Eplus, Inc. v. Lawson Software, Inc. ( 2012 )

United States Court of Appeals
for the Federal Circuit
__________________________
EPLUS, INC.,
Plaintiff-Cross Appellant,
v.
LAWSON SOFTWARE, INC.,
Defendant-Appellant.
__________________________
2011-1396, -1456, -1554
__________________________
Appeal from the United States District Court for the
Eastern District of Virginia in case no. 09-CV-0620,
Senior Judge Robert E. Payne.
__________________________
Decided: November 21, 2012
__________________________
SCOTT L. ROBERTSON, Goodwin Procter, LLP, of Wash-
ington, DC, and MICHAEL G. STRAPP of Boston, Massachu-
setts argued for plaintiff-cross appellant. With them on
the brief were JENNIFER A. ALBERT and DAVID M. YOUNG,
of Washington, DC, and HENRY C. DINGER of Boston,
Massachusetts.
DONALD R. DUNNER, Finnegan, Henderson, Farabow,
Garrett & Dunner, LLP, of Washington, DC, argued for
defendant-appellant. With him on the brief were KARA F.
EPLUS v. LAWSON SOFTWARE 2
STOLL, MOLLY R. SILFEN. JUSTIN R. LOWERY, and
ELIZABETH ANN LAUGHTON; and ERIKA H. ARNER, of
Reston, Virginia.
__________________________
Before DYK, PROST, and O’MALLEY, Circuit Judges.
PROST, Circuit Judge.
This is an appeal and a cross-appeal arising from an
infringement suit brought by ePlus, Inc. against Lawson
Software, Inc. (“Lawson”), in which a jury found that
Lawson infringes ePlus’s method and system claims.
Lawson appeals, arguing that the system claims are
indefinite and that the evidence of infringement of the
method claims does not support the jury’s verdict. Ac-
cordingly, Lawson submits that the district court should
have set aside the verdict and entered a judgment as a
matter of law (“JMOL”) of non-infringement. Moreover,
in case the verdict withstands this appeal, Lawson urges
us to at least hold that the district court erred by entering
too broad an injunction to remedy the infringement.
ePlus cross appeals, arguing that the district court abused
its discretion in barring it from presenting any evidence of
damages at trial. We agree with Lawson that the district
court erred in finding that the system claims are not
indefinite, and in that respect, we reverse the district
court’s determination. We also reverse in part the district
court’s denial of JMOL to Lawson and accordingly vacate
the judgment of direct and induced infringement entered
based on two of the asserted method claims. We remand
for the district court to consider what changes are re-
quired to the terms of the injunction, consistent with this
opinion. In all other aspects of the appeal and the cross-
appeal, we affirm.
3 EPLUS v. LAWSON SOFTWARE
I. BACKGROUND
A. The Asserted Patents
ePlus is the assignee of U.S. Patent Nos. 6,023,683
(“’683 patent”) and 6,505,172 (“’172 patent”), (collectively,
“patents in suit”). The patents in suit share a common
specification and teach systems and methods for “elec-
tronic sourcing.” At a high level of generality, electronic
sourcing is similar to online shopping. Specifically,
ePlus’s patents aim to enable businesses and organiza-
tions to use computer networks to purchase goods. The
specification explains that electronic sourcing systems
existed in prior art, but those older systems only enabled
the user to generate a single purchase order that would be
submitted to a single vendor. In contrast, one of the
important features of the claimed invention is its ability
to divide a single requisition (or shopping list) into multi-
ple purchase orders.
The patented invention includes a computer that
maintains a catalog database of items available from at
least two vendors. Vendors may be manufacturers,
distributors, or resellers. The user can search vendor
catalogs for items that match certain criteria, contact
vendors to determine whether a particular product is
available, and switch between different catalogs to look at
equivalent items. The customer then purchases the
desired items. The claims and the specification break
down the purchasing process into three steps. First, the
customer adds the desired item to an “order list” (some-
what akin to a wish list). Second, once the customer is
ready to make a purchase, the system uses the order list
to build a “requisition.” Third, the system determines
what inventory will be used to complete or “fill” the
EPLUS v. LAWSON SOFTWARE 4
requisition and accordingly generates “purchase orders,”
which are submitted to vendors.
There are five claims at issue on this appeal: claim 1
of the ’172 patent and claims 3, 26, 28, and 29 of the ’683
patent. Claims 26, 28, and 29 of the ’683 patent are
method claims; the remaining two are system claims.
Claim 26 of the ’683 patent recites:
26. A method comprising the steps of:
maintaining at least two product catalogs on a da-
tabase containing data relating to items associ-
ated with the respective sources;
selecting the product catalogs to search;
searching for matching items among the selected
product catalogs;
building a requisition using data relating to se-
lected matching items and their associated
source(s);
processing the requisition to generate one or more
purchase orders for the selected matching items;
and
determining whether a selected matching item is
available in inventory.
(Emphasis added.) Independent claim 28 is similar to
claim 26, except that the last limitation in claim 28 re-
cites:
5 EPLUS v. LAWSON SOFTWARE
converting data relating to a selected matching
item and an associated source to data relating to
an item and a different source.
(Emphasis added.) The third and last method claim,
claim 29, depends from claim 28. It recites:
29. The method of claim 28 further comprising the
step of determining whether a selected matching
item is available in inventory.
(Emphasis added.)
The two system claims are indistinguishable for the
purpose of this appeal. Claim 1 of the ’172 patent, which
we treat as representative, recites:
1. An electronic sourcing system comprising:
a database containing data relating to items asso-
ciated with at least two vendors maintained so
that selected portions of the database may be
searched separately;
means for entering product information that at
least partially describes at least one desired item;
means for searching for matching items that
match the entered product information in the se-
lected portions of the database;
means for generating an order list that includes at
least one matching item selected by said means
for searching;
EPLUS v. LAWSON SOFTWARE 6
means for building a requisition that uses data
obtained from said database relating to selected
matching items on said order list;
means for processing said requisition to generate
purchase orders for said selected matching items.
B. The Accused Product
Lawson sells computer software for supply chain
management. Lawson’s customers are often large organi-
zations that use its products to purchase goods and ser-
vices. The software products are modular—that is, they
are sold in building blocks, which customers may pur-
chase according to their needs. The “Core Procurement”
unit is the basic building block; all customers must have
it. Core Procurement is responsible for most of the basic
operations of Lawson’s system. Using Core Procurement,
a customer can search an internal item database known
as the “Item Master” to find desired products. The de-
sired products may be added to a requisition, which is
basically a list of items to be purchased, and it may in-
clude items available from various vendors. The customer
may look up whether a particular item in the Item Master
is available in the vendor’s inventory. If the customer
decides to purchase the items in the requisition, she can
create purchase orders. Purchase orders will then be
submitted to vendors.
Other “add-on” modules may be added to Core Pro-
curement for additional functionality. Three of those
modules are pertinent here: (1) the “Requisition Self
Service” (“RSS”) module, (2) “Punchout,” and (3) “Elec-
tronic Data Interchange” (“EDI”). RSS provides the user
with a user-friendly interface for using the features
offered by the Core Procurement module. RSS also allows
7 EPLUS v. LAWSON SOFTWARE
the user to add the desired items to a “shopping cart”
before placing the items in requisition. Similar to Core
Procurement, however, RSS can only access the internal
(Item Master) catalog. Customers who want to search
third party vendors’ databases must therefore use other
modules, such as Punchout. Punchout may be added to a
system that includes Core Procurement and RSS. By
adding Punchout, customers gain the ability to connect to
a third party vendor’s website to shop for products. The
parties refer to this ability as “punching out.” Once a
customer connects to the third party vendor’s website, she
may use the vendor’s search engine to search for items to
purchase. After the customer selects an item, the third
party may respond with whether that item is available in
its inventory. That is, when the customer uses Punchout,
it is the vendor (not the customer) who has direct access
to information about whether a particular item is avail-
able in the inventory. Finally, EDI builds on Punchout by
enabling customers to send purchase orders outside
Lawson’s system to a third party vendor.
In addition to selling procurement software, Lawson
provides services to customers who purchase its products.
These services may include installation and maintenance
of the products as well as providing training classes
(through webinars) and educational materials that aid in
operating Lawson’s software. Customers may also rely on
Lawson for managing their system. This so called “host-
ing” can be arranged in two ways. Lawson may provide
the customer with a computer that runs the purchased
software, in which case the actual hardware and software
reside at the customer’s facility. Alternatively, Lawson
may allow the customer to remotely access servers that
are physically located within Lawson’s facility and run
the procurement software.
EPLUS v. LAWSON SOFTWARE 8
C. The District Court Proceedings
ePlus filed suit against Lawson, alleging that various
combinations of Lawson’s software modules infringe claim
1 of the ’172 patent and claims 3 , 26, 28, and 29 of the
’683 patent, as well as other patent claims not at issue on
this appeal. Specifically, with respect to the two asserted
system claims, ePlus alleged that certain combinations of
Lawson’s software modules are infringing. As to the
method claims, ePlus alleged that (1) Lawson induces its
customers to use its software programs to perform all of
the steps of the asserted method claims; (2) Lawson itself
infringes the method claims by demonstrating, installing,
managing, and maintaining its software products for its
customers; and (3) Lawson, its customers, and third party
vendors jointly infringe the asserted method claims.
Three of the proceedings that occurred before the trial
are relevant to this appeal. First, at the summary judg-
ment stage, Lawson argued in pertinent part that claim 1
of the ’172 patent and claim 3 of the ’683 patent are
invalid as indefinite because the specification does not
disclose adequate structure for the “means for processing”
means plus limitation, which exists in both claims. The
district court denied Lawson’s motion. Second, Lawson
moved the trial court to exclude the testimony of ePlus’s
damages expert, Dr. Mangum, under Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579, 596 (1993). The
district court agreed with Lawson and found that Dr.
Mangum’s testimony was analytically flawed and thus
had to be excluded. Third, once Dr. Mangum’s testimony
had been barred, Lawson moved the district court to also
bar ePlus, pursuant to Rule 37, from presenting any
evidence of damages during trial at all, arguing that
ePlus had failed to disclose an alternate royalty rate that
could otherwise support its claim for monetary damages.
9 EPLUS v. LAWSON SOFTWARE
Fed. R. Civ. P. 37. The district court again agreed with
Lawson. It found that ePlus had not provided Lawson
with adequate notice of its royalty rate theory in violation
of Rule 26(f), Fed. R. Civ. P. 26(f), and that allowing ePlus
to supplement the record on the eve of trial would cause
disruption in the proceedings and undue prejudice to
Lawson.
The case was then tried to a jury. Notably, Lawson
did not raise the indefiniteness issue during trial, appar-
ently based on its understanding that as an issue of law,
indefiniteness did not need to be presented to the jury.
Before the close of the evidence, Lawson sought a JMOL
under Rule 50(a), but it did not raise the indefiniteness
issue in its brief. Fed. R. Civ. P. 50(a). At the hearing for
the JMOL motion, Lawson’s counsel informed the district
court that it still disagreed with the district court’s in-
definiteness ruling but stated that since indefiniteness
was an issue of law, there was no need for the district
court to “rerule” on it to preserve it for appeal. J.A. 3929.
Nonetheless, Lawson’s counsel tried to ensure that the
issue was preserved for appeal:
[LAWSON’S COUNSEL]: Th[e] summary judg-
ment [of indefiniteness] was denied. It’s my un-
derstanding that that issue is now preserved for
appeal and that Your Honor doesn't have to rerule
on it, but just to make the record clear,
Lawson again moves for judgment as a matter of
law on [indefiniteness]
THE COURT: How can you do that?
[LAWSON’S COUNSEL]: Your Honor –
THE COURT: You didn’t try them.
EPLUS v. LAWSON SOFTWARE 10
[LAWSON’S COUNSEL]: We did not try them.
THE COURT: You relied for better or for worse on
the summary judgment decision.
[LAWSON’S COUNSEL]: Correct.
THE COURT: And your appeal point is that the
“Court erred in failing to grant summary judg-
ment.[”]
[LAWSON’S COUNSEL]: Correct, Your Honor.
THE COURT: That’s where the matter stays.
There’s no judgment to be obtained on that at this
juncture, I don't think.
J.A. 3929.
The jury returned a verdict for ePlus. It found that
Lawson directly and indirectly infringes claim 1 of the
’172 patent and claims 3, 26, 28, and 29 of the ’683 patent
by using and inducing the use of systems that include the
combination of Core Procurement, Punchout, and RSS
modules (with or without EDI). The jury also found that
Lawson directly and indirectly infringes claim 1 of the
’172 patent by making systems that include the Core
Procurement and RSS modules (but not Punchout and
EDI).
After the trial, Lawson filed a renewed motion for
JMOL under Rule 50(b). Fed. R. Civ. P. 50(b). Therein,
Lawson generally argued that the system claims were
indefinite and also incorporated by reference its indefi-
niteness arguments made during claim construction and
at the summary judgment stage. The district court again
11 EPLUS v. LAWSON SOFTWARE
denied the motion and entered judgment of infringement
against Lawson.
ePlus accordingly filed a motion for a permanent in-
junction, which the district court granted on May 23,
2011. The district court’s order enjoins Lawson from
making, using, offering to sell, or selling products in those
configurations that the jury found to infringe ePlus’s
patents. It also enjoins Lawson from actively inducing or
contributing to the making, use, sale, or importation of
those configurations, as well as from installing, imple-
menting, upgrading, maintaining, supporting, training
and other related services for the infringing products.
Lawson subsequently filed a motion and asked the district
court to clarify and narrow the scope of the injunction. In
particular, Lawson argued that the district court should
not have enjoined Lawson from servicing products that
were already sold to customers prior to the issuance of the
injunction. The district court denied Lawson’s motion.
This appeal and cross-appeal ensued. We exercise juris-
diction pursuant to 28 U.S.C. § 1295(a)(1).
II. STANDARD OF REVIEW
We review the district court’s denial or grant of a
JMOL under regional circuit law. ActiveVideo Networks,
Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1319 (Fed.
Cir. 2012). That requires us to apply the law of the
Fourth Circuit here, which reviews de novo denials of
JMOL for whether substantial evidence supports the
jury’s verdict. Id. (citing Carolina Trucks & Equip., Inc.
v. Volvo Trucks of N. Am., 492 F.3d 484, 488 (4th Cir.
2007); Brown v. CSX Transp., 18 F.3d 245, 248 (4th Cir.
1994)). We also review de novo the district court’s deci-
sion regarding indefiniteness, as it is a question of law.
Ergo Licensing, LLC v. CareFusion 303, Inc., 673 F.3d
EPLUS v. LAWSON SOFTWARE 12
1361, 1363 (Fed. Cir. 2012). The district court’s decision
to grant an injunction and the scope of the injunction are
reviewed for abuse of discretion. i4i Ltd. P’ship v. Micro-
soft Corp., 598 F.3d 831, 861 (Fed. Cir. 2011), aff’d on
other grounds, 131 S. Ct. 2238 (2011). Regional circuit
law governs our review of the district court’s decisions
whether to admit expert testimony, Micro Chemical, Inc.
v. Lextron, Inc., 317 F.3d 1387, 1390-91 (Fed. Cir. 2003),
and whether to sanction a litigant under Rule 37, Clear-
Value, Inc. v. Pearl River Polymers, Inc., 560 F.3d 1291,
1304 (Fed. Cir. 2009). The Fourth Circuit reviews both
for abuse of discretion. S. States Rack & Fixture, Inc. v.
Sherwin-Williams Co., 318 F.3d 592, 599 (4th. Cir. 2003)
(Rule 37 sanctions); Kopf v. Skyrm, 993 F.2d 374, 378 (4th
Cir. 1993) (expert testimony).
III. THE APPEAL
Lawson raises three issues on this appeal. First, it
argues that the district court should have found that the
two asserted systems claims are indefinite. Second, it
argues that the evidence presented at trial does not
support the jury’s finding of infringement of the method
claims. Third, in the event that the infringement ruling
stands, Lawson urges us to hold that the district court’s
injunction order is impermissibly broad. We address each
argument in turn.
A. Indefiniteness
Lawson argues that claims 1 of the ’172 patent and
claim 3 of the ’683 patent are invalid for indefiniteness.
In particular, Lawson argues that the specification does
not disclose an accompanying structure for the “means for
processing” limitation that these two claims have in
common. ePlus counters that Lawson has waived this
13 EPLUS v. LAWSON SOFTWARE
argument, and that in any event the specification dis-
closes sufficient structure. We address each argument in
turn below.
First, we hold that Lawson has not waived its indefi-
niteness argument regarding the means for processing
limitation. Prior to trial, Lawson moved for summary
judgment, arguing that the specification does not ade-
quately disclose a structure for the “means for processing”
limitation. J.A. 7573-74. The district court rejected
Lawson’s argument, and Lawson did not raise the issue
again at trial. Nor did Lawson raise the issue in its first
(pre-verdict) JMOL motion. See id. at 3851. At the
hearing relating to that motion, however, Lawson’s attor-
ney informed the district court that it sought a ruling that
the system claims are indefinite. Id. at 3928-31. The
district court responded that in its view, Lawson could not
seek a JMOL based on indefiniteness because the issue
was not raised during trial. After the jury verdict was
delivered, Lawson again sought a JMOL. This time,
Lawson argued (in writing) that the system claims are
invalid for indefiniteness, yet it did not mention any
particular limitation.
ePlus argues that because Lawson did not raise the
issue of indefiniteness at trial, and because the JMOL
motions were not sufficiently specific, Lawson has waived
its right to appeal indefiniteness altogether. We disagree.
It is generally true that “[a] party may preserve an issue
for appeal by renewing the issue at trial or by including it
in memoranda of law or proposed conclusions of law.”
United Techs. Corp. v. Chromalloy Gas Turbine Corp., 189
F.3d 1338, 1344 (Fed. Cir. 1999). But that rule does not
present an obstacle to Lawson’s indefiniteness argument.
To begin with, indefiniteness is a question of law and in
effect part of claim construction. Thus, in a case like this,
EPLUS v. LAWSON SOFTWARE 14
when the arguments with respect to indefiniteness are
not being raised for the first time on appeal, we do not
readily find a waiver. See, e.g., Noah Sys., Inc. v. Intuit
Inc., 675 F.3d 1302, 1311 (Fed. Cir. 2012) (holding that
because Noah had made the same indefiniteness argu-
ments during claim construction before the district court,
waiver did not apply); United Techs., 189 F.3d at 1344 (“A
denial of a motion for summary judgment may be ap-
pealed, even after a final judgment at trial, if the motion
involved a purely legal question and the factual disputes
resolved at trial do not affect the resolution of that legal
question.”); cf. Lisle Corp. v. A.J. Mfg. Co., 398 F.3d 1306,
1317 (Fed. Cir. 2005) (holding that A.J. had waived its
indefiniteness defense where, in the Final Pretrial Order,
A.J. merely reserved the right to appeal the defense
contingent on this court’s adopting its proposed claim
construction of “detachably cooperative,” which we re-
jected). Moreover, the district court and ePlus were made
aware of Lawson’s indefiniteness argument regarding the
“means for processing” limitation—not just at the sum-
mary judgment stage, but also at the JMOL stage. And,
it is abundantly clear from the record that the district
court did not intend to revisit the indefiniteness issue
once it denied summary judgment. Given that indefinite-
ness is an issue of law, the district court regarded its
ruling on summary judgment to be the last word on the
matter until appeal. Indeed, at the hearing relating to
Lawson’s first motion for JMOL, the district court stated
to Lawson’s counsel that the indefiniteness argument was
mature for appeal. See supra part I.C. In light of the
specific facts of this case, Lawson was not required to
ignore the writing on the wall and press the issue over
and over again to preserve it for appeal. In sum, we reject
ePlus’s waiver argument. See also Harris v. Ericsson, 417
F.3d 1241 (Fed. Cir. 2005) (“An appellate court retains
case-by-case discretion over whether to apply waiver.”).
15 EPLUS v. LAWSON SOFTWARE
Turning to the merits, we note that there is no dis-
pute that the system claims are drafted as means plus
function claims under 35 U.S.C. § 112. “A patent appli-
cant who employs means-plus-function language ‘must set
forth in the specification an adequate disclosure showing
what is meant by that language.’” Net MoneyIN, Inc. v.
VeriSign, Inc., 545 F.3d 1359, 1367 (Fed. Cir. 2008)
(quoting In re Donaldson Co., 16 F.3d 1189, 1195 (Fed.
Cir. 1994) (en banc)). “[I]n a means-plus-function claim
‘in which the disclosed structure is a computer . . . pro-
grammed to carry out an algorithm, the disclosed struc-
ture is not the general purpose computer, but rather the
special purpose computer programmed to perform the
disclosed algorithm.’” Aristocrat Techs. Australia Pty Ltd.
v. Int’l Game Tech., 521 F.3d 1328, 1333 (Fed. Cir. 2008)
(quoting WMS Gaming, Inc. v. Int’l Game Tech., 184 F.3d
1339, 1349 (Fed.Cir.1999)).
We agree with Lawson that the specification does not
disclose sufficient structure for the “means for processing”
limitation. There is no dispute that the function claimed
in this limitation is generating one or more purchase
orders based on a requisition list. The district court
determined that the specification discloses “a purchase
order generation module.” J.A. 147. But there is no
mention of such structure in the specification. Nor is
there anything else that describes what structure specifi-
cally corresponds to the means for processing limitation.
The district court identified three passages in the
specification and three accompanying figures as those
that disclose the required structure, and ePlus points to
the same here on appeal. J.A. 147 (citing ’683 patent,
col.1 ll.37-59; col.3 ll.3-24, ll.43-54; col.15 ll.20-59; Figs. 1-
3). None suffices. The first passage appears in the “back-
ground” section of the specification and only describes
EPLUS v. LAWSON SOFTWARE 16
various types of requisition and purchasing systems in
the prior art; there is not even a mention of a structure.
’683 patent, col.1 ll.37-59. The second passage only states
that “the invention includes a means . . . for generating
one or more purchase orders for desired items from inven-
tory locations stocking the items,” but it does not say
anything about corresponding structures. Id. col.3 ll.20-
24. The third passage explains that “a requisition [that]
has been inventory sourced and accepted . . . can be
converted to one or more purchase orders, as represented
by step 114 in FIG. 3.” Id. col.15 ll.20-22. It then ex-
plains how a single requisition order may be used to
generate multiple purchase orders. But there is no ex-
planation as to what structure or algorithm should be
used to generate the purchase orders. And, step 114 in
Figure 3, to which ePlus refers and is reproduced below, is
just a black box that represents the purchase-order-
generation function without any mention of a correspond-
ing structure.
17 EPLUS v. LAWSON SOFTWARE
ePlus argues that it is not required to disclose a struc-
ture that corresponds to the overall function of generating
purchase orders because implementing that functionality
was already known prior to the ’683 patent. According to
ePlus, the specification need only disclose those aspects of
the claimed invention that do not exist in the prior art—
i.e., using a single requisition to generate multiple pur-
chase orders. The suggestion is that by combining the
teachings of the prior art and the ’683 patent, one of
ordinary skill in the art would know how to implement
the claimed invention. See Cross-Appellant’s Br. 56.
We disagree. The indefiniteness inquiry is concerned
with whether the bounds of the invention are sufficiently
demarcated, not with whether one of ordinary skill in the
art may find a way to practice the invention. Aristocrat,
521 F.3d at 1337. To assess whether a claim is indefinite,
therefore, we do not “look to the knowledge of one skilled
in the art apart from and unconnected to the disclosure of
the patent.” Id. (quoting Med. Instrumentation & Diag-
nostics Corp. v. Elekta AB, 344 F.3d 1205, 1212
(Fed.Cir.2003)). We rather “look at the disclosure of the
patent and determine if one of skill in the art would have
understood that disclosure to encompass [the required
structure].” Aristocrat, 521 F.3d at 1337 (quoting Med.
Instrumentation, 344 F.3d at 1212). Here, the specifica-
tion does not disclose any structure that is responsible for
generating purchase orders. There is no instruction for
using a particular piece of hardware, employing a specific
source code, or following a particular algorithm. There is
therefore nothing in the specification to help cabin the
scope of the functional language in the means for process-
ing element: The patentee has in effect claimed every-
thing that generates purchase orders under the sun. The
system claims are therefore indefinite.
EPLUS v. LAWSON SOFTWARE 18
Finally, contrary to ePlus’s argument, our decision in
Typhoon Touch Technologies, Inc. v. Dell, Inc., 659 F.3d
1376, 1385-86 (Fed. Cir. 2011), does not compel a different
result. There, the district court had found that the patent
claim was indefinite because it did not disclose the source
code or mathematical algorithm for a particular means
plus limitation. We reversed, noting that “it suffices if the
specification recites in prose the algorithm to be imple-
mented by the programmer.” Id. That holding has no
application here: The problem here is not the adequacy of
the substance or form of the disclosure, but the absence of
any disclosure at all. See also Aristocrat, 521 F.3d at
1337 (“The question . . . is not whether the algorithm that
was disclosed was described with sufficient specificity, but
whether an algorithm was disclosed at all.”). Unlike in
Typhoon Technologies, there is not even a recitation in
simple prose that can be deciphered as a structural limi-
tation on the patent claims. Thus, ePlus’s reliance on
Typhoon is unavailing. In sum, we hold that ePlus’s
system claims are indefinite.
19 EPLUS v. LAWSON SOFTWARE
B. Infringement
There is no dispute that Lawson’s system is capable of
infringing the method claims. Indeed, Lawson does not
even argue on appeal that its software products are not
within the scope of ePlus’s system claims, which are
substantively quite similar to the method claims. Lawson
nonetheless argues that ePlus failed to present sufficient
evidence to establish that Lawson or its customers per-
form every step of the methods disclosed in claims 26, 28,
and 29. Lawson also argues that the jury was not pre-
sented with sufficient facts to conclude that Lawson had
the requisite intent and knowledge for inducement.
Below, we address Lawson’s argument with respect to
each claim in turn.
1. Claim 26
Lawson argues that the jury was not offered any evi-
dence to show that any single entity (Lawson or its cus-
tomers) performed every step of the method disclosed in
claim 26. In particular, Lawson argues that no evidence
showed that Lawson or its customers “determin[ed]
whether a selected matching item is available in inven-
tory.” Lawson points out that while employing the
Punchout and EDI modules, a user does not have direct
access to the third party vendors’ inventory information,
and it therefore argues that only the vendors may “de-
termine” whether an item is available.
We disagree. Lawson is essentially raising a claim
construction argument regarding the meaning of the term
“determining” in the guise of a challenge to the sufficiency
of the evidence of infringement. That is, Lawson’s argu-
ment invites us to hold that “determining” is limited to
the act of looking up an item in the inventory by the party
EPLUS v. LAWSON SOFTWARE 20
that has ‘control’ over the inventory information. See
Appellant’s Br. 24-25. Under that terminology, a cus-
tomer who causes a vendor to report whether a particular
item is available does not “determine” whether that item
is available. Of course, if Lawson desired such a narrow
definition, it could (and should) have sought a construc-
tion to that effect. In the absence of such a construction,
however, the jury was free to rely on the plain and ordi-
nary meaning of the term “determining” and conclude
that a user who prompts a vendor to report whether a
particular item is available “determines” whether that
item is available—much in the same way, for example,
that one may call and speak to a sales representative at a
local store to determine whether a certain item is in stock.
With the determining step appropriately so defined,
there remains no serious dispute that Lawson’s customers
infringe claim 26. Moreover, in our view, the record
contains substantial evidence to show that Lawson itself
infringes claim 26. In particular, there is evidence that
Lawson installed, maintained, demonstrated, and man-
aged the infringing systems for its customers. The evi-
dence includes course catalogs and webinar presentations
offered by Lawson to its customers. ePlus also offered
testimony at trial to the effect that Lawson’s professional
services include developing, installing, and testing “up to
and including bringing a system live” for its customers.
J.A. 1941. ePlus also provided the jury with evidence that
the live testing phase included performing actual pro-
curements using Lawson’s systems. All of this circum-
stantial evidence permits a reasonable jury to infer that
Lawson performed the steps of claim 26. Finally, we have
reviewed the record and are satisfied that it contains
sufficient evidence of Lawson’s intent and knowledge to
allow a reasonable jury to conclude that Lawson induced
its customers to infringe claim 26. Thus, we affirm the
21 EPLUS v. LAWSON SOFTWARE
district court’s denial of JMOL of non-infringement with
respect to the jury’s verdict of direct and induced in-
fringement of claim 26.
2. Claim 28
With respect to claim 28, however, we must agree
with Lawson that the verdict of infringement is not
supported by substantial evidence. One of the steps in
method claim 28 is “converting data relating to a selected
matching item and an associated source to data relating
to an item and a different source.” There is no dispute
that to perform this “converting data” step, a user must
start with a desired item from a particular vendor and
look up the equivalent of that item that is offered by a
different vendor. At trial, ePlus’s expert explained that to
achieve this functionality, Lawson’s systems rely on an
international coding standard referred to as UNSPSC,
which assigns a particular string of characters to each
class of goods and services. When a user wants to find
items equivalent to the one she desires, the system will
search the UNSPSC codes of each item and will display
those items that belong to the same class of goods as the
one that is originally desired. It is important to note,
however, that UNSPSC codes are not by default present
in Lawson’s products; each customer has the option of
loading the code into the product for itself. So much is
uncontroversial, for as we already noted there is no
dispute that Lawson’s systems are technically capable of
infringing ePlus’s method claims.
The problem for ePlus is, however, that unlike in the
case of the system claims, ePlus must establish that more
likely than not at least one user used the accused systems
to perform the converting data step (in addition to the
remaining steps in claim 28, of course). But ePlus did not
EPLUS v. LAWSON SOFTWARE 22
present any evidence to the jury to make that showing,
either directly or circumstantially. Indeed, every mention
of the converting step in ePlus’s brief refers to the capa-
bility of the accused system, not an actual act of infringe-
ment. ePlus refers but once to any evidence of the use of
UNSPSC by Lawson itself, and even then it characterizes
the evidence as proof that Lawson taught its customers
how to “find[] items by UNSPSC categories”—not to use
those categories to convert a desired item offered by one
vendor to an equivalent item offered by another. Cross-
Appellant’s Br. 29. Similarly, ePlus offered the testimony
of two Lawson employees who testified that the accused
product is capable of using UNSPSC codes, but neither
stated that they (or anybody else at Lawson for that
matter) had actually used that functionality. Nor does
ePlus point to any evidence that shows Lawson’s custom-
ers performed the data converting step. To the contrary,
those customers whose testimony ePlus solicited either
expressly rejected having ever used UNSPSC codes or
denied knowing about the functionality. Because ePlus
did not offer any evidence that showed or even suggested
that anybody performed the converting data step, no
reasonable jury could have concluded that claim 28 was
infringed—either directly or indirectly.1
3. Claim 29
Claim 29 depends from claim 28 and similarly recites
the data converting step. For the same reasons that we
1 ePlus also alleges that Lawson infringes the
method claims under a divided infringement theory.
Lawson counters that the divided infringement theory is
not preserved for appeal. Because we hold that ePlus
failed to show that anyone performed the data converting
step at all, however, ePlus’s divided infringement theory
would fail in any event.
23 EPLUS v. LAWSON SOFTWARE
set out with respect to claim 28, substantial evidence also
does not support the jury’s finding of infringement of
claim 29.
C. The Injunction
Lawson argues that the district court abused its dis-
cretion in granting too broad an injunction. According to
Lawson, because damages are not at issue in this case,
the district court should not have enjoined it from servic-
ing and maintaining products sold before the injunction
issued. Lawson draws support from that proposition from
this court’s decisions in Odetics, Inc. v. Storage Technol-
ogy Corp., 185 F.3d 1259 (Fed. Cir. 1999), and Fonar
Corp. v. General Electric Co., 107 F.3d 1543 (Fed. Cir.
1997).
We disagree. It is true that we have held that servic-
ing a product is equivalent to repairing it, and that “[o]ne
is entitled to repair that which is sold free of liability for
infringement.” Fonar, 107 F.3d at 1555. In Fonar, for
example, the patentee had failed to mark its products in
violation of the patent marking statute, 35 U.S.C. § 287(a)
(1994). 107 F.3d at 1555. We affirmed the district court’s
determination that the accused infringer could not be held
liable for inducing infringement for repairing those prod-
ucts that were sold prior to the filing of the suit. Id.Similarly, in Odetics, we did not see any abuse of discre-
tion in the district court’s refusal to enjoin an accused
infringer from using or servicing products that were sold
during a laches period, when the patentee had inexcusa-
bly failed to assert its patent rights. 185 F.3d at 1273-74.
Our holding in these cases was based on the fact that the
sale was authorized and free of liability. Id. at 1273;
Fonar, 107 F.3d at 1555. Here, however, it just so hap-
pens that because of the district court’s enforcement of
EPLUS v. LAWSON SOFTWARE 24
the discovery rules, ePlus was not permitted to present
any evidence of damages. That does not mean that Law-
son was authorized to sell products that infringe ePlus’s
patent. Therefore, the district court did not abuse its
discretion.
IV. THE CROSS APPEAL
On cross appeal, ePlus argues that the district court
abused its discretion in excluding its damages expert and
also in ruling that it could not otherwise present any
evidence of damages to the jury. We reject both argu-
ments.
First, we hold that the district court did not abuse its
discretion in excluding the testimony of ePlus’s damages
expert. To show damages, ePlus had planned to rely
exclusively on the expert testimony of Dr. Mangum, who
estimated the reasonable royalty base to be around four to
five percent. As part of the analysis of the Georgia Pacific
factors, Dr. Mangum noted that Lawson had entered into
five settlement agreements. In two of those agreements,
ePlus had obtained much higher amounts than the other
three. Indeed, the sum of the higher two amounts well
exceeded the sum of the smaller three by 1500%, and the
highest paying agreement was over seventy times larger
than the smallest. Moreover, the two larger agreements
were paid in lump-sums; whereas one of the smaller three
included a royalty percentage. And, the three small
agreements were entered into at approximately the same
time that this suit was filed, while the larger two were
four to five years old. Dr. Mangum, however, gave great
weight to the two highest paying agreements, explaining
that the remaining three were not as informative.
25 EPLUS v. LAWSON SOFTWARE
The district court found that Dr. Mangum’s analytical
method was flawed and unreliable. In particular, it found
that the license agreements were not sufficiently proba-
tive because they were obtained during litigation and
included lump-sums received for multiple patents and
cross-licensing deals. The district court also observed
that Dr. Mangum had ignored the settlements that pro-
duced smaller rates, even though one of them included a
percentage rate rather than a lump sum.
ePlus argues that the district court erred and offers a
number of justifications that purportedly support Dr.
Mangum’s analysis. We need not explore each one of
ePlus’s justifications, however, for the applicable abuse of
discretion standard of review is highly deferential. It
suffices to state that we are satisfied that given the
district court’s observations about Dr. Mangum’s analysis,
there is ample justification to arrive at the conclusion
reached by the district court. ePlus’s arguments to the
contrary, therefore, are not persuasive.
Nor do we see any abuse of discretion in the district
court’s decision to prevent ePlus from presenting evidence
of damages. Trial management is particularly subject to
the wide latitude of the district court. Here, the district
court was reasonably concerned that any last-minute
addition to the record would disrupt the proceedings and
cause unacceptable delay. The district court was also
concerned that by changing the damage calculation
methodology on the eve of trial, ePlus would expose
Lawson to an unjustified risk of prejudice. These con-
cerns provided the district court with sufficient basis to
preclude ePlus from presenting any evidence of damages
at trial. Therefore, ePlus’s second argument also fails.
EPLUS v. LAWSON SOFTWARE 26
CONCLUSION
We reverse the district court’s determination that the
system claims are not indefinite. We also reverse in part
the district court’s denial of JMOL to Lawson and accord-
ingly vacate the judgment of infringement entered based
on claims 28 and 29 of the ’683 patent. We remand for
the district court to consider what changes are required to
the terms of the injunction, consistent with this opinion.
In all other respects, we affirm.2
COST
Each party shall bear its own cost.
REVERSED-IN-PART, VACATED-IN-PART,
AFFIRMED-IN-PART, AND REMANDED
2 To the extent that we have not addressed any of
the parties’ arguments on appeal or cross-appeal, we have
determined them to be unpersuasive.