800 Adept v. Murex Securities & Targus (Fed. Cir. 2008)
Adept and Targus both hold patents covering systems and methods for routing 1-800 calls to local franchises. In a multi-patent battle, the Orlando Florida jury found Targus liable for infringing the Adept patents and that the Targus patents were invalid.
Claim Construction: The Adept patents include the step of assigning the telephone number of each potential caller to a particular service location or franchise. The claims require that the assignment take place prior to the call being received, but there was a dispute as to whether the assignment can be stored as an algorithm rather than as a full database record-set. On appeal, the CAFC found that the patents focus on storing the assignment information in a database precludes the awkward twist that would all “assignment” to mean “implementing an algorithm to do the assignment.”
As summarized in the abstract, the patents make clear that assignment of service location telephone numbers to potential callers must be completed before a telephone call is ever placed: “Once all such assignments have been made, a database is assembled to be used by a long distance carrier for direct routing of telephone calls.”
Prosecution history: The prosecution history also supported this limited definition of assignment. Notably, the appellate panel agreed that the prosecution history was likely not clear enough for “prosecution disclaimer” but that it could still be used “as support for the construction already discerned from the claim language and confirmed by the written description.”
Because the Targus operation uses an on-the-fly algorithm to associate callers with franchises, it cannot infringe as a matter of law. Reversed.
All Claims Invalid: The jury found that all claims of the Targus patents were invalid. On appeal, the CAFC limited that holding to only the three claims that were actually included in the pretrial statement.
“Adept’s argument that it was unnecessary for its validity expert to put forth a claim-by-claim analysis of the unasserted claims is simply incorrect. Under the patent statute, the validity of each claim must be considered separately.
In this case, it is clear from the parties’ pretrial statement and from the trial proceedings that the unasserted claims were neither litigated nor placed in issue during the trial. We therefore reverse the trial court’s judgment of invalidity with respect to the unasserted claims.”
Expert Mistake = New Trial: Adept’s expert, Dr. Brody, made a few mistaken comments about scope of the company’s patent disclosure. According to the court, this was the “primary if not the entire evidence” that the jury could have used in its invalidity decision. New trial ordered on the claims affected.
Tortious Interference: Targus sent infringement allegations to Adept clients, and the jury found tortious interference with business relations. On appeal, the CAFC reversed.
“State tort claims against a patent holder, including tortious interference claims, based on enforcing a patent in the marketplace, are “preempted” by federal patent laws, unless the claimant can show that the patent holder acted in “bad faith” in the publication or enforcement of its patent.… As the Supreme Court said long ago, “Patents would be of little value if infringers of them could not be notified of the consequences of infringement, or proceeded against in the courts. Such action, considered by itself, cannot be said to be illegal.” Virtue v. Creamery Package (1913)”
In these cases, it is quite difficult to prove ‘bad faith’ because the claims of patent infringement must be objectively baseless. On appeal, the CAFC found that standard was not met because “Targus [could have had] a reasonable basis for believing that the patent was valid when it asserted the patent against Adept’s customers.”
- Adept has also sued various Targus customers in the E.D.Texas, including Federal Express, Enterprise Rent-A-Car, and Domino’s Pizza. Barnes & Thornburg, who represented Targus at trial, is representing the defendants in that case.