Monday, April 03, 2006

CAFC reverse district court in On Demand v. Ingram

In On Demand v. Ingram and Lightning Source, the CAFC tackled a case with "troll like" character. The CAFC reversed the ED Mo based on a partly incorrect claim construction, and determined that no reasonable jury could have found infringement based on a correct construction.

The CAFC cited to Richardson v. Suzuki, 868 F2d 1226 on the substantial evidence standard.

The CAFC cited to Phillips on claim construction, and found error in the way the district court had interpreted the term "sales information." There were other issues. The CAFC observed that the claim construction in the On Demand case occurred in 2002-2003 at a time when conflicting Federal Circuit panel decisions were producing uncertainty as to the law of claim construction.

In the end, the CAFC observed that the claims cannot be of broader scope than the invention that is set forth in the specification.

There was discussion of whether or not the preamble limited the claim scope, with citation to Kropa v. Robie, 187 F.2d 150. The CAFC found that in this case, the district court's instruction that the preamble did not limit claim scope was INCORRECT.

In its conclusion, the CAFC stated of claim construction: "Care must be taken lest word-by-word definition, removed from the context of the invention, leads to an overall result that departs significantly from the patented invention."

There was an injunction issue. The district court set a royalty for continued operation during appeal. The CAFC observed that that remedy was within the court's discretion.

From the Seattle Times through Bloomberg:

An appeals court threw out a $15 million verdict against Inc. and Ingram Industries Inc., saying no reasonable jury could find they infringed a patent for printing books.

The U.S. Court of Appeals for the Federal Circuit in Washington said March 31, 2006 the St. Louis jury based last year's decision on a misinterpretation of the patent owned by closely held On Demand Machine Corp.

"The printing of a single copy of a book, using computer technology and high-speed printing," was known before On Demand won the patent, the panel said, so the patent was limited to the printing based on the direct interaction with customers.

Ross offered to license the technology to Ingram's Book Group unit, one of the largest wholesale book distributors in the U.S.

Nashville-based Ingram refused and started Lightning Source, which On Demand claimed uses similar technology, and licensed it to Amazon.

Injunction issue in the case: The judge in the St. Louis trial refused to force Lightning Source to stop doing business after the jury verdict, calling it a "close case." The judge ordered the company to pay On Demand almost 13 percent of sales as royalties.

from an undated press release from Lightning Source:

Lightning Source was informed this morning that the United States Court of Appeals for the Federal Circuit reversed the St. Louis District Court judgment of infringement and vacated the damages award. The opinion was unanimous in finding that “no reasonable jury could find infringement on the correct claim construction.” No payment will be required for alleged damages cited in the lawsuit, originally filed by the On Demand Machine Corporation.

J. Kirby Best, CEO: "Lightning Source was established in 1997, founded on an innovative idea that has since become an industry. With over 27 million books manufactured and 4,300 publishing partners today, we look forward to moving ahead and continuing the growth of our business and services."


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