United States: Where Claims Were Anticipated As A Matter Of Law, Federal Circuit Reverses Postverdict Grant Of JMOL To The Contrary

This article previously appeared in Last Month at the Federal Circuit, October 2011

[Appealed from D Judges: Lourie, Linn (author), Dyk

[Appealed from D. Del., Magistrate Judge Thynge]

In Cordance Corp. v. Amazon.com, Inc., Nos. 10-1502, -1545 (Fed. Cir. Sept. 23, 2011), the Federal Circuit reversed the district court's JMOL determination that claims 1, 3, 5, 7, and 8 of U.S. Patent No. 6,757,710 ("the '710 patent") were not invalid, vacated the district court's JMOL determination that claim 9 of the '710 patent was not invalid, and affirmed the district court's judgment that U.S. Patent Nos. 5,862,325 ("the '325 patent") and 6,088,717 ("the '717 patent") remain valid and not infringed.

Cordance Corporation's ("Cordance") '710 patent is directed to an online purchasing system, and its '325 and '717 patents are directed to computerized feedback systems. The '717 patent is a continuation of the '325 patent and the '710 patent is a continuation of the '717 patent.

Cordance sued Amazon.com, Inc. ("Amazon"), alleging that Amazon's "1-Click®" purchasing features infringed claims 1-3, 5, and 7-9 of the '710 patent, and that Amazon's website features allowing customers to enter reviews of products for sale and reviews of transactions with third-party sellers infringed the '325 and '717 patents. The jury reached a verdict that Amazon infringed claims 1, 3, 5, 7, and 8 of the '710 patent, and that all of the asserted claims of the '710 patent were invalid. The jury also found that Amazon did not infringe any of the asserted claims of the '325 or '717 patents.

Cordance filed postverdict motions for JMOL and a new trial, seeking judgment of validity of the asserted claims of the '710 patent and challenging the district court's construction of "feedback information" as recited in the asserted claims of the '325 and '717 patents. The district court granted JMOL that Amazon failed to provide sufficient evidence to support a finding that (1) claims 7-9 of the '710 patent lacked written description; (2) claims 1-3, 5, and 7-9 of the '710 patent were invalid as anticipated; and (3) claims 1, 3, 5, 7, and 8 of the '710 patent were invalid under 35 U.S.C. § 102(f).

Amazon appealed the grant of JMOL, seeking to restore the jury's verdict that the '710 patent was invalid. Cordance cross-appealed, in an effort to reverse or vacate the jury's finding of invalidity of claims 1-3 and 5 of the '710 patent, and to modify the district court's construction of "feedback information" in the '325 patent and '717 patent.

On appeal, the Federal Circuit first concluded that the district court did not err in granting Amazon's JMOL that the asserted claims of the '710 patent could not claim priority to U.S. Patent No. 6,044,205 ("the '205 patent"), a CIP of the '325 patent, because the '710 patent contained new matter that was added with the filing of the application that matured into the '325 patent. The Court noted that to establish an earlier effective date, Cordance was required to prove prior conception, which Cordance did not do. Specifically, the Court concluded that Cordance failed to prove that the '710 patent was entitled to claim priority to a 1993 conception document because "Cordance failed to link any disclosure contained within the 1993 conception document to any limitations in the asserted claims of the '710 Patent as construed by the district court." Slip op. at 8. Cordance's attempt to claim priority to the filing date of the '205 patent failed for a similar reason. The Court indicated that "in order for the asserted claims of the '710 Patent to receive the benefit of the filing date of the '205 Patent, written description support for the asserted claims must be found in the '205 Patent." Id. at 9. Again, the Court found that Cordance failed to link any disclosure contained within the '205 patent to any limitation in the asserted claims of the '710 patent and found that the district court did not err in granting Amazon's JMOL as to the effective date of the '710 patent.

"In the absence of any ruling on the sufficiency of the evidence on both theories presented to the jury with respect to claim 9, the district court had no basis to find the jury's general verdict unsustainable on the written description theory alone. The JMOL ruling on written description was, thus, improper and is vacated." Slip op. at 17.

The Federal Circuit next addressed the JMOL determination that claims 1, 3, 5, 7, and 8 of the '710 patent were not invalid. Amazon presented an anticipation defense to these claims at trial, and the jury found each of these claims invalid but did not specify the basis for its invalidity finding. After the jury returned its verdict, Cordance filed a postverdict JMOL on the basis that Amazon presented insufficient evidence to support the jury's finding of invalidity premised on the theory of anticipation as to claims 1, 3, 5, 7, and 8. The Federal Circuit agreed with Amazon that claims 1, 3, 5, 7, and 8 of the '710 patent were anticipated by Amazon's 1995 system as a matter of law and reversed the district court's grant of Cordance's JMOL. The Court also found that the district court correctly construed the "automatically completing the purchase of an item" limitation as "completing the purchase without human input." While acknowledging Cordance's argument that Amazon's 1995 system could not "automatically complete the purchase" because a human user at Amazon had to manually verify credit cards, the Court concluded that what Amazon did after an order was complete was beyond the scope of the claims and wholly irrelevant. Similarly, the Court agreed with the district court's finding that Amazon's 1995 system satisfied the "metadata" limitations of claims 1, 3, 5, 7, and 8, because a sessionID number constitutes "data that describes or associates other data," however transmitted, under a proper claim construction of that term.

The Federal Circuit also rejected Cordance's argument that Amazon's theory of invalidity was akin to the "practicing the prior art" theory rejected by the Federal Circuit in Tate Access Floors, Inc. v. Interface Architectural Resources, Inc., 279 F.3d 1357 (Fed. Cir. 2002). The Court reminded that a "'practicing the prior art defense' typically refers to the situation where an accused infringer compares the accused infringing behavior to the prior art in an attempt to prove that its conduct is either noninfringing or the patent is invalid as anticipated because the accused conduct is simply 'practicing the prior art.'" Slip op. at 13-14. Here, the Court found that Amazon satisfied its burden to show that each limitation of claims 1, 3, 5, 7, and 8 was found in Amazon's 1995 system, and, thus, the claims were invalid as anticipated. As such, the Court reversed the district court's grant of Cordance's JMOL.

Before turning to the validity of claims 2 and 9 of the '710 patent, the Court addressed the nature of the jury's general verdict regarding these claims. At trial, Amazon presented two theories of invalidity as to claims 2 and 9 of the '710 patent: written description and derivation. In a general verdict, the jury found both claims to be invalid, but it was unclear upon which ground(s) the jury based its findings of invalidity because of the presentation of multiple invalidity theories. Cordance subsequently filed a JMOL motion alleging that Amazon presented insufficient evidence to support a finding that claims 1-3, 5, and 7-9 were invalid under § 102(f). Cordance also filed a JMOL motion alleging that Amazon presented insufficient evidence to support Amazon's written description theory as to claims 7-9, which the district court granted. In doing so, the district court found that claim 9 was not invalid under 35 U.S.C. § 112, even though two theories of invalidity were presented, and Cordance failed to persuade the district court that the evidence presented to the jury as to § 102(f) was insufficient. In light of this, the jury's finding of invalidity as to claim 2 was not disturbed, but the impact on claim 9 by the district court's grant of Cordance's JMOL motion as to § 112, but not as to § 102(f), is unclear.

The Court reminded that a "general jury verdict of invalidity should be upheld if there was sufficient evidence to support any of the alternative theories of invalidity." Id. at 17. Here, because there was no ruling on the sufficiency of the evidence on both theories presented to the jury with respect to claim 9, the Court found that the district court had no basis to find the jury's general verdict unsustainable on the written description theory alone. Accordingly, the Court vacated the JMOL ruling as to written description.

The Federal Circuit next addressed Cordance's cross-appeal seeking a new trial with regard to the jury's invalidity verdict. The Court, however, found that Cordance did not argue that Amazon's evidence on its derivation defense was insufficient as to claims 2 and 9 of the '710 patent or that the district court erred in failing to grant its JMOL motion on derivation as to claims 2 and 9. Instead, Cordance merely reargued that the grant of Cordance's JMOL motions was proper. Because Cordance failed to present any arguments specifically relevant to Cordance's entitlement to a new trial as to the validity of claims 2 and 9, the Court determined that the issue was waived on appeal. Accordingly, the Court concluded that the jury's verdict that claim 2 of the '710 patent was invalid remained in place.

As to the remaining issues on appeal pertaining to claims 1, 3, 5, 7, and 8 of the '710 patent, the Court found that because these claims were invalid as a matter of law, and because the jury's verdict of invalidity as to claims 2 and 9 of the '710 patent remain undisturbed, the Court did not need to decide the remaining issues since they were moot.

Finally, the Court concluded that the district court did not err in construing the "feedback information" limitation in the '325 and '717 patents. Specifically, the Court noted that the patents cover a system of collecting feedback information, aggregating feedback information, and disseminating statistical reports, which was based upon the use of fixed, predefined attributes with corresponding fixed, predefined value choices. Therefore, the Court found in light of the disclosure that feedback information "consists of " attributes and values, and the lack of support for Cordance's construction, the district court cannot be said to have erred in its construction of "feedback information."

Accordingly, the Federal Circuit reversed the district court's order granting JMOL as to claims 1, 3, 5, 7, and 8 of the '710 patent, vacated the district court's grant of JMOL on written description as to claim 9 of the '710 patent, and affirmed the remainder of the district court's determinations challenged on appeal.

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