CPLRG™ 0011 - Source Search Technologies, LLC v. LendingTree, LLC - Dec. 7, 2009

F.3d –, 2009 U.S. App. LEXIS 26570 (Fed. Cir. 2009) (RADER, Plager & Schall)


MAJOR ISSUES: Obviousness–no summary judgment of invalidity–fact issues on teachings of prior art references
E-commerce system: more than computerized version of pre-internet systems
Infringement–fact issues on accused system
Definiteness–”standardized” not unduly subjective

A suit involved a patent on a computerized procurement service.  uspatno5758328 A district court granted summary judgment that the patent was infringed and invalid for obviousness.  The Federal Circuit reversed, finding factual issues on both infringement and obviousness.  Both courts rejected an indefiniteness challenge.

The case well illustrates a basic patent law principle: claim scope is the same for both validity and infringement.  See Chisum Patent Law Digest § 5262.30.

The case is also notable as a post-KSR (2007) decision in which an internet-related patent survives a summary judgment motion of invalidity for obviousness.

1. The Patented Invention.  The application for the patent was filed in 1996, “at the dawn of the internet era.”  The patented system matched potential buyers with potential sellers over a network.   A buyer submits a request for quotation (RFQ) for a standard good or service.  The system sends the RFQ to selected sellers based on filter criteria.  The claimed invention purportedly solved the problems of “too much” information and “too little” information with prior art search systems by “using buyer, vendor, and network criteria to return both a manageable and a sufficient number of search results.”

2. Claim and Its Construction.  The asserted claim (14) required, inter alia, a “request for a quotation from a potential buyer” of “goods or services.”  The district court construed the claim limitation, “request for a quotation,” as meaning “a request for the price and other terms of a particular transaction in sufficient detail to constitute an offer capable of acceptance.”
The district court construed the claim limitation, “goods or services,” as meaning standardized articles.
On appeal, the patent owner and accused infringer did not dispute the constructions of the asserted claim but did dispute their application to the prior art (on invalidity) and to the accused infringer’s system (on infringement).

3. No Indefiniteness, “Standardize” Good or Service, Subjective Term.  Was the “standardized” construction unduly subjective?  The district court said “no” and granted summary judgment dismissing an indefiniteness challenge.  The Federal Circuit affirmed.  For indefiniteness as a ground for invalidating a patent claim, see Chisum Patent Law Digest § 2424; Chisum on Patents § 8.03.

4. Prior Art; Two Categories.  The district court relied on two categories of prior art.
a. Early E-Commerce; Internet Access and Distribution.  The first category was “early e-commerce” system for accessing and distributing goods and services over the internet.   Three prior art systems did not provide filtering or contractually-binding quotes.  A 1992 article in a magazine of the Association of Computing Machines discussed generally the need for a mediator to filter information between users and information sources.  A “third party” in the communication line could pass only information that it “deem[ed] relevant to individual users.”
b. “Bricks and Mortar” Prior Art; Pre-Internet Referral Systems.  The second category of prior art was “pre-internet referral services,” denominated “bricks and mortar” prior art.  The district court put “significant weight” on the “bricks and mortar” prior art, and the accused infringer contended that the pre-internet referral services “inherently embodied all the elements of [the asserted claim] except that a person, rather than a computer, did the `filtering.’ ”
c. Delayed Reliance on “Bricks and Mortar” Prior Art; No Judicial Estoppel.  The patent owner argued that the accused infringer was barred by “judicial estoppel” from relying on the “bricks and mortar” prior art because it failed to cite the art in its opening expert reports and discussed such art only in its supplemental report.  The Federal Circuit saw no abuse of discretion in the district court’s refusal to find judicial estoppel.  The accused infringer’s proferred grounds for delay, including a new Supreme Court decision on obviousness, KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), were “questionable.”  However, the patent owner had ample opportunity for full discovery on “bricks and mortar” prior art.

5. Fact Issues on Prior Art Prevent Conclusion That Invention Was a Common Sense Application of Prior Art to Apparent Problems. There were “points about” the prior art references that remained “in factual dispute” and that prevented “a conclusion that one of ordinary skill in 1996 would find the advances of the … patent easy, obvious, routine, or within the grasp of a common sense application of prior art to the apparent problems.”
a. For example, the record reflected that, in the one reference, the “quotes” sent to customers were non-binding, availability responses, not contractual offers.  Similarly, the other e-commerce systems did not return quotes.
b. The “bricks and mortar” systems also did not provide quotes.   Unlike the patented system, which involved standard (fungible) goods and services, the bricks and mortar” systems “involved non-fungible, non-commodity services, such as the services of an attorney on a legal matter, that could not be quantified or quoted immediately over the phone.”
c. More Than Computerized Version of Prior Art “Bricks and Mortar” Systems; Leapfrog Enterprises (2007). The court rejected the argument that the patent was merely “a computerized version of the bricks and mortar prior art.”  Compare Leapfrog Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1162 (Fed. Cir. 2007).  First, none of the prior art disclosed the claim requirement of a “quote” forwarded directly to the “potential buyer.”  Second, the prior art did not disclose filtering.  The e-commerce prior art did not disclose meaningful filtering. With the “bricks and mortar” prior art, that is, referral systems, it was not clear that a person skilled in the art would equate judgment by a human with filtering on a network.
d. The court concluded that, from the summary judgment record, it was not clear that the prior art, on the date of the invention (1996), which was at the “dawn of the internet era,” either taught the problem the patent addressed or the solution (filtering by simultaneous use of specifications submitted by buyer, vendor and network).

6. Fact Issues on Infringement. On infringement, the district court correctly found that claim 14’s “goods and services” limitation was met by the accused infringer’s system.  However, for reasons similar to the invalidity issue, it was error to grant summary judgment that the accused system met the “request for a quotation” limitation, as that limitation had been construed.
a. Accused System. The accused infringer’s system was a website that referred “borrowers to potential lenders for a variety of home, auto, and personal loans.”  With the system, (1) lenders provided the system with information on types of loans and borrowers that they would likely approve, (2) a prospective borrower selected a type of loan and submitted a “qualification form” (QF), (3) the system matched the borrower with five potential lenders, (4) the system sent information on the lenders reviewing the QF to the borrower, and (5) the system sent details of a lender’s loan offer to the borrower.  The system played “no further role in the process once the loan offers are sent to the borrower.”
b. Standardized Goods and Services.  The accused infringer argued that its system did not meet the “goods and services” limitation.  Its arguments lacked merit.
First, the accused infringer argued that the loans that it offered were not a good or service.  However, the accused infringer provided a “financial service.”  The patent specification “contemplate[d] similar types of services,” referring, for example, to providing quotations from insurance companies.
Second, the district court construed”goods or services” as meaning standardized goods and services.  The accused infringer argued that its loans were not standardized but rather customized to a particular borrowers means and needs.  However, the patent indicated that the reason for requiring standardization was to avoid confusion as to what is being offered. With loans, there was no risk of such confusion.  Even when the terms varied, the loans were “within the realm of a standard financial operation.”
c. “Request for a Quotation.” Fact issues on how the accused website operated precluded summary judgment that the website met the asserted claim’s “request for quote” limitation.
Evidence indicated that the accused website did not provide a quote to the buyer and that the buyer “must take significant steps before closing a loan.”  The form for the buyer indicated that it was “a request for a loan qualification,” not “an application for credit.”
On the other hand, the record would support a finding that the accused infringer did return an “offer capable of acceptance.”   The accused infringer instructed lenders to provide all conditions that must be satisfied before a lender was obligated to provide a loan.

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