Globetrotter Software, Inc. v. Elan Computer Group, Inc.

362 F.3d 1367
CourtCourt of Appeals for the Federal Circuit
DecidedMarch 23, 2004
DocketNos. 03-1179, 03-1205
StatusPublished
Cited by105 cases

This text of 362 F.3d 1367 (Globetrotter Software, Inc. v. Elan Computer Group, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367 (Fed. Cir. 2004).

Opinion

DYK, Circuit Judge.

The main appeal by Ken Greer (“Greer”) is from the decision of the United States District Court for the Northern District of California granting summary judgment on his state-law counterclaims for tortious interference with prospective economic advantage and unfair competition arising from Globetrotter’s allegations that Elan Computer Group, Inc. (“Elan”) and Greer infringed U.S. Patent Nos. 5,390,297 (“the '297 patent”), 5,386,369 (“the '369 patent”), and 5,671,412 (“the '412 patent”), Globetrotter Software, Inc. v. Elan Computer Group, Inc., No. C-98-20419-JF, slip op. at 3-7 (N.D.Cal. Nov. 13, 2002) (“Globetrotter III”). Because Globetrotter’s actions were not objectively baseless, state-law claims arising from Globetrotter’s communications regarding potential patent litigation were preempted. We therefore affirm the grant of summary judgment on these counterclaims.

On the cross-appeal relating to alleged infringement of the '297 patent, this case is before us for a second time. In our first decision, Globetrotter Software, Inc. v. Elan Computer Group, Inc., 236 F.3d 1363 (Fed.Cir.2001) (“Globetrotter I ”), which involved Globetrotter’s appeal from the district court’s denial of a preliminary injunction, we construed the “license file means” limitation of claim 55 of the '297 patent. However, we expressly reserved the issue “whether Globetrotter at trial could establish infringement based on the proper construction of the license file means limitation of claim 55.” Id. at 1370 n. 3. We also [1369]*1369did not decide whether the district court’s construction of the “prevent” limitation was correct. Id. at 1370 & n. 3. These issues are now before us in Globetrotter’s cross-appeal from the district court’s grant of summary judgment of non-infringement of the asserted claims of the '297 patent on the ground that the license file means and prevent limitations were not satisfied, Globetrotter Software, Inc. v. Elan Computer Group, Inc., No. C-98-20419-JF (N.D.Cal. Sept. 24, 2001) (“Globetrotter II ”).

On the cross-appeal, we hold that the district court’s construction of the prevent limitation was incorrect and that summary judgment of non-infringement of the license file means and prevent limitations was not proper. Accordingly, we vacate the grant of summary judgment with respect to version 5.0 of Elan’s allegedly infringing software (“LM 5.0”) and remand to the district court for further proceedings.

BACKGROUND

I

The main appeal here involves alleged misuse by Globetrotter of three patents it owns. However, on the cross-appeal, Globetrotter asserts only infringement of the '297 patent.

Each of the three patents is directed toward'a license management system that permits a purchaser of software to use a particular application on more than one computer on a network, while including protections against copyright infringement that prevent the purchaser from using more copies of the software than it has licensed. In particular, the '297 patent is entitled “System for Controlling the Number of Concurrent Copies of a Program in a Network Based on the Number of Available Licenses.” The system disclosed in the patent limits the number of copies of an application that can be in use on a network at a particular time to the number of application licenses that have been purchased from the vendor of the software, although there is no limit on the number of computers on the network that can access the licenses or run the application so long as the licensed number of copies in use at any one time is not exceeded. For example, a purchaser can install a copy of a software application on each of ten computers on a network, even though the purchaser only has purchased three licenses for the application. The system of the '297 patent prevents the purchaser from using more than three of those copies at a time because there are only three licenses available to the purchaser. If a user were to attempt to use the application simultaneously on a fourth computer, the license management system would determine that no further licenses were available and the fourth computer would be prevented from running the application.

The '297 patent issued on February 14, 1995. Shortly thereafter, Auto-trol, then the '297 patent’s assignee, asserted that the '297 patent covered Globetrotter’s license management product. Globetrotter maintained that it did not infringe the '297 patent, and it intimated that “several of [the patent’s] broader claims” might be invalid. (J.A. at A07681.) However, Globetrotter and Auto-trol entered into negotiations for a patent license agreement thereafter. Auto-trol ultimately assigned the '297 patent to Globetrotter on October 13,1997.

Globetrotter also is the assignee of the '369 patent, entitled “License Metering System for Software Applications.” It discloses a system for metering the use of software applications that prevents the problems of wear experienced in previous hardware-based metering systems. In addition, the system permits the vendor of the software to add value to the meter remotely, increasing the amount of soft[1370]*1370ware that a lessor of the software may use, without compromising the security of the license metering system. Finally, the metering system may be used to monitor multiple applications simultaneously.

Globetrotter as well is the assignee of the '412 patent, entitled “License Management System for Software Applications.” It discloses a license management system that allows program licensors to collect and organize their stored license records to increase the system’s flexibility. The license records can include license modifiers that allow the licensor to provide flexibility in the use of the software to its purchasers. In addition, the vendor of the software can group the licenses to prevent the software purchaser from using different components of a suite of programs on different computers simultaneously. Finally, the system includes functions designed to mitigate common problems with license server networks.

II

The alleged misuse of the three patents arises out of the following circumstances. Greer alleges that Rainbow Technologies, Inc. (“Rainbow”) was negotiating to purchase all of the outstanding shares of Elan not already owned by Rainbow for a price of $4,000,000. The negotiated agreement also provided that Greer, then the majority shareholder, chairman, and CEO of Elan, would receive a two-year employment agreement with a salary of $120,000, a commission on sales of Rainbow’s license management software, and stock options. At the time, Rainbow also distributed Elan’s allegedly infringing software. While these negotiations were pending, Globetrotter sent an e-mail and two letters alleging infringement of its patents. First, on October 3, 1997, Michael Christiano (“Christiano”), Globetrotter’s president and CEO, sent an e-mail to Walter Straub (“Straub”), the president and CEO of Rainbow, suggesting that Rainbow investigate whether Elan’s products infringed Globetrotter’s patents before purchasing Elan. Next, on October 7, 1997, Globetrotter sent a letter to Greer alleging that Elan infringed the '369 and '412 patents. A copy of the letter was also sent to Straub. On October 20,1997, shortly after Globetrotter acquired the '297 patent, Globetrotter sent a second letter to Greer and Straub, alleging that Elan also infringed the '297 patent.

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362 F.3d 1367, Counsel Stack Legal Research, https://law.counselstack.com/opinion/globetrotter-software-inc-v-elan-computer-group-inc-cafc-2004.