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Exploring the Latest in Intellectual Property Law
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Full Speed Ahead: District Court Entitled to Explore Litigation Funding Arrangements

by | Dec 15, 2022 |

The US Court of Appeals for the Federal Circuit denied a patent owner’s mandamus petition, clearing the way for a district court to probe who is funding the patent owner’s infringement litigation. In re Nimitz Techs. LLC, Case No. 23-103 (Fed. Cir. Dec. 8, 2022) (Lourie, Reyna, Taranto, JJ.) (per curiam) (nonprecedential).

Nimitz filed a complaint for patent infringement against Buzzfeed in the US District Court for the District of Delaware. The case was assigned to Chief Judge Connelly. Judge Connelly has two standing orders that require parties to disclose third-party litigation funders and the name of every individual and corporation with a direct or indirect ownership interest in the party. Nimitz filed a disclosure statement identifying Mark Hall as the sole owner and LLC member of Nimitz, and a statement representing that Nimitz has not entered any arrangement with third-party funders.

The district court later became aware that an entity called IP Edge was arranging assignments of patents to various LLCs that were plaintiffs in other actions before the district court. Based on the review of the documents in the other cases, it appeared to the district court that Hall had a connection with IP Edge. The district court ordered Hall and Nimitz’s counsel to appear at a hearing. During the hearing, the district court explored the relationship between Nimitz and an entity called Mavexar. After the hearing, the district court ordered production of communications between Hall, Mavexar and IP Edge, and communication and documents relating to the formation of Nimitz, Nimitz’s assets, Nimitz’s potential scope of liability resulting from the acquisition of the patent, the settlement or potential settlement of the cases and the prior evidentiary hearing. The district court also ordered production of monthly bank statements from Nimitz. Nimitz appealed to the Federal Circuit by filing a petition for writ of mandamus seeking an order vacating the district court’s order.

The Federal Circuit initially stayed the district court’s order pending the Court’s decision. While the mandamus petition was pending, the district court issued a memorandum explaining that the records sought in its prior order were relevant to addressing several concerns, including the following:

  • Compliance with the Rules of Professional Conduct
  • Compliance with the district court’s orders
  • Determining whether real parties in interest other than Nimitz, such as Mavexar and IP Edge, were hidden from the Court and the defendants
  • Determining whether those real parties in interest perpetrated a fraud on the district court by fraudulently conveying to a shell LLC the patent-in-suit and filing a fictitious patent assignment with the US Patent & Trademark Office designed to shield those parties from the potential liability they would otherwise face in asserting the patent in litigation.

Nimitz had argued that the district court’s order was improper because it would require disclosure of highly confidential litigation materials, including material protected by the attorney-client privilege and work-product immunity. In its decision on mandamus, the Federal Circuit rejected that argument, finding that the district court order made clear that Nimitz [...]

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Applying Collateral Estoppel in IPRs

by | Dec 15, 2022 |

The US Court of Appeals for the Federal Circuit considered whether a dependent claim invalidated by collateral estoppel also invalidates its parental independent claim. Google LLC v. Hammond Devel. Int’l, Inc., Case No. 21-2218 (Fed. Cir. Dec. 8, 2022) (Moore, C.J.; Chen, Stoll, JJ.)

The dispute began when Hammond Development sued Google, alleging that Google infringed several of Hammond’s patents on automated voice response systems. In response, Google filed multiple inter partes reviews (IPRs), one of which targeted Hammond’s ’483 patent. In that proceeding, the Patent Trial & Appeal Board (Board) held that all claims of the ’483 patent were obvious. Hammond did not appeal the decision in this IPR, which then became final, but only after Google filed an IPR against another of Hammond’s patents—the ’816 patent. The ’816 and ’483 patents are in the same family and share the same specification. In the later-filed IPR, the Board found claims 14 through 19 of the ’816 patent nonobvious and patentable. Google appealed.

Claim 14 is an independent claim and claim 18 depends from it. The parties agreed that the patentability of both claims rose and fell together. On appeal to the Federal Circuit, Google argued that claim 18 was invalid under the doctrine of collateral estoppel based on the prior art that rendered claim 18 of the ’483 patent invalid.

A party seeking to invoke collateral estoppel must show the following:

  • The issue is identical to one decided in the first action.
  • The issue was actually litigated in the first action.
  • Resolution of the issue was essential to a final judgment in the first action.
  • The party against whom collateral estoppel is being asserted had a full and fair opportunity to litigate the issue in the first action.

Because the parties had agreed that all but the first of the elements of collateral estoppel were met, collateral estoppel would apply if the issues of patentability were identical between the adjudicated and unadjudicated claims. The Federal Circuit found that slight differences in the claim language of the involved patents were immaterial because they related only to the number of application servers, and Google’s expert had credibly testified that distributing software applications across multiple servers was well known in the art and obvious. Hammond did not mount a substantive challenge to the expert evidence. As the Court noted, “collateral estoppel may apply even if the patent claims ‘use slightly different language to describe substantially the same invention,’ so long as ‘the differences between the unadjudicated patent claims and adjudicated patent claims do not materially alter the question of invalidity.’”

Google also attacked the validity of independent claim 14 of the ’816 patent. Although Google’s attack against claim 14 was based on a different combination of references (as compared to claim 18), the Federal Circuit apparently applied collateral estoppel to find claim 14 invalid as well, citing an agreement between the parties that “if claim 18 is unpatentable, then independent claim 14 is as well.”

Finally, Google argued that dependent [...]

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Game Over when Expert Fails to Use Correct Claim Construction

by | Dec 8, 2022 |

The US Court of Appeals for the Federal Circuit concluded that a district court did not abuse its discretion in striking expert testimony where the testimony did not rely on an agreed and court-adopted claim construction. Treehouse Avatar LLC v. Valve Corp., Case No. 22-1171 (Fed. Cir. Nov. 30, 2022) (Lourie, Reyna, Stoll, JJ.)

Treehouse owns a patent that describes a “method of collecting data from an information network in response to user choices of a plurality of users navigating character-enabled network sites on the network.” Valve owns two video games. To play the games, a user downloads the software onto a computer. The software contains data, images, sounds, text and characters. Treehouse sued Valve for patent infringement based on the operation of the accused video games. During the district court proceeding, both parties adopted the interpretation of the term “character enabled (CE) network sites” (CE limitation) that the Patent Trial & Appeal Board reached in a previous inter partes review. Despite the agreed-upon and court-adopted construction for the CE limitation, Treehouse’s infringement expert submitted a report that applied plain and ordinary meaning.

Valve filed a motion to strike portions of the expert’s testimony that relied on the plain and ordinary meaning of the term. Valve also filed a motion for summary judgment of noninfringement while this motion to strike was pending. Treehouse’s opposition appeared to concede that Valve was entitled to summary judgment if Valve’s motion to strike was granted, stating that “assuming that [the expert’s] testimony is not stricken, this portion of Valve’s motion should be denied.” The district court struck every paragraph of the expert’s report that Valve requested and granted Valve summary judgment of noninfringement. Treehouse appealed.

The Federal Circuit found that the district court did not abuse its discretion in striking portions of Treehouse’s expert report that did not address the claim construction of the CE limitation agreed upon by the parties and the district court. Treehouse argued that an expert report that does not recite an agreed claim construction remains admissible as long as the opinions expressed in the report are not inconsistent with that construction. The Court rejected Treehouse’s argument, explaining that “the grant of a motion to strike expert testimony is not improper when such testimony is based on a claim construction that is materially different from the construction adopted by the parties and the court.” The Court further explained that when a trial court has adopted a construction that the parties requested and agreed upon, any expert theory that does not rely upon that agreed-upon construction is suspect. The Court thus concluded that the district court did not abuse its discretion in striking the portions of the expert’s report that applied a “plain and ordinary meaning” of the CE limitation instead of the parties’ agreed-upon construction. In the absence of any admissible expert testimony by Treehouse regarding infringement of the CE limitation, the Court found that the district court properly granted summary judgment of noninfringement.



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Construing the Construction: Federal Circuit Chips Away at IPR Win

by | Nov 29, 2022 |

Addressing claim construction issues in inter partes review (IPR) proceedings before the Patent Trial & Appeal Board (Board), the US Court of Appeals for the Federal Circuit affirmed an obviousness finding as to some claims but reversed and remanded an obviousness finding as to another claim because of a claim construction error. VLSI Technology LLC v. Intel Corporation, Case Nos. 21-1826, -1827, -1828 (Fed. Cir. Nov. 15, 2022) (Chen, Bryson, Hughes, JJ.)

VLSI owns a patent directed to a technique for alleviating the problems of defects caused by stress applied to bond pads of an integrated circuit. Bond pads are a portion of an integrated circuit that sit above interconnected circuit layers and are used to attach the chip to another electronic component, such as a computer or motherboard. When a chip is attached to another electronic component, forces are exerted on the chip’s bond pad, which can result in damage to the interconnect layers. The patent discloses improvements to the structures of an integrated circuit that reduce the potential for damage to the interconnect layers when the chip is attached to another electronic component while also permitting each of the layers underlying the pad to be functionally independent in the circuit.

VLSI filed suit against Intel alleging infringement of the patent. During claim construction, the district court construed the claim term “force region” to mean a “region within the integrated circuit in which forces are exerted on the interconnect structure when a die attach is performed.” Before the district court’s construction but after the suit was filed, Intel filed petitions for IPR of the patent and advocated in its petitions for the same construction of “force region” that the district court ultimately adopted.

VLSI did not contest Intel’s construction, but it later became apparent that the two parties disagreed over the meaning of “die attach,” which formed part of the construction. Intel argued that the term “die attach” refers to any method of attaching a chip to another electronic component, including a method known as wire bonding, which was taught by a prior art reference included in Intel’s petitions. VLSI argued that the term refers to a method of attachment known as “flip chip” bonding and does not include wire bonding. In the Board’s final written decisions, it did not address the term “die attach,” but found that “force region” was not limited to flip chip bonding and subsequently found the challenged claims invalid as obvious. The Board also construed a second disputed term “used for electrical interconnection not directly connected to the bond pad,” which is recited in only one claim of the patent, in favor of Intel, and subsequently found that claim unpatentable. VLSI appealed.

On appeal, VLSI raised a number of procedural and substantive challenges to the Board’s construction of the two disputed terms. VLSI argued that the Board failed to acknowledge and give appropriate weight to the district court’s construction of “force region.” The Federal Circuit dismissed this argument, as there was ample evidence in [...]

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Delayed Disclaimer: Patent Owner Arguments Made during IPR Not a Claim Limiting Disclaimer in That Proceeding

by | Nov 29, 2022 |

Repeating a conclusion from an earlier non-precedential opinion in VirnetX, the US Court of Appeals for the Federal Circuit held that the Patent Trial & Appeal Board (Board) need not accept a patent owner’s arguments as a disclaimer in the very same inter partes review (IPR) proceeding in which those arguments are made. CUPP Computing AS v. Trend Micro Inc., Case Nos. 2020-2262, 2020-2263, 2020-2264, at *11 (Fed. Cir. Nov. 16, 2022) (Dyk, Taranto, Stark, JJ.)

CUPP Computing is the owner of three related patents each entitled “systems and methods for providing security services during power management mode.” After CUPP sued Trend Micro for patent infringement, Trend Micro filed petitions for IPR against all three patents, asserting that several claims of CUPP’s patents were obvious over two prior art references. The Board instituted all three IPR and found all challenged claims unpatentable as obvious. CUPP appealed.

The Federal Circuit affirmed the Board’s conclusions. The principal issue concerned CUPP’s argument that the Board erred in claim construction. In CUPP’s view, all of the evidence required the claimed “security system processor” be remote from a “mobile device processor.” The Court rejected CUPP’s arguments. Starting with the claims, the Court found that they simply required that the two processors be different. Although some claims required the security system to send a wake signal to or communicate with the mobile device, that language did not support CUPP’s remoteness construction. As the Court explained, just as an individual can send a note to oneself via email, a unit of the mobile device can send signals to and communicate with the same device. Indeed, some of the claims teach communication via an internal port of the mobile device, which was consistent with a preferred embodiment disclosed in the specification in which the two processors could be within the same mobile device.

The Federal Circuit then addressed CUPP’s disclaimer arguments. The Court agreed with the Board that CUPP’s statements made during the original prosecution were far from clear and unmistakable, being susceptible to several reasonable interpretations that are contrary to CUPP’s construction. The Court also agreed with the Board that CUPP’s arguments during the Trend Micro IPRs do not qualify as a disclaimer for purposes of claim construction. While a disclaimer made during an IPR proceeding is binding in subsequent proceedings, the “Board is not required to accept a patent owner’s arguments as disclaimer when deciding the merits of those arguments.”

As the Federal Circuit explained, expanding the application of disclaimers to the proceedings in which they are made—as CUPP proposed—is rife with problems. IPR proceedings are more similar to district court litigation than they are to initial examination, and it is well established that disclaimers in litigation are not binding in the proceeding in which they are made. Further, CUPP’s proposal would effectively render IPR claim amendments unnecessary, as patent owners would be free to change the scope of their claims retrospectively without regard to the protections provided by the IPR claim amendment process, such as [...]

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Sleep Better: Amendments Proposed during IPR Deemed Proper and Valid

by | Nov 29, 2022 |

The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s (Board) finding that proposed amendments made during an inter partes review (IPR) are valid and proper despite the inclusion of changes not related to patentability issues raised in the petition. Nat’l Mfg., Inc. v. Sleep No. Corp., Case No. 21-1321 (Fed. Cir. Nov. 14, 2022) (Stoll, Schall, Cunningham, JJ.)

We’ve likely all seen the commercials promising a proven quality of sleep. Sleep Number is the owner of numerous patents, including several directed to methods for adjusting “the pressure in an air mattress ‘in less time and with greater accuracy’ than previously known.” The patents state this is achieved by taking pressure measurements at the valve enclosure and applying a pressure adjustment factor that is iteratively revised using an “adjustment factor error.” The patent states that this method allows for monitoring the pressure of the air mattress without the need to turn off the pumps.

American National Manufacturing challenged the validity of the patents in an IPR proceeding, claiming that most were rendered obvious by the prior art of Gifft in view of Mittal and Pillsbury and that six of the dependent claims requiring a “multiplicative pressure adjustment factor” would have been obvious in further view of Ebel. Gifft disclosed an air-bed system using valve assembly pressure to approximate the air chamber pressure and Mittal and Pillsbury both disclosed using additive offsets to improve accuracy. Ebel disclosed using both additive and multiplicative components to accurately measure the actual pressure in an inflating or deflating air bag.

The Board agreed with American National that it would have been obvious to combine Gifft, Mittal and Pillsbury and that the resulting combination rendered most of the claims obvious, but it also noted that the combination failed to show that a “skilled artisan would have applied Ebel’s multiplicative factors” to the prior art. However, in each proceeding Sleep Number filed a motion to amend the claims contingent on a finding that the challenged claims were unpatentable. The proposed claims included the “multiplicative pressure adjustment factor” that the Board had determined was not unpatentable along with other non-substantive changes.

American National took issue with these amendments, arguing they were legally inappropriate, non-enabled because of an error in the specification and lacked written description support. The Board disagreed. American National appealed. Sleep Number cross-appealed the Board’s finding of obviousness.

The Federal Circuit found that the proposed amendments were not improper even though some of the changes were non-substantive changes to address consistency issues. The Court pointed out that “once a proposed claim includes amendments to address a prior art ground in the trial, a patent owner also may include additional limitations to address potential § 101 or § 112 issues, if necessary.” The Court rejected American National’s argument that permitting such amendments creates an “asymmetrical” and “unfair” proceeding “by allowing the patent owner and the Board to address concerns that may be proper for [an] examination or reexamination proceeding, but that [...]

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Not So Clean: Federal Circuit Upholds Trade Dress Preliminary Injunction, Finds Defenses Improperly Plead

by | Nov 17, 2022 |

The US Court of Appeals for the Federal Circuit upheld a “narrow” preliminary injunction in a trade dress case, finding that the opponent of a registered configuration mark failed to prove its lack of secondary meaning and functionality defenses. SoClean, Inc. v. Sunset Healthcare Solutions, Inc., Case No. 21-2311 (Fed. Cir. Nov. 9, 2022) (Newman, Lourie, Prost, JJ.)

SoClean manufactures Continuous Positive Airway Pressure (CPAP) machines. SoClean sued Sunset—a former distributor of SoClean products—for patent infringement and later added trademark infringement claims. At issue in this appeal was a single SoClean mark “for the configuration of replacement filters for its sanitizing devices.”

SoClean requested a preliminary injunction to stop Sunset from making or selling allegedly infringing CPAP filters. The district court granted the injunction but narrowly tailored the injunction to only enjoin Sunset from selling its filter cartridges without Sunset’s own brand name attached to the filter drawing so that customers would not falsely believe they were buying SoClean products. Sunset appealed.

While a party seeking preliminary injunction must prove all four eBay elements, this appeal focused on just one: “likelihood of success on the merits.” Sunset argued that the district court abused its discretion in finding that SoClean would likely defeat Sunset’s lack of secondary meaning defense and its functionality defense.

After noting that the parties agreed that SoClean’s trade dress was protectable only upon a showing that it had obtained secondary meaning, the Federal Circuit divided the secondary meaning issue into two subparts:

  1. Whether the district court should have questioned the validity of SoClean’s registration in light of Sunset’s evidence
  2. Whether the district court held Sunset to an improperly high standard of proof.

As to the first issue, the Court noted that federal registration is prima facie evidence of a mark’s validity. When, as here, the challenged mark was registered fewer than five years prior, the burden shifts from plaintiff to defendant, such that the defendant must rebut the presumption of validity. Sunset acknowledged that it had this burden, but its arguments to the district court focused only on the US Patent & Trademark Office’s decision to grant SoClean’s registration. The Court rebuffed that argument, noting that “scrutinizing the application process and deciding whether the trademark examiner was correct to issue the registration in the first place is the opposite” of the statutory presumption of validity.

Next, the Federal Circuit addressed Sunset’s standard of proof argument. The Court acknowledged that the district court misstated the law by suggesting that there was a “vigorous evidentiary requirement” on the challenging party, instead of simply a “preponderance of the evidence.” However, the Court also noted that the district court considered Sunset’s lack of secondary meaning evidence to be “equivocal, at best,” which “plainly fails to satisfy a preponderance-of-the-evidence standard.” Therefore, the Court judged the error to be harmless.

The Federal Circuit thus affirmed the finding that SoClean would likely defeat Sunset’s secondary meaning challenges.

The Federal Circuit next turned [...]

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Message to Judge Albright: Venue Motions Are First Order of Business

by | Nov 17, 2022 |

The US Court of Appeals for the Federal Circuit vacated a scheduling order from the US District Court for the Western District of Texas and directed the court to postpone fact discovery and other substantive proceedings until it considered a motion for transfer. In re: Apple Inc., Case No. 22-162 (Fed. Cir. Nov. 8, 2022) (Reyna, J.) The Federal Circuit ordered that Apple’s motion to transfer must proceed expeditiously as the first order of business, precluding fact discovery and other substantive matters. The Court has repeatedly scolded Judge Albright for his refusal to transfer patent cases out of the Western District of Texas.

Aire Technology sued Apple for patent infringement in October 2021. In April 2022, Apple moved to transfer the action to the US District Court for the Northern District of California, pursuant to 28 U.S.C. § 1404(a). During venue discovery, Apple submitted declarations by its employees, offered to make the declarants available for deposition, and stated non-opposition to a “reasonable continuance” of the transfer proceedings. Judge Albright granted Apple’s motion but sua sponte ordered the parties to complete fact discovery (which the court extended by 30 weeks) followed by another six weeks of rebriefing before he would rule on Apple’s request to transfer. Apple filed a petition for mandamus with the Federal Circuit seeking an order to vacate the district court’s scheduling order and promptly rule on the transfer motion, staying all proceedings on the merits until the transfer was resolved.

Apple argued that the district court abused its discretion in ordering the parties to complete 30 more weeks of fact discovery and six weeks of rebriefing the issue to decide on Apple’s transfer request. Apple noted that by the time the district court considered Apple’s motion, a full year would have elapsed since Apple initially sought the transfer, fact discovery would be completed, the parties’ infringement and invalidity contentions would be served, the asserted claims and prior art references would be narrowed, and the parties would have exchanged preliminary trial exhibits and witness lists.

The Federal Circuit agreed with Apple that the district court’s scheduling order went too far. The Court stated that “it is a clear abuse of discretion to require the parties to expend additional party and court resources litigating the substantive matters of the case while Apple’s motion to transfer unnecessarily lingers on the docket.” The Court noted that Aire consented to resolving Apple’s transfer motion at any time, provided that no stay interfered with discovery, claim construction proceedings or preparation of the case for trial.

The Federal Circuit disagreed with the district court’s view that delaying the decision until after full fact discovery and rebriefing could reduce “speculation” and “allow the parties to provide the court with the best evidence for ruling on a motion to transfer.” The Court stated that discovery on the transfer motion itself was sufficient to allow a decision of that motion, especially because the parties agreed that further venue discovery was unnecessary. The Federal Circuit ordered the district [...]

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Another Kind of Term Limit: Delay Resulting from After-Allowance Amendments Deducted from PTA

by | Nov 17, 2022 |

The US Court of Appeals for the Federal Circuit affirmed the US Patent & Trademark Office’s (PTO) decision on a patent term adjustment (PTA), finding that it was appropriate to deduct days from a patent term when the applicant files an amendment after notice of allowance and could have completed prosecution earlier by withdrawing the amendment or abstaining from filing it in first instance. Eurica Califorrniaa v. Vidal, Case No. 22-1640 (Fed. Cir. Nov. 7, 2022) (Lourie, Dyk, Hughes, JJ.) (per curiam) (non-precedential).

Eurica Califorrniaa is the sole inventor of a patent application entitled “nondestructive means of ectopic pregnancy management,” which was filed on March 15, 2014. Near the close of an extended patent prosecution, the examiner identified minor additional changes to the claim language of the patent application that would place it in position for allowance. The examiner unilaterally made the amendments and provided Califorrniaa a notice of allowance. In response, Califorrniaa requested an interview with the examiner and provided a list of further proposed amendments that included changes to the examiner’s amended claim limitations as well as substantive changes unrelated to the Examiner’s Amendments. Following the interview, Califorrniaa formally submitted his proposed amendments for the examiner’s consideration. As a result, the PTO deducted 51 days from the adjusted patent term of the patent to account for the time it took the examiner to consider and accept Califorrniaa’s post-allowance amendments. Califorrniaa appealed the PTO’s calculations, first to the district court (which affirmed the PTO) and then to the Federal Circuit.

The PTO may extend the nominal 20-years-from-filing patent terms to account for each day of delay attributable to the PTO, minus the number of days of delay attributable to an applicant’s failure to engage in reasonable efforts to conclude prosecution. Congress has granted the PTO authority to define when this “reasonable efforts” standard is not met, and the PTO has created regulations to address the issue. In 2019, the Federal Circuit issued its decision in Supernus v. Iancu, finding that the PTO failed to properly consider whether the applicant reasonably engaged in efforts to conclude prosecution. In response, the PTO adjusted its regulations to distinguish between post-allowance amendments expressly requested by the PTO and those voluntarily made by the applicant, and to change the relevant timeframe for the calculation of a reduction in PTA. The PTO’s regulations state, in part, that an applicant’s decision to amend their patent application after the examiner has issued a notice of allowance is not a reasonable effort to conclude prosecution.

Unlike its ruling in Supernus, where no identifiable effort to conclude prosecution existed, here the Federal Circuit agreed with the PTO’s finding that Califorrniaa could have, at any time, withdrawn his post-allowance amendments and accepted the examiner’s amendments to conclude prosecution. As such, an “identifiable effort” existed by which Califorrniaa could have avoided additional delay and concluded prosecution. Therefore, the Court affirmed the 51-day deduction of the patent term.

The Federal Circuit also found that the PTO’s post-Supernus updates to [...]

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Family Matters, but Only Sometimes if Claim Construction Is Involved

by | Nov 10, 2022 |

The US Court of Appeals for the Federal Circuit reversed a district court’s claim construction, explaining that the use of a restrictive term in a definition in an earlier application does not reinstate that term in a later patent that purposely deletes the term, even if the earlier patent is incorporated by reference. Finjan LLC v. ESET, LLC, Case No. 21-2093 (Fed. Cir. Nov. 1, 2022) (Prost, Reyna, Taranto, JJ.)

Finjan filed a lawsuit against ESET for infringement of five patents directed to systems and methods for detecting computer viruses in a “downloadable” through a security profile. Each of the asserted patents was part of the same family, and each claimed priority to the same provisional application. The term “downloadable” appeared in the claims of all the asserted patents but was defined slightly differently in the various patents in the family. The original provisional application defined “downloadable” as “an executable application program which is automatically downloaded from a source computer and run on the destination computer.” Two of the non-asserted patents in the family defined “downloadable” as “applets” and as “a small executable or interpretable application program which is downloaded from a source computer and run on a destination computer.” Two of the asserted patents defined “downloadable” as “an executable application program, which is downloaded from a source computer and run on the destination computer.” The two asserted patents incorporated by reference one of the non-asserted patents. The other three asserted patents did not include a definition of “downloadable,” but they incorporated by reference one of the asserted patents and one of the non-asserted patents that defined “downloadable.”

The district court construed the term “downloadable” as used in the asserted patents to mean “a small executable or interpretable application program which is downloaded from a source computer and run on a destination computer.” The district court based its construction on the incorporation by reference of one of the non-asserted patents, reasoning that although the patent family contained “somewhat differing definitions,” these definitions “can be reconciled.” In particular, the district court found that based on the definitions and examples included throughout the various patents in the family tree, the term “downloadable” in the asserted patents should be construed to include the word “small” as defined in the non-asserted patent. ESET moved for summary judgment of invalidity due to indefiniteness based on the word “small” as used in the adopted construction of “downloadable.” The district court granted the motion. Finjan appealed.

The Federal Circuit began by reciting the well-known maxim that claims must be read in light of the specification, which includes any patents incorporated by reference since those patents are “effectively part of the host patents as if they were explicitly contained therein.” However, the Court explained that “incorporation by reference does not convert the invention of the incorporated patent into the invention of the host patent.” Instead, the disclosure of the host patent provides context to determine what impact, if any, the patent incorporated by reference will have on the [...]

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