BillingNetwork Patent, Inc. et al v. American Business Systems LLC et al
Filing
125
MEMORANDUM OPINION AND ORDER on claim construction. Mailed notice(drw, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BILLINGNETWORK PATENT, INC.,
Plaintiff,
No. 09 cv 4690
Judge James B. Zagel
v.
ELECTRONIC NETWORK SYSTEMS, INC.
and INGENIX, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Billingnetwork Patent, Inc. (“BNP”) accuses Defendants Electronic Network
Systems, Inc. (“ENS”) and Ingenix, Inc. (“Ingenix”) of infringing United States Patent No.
6,674,229 (“’229 Patent”). On July 30, 2012, the Court conducted a hearing during which it
heard evidence and argument regarding the construction of four different terms contained in
Claim 1 of the ’229 Patent. The Court’s construction of these terms is set forth below.
I.
BACKGROUND
Plaintiff filed its application for the ’229 Patent on October 20, 1999 and the U.S. Patent
and Trademark Office (PTO) issued it on April 16, 2002. The ’229 Patent discloses a browserbased system that allows business operators to input and receive party billing information in
real-time by the use of a browser and which also performs the billing function of producing
itemized bills to responsible parties. BNP is the current assignee of the patent.1 Claim 1 of the
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Plaintiff has been involved in three previous litigations involving infringement of the ’229 Patent and the
construction of claims terms. On May 14, 2003, BNP’s predecessor in interest, Billingnetwork.com, filed a
complaint in the United States District Court for the Middle District of Florida against Advanced Healthcare Billing,
Inc., asserting infringement Claim 1 of the ’229 Patent. Billingnetwork.com v. Advanced Healthcare Billing, Inc.,
No. 8:03-cv-927. In the context of a preliminary injunction hearing, the court construed the term “real time.”
Ultimately, the case settled and did not proceed to final judgment.
On March 22, 2006, NDCHealth Corp. filed a declaratory judgment action in the United States District
Court for the Northern District of Georgia against BNP, for a declaration that NDCHealth did not infringe Claim 1.
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’229 Patent, which is the only claim at issue here, reads as follows (disputed terms are in bold):
An integrated internet facilitated billing, data processing, and communication
system comprising:
a database server and a home page of a website which provides access via an
internet service provider (ISP) to said database server by a plurality of browserbased subscribers each of which have electronic access to said home page via a
modem and the ISP;
said home page providing only secure access by each browser-based subscriber to
one of a plurality of subscriber areas within said system;
means for providing electronic transfer of substantially only billing and data
entry forms to the browser-based subscriber upon request, data entered on said
forms, when electronically returned to a corresponding said subscriber area, then
entered into said database server;
said database server then, utilizing an appropriate application software thereon,
producing billing invoices and statements to clients and customers for each
corresponding browser-based subscriber;
mean for providing real time electronic viewing and query access of data and
billing stored in said database server by each corresponding browser-based
subscriber;
a PC type computer electronically connected to said database server for
controlling said forms as required and responding to queries entered by each
browser based subscriber.
II.
THE LAW OF CLAIM CONSTRUCTION
A. Generally
A patent infringement analysis involves two steps. The first step, claim construction, is a
determination of the meaning and scope of the asserted patent claims. Claim construction is a
NDCHealth Corp., et al. v. BillingNetwork Inc., No. 1:06-cv-0666. On November 21, 2006, the parties submitted to
the court a Joint Claim Construction Statement as required pursuant to local rule. The NDCHealth Stipulation
included three of the four claim terms at issue in this case: “real time,” “producing billing invoices and statements to
clients and customers,” and “substantially only.” “Modem” was not construed nor agreed to in the NDCHealth
litigation. The case eventually settled and did not proceed to final judgment.
On June 28, 2004, BNP filed a lawsuit in the United States District Court for the Middle District of Florida
against Cerner Physicians Practice, Inc., asserting infringement of Claim 1. BillingNetwork Patent, Inc. v. Cerner
Physician Practice, Inc. et al., No. 8:04-cv-1515. The court in that case issued a claim construction order that
adopted the “real time” construction that BNP stipulated to in the NDCHealth litigation. The Cerner case settled and
did not proceed to final judgment.
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matter of law for the court, subject to de novo review on appeal. Markman v. Westview
Instruments, Inc., 52 F.3d 967, 979 (Fed.Cir.1995) (en banc ), aff'd 517 U.S. 370, 116 S.Ct.
1384, 134 L.Ed.2d 577 (1996). The second step is for the trier of fact to determine whether the
accused product or method falls within the scope of the properly construed claims. Cybor Corp.
v. FAS Techs., Inc., 138 F.3d 1448, 1467 (Fed. Cir. 1998) (en banc). Claim construction is to be
based primarily on the “intrinsic evidence” of the patent (in order of importance): the claim
language, the patent specification,2 and the prosecution history3 of the patent. MBO Labs., Inc. v.
Becton, Dickinson & Co., 474 F.3d 1323, 1329 (Fed. Cir. 2007); Phillips v. AWH Corp., 415
F.3d 1303, 1315 (Fed Cir. 2005) (en banc).
“[T]he claims of a patent define the invention to which the patentee is entitled the right to
exclude.” Phillips, 415 F.3d at 1312. See also Gillette Co. v. Energizer Holdings, Inc., 405 F.3d
1367, 1370 (Fed. Cir. 2005) (“In construing claims the analytical focus must begin and remain
centered on the language of the claims themselves…”). The words in a claim usually carry their
“ordinary and customary meaning,” which is “the meaning that the term[s] would have to a
person of ordinary skill in the art in question at the time of the invention, i.e., as of the effective
filing date of the patent application” in the context of the entire patent. Phillips, 415 F.3d at
1312-13. “[T]he person of ordinary skill in the art is deemed to read the claim term not only in
the context of the particular claim in which the disputed term appears, but in the context of the
entire patent” in light of the specification, prosecution history, and extrinsic evidence concerning
relevant scientific principles, the meaning of technical terms, and the state of the art. Id. at 1332;
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35 U.S.C. § 112, ¶ 1 provides that, every patent must have a specification containing “a 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 which it pertains, or with which it is most nearly connected, to make and
use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.”
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The prosecution history, also referred to as the file history, is the record of the correspondence between the
applicant and the U.S. Patent and Trademark Office during the patent application process. The prosecution history
becomes public record upon issuance of the patent.
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Phillips, 415 F.3d at 1313; Markman, 517 U.S. at 370.4
In addition to the claim language, the specification is “always highly relevant to the claim
construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a
disputed term.” Phillips, 415 F.3d at 1315 (citing Vitronics, 90 F.3d at 1582) (internal quotation
marks omitted).
The claim language need not necessarily have a customary and ordinary meaning because
a patentee may act (at his considerable peril) as his own “lexicographer” and give words special
meaning by clearly defining a patent term in the specification or prosecution history. Typhoon
Touch Techs., Inc. v. Dell, Inc., 659 F.3d 1376, 1382 (Fed. Cir. 2011). The specification itself
may also reveal an intentional disclaimer, or disavowal, of claim scope by the inventor, in which
case, “the inventor’s intention, as expressed in the specification, is regarded as dispositive.”
Phillips, 415 F.3d at 1316. See also Alloc, Inc. v. Int'l Trade Comm’n, 342 F.3d 1361, 1370 (Fed.
Cir. 2003) (holding that despite the absence of the word “play” in floor panel patent claims, the
claimed invention must have included a play limitation because the claim language recited floor
system features in which a play limitation was necessarily present, the specification read as a
whole led to the “inescapable conclusion” of a play limitation, and the “specification also
distinguished the prior art on the basis of play”).
Courts are cautioned against reading an inappropriate limitation from the specification
into the claims. Phillips, 415 F.3d at 1320 (“one of the cardinal sins of patent law”). See also
Retractable Technologies, Inc. v. Becton, Dickinson & Co., 653 F.3d 1296, 1305 (Fed. Cir.
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“In some cases, the ordinary meaning of claim language as understood by a person of skill in the art may
be readily apparent even to lay judges, and claim construction in such cases involves little more than the application
of the widely accepted meaning of commonly understood words.” Phillips, 415 F.3d at 1314. For example, Texas
Digital Systems, Inc. v. Telegenix, Inc., suggested greater emphasis on dictionary definitions of claim terms and
assigned a less prominent role to the specification and the prosecution history. Phillips, 415 F.3d at 1319
(referencing Texas Digital Systems, Inc. v. Telegenix, Inc., 308 F.3d 1193 (Fed.Cir.2002)).
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2011) (“There is a fine line between construing the claims in light of the specification and
improperly importing a limitation from the specification into the claims . . . In reviewing the
intrinsic record to construe the claims, we strive to capture the scope of the actual invention,
rather than strictly limit the scope of claims to disclosed embodiments or allow the claim
language to become divorced from what the specification conveys is the invention.”) (internal
citation omitted); Kara Tech., Inc. v. Stamps.com, Inc., 582 F.3d 1341, 1348 (Fed. Cir. 2009)
(“The claims, not specification embodiments, define the scope of patent protection. The patentee
is entitled to the full scope of his claims, and we will not limit him to his preferred embodiment
or import a limitation from the specification into the claims.”).
Beyond the specification a court may consider, if in evidence, a patent’s prosecution
history—the “undisputed public record” of proceedings in the Patent and Trademark Office—to
ascertain the true meaning of patent claim language. Markman, 52 F.3d at 980. “Yet because
the prosecution history represents an ongoing negotiation between the PTO and the applicant,
rather than the final product of that negotiation, it often lacks the clarity of the specification and
thus is less useful for claim construction purposes.” Phillips, 415 F.3d at 1317. See also
Inverness Med. Switz. GmbH v. Warner Lambert Co., 309 F.3d 1373, 1380-82 (Fed.Cir.2002)
(ambiguity of prosecution history made it less relevant to claim construction). “Nonetheless, the
prosecution history can often inform the meaning of the claim language by demonstrating how
the inventor understood the invention and whether the inventor limited the invention in the
course of prosecution, making the claim scope narrower than it would otherwise be.” Phillips,
415 F.3d at 1317. See also Schwing GmbH v. Putzmeister Aktiengesellschaft, 305 F.3d 1318,
1324 (Fed. Cir. 2002) (“Although prosecution history can be a useful tool for interpreting claim
terms, it cannot be used to limit the scope of a claim unless the applicant took a position before
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the PTO that would lead a competitor to believe that the applicant had disavowed coverage of
the relevant subject matter.”).
Only when ambiguity remains after consulting the intrinsic evidence may the court resort to
“extrinsic” evidence external to the claim language and file history to construe the claim terms.
See generally Helmsderfer v. Bobrick Washroom Equip., Inc., 527 F.3d 1379, 1382 (Fed. Cir.
2008); LB Plastics, Inc. v. Amerimax Home Prods., Inc., 499 F.3d 1303, 1308 (Fed. Cir. 2007).
Dictionaries, treatises, and inventor testimony, extrinsic evidence such as reasoned and well
supported expert testimony may be useful to provide background on the technology, explain how
the invention works, or to establish that a particular term in the patent has a particular meaning
in the pertinent art. Phillips, 415 F.3d at 1317-18.
III.CLAIM CONSTRUCTION ANALYSIS
A. Collateral Estoppel
Before construing the disputed terms in Claim 1, I address Defendants’ argument that
Plaintiff is collaterally estopped from proposing different term constructions than those it
stipulated to in NDCHealth and which the Cerner court adopted. The law of the regional circuit
applies to the issue of collateral estoppel, and the party seeking to invoke the doctrine bears the
burden of proving all necessary elements. RF Deleware, Inc. v. Pacific Keystone Technologies,
Inc., 326 F.3d 1255, 1261 (Fed. Cir. 2003). In the Seventh Circuit, issue preclusion is
appropriate if: (1) the issue sought to be litigated is identical to one decided in a prior action; (2)
that issue was actually litigated in the first action; (3) the determination of the issue was essential
to the final judgment in the first action; and (4) the party against whom estoppel is invoked had a
full and fair opportunity to litigate the issue in the first action. See Abbott Laboratories v. Dey,
L.P., 110 F.Supp.2d 667, 670 (N.D. Ill. 2000). Here, unlike in Abbott Labs, no final judgment
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was reached in the previous related infringement suits so collateral estoppel does not apply.
B. Claim Construction
1. Producing billing invoices and statements to clients and customers
Plaintiff argues that producing billing invoices and statements to clients and customers
should be construed as “producing itemized bills for good or services to the party (a person or
company) being billed.” In other words, Plaintiff argues that “invoice” and “statements” should
be interpreted as interchangeable, and so too should “clients” and “customers.” Defendants, on
the other hand, assert that this phrase requires four specific types of output: (1) billing invoices
to clients; (2) billing invoices to customers; (3) statements to clients; and (4) statements to
customers.
I agree with Plaintiff’s construction. Words of a claim are generally given their ordinary
and customary meaning, Phillips, 415 F.3d at 1312-13, and there can be no real dispute that, in
ordinary usage, “invoice” and “statements,” as well as “clients” and “customers” are
synonymous. The question then becomes whether intrinsic evidence demonstrates that these
terms have distinctive meaning in the context of the disputed claim. There is no such evidence.
The terms are never defined within the claim or specification, and they are used interchangeably
throughout the specification. Thus, there is no intrinsic evidence that Plaintiff intended to act as
its own lexicographer by giving otherwise synonymous terms distinctive meaning.
Defendants point to two pieces of extrinsic evidence to reinforce its position. First, Dr.
Krumholz’s deposition testimony, in which he states that the “customer” is the patient and the
“client” is the third party payer. I have no doubt that this is what Dr. Krumholz envisioned when
he submitted the ’229 Patent for approval. The problem for Defendants is that in determining
the scope of a claim, the inventor’s subjective intent is irrelevant. Howmedica Osteonics Corp.
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v. Wright Med. Tech., Inc., 540 F.3d 1337, 1347 (Fed. Cir. 2008). While the need of the medical
industry may have been what mothered the ’229 Patent, nothing in the claim language limits its
application to billing for medical services and Defendants’ proposed restrictions simply do not
make sense when the invention is applied to other fields.
Second, Defendants point to the Cerner claim construction. As I have already found, I
am not bound by this order. More to the point, I disagree with Defendants’ interpretation of it. I
read the Cerner court’s adoption of Defendants’ now proposed language as having been
primarily based upon the “plain language of the claim,” rather than evidence from the
prosecution history. (Def’s Ex. 3 at 24). As I have explained, I believe the plain language of the
claim points toward Plaintiff’s construction.
It is true that in adopting Plaintiff’s proposed construction, I am effectively rendering
both “statements” and “customers” superfluous—“a methodology of claim construction [the
Federal Circuit] has denounced.” Stumbo v. Eastman Outdoors, Inc., 508 F.3d 1358, 1362 (Fed.
Cir. 2007). The problem is I have no basis for assigning distinctive meaning to these terms other
than Dr. Krumholz’s testimony, which is a clearly invalid basis. Here, rendering certain terms
superfluous rather than importing limitations that run contrary to the terms’ ordinary meanings
and find no support in the intrinsic evidence is the lesser of two evils.
The Court construes the phrase “producing billing invoices and statements to clients and
customers” to mean “producing itemized bills for goods or services to the party (a person or
company) being billed.”
2.
Substantially only
Plaintiff argues that substantially only should be construed as “at least billing and data
entry forms and not any underlying software application.” Defendant argues that substantially
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only should simply be construed as “only.” I reject both constructions.
As to Plaintiff’s proposal, interpreting “substantially only” to mean “at least” could give
broadly expansive effect to language that is clearly meant to circumscribe Claim 1’s coverage of
other things electronically transferred along with billing and data entry forms. On the other
hand, I refuse to read out “substantially” altogether. See Playtex Prods., Inc. v. Procter &
Gamble Co., 400 F.3d 901, 907 (Fed. Cir. 2005).
Given the technological complexity of the subject matter at issue I am reluctant to
impose my own construction. The parties are ordered to submit new claim proposals for
substantially only. The new interpretations should reflect that the adverb “substantially”
operates both in concert with (by limiting the general universe of things electronically
transferred) and contrast to (by allowing some things other than billing and data entry forms) the
adverb “only.”
3.
Real Time
Plaintiff argues that real time should be construed as “without perceived delay.”
Defendants argue real time should be construed as “instantaneous.” I agree with Plaintiff that
Defendants’ proposed construction is based on an improper importation of a limitation from the
specification into the claims. See Computer Docking Station Corp. v. Dell, Inc., 519 F.3d 1366,
1374 (Fed. Cir. 2008). The word “instantaneous” does not appear in the claim itself and only
once appears in an embodiment described in specification. Nothing in the specification suggests
that the patentee intended for the claims to be “strictly coextensive” with this single
embodiment. Silicon Graphics, Inc. v. ATI Techs., Inc., 607, F.3d 784, 792 (Fed. Cir. 2010).
The extrinsic evidence from the time of the filing of the ’229 Patent supports Plaintiff’s
construction. The Dictionary of Computing & Digital Media (1999) defines “real time” as “[t]he
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time during which a data processing event occurs. Data is received and processed so fast and the
results are returned so quickly that the process seems instantaneous to the user.” The use of the
word ‘”seems” is critical—it is an acknowledgement that Defendants’ proposed construction
constitutes a physical impossibility.
This same concept was recently discussed by the Federal Circuit in Paragon Solutions,
LLC v. Timex Corp., 566 F.3d 1075 (Fed. Cir. 2009) in the context of two separate units
receiving electronic signals from one another:
[W]hen the claimed system is in operation, the displayed data must first be
acquired by the electronic positioning device and the physiological monitor and
then transmitted to the display unit for display. Even assuming that this
transmission happens at the speed of light, it still takes a non-zero amount of
time. Thus, what the claims describe as “displaying real-time data” cannot
possibly mean displaying data literally instantaneously, because the claims
themselves require a transmission that necessarily takes some time, however
minute that might be.
The same is true here. As such, the Court construes real time to mean “without perceived
delay.”
4.
Modem
Plaintiff argues that modem should be construed as “a device that converts a digital signal
into an analog signal suitable for transmission over an analog communication channel.”
Defendants argue it should be construed as “a communications device that both converts binary
digital signals to analog signals for transmission over a telephone line and also that receives
analog signals from a telephone line and reconverts the analog signal into a binary digital
signal.”
Defendants argue that modem should be limited to telephone lines because Claim 6,
which covers “thin client technology,” recites “transferring data via phone modem lines.” While
Defendants are generally correct that “the usage of a term in one claim can often illuminate the
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meaning of the same term in other claims,” Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed.
Cir. 2005), this cuts against their proposed construction. “The presence of a dependent claim
that adds a particular limitation gives rise to a presumption that the limitation in question is not
present in the independent claim.” Id. at 1315. Thus, the Court finds that presence of the
“phone” limitation in Claim 6 actually supports Plaintiff’s argument that modem should not be
construed as so limited in Claim 1.
Plaintiff’s construction is further supported by the fact that 1) there is nothing in the
specification or prosecution history to suggest that “modem” was intended to be limited to
devices operating via telephone lines alone, and 2) the extrinsic evidence suggests that a person
of skill in the art at the time the patent was issued would not understand modem to be limited to
telephone lines. For example, the Institute of Electrical and Electronics Engineers (IEEE)
Authoritative Dictionary of IEEE Standards Terms (7th ed. 2000) defines modem as “an
equipment that connects data terminal equipment to a communication line.” “A communication
line” is not limited to telephone lines under the IEEE’s definition and without intrinsic evidence
suggesting otherwise it should not be so limited here.
The Court construes modem to mean “a device that converts a digital signal suitable for
transmission over an analog communication channel.”
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IV.
THE COURT’S CONTSTRUCTION OF THE DISPUTED CLAIM TERMS
The Court having considered all submission and the oral presentation of both sides, and
been fully advised, IT IS HEREBY ORDERED as follows:
1. Claim 1 of the ’229 Patent recites “producing billing invoices and statements to clients
and customers.” The Court interprets this claim element to mean “producing itemized
bills for goods or services to the party (a person or company) being billed.”
2. Claim 1 of the ’229 Patent recites “substantially only.” The Court rejects both sides’
proposed constructions and orders the parties to submit new proposals that comport with
this order.
3. Claim 1 of the ’229 Patent recites “real time.” The Court interprets this claim element to
mean “without perceived delay.”
4. Claim 1 of the ’229 Patent recites “modem.” The Court interprets this claim element to
mean “a device that converts a digital signal suitable for transmission over an analog
communication channel.”
ENTER:
James B. Zagel
United States District Judge
DATE: November 9, 2012
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