Dow Jones & Company, Inc. v. Ablaise Ltd. (CAFC 2009-1524) precedential

The most surprising facet of this ruling is sight of the CAFC crawling back from de novo in toto via Cybor. This from the CAFC heavyweights. The decision was penned by Chief Judge Michel, with his successor, Judge Rader, in tow. Judge Folsom was third on the panel.

The district court's claim construction is likewise a matter of law and is reviewed without deference. Nazomi Commc'ns, Inc. v. Arm Holdings, PLC, 403 F.3d 1364, 1371 (Fed. Cir. 2005). However, in reviewing a district court's claim construction, this court takes into account the views of the trial judge, as well as the record of the trial, which helped that judge to understand the terms of the claim. Id. Though we review those views and that record "de novo," "common sense dictates that the trial judge's view will carry weight." Id. (quoting Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir. 1998) (Plager, J., concurring)).

Covenant Not to Sue

The preliminaries were whether Ablaise had ironically wiggled off the hook with its proposed peace pipe smoke.

As a threshold matter, this court must decide whether Ablaise's offer of a covenant not to sue Dow Jones for infringement of the '530 patent was sufficient to divest the district court of subject matter jurisdiction over Dow Jones' suit for declaratory judgment of invalidity.

Subject matter jurisdiction in a declaratory judgment suit depends upon the existence of "a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment," and the plaintiff bears the burden of proving the existence of such a controversy throughout the litigation. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937)); see also Preiser v. Newkirk, 422 U.S. 395, 401 (1975) (the actual controversy "must be extant at all stages of review, not merely at the time the complaint is filed"). According to the Supreme Court, "[T]he question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." MedImmune, 549 U.S. at 127 (quoting Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)).

In its order denying Ablaise's motion to dismiss for lack of subject matter jurisdiction, the district court reviewed this court's precedential case law. The district court noted that we have held, in a line of cases beginning with Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1060 (Fed. Cir. 1995), that a covenant not to sue for patent infringement divests the trial court of subject matter jurisdiction over claims that the patent is invalid, because the covenant eliminates any case or controversy between the parties. See Intellectual Prop. Dev., Inc. v. TCI Cablevision of Calif., Inc., 248 F.3d 1333, 1342 (Fed. Cir. 2001) (statement of non-liability divested the district court of Article III jurisdiction); Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855 (Fed. Cir. 1999) ("[A] covenant not to sue for any infringing acts involving products 'made, sold, or used' on or before the filing date is sufficient to divest a trial court of jurisdiction over a declaratory judgment action.").

Furthermore, the district court recognized the exception to Super Sack that this court carved out in Fort James Corp. v. Solo Cup Co., 412 F.3d 1340 (Fed Cir. 2005). In Fort James, the district court dismissed the alleged infringer's invalidity claim against the patent-in-suit when the patent holder submitted a covenant not to sue. 412 F.3d at 1344-45. However, the covenant not to sue was not offered by the patentee until after the jury had determined that the patent was not infringed. Id. We reversed the dismissal... [as being tardy, post-verdict].

We affirmed the jurisprudence engendered by Super Sack in Benitec Australia, Ltd. v. Nucleonics, Inc., 495 F.3d 1340 (Fed. Cir. 2007). In Benitec, we held that a pretrial tender of a covenant not to sue divested the district court of subject matter jurisdiction because, unlike Fort James, the covenant was tendered "before ... the considerable effort connected [with a trial] had taken place. 495 F.3d at 1347. More importantly, however, in Fort James, the jury's verdict of non-infringement had removed any reasonably apprehensible justiciable controversy between the parties. Fort James, 412 F.3d at 1348.

More recently, this court held that "whether a covenant not to sue will divest the trial court of jurisdiction depends on what is covered by the covenant." Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 556 F.3d 1294, 1297 (Fed. Cir. 2009). In Revolution Eyewear, the patentee offered a covenant not to sue that this court found did not bar future infringement actions if the accused infringer again offered for sale the allegedly infringing articles.2 556 F.3d at 1300. In its opinion, this court applied the MedImmune test, as set forth in SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372 (Fed. Cir. 2007), holding that:

[W]here a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where the party contends that it has the right to engage in the accused activity without a license, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights.

Revolution Eyewear, 556 F.3d at 1297.

The CAFC found Ablaise's proffered peace pipe sufficient.

Because News Corporation is insulated from liability should Dow Jones be found liable for infringement, Ab- laise's infringement suit against Dow Jones cannot be said to constitute a case or controversy involving News Corporation or its divisions and subsidiaries which are legally distinct entities from Dow Jones... Consequently, the covenant not to sue proffered by Ablaise extinguishes the controversy between Ablaise and Dow Jones and divests the district court of its Article III jurisdiction. We therefore reverse the order of the district court's denial of Ablaise's motion to dismiss Dow Jones' claim seeking invalidity of the '530 patent.

Obviousness

Ablaise offered its covenant only for '530, so the roasting of  '737 went ahead. '530 cheated death owing to Ablaise's offer to get off-the-hook.

The district court granted Dow Jones' motion for summary judgment of invalidity of the '737 patent on the grounds that the asserted claims were obvious under 35 U.S.C § 103. A claim is obvious if: "the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103(a). This analysis requires an assessment of the "interrelated teachings of [the prior art]; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having ordinary skill in the art." KSR Int'l. Co. v. Teleflex, Inc., 550 U.S. 398, 401 (2007).

The cited references were killer.

Reserved-in-part (not dismissing the case upon Ablaises offered covenant not to sue over '530) and affirmed-in-part ('737 obvious).

While it still breathes in the free, '530 is a goner if it ever shows its face in court again.

The patents differ from one another in two relevant respects. First, the method claimed by the '737 patent is capable of more flexible formatting than that claimed by the '530 patent. The '737 patent discloses a method of generating Web page formatting that coincides with a user's individual preferences, whereas the '530 patent limits a user's formatting options to certain prescribed templates which can be chosen by the user.

Second, only the '737 patent discloses a server that stores the user's preferences in a database to be matched against subsequent requests by that user. Thus, once a user expresses a preference for a given content to appear in a particular location and manner on the Web page, that preference will be stored in the database. Following a subsequent request by that user, the content will again be displayed in the same location and manner. The '530 patent, in contrast, discloses a method that is capable of accommodating only a user's current request that information be displayed according to a selected template, however that information is not stored in a database for future retrieval, and the user must reselect his preferred content template each time he requests information from the server.