09/28/14

H-W v. Overstock: Wait until after your Certificate of Correction Issues before Suing Someone else

Category: Claim Construction 
 
 
 
By: Abby Lin, Contributor 
 
TitleH-W Tech., LC v. Overstock.com, Inc., No. 2014-1054, -1055 (Fed. Cir. July 11, 2014).
Issues:
1) H-W appeals the district court’s construction of the claim terms “user of said phone” and “said user” to mean “a consumer operating the IP Phone.” H-W argues that the correct construction is “a person or thing that uses an IP phone.”
H-W Tech. LC, at *3 (internal citations omitted).
2a) [H-W appeals the summary judgment finding that claim 9, as presented prior to Certificate of Correction] is indefinite] H-W first argues that the district court itself had authority to correct the error in claim 9.
Id. at *5 (text added).
2b) H-W also argues that the district court “failed to factor the certificate of correction in [its] determination that claim 9 of the ‘955 Patent is indefinite and invalid.”
Id. at *8 (text added).
2c) Having concluded that the district court properly did not correct the patent claims itself or apply the certificate of correction to this lawsuit, the question remains whether H-W should be permitted to assert claim 9 uncorrected.
Id. at *9.
3) Finally, H-W appeals the district court’s holding that claim 17 is indefinite and invalid.
Id. at *10.
Holdings:
1) In sum, the only significant evidence that supports H-W’s position is a single, arguably marginally applicable, dictionary definition. The district court’s construction, on the other hand, is supported by the claims themselves, the specification, and the weight of the extrinsic evidence. We thus affirm the district court’s construction of “user of said phone” and “said user” to mean “a consumer operating the IP Phone.”
H-W Tech. LC, at *5.
2a) The parties appear to agree that the PTO’s error is clear on the face of the prosecution history. But this court has already deemed evidence of error in the prosecution history alone insufficient to allow the district court to correct the error. See Grp. One, 407 F.3d at 1303 (“The error here is not evident on the face of the patent. The prosecution history discloses that the missing language was required to be added by the examiner as a condition for issuance, but one cannot discern what language is missing simply by reading the patent. The district court does not have authority to correct the patent in such circumstances.”). In sum, we hold that the district court did not have authority to correct the error in claim 9 and correctly declined to do so.
Id. at *8.
2b) Based on the plain language of the statute, this court has specifically held that “[t]he certificate of correction is only effective for causes of action arising after it was issued.” Sw. Software, Inc. v. Harlequin Inc., 226 F.3d 1280, 1294–95 (Fed. Cir. 2000). [Since H-W filed before the Certificate of Correction issued, the District Court did not err.]
Id. at *9 (text added).
2c) When, as here, a claim issues that omits a material limitation, and such omission is not evident on the face of the patent, the patentee cannot assert that claim until it has been corrected by the PTO…. Regardless, the district court was correct to conclude that H-W cannot assert either the original or corrected versions of claim 9 in this lawsuit. The judgment of the district court in favor of Overstock and against H-W is thus correct. Still, in order to clarify that claim 9, as corrected, has not yet been litigated and, thus, has not been held invalid, we strike the portion of the judgment that holds claim 9 invalid.
Id. at *9-10.
3) And, as in those cases [IPXL and In re Katz], it is unclear here when infringement would occur. Claim 17 is thus indefinite. Accordingly, we affirm the district court’s holding that claim 17 is invalid.
Id. at *13.
 
 
Procedural HistoryH-W filed this suit in March 2012 and submitted infringement contentions in July of that year. That October, Overstock notified H-W that claim 9, as issued, was missing a limitation. It was not until late May 2013 that H-W obtained a certificate of correction from the U.S. Patent and Trademark Office (“PTO”) and subsequently submitted it to the district court. In the meantime, the parties had completed their summary judgment and claim construction briefing. A few months later, the district court [of the Northern District of Texas] construed the claims and granted summary judgment of invalidity, holding that claims 9 and 17 were indefinite. H-W Tech., LC v. Overstock.com. Inc., 973 F. Supp. 2d 689, 690 (N.D. Tex. 2013); J.A. 3. H-W timely appealed.
H-W Tech. LC, at *2-3 (text added).
 
 
Legal Reasoning (PROST, O’Malley):
Background
Claim 9Claim 9, as approved by the PTO, reads as follows:

9. A method for performing contextual searches on an Internet Phone (IP) phone comprising the steps of:

receiving a command to perform a contextual search;

receiving search criteria from a user of said IP phone;

submitting said search criteria to a server coupled to said IP phone; and

receiving from said server a list of merchants matching said search criteria and information regarding each of said merchants in said list;

wherein said user completes a transaction with at least one of said merchants listed without the need to generate a voice call;

wherein said information received by said user comprises a variety of offers, wherein said user selects one of said variety of offers associated with said one of said merchants listed, wherein said selected offer is transmitted to said one of said merchants listed electronically; and wherein said user’s contact and payment information is not transmitted to said one of said merchants listed, wherein said user’s contact and payment information is available to said one of said merchants listed. J.A. 1824 (emphasis added).

When the PTO issued the patent, however, the italicized language was inadvertently omitted. As noted, in its complaint in this case H-W asserted the uncorrected claim.

H-W Tech. LC, at *5-6 (text added).
Claim 1717. A tangible computer readable medium encoded with computer program for performing contextual searches on an Internet Phone (IP) phone comprising the steps of:

receiving a command to perform a contextual search;

receiving search criteria from a user of said IP phone;

submitting said search criteria to a server coupled to said IP phone; and

receiving from said server a list of merchants matching said search criteria and information regarding each of said merchants in said list;

wherein said user completes a transaction with at least one of said merchants listed without the need to generate a voice call; wherein said information received by said user comprises a variety of offers, wherein said user selects one of said variety of offers associated with said one of said merchants listed, wherein said selected offer is transmitted to said one of said merchants listed electronically; and wherein said user’s contact and payment information is not transmitted to said one of said merchants listed, wherein said user’s contact and payment information is available to said one of said merchants listed.
’955 patent col. 28 l. 61–col. 29 l. 15 (emphases added).

Id. at *10-11.
Claim ConstructionClaim construction is a question of law that we review without deference. Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 744 F.3d 1272, 1276–77 (Fed. Cir. 2014) (en banc); Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en banc). In construing claims, this court relies primarily on the claim language, the specification, and the prosecution history. Phillips v. AWH Corp., 415 F.3d 1303, 1314–17 (Fed. Cir. 2005) (en banc). After considering this intrinsic evidence, a court may also seek guidance from extrinsic evidence such as expert testimony, dictionaries, and treatises. Id. at 1317–18.
Id. at *2-3.
Regional Standard of Review and IndefinitenessApplying the law of the regional circuit, we review the grant of summary judgment de novo. E.g., LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 66 (Fed. Cir. 2012). Indefiniteness is a question of law that is also reviewed de novo. E.g., Exxon Research & Eng’g Co. v. United States, 265 F.3d 1371, 1376 (Fed. Cir. 2001).
Id. at *5.
Correcting PatentsA district court can correct a patent only if, among other things, “the error is evident from the face of the patent.” Grp. One, Ltd. v. Hallmark Cards, Inc., 407 F.3d 1297, 1303 (Fed. Cir. 2005); see Novo Indus., L.P. v. Micro Molds Corp., 350 F.3d 1348, 1357 (Fed. Cir. 2003).
Id. at *6.
When to Consider Certificate of CorrectionCertificates of correction are governed by 35 U.S.C. § 254, which states:

Whenever a mistake in a patent, incurred through the fault of the Patent and Trademark Office, is clearly disclosed by the records of the Office, the Director may issue a certificate of correction stating the fact and nature of such mistake, under seal, without charge, to be recorded in the records of patents. A printed copy thereof shall be attached to each printed copy of the patent, and such certificate shall be considered as part of the original patent. Every such patent, together with such certificate, shall have the same effect and operation in law on the trial of actions for causes thereafter arising as if the same had been originally issued in such corrected form. The Director may issue a corrected patent without charge in lieu of and with like effect as a certificate of correction.
(Emphasis added.)

Based on the plain language of the statute, this court has specifically held that “[t]he certificate of correction is only effective for causes of action arising after it was issued.” Sw. Software, Inc. v. Harlequin Inc., 226 F.3d 1280, 1294–95 (Fed. Cir. 2000).

Id. at *8-9.
1) Claim Construction Not Supported By Extrinsic/Instrinsic Evidence Not Valid
H-W argues that a “user of said phone” could be a “thing.” The only significant evidence H-W supplies in support of this contention, other than conclusory and undeveloped citations to the specification, is a general purpose dictionary definition of “user” as “a person or thing that uses something.” J.A. 754.

In contrast, the district court’s construction—that “user of said phone” is limited to a human consumer— finds plenty of support in the claims, specification, and extrinsic evidence. The claims, for example, reference “said user’s contact and payment information.” ’955 patent col. 28 ll. 25–28. Contact and payment information is not something one would expect a “thing” to possess. And the person using the IP Phone is a consumer because the person is purchasing products or services. E.g., id. col. 28 ll. 20–24 (“said user completes a transaction with at least one of said merchants”).

The specification contains further support for the proposition that a user is a person and not a thing. For example, the user of an IP Phone could enter information “by pressing certain areas in the screen with a finger.” Id. col. 6 ll. 65–66. Such reference to a finger indicates that the user is a person. Further, at times the specification even equates “user” with “consumer.” … As to extrinsic evidence, the inventors testified that a user is “whoever is operating the phone” and “the person that’s ordering the pizza [completing the transaction] . . . .” Claim Construction Order at *9. Overstock also counters H-W’s dictionary evidence by pointing to the general purpose Merriam-Webster dictionary which defines “user” as “one who uses.” J.A. 751.

H-W Tech. LC, at *4-5.
2) Claim 9 – Certificate of Correction
a) Error not Evident In Patent If Specification Says Missing Limitation is OptionalA district court can correct a patent only if, among other things, “the error is evident from the face of the patent.” Grp. One, Ltd. v. Hallmark Cards, Inc., 407 F.3d 1297, 1303 (Fed. Cir. 2005); see Novo Indus., L.P. v. Micro Molds Corp., 350 F.3d 1348, 1357 (Fed. Cir. 2003).

Here, the error is not “evident from the face of the patent.” Claim 9 reads coherently without the missing limitation. Nothing in the surrounding claim language indicates that the limitation was missing. Although other claims do contain the missing limitation, the inclusion of that limitation in one claim does not necessitate, or even fairly indicate, that the limitation should be included in all other claims. See SRI Int’l v. Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1122 (Fed. Cir. 1985) (“It is settled law that when a patent claim does not contain a certain limitation and another claim does, that limitation cannot be read into the former claim in determining either validity or infringement.”).

[H-W then argued that the specification clearly included the ‘no-contact transactions’ limitation at issue. However, the Federal Circuit found that the specification stated “no-contact transactions” appeared to be optional and therefore not necessary to the invention.]

The optional nature of such services negates any argument that such a limitation in the claim is implied as necessary to the invention. See Phillips, 415 F.3d at 1323 (warning against “importing limitations from the specification into the claims”)…In sum, we hold that the district court did not have authority to correct the error in claim 9 and correctly declined to do so.

H-W Tech. LC, at *6-8 (text added).
b) Certificate of Correction Is Effective Only For Causes Filed after Issuance[Per 35 U.S.C. 254, causes filed after certificate of correction has been issued are considered to have the corrected claims.] Here, H-W filed this suit before the certificate of correction issued, and neither party has argued that this suit involves causes of action arising after the certificate of correction issued. Indeed, it appears that H-W never even sought to amend the complaint to reflect the correction of claim 9. Thus, the district court was correct not to consider the certificate of correction when determining whether H-W could assert claim 9.
Id. at *9.
c) Claim 9 Uncorrected Cannot Be Asserted Because A Material Limitation was Missing and Not Corrected by the PTO.When, as here, a claim issues that omits a material limitation, and such omission is not evident on the face of the patent, the patentee cannot assert that claim until it has been corrected by the PTO. To hold otherwise would potentially permit patentees to assert claims that they never asked for nor rightly attained. Such a result would be inequitable and undermine the notice function of patents.

We note that this holding is, in some ways, more akin to unenforceability than invalidity—the framework generally used by the parties and the district court here. For example, unlike invalidity, unenforceability of a patent may be cured under certain circumstances. See, e.g., Morton Salt Co. v. G. S. Suppiger Co., 314 U.S. 488, 493 (1942), abrogated on other grounds by Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006) (“Equity may rightly withhold its assistance from such a use of the patent by declining to entertain a suit for infringement, and should do so at least until it is made to appear that the improper practice has been abandoned and that the consequences of the misuse of the patent have been dissipated.”).

Regardless, the district court was correct to conclude that H-W cannot assert either the original or corrected versions of claim 9 in this lawsuit. The judgment of the district court in favor of Overstock and against H-W is thus correct. Still, in order to clarify that claim 9, as corrected, has not yet been litigated and, thus, has not been held invalid, we strike the portion of the judgment that holds claim 9 invalid.

Id. at *9-10.
3) A Claim that Combines two statutory classes of invention is indefinite because it is unclear when infringement occurs.
Method and Apparatus MixThe district court held that the italicized limitations were method limitations and that apparatus claim 17 thus combines two statutory classes of invention. The rationale behind invalidating such a claim as indefinite is that it is unclear when infringement occurs.
H-W Tech. LC, at *11.
IPXL and In re Katz PrecedentAs noted by the district court, this case is very similar to two cases, IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005), and In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303, 1318 (Fed. Cir. 2011). In each of those cases this court held claims indefinite for combining two classes of invention.

The claim at issue in IPXL is reproduced below:
The system of claim 2 [including an input means] wherein the predicted transaction information comprises both a transaction type and transaction parameters associated with that transaction type, and the user uses the input means to either change the predicted transaction information or accept the displayed transaction type and transaction parameters. IPXL, 430 F.3d at 1384 (citation omitted).

The IPXL court reasoned as follows:
[I]t is unclear whether infringement of [the claim] occurs when one creates a system that allows the user to change the predicted transaction information or accept the displayed transaction, or whether infringement occurs when the user actually uses the input means to change transaction information or uses the input means to accept a displayed transaction. Because [the claim] recites both a system and the method for using that system, it does not apprise a person of ordinary skill in the art of its scope, and it is invalid under section 112, paragraph 2. Id.

Similarly, the court in In re Katz stated: Like the language used in the claim at issue in IPXL (“wherein . . . the user uses”), the language used in Katz’s claims (“wherein . . . callers digitally enter data” and “wherein . . . callers provide . . . data”) is directed to user actions, not system capabilities. In re Katz, 639 F.3d at 1318.

The present case falls squarely within the IPXL and In re Katz holdings. Here, the disputed language (“wherein said user completes . . .” and “wherein said user selects . . .”) is nearly identical to the disputed language in those cases. And, as in those cases, it is unclear here when infringement would occur. Claim 17 is thus indefinite. Accordingly, we affirm the district court’s holding that claim 17 is invalid.
Id. at *11-12.
Conclusion
We conclude that the district court correctly construed the claims and held claim 17 invalid. The district court also correctly held that H-W cannot assert either the uncorrected or corrected versions of claim 9 in this lawsuit. We thus affirm those holdings. However, for the sake of clarity, we strike the portion of the final judgment holding claim 9 invalid. This is to clarify that claim 9, as corrected, has not yet been the subject of litigation and, therefore, has not been held invalid.
H-W Tech. LC, at *13.
 
 
 Image Attribution Statement: Petr Kratochvil, "Broken Cell Phone," available as a Public Domain image released by author, http://www.publicdomainpictures.net/view-image.php?image=25387&picture=broken-cell-phone (last visited Sept. 28, 2014) (image modified).
 
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