United States Court of Appeals for the Federal Circuit
[End Page 04-1234]
EOLAS TECHNOLOGIES INCORPORATED
and THE REGENTS OF THE UNIVERSITY OF CALIFORNIA,
Plaintiffs-Appellees,
v.
MICROSOFT CORPORATION,
Defendant-Appellant.
Martin R. Lueck, Robins, Kaplan, Miller & Ciresi L.L.P., of Minneapolis, Minnesota,
argued for plaintiff-appellees. With him on the brief were Jan M. Conlin, Richard M.
Martinez, and Munir R. Meghjee. Of counsel was Emily M. Rome.
Constantine L. Trela, Jr., Sidley Austin Brown & Wood LLP, of Chicago, Illinois,
argued for defendant-appellant. With him on the brief were David T. Pritikin, Richard A.
Cederoth, Robert N. Hochman, and Carter G. Phillips, of Washington, DC. Of counsel on
the brief were H. Michael Hartmann, Brett A. Hesterberg, and Steven P. Petersen, Leydig,
Voit & Mayer, Ltd., of Chicago, Illinois. Of counsel was Thomas Andrew Culbert, Microsoft
Corporation, of Redmond, Washington.
Gregory S. Coleman, Weil, Gotshal & Manges LLP, of Austin, Texas, for amicus
curiae Oracle Corporation. With him on the brief were Matthew D. Powers and Edward R.
Reines, of Redwood Shores, California.
John D. Vandenberg, Klarquist Sparkman, LLP, of Portland, Oregon, for amici curiae
Autodesk, Inc., et al.
Charles K. Verhoeven, Quinn Emanuel Urquhart Oliver & Hedges, of San Francisco,
California, for amici curiae Netscape Communications Corporation, et al. With him on the
brief were David A. Perlson and Jennifer A. Kash.
Gerard M. Stegmaier, Wilson Sonsini Goodrich & Rosati, of Reston, Virginia, for
amicus curiae Association For Competitive Technology. With him on the brief was Craig M.
Tyler.
Appealed from: United States District Court for the Northern District of Illinois
Judge James B. Zagel
United States Court of Appeals for the Federal Circuit
[End Page 04-1234]
EOLAS TECHNOLOGIES INCORPORATED
and THE REGENTS OF THE UNIVERSITY OF CALIFORNIA,
Plaintiffs-Appellees,
v.
MICROSOFT CORPORATION,
Defendant-Appellant.
DECIDED: March 2, 2005
Before RADER, Circuit Judge, FRIEDMAN, and PLAGER, Senior Circuit Judges.
RADER, Circuit Judge.
The United States District Court for the Northern District of Illinois granted final
judgment to Eolas Technologies Incorporated and the Regents of the University of
California (collectively, Eolas) after a jury found that Microsoft Corporation (Microsoft)
infringed claims 1 and 6 of U.S. Patent No. 5,838,906 (the '906 patent) and actively
induced United States users of Internet Explorer to infringe claim 1. The district court
also invoked 35 U.S.C. § 271(f) to include foreign sales of Internet Explorer in the
royalty awarded to Eolas. Because the district court improperly granted judgment as a
matter of law (JMOL) in Eolas' favor on Microsoft's anticipation and obviousness
defenses and improperly rejected Microsoft's inequitable conduct defense, this court
vacates the district court's decision and remands for a new trial on these issues. In
addition, this court affirms the district court's claim construction of "executable
application" and finds the district court did not err in its jury instruction with regard to the
claim limitation "utilized by said browser to identify and locate." Finally, this court affirms
the district court's holding that "components," according to section 271(f)(1), includes
software code on golden master disks.
I.
On February 2, 1999, Eolas brought an infringement action against Microsoft. In
particular, Eolas alleged infringement of claims 1 and 6 of the '906 patent.1 The '906
patent carries the title "distributed hypermedia method for automatically invoking
external application providing interaction and display of embedded objects within a
hypermedia document." Eolas alleged that certain aspects of Microsoft's Internet
Explorer (IE) product incorporate its invention. Microsoft denied infringement and
asserted that the claims were invalid and unenforceable.
Essentially, the claimed invention allows a user to use a web browser in a fully
interactive environment. For example, the invention enables a user to view news clips
or play games across the Internet. The '906 claims require a web browser with certain
properties. Specifically, the invention calls for a browser located in a "distributed
hypermedia environment."
In operation, the claimed browser locates a web page, or distributed hypermedia
document, with a uniform resource locator (URL). Then the browser parses the text of
1
The University of California filed the '906 Patent on October 17, 1994,
which later issued on November 17, 1998. The University later granted an exclusive
license for the '906 Patent to Eolas. A reexamination of the '906 Patent was ordered by
the Director and is currently pending in the United States Patent and Trademark Office.
See Director Initiated Order for Reexamination, Control No. 90/006,831.
04-1234 2
the web page including an "embed text format" specifying an object external to the web
page that has "type information associated with it" (i.e., spreadsheets, databases). The
browser next uses that type information to identify and locate an executable application
that automatically enables interactive viewing of the object. The inventors have
consistently maintained that "[t]his invention was the first instance where interactive
applications were embedded in Web pages." The district court found that the invention
was reduced to practice no later than January 27, 1994, when it was presented at a
Web conference.
During prosecution of the '906 patent, the examiner rejected the claims several
times for obviousness. Besides the World Wide Web, HTTP and HTML, the examiner
cited three main prior art references during prosecution: (1) the Mosaic Web Browser,
which allows users to go from one website to another by clicking links on web pages
and has some capability to display objects; (2) U.S. Patent No. 5,206,951 to Khoyi et al.
(Khoyi), which describes an Object Linking and Embedding System (OLE);2 and (3) U.S.
Patent No. 5,581,686 to Koppolu et al. (Koppolu), which covers some OLE technology
where the application displaying data may be a component, such as an object handler
that is implemented as a Dynamically Linked Library (DLL).3 The examiner allowed the
claims on March 30, 1998.
2
OLE allows a visual object or data created using one application to be
displayed and edited in another application.
3
An example of a DLL is spell check; a DLL is a component that can run
only within another application. Compare a standalone application, such as Word or
Excel, which can run independently of another application. An implementation of OLE
technology would be using a standalone application, such as Word which may then
utilize a component or DLL such as spell check. 04-1234 3
Microsoft's Invalidity Defenses
At trial, Microsoft presented evidence that the Viola Web browser (Viola),
invented by Pei-Yuan Wei (Wei), was in public use more than one year before Eolas'
invention. Microsoft asserted that this prior art would invalidate the invention under 35
U.S.C. § 102(b). Microsoft also used the Viola reference to challenge validity on the
basis of sections 102(a), 102(g) and 103. Wei testified at trial that he had written code
for Viola so that the browser could handle embedded automatically-launched interactive
programs in May 1993. Wei testified as well that he demonstrated that capability to Sun
Microsystems engineers at that time. Microsoft corroborated existence of this code at
trial through a computer demonstration of an archived file, dated May 12, 1993. The
parties refer to this version of Viola as DX34. Wei demonstrated DX34 to two Sun
Microsystems engineers on May 7, 1993.
Wei also demonstrated a different version of Viola to the district court. This
second exhibit, DX37, was allegedly Wei's attempt on May 27, 1993, to improve DX34.
Apparently due to a bug in the program, Wei could not make the DX37 version function
in the courtroom in conjunction with the Internet. Microsoft's technical expert testified
that both versions of the Viola code taught all of the limitations of the claims at issue.
The district court found as a matter of law that Wei abandoned, suppressed or
concealed DX34 within the meaning of section 102(g) because Wei disclosed that
version only to the Sun engineers and then changed it. The district court extended this
finding to section 102(b) and found as a matter of law that since DX34 was abandoned,
showing it to the Sun engineers could not constitute a public use. The district court
prevented Microsoft from presenting any evidence of DX34 to the jury and later granted
04-1234 4
Eolas' Rule 50 motion for JMOL in ruling that neither the anticipation nor obviousness
defenses could be presented to the jury after hearing testimony on those issues from
Microsoft's expert.
Microsoft's Inequitable Conduct Defense
Michael D. Doyle (Doyle), one of the inventors of the '906 patent, knew of Viola
yet did not disclose any information regarding that reference to the United States Patent
and Trademark Office (PTO). On August 31, 1994, Doyle issued a press release to an
e-mail list indicating that researchers at the University of California had "created
software for embedding interactive program objects within hypermedia documents."
That same day, Wei contacted Doyle via e-mail in response to the press release. Wei
alleged that his May 1993 demonstration of Viola (version DX34) to Sun Microsystems
engineers exhibited a way to embed interactive objects and transport them over the
web. Wei directed Doyle to his paper about Viola (the Viola paper), which was available
on the Internet at least by August 13, 1994. Doyle downloaded and read the paper. In
a later email exchange, Doyle attempted to get Wei to concede that he was not the first
to invent. Additionally, Doyle told Wei the inventions were different.
On October 17, 1994, the University of California filed the '906 patent application.
In 1998, before issuance of the '906 patent, Doyle did more research on Viola and
made a folder labeled "Viola stuff." This folder included press releases of two "beta"4
versions of Viola from February and March of 1994. Although available on the Internet,
Doyle never obtained the Viola code.
4
A "beta" release occurs after the development stage and allows general
users to try new software. An "alpha" release is a version for specialists to test to
provide feedback to the software's author. 04-1234 5
The district court found that Doyle's knowledge of Viola was not enough to trigger
his obligation to bring it to the attention of the examiner of the '906 patent. The district
court determined that Viola was not prior art and as such not material. Although
questioning Doyle's credibility about his role in the prosecution of the patent, the trial
court nonetheless found that he had acted with candor before the PTO because "it was
the law and it was too dangerous not to do so."
Claim Construction for Infringement
Claim 1 is a method claim; claim 6 a product claim. The parties and the district
court focused on claim 6 to interpret the claims because Eolas asserted that the
computer program product in claim 6 embodies the method of claim 1. Claim 6 reads:
6. A computer program product for use in a system having at least one
client workstation and one network server coupled to said network
environment, wherein said network environment is a distributed
hypermedia environment, the computer program product comprising:
a computer usable medium having computer readable program code
physically embodied therein, said computer program product further
comprising:
computer readable program code for causing said client workstation to
execute a browser application to parse a first distributed hypermedia
document to identify text formats included in said distributed hypermedia
document and to respond to predetermined text formats to initiate
processes specified by said text formats;
computer readable program code for causing said client workstation to
utilize said browser to display, on said client workstation, at least a portion
of a first hypermedia document received over said network from said
server, wherein the portion of said first hypermedia document is displayed
within a first browser-controlled window on said client workstation, wherein
said first distributed hypermedia document includes an embed text format,
located at a first location in said first distributed hypermedia document,
that specifies the location of at least a portion of an object external to the
first distributed hypermedia document, wherein said object has type
information associated with it utilized by said browser to identify and locate
an executable application external to the first distributed hypermedia
04-1234 6
document, and wherein said embed text format is parsed by said browser
to automatically invoke said executable application to execute on said
client workstation in order to display said object and enable interactive
processing of said object within a display area created at said first location
within the portion of said first distributed hypermedia document being
displayed in said first browser-controlled window.
U.S. Patent No. 5,838,906 (issued Nov. 17, 1998), col. 17, ll. 58 â€" col. 18, ll. 30
(emphases added). After a Markman hearing, the district court construed the terms
"executable application" and "utilized by said browser to identify and locate." Eolas
Techs., Inc. v. Microsoft Corp., No. 99 C 0626 (N.D. Ill. Dec. 29, 2000). The district
court determined that "executable application" as used in the '906 patent refers to "any
computer program code, that is not the operating system or a utility, that is launched to
enable an end user to directly interact with data." Id. at 35. The district court also
determined that "utilized by said browser to identify and locate" means that "the
enumerated functions are performed by the browser." Id. Microsoft appeals the
"executable application" claim construction and the jury instruction given with regard to
the term "utilized by said browser to identify and locate."
The jury instruction regarding "utilized by said browser to identify and locate"
included in relevant part:
Utilized by said browser to identify and locate means that the enumerated
functions are performed by the browser. . . . The inventors contemplated
the browser's use of some outside resources such as the operating
system as operating systems are always involved in the operation of
computer programs. Nevertheless it must be the browser, not the
operating system, that must do the heavy lifting of identifying and locating
....
04-1234 7
Statutory Construction of 35 U.S.C. § 271(f)
Eolas claimed royalty damages for both foreign and domestic sales of Windows
with IE. Microsoft moved, in limine, to prevent Eolas from seeking damages based on
foreign sales under section 271(f).
Microsoft exports a limited number of golden master disks containing the
software code for the Windows operating system to Original Equipment Manufacturers
(OEMs) abroad who use that disk to replicate the code onto computer hard drives for
sale outside of the United States. The golden master disk itself does not end up as a
physical part of an infringing product. The district court denied Microsoft's motion,
finding that source code is the legal equivalent of a piece of computer hardware and
that "in a legal sense, a [sic] source code is a made part of a computer product." The
district court determined that the code on the golden master disks constitutes
"components" of an infringing product for combination outside of the United States
under section 271(f).
After a jury trial, the district court entered judgment in favor of Eolas. The district
court found that: (1) Microsoft did not show invalidity of the '906 claims; (2) Microsoft
did not proffer clear and convincing evidence of inequitable conduct; (3) Microsoft
infringed claims 1 and 6 and actively induced United States users of IE to infringe claim
1; and (4) Eolas's royalty for Microsoft's infringement should include foreign sales of the
patented computer code under section 271(f). The jury awarded Eolas a royalty of
$1.47 per unit of infringing product, which amounted to a total award of $520,562,280.
In its order, the district court issued a permanent injunction against Microsoft and
04-1234 8
awarded pre-judgment interest on the award. The permanent injunction has been
stayed pending this appeal. This court has jurisdiction under 28 U.S.C. § 1295(a)(1).
II.
Anticipation is a question of fact, which this court reviews for substantial
evidence. In re Hyatt,
211 F.3d 1367, 1371 (Fed. Cir. 2000). Obviousness is a
question of law premised on underlying findings of fact. Graham v. John Deere Co.,
383 U.S. 1, 17-18 (1966). This court "review[s] a grant of JMOL de novo, reapplying the
district court's JMOL standard anew." Union Carbide Chems. & Plastics Tech. Corp. v.
Shell Oil Co.,
308 F.3d 1167, 1185 (Fed. Cir. 2002). "In evaluating a Rule 50(a) motion,
this court must examine the evidence to determine whether a jury could properly
proceed to find a verdict for the party producing it, upon whom the onus of proof is
imposed. In this regard, this court must view the evidence in a light most favorable to
the non-moving party." Mahurkar v. C.R. Bard, Inc.,
79 F.3d 1572, 1576 (Fed. Cir.
1996) (internal quotations omitted). This court reviews inequitable conduct for an abuse
of discretion; "[t]he underlying factual issues of materiality and intent [are reviewed] for
clear error." CFMT, Inc. v. Yieldup Int'l Corp.,
349 F.3d 1333, 1337 (Fed. Cir. 2003).
This court reviews claim construction without deference. Markman v. Westview
Instruments, Inc.,
52 F.3d 967, 979 (Fed. Cir. 1995) (en banc). "The question of
whether a jury instruction on an issue of patent law is erroneous is a matter of Federal
Circuit law and is reviewed de novo." Sulzer Textil A.G. v. Picanol N.V.,
358 F.3d 1356,
1363 (Fed. Cir. 2004). Lastly, "[t]his court reviews questions of statutory interpretation
without deference." U.S. Steel Group v. United States,
225 F.3d 1284, 1286 (Fed. Cir.
2000).
04-1234 9
III.
PRIOR ART DEFENSES
As explained above, the district court found as a matter of law that DX34 was
abandoned, suppressed or concealed within the meaning of section 102(g) because
Wei disclosed that version to Sun Microsystems' engineers and then changed it. The
district court extended this finding to section 102(b), finding that abandonment of DX34
meant that the disclosure to the Sun Microsystems engineers could not constitute a
public use. The district court prevented Microsoft from presenting any evidence of
DX34 to the jury and later granted Eolas' Rule 50 motion for JMOL that DX37 did not
anticipate or render the '906 patent obvious. Consequently, the jury did not consider
Microsoft's anticipation and obviousness defenses.
The district court erred in finding as a matter of law that DX34 was abandoned,
suppressed, or concealed within the meaning of section 102(g). The relevant portion of
section 102(g) states:
A person shall be entitled to a patent unless--
(g) (2) before such person's invention thereof, the invention was made in
this country by another inventor who had not abandoned, suppressed, or
concealed it.
35 U.S.C. § 102(g) (2004).
This court's case law distinguishes between two types of conduct that invoke the
exception within section 102(g). Apotex USA, Inc. v. Merck & Co.,
254 F.3d 1031, 1038
(Fed. Cir. 2001). The first arises when an inventor actively conceals his invention from
the public. Fujikawa v. Wattanasin,
93 F.3d 1559, 1567 (Fed. Cir. 1996). Active
concealment "refers to situations in which an inventor designedly, and with the view of
04-1234 10
applying it indefinitely and exclusively for his own profit, withholds his invention from the
public." Id. The second occurs when "abandonment, suppression, or concealment may
be inferred based upon the prior inventor's unreasonable delay in making the invention
publicly known." Dow Chem. Co. v. Astro-Valcour, Inc.,
267 F.3d 1334, 1342 (Fed. Cir.
2001).
This case does not fit into either category. The record contains no evidence that
Wei either intentionally withheld DX34 from the public or unreasonably delayed a patent
application or public disclosure. In contrast, the record indicates Wei not only
demonstrated DX34 to two Sun Microsystems engineers without a confidentiality
agreement (on May 7, 1993), but only twenty-four days later (on May 31, 1993) posted
DX37 on a publicly-accessible Internet site and notified a Sun Microsystems engineer
that DX37 was available for downloading. The district court erroneously concluded that
the creation and public disclosure of DX37, an improved version of DX34, "abandoned"
the invention under section 102(g).
The district court's conclusion inappropriately narrowed the definition of
"invention," as used in section 102(g). This court's interference case law illustrates this
point. In interference cases, one party will sometimes assert that the other party
abandoned the invention by unreasonably delaying disclosure of the invention after first
reducing it to practice. However, this court excuses delay between the first reduction to
practice and public disclosure if the inventor continued to refine, perfect, or improve the
invention. Lutzker v. Plet,
843 F.2d 1364, 1367 (Fed. Cir. 1988) ("An inference of
suppression or concealment may be overcome with evidence that the reason for the
delay was to perfect the invention."). "The law does not punish an inventor for
04-1234 11
attempting to perfect his process before he gives it to the public. In fact, reasonable
experimentation is frequently encouraged." Frey v. Wagner,
87 F.2d 212, 215 (CCPA
1937).
In this case, DX37, which includes the same contested feature as DX34,
represents an improved version of Wei's invention, not an entirely new invention, as the
district court suggests. Because creating an improved version of an invention does not
in any sense abandon the original invention, the district court erroneously excluded
DX34 as prior art. Improvements may enhance an invention prior to disclosure or
patent application. If improvements caused loss of the original invention under the
erroneous rule adopted by the district court, the public would lose the benefit of diligent
efforts to produce a more useful product. Eolas' arguments that Wei's changes to the
functionality and architecture of DX34 show abandonment are unpersuasive because
such changes merely reflect improvements in advancing versions of software code.
Thus, this court remands for proceedings to consider whether DX34 is prior art and, if
so, whether it invalidates the '906 patent.
This court also reverses the district court's finding that Wei's May 7, 1993,
demonstration to two Sun Microsystems employees without confidentiality agreements
did not constitute a public use under section 102(b). "Public use [under 35 U.S.C. §
102(b)] includes any use of the claimed invention by a person other than the inventor
who is under no limitation, restriction or obligation of secrecy to the inventor." Netscape
Communications Corp. v. Konrad,
295 F.3d 1315, 1320 (Fed. Cir. 2002). Because the
Sun Microsystems employees were under no limitation, restriction or obligation of
secrecy to Wei, this court determines the demonstration may constitute a public use.
04-1234 12
The district court erred in linking its section 102(b) public use finding to its section
102(g) abandonment finding. A public use under section 102(b) cannot be undone by
subsequent actions. The inquiry into a section 102(b) public use proceeds independent
of the inquiry into a section 102(g) abandonment. "[N]otwithstanding abandonment of
the prior use â€" which may preclude a challenge under section 102(g) â€" prior
knowledge or use by others may invalidate a patent under section 102(a) if the prior
knowledge or use was accessible to the public." Woodland Trust v. Flowertree Nursery,
148 F.3d 1368, 1370 (Fed. Cir. 1998). Similarly, third party prior use accessible to the
public is a section 102(b) bar. See Baxter Int'l, Inc. v. COBE Labs., Inc.,
88 F.3d 1054,
1058-59 (Fed. Cir. 1996).
Netscape Communications Corp. v. Konrad,
295 F.3d 1315 (Fed. Cir. 2002),
informs the application of these principles to this case. In Netscape, Konrad owned
three computer-related patents. 295 F.3d at 1318. This court affirmed a finding of
invalidity based on Konrad's prior demonstration of the invention to two employees at
the University of California without any obligation of confidentiality. Id. at 1319.
Similarly, in the case at bar, Wei demonstrated DX34 to two Sun engineers who were
under no confidentiality obligation. Indeed, the Sun engineers informed Wei that they
intended to share information gleaned from Wei with other people at Sun. Eolas
attempts to distinguish Netscape on the basis that Konrad was the patentee in that
case, whereas here, Wei is a third party. However, a third party may, and often does,
initiate a public use. See, e.g., Baxter, 88 F.3d at 1058-59. Therefore, Wei's third-party
disclosure may erect a public use bar.
04-1234 13
Eolas further points to W.L. Gore & Association, Inc. v. Garlock, Inc.,
721 F.2d 1540, 1550 (Fed. Cir. 1983), to advance its position that section 102(b) does not apply
in this case. In Gore, a third party used the patented invention more than one year prior
to the patentee's application date and the court found no public use. Id. at 1549. Gore
represents a different factual situation. The third party in Gore deliberately chose to
keep the invention as a trade secret and avoid disclosure through a patent application.
Accordingly, the Gore third party had a confidentiality agreement in place with its
employees to prevent public disclosure of the method whose subject matter could not
otherwise be publicly discerned. Id. This court found the Gore third party could not
both elect to avoid the patent system and still invoke that system to erect a third-party
public use bar to an inventor who disclosed the invention for patenting. Thus, the
secret activity in Gore did not constitute public use. Id. This case, however, is very
different. Wei made no attempt to maintain confidentiality or to deliberately evade
disclosure. Wei's activities may erect a third party public use bar.
In addition, this court vacates the district court's JMOL that DX37 did not
anticipate the '906 patent. To anticipate, a single reference must teach each and every
limitation of the claimed invention. See EMI Group N. Am., Inc. v. Cypress
Semiconductor Corp.,
268 F.3d 1342, 1350 (Fed. Cir. 2001). When viewed in "a light
most favorable" to Microsoft, the testimony by Microsoft's expert, Dr. Kelly, presents a
question of fact as to whether DX37 anticipates the '906 patent. See Mahurkar v. C.R.
Bard, Inc.,
79 F.3d 1572, 1576 (Fed. Cir. 1996).
Dr. Kelly testified that DX37 is in a computer usable medium with a program for
use in a distributed hypermedia environment. Further, Dr. Kelly observed key features
04-1234 14
in DX37, such as a method to parse a hypermedia document to identify text formats, to
display at least a portion of the hypermedia document on a client workstation, to include
an embed text format that specifies the location of an object external to the hypermedia
document, to identify and locate an executable application, and to automatically display
the object and enable the user to interact with it. This testimony arguably supports
Microsoft's argument that DX37 teaches all of the limitations of the '906 patent. The
district court dismissed Dr. Kelly's testimony as "conclusory." This court hesitates to
disturb the district court's role in assessing evidence, but anticipation is a question of
fact. Accordingly, this particular determination lay within the province of the jury.
The district court also erred in its granting JMOL on obviousness. Dr. Kelly's
testimony provided sufficient evidence to survive JMOL. In his testimony, Dr. Kelly
discussed: (1) the scope of DX34 and DX37; (2) the potential differences between DX34
and DX37 and the claimed invention; and (3) the state of the art and the level of skill in
the art in 1993. Dr. Kelly's testimony could also be read to provide a suggestion to use
a browser in a distributed hypermedia environment as in the claimed invention.
Although Microsoft's direct examination of Dr. Kelly focused on anticipation, the
information solicited from Dr. Kelly might also support an argument of obviousness in
the alternative. In light of this court's determination that DX34 was not abandoned or
concealed, Microsoft should also have the opportunity to present DX34 as part of its
obviousness defense. See Panduit Corp. v. Dennison Mfg. Co.,
810 F.2d 1561, 1568
(Fed. Cir. 1987) (indicating that a key preliminary legal inquiry in obviousness analysis
is: "what is the prior art?"). Weighing the facts in favor of the non-moving party, as
required by Rule 50, a reasonable jury should have the opportunity to determine
04-1234 15
whether the claimed invention would have been obvious at the time of invention based
on the record.
In sum, with respect to the district court's prior art rulings, this court finds: the
district court erred in finding as a matter of law that DX34 was abandoned, suppressed
or concealed within the meaning of section 102(g); Wei's May 7, 1993 demonstration to
two Sun Microsystems employees without confidentiality agreements was a public use
under section 102(b); and the district court erred in its JMOL that DX37 did not as a
matter of law anticipate or render the '906 patent obvious. As a result, this court
remands for additional proceedings on these issues.
INEQUITABLE CONDUCT
This court also vacates the district court's decision on inequitable conduct. Again
the district court based its inequitable conduct finding on the misunderstanding that
Viola could not possibly constitute prior art. Relying on that erroneous determination,
the district court concluded that Viola could not be material to patentability. As
discussed above, the district court erred in determining that DX34 was abandoned,
suppressed or concealed within the meaning of section 102(g). Further, the district
court did not explain a reason for declining to consider DX37, also created prior to
Doyle's invention, as immaterial to patentability of the '906 patent. In respect to
potential prior art software under section 102(b), this court has explained that the
software product constitutes prior art, not necessarily the later published abstract
associated with that software product. In re Epstein,
32 F.3d 1559, 1567-68 (Fed. Cir.
1994). Similarly, in the case at bar, the Viola browser itself, not the later developed
Viola paper or "Viola stuff" file, constitutes prior art. On remand, the district court will
04-1234 16
have an opportunity to include this potential prior art in its inequitable conduct inquiry.
At the same time, the district court may reconsider its findings on Doyle's intent to
deceive the PTO.
CLAIM CONSTRUCTION
When interpreting disputed claim terms, this court accords claim terms their
customary meaning in the art at the time of invention. Home Diagnostics, Inc. v.
LifeScan, Inc.,
381 F.3d 1352, 1355 (Fed. Cir. 2004). Further, a construing court should
consult the specification to determine whether the patentee gave a claim term a
meaning inconsistent with that customary meaning in the proper technological and
temporal context. Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings,
370 F.3d 1354,
1360 (Fed. Cir. 2004).
The district court construed "executable application" to mean "any computer
program code, that is not the operating system or a utility, that is launched to enable an
end user to directly interact with data." Microsoft asserts that this term should be
construed as "standalone programs." Because, absent a disclaimer, the claims of the
'906 patent are not limited to the embodiments listed in the specification, this court
affirms the district court's construction.
As construed by the district court, "executable application" includes applications
or components that are not standalone, i.e., DLLs such as spell check. Such
applications or components can only run when invoked by some other application.
Microsoft asserts that its construction is consistent with the ordinary meaning of the
term and that the specification does not otherwise define the term. Microsoft correctly
points out that all of the disclosed embodiments in the specification describe standalone
04-1234 17
programs (i.e., word processors and spreadsheets). Nonetheless, absent a clear
disclaimer in the specification, the embodiments in the specification do not limit broader
claim language. Liebel-Flarsheim Co. v. Medrad, Inc.,
358 F.3d 898, 907-08 (Fed. Cir.
2004).
The record shows that the term "executable application" does not have a
customary meaning in the computer science field. Therefore, the district court
appropriately declined to impose a sharp limitation on its scope. Accordingly, the trial
court correctly perceived that "application" means "a computer program, that is not the
operating system or a utility, that is designed to allow an end-user to perform some
specific task." The district court also found support for this meaning in technical
dictionaries. For instance, the 1994 Microsoft Press Computer Dictionary defined
"application" as "a computer program designed to help people perform a certain type of
work. An application thus differs from an operating system (which runs a computer), a
utility (which performs maintenance or general-purpose chores), and a language (with
which computer programs are created). . . ." Microsoft Press Computer Dictionary 23-
24 (2d ed. 1994). A few years later, the same dictionary defined "application" as "a
program designed to assist in the performance of a specific task, such as word
processing, accounting, or inventory management. Compare utility." Microsoft Press
Computer Dictionary 27 (3d ed. 1997). Still another source on the meaning of technical
language defines "application" as a "program or group of programs designed for end
users." ZD Webopaedia, at http://www.zdwebopedia.com/TERM/a/application.html.
Neither the specification nor the prosecution history disclaims the district court's
construction of "executable application." The '906 patent makes no reference to the
04-1234 18
phrase "executable application" except in the claims. See generally the '906 patent. In
addition, the specification repeatedly indicates that the preferred embodiment is only
one possibility for practice of the invention. Id. Because this court "consistently
declines to construe claims according to the preferred embodiment," this court agrees
with the district court that Microsoft's proposed construction, limiting "executable
application" to standalone programs, does not comport with the entire technological and
temporal context for this term. N. Telecom Ltd. v. Samsung Elecs. Co.,
215 F.3d 1281,
1293 (Fed. Cir. 2000).
The prosecution history does not disclaim the district court's construction of
"executable application," and thus supports the trial court's reading of the term.
According to Microsoft, the applicants argued that the Khoyi patent used library routines
(i.e., components), while their invention did not. In addition, Microsoft claims the
applicants argued the Koppolu patent taught away from using standalone applications.
A review of the prosecution history does not show any disclaimer as Microsoft contends.
The applicants distinguished Khoyi on the grounds that the display of the data
object provided by the Khoyi functionality was not interactive, and in the '906 invention
such interactivity could be achieved "without requiring Khoyi-like capabilities in the
operating system." Thus, the applicants distinguished Khoyi on the feature of
interactivity, not on its use of standalone programs. While the applicants included
language about library routines and DLLs in their response, they did not distinguish the
'906 invention based on these features, rather such features were merely included in
language that outlined Khoyi's operation. Similarly, the applicants distinguished
Koppolu by pointing out that the particular kind of object handlers of Koppolu did not
04-1234 19
allow interactive processing of the object, because Koppolu did not enable such editing
of the object.
In light of the applicant's arguments distinguishing Khoyi and Koppolu, the
examiner's statement that "the claimed external executable application is not a code
library extension nor object handler (e.g. windows dll and OLE) as pointed out in
applicant's argument. (Paper #19 pages 12-14)," appears in the context of the
applicant's narrow argument. Thus, the examiner's statement also does not evince a
clear disclaimer. The arguments the examiner cited in the Reasons for Allowance
simply describe OLE object handlers. The applicants cite problems with OLE object
handlers, but do not disclaim anything. They simply argue that the cited references do
"not disclose or suggest the missing features." In addition, the applicant has "no
obligation to respond to an examiner's statement of Reasons for Allowance, and the
statement of an examiner will not necessarily limit a claim." ACCO Brands, Inc. v. Micro
Sec. Devices,
346 F.3d 1075, 1079 (Fed. Cir. 2003); see also N. Telecom Ltd., 215
F.3d at 1294 (requiring that prosecution history statements have "reasonable clarity and
deliberateness" to narrow claim scope). Overall, without a narrow customary ordinary
meaning for "executable application," the district court correctly gleaned the proper
definition of the term from the intrinsic evidence including the patent claims and
prosecution history.
Turning next to the jury instruction on "utilized by said browser to identify and
locate," the district court informed the jurors that "[t]he inventors contemplated the
browser's use of some outside resources such as the operating system." A review of
the trial record shows that Microsoft waived its right to appeal this issue.
04-1234 20
Microsoft commented on the proposed jury instructions to the district court. In
discussing the particular sentence Microsoft now takes issue with, Microsoft's counsel
stated to the district court, "It's undisputable, but it's also immaterial . . . the fact that
operating systems are involved in the operation of computer programs, so what?" The
district court sought at that point to clarify the record: "[N]o one is arguing here that the
browser cannot use the operating system . . . it simply can't be done and, in essence,
Microsoft is not taking the crazy position that what they mean is the browser can't use
the operating system at all." Microsoft's counsel responded, "That's correct."
Thus, the record shows that Microsoft did not properly preserve this issue for
appeal. "It is rare indeed for appellate relief to be granted when no objection was raised
at trial. . . . Under such circumstances, the question devolves into whether an error
occurred in the conduct of the trial that was so grievous as to have rendered the trial
unfair." Norian Corp. v. Stryker Corp.,
363 F.3d 1321, 1329 (Fed. Cir. 2004) (internal
citation and quotation omitted). This court detects no grievous unfairness in this
instruction despite Microsoft's argument that a properly instructed jury could not have
possibly found that the accused products infringe. As a whole, the jury instruction
properly guided the jury. Thus, the district court did not err in its jury instruction on this
disputed claim term.
35 U.S.C. § 271(f)
This court must also decide whether software code made in the United States
and exported abroad is a "component[] of a patented invention" under section 271(f).
Section 271(f)(1) states:
Whoever without authority supplies or causes to be supplied in or from the
United States all or a substantial portion of the components of a patented
04-1234 21
invention, where such components are uncombined in whole or in part, in
such a manner as to actively induce the combination of such components
outside the United States in a manner that would infringe the patent if
such combination occurred within the United States shall be liable as an
infringer.
35 U.S.C. § 271(f)(1) (2000). Section 271(f) refers to "components of a patented
invention." This statutory language uses the broad and inclusive term "patented
invention." Title 35, in the definitions section, defines "invention" to mean "invention or
discovery" â€" again broad and inclusive terminology. 35 U.S.C. § 100(a) (2000). The
next section in Title 35, section 101, explains that an invention includes "any new and
useful process, machine, manufacture or composition of matter." 35 U.S.C. § 101
(2000). Without question, software code alone qualifies as an invention eligible for
patenting under these categories, at least as processes. See In re Alappat,
33 F.3d 1526 (Fed. Cir. 1994); AT&T Corp. v. Excel Communications, Inc.,
172 F.3d 1352 (Fed.
Cir. 1999); MPEP § 2106.IV.B.1.a. (8th ed., rev. 2 2001). The patented invention in this
case is such a software product. '906 patent, col. 17, ll. 58 â€" col. 18, ll. 30. Thus, this
software code claimed in conjunction with a physical structure, such as a disk, fits within
at least those two categories of subject matter within the broad statutory label of
"patented invention."
This statutory language did not limit section 271(f) to patented "machines" or
patented "physical structures." Rather every form of invention eligible for patenting falls
within the protection of section 271(f). By the same token, the statute did not limit
section 271(f) to "machine" components or "structural or physical" components. Rather
every component of every form of invention deserves the protection of section 271(f).
04-1234 22
In examining the statutory language of section 271(f), this court must next
examine whether the software code on the golden master disk is a "component" of the
computer program invention. A "component" of a process invention would encompass
method steps or acts. See, e.g., 35 U.S.C. § 112, ¶6 (2000). A "component" of an
article of manufacture invention would encompass a part of that construct. Because a
computer program product is a patented invention within the meaning of Title 35, then
the "computer readable program code" claimed in claim 6 of the '906 patent is a part or
component of that patented invention.
Exact duplicates of the software code on the golden master disk are incorporated
as an operating element of the ultimate device. This part of the software code is much
more than a prototype, mold, or detailed set of instructions. This operating element in
effect drives the "functional nucleus of the finished computer product." Imagexpo,
L.L.C. v. Microsoft, Corp.,
299 F. Supp. 2d 550, 553 (E.D. Va. 2003). Without this
aspect of the patented invention, the invention would not work at all and thus would not
even qualify as new and "useful." Thus, the software code on the golden master disk is
not only a component, it is probably the key part of this patented invention. Therefore,
the language of section 271(f) in the context of Title 35 shows that this part of the
claimed computer product is a "component of a patented invention."
Sound patent policy also supports the meaning of section 271(f). In the first
place, this court accords the same treatment to all forms of invention. See, e.g., TRIPS
Agreement, Part II, Section 5 (1994) ("[P]atents shall be available and patent rights
enjoyable without discrimination as to the place of invention[ ] [and] the field of
technology . . . ."). This court cannot construct a principled reason for treating process
04-1234 23
inventions different than structural products. Moreover, as the district court pointed out,
process and product â€" software and hardware â€" are practically interchangeable in the
field of computer technology. Eolas Techs., Inc. v. Microsoft Corp.,
274 F. Supp. 2d 972, 974 (N.D. Ill. 2003). On a functioning computer, software morphs into hardware
and vice versa at the touch of a button. In other words, software converts its functioning
code into hardware and vice versa. Thus in the context of this patented invention, the
computer transforms the code on the golden disk into a machine component in
operation. Thus, sound policy again counsels against varying the definition of
"component of a patented invention" according to the particular form of the part under
consideration, particularly when those parts change form during operation of the
invention as occurs with software code.
The legislative history of section 271(f) also supports the meaning carried by the
language itself. Congress enacted section 271(f) in the wake of the United States
Supreme Court's decision in Deepsouth Packing Co. v. Laitram Corp.,
406 U.S. 518
(1972). Deepsouth acknowledged that unauthorized manufacturers of patented
products could avoid liability for infringement under the then-existing law by
manufacturing the unassembled components of those products in the United States and
then shipping them outside the United States for assembly. Section 271(f) closed that
obvious loophole in the statutory protections for patented inventions. Rotec Indus., Inc.
v. Mitsubishi Corp.,
215 F.3d 1246, 1252 n.2 (Fed. Cir. 2000). One Congressional
commentator stated this purpose expressly:
Section 101 [of the Bill] makes two major changes in the patent law in
order to avoid encouraging manufacturers outside the United States.
....
04-1234 24
[Section 271(f)] will prevent copiers from avoiding U.S. patents by
supplying components of a patented product in this country so that the
assembly of the components may be completed abroad. This proposal
responds to the . . . decision in Deepsouth . . . concerning the need for a
legislative solution to close a loophole in patent law.
130 Cong. Rec. H10525 (1984). These references again refer to correcting a loophole
for all forms of patented inventions.
Microsoft and amici argue that Congress' use of "components" must be identical
to the "components" of the patented invention in Deepsouth. In other words, since
Deepsouth dealt with the components of a physical machine, section 271(f)'s
"components" are limited to physical machines. This argument finds no support in the
language or history of the statute.
As already noted, the language of section 271(f) does not impose a requirement
of "tangibility" on any component of a patented invention. See Alan M. Fisch & Brent H.
Allen, The Application of Domestic Patent Law to Exported Software: 35 U.S.C.
§ 271(f), 25 U. Pa. J. Int'l Econ. L. 557, 575 (2004). In fact, neither the statute nor the
legislative history contains a limitation to "components of machines and other structural
combinations." Id. Microsoft, in effect, asks this court to add the word "physical" in front
of "components" in section 271(f). If the statute intended to limit the reach of
"components of patented inventions," it would have expressly included some narrowing
restriction. The statute simply does not include the limitation that Microsoft advocates.
Microsoft also argues this court's holding in Pelligrini v. Analog Devices, Inc.,
375 F.3d 1113 (Fed. Cir. 2004), imposes a requirement that components in section 271(f)
are physical. In the first place, this court in Pelligrini did not address the meaning of the
04-1234 25
"components" language in section 271(f). Moreover, Microsoft simply misreads the
language of Pelligrini.
In Pelligrini, this court held that section 271(f) did not apply to components
manufactured outside the United States and never physically shipped to or from the
United States. 375 F.3d at 1118. The court then explained that
‘[s]uppl[ying] or caus[ing] to be supplied' in § 271(f)(2) clearly refers to
physical supply of components, not simply to the supply of instructions or
corporate oversight. In other words, although Analog may be giving
instructions from the United States that cause the components of the
patented invention to be supplied, it is undisputed that those components
are not being supplied in or from the United States.
Id. Thus, Pelligrini requires only that components are physically supplied from the
United States. Pelligrini does not impose on section 271(f) a tangibility requirement that
does not appear anywhere in the language of that section.
In sum, the language and history of section 271(f)(1) as well as this court's law
protecting software inventions support this court's holding that section 271(f)(1)'s
"components" include software code on golden master disks.
IV.
In conclusion, because the district court improperly granted JMOL in
Eolas' favor on Microsoft's anticipation and obviousness defenses and
improperly rejected Microsoft's inequitable conduct defense, this court vacates
the district court's decisions and remands for further proceedings on these
issues. In addition, this court affirms the district court's claim construction of
"executable application" and finds the district court did not err in its jury
instruction with regard to the claim limitation "utilized by said browser to identify
and locate." Finally, this court affirms the district court's holding that
04-1234 26
"components," according to section 271(f)(1), includes software code on golden
master disks.
COSTS
Each party shall bear its own costs.
AFFIRMED-IN-PART, VACATED-IN-PART, and REMANDED
04-1234 27
Update
Alerts
Jump