By Dennis Crouch [UPDATED]
Soverain Softwarwe v. Newegg (Fed. Cir. 2013)
This Federal Circuit decision is fairly big news as far as its legal results. District Court Judge Davis rejected Newegg's obviousness argument on summary judgment – finding each of the asserted patent claims not invalid. On appeal, the Federal Circuit has completely reversed that holding and instead finds here that all of the asserted claims are invalid as obvious. The case also raises a novel argument for secondary indicia of nonobviousness.
The unanimous opinion is written by Judge Newman and joined by Judges Prost and Reyna.
The Federal Circuit panel's approach here follows the lead of KSR International Co., v. Teleflex, Inc., 550 U.S. 398 (2007). In that case, the Supreme Court was able to make the legal conclusion that the asserted claims were obvious because the factual underpinnings of obviousness were not in material dispute.
Where, as here, the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate.
In his usual quotable way, Greg Aharonian writes that "A bit of commonsense leaks into the CAFC."
The asserted patents in this case are all eCommerce patents purchased out of bankruptcy. United States Patent Nos. 5,715,314, 5,909,492, and 7,272,639. The court walked through the obviousness of each different claim finding that (1) each element was found in the prior art and (2) the combination of elements would have been well within the skill of an ordinary database designer and GUI developer.
Licensing as Secondary Indicia of Nonobviousness: The court does have an interesting discussion of secondary indicia of nonobviousness. The patentee argued that the extensive licensing of its patent provided evidence of the patent's nonobviousness – asking the rhetorical question "why would someone pay to license an invalid patent?" The court did not entirely foreclose that argument in the future, but appears to have sided with Newegg's contention that the licenses were taken "to avoid the costs of litigation" and not to take advantage of the invention.