LendingTree, LLC v. Zillow, Inc. et al

Filing 223

ORDER that the parties are hereby DIRECTED to prepare and submit an Amended Pretrial Order and Case Management Plan in accordance with the NCWD Local Patent Rules. Signed by District Judge Frank D. Whitney on 10/3/2012. (eef)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
DOCKET NO. 3:10-cv-00439-W
LENDINGTREE, LLC, a Delaware limited
liability company,
Plaintiff,
vs.
ZILLOW, INC., a Washington corporation;
NEXTAG, INC., a Delaware corporation;
QUINSTREET, INC., a Delaware
corporation; QUINSTREET MEDIA, INC.,
a Nevada corporation; ADCHEMY, INC., a
Delaware corporation; and LEADPOINT,
INC. D/B/A SECURERIGHTS, a Delaware
corporation,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

ORDER

THIS MATTER is before the Court pursuant to the parties’ Claim Construction Briefs. The
Court has previously entered an order on several terms, phrases and clauses (Doc. No. 186)
following a hearing on April 12, 2012. That hearing was continued to August 9, 2012, when the
Court received argument on the remaining claims. After reviewing the pleadings, exhibits thereto,
and applicable law and after hearing oral argument by the parties, the Court issues this partial ruling
on the remainder of the parties’ claim construction briefs.
I. Oral Ruling
During the hearing, the Court entered an oral ruling on several of the terms, phrases, or
clauses disputed by the parties. That ruling can be summarized as follows:

CLAIM CONSTRUCTION CHART
Term, Phrase, or Clause
“employing the selection
criteria to filter the
credit data” (‘816 Patent
Claims 1, 7, 22)
/
“applying the credit data
to a filter comprising the
plurality of selection
criteria of the database”
(‘594 Patent Claim 1)
/
“applying the credit data
to a filter comprising a
plurality of selection
criteria” (‘816 Patent
Claim 18)

Court’s Construction
AGREED: “comparing the
user’s credit data to each of
the plurality of the lending
institution’s selection criteria
to determine whether the
credit data satisfy the
selection criteria”

“automatically select one
or more lending
institutions” (‘816 Patent,
Claims 1, 7, 22)

“after matching, and without
manual intervention, choose,
from among the matched
lending institutions, one or
more lending institutions to
which to transmit credit data”
“after matching, and without
manual intervention, select all
of the matched
[lending/financial] institutions
for transmission of credit
data”

“select without manual
intervention each one of
said plurality of lending
institutions associated
with a match of said
credit data to said
selection criteria” (‘594
Patent Claim 1)
/
“automatically select
each one of the financial
institutions associated
with a match of the
credit data to the
selection criteria” (‘816
Patent Claim 18)

-2-

Term, Phrase, or Clause
“transmitting said
electronic qualification
form comprising said
credit data to said
plurality of lending
institutions associated
with a match of said
credit data” (’594 Patent,
Claim 1)
“transmitting the credit
data to each of the
selected lending
institutions” (’816 Patent,
Claim 1)
/
“transmitting the credit
data to the selected ones
of the financial
institutions” (’816 Patent,
Claim 18)
/
“forwarding the credit
data to the selected one
or more lending
institutions” (’816 Patent,
Claim 22)

Court’s Construction
“without manual intervention,
transmitting said electronic
qualification form comprising
said credit data to every
lending institution associated
with a match of said credit
data to said selection criteria”

“without manual intervention,
transmitting the credit data to
every [lending/financial]
institution selected”

II. Terms, Phrases, or Clauses Taken Under Advisement
The Court did not issue an oral ruling as to several terms, phrases and clauses.
A. “Whereby” Clauses
Particularly, the Court took under advisement the construction of the following three clauses:

Term, Phrase, or Clause
“whereby the selected lending
institutions compete with each
other for business with the
computer user” (‘816 Patent
Claims 1, 22)
-3-

Term, Phrase, or Clause
/
“whereby said lending
institutions associated with a
match of said credit data
compete with each other for
business with the Internet
user” (‘594 Patent Claim 1)
“whereby the selected lending
institutions compete with each
other for business with the
computer user by electing to
make offers to the computer
user” (‘816 Patent, Claim 7)

Plaintiff argues none of these terms are limiting and merely provide context to the operation
of the claim invention. According to Plaintiff, no construction is necessary. Defendants, however,
propose–in general–removing the “whereby” and construing the terms as limitations on the patent.
The standard applicable to the claim construction briefs before the Court is well-settled:
The district court has the “power and obligation to construe as a matter of law the
meaning of language used in the patent claim.” Markman v. Westview Instruments,
Inc., 52 F.3d 967, 979 (Fed.Cir.1995), aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134
L.Ed.2d 577 (1996). As a starting point, a claim term is to be given the “ordinary and
customary meaning” it would have had to a person of ordinary skill in the art at the
time of the invention. Phillips v. AWH Corp., 415 F.3d 1303, 1312–13
(Fed.Cir.2005) (en banc ); see also Dow Chemical Co. v. Sumitomo Chem. Co., Ltd.,
257 F.3d 1364, 1372 (Fed.Cir.2001). To determine that meaning, the court must first
look to how the words of the claims themselves define the scope of the patented
invention, and then look to “those sources available to the public that show what a
person of skill in the art would have understood [the] disputed claim language to
mean.” Phillips, 415 F.3d at 1314; see also Vitronics Corp. v. Conceptronic, Inc., 90
F.3d 1576, 1582–83 (Fed.Cir. 1996). The court must construe the entire claim,
including any preamble, so long as it gives life and meaning to the invention
claimed. See Pitney Bowes, Inc. v. Hewlett–Packard Co., 182 F.3d 1298, 1305
(Fed.Cir.1999).
For some claim terms, the ordinary meaning may be readily apparent, and
construction of those terms therefore “involves little more than the application of the
-4-

widely accepted meaning of commonly understood words.” Phillips, 415 F.3d at
1314. If technical terms are used, the court may also “consult scientific dictionaries
and technical treaties at any time” because “technical terms often have an ‘ordinary
meaning’ as understood by one of skill in the art, although these same terms may not
be readily familiar to a judge, or may be familiar only in a different context.” Dow
Chemical, 257 F.3d at 1372. The meaning of a disputed claim term should be
resolved primarily in light of the “intrinsic evidence of record, i.e., the patent itself,
including the claims, its specification and, if in evidence, the prosecution history.”
Vitronics, 90 F.3d at 1582 (describing intrinsic evidence as “the most significant
source of the legally operative meaning of disputed claim language”); see also
Phillips, 415 F.3d at 1316 (holding that “[t]he construction that stays true to the
claim language and most naturally aligns with the patent's description of the
invention will be, in the end, the correct construction”).
TecSec, Inc. v. IBM, Corp., 769 F.Supp.2d 997, 1003 (E.D.Va. 2011). The Court has applied these
principles in the previous rulings on claim construction in this case and continues to do so here.
The issue with respect to these terms is whether or not the “whereby” clause provides a
limitation on the claims such that the terms need to be construed by the Court. Several courts have
considered this issue and repeatedly held that a “whereby” term is not limiting, so long as the clause
states the result of following the patent process as set out in the claims. For example, in a recentlydecided case out of the Western District of Virginia, the court declined to construe the “whereby”
clause as an additional limitation on the claims because the “whereby” clauses stated the necessary
results of the limitations already set forth in the claim. Titan Atlas Mfg. Inc. v. Sisk, 1:11CV00012,
2012 WL 2072861 (W.D.Va. June 8, 2012). The Court explained:
A “whereby” clause that merely states the result of the limitations in the claim adds
nothing to the patentability or substance of the claim.” Tex. Instruments Inc. v. U.S.
Int'l Trade Comm'n, 988 F.2d 1165, 1172 (Fed.Cir.1993) (concluding, in process
claims, that the whereby clauses described “the result of arranging the components
of the claims in the manner recited in the claims” and thus were not limitations).
However, “when the ‘whereby’ clause states a condition that is material to
patentability, it cannot be ignored in order to change the substance of the invention.”
Hoffer v. Microsoft Corp., 405 F.3d 1326, 1329 (Fed.Cir. 2005); see also Scheinman
v. Zalkind, 27 C.C.P.A. 1354, 112 F.2d 1017, 1019 (C.C.P.A. 1940) (finding that
whereby clause in structure claim were “structural in character and import[ed] into
the count the structural features which both parties sought to produce.”).
-5-

Titan Atlas Mfg. Inc., 2012 WL 2072861 at *6; see also Minton v. Nat’l Ass'n of Sec. Dealers, Inc.,
336 F.3d 1373, 1381 (Fed. Cir. 2003) (“A whereby clause in a method claim is not given weight
when it simply expresses the intended result of a process step positively recited.”) (citing Tex.
Instruments Inc., 988 F.2d at 1172). Thus, if a whereby clause adds nothing to the claims and
simply characterizes the intended result of the executing steps, it need not be construed by the court.
See Minton, 336 F.3d at 1381.
With these principles in mind, the parties disagree as to whether having lenders “compete
with each other for business,” as those terms are used in the whereby clauses at issue here
(hereinafter, “‘lenders compete’ clauses”), adds substance to the claims or, instead, expresses the
intended result of the already-stated steps in the method process. Defendants contend these “lenders
compete” clauses add a substantive requirement because the other limitations generally describe the
matching and selection process, whereas the “lenders compete” clauses describe what the lenders
do afterwards. Plaintiff submits that the specification confirms that “competition” is not a material
element of the claims, but that the claims define a method that facilitates competition among
lenders. Put another way, Plaintiff argues that while the claims do not require competition among
lenders, lender competition is the intended result of practicing the claimed method.
The Court disagrees with Plaintiff. To conclude that lender competition is merely an
intended result would mean the claimed process does not necessarily capture the lender stage of the
method. The “lenders compete” clauses state an important component of the claimed process–some
action by the lending institution to the computer user–that is material to patentability. Quite simply,
because lender competition is not otherwise positively recited in the process steps, the Court cannot
conclude that whereby clause adds nothing to the claims or simply characterizes the intended result
-6-

of the executing steps. See Minton, 336 F.3d at 1381. For example, the claimed process alone can
lead to various results other than competition such as instances were none or only one of the selected
lenders makes an offer to extend credit. The “lenders compete” clauses (as a larger part of the
whereby clauses at issue here) are not mere surplusage to be ignored and instead must be construed
by the Court.
Proceeding with their construction, the Court agrees in large part with Defendants’ proposed
construction with some modification. Defendants propose a construction requiring the selected
lending institutions to “directly” compete. No support for such a construction is apparent in the
patents here. Instead, the Court finds that the claimed process requires “simultaneous” competition.
Accordingly, the Court defines the phrases as follows:

Term, Phrase, or Clause
“whereby the selected
lending institutions
compete with each other
for business with the
computer user” (‘816 Patent
Claims 1, 22)
/
“whereby said lending
institutions associated with
a match of said credit data
compete with each other
for business with the
Internet user” (‘594 Patent
Claim 1)
“whereby the selected
lending institutions
compete with each other
for business with the
computer user by electing
to make offers to the
computer user” (‘816
Patent, Claim 7)

Court’s Construction

“the selected lending institutions
simultaneously compete by
providing offers for credit to the
computer user via the [computer
network (‘816 patent)/Internet
(‘594 patent)]”

the selected lending institutions
simultaneously compete by
electing to make offers for credit
and by providing offers for credit
to the computer user via the
computer network

-7-

B. “Determining an Appropriate Transfer Method”
Following the hearing, the Court also deferred ruling and took under advisement the
construction of the following phrase:

Term, Phrase, or Clause
“determining an appropriate
transfer method” (‘816 Patent
Claims 2, 7, 23; ‘594 Patent
Claim 1)
Plaintiff’s proposed construction states “determining a transfer method that is compatible with the
lending institution,” while Defendants contend this term is indefinite. The Court declines to, for
purposes of this claim construction ruling only, conclude this phrase is indefinite.

This

determination, however, is without prejudice to Defendants to re-raise the definiteness issue at
summary judgment. In light of the intrinsic evidence, the Court concludes this phrase should be
construed as “determining which of the four transfer methods is compatible and will be used with
the lending institution.”
The parties are hereby DIRECTED to prepare and submit an Amended Pretrial Order and
Case Management Plan in accordance with the NCWD Local Patent Rules.
IT IS SO ORDERED.
Signed: October 3, 2012

-8-