As a reminder, here's the case-law standard for infringement analysis.

With this backdrop, an infringement analysis is a two-step process: “First, the court determines the scope and meaning of the patent claims asserted . . . [and second,] the properly construed claims are compared to the allegedly infringing device.” Cybor Corp., 138 F.3d at 1454 (citations omitted). “Step one, claim construction, is a question of law, that we review de novo. Step two, comparison of the claims to the accused device, is a question of fact, and requires a determination that every claim limitation or its equivalent be found in the accused device.” N. Am. Container, Inc. v. Plastipak Packaging, Inc., 415 F.3d 1335, 1344 (Fed. Cir. 2005) (citations omitted).

In a bizarre reprise of the recent Wilson Sporting Goods case, the CAFC struck an ominous note about having to know about the accused products before having "proper context for an accurate claim construction." In this case, however, making that point was off-point, because the CAFC lacked information about the accused product, even complaining about it.

In addition, this record on appeal does not supply any meaningful comparison of the accused products to the asserted claims. Without knowledge of the accused products, this court cannot assess the accuracy of the infringement judgment under review and lacks a proper context for an accurate claim construction. “While a trial court should certainly not prejudge the ultimate infringement analysis by construing claims with an aim to include or exclude an accused product or process, knowledge of that product or process provides meaningful context for the first step of the infringement analysis, claim construction.” Wilson Sporting Goods Co. v. Hillerich & Bradsby Co., 2006 WL 722127, slip op. at 7 (Fed. Cir. 2006) (citing SRI Int’l v. Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1118 (Fed. Cir. 1985); Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565, 1580 (Fed. Cir. 1991); Multiform Dessicants, Inc. v. Medzan, Ltd., 133 F.3d 1473, 1476-78 (Fed. Cir. 1998); Pall Corp. v. Hemasure Inc., 181 F.3d 1305, 1308 (Fed. Cir. 1999)). Without the vital contextual knowledge of the accused products or processes, this appeal takes on the attributes of something akin to an advisory opinion on the scope of the ’982 patent. The problems with such an appeal, even if within this court’s jurisdiction, have been noted in many of the court’s prior cases. See, e.g., id. (citing Bayer AG. v. Biovail Corp., 279 F.3d 1340, 1349 (Fed. Cir. 2002); CVI/Beta Ventures Inc. v. Tura LP, 112 F.3d 1146, 1160 n.7 (Fed. Cir. 1997)).

This ruling is thus supportive of Wilson, that a proper claim construction takes into account the accused product. But without knowing about the accused product, in view of Wilson, this ruling is oxymoronic, in that the CAFC took the case without a sufficiently developed record upon which to rule. Judge Mayer's dissent in this case echoes this opinion. The Lava v. Sonic ruling thus reinforces a bad precedent, muddying the distinction between claim construction as a matter of law, and fact-based infringement determination by comparing claim limitations to the accused product. Claim construction should be self-contained, without regard to the accused product. If the accused product enters into claim construction, that could argue, insensibly, for different claim constructions depending upon the accused products. That is precisely why infringement analysis should be a two-step process, not a leaky one-and-a-half step process as decided in Wilson.

The word "distributing" was the clincher claim term. The district court had ruled that it meant the whole combined order book, not just part of the book. The CAFC caught the error, noting the preamble language of "a" security, not necessarily "all" securities. Of course, whether "one" or "all" also relates to the scope of the also-disputed term "displaying." Here's an instance where the preamble provided for a broadening interpretation of a claim limitation.

On the merits, the parties dispute the meaning of two related limitations in the ’982 patent, “distributing” and “displaying” a combined order book to a trader. Independent claim 9 recites both limitations:

9. A data processing method for providing trading information to traders in a security or commodity from two or more alternative trading systems, comprising the steps of:
    receiving order book information from each participating alternative trading system in order book information protocols native to the particular alternative trading system;
    converting the information to a common system order book protocol;
    integrating the order book information from each alternative trading system into a single order book;
    distributing the combined order book to the traders in the common system order book protocol; and
    displaying said combined order book to the traders.

The district court construed the disputed limitations during a Markman hearing without issuing a formal claim construction order. Instead, the district court stated its claim construction from the bench at the close of the hearing. A district court retains discretion to rule in this manner, but in this instance the trial court’s oral recitation provides a very sparse explanation of the findings and reasoning supporting the claim construction.

Regarding the distributing limitation, the district court concluded that it “simply means distributing the combined order book -- that means in terms of the specification the consolidated order book -- pertaining to all orders from all ECN members.” Claim Construction Order at 442-43. In other words, the distributing limitation requires the distribution of the whole combined order book to the trader. The district court similarly construed the displaying limitation, concluding the system must display the whole combined order book for the trader. Upon review, the district court’s interpretation of the “distributing” and “displaying” limitations conflicts with the plain meaning of claim 9 and excludes embodiments disclosed in the specification.

According to its preamble, claim 9 “provid[es] trading information to traders in a security or commodity” rather than “all” securities or commodities. ’982 patent, col. 14, ll. 1-2 (emphasis added). By selecting the word “a” instead of “all,” the Applicant set forth a method wherein the traders may request and receive information for only a subset of the securities (i.e., one or more). See KCJ Corp. v. Kinetics Concepts, Inc., 223 F.3d 1351, 1356 (Fed. Cir. 2000) (the word “a” generally means “one or more” in open-ended claims). Thus, the language of the claim itself does not require the system to distribute or display the whole combined order book.

Furthermore, the specification discloses embodiments that distribute and display information for only a subset of the combined order book.

As a sidebar, Lava had advanced one claim construction for the word "distributing", which the district court shot down. Retaining new counsel, Lava advanced a different notion for "distributing," which the district court ignored. The defendants argued that Lava was judicially estopped from advancing the new claim construction on appeal. The CAFC replied that judicial estoppel only applied if the argument had gotten any traction in court; unsuccessful arguments weren't estopped.

At the outset, judicial estoppel does not normally apply on appeal to prevent a party from altering an unsuccessful position before the trial court. See RF Del., Inc. v. Pacific Keystone Tech., Inc., 326 F.3d 1255, 1262 (Fed. Cir. 2003) (quoting Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1565 (Fed. Cir. 1996)) (“The doctrine of judicial estoppel is that where a party successfully urges a particular position in a legal proceeding, it is estopped from taking a contrary position in a subsequent proceeding where its interests have changed.”) (emphasis in original). Thus, estoppel would not bar Lava from departing from a claim construction theory unsuccessfully advocated before the trial court.

The CAFC noted that the differences in Lava's two theories didn't amount to much anyway.

Judge Mayer dissented, lamenting taking the case with such an undeveloped record. Mayer also doesn't like the concept that claim construction is viewed purely as a matter of law.

The decision today is yet another example of the unfortunate consequences of Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc), Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), and Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), which cemented this court’s jurisprudence with respect to claim construction as being purely a matter of law subject to de novo review. Because claim construction is treated as a matter of law chimerically devoid of underlying factual determinations, there are no "facts" on the record to prevent parties from presenting claim construction one way in the trial court and in an entirely different way in this court. By not dismissing this case, we issue a decision based on an undeveloped record. We set ourselves up to have to decide claim construction again later, which could well differ from the ruling today. Furthermore, allowance of an appeal of the trial court’s perfunctory, offhand ruling from the bench, for all intents and purposes allows an interlocutory appeal of claim construction, which portends chaos in process.