Block Financial v. LendingTree (W.D. Mo. 2010)
[File Attachment: Block.v.LendingTree.Invalidity.pdf (25 KB)]
[File Attachment: DismissalReq.pdf (16 KB)]
[Updated March 17, 2010] In 2001, Block Financial sued LendingTree for infringement of its US Patent No. 6,014,645 entitled "REAL-TIME FINANCIAL CARD APPLICATION SYSTEM." Later, Block added assertions of infringement of its US Patent No. 7,310,617 (a continuation application). The case was stayed for several years pending outcome of a reexamination that changed or eliminated about half of the '645 patent's 35 claims.
In a September 2009 order, the district court (W.D. Mo. Judge Smith) issued a partial summary judgment order invalidating many of Block's claims in its '617 patent based on a violation of the "new matter" prohibition of the written description requirement – holding that Block's "February 2002 amendment added new matter to the pending application, which is prohibited by section 132. As those claims are not supported by the original application, they must be declared invalid."
In February 2010, the parties entered into a confidential settlement agreement after the court agreed to vacate its invalidity findings. The parties explained that such an action would serve the public interest:
The court vacating its order would serve the public interest since it facilitates a resolution of the litigation between the parties and the dispute regarding this particular issue. See U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 26 (1994) (holding that vacatur is appropriate when it would serve the public interest). The parties respectfully submit that the vacatur of the court's partial summary judgment order is in the public interest and ask that the court vacate its order in order to allow the parties to settle the current case.
In response to the joint motion vacate, the court issued following order:
The Court is informed that the parties have reached settlement of this case. The settlement contemplates that the Court vacate its Order of September 10, 2009 (Doc # 188). In accordance with the parties' agreement and their joint motion (Doc. # 247), the Court's Order of September 10, 2009 is hereby vacated.
Of course, the US Supreme Court might well contend that the public interest is not being served by this vacatur. In Lear, Inc. v. Adkins, 395 U.S. 653 (1969), the court refused to enforce a contract that barred patent validity challenges – noting a "strong federal policy" in challenging invalid patents and therefore "permitting full and free competition in the use of ideas which are in reality a part of the public domain." A major purpose of this settlement is to remove the black-spot of invalidity from the '617 patent so that it can be asserted against other parties at other times. And, as many have noted, the expense of invalidating a clearly invalid patent is often sufficient to lead to settlement. Of course, once a defendant is relieved of potential liability, it may be quite happy for the patent to remain in effect as a roadblock to other competitors.
See also, Gear Inc. v. L.A. Gear California Inc., 13 USPQ2d 1655 (S.D.N.Y. 1989) (using settlement agreement to vacate judgment of that the term "gear" was generic when used on clothing); Judkins v. HT Window Fashion Corp, 529 F.3d 1334 (Fed. Cir. 2008) (discussing the lower court's decision to vacated ruling of abandonment under 102(g) based on settlement agreement); In re Tamoxifen Citrate Antitrust Litigation, 429 F.3d 370 (2nd Cir. 2005); Aqua Marine Supply v. AIM Machining, Inc., 247 F.3d 1216 (Fed. Cir. 2001).