IP News

Federal Circuit Limits Patent Claims Based on Specification

In On Demand Machine Corp. v. Ingram Indus., Inc., Nos. 05-1074, 05-1075, 05-1100, 2006 WL 827302 (Fed. Cir. Mar. 31, 2006), the U.S. Court of Appeals for the Federal Circuit overturned a verdict of infringement after concluding that the jury relied on an incorrect claim construction of U.S. Patent 5,465,213 ('the Ross patent'), which is owned by On Demand Machine Corp. ('ODMC').

The Ross patent, titled 'System and Method of Manufacturing a Single Book Copy,' describes an arrangement whereby a retailer seller of books provides a computer containing promotional information, as well as the complete text of the book and the cover. According to the 'Summary of Invention,' the customer can browse the promotional information and select a book for purchase, which is then printed and bound, preferably at the same site.

Defendant Lightning Source is a book printing company whose corporate parent is defendant Ingram Industries. Lightning Source prints and sells books to publishers, wholesalers, and retailers, such as Amazon.com (another defendant in this case). Lightning Source does not sell to the public. Purchasers may order books through its Web site or by electronic data interchange, identifying the book by its title and author, or ISBN. Amazon.com sells books and other products to the public over the Internet. Amazon's Web site provides promotional and sales information on individual books. Amazon, however, does not print books.

After Lightning Source refused an offer to license the Ross patent, ODMC filed suit alleging willful infringement of claims 7 and 8. The district court construed the claims, and the case was heard by a jury, which returned a verdict of infringement and awarded $15 million in compensatory damages. The jury also found that infringement was willful, but the court declined to award enhanced damages and attorneys' fees.

On appeal, the defendants challenged the district court's claim construction. In considering the defendants' arguments, the Federal Circuit cited its opinion in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), which 'stressed the dominance of the specification in understanding the scope and defining the limits of the terms used in the claim … '

Relying on the specification of the Ross patent (and in some instances the prosecution history), the Federal Circuit found that the district judge had construed the claims of the Ross patent too broadly. For example, the district court had found that the term 'customer' was 'one who buys goods or services,' and was not limited to retail customers. The Federal Circuit found, however, that the specification 'repeatedly reinforces its usage of the term 'customer' as the retailer customer.' The Federal Circuit then found that Lightning Source could not meet this claim limitation because books were ordered from Lightning Source by resellers, not retail customers.

After reversing the district court's claim construction of various terms, the Federal Circuit concluded that no reasonable jury could find infringement.

 

Fisher-Price Prevails in Patent Suit Brought By LeapFrog

In LeapFrog Enterprises, Inc. v. Fisher-Price, Inc., No. 03-927, 2006 WL 891001 (D. Del. Mar. 30, 2006), the U.S. District Court for the District of Delaware ruled that Fisher-Price, Inc. and Mattel, Inc. did not infringe claim 25 of U.S. Patent No. 5,813,861 ('the '861 patent'), owned by LeapFrog Enterprises, Inc. The court also ruled that claim 25 of the '861 patent was invalid as obvious in light of the prior art. This case originally went to trial in May 2005, but the jury became deadlocked and a mistrial was declared.

The parties agreed to submit the disputed factual matters to Judge Gregory M. Sleet for resolution.

The '861 patent relates to an interactive learning device. Claim 25 reads as follows:

An interactive learning device, comprising:

a housing including a plurality of switches;

a sound production device in communication with the switches and including a processor and a memory;

at least one depiction of a se-quence of letters, each letter being associable with a switch; and

a reader configured to communicate the identity of the depiction to the processor, wherein selection of a depicted letter activates an associated switch to communicate with the processor, causing the sound production device to generate a signal corresponding to a sound associated with the selected letter, the sound being determined by a position of the letter in the sequence of letters.

The accused device, Fisher-Price's PowerTouch', is also an interactive learning device. The PowerTouch consists of a hinged plastic housing that, when open, is configured to accept one of many books that contain depictions of characters performing activities with descriptive labels near each character. When in a so-called 'phonics' mode, the PowerTouch verbally prompts the user to touch one of the many words depicted on the page. When the user touches a word, the PowerTouch pronounces the entire word, then sounds out each phonetic unit of the word, and then pronounces the entire word again.

The court found that the Power-Touch does not infringe claim 25 because it does not meet the limitation that a user must be able to ”choos[e] a particular depicted letter from the depicted sequence of letters by contacting or coming into proximity to that particular depicted letter.” The court further determined that the device will make the same sounds no matter which letter is selected from a word. In other words, the PowerTouch will sound out each of the phonetic units of the word 'Baker,' in the same way, no matter whether the user presses the letter B or the letter R.

Claim 25 of the '861 patent was also found to be invalid for obviousness. The court, which relied on testimony that the electronic components of claim 25 were well known as of the critical date, found an 'inherent motivation to combine' based on the ubiquity of these components.

 

WIPO Member States Adopt New International Trademark Treaty

On March 28, 2006, a new international treaty on trademarks, known as the 'Singapore Treaty on the Law of Trademarks,' was adopted by member states of the World Intellectual Property Organization ('WIPO'). By signing the treaty, countries agree to reform their own laws to be consistent with the guidelines of the treaty. The treaty resulted from negotiation sessions that took place from March 13-28, wherein the purpose was to revise the 1994 Trademark Law Treaty.

The changes mainly relate to procedural aspects of trademark registration and licensing, and will benefit national and regional trademark administration authorities in terms of simplified and streamlined procedures, including electronic filing processes. According to WIPO's press release, however, 'some developing countries … expressed concern about their ability to fully benefit from the Treaty.' Industrialized countries responded to this concern by committing to provide adequate technical assistance and other forms of support to enable them to reap the benefits of the treaty.

 

Supreme Court Hears Arguments in Case Involving the Use of Permanent Injunctions

On March 29, 2006, the U.S. Supreme Court heard arguments in the case between eBay Inc. and MercExchange, LLC. The justices were faced with the issue of whether the Federal Circuit erred when it set forth a general rule in patent cases that a district court must issue a permanent injunction after a finding of infringement and validity (absent exceptional circumstances). See MercExchange, LLC v. eBay Inc., 401 F.3d 1323, 1338 (Fed. Cir. 2005).

In September 2001, a jury found that eBay had infringed MercExhange's patents, but the district court declined to issue a permanent injunction. The district court justified its denial of MercExchange's motion for a permanent injunction arguing that: 1) the public interest favored the denial in light of a growing concern over the issuance of business-method patents; 2) the defendants would attempt to design around the injunction, resulting in numerous contempt hearings to determine if changes to the defendants' systems violates the injunction; 3) MercExchange had made public statements regarding its willingness to license its patents; and 4) Merc-Exchange had not moved for a preliminary injunction.

On appeal, the Federal Circuit reversed the denial of the permanent injunction, stating that the 'general rule is that a permanent injunction will issue once infringement and validity has been adjudged.'

According to analysts, several of the justices expressed skepticism with eBay's arguments and appeared to be reluctant to weaken the use of permanent injunctions.

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Eric Agovino is an associate in the New York office of Kenyon & Kenyon LLP. He can be reached at 212-908-6858.

Federal Circuit Limits Patent Claims Based on Specification

In On Demand Machine Corp. v. Ingram Indus., Inc., Nos. 05-1074, 05-1075, 05-1100, 2006 WL 827302 (Fed. Cir. Mar. 31, 2006), the U.S. Court of Appeals for the Federal Circuit overturned a verdict of infringement after concluding that the jury relied on an incorrect claim construction of U.S. Patent 5,465,213 ('the Ross patent'), which is owned by On Demand Machine Corp. ('ODMC').

The Ross patent, titled 'System and Method of Manufacturing a Single Book Copy,' describes an arrangement whereby a retailer seller of books provides a computer containing promotional information, as well as the complete text of the book and the cover. According to the 'Summary of Invention,' the customer can browse the promotional information and select a book for purchase, which is then printed and bound, preferably at the same site.

Defendant Lightning Source is a book printing company whose corporate parent is defendant Ingram Industries. Lightning Source prints and sells books to publishers, wholesalers, and retailers, such as Amazon.com (another defendant in this case). Lightning Source does not sell to the public. Purchasers may order books through its Web site or by electronic data interchange, identifying the book by its title and author, or ISBN. Amazon.com sells books and other products to the public over the Internet. Amazon's Web site provides promotional and sales information on individual books. Amazon, however, does not print books.

After Lightning Source refused an offer to license the Ross patent, ODMC filed suit alleging willful infringement of claims 7 and 8. The district court construed the claims, and the case was heard by a jury, which returned a verdict of infringement and awarded $15 million in compensatory damages. The jury also found that infringement was willful, but the court declined to award enhanced damages and attorneys' fees.

On appeal, the defendants challenged the district court's claim construction. In considering the defendants' arguments, the Federal Circuit cited its opinion in Phillips v. AWH Corp. , 415 F.3d 1303 (Fed. Cir. 2005) (en banc), which 'stressed the dominance of the specification in understanding the scope and defining the limits of the terms used in the claim … '

Relying on the specification of the Ross patent (and in some instances the prosecution history), the Federal Circuit found that the district judge had construed the claims of the Ross patent too broadly. For example, the district court had found that the term 'customer' was 'one who buys goods or services,' and was not limited to retail customers. The Federal Circuit found, however, that the specification 'repeatedly reinforces its usage of the term 'customer' as the retailer customer.' The Federal Circuit then found that Lightning Source could not meet this claim limitation because books were ordered from Lightning Source by resellers, not retail customers.

After reversing the district court's claim construction of various terms, the Federal Circuit concluded that no reasonable jury could find infringement.

 

Fisher-Price Prevails in Patent Suit Brought By LeapFrog

In LeapFrog Enterprises, Inc. v. Fisher-Price, Inc., No. 03-927, 2006 WL 891001 (D. Del. Mar. 30, 2006), the U.S. District Court for the District of Delaware ruled that Fisher-Price, Inc. and Mattel, Inc. did not infringe claim 25 of U.S. Patent No. 5,813,861 ('the '861 patent'), owned by LeapFrog Enterprises, Inc. The court also ruled that claim 25 of the '861 patent was invalid as obvious in light of the prior art. This case originally went to trial in May 2005, but the jury became deadlocked and a mistrial was declared.

The parties agreed to submit the disputed factual matters to Judge Gregory M. Sleet for resolution.

The '861 patent relates to an interactive learning device. Claim 25 reads as follows:

An interactive learning device, comprising:

a housing including a plurality of switches;

a sound production device in communication with the switches and including a processor and a memory;

at least one depiction of a se-quence of letters, each letter being associable with a switch; and

a reader configured to communicate the identity of the depiction to the processor, wherein selection of a depicted letter activates an associated switch to communicate with the processor, causing the sound production device to generate a signal corresponding to a sound associated with the selected letter, the sound being determined by a position of the letter in the sequence of letters.

The accused device, Fisher-Price's PowerTouch', is also an interactive learning device. The PowerTouch consists of a hinged plastic housing that, when open, is configured to accept one of many books that contain depictions of characters performing activities with descriptive labels near each character. When in a so-called 'phonics' mode, the PowerTouch verbally prompts the user to touch one of the many words depicted on the page. When the user touches a word, the PowerTouch pronounces the entire word, then sounds out each phonetic unit of the word, and then pronounces the entire word again.

The court found that the Power-Touch does not infringe claim 25 because it does not meet the limitation that a user must be able to ”choos[e] a particular depicted letter from the depicted sequence of letters by contacting or coming into proximity to that particular depicted letter.” The court further determined that the device will make the same sounds no matter which letter is selected from a word. In other words, the PowerTouch will sound out each of the phonetic units of the word 'Baker,' in the same way, no matter whether the user presses the letter B or the letter R.

Claim 25 of the '861 patent was also found to be invalid for obviousness. The court, which relied on testimony that the electronic components of claim 25 were well known as of the critical date, found an 'inherent motivation to combine' based on the ubiquity of these components.

 

WIPO Member States Adopt New International Trademark Treaty

On March 28, 2006, a new international treaty on trademarks, known as the 'Singapore Treaty on the Law of Trademarks,' was adopted by member states of the World Intellectual Property Organization ('WIPO'). By signing the treaty, countries agree to reform their own laws to be consistent with the guidelines of the treaty. The treaty resulted from negotiation sessions that took place from March 13-28, wherein the purpose was to revise the 1994 Trademark Law Treaty.

The changes mainly relate to procedural aspects of trademark registration and licensing, and will benefit national and regional trademark administration authorities in terms of simplified and streamlined procedures, including electronic filing processes. According to WIPO's press release, however, 'some developing countries … expressed concern about their ability to fully benefit from the Treaty.' Industrialized countries responded to this concern by committing to provide adequate technical assistance and other forms of support to enable them to reap the benefits of the treaty.

 

Supreme Court Hears Arguments in Case Involving the Use of Permanent Injunctions

On March 29, 2006, the U.S. Supreme Court heard arguments in the case between eBay Inc. and MercExchange, LLC. The justices were faced with the issue of whether the Federal Circuit erred when it set forth a general rule in patent cases that a district court must issue a permanent injunction after a finding of infringement and validity (absent exceptional circumstances). See MercExchange, LLC v. eBay Inc., 401 F.3d 1323, 1338 (Fed. Cir. 2005).

In September 2001, a jury found that eBay had infringed MercExhange's patents, but the district court declined to issue a permanent injunction. The district court justified its denial of MercExchange's motion for a permanent injunction arguing that: 1) the public interest favored the denial in light of a growing concern over the issuance of business-method patents; 2) the defendants would attempt to design around the injunction, resulting in numerous contempt hearings to determine if changes to the defendants' systems violates the injunction; 3) MercExchange had made public statements regarding its willingness to license its patents; and 4) Merc-Exchange had not moved for a preliminary injunction.

On appeal, the Federal Circuit reversed the denial of the permanent injunction, stating that the 'general rule is that a permanent injunction will issue once infringement and validity has been adjudged.'

According to analysts, several of the justices expressed skepticism with eBay's arguments and appeared to be reluctant to weaken the use of permanent injunctions.

---

Eric Agovino is an associate in the New York office of Kenyon & Kenyon LLP. He can be reached at 212-908-6858.