2010-1121 Honeywell v Nikon

Patentee Honeywell appeals from the order of Judge Farnan finding that claim 3 of U.S. Patent No. 5,280,371 is invalid under the on-sale bar provisions of § 102(b).  The '371 patent s directed generally to a directional diffuser for a flat panel LCD of the type used, for example, in aircraft cockpit displays.

The '371 patent was filed in July 1992.  In June 1990, Honeywell submitted to Boeing a four-volume sales proposal (the "AIM Proposal"). This proposal included a 313 page volume on "Technical Proposal & Plans," and 125 pages entitled "Price Offering & Contractual Terms & Conditions."

Proving on-sale bar requires showing that, before the critical date, that (i) the product embodying the claimed invention was the subject of a commercial offer for sale and (ii) the invention was ready for patenting.  See Order, p. 3. 

Honeywell conceded the latter, but argued that the product described by the AIM Proposal was not covered by claim 3 and that the AIM Proposal was not a commercial offer for sale.  On the first point, although Honeywell argued that evidence showed at least an issue of fact, the court concluded that the product described in the proposal did include all of the elements of claim 3.  Order, pp. 13-16.

As to whether the AIM Proposal was an offer for sale, the court reviewed the relevant law under Pfaff v Wells, 525 U.S. 55 (1998) and subsequent Federal Circuit decisions.  Despite Honeywell's insistence that the AIM Proposal would not have been accepted by Boeing without additional negotiation (and therefore wasn't an "offer"), the court found the express language of the proposal evidenced an intent to make an offer even if the parties' expectations might have been otherwise:

As the Court has noted, however, acceptance is not required for a proposal to be considered a commercial offer of sale.  Rather, the focus of the inquiry is whether the offer could have been made into a binding contract by formal acceptance. In this case, Honeywell relies on the parties' business relationship and the alleged custom and practice in the industry to argue that the AIMS Proposal could not be a formal offer for sale because further negotiation between the parties was expected. In the Court's view, however, the fact that further negotiations might arise or even be expected does not preclude the AIMS Proposal from being an invalidating offer where, as here, the AIMS Proposal contained the essential terms of an offer and Honeywell manifested its intent to make an offer to Boeing.

Order, p. 10.

Although the evidence and proposal language is a little different, this case reminds me of the Lacks Indus. v. McKechnie Vehicle case (2008-1167) decided by the Federal Circuit in 2008.  That case involved the question of whether a proposal made in the automotive industry was an "offer for sale" to trigger the on-sale bar.  In a non-precedential opinion, that panel appeared to reject the "could have been accepted" theory of Judge Farnan and found summary judgment inappropriate where there was a disputed fact as to whether such a proposal would be accepted under industry practice.

Defendants’ experts submitted that in the automobile industry, an OEM, such as Chrysler, would often accept a supplier’s initial quote, such as a SCORE proposal, subject to possible future revision.  However, Lacks’ witnesses testified that the purpose of submitting a SCORE proposal was “first to garnish [if Chrysler is] even interested and then [if the proposal is] even valid . . . .”  When viewing this record in a light most favorable to Lacks and resolving doubts in favor of Lacks, we cannot conclude that Defendants have established an automobile industry practice by clear and convincing evidence such that a reasonable fact-finder could not decide in Lacks’ favor. 

Lacks opinion, p. 9.

2010-1121 on Sale Order

2008-1392 Trading Tech Int'l v. eSpeed

Summary of Argument from plaintiff Trading Technologies
International, Inc.  Paul H. Berghoff, Leif R. Sigmond,
Jr., Matthew J. Sampson, Michael D. Gannon, S. Richard
Carden, Jennifer M. Kurcz and Paul A. Kafadar of McDonnell
Boehnen, Hulbert & Berghoff LLP, Chicago; and Steven F.
Borsand of Trading Technologies International, Inc., on brief.

The heart of the dispute is the meaning of the claim term
“static.” This term is explicitly and unambiguously defined in the patent
specification as:

The values in the price column are static; that is, they do
not normally change positions unless a re-centering command is received …

Instead of simply adopting this clear definition, the court
erred by construing “static” much more narrowly by requiring that the values in
the price column:

never change positions [which the court interpreted as
precluding “any movement”] unless by manual re-centering or
repositioning.

There is no support in any of the intrinsic evidence (or
extrinsic evidence for that matter) for such a narrow reading of static. As
such, this Court should vacate the district court's construction and adopt the
definition set forth in the patent.

The court also erred in ruling that Dual Dynamic and
eSpeedometer do not literally infringe. This ruling was based solely on the
court's improper construction of “static.” Under its construction, any product
that has a risk of automatic re-centering (which cannot be turned off) does not
literally infringe the patents-in-suit. However, the proper construction of
static is not limited to any particular type of re-centering and thus
encompasses both manual and automatic re-centering. Therefore, these products
literally infringe the patents-in-suit.

Furthermore, the court improperly barred TT from asserting
DOE against eSpeedometer¹⁷ by ruling that “static” was narrowed by
amendment during prosecution.¹⁸ However, to reach this conclusion the
court did not apply its narrow construction of “static” that it used to find no
literal infringement. Rather, the court construed “static” broadly for purposes
of its estoppel analysis – in conflict with its Markman ruling. This
was error because once a claim term is construed, that same construction must
be applied uniformly. Under the court's unduly narrow construction, there can
be no narrowing amendment and thus no estoppel.

¹⁷ The court found that eSpeedometer infringed the
“static” claim term under DOE, even under its unduly narrow construction of
that term.

¹⁸ All of TT's DOE arguments are moot if this Court adopts TT's
construction and finds literal infringement.

Moreover, the court improperly barred TT from asserting DOE
against Dual Dynamic, ruling that doing so would vitiate the “static” claim
term. Vitiation is not applicable because there is only a subtle difference of
degree between the “static” claim element, as narrowly construed by the
district court, and the operation of the price axis in Dual Dynamic. Thus, TT
should not be barred from asserting DOE against Dual Dynamic.



Finally, the
court erred by entering JMOL overturning the jury's verdict of willful
infringement. The court did not and could not challenge the jury's finding that
eSpeed knew or should have known that its product was infringing a valid
patent. The court's ruling was based solely on its mistaken belief that there
was no evidence that eSpeed sold its infringing products after the
patents-in-suit issued. In fact, there is substantial undisputed evidence in
the record that eSpeed continued selling its infringing product after the
patents issued and that it had the ability to pull off the market existing
infringing product. Accordingly, the JMOL ruling should be reversed.

TT states that it “commercialized the invention in a product
called MD Trader, and began selling it around Labor Day of 2000 as part of TT's
X_Trader software suite.” (TT-Br.8) In fact, however, TT first commercialized
the invention of the Patents-in-Suit much earlier, selling custom software
embodying it to Brumfield, then one of the world's busiest futures traders, who
used it in his proprietary trading and kept it as the “toppest of toppest of
secrets that you can imagine,” until, after investing millions of dollars in
TT, he concluded that there might be bigger rewards in going the “patent
route.”



Brumfield and TT's decision to exploit the invention as a trade secret
until it became more financially advantageous to enter the patent system has
critical implications for the validity and enforceability of the
Patents-in-Suit.



First, more than one year passed between TT's commercial sale
of the custom software embodying the invention to Brumfield and its filing of
the Provisional on March 2, 2000, and the sale is therefore a §102(b) bar.



Second,
TT has stipulated that the Patents-in-Suit are invalid due to Brumfield's
intervening public use if they are not afforded the benefit of the Provisional
filing date. Every Asserted Claim includes the limitation “single action of a
user input device,” a term that does not appear and is not defined in the
Provisional. The court construed it broadly, paraphrasing an ad hoc definition
that was first set forth in the Non-Provisional expressly “for the purposes of
the present invention.” This broad construction -“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” is not supported by the narrow disclosure of single mouse
click order entry in the Provisional and therefore, as TT stipulated,
Brumfield's pre-June 9, 1999 commercial use is also a §102(b) bar.



And
just as TT makes no mention of the existence, sale and use of Brumfield's
custom software in its brief, so too did TT fail to disclose this information
to the PTO during prosecution of the Patents-in-Suit. This information would
have been highly material, as it would have prompted the PTO to
consider in the first instance the on-sale and priority date issues now on
appeal. The district court, however, found that this information was not
material at all, and it did not go on to consider abundant evidence that its
nondisclosure was deliberately deceptive.



The “single action of a user input
device” limitation is also, as construed, indefinite, as it has no clear
meaning to a person of ordinary skill in the art, but rather depends upon the
subjective “perception” of each individual user.



Accordingly, this Court
should reverse, mandate the entry of judgment declaring the Asserted Claims
invalid, and remand for further proceedings on inequitable conduct.

2008-1167 Lacks Indus. v. McKenzie Wheel

An on-sale bar case where the court concluded that plaintiff’s product quotes—while not likely to be accepted without significant negotiations, back-and-forth, etc.–could have been accepted to create a binding contract, and thus qualify under Group One and establish an on-sale bar.

Oral argument is scheduled for Thursday, November 6, 2008 at 10:00 A.M., San Francisco Federal Court.

Summary of the Argument from Lacks Industries.  Steven L. Underwood, Matthew J. Gipson and Andrea W. Zydron of Price, Heneveld, Cooper, DeWitt & Litton, LLP,  (Grand Rapids, MI) and David W. Wicklund of Shumaker, Loop & Kendrick, LLP (Toledo, OH) on brief.

Summary of the Argument from Hayes Wheel.  J. Michael Huget and John C. Blattner of Butzel Long, PC (Ann Arbor, MI), and Stephen Glazek, Josh Moss of Barris Sott Denn &, Driker, LLC (Detroit, MI) on brief.

2008-1392 Trading Tech v. eSpeed

Both parties have appealed from various orders of Judge James Moran.  The case has a plethora of issues, mixed rulings, and reversals.  Excellent coverage of the district court proceedings is provided by David Donoghue at Chicago IP Litigation Blog.

Trading Tech brought several suits, including this one against eSpeed and Ecco, alleging infringement of 6,766,304 and 6,772,132, both similarly directed at software used in electronic trading in the futures market. 

The court granted eSpeed summary judgment of non-infringement related to its current software programs, but the fate of other accused products was tried to a jury verdict of willful infringement and an award of $3.5 million (including $1.5 million against eSpeed).  However, the court conditionally granted eSpeed a new trial on damages unless TT accepted a remittitur of the eSpeed apportionment to approx. $540,000.  It is not clear from the record if TT accepted or not.

eSpeed Appeals:  eSpeed designated for appeal the court’s order entering a permanent injunction against versions of eSpeed Futures view, Ecco Price Ladder, and eSpeed Autospeed Basis and materially-similar products.  According to the record, these programs were only used during a short period of time several years ago.  As Chicago IP noted, the fact that eSpeed no longer used these programs favored the grant of an injunction because there was no real harm to eSpeed.

Trading Tech Appeals:  TT has designated for appeal:

Orders on claim construction, including reconsideration.  In particular were the terms "static price axis" and "order entry region."  The court required the former to require a manual re-centering of the price display and the latter to exclude a "pop-up window" in the software display;

Order granting eSpeed partial summary judgment of non-infringement as to the Dual Dynamic, eSpeedometer, and modified eSpeedometer programs.  These programs essentially had a dynamic price axis with automatic re-centering and used a pop-up window for placing an order;

Order granting partial summary judgment to TT on prior public use under § 102(b).  The software was in development before the critical date, and also is "use."  eSpeed alleges it was commercial use which, albeit secret, is nevertheless "public."  TT argues it was experimental in nature and done to test the program.  The court granted summary judgment of no public use prior to March 2, 1999.  However, the parties’ also disagreed on the critical date:  TT claimed March 2, 1999, while eSpeed claimed June 9, 1999.  The court found questions of fact precluded summary judgment for either party as to public use between March 2 and June 9, 1999.  Determination of the critical date was put off for another day.

Order granting eSpeed’s JMOL on willfulness.  Despite the jury finding, the court found insufficient evidence to support willfulness–specifically lacking was an "objectively high likelihood that its actions constituted infringement of a valid patent."  The programs that were found to infringe were all written and sold before the patents issued and, upon issuance, eSpeed immediately stopped selling those programs and began a design-around.  There was no evidence or suggestion that eSpeed copied TT’s program (as opposed to its functionality). 

2008-1365, 1366 ResQNet.com v. Lasna, Inc.

Both parties appeal part of Judge Robert Sweet’s judgment following a bench trial on ResQNet’s two remaining patents.  The parties split infringement findings, with ResQNet being awarded approximately $400k (net after a $100k sanction against it and counsel under Rule 11).

ResQNet sued Lasna on 5 patents related to configurable remote terminals for computer systems.  Two patents were voluntarily withdrawn, and the court construed claim terms for the others.  ResQNet stipulated to non-infringement and appealed.  In ResQNet II, the Federal Circuit affirmed as to one patent but reversed on the other two.

On remand here, the court conducted a bench trial on the 2 remaining issues: infringement of claim 1 of 5,831,608 and claim 1 of 6,295,075. 

’608 Patent:  Claim 1 states:

1. Apparatus for implementing a computer terminal to be connected to a remote computer, said apparatus comprising:

means for identifying a particular user logged on to said remote computer through said computer terminal;

means
for identifying, based upon a position. length and type of each of a
plurality of fields, a particular screen to be displayed to said user;
and

a plurality of special function
keys, each key performing a specified function, the specified function
performed by each key being determined by the particular user logged on
and the particular screen identified to be displayed.

The court easily found that Lasna’s NewLook product did not infringe.  First, NewLook did not "identify a particular user" but instead identifies computer terminals regardless of the individual using it.  The court found this PC-as-user concept very different from  "identifying a particular user."  The court also found that NewLook did not meet the claim’s third limitation because customizable function keys were not tied to particular screens–thus, even though NewLook users could program function keys, it would apply to all screens and not just at a "particular screen."

’075 Patent:  The court just as easily found that NewLook did infringe claim 1 of the ’075 patent, both directly and indirectly.  Claim 1 states: 

1. The method of communicating between a host computer and a remote terminal over a data network comprising steps of:

establishing a first communication session between said terminal and a communications server via a first communications channel;

downloading,
from said server to said terminal, communications software for
communicating between said terminal and said host and a plurality of
specific screen identifying information;

utilizing
said communications software to implement a second communications
session between said terminal and said host via a second communications
channel independent of said server;

receiving a screen from said host to said terminal;

if
said received screen matches one of the plurality of specific screen
identifying information, displaying a customized GUI screen; and

if
said received screen does not match one of the plurality of specific
screen identifying information, displaying a default GUI screen.

On Sale Bar:  Lansa argued that this claim was invalid because NewLook v. 1.0 was for sale prior to the ’075 critical date.  The issue turned on "coomunication software," which the court construed to mean the software for
the subsequent communication between the terminal and host.  However, the court found the evidence to show that v. 1.0 had "communication software" fell short of clear and convincing.  Apparently the only evidence was a help manual, marketing brochure, and "thin" testimony from several witnesses. 

Obviousness:  Lasna introduced a manual for "Flashpoint" software that disclosed all elements of claim 1.  However, the court found no evidence that the manual was in "possession of the public" more than a year before the application was filed.  Further, although the manual itself was dated early enough, it was also marked as "an unpublished work . . . considered a trade secret belonging to the copyright holder."

Permanent Injunction:  The court declined to enter a permanent injunction, finding the ResQNet failed to establish any of the four eBay factors.

Sanctions:  The court declined to award sanctions against Lasna, but did impose Rule 11 sanctions against ResQNet and its counsel.  This sanction was based on the 2001 filing of an amended complaint, alleging infringement of patents that ResQNet had already determined were not infringed.  The court, applying circuit law, settled on a $100,000 fine.

Documents: Court’s Opinion (55 pages, scanned).

5,597,213 is directed to an automotive wheel and overlay assembly.  The Federal Circuit had previously affirmed a bench trial verdict that defendants infringed, but had remanded on the question of whether plaintiff’s pre-critical date activities constituted an “on sale” bar.  Judge John Feikens adopted Special Master Richard Grauer’s Report and Recommendation that plaintiff’s claims were barred by its own on-sale activities.  After reviewing the elements of a commercial offer vis-à-vis method claims and the law of the case doctrine, the report discusses in depth the sales and purchase practices of the automotive industry.  It concludes that plaintiff’s quotes—while not likely to be accepted without significant negotiations, back-and-forth, etc.–could have been accepted to create a binding contract, and thus qualify under Group One and establish an on-sale bar.