CPLRG™ 0045 - Bid for Position, LLC v. AOL, LLC - Apr. 7, 2010

Bid for Position, LLC v. AOL, LLC, 601 F.3d 1311 (Fed. Cir. 2010) (BRYSON, Newman & Moore)BidforPosition04072010

MAJOR ISSUES: prosecution history disclaimer; doctrine of equivalents

COMMENT.  Federal Circuit decisions distinguish between two ways in which a patent’s “prosecution history” can operate to narrow scope of the patent’s claims.  Prosecution history means the course a patent application steers from its filing with the Patent and Trademark Office (PTO) to its issuance (and, potentially, beyond, in case of reissue or reexamination proceeding).  Most pertinent are the actions of a PTO examiner in rejecting claims and the applicant’s arguments and claim amendments in response those actions.  Prosecution history estoppel limits the extent to which a claim can be expanded its literal scope.  Prosecution history disclaimer narrows a claim’s literal scope.
     In this case, the Federal Circuit finds a disclaimer, a comparatively rare occurence.

A patent concerned “continuous auctions for priority placement in internet search results.”  U.S. Pat. No. 7,225,151 B1 USPatNo7225151.
     a. Prior art placement auction systems entailed advertisers competing by bidding when a user used a keyword in a search request. The highest bidder got the top position in the search results.
     b. The patented system allowed an advertiser to pursue a constant position other than the highest.  The bidder could maintain the desired position until that position could not be maintained without exceeding a designated maximum bid. 

2. TWO ACCUSED SYSTEMS: “AdWords” and “Position Preference.”  In a district court suit, the patent owner, Bid for Position LLC, alleged that the “AdWords” and “AdWords” with “Position Preference” systems of the accused infringer Google infringed the patent’s claims.
3. After construing three disputed claim phrases, the district court granted summary judgment of non-infringement.  The Federal Circuit affirmed.

4. ACCUSED “AdWords” SYSTEM; DISCLAIMER.  The district court correctly found no infringement by the accused “AdWords” system because, inter alia, during prosecution, the patent owner disclaimed the subject matter of selecting, through inaction, the highest available priority position.  See Seachange Int’l, Inc. v. C-COR, Inc., 413 F.3d 1361, 1372-73 (Fed. Cir. 2005).”  That was how “AdWords” without the “Position Preference” feature functioned.

5. ACCUSED “POSITION PREFERENCE” SYSTEM: FAILURE TO MEET “VALUE” LIMITATION.   The “AdWords” system with “Position Preference” did not infringe “for a different reason: the system did not meet the asserted claims’ “value” limitation.
    a. LIMITATION: “VALUE” OF FIRST BID EXCEED “VALUE” OF SECOND BID.  The asserted claims required:  “the relative position of priority for providing the service for the first bidder is dependent on whether the value of the first bid exceeds the value of the second bid.”
     b. DISTRICT COURT: “VALUE” IS MONETARY AMOUNT OF BID.  The district court construed “value” to mean the monetary amount of the bid.
     c. ACCUSED SYSTEM: BIDS ADJUSTED BY CONFIDENTIAL ALGORITHM; PRIORITY NOT BASED SOLELY ON MONETARY VALUE.  The accused infringer Google’s system adjusted each bid according to a confidential algorithm, which considered factors such as the likelihood that a user would “click” an advertisement.  Thus, the accused system did not rank bids solely by monetary value but rather by a “Quality Score.”
    d. PATENT OWNER: MERE CONVERSION OF VALUE, LIKE A CURRENCY EXCHANGE?  The patent owner argued that the accused system simply mechanically converted the bids’ values “akin to a currency exchange conversion.”  The argument lacked merit because the adjustment resulted in a ranking entirely different from the ranking by monetary value.
      e. PATENT OWNER: “VALUE” DISTINCT FROM AMOUNT OR PRICE?  Alternatively, the patent owner argued that the “value” of a bid in the claim limitation should not be restricted to monetary amount.  The argument lacked merit because it was clear from the claims and specification that a “bid” and “value of the bid” meant the same thing.

6. DOCTRINE OF EQUIVALENTS; FUNDAMENTAL DIFFERENCE.   The patent owner argued “briefly” for infringement under the doctrine of equivalents.  However, the district court correctly ruled that a reasonable fact-finder could not find the accused “quality” ranking of bids was substantially similar to the claimed monetary bid amount ranking of bids.   The advertiser controlled the latter but not the former.  That was a “sufficiently fundamental” difference.

CROSS REFERENCES.   On prosecution history disclaimer, see Chisum Patent Law Digest 5225; Chisum on Patents 18.03[2][d].

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