Soverain Software LLC v. Newegg Inc.
On rehearing, the U.S. Court of Appeals for the Federal Circuit clarified its prior decision with respect to a claim of a patent at issue that was not treated in the original decision. Soverain Software LLC v. Newegg Inc., Case No. 11-1009 (Fed. Cir., September 4, 2013) (on rehearing) (per curiam).
This dispute arose from three patents that describe a software system entitled Transact, which enables a buyer to purchase products online through computers interconnected by a network. (See IP Update , Vol. 16, No. 2). Soverain acquired the Transact software and related patents and then proceeded to sue several online retailers, including Newegg, for patent infringement. In the original opinion, the Court reversed the district court's decision of non-obviousness in view of prior art presented by Newegg. The Court discussed the disputed claims and determined that each element was found in the prior art, thereby holding that the asserted claims were obvious.
At the request of both parties, the Court granted a rehearing to clarify its rulings with respect to claims 34 and 35 of the patent in suit. Although claim 34 was treated on appeal and subsequently found obvious by the Court, the district court's judgment initially referred to claim 35, not claim 34. Claim 34 is related to a network-based sales system that includes a buyer computer interconnected to a shopping cart computer through a computer network, where the shopping cart computer is able to create a "payment message" that initiates the online transaction once activated by the buyer computer. Claim 35 narrows claim 34 by requiring the shopping cart computer to create the payment message before the buyer computer activates the payment message.
In its discussion on validity, the district court directed its substantive analysis to the limitations of claim 34 and did not mention any limitation of claim 35. During the appeal, both Newegg and Soverain focused their arguments solely on claim 34. Claim 35 was neither briefed nor mentioned during arguments before the Court. As a result, the Court treated claim 34 as "representative" of the shopping cart claims in suit, subsequently holding claim 34 invalid as obvious.
In its supplemental briefing for rehearing, instead of providing any new information concerning claim 35 or evidence that might contradict expert testimony as to the content of claim 35 in view of the prior art presented by Newegg, Soverain reargued issues previously resolved in the appeal. Since dependent claim 35 was not argued to the district court separate from independent claim 34, the Court determined that precedent requires that claims 34 and 35 rise or fall together. Accordingly, the Court concluded that the limitation of claim 35 is also found in the prior art of record, thereby holding that claim 35 is also invalid as obvious.
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