United States: Federal Circuit Affirms Motion To Strike And Motion For Summary Judgment After Expert Applies "Materially Different" Claim Construction

Holding

In Treehouse Avatar LLC v. Valve Corporation, No. 2022-1171 (Fed. Cir. Nov. 30, 2022), the Court of Appeals for the Federal Circuit ("the Federal Circuit") affirmed the decision from the District Court for the Western District of Washington, striking expert testimony it found inconsistent with the parties' agreed-upon claim construction and granting a motion for summary judgment of noninfringement in favor of Valve.

Background

Treehouse Avatar ("Treehouse") is the owner of U.S. Patent No. 8,180,858 ("the '858 patent"). The '858 patent is directed to a network system that creates and presents virtual characters that users on a network site can customize and use. Valve Corporation ("Valve") owns two video games where characters can be selected and customized that Treehouse alleges infringe the '858 patent. Independent claim 1 of the '858 patent is representative and recites:

Treehouse at *3-4 (emphasis added).

District Court Decision

In May 2015, Treehouse sued Valve for infringement of the '858 patent in the U.S. District Court for the District of Delaware. The case was transferred to the District Court for the Western District of Washington, and the parties submitted a joint claim construction brief, adopting the construction of "character-enabled (CE) network sites" ("the CE limitation") that the Patent Trial and Appeal Board ("the PTAB") had applied in an earlier inter partes review. At the PTAB, neither party suggested that the plain and ordinary meaning should apply, and the PTAB construed the CE limitation as meaning "a network location, other than a user device, operating under control of a site program to present a character, object, or scene to a user interface." Id. at *5.

Despite agreeing to adopt the PTAB's claim construction, Treehouse's infringement expert prepared and submitted a report that applied the plain and ordinary meaning for the CE limitation rather than the agreed-upon construction. Id. Treehouse's expert subsequently submitted a supplement to his report to "clarify" that the PTAB's construction was the ordinary meaning and that his "opinions applied this meaning and [were] unchanged." Id. at *6. Valve filed a motion to strike portions of Treehouse's expert testimony, arguing that the construction the expert applied to the report—the plain and ordinary meaning—was "'overbroad and inapplicable' for 'allow[ing] the use of characters on the network sites.'" Id.

While the motion to strike was pending, Valve filed a motion for summary judgment of noninfringement, asserting that the allegedly infringing video games failed to meet the CE limitation of the '858 patent under the agreed-upon construction. Id. Notably, the allegedly infringing video games, including the characters and customizable attributes and other features, are all downloaded onto and stored on user computers, not Valve's servers as the '858 patent requires. Id. at *6-7. Arguing against the motion, Treehouse's expert opined that because items are available for purchase while the games are played online, the games therefore must infringe. Id. at *7.

The district court granted Valve's motion to strike and the motion for summary judgment of noninfringement, finding that Valve demonstrated that the construction applied by Treehouse's expert was inconsistent with the parties' agreed-upon construction and that Treehouse had failed to "offer admissible evidence showing that Valve's video games operated the CE limitation." Id. at *7, 9.

Federal Circuit Decision

The Federal Circuit noted that there was "no dispute that [Treehouse's expert] failed to address the construction of the CE limitation in his report." Id. at *9. However, Treehouse argued that an expert report that does not use an agreed-upon claim construction "should only be stricken where the report is inconsistent with, not merely different from, the agreed upon construction." Id. The Federal Circuit noted that Valve had argued in the district court that the Treehouse's expert's construction of the CE limitation omitted several requirements that left the construction overbroad. Id. Valve contended that these requirements were "'not redundant' of other language in the claim or the plain and ordinary meaning" of the CE limitation. Id.

The Federal Circuit affirmed the grant of a motion to strike the expert testimony, noting that it is not improper to strike expert testimony when "such testimony is based on a claim construction that is materially different from the construction adopted by the parties and the court." Id. at *10 (emphasis added). The Federal Circuit further noted that "any expert theory that does not rely upon that agreed-upon construction is suspect," and that Treehouse failed to show that the district court abused its discretion in granting the motion to strike. Id.

Finding that the district court properly struck portions of the expert testimony, the Federal Circuit also held that Treehouse failed to provide admissible evidence that the accused video games satisfied the CE limitation under the agreed-upon construction. Id. at *11. The Federal Circuit pointed to significant evidence that Valve provided during the district court trial showing that the accused video games did not satisfy the CE limitation of the '858 patent because the user's own software and hardware presents the game and characters. Id. The Federal Circuit therefore affirmed the district court's grant of the motion for summary judgment of noninfringement. Id.

Takeaway

For patent prosecutors, this decision serves as a reminder why careful attention to patent application drafting is so important. The disclosure provides the framework for any future claim construction. The goal is to be so clear that there is no need to resort to expert testimony in litigation.

The specification acts as a dictionary for the claim terminology, so the time to set out the desired claim construction is when drafting the specification. Better to explicitly set out the scope intended by the inventor than leave it to a district court judge or PTAB panel influenced by opposing counsel. If broad meaning for a term intended, set forth a broad definition in the specification. Alternatively, consider embodiments with narrower definitions; maybe patent profanity could assist in construing alternative claims more narrowly. Clearly define any intended special meaning. Use the specification to eliminate uncertainty. Also use specification to describe how claims will be infringed. Once the desired terminology is drafted, consistently use it!

The more care a practitioner takes throughout prosecution, from the initial drafting to the winning arguments to the examiner, the better the chance the patent has of being construed as the patentee hopes, and of withstanding any and all challenges by opponents.

When challenging or enforcing patents, and expert opinions and reports rely on claim constructions, try to ensure that experts are being provided with proper claim constructions so that compelling, and admissible, testimony can be prepared and used in a case.

This decision additionally highlights a potential pitfall regarding claim construction—a joint brief adopting an earlier construction. If parties are proposing adopting a prior claim construction in a joint brief, practitioners would be wise to ensure that the agreed-upon construction is consistent with arguments that will be made in the case, including expert opinions. A joint brief adopting an agreed-upon construction can ease the burden at trial, but agreement to a joint brief should be made thoughtfully and purposefully.

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.