Minton v. National Ass'n. of Securities Dealers, 02-1560.

Citation336 F.3d 1373
Decision Date29 July 2003
Docket NumberNo. 02-1560.,02-1560.
PartiesVernon F. MINTON, Plaintiff-Appellant, v. NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. and The Nasdaq Stock Market, Inc., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Peter L. Brewer, Moser, Patterson & Sheridan, LLP, of Houston, TX, argued for plaintiff-appellant. On the brief was Jerry W. Gunn, Law Office of Jerry W. Gunn, of Houston, TX.

Randall L. Sarosdy, Akin, Gump, Strauss, Hauer & Feld, L.L.P., of Austin, Texas, argued for defendants-appellees. With him on the brief was Gregory C. Mathis. Of counsel on the brief were Daniel Joseph and Beth H. Wilensky, Akin, Gump, Strauss, Hauer & Feld, L.L.P., of Washington, DC.

Before LOURIE, GAJARSA, and LINN, Circuit Judges.

Opinion of the court filed by Circuit Judge LOURIE; Concurring opinion filed by Circuit Judge GAJARSA.

LOURIE, Circuit Judge.

Vernon F. Minton appeals from the final decision of the United States District Court for the Eastern District of Texas granting summary judgment that Minton's U.S. Patent 6,014,643 is invalid under 35 U.S.C. § 102(b) because it claims subject matter that was on sale more than one year prior to the filing of his patent application. Minton v. Nat'l Ass'n. of Sec. Dealers, Inc., 226 F.Supp.2d 845 (E.D.Tex. 2002). Because the court's decision contains no legal error, we affirm.

BACKGROUND

Minton is the sole inventor and owner of the '643 patent, which is directed to a computerized securities trading system. When using the system, individuals connect to a computer network through which they are able to post offers to trade securities as well as to select and reply to posted offers to cause trades to occur. More specifically, according to method claim 1, which is representative, offers to trade a security are transmitted over a network to an individual's computer, where the offers are ranked and displayed. The individual replies to an offer, and the system responds by "executing a trade of the security based on information contained in the offer for consideration specified in the reply to the offer, whereby the security is traded efficiently between the first individual [who entered the offer] and the second individual [who entered the reply in response to the offer]." '643 patent, col. 15, ll. 55-59.

Prior to his patent application's critical date, Minton leased a computer program and telecommunications network called "TEXCEN" to the brokerage firm R.M. Starks & Co. Minton, 226 F.Supp.2d at 855. TEXCEN performed similarly to what is claimed in the '643 patent, with one possible difference being the way it executed trades: TEXCEN required that a broker intervene to complete the trade. Id. at 856.

In a thorough and well-written opinion, the court granted summary judgment of invalidity on two grounds: (1) Minton's lease of TEXCEN was an anticipatory on-sale bar under 35 U.S.C. § 102(b); and (2) the claimed invention would have been obvious over TEXCEN in view of U.S. Patent 3,573,747, issued to Adams, under 35 U.S.C. § 103. Id. at 852, 875.

In opposition to the defendants' (collectively, "NASDAQ's") motion for summary judgment, Minton conceded that TEXCEN had been "on sale" prior to the critical date, id. at 855, and the court determined that, due to the strong similarities between TEXCEN and the invention claimed in the '643 patent, the invention had been "ready for patenting" at that time, id. at 859-60. Minton argued in his opposition that TEXCEN had not performed the claimed "executing" step, but the court rejected that argument, construing the term "executing" to mean simply "changing a memory location to indicate that an agreement had been reached between the two [trading] individuals." Id. at 865. The court also determined that the Adams patent had disclosed everything in the claimed method except the ranking and displaying steps, which were concededly part of TEXCEN. Id. at 876. The court concluded that it would have been obvious to modify Adams to include the ranking and displaying steps, as taught by TEXCEN. Id. at 878-79.

Minton filed a motion for reconsideration, in which he argued, inter alia, that the lease of TEXCEN was experimental and therefore not "on sale." The court denied the motion, stating only that "the motion for reconsideration should be denied for the reasons previously set forth in the court's memorandum opinion." Minton v. Nat'l Ass'n of Sec. Dealers, Inc., No. 9:00-CV-19, slip op. at 2 (E.D.Tex. July 15, 2002) ("Reconsideration Denial").

Minton timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). "The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). We review a district court's grant of a motion for summary judgment de novo. Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 149 F.3d 1309, 1315 (Fed.Cir.1998).

An assessment of the validity of a patent claim in light of an alleged sale involves, first, determining whether a sale is truly a "sale" within the meaning of 35 U.S.C. § 102(b), a question of law based on underlying facts. See Dana Corp. v. Am. Axle & Mfg., Inc., 279 F.3d 1372, 1375 (Fed.Cir.2002). The next step is claim construction, during which the court determines the scope and meaning of the patent claims, also a legal determination, see Markman v. Westview Instruments, Inc., 52 F.3d 967, 970-71 (Fed.Cir.1995) (en banc), aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996), that we review de novo, Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed.Cir.1998) (en banc). The final step involves a comparison of the asserted claims with the device or process that was sold. A determination that a claim is invalid as being anticipated requires factual findings that "each and every limitation is found either expressly or inherently" in the device or process that was sold. Celeritas Techs. Inc. v. Rockwell Int'l Corp., 150 F.3d 1354, 1360 (Fed. Cir.1998). Because "a patent is presumed to be valid, 35 U.S.C. § 282, and this presumption can only be overcome by clear and convincing evidence of facts to the contrary," Dana, 279 F.3d at 1375, the facts underlying a conclusion that a claim is unpatentable in light of a sale must be proven with clear and convincing evidence.

On appeal, Minton raises two arguments that TEXCEN was not "on sale" so as to trigger the on-sale bar of § 102(b). Minton first argues that, as in In re Kollar, 286 F.3d 1326 (Fed.Cir.2002), the license of the TEXCEN process was not a commercial offer for sale. Minton secondly argues that the court failed to analyze the experimental use issue, even though he properly raised it in post-judgment briefing after this court issued a decision in EZ Dock, Inc. v. Schafer Systems, Inc., 276 F.3d 1347 (Fed.Cir.2002), which he contends changed the landscape of experimental use law. Minton contends that several factors support a finding that the use was experimental, and, acknowledging that some factors here militate against a conclusion of experimental use, that the presence of opposing factors is the sine qua non of a factual dispute that should not be resolved on summary judgment.

Minton also argues that the court erred in its claim construction, and thus its invalidity analysis, in two respects. First, he contends that the court failed to construe the "executing" step as giving the trading individuals, rather than a broker, the "last say" in the trade, and that TEXCEN did not perform the "executing" step as properly construed. Second, he contends that the court failed to give weight to the "efficiently traded" result in the "whereby" clause of the claim. In the context of the '643 patent, according to Minton, the phrase "efficiently traded" means traded by computer with minimal broker involvement (i.e., pre-approval but not actuation of the trade), and TEXCEN did not meet that claim limitation.

Finally, on the issue of obviousness, Minton argues that there are genuine issues of material fact as to whether secondary factors of nonobviousness exist, specifically, long-felt need and the commercial success of the accused NASDAQ system.

NASDAQ responds that Minton raised the experimental use issue too late, in his motion for reconsideration after he had conceded that TEXCEN had been "on sale." According to NASDAQ, that strategy is not permitted in the Fifth Circuit, the regional circuit in which the district court is located. On the merits, NASDAQ contends that Minton's sale of TEXCEN was not experimental, and that his only evidence of experimentation was his own testimony, which, lacking contemporaneous corroboration, is insufficient. NASDAQ further contends that Minton's lease agreement was unlike the patent or know-how license in Kollar, but instead effected the conveyance of equipment performing the claimed process, thus triggering the on-sale bar.

NASDAQ also responds that the construction of the "executing" step now raised by Minton on appeal was waived in the district court. On the merits, NASDAQ contends that Minton's only support for his definition of "executing" is his own affidavit, which is entitled to little weight, and that his new definition is inconsistent with the specification's description of a broker's involvement.

Finally, on the issue of obviousness, NASDAQ again argues that Minton's evidence regarding the secondary factors was not timely presented before summary judgment and therefore should not be considered by this court. On the merits, NASDAQ contends that his evidence fails to show a nexus between the secondary factors and the claimed invention.

Although the '643 patent contains both method and apparatus claims, they do not differ in any...

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