AN AUSTIN PATENT ATTORNEY’S OVERVIEW, EPLUS v. LAWSON SOFTWARE

AN AUSTIN PATENT ATTORNEY’S OVERVIEW:

This case is an appeal/cross-appeal resulting from a patent infringement lawsuit brought by ePlus against Lawson Software, Inc. (“Lawson”). Lawson appealed the district court ruling and the jury’s finding that Lawson infringes ePlus’s method and system claims.

ePlus is the assignee of United States Patent No. US6023683 patent that is directed towards enabling businesses to divide a single shopping list into multiple purchase orders from different vendors.  These patents specify that a user can search vendor catalogs for items that match certain criteria, contact the vendors, switch between different vendor’s catalogs and purchase desired items. A representative claim is produced below:

26.       A method comprising the steps of:

maintaining at least two product catalogs on a database containing data relating to items associated with the respective sources;

selecting the product catalogs to search;

searching for matching items among the selected product catalogs;

building a requisition using data relating to selected matching items and their associated

source(s);

processing the requisition to generate one or more purchase orders for the selected matching items; and

            determining whether a selected matching item is available in inventory.

Independent claim 28, is similar to independent claim 26 but includes a further “converting step” as reproduced below:

converting data relating to a selected matching item and an associated source to data relating to

an item and a different source.

The accused product of Lawson is related to computer software for supply chain management. Lawson provides a procurement system where a customer can search an internal database to find desired products, the customer may determine what products are desired to purchase, which may include items available from various vendors. If the customer decides to purchase items, the customer can create purchase orders that are communicated to vendors.  Lawson’s system also includes add-on content where customers can buy additional software to search third party vendor’s databases for items and shop for products. Upon a customer connecting to the third party vendor’s website, the customer may use the vendor’s website to search for items to purchase, and if items are selected the third party vendor may respond to the procurement system that the customer desires to purchase a product.

At the summary judgment stage of the trial, Lawson argued that the claims of the patent in question are invalid as being indefinite; this motion was denied by the district court.  The case was then tried to a jury, however, Lawson did not raise the indefiniteness issue during trial based on Lawson’s attorneys understanding that indefiniteness is an issue of law and did not need to be presented to the jury. The jury returned a verdict for ePlus finding that Lawson directly and indirectly infringed upon the claims of the patent in suit. After trial, Lawson filed a renewed JMOL that the claims were indefinite, however the district court again denied the motion and entered judgment of infringement against Lawson. The district court granted ePlus’s motion for a permanent injunction enjoining Lawson from making, using, offering to sell, or selling product in those configurations that a jury found to infringe ePlus’s patents.

On appeal Lawson argued that 1) the DC should have found the system claims indefinite, 2) the evidence presented at trial does not support the jury’s finding of infringement, and 3) if the court found that Lawson infringe, Lawson urges the court of Appeals to hold that the district court’s injunction is impermissibly broad.

Regarding the indefinite system claims, the court of appeals held that Lawson did not waive its right to an indefinite claim because a party can preserve an issue for appeal by renewing the issue at trial or by including it in memoranda of law or proposed conclusion of law United Techs. Corp. v. Chromalloy Gas Turbine Corp., 189 F.3d 1338, 1344 (Fed. Cir. 1999).  Thus, the district court and ePlus were made aware of Lawson’s indefiniteness argument not just at the summary judgment stage, but also at the JMOL stage. Given that indefiniteness is an issue of law, Lawson was not required to ignore the writing on the wall and press the indefiniteness issue over and over again to preserve it for appeal.

The court of appeals held that the system claims were indefinite because the system claims were drafted as means plus function claims, but the specification does not provide an adequate disclosure showing what is meant by the language. The court stated that when determining if a claim is indefinite due to structural limitations, the court does not “look to the knowledge of one skilled in the art apart from and unconnected to the disclosure of the patent.” Id. (quoting Med. Instrumentation & Diagnostics Corp. v. Elekta AB, 344 F.3d 1205, 1212 (Fed.Cir.2003)). We rather “look at the disclosure of the patent and determine if one of skill in the art would have understood that disclosure to encompass [the required structure].” Aristocrat, 521 F.3d at 1337 (quoting Med. Instrumentation, 344 F.3d at 1212). In this case, because the specification does not disclose structures to generate purchase orders, there are no instructions for using a particular piece of hardware there is nothing in the specification to determine the functional language in the means plus function element. As such, the system claims are indefinite.

Regarding the infringement of claim 26, the court of appeals held that the record contains substantial evidence to show that Lawson by itself infringed upon claim 26 as recited above, and if Lawson wanted a more narrow scope of the term “determining” then they should have argued those points during claim construction. Regarding infringement of claim 28, the court of appeal held that Lawson did not infringe independent claim 28 as recited above because as a default do not use UNSPSC codes to determine matching products, and each customer has the option of loading the code into the product itself. As such, Lawson’s systems are technically capable of infringing ePlus’s method claims, however the standard is that ePlus must establish that more likely than not at least one user used the accused system to perform the converting data step, not just that the system could be used to perform the converting data step.

Regarding, the injunction issue, Lawson argued that the district court abused its discretion in granting too broad an injunction because damages are not at issue in this case, and therefore the district court should not have enjoined it from servicing and maintaining products sold before the injunction issued. The court of appeals reasoned, the because ePlus was not permitted to present evidence of damages at the district court, that does not mean that Lawson was authorized to sell products that infringe ePlus’s patent, and therefore the district court did not abuse its discretion in issuing the injunction.

AN AUSTIN PATENT ATTORNEY TAKE-A-WAYS:

1) Don’t draft claims in “means-plus-function.” If anything the claims are going to be construed based on only what is recited in the specification. If ePlus would have drafted a claim claiming “a processor configured to…” or “a computer configured to…,” then the claims would have likely turned out to be definite and enabling.

2)  This case is a prime example why it might be beneficial for a company to maintain an active patent on file with the USPTO. This is because the original patent application was filed in 1994 and granted in 2000, both of which were before the Bilski decision. If ePlus would have had an active patent they could have amended the system claims to include structural limitations, and therefore they could have claimed substantially the same subject matter with definite claims based on patent laws that were not enacted at the time of filing.

3) To preserve the right to argue issues that are a matter of law all that is necessary is to argue them once before the district court to not waive your right to appeal these issues. As established by this case for issues that are matters of law, the district court is not likely to change their position on the issue. Thus, it would be silly to require a party to continuously argue a position when they know what the outcome is going to be.