United States: Neither The Mandate Rule Nor Collateral Estoppel Bars A Second Appeal On Claim Constructions Not Necessarily Decided By An Earlier Rule 36 Decision

Article by Adam S. Boger*

In TecSec, Inc. v. International Business Machines Corp., No. 12-1415 (Fed. Cir. Oct. 2, 2013), the Federal Circuit held that TecSec, Inc.'s ("TecSec") appeal of the district court's claim construction was not barred under either the mandate rule or the doctrine of collateral estoppel by the Court's earlier summary affirmance under Federal Circuit Rule 36 ("Rule 36") in a prior appeal. The Court then affirmed-in-part, reversed-in-part, and remanded the district court's SJ decision of noninfringement after concluding that the district court had incorrectly construed various claim terms.

TecSec owns U.S. Patent Nos. 5,369,702 ("the '702 patent"); 5,680,452 ("the '452 patent"); and 5,898,781 ("the '781 patent"), all directed to methods and systems for securing computer data by nesting encrypted objects into other objects, which are also encrypted. Representative claim 8 of the '702 patent recites in relevant part: "A system for providing multi-level multimedia security in a data network comprising . . . digital logic means, the digital logic means comprising . . . a system memory means for storing data . . . ." Slip op. at 3 (citation omitted).

TecSec sued International Business Machines Corp. ("IBM") and several other companies, alleging infringement by Internet servers and related software products. Early in the case, the district court severed TecSec's claims against IBM and stayed proceedings against the other defendants. The district court then granted IBM's motion for SJ of noninfringement, concluding that TecSec had failed to produce any evidence of any act of infringement by IBM or its customers. The district court also construed the claims and separately concluded that TecSec had failed as a matter of law to show that IBM's software met every limitation of the claims as construed. On its first appeal, TecSec challenged both the district court's claim construction and its conclusion that TecSec had failed to prove infringement by IBM. The Federal Circuit affirmed the decision without opinion pursuant to Rule 36. On remand, TecSec stipulated to noninfringement by the other defendants under the claim construction adopted by the district court during the proceedings against IBM, and the district court entered SJ of noninfringement. TecSec again appealed the district court's claim construction.

In the present appeal, the Federal Circuit held that neither the mandate rule nor the doctrine of collateral estoppel barred TecSec from rearguing claim construction. Addressing the mandate rule, the Court reasoned that because the district court's earlier-appealed judgment was based on two independent grounds—a failure of proof on infringement and a failure to show that IBM's software met the various claim limitations as construed—and because the Rule 36 decision did not articulate a basis for affirmance, "it cannot be concluded simply on the basis of this court's summary affirmance that we expressly or by necessary implication decided the claim construction issues in the IBM appeal." Id. at 10. Based on the same reasoning, the Court also concluded that claim construction was neither actually determined by nor critical and necessary to its Rule 36 affirmance, and thus the Court held that collateral estoppel also did not apply to this case.

"Had claim construction been the only issue in the IBM appeal, and had that claim construction been essential to sustaining the judgment of noninfringement, the preclusive effect of our Rule 36 judgment would have been undeniable. But that was not the case." Slip op. at 11.

The Federal Circuit then turned to the disputed claim constructions. The Court first construed "multi-level multimedia security" as requiring "multiple layers of encryption." Id. at 16. The Court rejected TecSec's argument that "security" is broader than "encryption" and thus encompasses access control, finding that the inventor had defined "multi-level multimedia security" during prosecution to require multiple layers of encryption. Specifically, in responding to a rejection that "multi-level multimedia security" was unclear, the inventor had amended the specification and explained that the invention achieves multi-level multimedia security in two ways, both of which require multiple layers of encryption. The Court also rejected TecSec's claim differentiation argument for a broader interpretation of "security," explaining that "[c]laim differentiation is not a rigid rule and it cannot overcome a construction required by the prosecution history." Id. (citing Regents of Univ. of Cal. v. Dakocytomation Cal., Inc., 517 F.3d 1364, 1375 (Fed. Cir. 2008)).

The Federal Circuit then held that "multimedia security" broadly relates to the type of security employed and was not limited during prosecution to the type of data secured, i.e., multimedia data. Specifically, the Court rejected the defendants' argument that the inventor had defined the term during prosecution by referring to a dictionary definition of "multimedia." According to the Court, the inventor cited the dictionary solely for the proposition that "multimedia" was well known in the art; he did not argue that the definition of "multimedia security" required encryption of multimedia objects, nor did he characterize his claims as limited to encryption of multimedia objects, or distinguish his invention from the prior art on that basis. The Court thus concluded, "In these circumstances, we cannot say that the inventor clearly and unmistakably limited his claims to encrypting multimedia objects." Id. at 18.

The Federal Circuit also addressed sixteen disputed claim limitations employing the term "means." The Court first held that the terms "system memory means" for storing data and "digital logic means" were not means-plus-function limitations under 35 U.S.C. § 112, ¶ 6. The Court explained that, to one of skill in the art, a "system memory" is a specific structure for storing data, and thus overcame the presumption that the use of the term "means" triggered § 112, ¶ 6. The Court distinguished Chicago Board Options Exchange v. International Securities Exchange, 677 F.3d 1361, 1367 n.1 (Fed. Cir. 2012), explaining that, in that case, not only had the Court held that the patentee had waived its right to argue that "system memory" recited sufficient structure to avoid § 112, ¶ 6, but also noted that the "system memory means" in that case recited a more specific function than simply storing data. Next, the Court held that "digital logic means" designates to skilled artisans the structure of digital circuits that perform Boolean algebra, and the claims, which did not recite a function for the digital logic means to perform, did recite sufficient structural elements, including a system memory and specific modules and subsystems, so as to not implicate § 112, ¶ 6.

Finally, the Federal Circuit held that the specification discloses sufficient corresponding structure for the fourteen disputed computer-implemented means-plus-function limitations to avoid indefiniteness. The Court rejected the defendants' contentions that the specification discloses only generic software, finding instead that the specification discloses three examples of specific products with detailed prose that show how those products operate to implement the claimed functions. In light of its claim construction, the Federal Circuit affirmed the district court's SJ of noninfringement as to one defendant, reversed as to the remaining defendants, and remanded for further proceedings.

Judge Reyna dissented. Judge Reyna would have held that TecSec was barred under both the mandate rule and the doctrine of collateral estoppel from relitigating the district court's claim construction. According to Judge Reyna, claim construction and the sufficiency of the evidence showing an act of infringement are not alternative grounds for finding noninfringement, but rather are part of a singular analysis. Judge Reyna concluded that "[t]he majority's disposition in this case allow[ed] TecSec two bites at the claim construction apple," undermining both the confidence in and the utility of Rule 36. Reyna Dissent at 10.

Judges: Moore, Linn (author), Reyna (dissenting)

[Appealed from E.D. Va., Judge Brinkema]

*Adam S. Boger is a Law Clerk at Finnegan.

This article previously appeared in Last Month at the Federal Circuit, November 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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