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SAP Needs Expert For Indefiniteness Defense Against Means-Plus-Function Claims

Wednesday, February 26, 2014

By Tony Dutra  

Feb. 24 --SAP will have to return to district court to fight a patent infringement case after the U.S. Court of Appeals for the Federal Circuit ruled Feb. 24 that it failed to provide an expert witness to invalidate elcommerce.com's patent (Elcommerce.com, Inc. v. SAP AG, Fed. Cir., No. 2011-1369, 2/24/14).

The court accused the high tech firm of persuading the district court of a Federal Circuit standard that is incorrect.

However, a dissent contended that SAP was correct to argue that an expert is not needed to show that structure to support a means-plus function limitation is absent from a patent specification.

In any case, the current status of the case is that asserted method claims are not infringed and asserted system claims were improperly determined to be invalid. The latter may well still be found to be invalid or not infringed on remand.

Supply Chain Management Software Patent

Elcommerce.com Inc. owns a patent (U.S. Patent No. 6,947,903) on a system and method for monitoring a supply chain of components need to manufacturer a product, such as a resistor or integrated circuit.

The company sued SAP AG and SAP America Inc. for patent infringement in the U.S. District Court for the Eastern District of Texas, but SAP successfully had the case transferred to the Eastern District of Pennsylvania. Judge Jan E. Dubois construed representative claims and, with elcommerce's stipulation, granted summary judgment of noninfringement of the method claims.

The court also granted summary judgment of invalidity for indefiniteness, under 35 U.S.C. §112, ¶2, of the asserted system claims, based on a failure to comply with the requirements of means-plus-function claiming under paragraph 6 of Section 112. Elcommerce appealed the venue transfer as well as the court's substantive judgments

Venue Transfer Proper

Judge Pauline Newman wrote the majority's opinion.

As to venue transfer, the appeals court first rejected SAP's argument that venue was irrelevant when the questions to be considered by the Federal Circuit, such as claim construction, are subject to de novo review. If a lower court makes judgments and later is held not to have had jurisdiction, those judgments are void and “cannot receive appellate review, even when review is by de novo determination,” the court said.

However, the court also rejected arguments by elcommerce that transfer was improper. SAP had filed declaratory judgment counterclaims in the Eastern District of Texas, and elcommerce contended that its status as defendant to those charges meant that the Pennsylvania court must have personal jurisdiction over the firm.

The court distinguished Hildebrand v. Steck Mfg. Co., 279 F.3d 1351, 61 U.S.P.Q.2d 1696 (Fed. Cir. 2002) (33 PTD, 2/19/02), where the declaratory judgment action was the first one filed.

“Jurisdiction is determined at the time the complaint is filed,” the court said.

Noninfringement of Method Claims Affirmed

The court next affirmed claim construction judgments as to a number of terms contested by elcommerce on appeal. Key to these decisions was that prior art systems required vendors in the chain to retrieve and place information using a common site, while the invention monitored, scanned and detected information at each independent supplier's site.

The court determined from the “Summary of the Invention” section of the patent that it required visiting each site so as to overcome problems with the prior art--incompatibilities between suppliers' systems and the common site and a security concern when their information was mixed with that of their competitors.

The court thus affirmed the noninfringement judgment as to the method claims.

SAP Evidence on System Claims Inadequate

Representative system claim 37 includes nine limitations in mean-plus-function format. In the lower court, SAP argued that there was no structure at all in the patent specification corresponding to a number of the functions. Elcommerce argued that SAP was required to provide an expert witness to show that one of ordinary skill in the art would not understand the functions described.

The majority agreed with elcommerce; the dissent agreed with SAP.

“SAP apparently persuaded the district court (and our colleague in dissent) that no evidence of the understanding and knowledge of persons of skill in the field need be presented or indeed would be useful even if the trial court thought otherwise,” the majority stated.

The court said that the specification contained “page-after-page of text and flow-charts and block diagrams illustrating supporting structure.” It provided details on support for two of the functions in claim 37.

The court cited a number of precedents but relied most on Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 2008 BL 81669, 86 U.S.P.Q.2d 1609 (Fed. Cir. 2008) (79 PTD, 4/24/08), for the proposition that what need not be included--what a skilled artisan would understand without being particularly described--in a specification is determined on a case-by-case basis. And a district court judge--who is not a skilled artisan--would not be capable of making that determination without expert advice, the court concluded.

It thus vacated the district court's rulings as to the system claims.

Judge S. Jay Plager joined the opinion.

Dissent: That's Not Our Standard

Judge Evan J. Wallach dissented to the court's decision on definiteness.

Wallach said that the patentee must show in the specification the algorithm corresponding to each recited function, and only then, “expert testimony may be helpful in determining whether the algorithm is adequate corresponding structure in the view of a skilled artisan. He cited Noah Sys., Inc. v. Intuit Inc., 675 F.3d 1302, 2012 BL 84622, 102 U.S.P.Q.2d 1410 (Fed. Cir. 2012) (69 PTD, 4/11/12), for setting that standard.

Wallach acknowledge the support for the two means-plus-function limitations but said that elcommerce was equally liable for not introducing an expert witness of its own to show support for the other seven. In particular, he said that Noah held that “expert testimony is not required where the specification contains no algorithm corresponding to each recited function.”

In a footnote, the majority opinion rejected the requirement for an algorithm, again relying on Finisar.

“The usage 'algorithm' has indeed become patent jargon, but it does not convert the established description requirements into the need for mathematical equations or software programs,” the majority said.

Christopher R. Benson of Fulbright & Jaworski LLP, Austin, Texas, represented elcommerce.com. Michael A. Morin of Finnegan, Henderson, Farabow, Garrett & Dunner LLP, Washington, D.C., represented SAP.

 


Text is available at http://www.bloomberglaw.com/public/document/elcommercecom_v_SAP_AG_Docket_No_1101369_Fed_Cir_May_06_2011_Cour.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

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