With these two cases, the Federal Circuit was looking out for safety, tackling patents for locks and laptop trackers.
Cracking the (Patent) Code
In re Jie Xiao, No. 2011-1195 (Fed. Cir. Oct. 12, 2011) (Judges Lourie, Bryson, and Dyk) (nonprecedential)
In this appeal, Xiao hoped to lock up a patent, but he got the combination wrong. Xiao filed a patent application for a combination lock that uses letters instead of numbers on the tumblers (the parts of the lock that you turn to set your combination). To keep the lock from being gigantic, Xiao’s lock had 9 letter options and one “wild card”—an asterisk (*)—per tumbler. It looks like this:
The idea is to use the wild card option for letters that aren’t available on the tumbler—like the coveted blank tile in Scrabble®. Xiao said the wild card label is what made his lock different from other prior art locks.
The Board of Patent Appeals and Interferences said that Xiao’s lock is obvious. The Federal Circuit agreed. The court said the wild card label is just “printed matter” and isn’t patentable. “Printed matter” (essentially words or numbers written on a surface) can make a device nonobvious and patentable only if those words or numbers affect what the device does. Here, the combination lock still works like a combination lock, wild card or not. So, the court concluded that Xiao’s lock is obvious.
Did the Federal Circuit correctly crack the code? Read the Xiao opinion.
Keeping the District Court on Track
Absolute Software, Inc. v. Stealth Signal, Inc., Nos. 2010-1503, -1504 (Fed. Cir. Oct. 11, 2011) (Chief Judge Rader, Judges Prost and O’Malley)
Absolute and Stealth have patents on computer software programs that track lost or stolen laptops. Absolute’s program, Computrace, communicates “without signaling” over the Internet between two IP addresses, a host system and the computer on which the software is installed, to locate the missing computer. Stealth’s product, XTool Tracker, sends messages that contain two IP addresses (the laptop’s and the host’s) and has an audible “beep” at the end of the communication. Stealth included this “beep” to design around Absolute’s “without signaling” requirement.
Absolute and Stealth sued each other for patent infringement. The district granted summary judgment motions for both Absolute and Stealth, saying that neither party infringed the other’s patents. Both parties asked the federal circuit to look at the district court’s claim construction and summary judgment ruling and track down any mistakes.
“Waive” Goodbye to Your Claim Construction Appeal
The claim construction story is a little different from usual. At the district court, the judge appointed a special master to handle claim construction. (Sometimes a trial judge will appoint another person, called a special master, to handle a particular issue, especially if the issue is very technical or complex. In this case, the special master was a computer science professor.) The special master held a hearing on claim construction and wrote a Report & Recommendation, and the district court judge adopted that report. Both Absolute and Stealth had a chance to respond to the report. Stealth had several objections to the report, but Absolute “commend[ed] the Special Master on an extraordinarily thorough and thoughtful analysis of the claim construction issues.” (See page 10.) Absolute did not object to the claim constructions that it appealed.
The Federal Circuit said that Absolute gave up its right to argue that the special master’s construction was wrong because Absolute didn’t object to it the first time it had the chance. The court said that Absolute’s initial proposed claim constructions, the ones it gave to the Special Master before the report came out, don’t count if Absolute didn’t raise them again after the report came out, especially when the Special Master specifically asked for objections. The court did mention that it “retains discretion to deviate from the general rule of waiver in certain circumstances,” but this case isn’t one of those. (See page 17.)
Absolute’s Facts Aren’t, in Fact, Absolute
The district court concluded in summary judgment that Stealth did not infringe Absolute’s patents. Here’s a little background on the rules for summary judgment: A judge can only grant summary judgment when there are “no genuine issues of material fact.” In other words, if there are any important questions about the facts of the case—the who, what, when, where, or how—a jury (or judge, in a bench trial) has to resolve those questions before deciding who wins.
In this case, the Federal Circuit said the district court shouldn’t have granted summary judgment because there were still questions about the facts. The court looked at two particular questions about how the products worked.
First, the court said the district court shouldn’t have concluded that Stealth’s XTool Tracker provides only one IP address, because no expert clearly determined that point. This is important, because Absolute’s patent, as the Special Master interpreted it, requires that the software provide two IP addresses to create a “global network communication link.” Since the record is unclear about whether the XTool Tracker provides one or two IP addresses, the court said this is a fact issue that must be resolved.
Second, the court said there is a fact question about the timing of the “beep” signal at the end of the XTool Tracker’s message. Absolute argued that it’s reasonable to think the “communication” ends before the beep, depending on the timing. Stealth argued that the beep is always part of the communication. Because the parties disagree on this point, the Federal Circuit concluded that this is a disputed fact issue. Since these fact issues exist, said the court, the district needs to take the case up again.
Read the Absolute opinion to see if you think the Federal Circuit was on the right track.