With pending counterclaims of invalidity and unenforceability absent detailed infringement analysis, the U.S. Court of Appeals for the Federal Circuit was placed in an "awkward position" to review claim construction and stipulated judgments of non-infringement. Lava Trading, Inc. v. Sonic Trading Management, LLC, et al., Case Nos. 05-1177, -1192 (Apr. 19, 2006) (Rader, J.; Linn, J.; concurring; Mayer, J.; dissenting). Due to the district court’s flawed claim interpretation, the Federal Circuit vacated the stipulated judgments and remanded the case.
Lava Trading sued Sonic Trading for infringement of its patent for software that aggregates and integrates securities trading and order placement on behalf of various alternative trading systems. In addition to denying infringement, the defendants counterclaimed for declaratory judgment of invalidity and unenforceability. After a Markman hearing, the district court issued a claim construction ruling from the bench. Consequently, the parties stipulated to final judgments of non-infringement.
In its evaluation of the case, the Federal Circuit expressed concern that its review of the claim construction may implicate issues and claims that were beyond the reach of its jurisdiction. The district court failed to provide a meaningful comparison of the accused product to the asserted claims. Absent this analysis, the district court lacked the proper context for an accurate claim construction, and the Federal Circuit could not properly assess the accuracy of the appealed judgment of non-infringement. The Federal Circuit recognized that the appeal was rather problematic without the "vital contextual knowledge of the accused products or process," and its opinion would be analogous to an advisory opinion on the scope of the patent-in-suit. However, the Court asserted its jurisdiction based on the district court’s rule 54(b) certification of the case.
Before addressing the claims, the Federal Circuit addressed an estoppel/waiver theory raised by Sonic based on Lava’s changed position on claim construction. The Federal Circuit rejected this argument and noted estoppel would not bar a party from departing from a claim construction theory unsuccessfully advocated before the trial court. Second, the Federal Circuit reasoned Lava did not waive its current theory because there was not a practical difference between the two theories. The Federal Circuit determined the district court’s claim construction was flawed and set aside the final judgment orders on non-infringement.
In dissent Judge Mayer stated the Court lacked jurisdiction because there was no final judgment due to the interrelatedness of the infringement claim and unenforceability counterclaim. Judge Mayer noted the majority’s ruling on the presently undeveloped record forced the Court to decide the claim construction again at a later date, and that ruling could differ from its present ruling.
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