Function Media, L.L.C. v. Kappos

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
FUNCTION MEDIA, L.L.C.,
Appellant,
v.
David J. Kappos, Director,
UNITED STATES PATENT AND TRADEMARK
OFFICE,
Appellee,
AND
GOOGLE, INC.,
Appellee.
______________________
2012-1380
(Reexamination No. 95/001,069)
______________________
Appeals from the United States Patent and Trade-
mark Office, Board of Patent Appeals and Interferences.
----------------------
FUNCTION MEDIA, L.L.C.,
Appellant,
v.
2 FUNCTION MEDIA, L.L.C. v. KAPPOS
David J. Kappos, Director,
UNITED STATES PATENT AND TRADEMARK
OFFICE,
Appellee,
AND
GOOGLE, INC.,
Appellee.
______________________
2012-1381
(Reexamination No. 95/001,069)
______________________
Appeals from the United States Patent and Trade-
mark Office, Board of Patent Appeals and Interferences.
______________________
Decided: March 7, 2013
______________________
JUSTIN A. NELSON, Susman Godfrey, L.L.P., of Se-
attle, Washington, argued for appellant. With him on the
brief were MAX L. TRIBBLE and JOSEPH S. GRINSTEIN, of
Houston, Texas. Of counsel on the brief was MICHAEL F.
HEIM, Heim, Payne & Chorush, L.L.P., of Houston, Texas.
Of counsel were MIRANDA Y. JONES and NIRAJ P. PATEL.
LORE A. UNT, Associate Solicitor, Office of the Solic-
itor, United States Patent and Trademark Office, of
Alexandria, Virginia, argued for appellee, United States
Patent and Trademark Office. With her on the brief were
RAYMOND T. CHEN, Solicitor, and SCOTT C.
WEIDENFELLER, Associate Solicitor.
FUNCTION MEDIA, L.L.C. v. KAPPOS 3
JOHN A. DRAGSETH, Fish & Richardson P.C., of
Minneapolis, Minnesota, argued for appellee, Google, Inc.
With him on the brief were JOHN C. PHILLIPS and JASON
W. WOLFF, of San Diego, California.
______________________
Before MOORE, MAYER, and WALLACH, Circuit Judges.
MOORE, Circuit Judge
Function Media appeals from the decisions of the
Board of Patent Appeals & Interferences (Board) finding
unpatentable various claims of U.S. Patent Nos. 7,249,059
and 7,240,025 during an inter partes reexamination.
Function Media challenges the Board’s claim construction
and invalidity findings. For the reasons below, we affirm-
in-part, vacate-in-part, and remand for further proceed-
ings.
BACKGROUND
The ’059 and ’025 patents relate to an electronic ad-
vertising system that links sellers and buyers of electronic
advertisements. See, e.g., ’025 patent, at [57]. The pa-
tents disclose a computer system that employs a central
controller to read information from user interfaces to
facilitate transactions involving electronic advertisements
between buyers, sellers, and third-party professionals,
e.g., agents of a seller. Id. [57], col. 3. l.19–col.4 l.58.
Claim 1 of the ’059 patent is representative:
A computer system allowing a third party profes-
sional to manage, create and publish customized
electronic advertisements, for a seller, to internet
media venues owned or controlled by other than
the seller and other than the third party profes-
sional, comprising:
...
4 FUNCTION MEDIA, L.L.C. v. KAPPOS
a third interface to the computer system through
which the third party professional is . . . prompted
to input information to create an electronic adver-
tisement for the seller for publication to the select-
ed internet media venues; . . . and
a computer controller of the computer system pro-
cessing and publishing the electronic advertise-
ment to one or more of the selected internet media
venues . . . .
’059 patent, claim 1 (emphases added). The ’025 patent
claims contain similar limitations but recite that a “sell-
er,” instead of a “third party professional,” is prompted to
“input information to create an electronic advertisement.”
E.g., ’025 patent, claim 1.
Function Media sued Google for infringing the ’059
and ’025 patents. After a trial, the district court entered
judgment that the asserted claims of the ’059 and ’025
patents were not infringed, that a number of claims were
invalid, and that Google failed to prove invalidity of
claims 52, 63, 90, and 231 of the ’025 patent. See Final
Judgment, Function Media, L.L.C. v. Google, Inc., No.
2:07-CV-279 (E.D. Tex. Sept. 9, 2011), ECF No. 492, at 1–
2 (Final Judgment). Function Media appealed, and we
recently affirmed every challenged aspect of the district’s
court judgment. Function Media, L.L.C. v. Google Inc., ---
F.3d ---, 2013 WL 516366, at *17 (Fed. Cir. Feb. 13, 2013).
During the pendency of the district court litigation,
Google initiated inter partes reexaminations of the ’059
and ’025 patents. The U.S. Patent & Trademark Office
(PTO) rejected the claims based on two references, Ad-
Force and U.S. Patent No. 5,666,493 (Wojcik). AdForce
discloses computer software that allows a user to upload
Internet banner images and customize those images for
display on an Internet website. Wojcik discloses a soft-
ware system for managing customer orders and inventory.
The PTO rejected most of the claims as anticipated by
FUNCTION MEDIA, L.L.C. v. KAPPOS 5
AdForce. For claims 24 and 50 of the ’059 patent, the
PTO concluded that AdForce in combination with Wojcik
rendered those claims obvious. The Board upheld the
rejections, including the rejections of claims 52, 63, 90,
and 231 of the ’025 patent, and Function Media now
appeals. We have jurisdiction under 28 U.S.C. §
1295(a)(4)(A).
DISCUSSION
“Anticipation is a question of fact, which we review for
substantial evidence, while claim construction is a matter
of law, reviewed de novo.” In re Am. Academy of Sci. Tech
Ctr., 367 F.3d 1369, 1363 (Fed. Cir. 2004) (citations
omitted). Obviousness is a legal question based on under-
lying factual determinations, including whether a prior
art reference is analogous art. Graham v. John Deere Co.,
383 U.S. 1, 17–18 (1966); In re Klein, 647 F.3d 1343, 1347
(Fed. Cir. 2011). We review for substantial evidence the
Board’s determination that a reference is analogous art.
Id.I.
Before we address the merits of Function Media’s ap-
peal, we discuss the scope of the reexamination proceed-
ing in view of the Function Media litigation. The PTO has
not issued a final decision addressing whether it can
maintain the reexamination of claims 52, 63, 90, and 231
of the ’025 patent after the entry of judgment in the
Function Media litigation. Under the version of 35 U.S.C.
§ 317(b) that governs this appeal, the PTO is barred from
maintaining an inter partes reexamination of a patent
claim once a “final decision has been entered” in a civil
action holding that the third-party requester failed to
“sustain[] its burden of proving the invalidity” of that
patent claim. Optional Inter Partes Reexamination
Procedure Act of 1999, Pub.L.No. 106–113, §§ 4604, 113
Stat. at 1501A–570 (repealed 2012); Bettcher Indus., Inc.
v. Bunzl USA, Inc., 661 F.3d 629, 646 (Fed. Cir. 2011).
6 FUNCTION MEDIA, L.L.C. v. KAPPOS
We have held that this rule only applies when “all appeals
have terminated.” Id. This provision existed to prevent
duplicative, harassing actions against a patentee. If a
defendant brought an invalidity challenge in a district
court litigation and was unsuccessful, it is not permitted
to bring the same challenge in an inter partes reexamina-
tion. This is exactly what happened with claims 52, 63,
90, and 231 of the ’025 patent. Defendants challenged the
validity of these four claims and lost in the district court.
The district court decision became final and appeals were
filed. However, there was no appeal regarding the validi-
ty of claims 52, 63, 90, and 231.
The PTO explained that it denied Function Media’s
petition to dismiss from the reexamination claims 52, 63,
90, and 231 of the ’025 patent because Function Media’s
appeal in the district court litigation raised claim con-
struction issues that might impact the validity of those
claims. J.A. 7268–70. Function Media has requested that
the PTO reconsider its decision on the basis that Google is
barred from continuing to litigate its invalidity claims on
remand because it failed to appeal from the district
court’s judgment of no invalidity. See Odetics, Inc. v.
Storage Tech. Corp., 185 F.3d 1259, 1275 (Fed. Cir. 1999)
(holding that a party’s “failure to appeal the judgment of
no invalidity precluded the continued litigation of that
issue”). Function Media is correct. Google’s failure to
appeal the determined validity of those claims removed
them from any subsequent actions. Regardless, we have
now affirmed the district court’s judgment in full and
have expressly adopted its claim constructions. Function
Media, 2013 WL 516366, at *6–14, 17. There remains no
argument for maintaining these claims in the inter partes
reexamination in light of the clear preclusion in the
statute at issue at the time, 35 U.S.C. § 317(b).
It would be improper for us to address the merits of
the Board’s findings that claims 52, 63, 90, and 231 of the
’025 patent are not patentable. Thus, we vacate the
FUNCTION MEDIA, L.L.C. v. KAPPOS 7
Board’s decision on those claims and remand the case to
the PTO for it to rule on Function Media’s petition to
dismiss.
II.
We now turn to the merits of Function Media’s ap-
peal. Function Media first challenges the Board’s claim
construction. It argues that the Board wrongly concluded
that the claims did not require the central computer
controller to create the electronic advertisements. Our
court, however, has already concluded that the claims of
the ’059 and ’025 patents do not require the central com-
puter to create the electronic advertisement. Function
Media, 2013 WL 516366, at *7–8. We specifically held
that the creation of the advertisement by “either the seller
or the central computer would satisfy the claims.” Id. at
*7. We are bound by that construction. Hynix Semicon-
ductor, Inc. v. Rambus Inc., 645 F.3d 1336, 1350–51 (Fed.
Cir. 2011).
Function Media also challenges the factual findings
regarding the AdForce and Wojcik references. It asserts
that AdForce does not anticipate the claims because it
discloses that a user, not the software, creates the elec-
tronic advertisements. Regarding the Board’s obvious-
ness findings, Function Media argues that a skilled
artisan would not have considered Wojcik to be analogous
art because the reference relates to processing food or-
ders, not electronic presentations and advertising.
Both arguments are without merit. AdForce discloses
a user interface through which a user uploads a graphic,
selects an ad style and an ad size, and enters text to
accompany the graphic. J.A1183–85. A skilled artisan
could glean from this disclosure that the AdForce soft-
ware creates the advertisement—the software packages
the graphic and the accompanying text to create the
electronic advertisement displayed on a website. Id.8 FUNCTION MEDIA, L.L.C. v. KAPPOS
Similarly, substantial evidence supports the Board’s
finding that Wojcik would have been considered analo-
gous art. Although Wojcik does not specifically relate to
electronic advertising, it discloses a computer system for
managing the transaction flow relating to various goods
and services. J.A. 4603. Based on that disclosure, one of
ordinary skill could find that Wojcik is reasonably perti-
nent to the problem the inventors of the ’059 patent set
out to solve—managing the flow of electronic advertising
transactions between buyers, sellers, and third-party
professionals. See ’059 patent, at [57].
CONCLUSION
We have considered the parties’ remaining arguments
and conclude that they are without merit. For the rea-
sons stated above, the Board’s decisions are
AFFIRMED-IN-PART, VACATED-IN-PART, AND
REMANDED.
COSTS
Costs to Appellees.