Nobelbiz, Inc. v. Global Connect, L.L.C.

Opinion

United States Court of Appeals for the Federal Circuit ______________________

NOBELBIZ, INC., Plaintiff-Appellee

v.

GLOBAL CONNECT, L.L.C., T C N, INC., Defendants-Appellants ______________________

2016-1104, 2016-1105 ______________________

Appeals from the United States District Court for the Eastern District of Texas in Nos. 6:12-cv-00244-RWS, 6:12-cv-00247-RWS, 6:13-cv-00804-MHS, and 6:13-cv- 00805-MHS, Judge Robert Schroeder III, Judge Michael H. Schneider. ______________________

ON PETITION FOR REHEARING EN BANC ______________________

RALPH A. DENGLER, Venable LLP, New York, NY, filed a petition for rehearing en banc for plaintiff-appellee. Also represented by GIANNA CRICCO-LIZZA; MEGAN S. WOODWORTH, Washington, DC; WILLIAM A. HECTOR, San Francisco, CA.

CLINTON EARL DUKE, Durham Jones & Pinegar, Salt Lake City, UT, filed a response to the petition for defend- ants-appellants. Also represented by LYNDON BRADSHAW. ______________________ 2 NOBELBIZ, INC. v. GLOBAL CONNECT, L.L.C.

Before PROST, Chief Judge, NEWMAN, LOURIE, DYK, MOORE, O’MALLEY, REYNA, WALLACH, TARANTO, CHEN, HUGHES, and STOLL, Circuit Judges. O’MALLEY, Circuit Judge, with whom NEWMAN and REYNA, Circuit Judges, join, dissents from the denial of the petition for rehearing en banc. PER CURIAM. ORDER A petition for rehearing en banc was filed by appellee NobelBiz, Inc., and a response thereto was invited by the court and filed by appellants Global Connect, L.L.C. and T C N, Inc. The petition for rehearing was first referred to the panel that heard the appeal, and thereafter, the petition for rehearing and response were referred to the circuit judges who are in regular active service. A poll was requested, taken, and failed. Upon consideration thereof, IT IS ORDERED THAT: The petition for panel rehearing is denied. The petition for rehearing en banc is denied. The mandate of the court will issue on December 15, 2017. FOR THE COURT

December 8, 2017 /s/ Peter R. Marksteiner Date Peter R. Marksteiner Clerk of Court United States Court of Appeals for the Federal Circuit ______________________

GLOBAL CONNECT, L.L.C., T C N, INC., Defendants-Appellants ______________________

Appeals from the United States District Court for the Eastern District of Texas in Nos. 6:12-cv-00244-RWS, 6:12-cv-00247-RWS, 6:13-cv-00804-MHS, and 6:13-cv- 00805-MHS, Judge Robert Schroeder III, Judge Michael H. Schneider. ______________________

O’MALLEY, Circuit Judge, with whom NEWMAN and REYNA, Circuit Judges, join, dissenting from the denial of rehearing en banc. The panel majority in this case held that the district court erred by adopting a plain-and-ordinary-meaning construction for several non-technical terms, and by purportedly allowing the parties’ experts and counsel to make arguments to the jury about what those simple terms mean. See NobelBiz, Inc. v. Glob. Connect, L.L.C., Nos. 2016-1104, 2016-1105, 2017 WL 3044641, at *2–4 (Fed. Cir. July 19, 2017). I agree with Judge Newman, who dissented from that holding, that the majority erred 2 NOBELBIZ, INC. v. GLOBAL CONNECT, L.L.C.

by turning what is fundamentally a factual question for the jury regarding whether the accused systems and features infringe the patent claims into a legal one for the court—and ultimately this court—to resolve. 1 See id. at *4–6 (Newman, J., dissenting). And, by relying on O2 Micro International Ltd. v. Beyond Innovation Technology Co., 521 F.3d 1351 (Fed. Cir. 2008), to support its holding, the majority has added to the growing confusion regard- ing the scope of that decision. In the nearly ten years since O2 Micro issued, this court has stretched its holding well beyond the factual circumstances at issue there. In so doing, we have caused unnecessary difficulties for district courts, which must manage these already diffi- cult-enough cases, and have intruded on the jury’s fact- finding role. It is time we provide much-needed guidance en banc about O2 Micro’s reach. I dissent from the court’s order declining the opportunity to do so in this case. O2 Micro involved technology related to DC-to-AC converter circuits for controlling the amount of power delivered to cold cathode fluorescent lamps used to back- light laptop screens. Id. at 1354. During the claim con- struction phase of the case, the parties presented a clear dispute to the district court regarding the meaning of the term “only if” in the claim limitation “a feedback control loop circuit . . . adapted to generate a second signal pulse signal for controlling the conduction state of said second plurality of switches only if said feedback signal is above a predetermined threshold.” Id. at 1356, 1360–61. The plaintiff asserted that the claims would be understood by one of ordinary skill in the art to only apply to “the steady state operation of the switching circuit,” while the defend- ants argued that the claims apply at all times, with no

1 I will not repeat the thoughtful points spelled out in Judge Newman’s panel dissent—I could not state them more clearly. I do adopt them by reference, however. NOBELBIZ, INC. v. GLOBAL CONNECT, L.L.C. 3

exception. Id. at 1360. Thus, the parties disputed “not the meaning of the words themselves, but the scope that should be encompassed by th[e] claim language.” Id. at 1361. The district court acknowledged the parties’ dis- pute but declined to resolve it, giving the term a plain- and-ordinary-meaning construction instead. Id. This left the parties to argue about claim scope to the jury. See id. at 1362 (“O2 Micro also brought the inventor of the pa- tents-in-suit to testify regarding the meaning of ‘only if’[.]”). The technology at issue here, by contrast, is much dif- ferent, and, in fact, simpler. The patents relate to a method for processing a communication between a first party and a second party. See NobelBiz, 2017 WL 3044641, at *1. The terms at issue—“replacement tele- phone number,” “modify caller identification data of the call originator,” and “outbound call”—are less technical than the term at issue in O2 Micro. And, at least for two of those terms, the parties did not dispute how a skilled artisan would understand their scope. Instead, the par- ties disputed only whether a formal construction was required. See id. Finally, the expert testimony in this case reveals that neither expert opined specifically about the meaning of the claim terms, nor did they contend that the terms have complex or technical meanings to one of skill in the art. The experts merely expressed their own views about whether the allegedly infringing systems read on those terms. This case is therefore distinguisha- ble from O2 Micro. Beyond this case, O2 Micro has caused difficulties for courts and litigants alike. O2 Micro’s general rule is easy enough to state in the abstract: “When . . . parties raise an actual dispute regarding the proper scope of the[] claims, the court, not the jury, must resolve that dispute.” O2 Micro, 521 F.3d at 1360. We have not articulated, however, what constitutes an “actual dispute” in this context. While we expect district courts to distinguish 4 NOBELBIZ, INC. v. GLOBAL CONNECT, L.L.C.

bona fide infringement arguments from those masquerad- ing as claim construction disputes, we have not provided the lower courts with effective guidance to do so. As a result, courts have struggled to strike the delicate balance between ensuring that they do not permit the jury to determine claim scope, on the one hand, and ensuring that they do not encroach upon the constitutionally man- dated function of the jury to find facts, on the other. One court recently expressed frustration over O2 Mi- cro and the confusion surrounding it, citing to the panel decision in this case as an example of the “trap” that O2 Micro has set for district courts: O2 Micro problems are difficult to evaluate with any confidence during pretrial (or trial, for that matter) because it is frequently impossible to de- lineate between a pure claim construction argu- ment and a noninfringement argument. Yet juries are summoned, trials are held, and verdicts are reached, only to have the case fall in the O2 Micro trap on appeal. See, e.g., NobelBiz, Inc. v. Glob. Connect, L.L.C., No. 2016-1104, 2017 WL 3044641 (Fed. Cir. July 19, 2017). Short of hold- ing both a jury trial and an identical bench trial in every patent case, there is not a clear path around O2 Micro. Huawei Techs. Co. v. T-Mobile US, Inc., No. 2:16-CV- 00052-JRG-RSP, 2017 WL 4070592, at *1 (E.D. Tex. Aug. 29, 2017), adopted, 2017 WL 4049251 (E.D. Tex. Sept. 13, 2017). Without additional guidance from our court, district courts will continue to fall into this trap. Furthermore, our case law has applied O2 Micro in- consistently. We have, at times, found that when a term is non-technical and within the ken of an average juror, there is no actual dispute under O2 Micro, and therefore no need for court intervention. See, e.g., GPNE Corp. v. Apple Inc., 830 F.3d 1365, 1371–73 (Fed. Cir. 2016) (find- NOBELBIZ, INC. v. GLOBAL CONNECT, L.L.C. 5

ing no O2 Micro violation where the district court declined to construe the term “pager,” and determining that the real dispute was about allowing the defendant “to make certain arguments to the jury”); Summit 6, LLC v. Sam- sung Elecs. Co., 802 F.3d 1283, 1291 (Fed. Cir. 2015) (finding that the district court did not err in declining to construe the disputed term, which was itself “comprised of commonly used terms; each is used in common parlance and has no special meaning in the art”); ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1326 (Fed. Cir. 2012) (finding that the district court did not err under O2 Micro in concluding that “superimpos- ing” claim terms “have plain meanings that do not require additional construction”); see also Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co., 425 F.3d 1366, 1377 (Fed. Cir. 2005) (“Because the claim language does not require a particular form of testing, this inquiry is not a claim construction question, which this court reviews de novo. Rather, this court reviews this inquiry as a ques- tion of fact.”), overruled on other grounds by Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348 (Fed. Cir. 2009). At other times, however, we have found that such a construction leaves the scope of the claims unanswered, as in this case. See, e.g., NobelBiz, 2017 WL 3044641, at *2–4; Eon Corp. IP Holdings LLC v. Silver Spring Net- works, Inc., 815 F.3d 1314, 1319–20 (Fed. Cir. 2016) (finding that the district court erred by instructing the jury that the terms “portable” and “mobile” should be given their plain and ordinary meanings). It is unsurprising, therefore, that district courts have themselves struggled to find a consistent approach for resolving O2 Micro issues. Compare Unwired Planet, LLC v. Google Inc., No. 3:12-cv-00504-MMD-VPC, 2014 WL 7012497, at *10–30 (D. Nev. Dec. 12, 2014) (holding that O2 Micro required the court to reject plain-and- ordinary-meaning constructions), aff’d in part, 660 F. 6 NOBELBIZ, INC. v. GLOBAL CONNECT, L.L.C.

App’x 974 (Fed. Cir. 2016), with Unwired Planet, LLC v. Square, Inc., No. 3:13-cv-00579-RCJ-WGC, 2014 WL 4966033, at *2 (D. Nev. Oct. 3, 2014) (citing O2 Micro for the proposition that “a district court is not obligated to construe terms with ordinary meanings, lest trial courts be inundated with requests to parse the meaning of every word in the asserted claims”); see also Peter E. Gratzinger, After O2 Micro: The Court’s Evolving Duty to Map Words to Things, 32 Santa Clara High Tech. L.J. 141, 142–43 (2015–2016) (noting that, despite the “seem- ingly simple premise” articulated in O2 Micro, “there is wide variation in how district courts interpret and im- plement the duty to resolve claim construction disputes”); Matthew Chivvis, Patents: When the “Plain and Ordinary” Meaning Is Neither Plain Nor Ordinary, N.Y. L.J., Aug. 11, 2016, at 1 (“The U.S. Court of Appeals for the Federal Circuit’s decisions provide conflicting guidance on the duty to construe a term when the plain and ordinary meaning is disputed. The lack of a clear rule has allowed district courts to vary widely in how they handle claim construction in these circumstances.”). Our lack of clarity about the reach of O2 Micro has al- so led courts to stray from general principles of orderly case management, making patent litigation needlessly more expensive and inefficient. Litigants often invoke O2 Micro to justify belated claim constructions presented long after court-ordered deadlines. See Huawei Techs., 2017 WL 4070592, at *1 (noting that “one party or anoth- er argues in virtually every patent case approaching trial” that the court “must ensure that . . . late-breaking claim construction dispute[s] [are] not presented to the jury”); Opticurrent, LLC v. Power Integrations, Inc., No. 2:16-CV- 325, 2017 WL 1383979, at *10 (E.D. Tex. Apr. 18, 2017) (construing a claim term to avoid “late-breaking disputes lodged under the guise of” O2 Micro, despite the fact that the term “has no special meaning other than its plain meaning”). NOBELBIZ, INC. v. GLOBAL CONNECT, L.L.C. 7

And, even though district courts maintain broad dis- cretion to manage their dockets, many courts apparently feel compelled by O2 Micro to resolve such disputes, no matter how late they are raised and no matter how simple the question posed for consideration by the jury might seem. See, e.g., Tyco Healthcare Grp. LP v. Applied Med. Res. Corp., No. 9:06-CV-151, 2009 WL 1883423, at *1, 9 (E.D. Tex. June 30, 2009) (in view of O2 Micro, allowing the defendant to modify its proposed construction “long after the Markman hearing had been conducted”); see also Pressure Prods. Med. Supplies, Inc. v. Greatbatch Ltd., 599 F.3d 1308, 1315–16 (Fed. Cir. 2010) (finding that the district court’s adjustment of a prior construction in response to cross-examination at trial was consistent with the trial court’s duty under O2 Micro). District courts’ reading of O2 Micro as preventing them from enforcing their own deadlines effectively places “sand in the gears of the overall trial process” and disincentivizes litigants from crystallizing their disputes early in the case. Packet Intelligence LLC v. NetScout Sys., Inc., No. 2:16-CV-230- JRG, 2017 WL 2531591, at *2 n.2 (E.D. Tex. Apr. 27, 2017) (denying plaintiff’s request to add products, in part because of the effect that a late O2 Micro dispute would have on the litigation). We should clarify the scope of O2 Micro’s reach, and, at the very least, clarify under what circumstances a plain-and-ordinary-meaning dispute is an “actual” one within the meaning of O2 Micro. The fact that parties’ experts might proffer differing definitions of a term’s plain and ordinary meaning to a jury should not be enough to justify removing that question from the jury’s consideration. This case presents the opportunity for us to clarify the confusion our case law has created. For these reasons, I respectfully dissent from the denial of rehearing en banc.