Last week, the Federal Circuit decided to save a spam e-mail patent, give us a tutorial on who can host a patent infringement party (i.e., a lawsuit with lots of accused patent infringers), and learn about the differences between American Express’s gift cards and “bearer instruments.” If you want more guidance from the only federal appellate court that decides patent cases, well, read on!
CBT Flint Partners, LLC v. Return Path, Inc., Nos. 2010-1202, -1203 (Fed. Cir. Aug. 10, 2011) (Judges Lourie, Bryson, and Linn)
CBT has two patents covering methods and systems for charging money to send spam e-mails to recipients who don’t want them and didn’t ask for them.
And the “Top Disliked Technology” Award Goes to: E-mail Spam Systems
Here’s the patented method: the spammer sends the spam e-mail, the Internet service provider (ISP) determines whether the spammer has paid money for the privilege of spamming on the network, and if so, the ISP will forward the e-mail to the spam-e. If the spammer hasn’t paid the fee, it receives an e-mail asking if it wants to pay the fee to send its spam e-mail. This is not my favorite set of patents—I really dislike spam.
The Problem: Fixing Patent Claim Errors During Litigation
A major claim in one of the spam patents has serious language problems that the district court said it couldn’t fix. So the court decided that those problems meant that the claim was indefinite because there are three possible corrections to fix the claim (meaning the scope of the claim could not be defined, which is a requirement for a patent claim to be valid). Since there was a debate about the appropriate correction, under the Novo Industries case, the district court concluded that it lacked authority to correct the claim (and the U.S. Patent & Trademark Office is the only entity that can correct it). Since the claim is invalid, it couldn’t be enforced against the accused patent infringers, Return Path and Cisco.
The district court made a reasonable decision. The Federal Circuit has often stated that courts can’t import words into a claim or add additional restrictions on the patented technology when interpreting it (a process called “claim construction”). But what are the court’s options when a claim that is being asserted during litigation has a clear drafting error, for instance, if a word is missing from a claim that was intended to be included?
Well, in the CBT case, the Federal Circuit told us that the district court could fix that issue and interpret the claim to fulfill its “clear and apparent meaning.” It concluded that a figure in the patent’s specification (the part of the patent that includes a written description of the invention) led it to the fix. That is, that one step of the patented method requires that a computer “detect and analyze” an e-mail to determine whether the sender is authorized to send spam e-mails. Also, a person who is skilled in this technology area would understand the meaning and scope of this claim, even with the word missing. So the missing word wasn’t really a problem for the Federal Circuit.
That means that sometimes courts can import language to fix claim-drafting errors. So this case puts an asterisk on the general rule against adding words into a patent claim.
Paying Money for Reckless Litigation Tactics
In a rare move, the district court also allowed Cisco to recover its litigation costs, including e-discovery costs related to collecting, searching, identifying, and producing electronic documents in response to CBT’s discovery requests. It determined that these services are the “21st Century equivalent of making copies” and are recoverable under 28 U.S.C. § 1920.
But the trial court did not allow Cisco to recover its’ attorneys’ fees resulting from its effort to defend against the patent infringement claims. That court decided that CBT had exercised poor legal judgment and was reckless in pursuing the litigation, but it was not clear that the pre-litigation investigation of Return Path’s and Cisco’s methods “was so pathetic as [to] justify an inference of bad faith” to support recovery of attorneys fees. (Read the district court’s opinion on the motion to recover costs and fees here.)
It would have been interesting to hear the Federal Circuit’s view on these issues. But because it disagreed with the district court on the claim error issue, it did not allow costs and did not take up the issue of attorneys’ fees. That’s because the “prevailing party” may be awarded costs and fees, but the Federal Circuits decision on the claim language meant that Cisco was no longer entitled to ask for costs and fees.
Read the Federal Circuit’s CBT opinion here.
MHL Tek, LLC v. Nissan Motor Co., No. 2010-1287, -1317, -1318 (Fed. Cir. Aug. 10, 2011) (Chief Judge Rader, Judges Gajarsa and Prost)
Who Can Sue for Patent Infringement?
Not everyone with a license or other miscellaneous rights relating to a patent can sue others for infringement of it. Only those who have an exclusive license or all the substantial rights get to pursue those rights—in a litigation—against potential infringers.
MHL Tek sued a slew of car companies in Texas for patent infringement, but had trouble showing that it had the necessary rights in the three patents it sued on. The ’496 patent, the ’966 patent, and the ’516 patent, relate to tire pressure monitoring and systems in cars. They all have the same two inventors, and they share a complicated assignment story.
Here’s a mind map of the patent assignment saga:
So what does this mean for MHL Tek, the company that filed this patent infringement suit against Nissan, Hyundai, Porsche, Subaru, BMW, and Audi companies? It means that its infringement claims based on all three patents are in trouble.
Who Can Host This Patent Litigation Party?
If you file a suit for infringement, you need to have sufficient patent rights before you file it. You can’t meet that requirement through a later assignment of the rights you are missing. In this case, MHL Tek had a problem because the inventors had already given their patent rights to Animatronic, and Animatronic passed most of those rights to McLaughlin Electronics (ME), with the exception of the carve-out for uses unrelated to tire pressure sensing technologies. MHL Tek tried to fix this issue by filing an amended complaint for infringement after Animatronic assigned it any rights it retained. That did not solve the problem.
The Federal Circuit decided that MHL Tek lacked rights to the claims of the ’496 and ’966 patents. Both patents claim tire pressure monitoring systems and those patent rights had been transferred to ME. So even after the second Animatronic assignment and the amended complaint filing, MHL Tek did not have the patent rights it needed to file the suit. And the ’516 patent technology had also been assigned to Animatronic (then assigned to ME). So the agreement assigning the ’516 patent to MHL Tek was worthless. That means this infringement case is over.
This case shows how important it is to perform an investigation of patent rights before you sue another party for infringement of them. It also supports the use of license provisions that require the patent owner to disclose any rights it has already transferred to other parties. And a patent title search wouldn’t hurt.
Read the MHL Tek opinion here.
Privacash, Inc. v. American Express Co., No. 2011-1027 (Fed. Cir. Aug. 11, 2011) (Judges Lourie, Bryson, and Linn) (nonprecedential)
Who thought that the Federal Circuit would ever run into commercial paper issues? Not me. But in this case, the court did consider them, and determined that American Express and its affiliates do not infringe Privacash’s patent because the accused gift credit cards are not “bearer instruments” as required by the patent claims. The court interpreted the term “bearer instrument” to mean “as good as cash” and noted that anyone in possession of the card can use it up to its credit limit. Since American Express’s gift cards can be cancelled or deactivated if they are lost or stolen, they do not meet the court’s construction, which it reached after it reviewed the patent teachings and dictionaries relating to finance and banking.
Read the Privacash opinion here.