Netscape Communications Corp., v. Valueclick, Inc. et al

Filing 294

MEMORANDUM AND OPINION re 293 . Signed by District Judge T. S. Ellis, III on 1/29/2010. (nmcc)

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division

29

NETSCAPE COMMUNICATIONS CORP., )
Plaintiff, )

v. VALUECLICK, INC., et al.,
Defendants.

) ) ) )
)
MEMORANDUM OPINION

No. l:09cv225

In this patent infringement suit, plaintiff claims that defendants1 wilfully infringed, and

continue to infringe, U.S. Patent No. 5,774,670 ("the '670 patent"), colloquially known as the
"Internet cookies patent." At issue are the parties' various motions for summary judgment.
More precisely, the parties filed cross-motions as to the following issues:

(i) that the '670 patent is invalid pursuant to 35 U.S.C. § 102(b), commonly referred to as the "on-sale bar," which prohibits a patent applicant from obtaining a patent where the claimed invention was on sale more than one year prior to
application; and

(ii) that plaintiff has waived its right to enforce the '670 patent.

In addition, plaintiff moves for partial summary judgment as to the following defenses: (i) the invalidity defense of public use pursuant to 35 U.S.C. § 102(b), which prohibits a patent applicant from obtaining a patent where the claimed invention
was in public use more than one year prior to application;

(ii) the invalidity defense that the patented invention was anticipated by prior art publications and patent applications pursuant to various provisions of 35 U S C §
102;

Commission Junction, Inc., MeziMedia, Inc., and Web Clients, L.L.C (collectively
"defendants").

1 The six named defendants are ValueClick, Inc., Mediaplex, Inc., FastClick, Inc.,

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(iii) the invalidity defense of nonjoinder or misjoinder of named inventors
pursuant to 35 U.S.C. § 102(f);

(iv) the equitable defense of equitable estoppel; and

(v) the defense of federal preemption of defendants' state law counterclaims of intentional misrepresentation or fraud, negligent misrepresentation or constructive
fraud, and unfair competition.

Finally, defendants move for summary judgment as to the following issues:

(i) the invalidity defense that '670 patent claims 9,10, and 14 are fatally indefinite under 35 U.S.C. § 112, which requires claims to state particularly and distinctly
the subject matter claimed as the invention; (ii) the equitable defense of laches;

(iii) non-infringement of'670 patent claims 1-8 under any claim construction;
(iv) non-infringement of all '670 patent claims under defendants' proposed
Markman claim constructions; and
(v) willful infringement.

The parties' various motions have been fully briefed and argued, and are now ripe for resolution.
I.

The '670 patent claims "a method and apparatus for transferring state information

between a server computer system and a client computer system." '670 Patent Abstract. Prior to this invention, http clients and http servers interacted in a "stateless environment," which
prevented an http server from recognizing that it had responded to prior requests made by an http

client. Thus, in essence, a server would essentially meet the client anew each time a client
requested a file from the server. The subject of the '670 patent--commonly known as Internet
"cookies technology"--claims a method of transferring and storing state information on an http

client such that an http client would have "memory" of its requests to a specific http server, and
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concomitantly, an http server would have "memory" of the requests it had received and to which it had responded. The '670 patent contains twenty-six claims. Claim 1, upon which claims 2-8 depend,

describes the general method of transferring and storing state information in four distinct steps:
A method of transferring state information between an http server and an http client, said method comprising the steps of:

requesting a file on said http server from said http client; transmitting said file from said http server to said http client; transmitting a state object from said http server to said http client; and storing said state object on said http client.

Importantly, steps 1 and 2 are indisputably part of the prior art and are neither innovative nor

unobvious; steps 3 and 4--that is, the transfer and storage of a cookie--comprise the claimed

invention that purports to address the http protocol's heretofore statelessness.2 Building on this
general four-step process, claims 2-8 further define the method of transferring state information

by (i) identifying additional attributes of the state object, and (ii) specifying particular sequences of, or prerequisites to, transmission and retransmission of state information. While claims 1-8 describe the method of transferring state information, claims 9-10 and 14-26 describe the various computer systems capable of executing the claimed method.3 Specifically, claim 9 describes a computer readable medium on an http client that contains executable program instructions that perform the claimed method. Similarly, claim 10 provides

2 For a brief description of the prior art and claimed invention, see Netscape Commc 'ns
Corp. v. ValueClick, Inc. (Netscape I), -- F. Supp. 2d --, 1:09cv225, at 2-4 (E.D. Va. Oct. 22,
2009) (Mem. Op.).

3 See Netscape I, -- F. Supp. 2d --, 1:09cv225, at 6 n.8 (citing DSW, Inc. v. Shoe
Pavilion, Inc., 537 F.3d 1342, 1348 (Fed. Cir. 2008)) (distinguishing method/process claims with product/system/apparatus claims). See generally 1-1 Chisum on Patents §§ 1.02-1.03 (2009).
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the counterpart to claim 9 in describing a computer readable medium on an http server that is capable of performing the claimed method. Claim 14, then, lists the requirements of an http client computer system--namely, a processor, memory coupled to the processor, and a computer
readable medium containing executable program instructions--capable of performing the

claimed method. Finally, claims 15-26 apply the attributes and special conditions found in
claims 2-8 to the computer systems described in claims 9, 10, and 14. As often occurs in patent infringement suits, the parties disputed the meaning of a number

of patent claim terms. Accordingly, following full briefing and oral argument, the disputed terms were construed in accordance with Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996). See Netscape /, -- F. Supp. 2d --, l:09cv225. Relevant to the disposition of the various
motions at bar are the following claim term constructions: · "file," as used in claims 1,9, 10, and 14: "electronically stored or transmitted information or data."

·

"state object," as used in claims 1,9, 10, and 14: "data having a

predetermined structure that specifies state information."
· "state information" as used in claims 1,9, 10, and 14: "information, such

as a cookie, that specifies an identity, a characteristic, or a condition of a
client and/or a server."

·

The steps of claim 1 should be construed, as follows: (i) request for a file
by the http client; (ii) transfer of the file from the http server to the http

client; (iii) transfer of the state object from the http server to the http client; and (iv) storage of the state object by the http client.
Id. at 33.

II.4

4 The material and undisputed facts set forth herein are derived from the parties'
pleadings, memoranda and exhibits submitted in support of their various motions for summary
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The following undisputed material facts are pertinent to the various motions at bar:
1. Plaintiff, the assignee and sole owner of the '670 patent, is a Delaware corporation with its principal place of business in Virginia. Plaintiff is a wholly-owned subsidiary of AOL, L.L.C ("AOL"). See Am. Answer U 1.

2.

Defendants ValueClick, Inc., Mediapiex, Inc., FastClick, Inc., Commission Junction, Inc., and MeziMedia are Delaware or California corporations with their principal places of business in California. Defendant Web Clients, L.L.C. is a Delaware limited liability company with its principal place of business in Pennsylvania. Defendants are related business entities; ValueClick, Inc. wholly-owns the other defendants, which operate as ValueClick's subsidiaries. They provide online marketing services, including advertising campaigns, to business segments in the United States. See Am.
Answer HH 2-8, 13.

3. In 1994, MCI Communications Corp. ("MCI") began developing an online shopping mall known as "marketplaceMCI," which was to consist of four components: (i) an MCI-branded Web browser; (ii) a Web server designed to integrate the other components; (iii) a "Merchant server," used by various sellers to "receive and fill orders and, depending on merchant circumstances, to aid in the billing and charging process"; and (iv) various back-end systems allowing MCI to provide technical support and maintain merchant accounts. See Defs.' Attach. 2 K 6.5 MCI developed some of the marketplaceMCI software in-house and contracted with other vendors, such as Netscape, to develop and program other aspects of marketplaceMCI. See id.

4. On August 10, 1994, plaintiffs representatives met with MCI personnel to consider whether Netscape could provide MCI with software for marketplaceMCI. See id; Defs.' Ex. 8, at 63. Specifically, MCI sought technology that would allow the transfer and processing of online customer order, billing, and shipping information. This required that servers interact with client computers in a non-stateless environment. Defs.' Attach. 2^8; Defs.' Ex. 9, at 111. During the meeting, plaintiff initially proposed software technology that involved storing state information on a server; MCI rejected

judgment, and the representations made by counsel in the course of the September 25, 2009 and December 18, 2009 hearings. See Rothe Dev. Corp. v. U.S. Dep V of Defense, 262 F.3d 1306
1316 (Fed. Cir. 2001) (citing Rule 56(c), Fed. R. Civ. P.).

described in the '670 patent specification is a "fairly explicit marketplaceMCI example " Defs '
Attach. 2^19.
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5 Defendants' expert opines that the "On-line Shopping System Application" embodiment

this proposal and instead specified that state information was to be stored on client computers. Although the parties dispute whether certain technological requirements were discussed,6 the parties agree that, at a minimum, there was a general understanding by the end of the August 10, 1994 meeting that any product sold to MCI required client storage of state information. See, e.g., Statement of Disputed Facts ffl| 3-6 ("Netscape agrees only ... that Netscape would design and develop a web browser product and a server software product that would store state information on the client side as opposed to the server side."). This MCI requirement--that is, the storage of state information on a client computer following transmission of a file and state information--is indistinguishable from claim 1 's four-step method.

Defs.' Ex. 4, at 96-99; Defs.' Ex. 5, at 61-62; Defs.' Ex. 19, at 101; PL's '

5. Netscape and MCI representatives continued to negotiate following the August 10, 1994 meeting. See Defs.' Ex. 5, at 81-82 (Cerf s deposition testimony that Klensin "very likely" met with Netscape employees for followup meetings); Defs.' Ex. 8, at 64 (Sha's deposition testimony that "[he] had many subsequent meeting [sic]"). As Netscape co-founder and vice president Marc Andreessen stated in an internal email dated August 28, 1994, "someone's gonna ask again me [sic] how much money MCI has given us--answer is I don't know yet; deal is still being struck We are 100% MCI's selected software partner." Defs.' Ex. 15.

6. On September 8, 1994, MCI and Netscape representatives met again in Sunnyvale, California, where they agreed to a licensing agreement in principle. More specifically, plaintiff initially offered MCI a certain number of licenses for a commercial version of its Web browser, at the time called Mosaic, for $3.6 million. MCI ultimately agreed to pay $7.2 million for a greater number of licenses. See Defs.' Ex. 8, at 66-68; Defs.' Ex. 9, at 111-12. That same day--September 8, 1994--Netscape co-founder Jim Clark sent an email to Netscape executive Bill White stating, "[o]ur deal with MCI is great."

Id. at 114.7 In an email dated September 25, 1994, Andreessen notes that MCI

day design session in which name-value pairs and secure encryption were discussed. See, e.g., Defs.' Ex. 5, at 98. By contrast, plaintiff contends that the meeting involved only "high-level" discussions that did not progress beyond MCI's general requirement that state information be
stored on the client. See, e.g., Defs.' Ex. 19, at 113.

* Specifically, defendants claim that Netscape and MCI representatives engaged in an all-

purportedly sent by Jim Clark." PL's Statement of Disputed Facts f 8. Yet, Clark testified in his
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attempts to dispute this fact by "agreefing] only that the book ... refers to an email that was

The Making of the Billion-Dollar Startup that Took on Microsoft. Defs.' Ex. 9. Plaintiff

7 This email is fully reproduced in a book co-authored by Clark, entitled Netscape Time:

is "writing such large checks to us these days." Defs.' Ex. 12.8

7.

Following the August 10, 1994 meeting, Andreessen tasked Lou Montulli, a Netscape programmer and the named '670 patent inventor, with satisfying MCI's requirements. This task entailed writing source code directing a client
computer to receive and store state information sent from a server. Although

MCI employees Vincent Cerf and John Klensin did not specify how Netscape was to accomplish MCI's requirements, see Defs.' Ex. 5, at 78, it is undisputed, as Andreessen testified, that this MCI project "eventually led to the creation of cookies," thereby providing an explicit evidentiary link between the product sold to MCI and the patented technology. PL's Ex. 45, at 102; see also Defs.' Opp'n Ex. 15, at 140. Montulli testified that while he was not specifically aware that MCI was a Netscape customer, he was asked in the summer of 1994--according to his best recollection, in July or August

19949--to develop a "shopping cart methodology" that would specifically

deposition that he was "confident that this e-mail was from [him]," and that he was not going to dispute that it was created by him on or around September 8, 1994. Defs.' Ex. 10, at 79-80.
Thus, plaintiff fails to create an actual dispute of fact here.

direct knowledge of the financial arrangements between the companies, see Defs.' Ex. 4, at 18485, or (ii) had no specific recollection of whether payment was made, see Defs.' Ex. 10, at 89-90. In the course of the September 25,2009 hearing, plaintiff, by counsel, conceded that the $500,000 was "probably paid," but suggested that the payment could have been for consulting services, not software. See Transcript at 82 (Sept. 25, 2009). The record evidence does not support this contention. The licensing agreement specifically states that a $500,000 pre-payment was made for "Netscape Software," not consulting services, see Defs.' Ex. 13, at 9, and indeed, the agreement also reflects a separate $100,000 retainer payment for consulting services, see id. at 14-15. It is worth noting, however, that even if no payment was received, the on-sale bar would still apply because a mere commercial offer is sufficient to invoke § 102(b). See

payments, those disputes are immaterial as the current record clearly and convincingly reflects that MCI made substantial payments to Netscape in September 1995. Article 6(b)(i) of the February 1995 Netscape-MCI licensing agreement states that $500,000 was paid on September 23, 1994, "receipt of which is hereby acknowledged by Netscape." Defs.' Ex. 13, at 9. Although plaintiff in its brief denies receiving this payment, plaintiffs cited evidence in support of this denial--namely deposition testimony of Netscape and MCI executives--fails to raise a genuine issue of material fact. At most, this testimony demonstrates only that the deponent (i) lacked

8 Although there appears to be a dispute concerning the precise timing and amounts of

Weatherchem Corp. v. J.L Clark, Inc., 163 F.3d 1326, 1333 (Fed. Cir. 1998) (holding immaterial the fact that no money exchanged hands until after the critical date).

conception of the inventions covered, disclosed, or claimed in the '670 patent are as early as
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9 In a response to defendants' interrogatories, plaintiff confirms that "[t]he dates of

address the "sessionless[, i.e., stateless] nature of HTTP." Defs.' Opp'n Ex. 16, at 114-19. Thus, the undisputed record evidence supports a finding that the software produced for MCI by Montulli in the summer of 1994 contained cookies functionality that addressed the http protocol's statelessness by instructing a client computer to store state information sent from a server.

8. Prior to writing the cookies source code, Montulli engaged in design review sessions with senior Netscape programmer John Giannandrea. See Defs.' Ex. 21, at 58-63. According to Giannandrea's declaration submitted to the U.S. Patent and Trademark Office ("U.S. PTO"), these meetings occurred in July and August 1994. During these meetings, Montulli (i) verbally disclosed the invention of "an HTTP state object, commonly known as a cookie," which
was later claimed in the '670 patent, and (ii) diagramed the invention with Giannandrea on a whiteboard. Defs.' Ex. 23 ffll 2-3. Accordingly, these meetings clearly evidence Montulli's disclosure of a fully-conceived cookies

invention by August 1994. In addition, important to the issue of inventorship is that Giannandrea's role in these meetings was limited to validating the design and making general suggestions; he did not participate in the
invention's implementation. See Defs.' Ex. 21, at 58-66.

9. In September 1994, plaintiff sent MCI and Silicon Graphics, International--both Netscape clients--a test version of the Mosaic Web

rather Netscape argues that these early releases could not have contained cookies technology. No record evidence establishes whether these test versions were cookies-functional. In addition, defendants assert that test versions were sent to the San Jose Mercury News and Digital Equipment Corporation, and that a nascent version of the Web browser was publicly demonstrated at the Interop trade show. As discussed infra, these factual assertions are unsupported by defendants' cited evidence.

browser. See Defs.' Exs. 12, 15, 16. Plaintiff does not dispute that it sent an early version of its Web browser to MCI and Silicon Graphics, International;

10. The Netscape source code repository first records a draft computer source code containing cookies functionality on October 3 or 4, 1994. Additional cookies source code was entered into the repository on October 6 and October 13, 1994.10 See PL's Ex. 42 H 22-23; PL's Ex. 43 140.

July-August 1994." PL's Ex. I,at26.

10 The parties dispute the date on which the cookies invention was reduced to practice. Specifically, plaintiff submits that the invention was reduced to practice no earlier than October

13, 1994, while defendants submit that the invention was reduced to practice prior to October 6, 1994. Plaintiff, by counsel in the course of the September 25, 2009 hearing, argued that the issue
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11. Montulli, the named inventor, filed the '670 patent application with the U.S.

PTO on October 6, 1995. The '670 patent issued on June 30, 1998. 12. Between 2001 and 2005, defendants ValueClick, Mediaplex, and Commission Junction entered into marketing and advertising agreements with plaintiffs
parent company, AOL. See Defs.' Ex. 35. Moreover, in 2004 defendant

Commission Junction "announced the launch of an online affiliate marketing
program ... to promote the new Netscape Internet Service." Defs.' Exs. 39,

40. It is undisputed that neither Netscape nor AOL disclosed the existence of the '670 patent to ValueClick, Mediaplex, or Commission Junction in
negotiating and entering into these agreements.

13. The parties dispute whether Montulli or other Netscape employees
participated in the Internet Engineering Task Force, a standards-setting

organization, in an individual capacity or on behalf of plaintiff in 1997 and 1998. See, e.g., PL's Ex. 13; Defs.' Ex. 58, at 13-22. In addition, assuming that Montulli or other Netscape employees were members of this
organization--and that plaintiff, through its employees, was also a

member--the parties dispute material facts relating to the existence, nature, and implementation of any organization disclosure obligation and the extent of members' compliance with such disclosure obligations. See, e.g., PL's Exs. 22-26; Defs.' Exs. 59, 60, 76, 78. Notwithstanding these factual disputes, the
parties agree that plaintiff did not disclose the '670 patent to the Internet Engineering Task Force, although, according to plaintiff, the organization was aware of the patent following its issuance in 1998. See, e.g., PL's Exs. 25,26. 14. Plaintiff filed the instant suit on February 27,2009, alleging willful infringement and continued infringement of the '670 patent. Defendants had no knowledge of the '670 patent prior to the filing of this suit. See PL's
Statement of Facts ^8.
HI.

was "a question of fact for the jury to decide" based on competing expert testimony. See

Transcript at 87-88 (Sept. 25,2009). Yet, the date on which an invention is reduced to practice is a legal determination based on underlying facts. See Tasked v. Dentlinger, 344 F.3d 1337, 1339 (Fed. Cir. 2003). Thus, the parties may not argue, as a factual matter, that there is a genuine dispute regarding when the invention was reduced to practice simply because their respective
experts conclude that the invention was reduced to practice by different dates, compare PL's Ex.

38 Iffl 14-15, with PL's Ex. 42 ffl| 22-23 and PL's Ex. 43 If 40; the parties may, however, dispute facts underlying this legal determination, although in this case the parties agree that draft cookies
source code existed as of October 3 or 4, 1994.
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Plaintiff and defendants move for summary judgment on defendants' § 102 and § 112 invalidity defenses. Specifically, the parties filed cross-motions for summary judgment on the issue of the § 102(b) statutory on-sale bar. In addition, plaintiff argues that it is entitled to
summary judgment on the following invalidity defenses: (i) public use under § 102(b), and (ii)

inventorship under § 102(f).'' Finally, defendants contend that they are entitled to summary
judgment on their defense that claims 9, 10, and 14 are fatally indefinite pursuant to § 112. With
respect to these invalidity defenses, it is important to note that "[a] patent is presumed to be

valid, so a party alleging invalidity further faces an evidentiary burden of clear and convincing evidence to show facts supporting a conclusion of invalidity." Ultimax Cement Mfg. Corp. v.

CTS Cement Mfg. Corp., 587 F.3d 1339, 1351 (Fed. Cir. 2009) (emphasis added). As the Federal Circuit has explained, "[t]he 'clear and convincing' evidence standard is an intermediate standard which lies somewhere in between the 'beyond a reasonable doubt' and the 'preponderance of the
evidence' standards of proof," and in practice requires that "the ultimate factfinder [have] an

abiding conviction that the truth of [the claimants'] factual contentions are highly probable." Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1360 n.5 (Fed. Cir. 2007) (citations and quotation
marks omitted).
A. On-SaleBar

Section 102(b) states that a person is prohibited from applying for a patent if "the

invention was ... on sale in this country, more than one year prior to the date of the application for patent in the United States." 35 U.S.C. § 102(b). Defendants contend that the '670 patent is

11 Plaintiff also moves for summary judgment with respect to defendants' § 102 prior art
invalidity defense. Resolution of this issue is deferred pending further briefing.
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invalid under § 102(b) because the invention claimed in the patent was offered for sale, and indeed sold, to MCI in August and September 1994, more than one year prior to the filing of the
'670 patent application on October 6, 1995.

The § 102(b) bar, colloquially known as the "on-sale bar," was well elucidated in Pfaffv.

Wells Elecs., Inc., 525 U.S. 55 (1998). There, the Supreme Court identified two conditions for the application of the on-sale bar: (i) a commercial offer of an invention that is (ii) ready for

patenting prior to the statutory one-year period, i.e., the "critical date." Importantly, the party claiming invalidity must establish both prongs of the Pfafjf'test by clear and convincing evidence.
Clock Spring, LP. v. Wrapmaster, Inc., 560 F.3d 1317, 1325 (Fed. Cir. 2009).

The P/ojfdecision first requires that the product "be the subject of a commercial offer for sale." Pfaff, 525 U.S. at 67. This requirement is further separated into two distinct, constituent elements: (i) a commercial offer for sale, and (ii) a sufficient degree of identity between the product offered for sale and the patented invention. See Allen Eng 'g Corp. v. Bartell Indus.. Inc.,

299 F.3d 1336, 1353 (Fed. Cir. 2002). The Federal Circuit has defined a "commercial offer" to
mean "one which the other party could make into a binding contract by simple acceptance." Group One, Ltd v. Hallmark Cards, Inc., 254 F.3d 1041, 1048 (Fed. Cir. 2001). As to identity between the offered product and the patented invention, the Federal Circuit has also held that a

party invoking the § 102(b) on-sale bar must prove that "the device sold 'fully anticipated the claimed invention or would have rendered the claimed invention obvious by its addition to the
prior art.'" Allen Eng'g Corp., 299 F.3d at 1352 (quoting Tec Air, Inc. v. Denso Mfg. Mich. Inc., 192 F.3d 1353, 1358 (Fed. Cir. 1999)). Notably, "[s]ection 102(b) does not require a strict

identity between the claimed invention and the device involved in the public use or on sale

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activities." In re Smith, 714 F.2d 1127, 1137 n.13 (Fed. Cir. 1983). See generally 2-6 Chisum
on Patents § 6.02[3][c] (2009) (discussing identity).

The second Pfajf prong requires that the invention "be ready for patenting," demonstrated

either by (i) "proof of reduction to practice before the critical date," or (ii) "proof that prior to the
critical date the inventor had prepared drawings or other descriptions of the invention that were

sufficiently specific to enable a person skilled in the art to practice the invention." Pfaff, 525
U.S. at 67-68. Where, as here, the invention involves software or computer programming, this

second /^/^requirement may be satisfied even though there is no "actual completion of such
software ..., provided that there is a disclosure that is sufficiently specific to enable a person

skilled in the art to write the necessary source code to implement the claimed method." Robotic
Vision Sys. v. View Eng 'g, 249 F.3d 1307, 1312 n.2 (Fed. Cir. 2001), cited with approval in

Auction Mgmt. Solutions, Inc. v. Manheim Auctions, Inc., 2009 WL 801800 (N.D. Ga. Mar. 24,

2009). Moreover, the Federal Circuit has also held that ordinarily "creation of the specific source code is within the skill of the art." Robotic Vision Sys. v. View Eng'g, 112 F.3d 1163, 1166 (Fed.
Cir. 1997). It remains to apply these principles to the record facts in this case.
/. Commercial Offer

The first Pfaff prong requires a commercial offer for sale. In this case, undisputed record evidence clearly and convincingly establishes that Netscape made a commercial offer to MCI

prior to October 6,1994, the critical date. According to an email by Andreessen, negotiations between MCI and Netscape were ongoing by at least August 28, 1994: "[S]omeone's gonna ask
again me [sic] how much money MCI has given us--answer is I don't know yet; deal is still

being struck. ... We are 100% MCI's selected software partner." Defs.' Ex. 15. These

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negotiations culminated at a September 8, 1994 dinner meeting between Netscape and MCI

executives, who outlined a licensing agreement for a "commercial version of Mosaic," a cookies-

functional Web browser. As Netscape co-founder Clark recounts in his book, Netscape Time,

MCI agreed to Netscape's offer to license the Mosaic Web browser for $7.2 million. See Defs.'

Ex. 9, at 111-12; see also Defs.' Ex. 8, at 66-68. This agreement is confirmed in a September 8,
1994 email from Clark, in which he states that "[o]ur deal with MCI is great." Defs.' Ex. 9, at 114 (reproducing email). Additionally, a February 1995 MCI-Netscape licensing agreement reflects that Netscape received a $500,000 pre-payment for "Netscape Software" on September
23, 1994. See Defs.' Ex. 13, at 9; supra note 8.

In response to these facts, plaintiff contends that MCI could not have received any

cookies-functional software products prior to the October 13, 1994 public release of the Mosaic

Web browser. This argument, however, misunderstands the first Wprong, which makes
immaterial the date of delivery and focuses instead on the offer for sale. See Weatherchem Corp.
v. J.L, Clark, Inc., 163 F.3d 1326, 1333 (Fed. Cir. 1998) ("It is immaterial that the record shows no delivery... until after the critical date."). Put another way, this prong of the PfqfftoA

requires only that the patented technology be offered for sale; the test requires neither that the
sale actually be consummated, nor that the product ultimately be delivered.

Thus, ample record evidence recounts ongoing negotiations between Netscape and MCI

in August and September 1994 culminating in a September 8, 1994 meeting, at which MCI
accepted in principle Netscape's offer to license a cookies-functional Web browser for
approximately $7 million. This clear and convincing evidence establishes that a commercial

offer was made prior to October 6, 1994, the critical date. Whether there is sufficient identity
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between the technology Netscape offered for sale and the contested '670 patent claims is
addressed next.
2. Identity

In addition to proving a commercial offer for sale, the undisputed record evidence clearly

and convincingly establishes sufficient identity between the product offered for sale to MCI in
August and September 1994 and claim 1 of the '670 patent. Yet, by the same token, the current record evidence does not support a finding on summary judgment that claims 2-10 and 14-26
were offered for sale prior to the critical date.

It is well-settled that there are two methods of proving identity under the PfqfftQSl,

namely the anticipation test and the obviousness test. As the Federal Circuit has stated, a party

claiming invalidity under the on-sale bar must prove that "the device sold 'fully anticipated the
claimed invention or would have rendered the claimed invention obvious by its addition to the

prior art.'" Allen Eng'g Corp., 299 F.3d at 1352 (quoting Tec Air, Inc. v. Denso Mfg Mich. Inc.,
192 F.3d 1353, 1358 (Fed. Cir. 1999)).12

With respect to the anticipation test, it is important to emphasize that a district court

applying the on-sale bar to a patent claim must record "specific findings linking elements of the

[offered product] to claim limitations of the [instant] patent." Id. at 1355. Further, a district
court must also make specific findings as to each contested patent claim because the on-sale bar

may invalidate patent claims containing certain claim limitations, but not patent claims

(anticipation); TorPharm Inc. v. Ranbaxy Pharms., Inc., 336 F.3d 1322, 1327 (Fed. Cir. 2003)
identity requirement).

12 See also Scaltech Inc. v. Retec/Tetra. LLC, 178 F.3d 1378, 1383 (Fed. Cir. 1999)

(citation omitted) (obviousness). See generally 2-6 Chisum on Patents § 6.02[3][cj (discussing
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comaining differem claim limitations. See id. a. 1353. This resul, is sensible because each

claim, whe.her independen. or dependent is presumed valid in its own right, and "dependen,
claims necessarily add Itatoto, ,0 the ciaims fom whid) ,hey depend ^ ^^ ^ ^

subjec. ,o ,he same asserted grounds of invalidity." Dana Corp. v. Am. Axle & Mfg., 279 F.2d

1372, 1376 (Fed. Cir. 2002). Moreover, in Search .he Federal Circui. clarified .ha. .he

an.icipa.ion ,eS, does no. require .ha. ",he offer specifically identify these limtaions" provided

tot ".he process .ha. was offered for sale inheren.ly possessed each of .he claim limtaions."
ScaUech fne. , Re.ecfTe.ra, L.LC, ,78 F.3d ,378, 1383-84 (Fed. Cir. ,999). Pu. simply, ,he
on-sale bar applies even if ,he offer does no. reference each of ,he pa.en, claim ,imi«a,ions; i, is

sufficien, if ,he produc. or me.hod offered for sale inheren.ly possessed each of the claim
limitations.

Wi.h respec. to .he obviousness test, which adopls and applies .he analysis performed
when a party claims invalidity under § 103," the Supreme Court has made clear lha,

"obviousness is a ques,ion of law based on underiying findings of facs," namely: (i, .he scope

and con.em of .he prior art, (ii) .he characteristics and understanding of an individual of ordinary

skill in the art at .he .ime of Invention, (iii) the differences between the claimed invention and the
Prior art, and (iv) ,he evidence of secondary fac.ors of non-obviousness. See Graham , John

Deere Co., 383 U.S. I, ,7-,8 (.966). Where .he parties disPu.e ,hese predica,e facts, no legal

finding of obviousness can be made on summary judgment. See Source Search TeOns., LLC v.

the art to which said subject matter pertains")'
-15-

* PCrS°n

8 "^ ^ in

LendingTree, LLC, 588 F.3d 1063, 1071-73 (Fed. Cir. 2009).

These principles, applied here, compel the conclusion that prior to October 6, 1994, Netscape offered for sale to MCI the method described in claim 1 of the '670 patent. That

method contains the following steps, each of which must be linked to elements of the product offered for sale: (i) an http client's requesting a file from an http server; (ii) an http server's sending the requested file; (iii) an http server's sending a "state object" containing state

information, commonly referred to as a "cookie"; and (iv) the storage of this state object on the

http client.1"1 There can be no serious dispute that the first two elements of claim 1 were part of
the offer of sale prior to the critical date. The third and fourth elements require further
discussion.

During the August 10, 1994 meeting, it is undisputed that MCI rejected Netscape's initial
proposal to store state information on a server, and that both companies understood by the end of

the meeting that MCI required client storage of state information. Indeed, both Netscape and

MCI meeting attendees confirm that these "MCI requirements" were discussed and agreed to on
August 10, 1994:

·

Dr. Cerf of MCI testified that during the August 10, 1994 meeting, "we needed the Netscape browser, the client side, to perform some functions that it did not in its initial implementation, and specifically I insisted that there be a capability to store the state of the user of the--of the marketplaceMCI system on the client side.... [W]e were outlining specific requirements, including the need to store information on the client side, and that was probably the most significant addition that we required before we felt we could use their product in this martketplaceMCI system We stated what the requirements were as clearly as we could, and subsequently, Netscape responded with a design "
Defs.'Ex. 5, at 61-62.

14 See Netscape I, ~ F. Supp. 2d --, 1:09cv225, at 19-21, 33.
-16-

·

Dr. Klensin of MCI testified that during the August 10, 1994 meeting, "[w]e came out with a clear understanding that this information had to be stored client side" and that "by the time the session ended, there was a general understanding between the MIT [sic] people and the Netscape people what needed to be done. It needed to be done on the client side, that the state information where the user was last in the marketplace needed to be transmittedfrom the server to the client in some way. The client needed to keep it. There would be minimum information kept on--minimal or zero information kept on the server, and that's what I'm referring to as general design parameters." Defs.' Ex. 4, at 19, 96-99, 101 (emphasis added). Andreessen of Netscape testified that during the August 10, 1994 meeting, "Vint [Cerf] and I sat down as part of the discussions of MCI's requirements for their marketplaceMCI, and we presented our architecture and our thoughts and ideas. And at a certain point, they said, oh, you mean that a user has to log back in every time they show up on the Web site? And we said, yes, because that's how it worked at the time. And they said, that won't work. We need to have the ability for the server, or in their case, the shopping mall to recognize that the user has been there already, and to have the user's information essentially already available so that after the first visit, the users don't have to log in again." Defs.' Ex. 19, at 101-02.

·

And as plaintiffs own opposition summary judgment brief states, "Netscape agrees ... that
Netscape would design and develop a web browser product and a server software product that would store state information on the client side as opposed to the server side." PL's Statement of
Disputed Facts \ 5.

This evidence clearly and convincingly establishes that the four steps of claim 1 were

discussed at the August 10, 1994 meeting. Steps 1 and 2 of the method--the http client's request
for a file and the http server's transmitting the requested file--are found in (i) Andreessen's
statement that the user, i.e., the http client, "show up on the Web site," and (ii) Dr. Cerf s

testimony that MCI was buying a Netscape Web browser. The use of a Web browser by an http client to navigate the Internet necessarily and inherently requires an http client to send a request to an http server for a file, and for the http server to respond by transmitting a file which is then
-17-

assembled and displayed on the http client computer.'5 Thus, the claim limitations described in
steps 1 and 2 were inherently part of the product offered for sale, and hence the offered product

anticipates those limitations. See Scaltech, 178 F.3d at 1384. Steps 3 and 4 of claim 1-the http server's transmitting a state object and the storage of that state object-were likewise discussed
on August 10, 1994, as evidenced by Dr. Klensin's and Andreessen's explicit testimony. Most

telling is Dr. Klensin's undisputed statement that the meeting participants understood that state information "needed to be transmitted from the server to the client in some way" and that "the

client needed to keep it." Deft.' Ex. 4, at 98-99. This testimony tracks precisely steps 3 and 4 of

claim 1 of the '670 patent, and hence the offered product also anticipates these claim limitations.
Thus, according to meeting participants with firsthand knowledge of the discussions, the four
steps of claim 1 were indisputably discussed on August 10, 1994, and thereafter sold by
September8, 1994.

In response, plaintiff argues that identity is not established with respect to claim 1

because Netscape did not know on August 10, 1994, that it would use the cookies invention to
satisfy MCI's technological requirements of state information storage on a client computer, and

hence the on-sale bar cannot be applied. Although Netscape and MCI did not discuss the specific
source code to be used in accomplishing state information storage on a client computer on that

col 1 U 39 62 rThe MP r \ „*' ^ ^^ 5 * 25> *" aho '670 Patent specification Wide Web tTh v [kC] °WS6r ^TM*abrowsers reside documents from the WorldUSer t0 retrieve in clients and Web doTM t "' -h env,ronment, Web
for a document. The server delivers the requested document
-18-

documents reside m servers.... A browser opens a connection to a server and initiates a request
") q

date,16 plaintiffs argument in this respect nonetheless fails because claim 1 neither requires nor
specifies that a particular source code must be used. Instead, claim 1 contains only the limitation

that state information be sent in the form of a "state object," which, as construed in Netscape I, is "data having a predetermined structure that specifies state information." Netscape I, -- F. Supp.

2d --, l:09cv225, at 19-20, 33 (emphasis added). A "cookie," with its particular programming
syntax, is but one possible embodiment of the invention that addresses statelessness, and claim 1

is not limited to this specific statelessness solution. Indeed, claim 1 requires only that state

information be conveyed in a structured manner. In this case, the storage of state information on
a client necessarily and inherently requires that this data be conveyed in a structured manner, and

therefore the Netscape and MCI August 10, 1994 discussion of state information storage on a
client computer fully satisfies and anticipates claim l's limitations. See Scaltech, 178 F.3d 138384 (rejecting requirement "that the offer specifically identify these limitations" so long as "the
process that was offered for sale inherently possessed each of the claim limitations"). Put

simply, although the cookies invention was not referenced as such, the limitations set forth in
claim 1 clearly were discussed and agreed upon.

Furthermore, plaintiffs argument also fails because the undisputed record evidence

clearly and convincingly establishes (i) that the cookies invention was part of the product offered

and sold to MCI in satisfaction of MCI's technological requirements of state information storage

design. Defs.' Ex. 5, at 62. Moreover, Dr. Cerf states, "I also reiterate that what MCI and what John LKlensin] and I were asking for is a solution to a particular requirement. We made as I
what outcome we needed." PL's Ex. 41.

requirements were as clearly as we could, and subsequently, Netscape responded with a proposed

how [Netscape] did it. I only cared that it meet the requirements. So we stated what the

16 As Dr. Cerf recounts, "we basically said we need it to perform this way. I didn't care

recall, no specific demands on its implementation. We only outlined what it is that we needed
-19-

on a client computer, and (ii) that Netscape's decision to use the cookies invention to satisfy

MCI's requirements occurred before the critical date. To begin with, the record evidence shows that Netscape developed the Internet cookie to address the issue of statelessness between marketplaceMCI shoppers and marketplaceMCI merchants. Indeed, Andreessen stated this fact

directly in testifying that Netscape's developing software for marketplaceMCI "eventually led to the creation of cookies." PL's Ex. 45, at 102. Additionally, Andreessen recounts:
· "[W]e gave [Montulli] the project of satisfying MCI requirements. We

broadened it out to say, make it a general mechanism, because we don't want to build a feature just for one customer." Defs.' Ex. 19, at 137.
· A: We were building a general product for general consumption, general distribution, general sale. We built the cookie functionality into the browser in part to satisfy MCI's requirements, but as I said, we had broadened that requirement to be a general function for everybody to be
able to use.

Q: So you expected that the cookie functionality would be included in browsers sold not just to MCI, but to other customers as well?
A: Yes, that it correct.

Q: And MCI was okay with that?

A: Yes. In fact, it would have been a requirement. It never even came up as an issue because they would have wanted everybody to be able to visit MCI
marketplace.

Defs.' Opp'n Ex. 15, at 140 (emphasis added).

It is equally clear from this record that Netscape made the decision to use the Internet
cookie to satisfy MCI's technological requirements prior to the critical date. Specifically, Montulli recounts that while he did not know of a specific customer's request for the cookies technology, he does recall that, in July or August 1994, he began working on "something that's

become known as the Web cookie." According to Montulli, he was tasked in summer 1994 with
developing technology for a "shopping cart methodology" that would specifically address the "sessionless nature of HTTP" and that would ultimately be implemented in an "e-commerce

-20-

server." Defs.' Opp'n Ex. 16, at 114-19. Montulli further characterized the goal of the Internet

cookie, as follows:
when a user connects to a Web site and retrieves a document, in a shopping cart situation, you're trying to get them to say, I want to choose a product, or a service. And when you make that action, they may get a Web page that says you chose this product, but when you reconnect to the server again, the server doesn't know that you were the guy who selected the product, and so it forgets that you selected the

product.
Id. at 118-19. This testimony is consistent with Dr. Klensin's description of marketplaceMCI as
including a "merchant server" or "commerce server" that would "receive and fill orders and,

depending on merchant circumstances,... aid in the billing and charging process," and further

corroborates Andreessen's recollection that the cookies invention was Netscape's solution to
MCI's statelessness issue. Defs.' Attach. 2^6. In sum, the record evidence, taken as a whole,

clearly and convincingly shows that Netscape offered for sale, prior to the critical date in August and September 1994, the method described in claim 1, and hence the anticipation test as set forth

in Allen Eng 'g Corp. and Scaltech is met.17
Although the undisputed record evidence clearly and convincingly establishes that each of

the elements of the method set forth in claim 1 was offered for sale prior to the critical date, the §

102(b) on-sale bar must be applied on a claim-by-claim basis. See Allen Eng'g Corp., 299 F.3d
at 1353. Thus, the conclusion that independent claim 1 is invalid under § 102(b) does not

automatically invalidate claims 2-8, even though claims 2-8 are dependent on claim 1. Here, claims 2-8 specify particular attributes relating to the general method set forth in claim 1, such as whether the cookie expires or whether the transfer of state information must

17 Given this, it is not necessary to reach or decide whether identity is shown by clear and
convincing evidence under the obviousness test.
-21-

occur over a secure connection. Claims 9, 10, and 14-26 specify the hardware and software

requirements of computer systems--i.e., http clients and http servers--capable of performing the
general four-step method set forth in claim 1 under the particular conditions described in claims
2-8. In this case, the current record does not warrant a finding on summary judgment that there is sufficient identity between claims 2-10 and 14-26, and the product discussed at the August 10,

1994 meeting or sold to MCI thereafter under either the anticipation test or obviousness tests. With respect to the anticipation test, the record does not contain a sufficiently detailed
description of marketplaceMCI to allow a claim-by-claim and limitation-by-limitation comparison of marketplaceMCI to the contested claims. See Scaltech Inc., 178 F.3d at 1383

(holding that the "subject of the barring activity [must] [have] met each of the limitations of the claim"). At best, Dr. Klensin states that "the relationship between marketplaceMCI design work and Netscape's evolving product design and implementation plans is evidenced in the '670

patent itself by the use of a fairly explicit marketplaceMCI example in the section of the '670 Patent... entitled 'An On-line Shopping System Application.'" Defs.' Attach. 2^19. Yet, even
assuming this description is sufficiently detailed, summary judgment in favor of defendants would not be warranted under the anticipation test because the parties dispute whether the attributes enumerated in claims 2-8 were discussed at the August 10, 1994 meeting, and no record evidence establishes that Netscape and MCI discussed the computer hardware and software systems described in claims 9-10 and 14-26. Compare, e.g., Defs.' Ex. 5, at 98 (Cerf testimony of "name-value pairs" discussion at meeting), with Defs.' Ex. 19, at 113 (Andreessen testifying that "I don't think it got to the level of granularity of something like name-value pairs."). Accordingly, for purposes of the on-sale bar, the summary judgment record does not

-22-

permit a finding that what was offered for sale in August and September 1994 anticipated claims 2-10 and 14-26 of the '670 patent. Nor can defendants establish by clear and convincing evidence identity of claims 2-10 and 14-26 under the obviousness test on the summary judgment record because the predicate

facts underlying an obviousness analysis are plainly contested.18 Specifically, the parties dispute
the characteristics and understanding of an individual of ordinary skill in the art in 1994. Compare PL's Ex. 4 ^ 35 (requiring a bachelors degree in computer science or computer

engineering and approximately two years of experience), with Defs.' Supp. Br. Attach. C154
(requiring masters degree in computer science or electrical engineering and 1-3 years

experience). Additionally, even assuming the parties agreed on the characteristics of one of ordinary skill in the art, summary judgment would still be inappropriate here. Although the parties submit competing expert opinions as to whether certain prior art references render the

claimed invention obvious,19 the parties do not offer any testimony as to whether the August 10,
1994 Netscape-MCI discussions would have made the patented technology obvious to one of ordinary skill in the art. Only expert testimony regarding the August 10, 1994 discussions is

relevant to the on-sale bar analysis because the § 102(b)/§ 103 hybrid analysis considers the subject of the offer for sale to be a prior art reference and poses the obviousness question in

18 As noted supra, the obviousness analysis relies on four factual findings: (i) the scope
and content of the prior art, (ii) the characteristics and understanding of an individual of ordinary skill in the art at the time of invention, (iii) the differences between the claimed invention and the prior art, and (iv) the evidence of secondary factors of non-obviousness. Source Search Techns.,
LLCv. LendingTree, LLC, 588 F.3d 1063, 1071-73 (Fed. Cir. 2009).

19 See, e.g., PL's Ex. ffi| 46-240 (providing claim-by-claim rebuttal testimony to
defendants' expert regarding obviousness and anticipation based on prior art).
-23-

relation to that reference. See TorPharm Inc. v. Ranbaxy Pharms., Inc., 336 F.3d 1322, 1327

(Fed. Cir. 2003) (citation omitted).20 Furthermore, it is clear that a material factual dispute exists
as to the prior art's content, namely whether the storage and transfer of state information in both

http and non-http contexts was within the prior art before August 10, 1994.21 Accordingly,
where, as here, the parties dispute facts underlying the obviousness determination, summary
judgment is inappropriate. See Source Search Techns., 588 F.3d at 1071.

In sum, the Pfqff'test requires that the claimed invention be the subject of the commercial
offer for sale. This requirement does not mandate strict identity and is satisfied by either (i)

showing that the product fully anticipated each of the claimed invention's limitations, or (ii)
showing that the product sold rendered the contested claims obvious. In this case, identity is proven by clear and convincing evidence as to claim 1 because a product designed to execute the four-step method described in claim 1--namely, a cookies-functional Web browser--was sold to

MCI in August and September 1994 for incorporation into the marketplaceMCI product. By contrast, material record facts are disputed as to (i) whether claims 2-10 and 14-26 were fully
anticipated by the marketplaceMCI product, and (ii) whether the discussions on August 10, 1994

20 It is worth noting that Dr. Klensin states his personal belief that "the technology
covered by those claims 1,9, 10, 14, is an obvious consequence of MCI requirements as

specified to Netscape by MCI during the August 10, 1994 meeting," but Dr. Klensin nowhere
defines a person of ordinary skill in the art, nor does he conduct the obviousness analysis from
this person's perspective. Defs.' Attach. 2^21.

21 Compare Defs.' Opp'n Ex. 16 (Montulli testifying that "there were other ways of
dealing with [the statelessness problem in the context of MCI's requirements]"), with Defs.'
Attach. 21| 21 ("The general technology for sharing state between two computers generally ... was very well understood in the industry ... prior to the August 10, 1994 meeting.... [T]he

technology described in very broad terms in claim 1 is the only plausible realization of that
shared state model.").
-24-

would have made claims 2-10 and 14-26 obvious to one skilled in the art.
3. Ready for Patenting

Finally, the undisputed record satisfies by clear and convincing evidence the Pfaff'test's requirement that the claimed invention be "ready for patenting" prior to the critical date. This conclusion is reached under two theories: (i) "by proof that the invention was reduced to practice prior to the critical date"; and (ii) "by proof that prior to the critical date the inventor had
prepared drawings or other descriptions of the invention that were sufficiently specific to enable
a person skilled in the art to practice the invention." Pfaff, 525 U.S. at 67-68.

Pertinent to the "ready for patenting" theory is the record fact that Montulli logged a draft
of the http cookies source code into the Netscape source code repository prior to October 6, 1994,
the critical date. As plaintiffs experts concluded:

Based on my review of the [Netscape Concurrent Version System repository], log entries ... on October 4, 1994 show that Lou Montulli checked in new versions of the mkhttp.c and mkaccess.c files with the comment: 'changes to implement SetCookie: and Cookie:' .... In version 1.14 of mkaccess.c, dated 5:12am UTC on October 4,1994, and version 1.141 of mkhttp.c, dated 5:12am UTC on October 4, 1994, Mr. Montulli added code pertaining to HTTP cookies.

PL's Ex. 42 ffl[ 22-23; see also PL's Ex. 43 ^| 40 (opining that browser-side-cookies code was

entered into source code repository on October 3,1994).22 Additionally, plaintiff, by counsel in
the course of the September 25,2009 hearing, stated that "[p]art of the method was done by

October 6th. An early part of it went in on October 3rd." Transcript at 85-86 (emphasis added).
In response, Netscape asserts that "no 'deal' or software product could have included the claimed

22 Additional undisputed record evidence, namely Giannandrea's deposition testimony, establishes that "Mosaic"--the commercial name of Netscape's web browser using cookies technology--was "being built" in September 1994. Defs.' Ex. 21, at 81.
-25-

'cookie' technology prior to October 13, 1994" because the public Web browser was not released

until that date, and hence the invention could not have been reduced to practice prior to the
critical date. Yet, this statement misunderstands the law governing the "ready for patenting"

Pfaff"prong because it assumes that an invention is only reduced to practice, and thus the on-sale bar can only be applied, after the source code has been perfected.23 To the contrary, it is well-

settled that the Pfaff'test may be satisfied despite the patentee's continued refinement of the

invention.24 Accordingly, where, as here, the undisputed record evidence shows that draft
cookies source code existed as of October 3 or 4, 1994, the second Pfaff'prong is satisfied.
Moreover, with respect to inventions involving computer code, Pfajf simply requires

complete conception of the invention, not the source code's actual completion, provided that

there is an enabling disclosure that would allow one skilled in the art to complete the invention.
See Robotic Vision Sys., 249 F.3d at 1311-13. The facts of Robotic provide an instructive
comparison here. In that case, a co-inventor disclosed the substance of the invention to a

colleague, and thereafter the colleague wrote the software implementing the invention based on the co-inventor's enabling disclosure. On appeal, the Federal Circuit found that this internal
enabling disclosure to a co-worker satisfied the second Pfaff prong. Id. at 1313.

immaterial that the record shows no delivery .. . until after the critical date.").

23 See Weatherchem Corp. v. J.L. Clark, Inc., 163 F.3d 1326, 1333 (Fed. Cir. 1998) ("It is

2008) ("Consistent with the rule that later refinements do not preclude reduction to practice, it is improper to conclude that an invention is not reduced to practice merely because further testing is being conducted."); Auction Mgmt. Solutions, Inc. v. Manheim Auctions. Inc., 2009 WL 801800, at *3 (N.D. Ga. Mar. 24,2009) (rejecting argument that subsequent changes to draft computer
source code precluded application of on-sale bar).

24 See Atlanta Attachment Co. v. Leggett & Plait, Inc., 516 F.3d 1361, 1367 (Fed. Cir.

-26-

Similarly, in this case it is clear that in July or August 1994, Montulli disclosed the

specifics of the cookies invention--namely, "the idea of having a Web server request with [sic] a browser keep a cookie for returning back to the Web server later," Defs.' Ex. 21, at 59--to John
Giannandrea. Defs.' Opp'n Ex. 16, at 173. Giannandrea, a Netscape principal serving as the
Web browser division's chief technology officer, "had more years of experience as a software engineer than [Montulli]," and thus was a person "skilled in the art" for purposes of the Robotic
test. Defs.' Ex. 21, at 16-17, 61. Notably, Montulli's description of the invention corresponds to the four steps claimed in '670 patent claim 1, particularly the third and fourth steps of receiving and storing a state object. Montulli's recollection is corroborated by Giannandrea's signed declaration submitted to the U.S. PTO, in which Giannandrea states: "In one of a series of design
meetings held during July-August, 1994, the inventor, Montulli, disclosed the invention of the [cookies technology]." Defs.' Ex. 23 1H| 2-3, at 59. According to Giannandrea, these meetings involved Montulli and Giannandrea reviewing and drawing on a whiteboard the "Web cookies"
design and the "software architecture"--that is, the computer source code--to be used in implementing the cookies invention. See Defs.' Ex. 21, at 58-63 (recounting role in reviewing

Montulli's design). Following these meetings and the refinement of the cookies design and
software architecture, Montulli began writing the actual cookies computer code, which he then
entered into the Netscape source repository in draft form for the first time on October 3 or 4,

1994. See id As in Robotic, it is clear from the summary judgment record that Montulli wrote the software code implementing the cookies invention only after disclosing the initial design and
subsequent refinements, including the form of the source code, to Giannandrea prior to the

critical date, and that Giannandrea, a person with more years of programming experience than

-27-

Montulli, would have been able to write the cookies source code based on Montulli's enabling

disclosure. See Robotic Vision Sys., 249 F.3d at 1311-12. Thus, these undisputed facts clearly
and convincingly show that the invention was "ready for patenting" under the Robotic
interpretation of the second Pfqff prong.
4. Conclusion

These undisputed record facts clearly and convincingly show that Netscape offered--and indeed sold--the method of transferring and storing state information set forth in claim 1 of the '670 patent to MCI before October 6, 1994, the critical date, with the understanding that it would

be implemented in marketplaceMCI. Moreover, clear and convincing evidence demonstrates that
each limitation found in claim 1 of the '670 patent was anticipated by the product sold to MCI. By contrast, the current record does not allow a determination that claims 2-10 and 14-26 were anticipated by the MCI sale or were rendered obvious by MCI and Netscape's shared

understanding on August 10, 1994 that MCI required client storage of state information. Finally,
it is clear from the undisputed facts that Montulli disclosed the cookies design and software architecture to Giannandrea in a series of design review meetings in August and September 1994,

and that Montulli thereafter began reducing the conceived invention to computer source code,

which existed in draft form on October 3 or 4, 1994. Accordingly, because both PfqfjTprongs are
met as to claim 1 such that a trier of fact would have "an abiding conviction that the truth of

[defendants'] factual contentions are highly probable," defendants are entitled to summary

judgment as to claim l's invalidity under the § 102(b) on-sale bar. Pfizer, Inc., 480 F.3d at 1360
n.5 (citations and quotation marks omitted). Yet, with respect to claims 2-10 and 14-26, the current record does not warrant summary judgment for either party on the ground of the on-sale

-28-

bar because the parties dispute whether the limitations found in these patent claims were

anticipated or rendered obvious in August and September 1994. Thus, it remains to litigate at
trial defendants' § 102(b) on-sale bar defense with respect to claims 2-10 and 14-26.
B. Public Use

Plaintiff moves for summary judgment as to the issue of public use under § 102(b). That

statutory provision states that a person is not entitled to a patent where "the invention was ... in

public use ... in this country, more than one year prior to the date of the application for patent in
the United States." 35 U.S.C. § 102(b). To establish public use under § 102(b), an alleged

infringer must show that the purported use was (i) accessible to the public, or (ii) was
commercially exploited prior to the date of the patent application. Invitrogen Corp. v. Biocrest

Mfg., L.P., 424 F.3d 1374, 1380 (Fed. Cir. 2005). A patented invention is considered to be "in
public use if it is shown to or used by an individual other than the inventor under no limitation,

restriction, or obligation of confidentiality." Petrolite Corp. v. Baker Hughes Inc., 96 F.3d 1423, 1425 (Fed. Cir. 1996) (citing In re Smith, 714 F.2d 1127, 1134 (Fed. Cir. 1983)). Importantly,
public use must be proved by clear and convincing evidence. See Am. Seating Co. v. USSC

Group, Inc., 514 F.3d 1262, 1267 (Fed. Cir. 2008). In this case, defendants argue that Netscape
sent early versions of software containing the cookies technology to Silicon Graphics,

International ("SGI"), MCI, the San Jose Mercury News, and Digital Equipment Corporation
("DEC") in September 1994, and displayed the technology at the September 1994 Interopt trade

show. These assertions of public use under § 102(b) plainly fail because they are not supported
by record evidence.

To begin with, the current record contains no evidence that a test release was actually sent

-29-

to the San Jose Mercury News or DEC. Defendants merely cite a San Jose Mercury News press
release announcing a partnership between Netscape and San Jose Mercury News, Defs.' Ex.

17--which is inadmissible hearsay and may not be considered on summary judgment--and an email from Andreessen thanking Netscape programmer Jamie Zawinski for "putting up with ...
the pending DEC pre-alpha," Defs.' Opp'n Ex. 17, neither of which indicate actual transfer of the

patented technology. Furthermore, the record evidence does not indicate whether the "alpha" or
"beta" versions of plaintiff s Web browser sent to these companies were cookies-functional.

Thus, there is no evidence that the invention was shown to, or actually used by, a Netscape

customer prior to the critical date.25 See Petrolite Corp., 96 F.3d at 1423 (citation omitted); 2-6
Chisum on Patents § 6.02[5] (noting the Federal Circuit requires actual use). Finally, as to the Interop trade show, defendants' evidence--an August 3, 1994 email from Tom Paquin of Netscape evaluating whether a public demonstration of "X mozilla" was technologically

feasible--does not establish that the Interop demonstration actually occurred. See Defs.' Opp'n
Ex. 18; see also Beachcombers, Int'l, Inc. v. Wildewood Creative Prods., Inc., 31 F.3d 1154, 1159-60 (Fed. Cir. 1994) (discussing adequacy of evidence in case of private party demonstration). Accordingly, because no triable issue of fact exists as to whether the patented

cookies technology was sent to Netscape customers prior to the critical date, and there is not

sufficient evidence for a trier of fact to conclude by clear and convincing evidence that the

25 Indeed, there is no evidence to suggest that SGI, San Jose Mercury News, or DEC were
aware of, or interested in, the patented cookies technology. As Andreessen testified, the cookies

functionality was a product of MCI's specific request, and was simply integrated into plaintiffs generally-marketed Web browser product. See Defs.' Opp'n Ex. 15, at 139-40. Defendants cite

no facts indicating that SGI, the San Jose Mercury News, or DEC required client storage of state
information, as MCI explicitly did.
-30-

patented invention was sent to a Netscape customer prior to the critical date, plaintiff is entitled
to summary judgment as to the § 102(b) public use defense. C. Inventorship

Plaintiff moves for summary judgment on defendants' in