Dealertrack v. Huber et al (CAFC 2009-1566) precedential; Judges Linn (author), Plager (dissent-in-part) and Dyk

Appellees Finance Express, John Doe Dealers, and RouteOne (collectively, "Appellees") filed four summary judgment motions1: (1) non-infringement of all asserted claims of the '841 Patent based on the absence of a "com-munications medium," as construed by the district court, in the accused devices and based on several other proposed claim constructions; (2) invalidity of claims 14, 16, and 17 of the '841 Patent for indefiniteness under 35 U.S.C. § 112, ¶¶ 2, 6 for failure to disclose adequate structure corresponding to the purported means-plus-function "tracking" limitation; (3) invalidity of all asserted claims of the '427 Patent for failure to claim patent-eligible subject matter under 35 U.S.C. § 101; (4) invalid-ity of all asserted claims of the '427 Patent for failure to claim priority to the '403 Patent.

The district court agreed with Appellees' proposed claim construction of the phrase "communications medium" in the '841 Patent as "a 'network for transferring data,' not including the internet." Claim Construction, at 19. Because "communications medium" was a limitation in all claims of the '841 Patent, and because it was undis-puted that the accused products transferred data only over the Internet, the district court granted summary judgment of non-infringement of all asserted claims of the '841 Patent. The district court denied summary judgment of invalidity for failure to disclose adequate structure for the "tracking" limitation of the claims of the '841 Patent because the district court determined that "tracking" was not part of the function of the central processing means limitation. The district court granted summary judgment of invalidity of all claims of the '427 Patent for failure to claim patent-eligible subject matter under § 101. The district court denied summary judgment of invalidity of the '427 Patent for failure to claim priority to the '403 Patent. These rulings are all at issue on appeal--directly, as alternative grounds of affirmance, or in the cross-appeal.

The district court's claim construction of "communications medium" was curmudgeonly.

The district court construed "communications medium" as "a 'network for transferring data,' not including the internet." Claim Construction, at 19. The district court grounded its construction on two bases. First, the specification included the following statement in its "Detailed description of the preferred embodiment(s)" section: "Although illustrated as a wide area network [in FIG. 1], it should be appreciated that the communications medium could take a variety of other forms, for example, a local area network, a satellite communications network, a commercial value added network (VAN) ordinary telephone lines, or private leased lines." '841 Patent col.17 l.67 - col.18 l.5. The district court noted that though "it is improper for a court to limit a patent to its preferred embodiment, it is reasonable to assume that when a patent supplies a long list of examples like here, the list is exhaustive." Claim Construction, at 18 (internal citations omitted). Second, the district court rejected Dealertrack's arguments that (1) references in the specification to "TCP/IP" and "CompuServe" implicitly refer to the Inter-net as a communication medium; (2) the ordinary meaning of communications medium included the Internet; and (3) the prosecution history shows the Internet was implicitly considered a "communications medium" by the examiner and the patentee.

On appeal:

We agree with Dealertrack that the district court improperly carved-out the Internet from its construction of "communications medium." In Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), this court "expressly rejected the contention that if a patent describes only a single embodiment, the claims of the patent must be construed as being limited to that embodiment." Id. at 1323. The disclosure of multiple examples does not necessarily mean that such list is exhaustive or that non-enumerated examples should be excluded. As we noted in Phillips, "[m]uch of the time, upon reading the specification in [] context, it will become clear whether the patentee is setting out specific examples of the invention to accomplish those goals, or whether the patentee instead intends for the claims and the embodiments in the specification to be strictly coextensive." Id. Here, the context makes clear that the examples were not meant to be definitive of the scope of "communications medium."

Another claim term, "central processing means," was modified. Summary judgment of non-infringement vacated and remanded.

But some '841 claims were invalidated for indefiniteness, because the "central processing means" failed to disclose an algorithm to perform the claimed tracking. The district court got this wrong. Of course, the origin of omission lies with the prosecution firm: Sterne, Kessler, Goldstein & Fox, who advertise that they achieve a "gold standard in patent quality." Fools gold maybe.

Similarly for '427 claims, all of which went down on the tracks of §101, owing to excessively broad claim scope. The entertainment for this debacle yields thanks to Goodwin Proctor, another large firm, for their prosecution of '427.

The claims here do not require a specific application, nor are they tied to a particular machine. The computer here does no more than the computer in Benson to limit the scope of the claim. The process in Benson covered the use of binary-coded decimal ("BCD") to pure binary conversion in "the operation of a train[, or the] verification of drivers' licenses[, or the] researching [of] the law books for precedent . . . performed through any existing machinery or future-devised machinery." 409 U.S. at 68. Similarly, here, the claims cover a clearinghouse process using any existing or future-devised machinery.

In dissent, Judge Plager had comments about '427 invalidity in light of §101. Plager thought the district court should not have ignored the prior art invalidity motions; in fact, should have preferred them over a §101 ruling.

The trial court chose to decide the case under §101, rather than on the §103 issue. In my view that was an error that this court can and should correct.

Plager also expressed his fear (yes, fear) of the mess that the courts have made of §101. Of course, Congress passes pathetic patent law (confining the comment to this one area only by example), leaving a corrupt judiciary to make further hash of it. The courts should develop metrics as case law, but refuse to do so, because it would then preclude room for the subjective biases that higher courts indulgently insist upon. The Supreme Court is quite adept at creating runes to be read variously.

Judge Plager's fear is well placed, though not as expansive as it should be. Plager cautioned that district courts "not foray into the jurisprudential morass of §101 unless absolutely necessary."