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Assessing Indefiniteness with Respect to Means-Plus-Function Limitations Requires Disclosure of Structure Corresponding to Overall Function, Regardless of Whether Implementing That Function Was Known in the Art

November 21, 2012
Mourad, Hala S.

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Last Month at the Federal Circuit - December 2012

Judges: Dyk, Prost (author), O'Malley

[Appealed from: E.D. Va., Senior Judge Payne]

In ePlus, Inc. v. Lawson Software, Inc., Nos. 11-1396, -1456, -1554 (Fed. Cir. Nov. 21, 2012), the Federal Circuit reversed the district court’s determination regarding indefiniteness, reversed-in-part the district court’s denial of JMOL of noninfringement to Lawson Software, Inc. (“Lawson”), and accordingly
vacated-in-part a judgment of infringement against Lawson. The Court also remanded the case to the district court for determination of what changes are required to the terms of the district court’s injunction affecting products sold by Lawson before the injunction issued. The Court affirmed the district court on the issue of infringement of a single method claim.

ePlus, Inc. (“ePlus”) owns U.S. Patent Nos. 6,023,683 (“the ’683 patent”) and 6,505,172 (“the ’172 patent”), which are directed to electronic sourcing and to dividing a single requisition (or shopping list) into multiple purchase orders. Lawson sells computer software modules for supply chain management. ePlus filed suit against Lawson, alleging that various combinations of Lawson’s software modules infringed two system claims of the ’172 patent and the ’683 patent, and three method claims of the ’683 patent.

The system claims both recite a “means for processing” means-plus-function limitation claiming the function of generating one or more purchase orders based on a requisition list. At the SJ stage, the district court denied Lawson’s motion, arguing that the system claims were invalid as indefinite because the specification did not disclose adequate structure for the “means for processing” means-plus-function limitation. Lawson did not raise the indefiniteness issue during trial, based on its understanding that indefiniteness, as an issue of law, did not need to be presented to the jury. Before the close of evidence during trial, Lawson sought JMOL, but did not raise the indefiniteness issue in its brief. After the jury returned a verdict for ePlus, Lawson filed a renewed motion for JMOL, generally arguing that the system claims were indefinite. The district court again denied the motion and entered judgment of infringement against Lawson. The district court granted ePlus’s motion for a permanent injunction, which enjoined Lawson from, inter alia, servicing products sold to customers that the jury found to infringe ePlus’s patents. The district court denied Lawson’s motion to clarify and narrow the scope of the injunction, including its effect on infringing products sold before the injunction issued.

On appeal, the Federal Circuit first addressed whether the district court should have found that the two asserted systems claims are indefinite. ePlus argued that Lawson waived its right to appeal indefiniteness regarding the “means for processing” limitation because it did not raise the issue of indefiniteness at trial, and because the JMOL motions were not sufficiently specific. The Court rejected ePlus’s argument, holding that Lawson did not waive its indefiniteness argument. The Court explained that because indefiniteness is a question of law and in effect part of claim construction, a waiver is not readily found when the indefiniteness arguments are not being raised for the first time on appeal. Here, the Court found that ePlus and the district court were aware of the indefiniteness arguments at the SJ and JMOL stages. The Court further noted that the district court told Lawson’s counsel that the indefiniteness argument was mature for appeal and, in light of such specific facts, “Lawson was not required to ignore the writing on the wall and press the issue over and over again to preserve it for appeal.” Slip op. at 14.

Turning to the merits, the Federal Circuit found that the common specification of the ’172 patent and the ’683 patent did not disclose sufficient structure for the “means for processing” limitation. The district court determined that the specification disclosed “a purchase order generation module.” Id. at 15 (citation omitted). The Court examined three passages in the specification and three accompanying figures identified by the district court as disclosing the required structure, and determined that the specification contained no mention of such structure or any explanation as to what structure or algorithm specifically corresponded to the “means for processing” limitation and should be used to generate the purchase orders.

ePlus argued that it was not required to disclose a structure that corresponded to the overall function of generating purchase orders because implementing that functionality was already known prior to the ’683 patent. The Court rejected this argument, explaining that “[t]he indefiniteness inquiry is concerned with whether the bounds of the invention are sufficiently demarcated, not with whether one of ordinary skill in the art may find a way to practice the invention.” Id. at 17 (citing Aristocrat Techs. Australia Pty. Ltd. v. Int’l Game Tech., 521 F.3d 1328, 1337 (Fed. Cir. 2008)). Accordingly, the Court looked to the disclosure of the ’172 and ’683 patents to determine whether one of skill in the art would have understood that disclosure to encompass the required structure. Finding that the specification did not disclose any structure responsible for generating purchase orders or any instruction for using a particular piece of hardware, employing a specific source code, or following a particular algorithm, the Court determined that “[t]he patentee has in effect claimed everything that generates purchase orders under the sun.” Id. Accordingly, the Court found the system claims indefinite.

Next, the Court considered whether the evidence presented at trial supported the jury’s finding of infringement of the method claims. The Court affirmed-in-part the district court’s denial of JMOL of noninfringement with respect to the jury’s verdict of infringement for one of the method claims and reversed-in-part for the remaining two method claims. Regarding the reversal-in-part, the Court found that ePlus did not offer any evidence that suggested that Lawson’s customers performed the required converting data step. The Court noted that every mention of the converting data step in ePlus’s briefs referred to the capability of the accused system rather than an actual act of infringement. Accordingly, the Court determined that no reasonable jury could have concluded that the two method claims were infringed.

Finally, the Court addressed whether the district court’s injunction order was impermissibly broad. Lawson argued that the district court should not have enjoined it from servicing and maintaining products sold before the injunction issued because damages were not at issue. The Court disagreed, finding that although servicing a product is equivalent to repairing it, and that one is entitled to repair where the sale was authorized and free of liability, ePlus was not permitted to present any evidence of damages because of the district court’s enforcement of the discovery rules, which the Court determined did not mean that Lawson was authorized to sell products that infringed ePlus’s patent. The Court accordingly determined that the district court did not abuse its discretion in granting too broad an injunction.

On cross-appeal, ePlus argued that the district court erred in excluding the testimony of ePlus’s damages expert because of analytically flawed testimony and in barring ePlus from presenting evidence of damages during trial because ePlus had not provided Lawson with adequate notice of its royalty rate theory. The Court rejected ePlus’s arguments, finding that the district court properly found the expert’s analysis unreliable. The Court also determined that ePlus was correctly precluded from presenting evidence of damages because the district court was properly concerned that the last-minute addition to the record would disrupt the proceedings and cause unacceptable delay, and that changing the damage calculation methodology on the eve of trial would expose Lawson to an unjustified risk of prejudice. Accordingly, the Court held that the district court did not abuse its discretion.

Summary authored by Hala S. Mourad, Esq.