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Patent - Internet Library of Law and Court Decisions - Updated November 8, 2008

The Federal Circuit Court of Appeals vacated the decision of the district court below, which had enjoined defendant Barnesandnoble.com ("BN") from continuing to use the "Express Lane" check-out feature of its web site on the ground that this feature was likely to infringe plaintiff Amazon's patent for "single action" ordering. While the Federal Circuit found that there was a substantial likelihood that Amazon would succeed on its claim that BN's "Express Lane" feature infringed Amazon's "single action" patent, it further found that BN had raised "substantial questions" as to the validity of this patent, given the prior art available at the time of plaintiff's invention. As a result, the Federal Circuit vacated the injunction issued below, and remanded the case to the district court for further proceedings.

The court issued a preliminary injunction enjoining the defendants from continuing to operate on the Barnesandnoble.com website their "Express Lane" product ordering feature as it was then configured on the ground that operation of this feature infringed plaintiff Amazon.com Inc.'s '411 patent. As stated by the court, the '411 patent "describes a method ... in which a consumer can complete a purchase order for an item via the Internet using only a single action (such as a single click of a computer mouse button) once information identifying the item is displayed to the consumer."

Sometime prior to May 1997, Jeffrey Bezos conceived of the idea of enabling Amazon.com's users to purchase products with a single click of a computer mouse. This idea, which gave rise to the '411 patent, was commercially implemented by Amazon.com in September 1997. In May 1998, Barnesandnoble.com began use on its web site of its "Express Lane" ordering feature. According to the court, "Express Lane allows customers who have registered for the feature to purchase items by simply clicking on the Express Lane button shown on the detail or product page that describes and identifies the [product] to be purchased. The text beneath the Express Lane button invites the user to 'Buy it now with just one click!'"

Shortly after the '411 patent was issued, Amazon.com commenced this suit, alleging that defendants' operation of Express Lane infringed the '411 patent. Amazon.com also moved for a preliminary injunction.

Defendants argued that Amazon.com was not likely to succeed on the merits of its claim because the '411 patent was invalid on obviousness and anticipation grounds. Defendants also argued that they were not infringing plaintiff's patent. The court rejected these arguments, and issued the requested preliminary injunction. The court further held that "Barnesandnoble.com can modify its 'Express Lane' feature with relative ease to avoid infringement of the '411 patent. For instance, infringement can be avoided by simply requiring users to take an additional action to confirm orders placed by Express Lane."

The Federal Circuit Court of Appeals sharply limited the patentability of ‘business method’ patents.  While reaffirming that business methods could be patented as processes, the Court held that to be patentable, the business method must involve a ‘process’ that “is tied to a particular machine or apparatus or … transforms a particular article into a different state or thing.”  To be ‘transformative’ the process must transform either a “physical object or substance or an electronic signal representative of any physical object or substance.”  Moreover, “the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity.”  The Court rejected the test it had adopted ten years prior for the determination of patentability of business methods in State Street Bank and Trust Co. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir.  1998), which held that such processes could be patentable if they produced a ‘a useful, concrete and tangible result.’  Applying this test, the Court held that Bilski’s invention - a business method for hedging risks in the field of commodity trading – was not patentable because Bilski’s process only resulted in the purchase or sale of legal obligations – option contracts - and was not tied to any particular machine.

Supreme Court holds that the traditional four factor test governing the issuance of injunctive relief generally also applies when a prevailing patent holder seeks injunctive relief to prevent an infringing party from continuing to use the patented invention.  In reaching this result, the Supreme Court rejected categorical rules that dictate either that such injunctive relief will issue "absent exceptional circumstances" or conversely, will not issue if the patent holder fails to make commercial use of the patent, or has evidenced a willingness to license the patented invention or process.

The United States Court of Appeals for the Federal Circuit vacated the decision of the district court, which decision had limited the business method patent claim being asserted by the plaintiff in such a way as to result in a determination that the defendants' activities did not infringe it. Plaintiff claims that its 1985 patent covers such things as the sale of digital music and software over the Internet, which music or software is delivered via a download to a consumer's pc. The Court of Appeals held that the district court had improperly limited the patent being claimed by the plaintiff. The Court of Appeals held that while the claimed patent did cover real time downloads to pcs located in a consumer's home in response to a consumer's request, such downloads could not be to a consumer's hard drive. The Court of Appeals remanded the case to the district court for a determination of whether defendants' activities infringed the patent as interpreted by the Court of Appeals, or whether the patent itself was valid.

District Court holds invalid Xerox's patent for a computer system that recognizes handwritten symbols known as "Unistrokes" because it was rendered obvious by prior art.  The Court accordingly granted defendant 3Com Corp.'s motion for summary judgment, dismissing claims that defendant's Palm Pilot, which uses a computer based system known as "Graffiti" to recognize unistroke symbols, infringes Xerox's patent.

Quick Hits

Affirming the decision of the Court below, the Federal Circuit Court of Appeals holds that defendant Coolsavings.com method of distributing coupons over the Internet does not infringe plaintiff Catalina Marketing International’s (“Catalina”) patent for a method of distributing coupons from electronic terminals located at points of sale that are connected to a central host computer that provides information as to the available coupons.  The Federal Circuit held that the District Court had properly limited the claims at issue of Catalina’s patent to a system activated by a magnetic card reader, where the consumer selects coupons of interest from a device with a touch screen, subject to predetermined coupon limits.  As so limited, Coolsavings.com’s method of distributing its coupons to consumers who visit its website and download them at home was found not to infringe, and plaintiff’s patent infringement claims were accordingly dismissed.

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Reversing the decision of the Court below, the Federal Circuit Court of Appeals holds that the District Court improperly limited the claims of plaintiff Catalina Marketing International’s (“Catalina”) patent by construing language contained in the patent’s preamble as limiting the patent claimed in the application.  More particularly, Catalina’s patent covers a distribution system for discount coupons, which are dispensed from terminals connected to a central computer system, which provides information as to the coupons available.  Language in the preamble of the patent claims stated that these devices are “located at predesignated sites such as consumer stores.”  The District Court held that this language limited the claimed patent.  As a result, the District Court granted defendant Coolsavings.com summary judgment, and dismissed plaintiff’s infringement claim, because its system of distributing coupons via its website to consumer’s computers did not utilize devices located in consumer stores.

The Federal Circuit reversed, holding that this language did not limit the claim.  In reaching this result, the Court stated:

In general, a preamble limits the invention if it recites essential structure or steps, or if it is necessary to give life, meaning and vitality’ to the claim.  Conversely, a preamble is not limiting ‘where a patentee defines a structurally complete invention in the claim body and uses the preamble only to state a purpose or intended use for the invention.’

Nonetheless, because this language was contained in the specification of one of the patent claims at issue, the Federal Circuit affirmed so much of the District Court’s decision that determined that Coolsavings.com’s system of coupon distribution did not literally infringe this claim of the patent.  As interpreted by the Federal Circuit, this limitation requires that the patented system predesignate locations where the user can obtain coupons before actually locating the coupon dispensing devices there, which does not occur in Coolsavings.com’s internet based system. 

The Court remanded the matter to the District Court for a determination as to whether Coolsavings.com’s system infringed other aspects of plaintiff’s patent, either literally or via the doctrine of equivalents. 

Said the Court:

An accused device that does not literally infringe a claim may still infringe under the doctrine of equivalents if each limitation of the claim is met in the accused device either literally or equivalently.  An element in the accused product is equivalent to a claim limitation if the differences between the two are ‘insubstantial’ to one of ordinary skill in the art.  Insubstantiality may be determined by whether the accused device ‘performs substantially the same function in substantially the same way to obtain the same result’ as the claim limitation.

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