Federal Circuit Affirms Noninfringement Ruling for Online Retailers Due to Prosecution Disclaimer

June 4, 2021

The Federal Circuit has just upheld a California court’s claim construction order that ended a long-running case filed by SpeedTrack, Inc. against a variety of retailers, including Amazon, Best Buy, and Costco. On June 3, the appellate court issued a precedential decision that affirmed a February 2020 ruling from Northern District of California Judge Jeffrey S. White that narrowed a key claim term from the asserted search patent due to prosecution history disclaimer, which per the Federal Circuit prevents a patentee from “recapturing through claim interpretation specific meanings disclaimed during prosecution”.

SpeedTrack filed the suit here at issue (4:09-cv-04479) in September 2009 against over 20 online retailers, including Amazon, B&H Foto, Best Buy, Costco, Home Depot, HP, Macy’s, and Nike, alleging infringement of the 5,544,360 patent through their respective e-commerce websites’ search features. However, the case was immediately stayed pending the resolution of an ex parte reexamination of the patent and two other district court cases: the campaign’s 2006 suit against Walmart, Hertz, Magellan Navigation, and Toyota (4:06-cv-07336) and a 2007 action against Office Depot, CDW, Circuit City, CompUSA, NewEgg, and PC Connection (4:07-cv-03602). The 2009 case then resumed in 2016 after appeals in those other two proceedings concluded—the Walmart lawsuit having ended in a judgment of no invalidity and noninfringement affirmed by the Federal Circuit, the latter as the result of a different claim construction issue; and the Office Depot case having concluded as a result of the Kessler doctrine, a judgment upheld by the Federal Circuit for which the Supreme Court denied review. In the newly revived 2009 case, the court subsequently denied the defendants’ Alice challenge in January 2017 and addressed a dispute over SpeedTrack’s infringement contentions and related discovery the following year, among other issues addressed.

The case then proceeded to claim construction, which turned on the distinctions between the ’360 patent and prior art. In particular, the patent purports to describe a computer filing system that improved upon traditional hierarchical file structures—specifically, their “cumbersome” nature when dealing with many files, or when file categories are ill-defined. Per the patent’s specification, prior art systems attempting to solve this issue had other problems: those that rely on file content search are subject to typos; and those that involve searching relational databases are limited in that they are restricted by “the field of each data element and by the content of each field”, which are hierarchically organized. The ’360 patent, in contrast, claims “hybrid” folders, which “contain those files whose content overlaps more than one physical directory”. The representative claim implements this system, in part, by requiring the creation of a “category description table” containing “category descriptions”, the latter described as “having no predefined hierarchical relationship with such list or each other”.

That last term—“[category descriptions] have no predefined hierarchical relationship”—would become the focal point for the parties’ dispute over claim construction. The source of this conflict was that this term was added during prosecution to overcome two rejections in light of the 5,047,918 patent (“Schwartz”), which claims a system allowing users to “characterize stored data files according to user-defined file attributes”. Relevantly, during prosecution the applicants characterized Schwartz’s “file attributes” as variables “having a user-defined name such as ‘author’ or ‘subject matter’”, allowing a field name like “author” or “language” and a respective value describing that field, like “Smith” or “French”. The applicants distinguished their invention as a “non-hierarchical filing system that allows essentially ‘free-form’ association of category descriptions to files without regard to rigid definitions of distinct fields containing values”, in contrast describing Schwartz as a “hierarchical system that uses predefined field-and-value relationships” (as later recounted by the Federal Circuit).

In November 2019, the court construed the term as follows, adopting the following stipulated construction from the Walmart case as sought by SpeedTrack:

The category descriptions have no predefined hierarchical relationship. A hierarchical relationship is a relationship that pertains to a hierarchy. A hierarchy is a structure in which components are ranked into levels of subordination; each component has zero, one, or more subordinates; and no component has more than one subordinate component.

Judge White rejected the defendant’s alternate construction, which took the first two sentences of that definition and added a further requirement that a “data field and its associated values have a predefined hierarchical relationship” in light of the applicant’s arguments distinguishing Schwartz—as a result of which, they argued, the applicants had disclaimed the use of fields and values to categorize files, thereby undermining the plaintiff’s infringement case. Judge White held in part that this construction was deficient in several respects: specifically, he noted that the terms “field” and “value” were found in neither the ‘360 patent nor in Schwartz and might confuse a jury, ruled that the defendants’ arguments were “overbroad”, as the “prosecution history does not show disclaimer of all field-and-value relationships”; and faulted their construction for not defining “hierarchy”. SpeedTrack then filed a motion seeking clarification on this construction, also moving to bar the defendants from relying on prosecution disclaimer.

Judge White issued a new claim construction order that revisited this term in February 2020, retaining the original language but adding the following clarification:

Category descriptions based on predefined hierarchical field-and-value relationships are disclaimed. “Predefined” means that a field is defined as a first step and a value associated with data files is entered into the field as a second step. “Hierarchical relationship” has the meaning stated above. A field and value are ranked into levels of subordination if the field is a higher-order description that restricts the possible meaning of the value, such that the value must refer to the field. To be hierarchical, each field must have zero, one, or more associated values, and each value must have at most one associated field.

Assessing the ‘360 patent applicant’s statements made during prosecution, the court concluded that “[t]he prosecution history demonstrates clear and unambiguous disavowal of category descriptions based on hierarchical field-and-value systems.”

The following month, the parties filed a joint stipulation of noninfringement as to remaining defendants Amazon, B&H Foto, Best Buy, Dell, OfficeMax, Macy’s, Overstock.com, REI, and Valuevision (d/b/a Evine Live), with SpeedTrack conceding that none of the “accused products or services infringe, either literally or under the doctrine of equivalents”, under the court’s revised construction. The plaintiff further explained that it had “determined that Defendants’ accused products and services use field-and-value relationships, as those terms are used in the Court’s modified construction”.

Ruling on appeal, the Federal Circuit affirmed Judge White’s construction, holding that the claims do not “cover predefined hierarchical field-and-value relationships”. The appellate court explained that Judge White had correctly interpreted the prosecution history given the ‘360 patent applicant’s extensive comparison of their claims to Schwartz: “On this prosecution record, we agree with the district court’s assessment. In no uncertain terms, ‘the applicant[]s argued that Schwartz had a ‘hierarchical’ relationship between fields and values that fell outside the scope of the amended claims’”. As a result, the appellate court held that the “claims exclude predefined field-and-value relationships”. The Federal Circuit underscored this point in rebutting each of the patent owner’s counterarguments as inadequate, citing the fact that the applicant “repeatedly highlighted predefined hierarchical field-and-value relationships as a difference between Schwartz and the ‘360 patent”.

Having thus upheld the district court’s revised claim construction due to prosecution disclaimer, the Federal Circuit then concluded by affirming the resulting final judgment of noninfringement.