REALTIME DATA, LLC (doing business as IXO) loses at CAFC
Realtime Data, LLC (“Realtime”) appeals from multi- ple decisions of the United States District Court for the Southern District of New York, granting motions filed by several companies in the financial services industry (the “Defendants”) for summary judgment of (i) noninfringe- ment of various claims of U.S. Patents 7,417,568 (the “’568 patent”), 7,714,747 (the “’747 patent”), and 7,777,651 (the “’651 patent”), and (ii) invalidity under 35 U.S.C. § 112 of several claims of the ’651 and ’747 patents.
As to claim construction
Realtime first argues that the district court erred in its construction of three claim terms: “descriptor indicates,” “data field/block type,” and “data stream.”
The CAFC noted:
Dr. Modestino concluded that “[i]t should be understood that the passive process of receiving a data stream [from an external source] as practiced in the ’506 patent is quite different from the active process of retrieving, or fetching, a block of data from a storage device internal to a computer system using standard storage device access techniques,” id. (emphasis added), and that “one of ordi- nary skill in the art would distinguish this active process of retrieving a data block from an internal storage device as fundamentally different from the passive process of receiving a data stream as recited in independent claims 1, 69 and 86 of the ’506 patent,” id. at 972 (emphasis added).
Although Dr. Modestino’s declaration dealt, in part, with a narrower term “receiving a data stream,” the declaration makes clear that a person of ordinary skill would understand that a data stream as disclosed in the written description of the ’747 patent means a data stream received from an external source. Given this distinction advanced by Realtime’s own expert in the reexamination, the district court did not err by including the external source requirement in the construction of “data stream” in claims 15, 20, 22, and 32 of the ’568 patent; claims 1, 7, 8, 13, 14, and 19 of the ’747 patent; and claims 1, 4, 6, 7, 12, 13, 18, 19, 21, 22, 25, 26, 29, 34, 35, 43, 47, 49, 95, 97, 108, and 112 of the ’651 patent.
As to infringement:
We agree with the Defendants. The decoding claims disclose the limitation “wherein the lossless encoders are selected based on analysis of content of the data blocks” ’651 patent col. 31 ll. 36–37, col. 33 ll. 10–11. The parties stipulated that this limitation means that “the system (or method) selects the lossless encoders based on an analysis of content of the data blocks (or data fields).” J.A. 5341, 5334. According to the stipulated claim construction, these decoding claims thus require the selection of an encoder. Realtime cannot now change the construction that it had agreed to in the district court. Versata Soft- ware, Inc. v. SAP Am. Inc., 717 F.3d 1255, 1262 (Fed. Cir. 2013). The district court thus did not err in granting the Defendants’ motion for summary judgment of nonin- fringement of claims 95, 97, 108, and 112 of the ’651 patent.
In conclusion, we agree with the Defendants in all respects concerning the district court’s holding of nonin- fringement.
As to written description
The Defendants contend that the limitation lacks written description support under § 112, ¶ 1 because there is no mention of content-based or content-dependent decompression in the written descrip- tion of the ’651 and ’747 patents.
We agree with the Defendants that the ’651 and ’747 patents lack adequate written description of the “content dependent data decompression” limitation. The written description is a statutory requirement set forth in 35 U.S.C. § 112. The written description “must clearly allow persons of ordinary skill in the art to recognize that [the inventor] invented what is claimed.” Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc) (citation and quotations omitted).
The test is whether the disclosure “conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date.” Id.
As the district court found, the written descriptions of the ’651 and ’747 patents do not contain any definition of “content dependent data decompression.” Written De- scription Opinion, 2012 WL 2545096, at *8. The written description describes the process of data decompression as determining “whether the data compression type de- scriptor is null” (meaning that the content is not com- pressed), or not null meaning that “the corresponding decoder or decoders” matching the compression type descriptor used to encode the data are selected to decode the data block. ’747 patent col. 15 ll. 11–25; ’651 patent col. 17 ll. 10–28 (describing the process of extracting the data compression type descriptor to determine the decod- ers to use).
As to DOE
Realtime finally argues that the district court abused its discretion in precluding Realtime from arguing in- fringement under the doctrine of equivalents, applying its local rules in doing so. We affirm the district court in its decision concerning the doctrine of equivalents. As a general matter, we “defer to the district court when interpreting and enforcing local rules so as not to frus- trate local attempts to manage patent cases according to prescribed guidelines.” Genentech, Inc. v. Amgen, Inc., 289 F.3d 761, 774 (Fed. Cir. 2002). Particularly in re- viewing the district court’s exercise of discretion, we determine whether: “(1) the decision was clearly unrea- sonable, arbitrary, or fanciful; (2) the decision was based on an erroneous conclusion of law; (3) the court’s findings were clearly erroneous; or (4) the record contains no evidence upon which the court rationally could have based its decision.” In re Cambridge Biotech Corp., 186 F.3d 1356, 1369 (Fed. Cir. 1999). (...)
We agree with the Defendants on this point. The dis- trict court was well within its discretion to preclude Realtime from asserting infringement under the doctrine of equivalents. In asserting its allegations of infringe- ment under the doctrine of equivalents two and a half years into the litigation, Realtime failed to comply with the local rules of both the Eastern District of Texas and the Southern District of New York, which require com- plete infringement assertions within 10 and 14 days, respectively. Additionally, because Realtime asserted such contentions after fact discovery had closed, the Defendants were prejudiced from developing adequate discovery and developing theories of noninfringement under the doctrine of equivalents. The district court thus did not abuse its discretion by precluding Realtime from asserting infringement allegations under the doctrine of equivalents.