United States: Court Reverses Claim Construction Not Supported By Claim Language And Specification

This article previously appeared in Last Month at the Federal Circuit, June 2012

Judges:  Rader, Wallach (author), Fogel (district judge sitting by designation)

In Chicago Board Options Exchange, Inc. v. International Securities Exchange, LLC,  Nos. 11-1267,
-1298 (Fed. Cir. May 7, 2012), the Federal Circuit vacated the district court's judgment of noninfringement and remanded for further proceedings based on its interpretation of the claim terms "system memory means," "matching," and "automated exchange."

International Securities Exchange, LLC ("ISE") is the owner of U.S. Patent No. 6,618,707 ("the '707 patent"), directed to an automated exchange for the trading of options contracts that allocates trades among market professionals and that assures liquidity.  The '707 patent distinguishes an "automated" exchange from the traditional, floor-based "open-outcry" system for trading options contracts.

ISE sued Chicago Board Options Exchange, Inc. ("CBOE") for infringement of the '707 patent in the Southern District of New York.  Subsequently, CBOE sued ISE in the Northern District of Illinois seeking, among other relief, a DJ that the '707 patent is invalid, is not infringed by CBOE, and is unenforceable because of inequitable conduct before the PTO.  The New York action eventually was transferred to the Northern District of Illinois where the cases were consolidated.

After the district court issued its final claim construction order, CBOE moved for SJ of noninfringement based on the district court's construction of the terms "system memory means," "matching," and "automated exchange."  The district court denied the portion of CBOE's motion based upon the "automated exchange" limitation, but granted the motion with respect to the "system memory means" and "matching" limitations.  ISE appealed on claim construction and the resulting SJ decision.  

On appeal, the Federal Circuit first reviewed claim construction.  With regard to the means-plus-function term "system memory means," the parties agreed on the function of this claim limitation but disputed the corresponding disclosed structure.  ISE contended that "system memory" is sufficient.  CBOE argued, and the district court agreed, that the structure associated with the claim limitation also includes the bid-matching process and the offer-matching process because those processes store allocating parameters pertaining to public customer orders while the system memory stores allocating parameters related to professional orders.  CBOE further contended that the bid-matching process and the offer-matching process "store" allocation parameters because they "apply" and "contain" allocation parameters.  The Court found that the specification did not support CBOE's position.  The Court explained that system memory is the disclosed structure clearly associated with "system memory means," and the language in the specification shows that the bid-matching process and the offer-matching process "apply," not "store," allocation parameters.   The Court further explained that the general presumption that different terms have different meanings remain because nothing in the '707 patent suggests that "storing" and "applying" are used interchangeably in reference to allocation parameters.

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