Opinion
03 Civ. 842 (TPG)
May 20, 2004
OPINION
Introduction
This is a patent infringement case. Plaintiff Lava Trading, Inc. ("Lava") claims that Sonic Trading Management LLC, and its principal officers Joe Cammarata and Louis Liu are infringing Lava's patent for a computerized securities trading system.
Defendants move for partial summary judgment on the ground that the patent is invalid, by reason of indefiniteness.
The motion is denied.
Facts
On August 21, 2001 the U.S. Patent Office granted patent number U.S. 6.278.982 B 1 (the "982 patent") to inventors Richard A. Korkhammer, et al., and assignee Lava Trading Inc. The patent is for an electronic securities trading system that allows a customer/trader to consolidate his trading activities with several different electronic exchanges on a single computer terminal. Lava's consolidated trading system responds to the fragmentation of the securities markets resulting from the proliferation of so-called ATSs and ECNs. ATS means "alternative trading system." An ECN or "electronic communication network" is one type of ATS. ECNs originally developed private trading systems for their members to directly trade electronically with each other, thus eliminating the market-maker or "middleman" system that characterizes trading on the NYSE or the NASDAQ. Given the closed nature of individual ECNs, there are substantial fluctuations between the prices being offered within each ECN and between ECNs. The fragmentation of the market results in various disadvantages to traders. The benefit of Lava's system is to consolidate and to organize in real time information from, and trading on, different electronic exchanges, including the NASDAQ, on a single computer screen or display.
In order to provide such consolidated information and trading on a single trader terminal, Lava's system must convert electronic order book information from several ECNs and electronic exchanges in real time, analyze and integrate that information on what the patent calls a "consolidating computer system" ("CCS"), and process transactions on the CCS by relaying orders back to the ECNs and the electronic exchanges in real time.
Each ECN and electronic exchange maintains and processes buy and sell orders using its own special electronic formats or protocols. The improvement of the `982 patent over prior art consists, among other things, in receiving incoming streams of market information from two or more participating ECNs and electronic exchanges in their native order protocol and converting them to a common protocol so that the information can share, and be processed in, a common environment in Lava's CCS. The Lava system thus includes "protocol converters" for data received from each ECN or electronic exchange.
In order to provide consolidated trading as described, the Lava system must perform additional operations. It sorts and filters the incoming market information by various attributes, and intelligently directs the outgoing stream of orders to the appropriate electronic — exchanges. This is accomplished by so-called "analytical engines." Because trading on ECNs is limited to members, the Lava system also must limit information that the CCS supplies to a customer to only those ECNs (and electronic exchanges) where the customer is an ECN member for electronic exchange user). This is accomplished by "ECN filtering" through a "subscriber server.
Claim 1 of the `982 patent reads as follows:
1. A financial data processing system for securities or commodities for traders which integrates order book information from two or more alternative trading systems comprising:
at least two alternative trading systems having different order book information protocols;
data communication means to receive information from each participating alternative trading system to allow receipt of their order book information in their native order book information protocols;
converter means to convert order book information of each alternative trading system into a common system order book information protocol; integration means for combining the order book information from each alternative trading system into a single order book;
means for distributing the resulting combined order book to traders in the common order book information protocol;and
display means for displaying said order book to traders.
Defendants' claim of indefiniteness relates to the phrase "data communication means." Claims 2 and 8 are dependent on Claim 1, and defendants' argue that they are thus also invalid.
Defendants allege that the term "data communication means" is a means-plus-function term and must therefore be construed in accordance with 35 U.S.C. § 112, ¶ 6. They further allege that Section § 112, ¶ 6 requires that the general means claimed must be described more particularly in the written specification by describing the corresponding structure, material or act supporting the claimed means. According to defendants, the patent specification "does not identify any structure which receives, or is even capable of receiving, ATS order book information sent by an ATS," thus rendering the claim limitation indefinite. (Defendants' Memorandum In Support, at 50).
Discussion
Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). "A determination of claim indefiniteness is a legal conclusion that is drawn from the court's performance of its duty as the construer of patent claims." Amtel Corp. v. Information Storage Devices, 198 F.3d 1374 (Fed. Cir. 1999) (internal citations omitted).
A patent is presumed valid. 35 U.S.C. § 282 (2001). The burden of establishing invalidity of a patent or any claim thereof rests on the party asserting such invalidity, 35 U.S.C. § 282 (2001). Invalidity must be established by clear and convincing evidence. Helifix Ltd. v. Blok-Lok Ltd., 208 F.3d 1339, 1346 (Fed. Cir. 2000).
A patent must describe the exact scope of an invention and its manufacture to secure to the patentee all to which he is entitled and to apprise the public of what is still open to them. Markman v. Westview Instruments, Inc., 116 S.Ct. 1384, 1387, 516 U.S. 368, 373 (1996). There are two distinct parts of a patent specification. The first is a detailed "written description of the invention and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art . . . to make and use the same." 35 U.S.C. § 112, ¶ 1. Second, a patent "specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention." 35 U.S.C. § 112, ¶ 2.
The claims define the scope of a patent grant, Markman, 116 S.Ct. at 1388, but do not set forth the invention in all of the detail required by the written description. So, for example, the written description, pursuant to § 112, ¶ 1, but not the claims section, pursuant to § 112, ¶ 2, is required to contain sufficient description to establish that the inventor had possession of the invention as of the filing date of the patent application (possession), to enable a person skilled in the art to make and use the invention (enablement) and to set forth the best mode contemplated by the inventor to carry out his invention (best mode). In establishing possession, enablement and best mode, the written description need not disclose in detail what is conventional or well known to one of ordinary skill in the art. Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384, 231 USPQ 81, 94 (Fed. Cir. 1986). If a skilled artisan would have understood the inventor to be in possession of the claimed invention at the time of filing, even if every nuance of the claims is not explicitly described in the specification, then the adequate description requirement is met. See, e.g., Vas-Cath, 935 F.2d at 1563. Similarly, not everything necessary to practice the invention need be disclosed. In fact, what is well-known is best omitted. In re Buchner, 929 F.2d 660, 661, 18 USPQ2d 1331, 1332 (Fed. Cir. 1991). All that is necessary is that one skilled in the art be able to practice the claimed invention, given the level of knowledge and skill in the art. In re Wright, 999 F.2d 1557, 1561 (Fed. Cir. 1993) ("The specification must teach those skilled in the art how to make and use the full scope of the claimed invention without `undue experimentation'.").
Claims and claim limitations define the scope of the patent grant. A claim that fails to "particularly point out and distinctly claim the subject matter of the invention" is considered indefinite. 35 U.S.C. § 112, ¶ 2. The determination whether a claim is invalid as indefinite is similar to the standard relied upon in establishing the adequacy of the written description. It depends on "whether those skilled in the art would understand the scope of the claim when the claim is read in light of the specification." Amtel Corp., 198 F.3d at 1378.
The recitation in a claim of a general means to accomplish a specified function is, without more, insufficient to circumscribe the scope of a claim without rendering the claim indefinite. Section 112, ¶ 6, however, permits the following:
An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.
In other words, to the extent that the claim language merely identifies a means to accomplish a specific function, the written patent specification must render the claim more definite by describing a specific structure or material that serves as the means to accomplish the function. A claim element that adopts this form is referred to as a "means-plus-function" element.
In In re Donaldson Co., Inc., 16 F.3d 1189, 1195 (Fed. Cir. 1994), the Federal Circuit has explained how the definiteness requirement of § 112, ¶ 2 applies in the specific context of a § 112, ¶ 6 means-plus-function claim limitation:
Although [§ 112, ¶ 6] statutorily provides that one may use mean-plus-function language in a claim, one is still subject to the requirement that a claim "particularly point out and distinctly claim" the invention [§ 112, ¶ 2]. Therefore, if one employs means-plus-function language in a claim, one must set forth in the specification an adequate disclosure showing what is meant by the claim language. If an applicant fails to set forth an adequate disclosure, the applicant has in effect failed to particularly point out and distinctly claim the invention as required by the second paragraph of section 112.
The law, however, does not require anything more than compliance with § 112, ¶ 2. Amtel Corp., 198 F.3d at 1379. Such compliance is achieved so long as it is "clear to those skilled in the art what structure must perform the function recited in the means-plus-function limitation." Id. The "one skilled in the art" mode of analysis applies with equal force when determining whether a § 112, ¶ 6 means-plus-function limitation is sufficiently definite under § 112, ¶ 2. Amtel Corp., 198 F.3d at 1379. The use of a means-plus-function claim element thus does not raise the bar for a patent holder seeking to ward off a challenge of claim indefiniteness. Section 112, ¶ 6 does not impose any additional description requirement to that imposed by § 112, ¶ 1. In re Knowlton, 481 F.2d 1357, 1366, 178 USPQ 486, 492-93 (CCPA 1973). Adopting the Federal Circuit's reasoning inIn re Dossel, the PTO has issued Supplemental Examination Guidelines for Determining the Applicability of 35 U.S.C. § 112, ¶ 6, which emphasize this point:
Under certain limited circumstances, the written description does not have to explicitly describe the structure (or material or acts) corresponding to a means (or step-) plus-function limitation to particularly point out and distinctly claim the invention as required by 35 U.S.C. § 112, [¶] 2. Rather, disclosure of structure corresponding to a means-plus-function limitation may be implicit in the written description if it would have been clear to those skilled in the art what structure must perform the function recited in the means-plus-function limitation. However, the claims must still be analyzed to determine whether there exists corresponding adequate support for such claim under 35 U.S.C. § 112 [, ¶] 1.65 Fed. Reg. 38510, 38514 (2000) (emphasis added) (citations omitted).See also, Amtel Corp., 198 F.3d at 1379 (endorsing the PTO's proposed Supplemental Examiner Guidelines).
Use of the term "means," particularly as used in the phrase "means for" generally invokes section 112, ¶ 6, and the use of a different formulation generally does not. Greenberg v. Ethicon Endo-Surgery Inc., 91 F. 1580, 1584, 39 USPQ2d 1783, 1787 (Fed. Cir. 1996). The recitation of some structure in means-plus-function element does not preclude the applicability of section 112, ¶ 6. Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533, 1536, 19 USPQ2d 1367, 1369 (Fed. Cir. 1991).
Defendants argue that the claim limitation "data communication means" is indefinite, because it is a means-plus-function claim limitation that finds no corresponding structure, material or action in the patent specification. According to the defendants the patent nowhere specifies any "data communication means" that show what is meant by the claim language. Such disclosure, defendants argue, is however required, if the patent makes use of means-plus-function language in a claim.
The motion thus raises two issues. First, is the phrase "data communication means" a claim element stated in such a way that there must be a description of corresponding structure, material or acts in the written specification within the meaning of § 112, ¶ 6? If the answer to this question is in the affirmative, does the written specification of the `982 patent provide the necessary written specification?
As already stated, the use of the term "means" gives rise to the presumption that the inventor used the term advisedly to invoke the statutory mandates for means-plus-function clauses. Ethicon Endo-Surgery Inc., 91 F. at 1584, 39 USPQ2d at 1787. In the case of the element "data communication means to receive information from each participating alternative trading system," a means is clearly invoked for the purpose of achieving a certain function. In this context it does not make a difference whether the language used is "means for" or "means to." The meaning is the same. The last phrase of this claim limitation, "to allow receipt of their order book information in their native order book protocols," does not specify how to accomplish the reception of information from participating ATSs, but rather further specifies the function to be performed, as follows. Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533, 1536, 19 USPQ2d 1367, 1369 (Fed. Cir. 1991) (finding that the recitation of some structure in a means-plus-function element did not preclude the applicability of section 112(6), but merely served to further specify the function of that means). Means are required to receive not just any information, but order book information in the native order book protocols of the ATSs. Means to receive other, additional types of information are not claimed, except insofar as such additional information allows the receipt of the order book information in native order book information protocols that is ultimately sought by such means. In short, the court agrees with defendants that "data communication means" is a means-plus-function term, and that § 112, ¶ 6 applies.
Defendants' indefiniteness claim, however, is without merit. In its opening claim construction brief Lava construes "data communication means" as a data link for the receipt of certain information from electronic exchanges. There appears to be nothing obscure about such a data link or data feed, and the `982 patent appears to use the term in its customary meaning. As Lava's expert Professor demons states in his supporting declaration:
In the context of computer systems data communications refers to the transfer of messages or data feeds between two computer systems, or between two nodes in a single computer system . . . . The patent makes this clear when it refers to the sources and destinations of these data communications feeds and identifies them as parts of a computer network.
While demons construes "data communication means" to refer to "any means" for affecting such data transfer, the court need not go beyond what is disclosed in the patent specification. In re Donaldson, 16 F.3d at 1194-95. The specification of the `982 patent teaches that:
the trading terminals, each participating ECN order book computer, each participating electronic exchange, and the CCS [consolidating computer system] form a computer network.
Column 4, lines 22-24. The diagram in Figure 2 identifies such data links or feeds within the described network by means of vectors labeled "Market Data" pointing from each ECN or electronic exchange (including the NASDAQ) to the CCS. Similarly, the diagram in Figure 3 identifies such data links or feeds by means of vectors labeled "Order Data" pointing from each ECN or electronic exchange (including the NASDAQ) to its dedicated protocol converter within the square dotted boundary that designates the CCS system. Such data feeds are also indicated on the diagram in Figure 3 by additional lines marked "Orders, Executions, Confirmations" connecting the dedicated protocol converter within the CCS to each ECN or electronic exchange (including the NASDAQ). WMS Gamine, Inc. v. International Game Technology, 184 F.3d 1339, 51 U.S.P.Q.2d 1385 (Fed. Cir. 1999) (finding corresponding structure for a means-plus-function claim element in a figure in the written specification). See also Vas-Cath, Inc. v. Makurkar, 935 F.2d 1555, 1565, 19 USPQ2d 1111 (Fed. Cir. 1991) ("Under proper circumstances, drawings alone may provide a `written description' of an invention as required by § 112").
Other references to data feeds are present in the specification. In discussing the integration and filtering of bid and offer information from ECNs within the CCS and the transmission of this aggregated data to customers, the written specification specifically refers to transmission through "direct lines, the Internet or via any other form of network for display and execution." (Column 3, at 54-56). This is consistent with the construction of "data communication means" as means by which data is generally transferred within a network. While the specific mention of "direct lines, the internet or via any other form of network for display and execution" at column 3, lines 54-56 concerns a different transmission, the diagram in Figure 3 does not distinguish, in its depiction, the structure of data feeds leading to customers from the structure of data feeds receiving order book information from ECNs, except that it clearly indicates that the content of the information received across such lines is different. Thus it is certainly plausible from the patent specification that the described direct lines, internet lines or other forms of networking provide corresponding structure by which all data transfer functions described in the claims are to take place.
The phrase "receipt of order book information in their native order book protocol" further specifies the function of "data communication means," rendering it more precise in scope.
Without anticipating the results of the claim construction hearing, it is fair to conclude that "protocol" is a term of art that appears to be used by the `982 patent in its customary meaning. One dictionary definition from the Modern Dictionary of Electronics (7th ed. 1999), at p. 595, cited by Lava, defines the term as "a set of conventions for the transfer of information between devices." According to Lava's proposed construction "order book information protocols native to the particular alternative trading system" thus means "conventions for formatting and communicating order book information used internally by the particular alternative trading system." Lava's proposed construction appears entirely consistent with the written specification. (Defendants appear to agree with Lava's construction of the term "native." But they disagree in that they claim the customary meaning of the term "protocol" does not cover the communication of information and thus should be understood more narrowly as "the format, i.e. arrangement, representation and language, of the order book information used internally by participating ATSs and as received by the claimed system." Defendants' construction, however, is not credible in light of all the dictionary definitions and technical treatments of the term "protocol" in networking provided in the briefs and supporting documentation).
What is apparently required in order to receive order book information in the native order book protocol of an ECN is an application or an interface that uses the native order book protocol to recognizes and read the order book information transmitted. The protocol may be proprietary and require licensing from the ECN or be otherwise difficult to obtain. But defendants have not made the case that one skilled in the art would not readily understand what is required in order to receive order book information in the native order book protocol of an ECN. Indeed, deposition testimony by Sonic officer and defendant Liu discussing the ITCH protocol that is used and published by the Island ECN suggests as much. Liu states that "ITCH protocol is a protocol that I can use to getall the information on Island ECN." (Liu Deposition, at p. 63).
Exhibit 3 of Appendix F (to Lava's Opening Claim Construction Brief) contains a brief description of, and a technical specification for, the ITCH protocol stating that "ITCH is the vendor level data feed for the Island trading system. It disseminates information about orders in the Island Limit Order Book and orders matched on the Island trading system to interested third parties in real time." Moreover, the technical description suggests ways in which programmers can "build a book from the ITCH datastream." (Id. at ¶ 4.3). In addition, the ITCH specification lists a variety of ways in which subscribers can connect up with the Island ECN and receive order book information in the ITCH protocol.
While this does not prove that the method for the receipt of order book information in the native order book protocol of an ECN was well-known in August of 2001 at the time the patent was granted, it is sufficient to raise serious doubts about defendants charge of indefiniteness.
Conclusion
There appears to be adequate support for the claim term in the specification to conclude that the claim is sufficiently definite to one skilled in the art. Defendants' motion for partial summary judgment is denied. Defendants have not shown by clear and convincing evidence that the relevant claim terms are indefinite.
SO ORDERED.