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Dealertrack, Inc v. David L. Huber and Finance Express

January 20, 2012

DEALERTRACK, INC., PLAINTIFF-APPELLANT,
v.
DAVID L. HUBER AND FINANCE EXPRESS, LLC, DEFENDANTS-APPELLEES, AND JOHN DOE DEALERS, DEFENDANT, AND ROUTEONE, LLC, DEFENDANT-CROSS APPELLANT.



Appeal from the United States District Court for the Central District of California in consolidated case no. 06-CV-2335, Judge Andrew J. Guilford.

The opinion of the court was delivered by: Linn, Circuit Judge.

Before LINN, PLAGER, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge LINN.

Opinion concurring in part and dissenting in part filed by Circuit Judge PLAGER.

Dealertrack, Inc. ("Dealertrack") appeals the grant of summary judgment of noninfringement of claims 7-9, 12, 14, 16, and 17 of U.S. Patent No. 6,587,841 ("'841 Patent") and the grant of summary judgment of invalidity of claims 1, 3, and 4 of U.S. Patent No. 7,181,427 ("'427 Patent") for failure to claim patentable subject matter under 35 U.S.C. § 101. Dealertrack, Inc. v. Huber, No. CV-06-2335 (C.D. Cal. Sept. 27, 2008) ("Claim Construction"); Dealertrack, Inc. v. Huber, 657 F. Supp. 2d 1152 (C.D. Cal. July 7, 2009) ("Invalidity"). RouteOne, LLC ("RouteOne") cross-appeals the district court's denial of summary judgment of invalidity of claims 14, 16, and 17 of the '841 Patent for indefiniteness. For the reasons set forth below, we affirm-in-part, vacate-in-part, reverse-in-part, and remand.

BACKGROUND

I. The Patents in Suit

Dealertrack is the owner of the '841 and '427 Patents, directed to a computer-aided method and system, respectively, for processing credit applications over electronic networks. The '841 Patent claims priority to and incorporates by reference U.S. Patent No. 5,878,403 ("'403 Patent") and uses the following incorporation language: "This is a division of application Ser. No. 08/526,776, filed Sep. 12, 1995, hereby incorporated by reference. Now U.S. Pat. No. 5,878,403." '841 Patent col.1 ll.5-7. The '427 Patent also claims priority to the '403 Patent, of which it is a continuion-in-part.

Prior to Dealertrack's invention, car dealers, in seeking car loans on behalf of their customers, would apply to funding sources (i.e. banks) by: filling out application forms particular to each bank; faxing or transmitting the application to the respective banks; waiting for bank personnel to enter the application information into their internal computer systems; and eventually receiving responses from each bank. Dealertrack proposed to automate the process through the use of a "central processor," which receives credit application data from dealers, processes the data to conform to the individual application forms of different banks, forwards the completed applications to banks selected by the dealer, receives answers from the banks, and forwards those answers back to the dealer. Figure 1A of the '841 Patent, below, displays a preferred embodiment of the system:

'841 Patent, fig. 1A. An important feature of the invention was to allow the dealer to fill out a single application, to control which banks would receive the application, and to control the order and timing in which the applications were sent to the banks.

II. District Court Proceedings

Dealertrack sued appellees David L. Huber and Finance Express, LLC ("Finance Express") for infringement of the '841, '427, and '403 Patents by their FEX system, and sued appellee RouteOne for infringement by its Credit Aggregation System ("CAS") and its Messenger system. The validity of the '403 Patent and infringement of any of the patents by RouteOne's Messenger system are not in dispute on appeal. All of the accused products offer automobile dealers loan management services that pass all communications between dealers and lenders through the Internet.

Appellees Finance Express, John Doe Dealers, and RouteOne (collectively, "Appellees") filed four summary judgment motions*fn1 : (1) non-infringement of all asserted claims of the '841 Patent based on the absence of a "communications medium," as construed by the district court, in the accused devices and based on several other proposed claim constructions; (2) invalidity of claims 14, 16, and 17 of the '841 Patent for indefiniteness under 35 U.S.C. § 112, ¶¶ 2, 6 for failure to disclose adequate structure corresponding to the purported means-plus-function "tracking" limitation; (3) invalidity of all asserted claims of the '427 Patent for failure to claim patent-eligible subject matter under 35 U.S.C. § 101; (4) invalidity of all asserted claims of the '427 Patent for failure to claim priority to the '403 Patent.

The district court agreed with Appellees' proposed claim construction of the phrase "communications medium" in the '841 Patent as "a 'network for transferring data,' not including the internet." Claim Construction, at 19. Because "communications medium" was a limitation in all claims of the '841 Patent, and because it was undisputed that the accused products transferred data only over the Internet, the district court granted summary judgment of non-infringement of all asserted claims of the '841 Patent. The district court denied summary judgment of invalidity for failure to disclose adequate structure for the "tracking" limitation of the claims of the '841 Patent because the district court determined that "tracking" was not part of the function of the central processing means limitation. The district court granted summary judgment of invalidity of all claims of the '427 Patent for failure to claim patent-eligible subject matter under § 101. The district court denied summary judgment of invalidity of the '427 Patent for failure to claim priority to the '403 Patent. These rulings are all at issue on appeal-directly, as alternative grounds of affirmance, or in the cross-appeal.

Dealertrack timely appealed, and RouteOne properly cross-appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

I. The '841 Patent

Independent claim 7 of the '841 Patent reads as follows, with the contested limitations highlighted in bold:

7. A computer based method of operating a credit application and routing system, the system including a central processor coupled to a communications medium for communicating with remote application entry and display devices, remote credit bureau terminal devices, and remote funding source terminal devices, the method comprising: selectively receiving credit application data from a remote application entry and display device; selectively obtaining credit report data from at least one remote credit bureau terminal device; selectively forwarding the credit application data, and credit report data if appropriate, to at least one remote funding source terminal device; and forwarding funding decision data from the at least one remote funding source terminal device to the respective remote application entry and display device, wherein the step of selectively forwarding the credit application data and credit report data to at least one remote funding source terminal device comprises: sending at least a portion of the credit application data, and the credit report data if appropriate, to more than one of said at least one remote funding source terminal devices substantially at the same time.

'841 Patent col.32 l.55 -- col.33 l.10. Dependent claim 8 adds "[the method of claim 7] further comprising the step of enabling reviewing, analysis and editing of the credit application data at the remote application entry and display device prior to the step of selectively forwarding the credit application data." Id. col.33 ll.11-15. Dependent claim 9 adds, "wherein said remote application entry and display device is located at a vehicle dealer." Id. col.33 ll.16-18. These claims are not argued separately.

Independent claim 14 of the '841 Patent reads as follows, with the limitations relevant to this appeal highlighted in bold:

14. A credit application and routing system, comprising:

a communications medium;

central processing means, operably coupled to said communications medium, for executing a computer program which implements and controls credit application processing and routing;

at least one credit application input terminal device, operably coupled to said communications medium, for keyboard entry of at least credit application information, for visual display of at least funding decision information, and for sending and receiving to and from said central processing means over said communications medium; and

at least one funding source terminal device, operably coupled to said communications medium, for receiving at least a portion of a credit application over said communications medium from said at least one credit application input terminal device through said central processing means, and for sending a funding decision to said at least one credit application input terminal device through said central processing means over said communications medium,

wherein said central processing means computer program which implements and controls credit application processing and routing, further provides for tracking pending credit applications.

'841 Patent col.34 l.48 -- col.35 l.6. Independent claim 12 is the same as claim 14 except for the wherein clause, which reads "wherein there are a plurality of funding source terminal devices connected to said communications medium, and wherein a credit application is sent to more than one of said plurality of funding source terminal devices over said communications medium through said central processing means." Id. col.34 ll.14-19. Independent claim 16 is identical to claim 14, but adds "at least one credit bureau terminal device, operably coupled to said communications medium, for receiving at least a portion of a credit application from said at least one credit application input terminal device through said central processing means over said communications medium, and for sending credit information to said at least one credit application input terminal device over said communications medium through said central processing means." Id. col.35 ll.35-43. Claim 17 depends on claim 16, and adds "wherein said central processing means computer program which implements and controls credit application processing and routing, further provides outcome results including approval, decline, conditional approval or a message." Id. col.35 ll.49-53.

A. Standard of Review

Claim construction is a question of law which this court reviews de novo. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc). "Where . . . the parties do not dispute any relevant facts regarding the accused product[ and] disagree [only] over which of two possible meanings of [the claim at issue] is the proper one, the question of literal infringement collapses to one of claim construction and is thus amenable to summary judgment." Athletic Alternatives, Inc. v. Prince Mfg., Inc., 73 F.3d 1573, 1578 (Fed. Cir. 1996).

This court reviews the grant or denial of summary judgment under the laws of the regional circuit. MicroStrategy, Inc. v. Bus. Objects, S.A., 429 F.3d 1344, 1349 (Fed. Cir. 2005). The Ninth Circuit reviews grants or denials of summary judgment de novo, asking "whether there are any genuine issues of material fact" while "[v]iewing the evidence in the light most favorable to the nonmoving party." Burke v. County of Alameda, 586 F.3d 725, 730-31 (9th Cir. 2009).

B. "Communications Medium"

There is no dispute that if the district court's claim construction of "communications medium" stands, Appel-lees are entitled to summary judgment of non-infringement.

The district court construed "communications medium" as "a 'network for transferring data,' not including the internet." Claim Construction, at 19.The district court grounded its construction on two bases. First, the specification included the following statement in its "Detailed description of the preferred embodiment(s)" section: "Although illustrated as a wide area network [in FIG. 1], it should be appreciated that the communications medium could take a variety of other forms, for example, a local area network, a satellite communications network, a commercial value added network (VAN) ordinary telephone lines, or private leased lines." '841 Patent col.17

l.67 -- col.18 l.5. The district court noted that though "it is improper for a court to limit a patent to its preferred embodiment, it is reasonable to assume that when a patent supplies a long list of examples like here, the list is exhaustive." Claim Construction, at 18(internal citations omitted). Second, the district court rejected Dealertrack's arguments that (1) references in the specification to "TCP/IP" and "CompuServe" implicitly refer to the Internet as a communication medium; (2) the ordinary mean- ing of communications medium included the Internet; and (3) the prosecution history shows the Internet was implicitly considered a "communications medium" by the examiner and the patentee.

Dealertrack argues that in 1995 ordinary artisans would have understood that the Internet was a communications medium as the phrase was used in the '841 Patent because: (1) the specification explicitly says that "[t]he communications medium used need only provide fast reliable data communication between its users," '817 Patent col.18 ll.8-9, and is not further limited anywhere; (2) it is undisputed that the Internet is-and was in 1995-a network for transferring data; (3) the '841 Patent is a divisional of the '403 Patent, which includes the Internet as an example of a "communications medium" and is incorporated by reference into the '841 Patent; (4) the Internet is a wide area network, which is expressly cited as an example of a communications medium; and (5) during prosecution, (a) the examiner manifested an understanding that the Internet was a particular "communications medium" by making rejections over Internet-based prior art, and (b) applicant distinguished such prior art on grounds unrelated to the Internet. Dealertrack argues in the alternative that even if the Internet was not understood as a "communications medium" by ordinary artisans in 1995, it can be captured within the claim scope as after-arising technology.

Appellees counter that: (1) the specification requires that the communications medium be both reliable and secure, and the Internet was neither of these as of 1995; (2) the patentee disclaimed the Internet by capitulating to the examiner's requirement that "Internet" be removed from the specification as "new matter" after applicants attempted to insert it during prosecution; and (3) the incorporation by reference of the '403 Patent is inapposite because the Internet was improperly included in the '403 Patent's specification during prosecution, and anyway the '841 Patent, by its terms, only incorporates by reference the application that gave rise to the '403 Patent as originally filed. As to Dealertrack's alternative argument, Appellees argue that the Internet may not be captured as after-arising technology because it was in existence as of the priority date of the '841 Patent.

We agree with Dealertrack that the district court improperly carved-out the Internet from its construction of "communications medium." In Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), this court "expressly rejected the contention that if a patent describes only a single embodiment, the claims of the patent must be construed as being limited to that embodiment." Id. at 1323. The disclosure of multiple examples does not necessarily mean that such list is exhaustive or that non-enumerated examples should be excluded. As we noted in Phillips, "[m]uch of the time, upon reading the specification in [] context, it will become clear whether the patentee is setting out specific examples of the invention to accomplish those goals, or whether the patentee instead intends for the claims and the embodiments in the specification to be strictly coextensive." Id. Here, the context makes clear that the examples were not meant to be definitive of the scope of "communications medium." The section in which the list of examples is found is entitled "Detailed description of the preferred embodiment(s)." '841 Patent col.17. The first paragraph of the section says: "It should be kept in mind that the following described embodiment(s) is only presented by way of example and should not be construed as limiting the inventive concept to any particular physical configuration." Id. col.17 ll.56-59. While in some circumstances this may be taken as rote language, the additional context of the list cannot:

"Although illustrated as a wide area network, it should be appreciated that the communications medium could take a variety of other forms, for example, a local area network, a satellite communications network, a commercial value added network (VAN) ordinary telephone lines, or private leased lines. . . . The communications medium used need only provide fast reliable data communication between its users."

Id. col.17 l.67 -- col.18 l.9 (emphases added). The specification thus gives a basic definition of a communications medium as anything that "need only" provide "fast reliable data communication between its users." Id. The list itself is explicitly prefaced with a description that the enumerated articles are "example[s]." The natural reading of this paragraph, and the only reading that does not violate this court's repeated prohibition against importing limitations from the specification, is of a non-exhaustive list that, if anything, broadens the definition of "communications medium."

Both parties agree that a "communications medium" is a "network for transferring data" and only disagree about the Internet carve-out. There is undisputed evidence in the record, not challenged on appeal, that in 1995 the Internet was a network for transferring data. More specifically, Dealertrack proffered expert testimony that in 1995 the Internet was the world's largest wide area network, an enumerated species of a communications medium in the specification. To specifically exclude the Internet would thus require a waiver of claim scope that is "both so clear as to show reasonable clarity and deliberateness, and so unmistakable as to be unambiguous evidence of disclaimer." Omega Eng'g, Inc. v. Raytek Corp., 334 F.3d 1314, 1325-26 (Fed. Cir. 2003) (internal citations and parentheticals omitted). There was no such waiver here. The only part of the record that bears on this is a post-allowance examiner's amendment deleting the phrase "the InterNet" from the list of examples in the specification and canceling the claims specifically directed to the ...


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