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February 27, 2010


Trading Technologies sued eSpeed and Ecco for infringing 6,772,132 & 6,766,304, which go to displaying "static price levels" on a computerized board for commodity trading. One service product infringed, but others literally did not, and applying the doctrine of equivalents was proscribed. Defenses to indefiniteness and inequitable conduct went nowhere, as did on-sale bar (§ 102(b)) based on a provisional priority date. Affirmation on appeal toted up dynamic case law quotes, not on sale, but ones that litigators must buy.

Trading Technologies v. eSpeed and Ecco (CAFC 2008-1392, -1393, -1422) precedential


Evaluation of summary judgment of non-infringement requires two steps--proper claim construction and comparison of those claims to the accused product. Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282, 1288 (Fed. Cir. 2009). Because the parties dispute the meaning of terms in the asserted claims, this court reviews the district court's claim construction order under the requirements of Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

Claim Construction

The CAFC panel soliloquized on injecting factual understanding into claim construction as a matter of law. This to finally admit to simplistic inconstancy with Supreme Court precedent by the CAFC's own Cybor ruling.

The Supreme Court in Markman held that "the construction of a patent, including terms of art within its claim, is exclusively within the province of the court." Id. at 372. The Supreme Court recognized that claim construction "falls somewhere between a pristine legal standard and a simple historical fact." Id. at 388 (quoting Miller v. Fenton, 474 U.S. 104, 114 (1985)). Although claim construction is not a purely legal matter, the Supreme Court found "sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings." Id. at 390.

Nevertheless, in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), this court interpreted Markman as holding that claim construction was solely a question of law, which this court should review without deference. Id. at 1451. The question presented before the Supreme Court was "whether the interpretation of a so-called patent claim . . . is a matter of law reserved entirely for the court, or subject to a Seventh Amendment guarantee that a jury will determine the meaning of any disputed term of an art about which expert testimony is offered." Markman, 517 U.S. at 372. Although the Supreme Court addressed only the role of the trial court in claim construction, this court understood that "the Supreme Court was addressing under which category, fact or law, claim construction should fall." Cybor, 138 F.3d at 1455. This court concluded that "[n]othing in the Supreme Court's opinion supports the view that the Court endorsed a silent, third option--that claim construction may involve subsidiary or underlying questions of fact." Id.

An examination of the Supreme Court's ruling in Markman shows multiple references to factual components of claim construction:

• "[C]onstruing a term of art following receipt of evidence" is "a mongrel practice." Id. at 378.
• Claim construction "falls somewhere between a pristine legal standard and a simple historical fact." Id. at 388.
• "We accordingly think there is sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings." Id. at 390.

These references in the Supreme Court opinion leaves this court stranded between the language in the Court's decision and the language in this court's Cybor decision.

In order to resolve this case, this court must confront findings by the trial court about the meaning of the disputed claim term "static." In reaching the meaning of that term, the trial court explored and made findings about the technical background of the invention--the inventive features and the timing of those features against the backdrop of the prior art. In addition, the district court determined the meaning that an artisan of ordinary skill in this discipline would assign the term "static." The trial court also made findings about the understanding of such an ordinary artisan about the metes and bounds of the asserted claims. In still another factual setting, the district court determined the way that the ordinary artisan would interpret the patent applicant's statements made to the PTO examiner during the prosecution of the patents-in-suit. These factual determinations about the timing and nature of the history of the patent acquisition process also informed the trial court's claim construction. In sum, claim construction involves many technical, scientific, and timing issues that require full examination of the evidence and factual resolution of any disputes before setting the meaning of the disputed terms.

Of course, as the Supreme Court repeatedly clarified in Markman, the trial court occupies the best vantage point and possesses the best tools to resolve those evidentiary questions:

• "[A] jury's capabilities to evaluate demeanor to sense the mainsprings of human conduct or to reflect community standards are much less significant than a trained ability to evaluate the testimony in relation to the overall structure of the patent." Id. at 389-90 (citations and internal quotation marks omitted).
• "The decisionmaker vested with the task of construing the patent is in the better position to ascertain whether an expert's proposed definition fully comports with the specification and claims and so will preserve the patent's internal coherence." Id. at 390.

The self-anointed power of Cybor proves irresistible, and its gratuitous flaunting a sorry spectacle.

Despite the Supreme Court's emphasis on the trial court's central role for claim construction, including the evaluation of expert testimony, this court may not give any deference to the trial court's factual decisions underlying its claim construction. This court's prior en banc decision requires a review of the district court's claim construction without the slightest iota of deference. See Cybor, 138 F.3d at 1451.

Whereupon Judge Rader succinctly pens edifying claim construction case law.

To construe a claim, courts must determine the meaning of disputed terms from the perspective of one of ordinary skill in the pertinent art at the time of filing. Chamberlain Group, Inc. v. Lear Corp., 516 F.3d 1331, 1335 (Fed. Cir. 2008). The claim terms "are generally given their ordinary and customary meaning." Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc) (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)). "[T]he claims themselves provide substantial guidance as to the meaning of particular claim terms." Id. at 1314.

But the claims "must be read in view of the specification, of which they are a part." Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc), aff'd, 517 U.S. 370 (1996). A patent's specification "is always highly relevant to the claim construction analysis." Phillips, 415 F.3d at 1315 (quoting Vitronics, 90 F.3d at 1582 (Fed. Cir. 1996)). When consulting the specification to clarify the meaning of claim terms, courts must not import limitations into the claims from the specification. Abbot Labs., 566 F.3d at 1288. Therefore, when the specification uses a single embodiment to enable the claims, courts should not limit the broader claim language to that embodiment "unless the patentee has demonstrated a clear intention to limit the claim scope using 'words or expressions of manifest execution or restriction.'" Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 905 (Fed. Cir. 2004) (quoting Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1327 (Fed. Cir. 2002)). In addition, "other claims of the patent . . . can also be valuable sources of enlightenment as to the meaning of a claim term." Id. (citing Vitronics, 90 F.3d at 1582).

In claim construction "a court 'should also consider the patent's prosecution history . . . .'" Phillips, 415 F.3d at 1318 (quoting Markman, 52 F.3d at 980). "[T]he prosecution history can often inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it would otherwise be." Id. (citing Vitronics, 90 F.3d at 1582-83). For example, "a patentee may, through a clear and unmistakable disavowal in prosecution history, surrender certain claim scope to which he would otherwise have an exclusive right by virtue of the claim language." Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1324 (Fed. Cir. 2009) (citations omitted). At the same time, because prosecution history represents an ongoing negotiation between the PTO and the inventor, "it often lacks the clarity of the specification and thus is less useful for claim construction purposes." Netcraft Corp. v. eBay, Inc., 549 F.3d 1394, (Fed. Cir. 2008).

The term "static" in "static display of prices" got a mental workout, and ended up in the same spot.

The specification was heavily relied upon. No foul here for that, but a welcome caution about overreliance on the specification, particularly in narrowing claim limitations.

This court recognizes that this interpretation relies heavily on the specification and risks reading improperly a preferred embodiment into the claim. See Saunders Group, Inc. v. Comfortrac, Inc., 492 F.3d 1326, 1332 (Fed. Cir. 2007) (holding that claim scope is not limited to the disclosed embodiments "unless the patentee has demonstrated a clear intention to [do so]"). This court takes some comfort against this risk from the inventors' use of the term "the present invention" rather than "a preferred embodiment" or just "an embodiment." The inventors' own specification strongly suggests that the claimed re-centering feature is manual.

Because an inventor must evince a "clear intention" to limit the claim terms to a specification embodiment, this court examines other claims to detect any contrary intentions.

Doctrine of Equivalents

The district court prevented TT from relying on the doctrine of equivalents. The trial court reasoned that claim vitiation barred assertion of infringement by equivalents [against accused products...] The Supreme Court discussed these "legal limitations on the application of the doctrine of equivalents" in Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17, 39 n.8 (1997). Under the "all-elements rule," a patentee may not assert "a theory of equivalen[ce] [that] would entirely vitiate a particular claim element." Id. Under prosecution history estoppel, a patentee may not seek to recapture as an equivalent subject matter surrendered during prosecution. Id. This court reviews both legal limitations without deference. Lockheed Martin Corp. v. Space Sys./Loral, Inc., 324 F.3d 1308, 1318 (Fed. Cir. 2003).

The all-elements rule requires this court to consider "the totality of circumstances of each case and determine whether the alleged equivalent can be fairly characterized as an insubstantial change from the claimed subject matter without rendering the pertinent limitation meaningless." Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1359 (Fed. Cir. 2005). In other words, this rule empowers a court to perform again the standard "insubstantial variation" test for equivalency, but this time as a question of law. Claim vitiation applies when there is a "clear, substantial difference or a difference in kind" between the claim limitation and the accused product. Id. at 1360. It does not apply when there is a "subtle difference in degree." Id.

In this case, the trial court considered whether an occasional automatic re-centering of the price axis in Dual Dynamic is equivalent to "never chang[ing] positions unless by manual re-centering or re-positioning." The court determined that the automatic re-centering would render the claim limitation "static"--synonymous with only manual re-centering--meaningless. The trial court's construction of the claim limitation "static" specifically excludes any automatic re-centering. See SciMed Life Sys. v. Advanced Cardiovacsular Sys., 242 F.3d 1337, 1347 (Fed. Cir. 2001) ("[I]f a patent states that the claimed device must be 'non-metallic,' the patentee cannot assert the patent against a metallic device on the ground that a metallic device is equivalent to a non-metallic device.").

On appeal, this court observes that the Dual Dynamic system may only automatically re-center its price axis once or twice per trading day. Still this occasional automatic re-centering is not a "subtle difference of degree" because the claim forbids all automatic re-centering. This court concludes that the occasional automatic re-centering is not merely an insubstantial variation.

This court further agrees with the district court that prosecution history estoppel precludes TT from relying on the doctrine of equivalents to prove the eSpeedometer system infringes.

Placed in the proper context of the timing for claim construction and prosecution history estoppel, the district court properly prevented the recapture of surrendered subject matter. The trial court construed the claims as amended and properly limited the claims to manual re-centering. Prosecution history estoppel applies at the time of infringement to determine whether the applicant surrendered claim scope during prosecution. See Warner-Jenkinson, 520 U.S. at 39 n.8. TT's argument assumes that the trial court and this court would have construed "static" the same without the full prosecution history. This court need not engage in this conjecture because the inventors narrowed the claim scope during prosecution. Thus, both claim construction and prosecution history estoppel operate in this case with similar limited results. The first limits the claims to manual re-centering. The latter prevents TT from asserting that eSpeedometer is an equivalent, because its price level automatically drifts towards the center of the display after every change in the inside market. Thus, during prosecution, the inventors surrendered any subject matter that moves automatically.


The economic argument of willfulness is that companies should be found negligent for willfully be ignorant of granted patents. After all, the quid pro quo to a patent grant is public notice to advance technology. The legal standard has it precisely opposite.

In In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc), this court held that "proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness." "[A] patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." Id. The patentee must also show that the infringer knew or should have known of this objectively high likelihood. Id.

eSpeed began redesigning Futures View immediately after this suit commenced and replaced Futures View with the redesigned Dual Dynamic by the end of December 2004. Prompt redesign efforts and complete removal of infringing products in a span of a few months suggest that eSpeed was not objectively reckless.


The parties dispute whether the limitation "single action of a user input device" is indefinite as construed. A patent specification must "conclude with one or more claims particularly pointing out and distinctively claiming the subject matter which the applicant regards as his invention." 35 U.S.C. § 112, ¶ 2. "The statutory requirement of particularity and distinctness in claims is met only when [the claims] clearly distinguish what is claimed from what went before in the art and clearly circumscribe what is foreclosed from future enterprise." United Carbon Co. v. Binney & Smith Co., 317 U.S. 228, 236 (1942). However, absolute clarity is not required. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1347 (Fed. Cir. 2005). Only claims "not amenable to construction" or "insolubly ambiguous" are indefinite. Id. (citation omitted). This court reviews definiteness without deference. AllVoice Computing v. Nuance Commc'ns, 504 F.3d 1236, 1240 (Fed. Cir. 2007).

The district court's construction correctly sets objective boundaries by distinguishing the invention from multiple-action systems found in the prior art.

Moreover, one of ordinary skill in the art would distinguish user actions as singular or multiple. The claim construction provides an example of a singular action--one or more clicks of a mouse button. Importantly, the district court's construction requires that the "action" must be done in a "short period of time." Although a "short period of time" may vary slightly from one circumstance to the next, an artisan of ordinary skill would not find the term insolubly ambiguous.


The jury found that the patents-in-suit claimed priority to their provisional application, which was filed on March 2, 2000. Every claim of the patents-in-suit recites use of a "single action of a user input device." In contrast, the provisional application never refers to a "single action of a user input device," but instead refers solely to "a single click of a computer mouse."

Claims enjoy the earlier filing date only if the provisional application provided adequate written description under 35 U.S.C. § 112, ¶ 1. New Railhead Mfg. v. Vermeer Mfg., 298 F.3d 1290, 1294 (Fed. Cir. 2002). The "prior application itself must describe an invention . . . in sufficient detail that one skilled in the art can clearly conclude that the inventor invented the claimed invention as of the filing date sought." Lockwood v. Am. Airlines, 107 F.3d 1565, 1572 (Fed. Cir. 1997). Therefore, the provisional application must describe the invention in such a way that one of ordinary skill in the art "would understand that the genus that is being claimed has been invented, not just the species of a genus." Carnegie Mellon Univ. v. Hoffman-La Roche, Inc., 541 F.3d 1115, 1124 (Fed. Cir. 2008).

The district court judge had let the issue of priority go the jury, as a matter of factual dispute.

Turning to the merits, the record shows substantial evidence to support the jury's verdict that the provisional application's written description was adequate.

T]he parties' experts did not dispute that one of ordinary skill in the art would have known about other forms of "single action" such as a double-click or pressing a key. Considering the undisputed knowledge of those skilled in the art, disclosure of a species in this case provides sufficient written description support for a later filed claim directed to a very similar and understandable genus. Accordingly, the patents-in-suit are entitled to claim priority to the provisional application.

On-Sale Bar

An on-sale bar under 35 U.S.C. § 102(b) applies when the invention was both the subject of a commercial sale and ready for patenting before the critical date. Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998). The transaction at issue must be a "sale" in a commercial law sense. Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1352 (Fed. Cir. 2002). "[A] sale is a contract between parties to give and to pass rights of property for consideration which the buyer pays or promises to pay the seller for the thing bought or sold." In re Caveney, 761 F.2d 671, 676 (Fed. Cir. 1985). The invention is ready for patenting, inter alia, if there is "proof of reduction to practice before the critical date." Plumtree Software, Inc. v. Datamize, LLC, 473 F.3d 1152, 1161 (Fed. Cir. 2006).

The basis for accusation was a software development contract by the inventor more than year before filing the provisional application.

ICA2 was not a sales transaction for a product embodying the patented invention. Under ICA2, TT promised to develop trading software for Brumfield because he lacked the technical expertise to do so. ICA2 was a contract for providing hourly programming services to Brumfield--not a computer software license. Brumfield did not sell or offer for sale anything embodying the invention.

Inequitable Conduct

A patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution. Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006) (citation omitted). Where a judgment regarding inequitable conduct follows a bench trial, as it did here, this court reviews the district court's findings of materiality and intent for clear error and its ultimate conclusion for an abuse of discretion. ACCO Brands, Inc. v. ABA Locks Mfg. Co., 501 F.3d 1307, 1314 (Fed. Cir. 2007). The district court held that TT did not engage in inequitable conduct by not disclosing Brumfield's custom software to the PTO because the software was not material to the question of patentability. This court agrees.


District Court Judge Clark wrote a chiding concurring opinion, based on the reality that claim construction ultimately has a fact base.

I write separately to respectfully suggest that the current de novo standard of review for claim construction may result in the unintended consequences of discouraging settlement, encouraging appeals, and, in some cases, multiplying the proceedings.

Determination of the meaning that would have been attributed to a claim term by one of ordinary skill in a sophisticated field of art on the date of filing often requires examination of extrinsic evidence--a determination of crucial facts underlying the dispute, as outlined by Judge Rader in the majority opinion. On some occasions, a determination will be made based, in part, on the weight to be given to conflicting extrinsic evidence or even to an evaluation of an expert's credibility.

The standard of review that will be applied by a higher court sets one of the important benchmarks against which competent counsel evaluates decisions regarding settlement and appeal. The importance is highlighted by the fact that every brief must state the standard of review. See Fed. R. App. P. 28(a)(9)(B), (b)(5); Fed. Cir. R. 28(a)(10),(b).

The de novo review standard has at least two practical results, neither of which furthers the goal of the "just, speedy, and inexpensive determination of every action and proceeding." Fed. R. Civ. P. 1. First, rejection of settlement is encouraged, and a decision to appeal is almost compelled, where counsel believes the client's position is valid, even if debatable, depending on the view taken of extrinsic evidence. It is a natural reaction upon receiving an unfavorable claim construction from a trial court to conclude that one's own view of complicated facts will be better understood by the judges of the Federal Circuit, who generally have more experience with patent cases, and who, by their own authoritative rule, review the claim construction without regard to any determination the lower court has made.

A patentee has the opportunity to write clearly enough so that the meaning of the claims can be determined from the specification. What public policy is advanced by a rule requiring the determination of underlying facts by more than one court, especially when the likely result is that another group of citizens will be required to "volunteer" for lengthy jury duty on remand?

A second, although less common, consequence of the de novo review standard is the opportunity it offers to the party that presents a case with an eye toward appeal rather than the verdict. Skilled counsel who believes a client may not be well received by a jury is tempted to build error into the record by asking for construction of additional terms, and/or presenting only a skeleton argument at the claim construction stage.

This is risky, but it would be unusual for this Court to consider a point waived if a particular claim construction had been requested of the trial court and some argument made, but the clearest explanation was presented on appeal. An appellate court normally does not consider an unpreserved point of error, but a more sharply focused argument regarding points presented on appeal, from among those that are technically preserved, is actually the goal of the appellate specialist. This tactic would be less inviting if claim construction was officially accorded some measure of deference, even if it was applied only in those cases in which resort to extrinsic evidence was necessary.

Posted by Patent Hawk at February 27, 2010 4:59 PM | Claim Construction


I need to read the Decision, but my interest is taken by the passages above, on priority and written description. Till now, I had thought the written description test to be more in the nature of a novelty test than an obviousness one. (You know, it's not enough that the reader finds the claim obvious in the light of the disclosure of the provisional. Rather, the claimed subject matter, as such, has to be present in the disclosure of the provisional). Also, I am wondering:

1. Is the test the same, when the invention was made in the UK, the provisional was filed at the UKPTO and the priority claim was made under the provisions of the Paris Convention (and, if not,why not)?

2. In any case, will it be the jury that decides whether the UK inventor will get the benefit of her Paris Convention priority claim?

Posted by: MaxDrei at February 28, 2010 3:18 AM

semi off topic:

How is the closed 'consiting of' language weighed against the doctrine of equivalents in infrigment trials?

Lets say your claim is A composition consisting of elements A, B and C.

Another company produces ABC + 10% D wouldn't be infrining but what if you take it further to say ABC + 0.000000001% D

Posted by: anon at March 2, 2010 6:46 AM

Anon, I should have thought that pretty much the entire corpus of law on claims to alloy compositions is relevant to your enquiry. Are there no books that will help you? There are in Europe (not that that's any help to you where you are).

In UK the courts don't do "Doctrine of Equivalents" but that doesn't stop them finding infringement when the accused embodiment falls outside the literal meaning of the words of the claim. In England you ask the PHOSITA "What was the drafter using the language of the claim to mean?". In alloy claims, for example, did the drafter mean to include alloys of commercial levels of purity? If so, what are the commercial levels of incidental impurity elements in such alloys? In the accused embodiment, are such impurity levels also present, just so?

Posted by: MaxDrei at March 2, 2010 2:50 PM