Monday, July 14, 2008

CAFC: Web-Based Implementation Deemed Obvious; Joint Infringement Nixed

Muniauction, Inc. v. Thomson Corp., July 14, 2008 (2007-1485)

After a jury trial, the district court ruled that Thomson wilfully infringed Muniauction's patent related to conducting original issuer auctions of financial instruments. The district court awarded enhanced damages, and entered a permanent injunction against Thomson. Shortly after trial, the Supreme Court issued KSR International Co. v. Teleflex, Inc., however the district court did not modify their finding that Muniauction's patent was not obvious.

While the appeal was pending, the CAFC issued two opinions relevant to this case: (1) In re Seagate (changing the standard of willful infringement from one akin to negligence to that of objective recklessness) and (2) BMC Resources (where steps of a method claim are performed by multiple parties, the entire method must be performed at the control or direction of the alleged direct infringer). Thomson argued that these cases rendered the patent invalid and/or established that Thomson did not infringe as a matter of law.

Obviousness

On the issue of obviousness, the CAFC found that Muniauction's patent was disclosed in the prior art, except that the prior art did not discuss the use of a web browser for performing the claimed features.

The CAFC noted that the patent specification identified the invention as using a "conventional Internet browser" and "conventional web browsing software." Accordingly, the CAFC acknowledged that this terminology "denotes a reference to web browsers in existence at the time of the alleged invention."

The CAFC also cited various patent and prior art publications that generally disclosed the use of Internet browsers for electronic auctions, and thus, indicated the obviousness of the claimed combination. Furthermore, citing Leapfrog Enterprises, the CAFC found that "adapting existing electronic processes to incorporate modern internet and web browser technology was similarly commonplace at the time the [] patent application was filed."

On secondary considerations, the CAFC noted that "[a] nexus between the merits of the claimed invention and evidence of secondary considerations is required in order for the evidence to be given substantial weight in an obviousness decision." Finding that Muniauction's evidence of secondary considerations lacked the requisite nexus to the claims, the CAFC ruled the patent was obvious as a matter of law.

Noninfringement

The only theory of infringement put forward by Muniauction was that of so-called joint infringement, which was addressed in BMC Resources v. Paymentech:

[W]here the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises "control or direction" over the entire process such that every step is attributable to the controlling party, i.e., the "mastermind." . . . At the other end of this multi-party spectrum, mere "arms-length cooperation" will not give rise to direct infringement by any party.
Muniauction's patent recited the feature of "inputting data associated with at least one bid for at least one fixed income financial instrument into said bidder’s computer via said input device." Since Thomson did not "input" data, nor "control" or "direct" users to perform the acts, the CAFC found there to be no infringement as well:

Under BMC Resources, the control or direction standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method . . . In this case, Thomson neither performed every step of the claimed methods nor had another party perform steps on its behalf, and Muniauction has identified no legal theory under which Thomson might be vicariously liable for the actions of the bidders. Therefore, Thomson does not infringe the asserted claims as a matter of law.
REVERSED-IN-PART AND VACATED-IN-PART

From the footnotes:

Footnote 3:
Because the ’099 patent is itself silent regarding how to actually implement the methods claimed therein with a web browser, Muniauction’s argument therefore might suggest that the claims present an enablement issue, rather than support a
conclusion of nonobviousness. See, e.g., Sitrick v. Dreamworks, LLC, 516 F.3d 993, 999 (Fed. Cir. 2008) ("The ‘enablement requirement is satisfied when one skilled in the art, after reading the specification, could practice the claimed invention without undue experimentation.’")
Footnote 4:
We further note that our conclusion as to the nexus between this award and the claims is consistent with the long-established rule that "[c]laims which are broad enough to read on obvious subject matter are unpatentable even though they also read on nonobvious subject matter." In re Lintner, 458 F.2d 1013, 1007 (CCPA 1972) (citing In re Mraz, 455 F.2d 1069, 1073 (CCPA 1972)).

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