate it, whether or not we chose to
express a view on it when the case reached us. Collateral
estoppel cannot, therefore, apply in these circumstances.
FURNACE BROOK v. AEROPOSTALE 12
The same is true with respect to the equivalence of
cellular telephones. Overstock argued that cellular tele-
phones could not be equivalents because they existed as of
the time of the patent application and “foreseeable em-
bodiments that are excluded by the patentee cannot be
reclaimed under the doctrine of equivalents.” Overstock’s
Mot. Summ. J., No. 05-civ-7329 Doc. 139 at 9. Though
this issue was raised during summary judgment, the
district court never addressed the issue, or ruled on the
broader question of the equivalence of cellular telephones.
Furnace Brook raised this issue on appeal, stating that
“the district court never mentioned this issue once in
granting summary judgment of no infringement of claim 1
under the doctrine of equivalents.” Overstock’s Br. 30,
No. 2007-1064. But we ignored it.
Rather than discuss the fact that the district court
granted summary judgment of non-infringement without
even determining whether a cellular telephone was
equivalent to a telephone terminal, we affirmed the
district court’s grant of summary judgment on the
grounds that Furnace Brook offered “insufficient evi-
dence” with respect to any claim of equivalence. Again,
however, Furnace Brook had no reason to present this
evidence because the type of connection between the
cellular phone and the website was not relevant under the
district court’s narrow telephone terminal construction
and was not raised by Overstock’s equally narrow motion
for summary judgment.
For all of these reasons, it is apparent that Furnace
Brook was never given the opportunity to present evi-
dence that Overstock’s website infringed the ‘832 patent,
either literally or under the doctrine of equivalents, under
this court’s construction of telephone terminal. Furnace
Brook simply has never had the opportunity to litigate,
under this court’s binding construction of telephone
13 FURNACE BROOK v. AEROPOSTALE
terminal, whether a website infringes the ‘832 patent.
The majority’s claim that Furnace Brook had the oppor-
tunity and incentive to litigate this issue ignores what
actually occurred in Overstock. Accordingly, I respectfully
dissent.