By Geng Chen – Edited by Ashish Bakshi
Elcommerce.com, Inc. v. SAP AG , No. 2011-1369 (Fed. Cir. Feb. 24, 2014)
The United States Court of Appeals for the Federal Circuit affirmed in part and vacated in part the United States District Court for the Eastern District of Pennsylvania’s grant of summary judgment in a patent infringement suit filed by elcommerce against SAP AG and SAP America, Inc. (“SAP”). Elcommerce.com, slip op. at 1–3. The district court held that the method claims in elcommerce’s U.S. Patent No. 6,947,903 (“the ‘903 patent”) were not infringed and that the system claims were invalid for indefiniteness under 35 U.S.C. § 112. Id. at 3. The Federal Circuit affirmed the noninfringement holding but vacated the invalidity holding, id., stating that SAP had failed to meet its evidentiary burden because its indefiniteness argument was not supported by the testimony of “technical experts who meet the Daubert criteria,” id. at 29.
The ‘903 patent claims “a method and system for monitoring a supply-chain ,” with many elements in the system claims couched in means-plus-function form. For a term expressed in means-plus-function form to be valid, the specification must describe a “corresponding structure, material, or acts . . . .” 35 U.S.C. § 112(f). SAP argued that the ‘903 patent’s specification did not contain any structures corresponding to the claimed functions; elcommerce countered that any determination of whether the specification supported the function had to be “made from the viewpoint of persons of skill in the field of the invention . . . .” Elcommerce.com, slip op. at 21. Thus, according to elcommerce, SAP’s failure to provide expert testimony to support its argument that the specification did not support the claims meant that SAP, as the challenger to the patent’s validity, had not met its burden of proof. Id. at 29.
The Federal Circuit first identified the source of the error as SAP’s attorney, who during the Markman hearing repeatedly assured the district court that Federal Circuit case law did not require expert testimony on the issue of whether a structure was present in the specification. Id. at 21. SAP maintained that the specification contained no structures, while elcommerce argued that the ‘903 patent’s many pages of text, flowcharts, and block diagrams did contain structures. Without expert testimony, the district court” received no evidence on” how to resolve this controversy. Id. at 28. As the standard is whether a person of ordinary skill in the art would have understood what was in the specification to be structures corresponding to the claimed functions, a generalist judge could not ordinarily assess the arguments against this standard without external evidence. See id. at 28–29. The Federal Circuit clarified that expert testimony would not always be needed, but in this case, the district court’s repeated requests for further information suggested that it was required. See id. at 29. Thus, the Federal Circuit vacated the finding of invalidity and remanded the case. Id. at 29–30.
The Federal Circuit also upheld the district court’s decision to uphold SAP’s venue transfer motion, resolving a dispute over personal jurisdiction, id. at 4–10, and the finding of noninfringement, affirming the district court’s claim construction, id. at 11–17.
Judge Wallach dissented, positing that Noah Systems, Inc. v. Intuit Inc., which “affirmed the exclusion of expert testimony from the indefiniteness inquiry when there was a total absence of corresponding structure,” controlled. Id. at 1–2 (Wallach, J., dissenting). Judge Wallach warned that the panel’s approach, which would allow patentees to “avoid providing specificity as to structure” as long as they could later have a person of ordinary skill “devise a means to perform the claimed function,” would allow “unbounded functional claiming” in violation of the general purpose of section 112. Id. at 7 (quoting Function Media, L.L.C. v. Google Inc., 708 F.3d 1310, 1319 (Fed. Cir. 2013)) (internal quotation marks omitted)
Elcommerce.com’s holding that those challenging the definiteness of means-plus-function claims should, in most instances, provide expert testimony to support their arguments will add yet another battle between experts to already complicated Markman hearings. The Federal Circuit’s unwillingness to clarify when such testimony is not necessary means that this issue will likely come up again before the court for clarification.