Specification Plays a Key Role in Narrowing Claim Scope
March 31, 2006
Last Month at the Federal Circuit - April 2006
Judges: Newman (author), Mayer, Bryson
In On Demand Machine Corp. v. Ingram Industries, Inc., Nos. 05-1074, -1075, -1100 (Fed. Cir. Mar. 31, 2006), the Federal Circuit reversed the district court’s judgment of infringement and vacated the jury’s damages award. The Court also vacated the royaltybearing license awarded during the appeal and found the cross-appeal by the patentee moot.
Plaintiff On Demand Machine Corporation (“ODMC”) owns U.S. Patent No. 5,465,213 (“the Ross patent”), which relates to a method of rapidly manufacturing a single copy of a book. According to the invention, a customer of a retail bookseller may use a computer console to browse through the computer’s book selection and purchase a book. A single copy of the book is then printed and bound, preferably at the same site. Defendants Lightning Source, Inc. (“Lightning Source”) and its corporate parent, Ingram Industries, Inc. (“Ingram”) print and sell books as ordered by publishers, wholesalers, and retailers, such as defendant Amazon.com, but do not sell directly to the public.
ODMC filed suit against the defendants, alleging willful infringement of claims 7 and 8. After construing the claims, the district court instructed the jury accordingly. The jury then returned a verdict of willful infringement and awarded $15,000,000 in compensatory damages. Despite the verdict of willfulness, however, the district court denied ODMC’s request for enhanced damages and attorney fees given the closeness of the case. The district court also rejected ODMC’s request for an immediate injunction and instead ordered the defendants to pay ODMC a percentage of the defendants’ revenues for operations covered by the Ross patent while the appellate and postappellate proceedings were pending.
On appeal, the defendants challenged the district court’s claim construction and disputed the various jury instructions based on the claim construction. The defendants also argued that no reasonable jury could have found infringement and that the damages award was excessive or speculative. ODMC, on the other hand, appealed the district court’s grant of what it considered a compulsory license and claimed it had the right to an injunction.
In reviewing the district court’s claim construction analysis, the Federal Circuit first noted that the district court’s analysis occurred before the Court ruled on Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). As characterized by the Court, Phillips “stressed the dominance of the specification in understanding the scope and defining the limits of the terms used in the claim.” Slip op. at 8.
In accordance with Phillips, the Court primarily focused on the specification of the Ross patent when construing the various terms. The specification describes the invention as a system in which the retailcustomer accesses promotional sales information on a customer module (e.g., a kiosk). The promotional sales information helps the consumer choose a desired book for purchase and then facilitates the high-speed manufacture of a single copy of a selected book on the immediate premises while the customer waits for a very short time.
In view of this disclosure, the Court considered the preamble phrase, “high speed manufacture of a single copy of a book,” as limiting because the specification suggested that this feature was fundamental to the Ross invention. Moreover, the Court construed the term “customer” to mean a retail customer (and not just anyone who buys goods or services), and construed the term “printing on paper pages” to require printing on pages (and not rolls or webs of paper that would require commercial-scale equipment for cutting the paper after printing). The Court also found that the claim term, “providing means for a customer to visually review said sales information,” requires that the bookseller provide a computer to the customer. It was undisputed that the defendants did not provide computers to their customers, but rather customers used their own computers to order books from Amazon.com.
To construe the term “sales information,” the Court relied on both the specification and the prosecution history. The specification makes clear that sales information is information that helps the consumer choose a book, and identifies descriptive material as promotional information (e.g., plot synopses, biographical information about the author). Moreover, in view of arguments made to distinguish the invention during the prosecution history, the Court also found that promotional material does not include file identifiers such as the title, author, or ISBN number. Accordingly, the Court held that sales information requires that promotional information is stored in the computer that the consumer uses, and that file identifiers are not promotional information. Ingram and Lightning Source cannot infringe because books are ordered from the defendants based solely on file identifiers and not promotional information.
Based on the correct claim constructions, the Court held that no reasonable jury could find that any of the defendants infringe the defendants do not sell directly to retail consumers by providing promotional sales information on a computer module so that single-copy books can be purchased and rapidly printed on paper pages. Accordingly, the Court reversed the judgment of infringement, vacated the damages award, and held ODMC’s cross-appeal to be moot.