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When reviewing the denial of a JMOL motion, “‘[t]his court reviews a jury's conclusions on obviousness, a question of law, without deference, and the underlying findings of fact, whether explicit or implicit within the verdict, for substantial evidence.’” Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, 1343 (Fed. Cir. 2007) (quoting LNP Eng’g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1353 (Fed. Cir. 2001)); accord PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1360 (Fed. Cir. 2007) (citing Caver v. City of Trenton, 420 F.3d 243, 262 (3d Cir. 2005)). “Those factual underpinnings include the scope and content of the prior art, differences between the prior art and the claims at issue, and the level of ordinary skill in the art.” Dippin’ Dots, 476 F.3d at 1343 (citing Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966)).

The first issue we address with respect to obviousness is the scope and content of the prior art—specifically whether the prior art exhibited every step of the methods claimed in independent claims 1 and 31 of the ’099 patent. Thomson argues that a bidding process employing the prior art Parity® system performed every step of the claimed methods other than a web browser. Because Muniauction’s expert conceded that bid submissions using Parity® performed every limitation of claims 1 and 31 as construed by the district court, other than a web browser, no reasonable juror could find to the contrary.

At trial and on appeal, the parties dispute whether bid submissions using the Parity® system performed the step of “automatically computing at least one interest cost value based at least in part on said inputted data” (the “automatic computation step”),
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which appears in both independent claims 1 and 31. ’099 patent col.14 ll.54–57, col.17 ll.1–5. The court noted that in the Notice of Allowability, the Examiner concluded that articles related to the trademark registration of Parity® and trade press releases supported the applicant’s argument that Parity® did not perform the automatic computation step. Muniauction, 502 F. Supp. 2d at 491; see also Notice of Allowability, U.S. App. No. 09/087,574 at 2–3 (Aug. 24, 2000). However, the testimony of Muniauction’s expert establishes that the Examiner’s conclusion was incorrect under the district court’s construction of the automatic computation step.

The district court construed the automatic computation step as “calculating, without further action by the user, an interest cost value, representing borrowing cost associated with an original issue fixed income financial instrument, based at least in part on the information put into a bidder's computer in the previous step.” Muniauction, Inc. v. Thomson Corp., No. 01-CV-1003 at 15 (Aug. 11, 2006) (“Claim Construction Order”). The court also concluded that the automatic computation step was not claimed as being performed in a specific location—e.g., it “could be performed on the bidder’s computer, where the bid data has been inputted, or, at some other location where the data has been transferred for the purpose of computation.” Id. at 10. On direct examination, Muniauction’s liability expert, Don O’Neill, testified that Parity® “didn’t do” the automatic computation step because bid calculations were performed using independent software on the bidder’s computer, which were then transferred using a Parity® export file. On cross-examination, however, Mr. O’Neill clarified that his conclusion that Parity® did not perform the automatic computation step was based on the absence of “an automatically computing calculator” in the Parity® system. Mr. O’Neill further testified that Parity “did automatically compute a true interest cost” in the sense that bidders did not have to compute bids by hand and that Parity® re-did some of the computation done by the bidder’s software during bid preparation.

Only Mr. O’Neill’s testimony on cross-examination is relevant to the inquiry of whether the automatic computation step is disclosed by the prior art. When testifying on invalidity, “[a]n expert must ‘[compare] the construed claims to the prior art.’” Tivo, Inc. v. Echostar Comm’ns Corp., 516 F.3d 1290, 1311 (Fed. Cir. 2008) (second alteration in original) (quoting Helifix, Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339, 1346 (Fed. Cir. 2000)). As discussed above, Mr. O’Neill explicitly stated that his original conclusion on direct examination was based on the absence of “an automatically computing calculator” from Parity®, a limitation not required by the claims. The district court specifically construed the automatic computation step as capable of being performed on the bidder’s computer, Claim Construction Order at 10, and Mr. O’Neill testified that this is exactly what happened when a user submitted a bid using Parity®. Accordingly, we conclude that substantial evidence does not support a finding that the submissi0n of bids using Parity® lacked any element of independent claims 1 and 31 other than the use of a web browser.

Having ascertained the differences between the prior art Parity® system and the independent claims of the ’099 patent, we turn to the legal question of whether it would have been obvious to one of ordinary skill in the art to modify the Parity® system to incorporate conventional web browser functionality. Section 103 of Title 35 “forbids issuance of a patent when ‘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.’” KSR Int’l Co. v. Teleflex Inc., 127 S. Ct. 1727, 1734 (2007) (quoting 35 U.S.C. § 103). A central principle in this inquiry is that “a court must ask whether the improvement is more than the predictable use of prior art elements according to their established functions.” Id. at 1740. On the record before us, we answer this question in the negative and conclude that claims 1 and 31 of the ’099 patent are obvious as a matter of law.

When the ’099 patent’s application was filed on May 29, 1998, the use of web browsers was well known. Indeed, the written description of the ’099 patent itself identifies the invention as using “a conventional Internet browser,” ’099 patent, Abstract, and “conventional web browsing software,” id. at col.6 l.43. The use of “conventional” to modify “Internet browser” and “web browsing software” denotes a reference to web browsers in existence at the time of the alleged invention of the ’099 patent. See PC Connector Solutions LLC v. SmartDisk Corp., 406 F.3d 1359, 1363 (Fed. Cir. 2005) (concluding that term “conventional” is implicitly time dependent and construing “the literal scope of the claim limitations qualified by th[at] term[] as being limited to technologies existing at the time of the invention”). We therefore begin with an understanding that the modification of Parity® to incorporate web browser functionality represents a combination of two well known prior art elements to a person of ordinary skill in the art.

In our analysis of the obviousness of independent claims 1 and 31, we recognize our obligation to guard against any hindsight bias, see Graham v. John Deere Co., 386 U.S. 1, 36 (1966), but we note that the use of the internet and web browser technology 2007-1485 10
to conduct electronic auctions was well-established at the time the ’099 patent application was filed. For example, U.S. Patent No. 5,794,219, filed on February 20, 1996,1 discloses an online auction wherein bids are submitted using internet browsers such as Netscape. ’219 patent Fig. 1, col.5 ll.14–30. Similarly, U.S. Patent No. 5,835,896, filed on March 29, 1996,2 also discloses the use of the World Wide Web and a web browser to conduct on electronic auction. ’896 patent Fig. 3, col.6 ll.23–38. Although neither the ’219 patent nor the ’896 patent specifically address original issuer auctions of financial instruments, “[w]hen a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one.” KSR, 127 S. Ct. at 1740. With regard to this case, a speech given in May of 1996 at a meeting of the Government Finance Officer’s Association (“GFOA”) explicitly addressed the desirability of using World Wide Web technology to distribute debt issue to consumers. Girard Miller, Technical Servs. Dir., GFOA, Speech at the 1996 General Session of the GFOA Conference (May 18–22, 1996). At a minimum, this speech suggests “the effects of demands known to the design community or present in the marketplace,” KSR, 127 S. Ct. at 1740, thereby indicating the obviousness of the claimed combination.

Finally, the combination of known elements present in this case is quite similar to that in Leapfrog Enterprises, Inc. v. Fisher-Price, Inc., 485 F.3d 1157 (Fed. Cir. 2007). In Leapfrog, the court ruled that “[a]ccommodating a prior art mechanical device that

1 Although the ’219 patent did not issue until after the ’099 patent was filed, it is prior art to the ’099 patent under 35 U.S.C. § 102(e)(2)—“a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent.”

2 The ’896 patent is also § 102(e)(2) prior art to the ’099 patent. accomplishes [the goal of teaching a child to read phonetically] to modern electronics would have been reasonably obvious to one of ordinary skill in designing children’s learning devices.” 485 F.3d at 1161. The court reached this result based in part on its reasoning that “[a]pplying modern electronics to older mechanical devices has been commonplace in recent years.” Id. The record in this case demonstrates that adapting existing electronic processes to incorporate modern internet and web browser technology was similarly commonplace at the time the ’099 patent application was filed.
When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under § 103. Muniauction argues, notwithstanding this trend, that the incorporation of web browser functionality into existing electronic prior art systems was nevertheless beyond the ability of a person of ordinary skill in the art at the time the ’099 patent application was filed. In particular, Muniauction claims that a person of ordinary skill would not have known how to use a web browser to implement certain steps of methods claimed in the ’099 patent. Thomson responds by noting that the ’219 patent teaches the use of a web browser both to communicate information associated with a bid over an electronic network and to display information associated with a bid. In light of this teaching, we are not persuaded by Muniauction’s argument that a person of ordinary skill would not have known how to implement the communicating and displaying steps of the ’099 patent with a web browser during the relevant time period.3

Under the foregoing analysis, we conclude that Thomson has clearly and convincingly established a prima facie case that claims 1 and 31 of the ’099 patent are obvious as a matter of law. Accordingly, we turn to Muniauction’s attempt to rebut this prima facia case with secondary considerations of nonobviousness.

In its denial of Thomson’s JMOL motion, the district court noted that “[p]laintiff presented evidence of skepticism, legally appropriate praise, copying, and commercial success.” Muniauction, 502 F. Supp. 2d at 491. The district court ruled that the evidence presented by Muniauction on these secondary considerations was sufficient for the jury to have concluded that Thomson failed to prove obviousness by clear and convincing evidence. Id. We disagree for two reasons. First, at least some of the factors argued by Muniauction lack the requisite nexus to the claims. Second, to the extent that some of the factors arguably meet the nexus requirement, their relationship to the claims is simply too attenuated to overcome the strong prima facie demonstration by Thomson that the claims are obvious.

For us to accord substantial weight to the secondary considerations proffered by Muniauction, “[a] nexus between the merits of the claimed invention and evidence of

3 Because the ’099 patent is itself silent regarding how to actually implement the methods claimed therein with a web browser, Muniauction’s argument therefore might suggest that the claims present an enablement issue, rather than support a conclusion of nonobviousness. See, e.g., Sitrick v. Dreamworks, LLC, 516 F.3d 993, 999 (Fed. Cir. 2008) (“The ‘enablement requirement is satisfied when one skilled in the art, after reading the specification, could practice the claimed invention without undue experimentation.’” (quoting AK Steel Corp. v. Sollac, 344 F.3d 1234, 1238–39 (Fed. Cir. 2003))). secondary considerations is required in order for the evidence to be given substantial weight in an obviousness decision.” Ruiz v. A.B. Chance Co., 234 F.3d 654, 668 (Fed. Cir. 2000) (quoting Simmons Fastener Corp. v. Ill. Tool Works, Inc., 739 F.2d 1573, 1575 (Fed. Cir. 1984)). Put another way, commercial success or other secondary considerations may presumptively be attributed to the patented invention only where “‘the marketed product embodies the claimed features, and is coextensive with them.’” Ormco Corp. v. Align Tech., Inc., 463 F.3d 1299, 1311–12 (Fed. Cir. 2006) (quoting Brown & Williamson Tobacco Corp. v. Philip Morris Inc., 229 F.3d 1120, 1130 (Fed. Cir. 2000)).

Muniauction claims, for example, that legally appropriate praise in the form of an “Innovations in American Government” award to the City of Pittsburgh for its use of the Muniauction system tends to rebut any prima facie showing of obviousness. The press coverage of the award in the record, however, focuses on the availability of maturity-by-maturity bidding in the Muniauction system, as compared to the conventional all-or-none bidding.

Although both auction types are disclosed in the written description of the ’099 patent, see ’099 patent col.5 ll.23–65, col.13 ll.31–33, claims 1 and 31 include conventional all-or-none bidding, as well as maturity-by-maturity bidding. Thus, the 1999 award lacks the required nexus with the scope of the claims.4 In addition, the same press coverage of the Innovations in American Government award also demonstrates that the source of much of the skepticism was the large investment banks

4 We further note that our conclusion as to the nexus between this award and the claims is consistent with the long-established rule that “[c]laims which are broad enough to read on obvious subject matter are unpatentable even though they also read on nonobvious subject matter.” In re Lintner, 458 F.2d 1013, 1007 (CCPA 1972) (citing In re Mraz, 455 F.2d 1069, 1073 (CCPA 1972)). who were advantaged by the existing all-or-none bidding system. This type of market-force skepticism also lacks the requisite nexus to the claimed invention. Finally, as to any remaining secondary considerations, the evidence is simply inadequate to overcome a final conclusion that independent claims 1 and 31 are obvious as a matter of law. Cf. Leapfrog, 485 F.3d at 1162 (“given the strength of the prima facie obviousness showing, the evidence on secondary considerations was inadequate to overcome a final conclusion that claim 25 would have been obvious”).

In addition to independent claims 1 and 31, Mr. O’Neill also testified that elements of certain asserted dependent claims were also performed when an electronic bid was submitted using the Parity® system. In particular, O’Neill testified that Parity® met the limitations of claims 9, 14, 36, and 56. Accordingly, these claims are also obvious under our analysis of independent claims 1 and 31. Because we do not reach a similar conclusion with respect to the remaining dependent claims—2, 18, 20, 24, 32, 40, 42, and 46—we must consider whether they are infringed by Thomson.  Next Page ->

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