Exigent Technology, Inc. v. Atrana Solutions, Inc.

• Decision Date: 22 March 2006
• Docket Number: No. 05-1338.,05-1338.
• Citation: 442 F.3d 1301
• Parties: EXIGENT TECHNOLOGY, INC., Plaintiff-Appellant, v. ATRANA SOLUTIONS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1301

442 F.3d 1301

EXIGENT TECHNOLOGY, INC., Plaintiff-Appellant, v. ATRANA SOLUTIONS, INC., Defendant-Appellee.

No. 05-1338.

United States Court of Appeals, Federal Circuit.

March 22, 2006.

COPYRIGHT MATERIAL OMITTED

Matthew C. Wagner, Collen IP Intellectual Property Law, P.C., of Ossining, New York, argued for plaintiff-appellant. With him on the brief was Jeffrey A. Lindenbaurn.

William M. Lee, Jr., Barnes & Thornburg LLP, of Chicago, Illinois, argued for defendant-appellee. With him on the brief were Peter J. Shakula and John P. Wappel. Of counsel on the brief was Jonathan D. Plotkin, Atrana Solutions, Inc., of Dallas, Texas.

Before GAJARSA, DYK, and PROST, Circuit Judges.

DYK, Circuit Judge.

Exigent Technology, Inc. ("Exigent") appeals the district court's grant of summary judgment of non-infringement to Atrana Solutions, Inc. ("Atrana"), its denial, as moot, of Exigent's motion to vacate the grant of summary judgment and enforce an alleged settlement agreement, and its grant of attorney fees and costs. We conclude that the district court properly found no genuine issue of material fact concerning infringement and properly rejected Exigent's Rule 56(f) motion. However, we also conclude that the district court improperly denied as moot Exigent's motion to vacate and enforce the alleged settlement agreement. We thus affirm in part, reverse in part, vacate in part, and remand.

BACKGROUND

Exigent owns U.S. Patent No. 6,651,885 ("'885 patent") on a "multi-function transaction processing system," which could be used in a variety of commercial transactions including credit card purchases and pre-paid phone card services. On March 2, 2004, Exigent brought suit against Atrana, alleging infringement of the '885 patent either literally or through the doctrine of equivalents. Exigent specifically asserted independent claims 1 and 47.¹

The district court issued a scheduling order which set the close of fact discovery for September 10, 2004, the deadline for summary judgment motions for September 24, 2004, and the close of expert discovery for December 10, 2004. After the case had been redistributed to United States District Judge Marcia G. Cooke, Exigent submitted a status report, simply stating that it expected to finish discovery by April of 2005. The district court set a trial date of January 10, 2005, noting that all previously established deadlines would remain in force.

On August 30, 2004, the district court conducted a Markman hearing. Although Exigent did not file a Markman brief prior to the hearing, the district court permitted Exigent to file a supplementary brief and claim construction chart after the hearing.

On September 24, 2004, Atrana filed a twelve-page motion for summary judgment on the issues of infringement, invalidity, and unenforceability, describing the legal issues and identifying what proof it believed was lacking. In support of non-infringement, Atrana stated that "Exigent will not be able to establish that any system of Atrana infringes any claim of the '885 Patent" and specifically explained that Atrana's systems did not contain certain claim limitations. J.A. at 550. Atrana also attached a declaration from its Chief Executive Officer, Salah Boukadoum, stating that no Atrana system contained certain claim limitations. The district court granted Exigent two separate extensions of time to respond to the summary judgment motion. As a result, Exigent's response was due on October 29, 2004. On October 26, 2004, Exigent retained new counsel, and filed a motion pursuant to Rule 56(f) of the Federal Rules of Civil Procedure seeking an extension of time to respond to the summary judgment motion so it could complete fact and expert discovery before responding to the summary judgment motion. Exigent did not file a substantive response to the summary judgment motion. The district court denied the Rule 56(f) motion on November 3, 2004.

On November 10, 2004, Exigent and Atrana attended a mandated mediation session where they signed an "Agreement in Principle Term Sheet," including an agreement to dismiss the current case under terms to be agreed and to license the patented system to Atrana in exchange for royalty payments—although the term "PIN" was left still to be defined. The Term Sheet contemplated that the parties would negotiate and sign a formal agreement. It stated:

The parties agree to negotiate additional terms ordinarily in licensing agreements of this sort in good faith to within five business days execute a formal Settlement Agreement embodying these Principles and forward it to the Mediator for filing with the Court, failing which the mediator will report an impasse.

J.A. at 1168. Furthermore, the parties agreed "that this Agreement will not affect any deadlines set by the Court." J.A. at 1169. However, that same day, the district court granted Atrana's motion for summary judgment with respect to non-infringement, declining to reach the issues of invalidity and unenforceability. In so doing, the court construed several of the claim terms, including the terms "control processor," "user account," and "payment authority." The court then concluded that "the record is devoid of evidence demonstrating that Atrana infringed the '885 patent." J.A. at 41. The court then held that "there is no genuine issue of material fact regarding whether the Atrana device includes a control processor . . . . Nor does the accused device create accounts in response to receipt of a payment authority . . . . Moreover, the accused device does not have a card assembly with promotional materials contain[ed] thereon." Id. The court then "decline[d] to address" Atrana's invalidity and unenforceability arguments because it agreed with Atrana on non-infringement. Id. The court also denied all pending motions as moot.

The parties were apparently unable to execute a final settlement agreement. On November 18, 2004, Exigent filed a motion requesting that the district court vacate its decision granting summary judgment and enforce the alleged settlement agreement as reflected in the Term Sheet. On November 19, the mediator filed his report stating that "[a]n agreement was reached" as a result of the mediation session on November 10. J.A. at 1170. On November 22, the mediator filed a second report stating that "[p]er a telephone call from Defendant's counsel . . . the [mediator] has been informed that he should report an impasse." J.A. 1201.

On November 29, in response to a motion by Atrana, the district court amended its summary judgment order to note that the plaintiff bore the burden of proving that the accused device infringes "on each and every element of the asserted claims." J.A. at 43. The court stated that the amended order, which again denied all other pending motions as moot, would relate back to the date of the initial November 10 order. On March 10, 2005, the district court entered a final order of dismissal and awarded fees and costs to Atrana. On March 15, Exigent filed a motion for clarification of the final order, arguing that the court had not yet ruled on Exigent's motion to vacate the summary judgment grant and enforce the alleged settlement agreement, and therefore that the court could not issue a "final order." The district court denied Exigent's clarification motion, stating that all pending motions had been denied as moot. Exigent timely appealed. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a)(4).²

DISCUSSION

Exigent challenges the district court's (1) grant of summary judgment of non-infringement, (2) denial of its motion to vacate the summary judgment grant and enforce the settlement agreement, and (3) grant of attorney fees and costs.³

I

A. The Summary Judgment Grant

Exigent argues that we should reverse the district court grant of summary judgment because the district court's claim construction was flawed and because Atrana failed to sufficiently support its summary judgment motion regarding non-infringement.

As to the claim construction, Exigent attempts to challenge many of the district court's constructions as too narrow. However, the district court's judgment on non-infringement rested on the failure to meet three specific claim limitations: (1) the inclusion of a "control processor," (2) the creation of accounts in response to receipt of a "payment authority," and (3) the inclusion of a "card assembly" with "promotional materials thereon." We find no reversible error in the district court's construction of the term "payment authority," and thus need not reach the correctness of the district court's claim construction in other respects.

The district court construed the term "payment authority" in the '885 patent as "[d]ata that is input by the consumer that represents the monetary value of the transaction and the consumer's authorization for payment that is received by the transaction terminal and is also used to define the value of the user's account." J.A. at 39. On appeal, Exigent argues that this construction is erroneous because the claims contain no reference to the "payment authority representing a monetary value" and because there is no limitation that the payment must be received by the transaction terminal. Exigent's Brief at 26. However, Exigent failed to make this argument to the district court. In fact, the district court's construction is not at odds with what Exigent proposed below. Exigent construed "payment authority" as "the information inputted by the user of the system as a result of acknowledging payment be it by cash, credit card or independent of the purchase or system. . . . In this context the data entry facility is physically structured to accept information acknowledging payment by cash or credit card, etc." J.A. at 279 (emphasis added). Exigent also stated in its proposed construction chart: "payment authority—a credit card transaction or acknowledgment of cash payment from a consumer."⁴ J.A. at 285. Thus Exigent...