Perfect Web Technologies, Inc. v. Infousa, Inc.

Decision Date02 December 2009
Docket NumberNo. 2009-1105.,2009-1105.
PartiesPERFECT WEB TECHNOLOGIES, INC., Plaintiff-Appellant, v. INFOUSA, INC., Defendant-Appellee.
CourtU.S. Court of Appeals — Federal Circuit

John C. Carey, Carey Rodriguez Greenberg & Paul, LLP, of Miami, FL, argued for plaintiff-appellant. With him on the brief was Allison J. Cammack.

John C. Rozendaal, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., of Washington, DC, argued for defendant-appellee. With him on the brief were Wan J. Kim and Daniel G. Bird.

Before LINN, DYK, and PROST, Circuit Judges.

LINN, Circuit Judge.

Perfect Web Technologies, Inc. ("Perfect Web") appeals a summary judgment order holding that the asserted claims of its U.S. Patent No. 6,631,400 ("'400 patent") are invalid. Perfect Web Techs., Inc. v. InfoUSA, Inc., No. 07-CV-80286 (S.D.Fla. Oct. 24, 2008) ("Opinion"). Because we agree with the district court that the asserted claims would have been obvious, we affirm.

BACKGROUND

The '400 patent claims methods of managing bulk e-mail distribution to groups of targeted consumers. The '400 patent's application was filed on April 13, 2000, at a time when, according to the specification, the Internet was at an "early and fervent stage of development." '400 patent col.1 ll.25-27. The patent recognizes that "electronic mail (email) is an often used component of the Internet." Id. col.1 ll.27-28. In describing "opt-in bulk e-mailing services," the patent explains that distributors access lists of customers who express subject matter preferences for commercial email. Id. col.1 l.56. The patented invention involves comparing the number of successfully delivered e-mail messages in a delivery against a predetermined desired quantity, and if the delivery does not reach the desired quantity, repeating the process of selecting and e-mailing a group of customers until the desired number of delivered messages has been achieved.

Perfect Web asserted claims 1, 2, 5, 11, 12, and 15 against InfoUSA, Inc. Independent claim 1 represents the asserted claims:

1. A method for managing bulk e-mail distribution comprising the steps:

(A) matching a target recipient profile with a group of target recipients;

(B) transmitting a set of bulk e-mails to said target recipients in said matched group;

(C) calculating a quantity of e-mails in said set of bulk e-mails which have been successfully received by said target recipients; and,

(D) if said calculated quantity does not exceed a prescribed minimum quantity of successfully received e-mails, repeating steps (A)-(C) until said calculated quantity exceeds said prescribed minimum quantity.

Dependent claim 2 adds the step of choosing a subset of the targeted group for email distribution. Claim 5 also depends from claim 1 and specifies that the list of targeted recipients is an "opt-in list." Claim 11 is an independent apparatus claim to a "machine readable storage" with a "computer program" that performs the method of claim 1. Claims 12 and 15 depend from claim 11 and mirror claims 2 and 5, respectively.

At the district court, the parties filed a joint claim chart and separate memoranda of law addressing claim construction. InfoUSA moved for summary judgment of invalidity. After conducting a Markman hearing, but without issuing a formal claim construction order, the district court convened a summary judgment hearing. The court then granted InfoUSA's motion, assuming for summary judgment purposes that Perfect Web's claim constructions were correct. Opinion at 1 n. 1. It first concluded that claim 1 would have been obvious under 35 U.S.C. § 103 because steps (A)-(C) of the claimed methods appear in the prior art and step (D) "would be obvious to virtually anyone." Id. at 7. Moreover, the court found that claim 1 was anticipated under 35 U.S.C. § 102(b) by a company called the EmailChannel, which allegedly performed the claimed method in public before the patent's critical date. Id. at 15. Additionally, the court held that claim 1 did not constitute patentable subject matter under 35 U.S.C. § 101 because it was "merely a series of algorithms." Id. at 18. Finally, the court concluded that all of the dependent claims were also invalid as obvious, anticipated, and/or directed to ineligible subject matter.

Perfect Web appealed, and we have jurisdiction under 28 U.S.C. § 1295(a)(1) (2006).

DISCUSSION

"We review a district court's grant of summary judgment de novo, reapplying the standard applicable at the district court." Young v. Lumenis, Inc., 492 F.3d 1336, 1345 (Fed.Cir.2007). Summary judgment is proper if there is "no genuine issue as to any material fact" and "the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

Obviousness

"Obviousness is a question of law based on underlying findings of fact." In re Kubin, 561 F.3d 1351, 1355 (Fed.Cir. 2009). The underlying factual inquiries are: (1) the scope and content of the prior art, (2) the differences between the prior art and the claims at issue, (3) the level of ordinary skill in the pertinent art, and (4) secondary considerations of nonobviousness. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 406, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007) (citing Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966)).

The district court began its obviousness analysis by stating that the relevant art in the '400 patent is "the art of e-mail marketing," and that the person of ordinary skill in that art possessed "at least a high school diploma, one year of experience in the industry, and proficiency with computers and e-mail programs." Opinion at 6. It then found that the prior art and '400 patent specification showed that steps (A)(C) of the claim 1 method were previously known. According to the court, "[t]he question then becomes whether e-mail marketers of ordinary skill would have repeated the first three steps to deliver a prescribed quantity of e-mail to targeted recipients," as called for in step (D). Id. at 7. Citing the Supreme Court's teaching in KSR that "[a] person of ordinary skill is also a person of ordinary creativity, not an automaton," the court found step (D) obvious: "the final step is merely the logical result of common sense application of the maxim `try, try again.'" Id. at 11. The district court rejected Perfect Web's alleged secondary considerations of nonobviousness because Perfect Web failed to establish the necessary nexus between InfoUSA's gross revenue and the invention to show commercial success and introduced insufficient evidence of a long-felt need for the invention.

On appeal, the parties have narrowed the obviousness controversy to a select few issues. Perfect Web does not contest the district court's analysis of the first three Graham factors, including the definition of ordinary skill in the pertinent art. Perfect Web's Br. 46. Perfect Web also "assumes for purposes of this appeal that at least one prior art reference discloses the first three steps" of claim 1. Id. Furthermore, Perfect Web makes no obviousness arguments specific to the other asserted claims (2, 5, 11, 12, and 15), urging only that "those claims are valid for the reasons set forth regarding claim 1." Id. at 58; see also SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1319 (Fed.Cir.2006) (noting that "arguments not raised in the opening brief are waived"). Meanwhile, InfoUSA concedes that step (D) does not appear in the prior art. Opinion at 7. As to secondary considerations, Perfect Web now asserts only long-felt need, not commercial success.

Perfect Web argues that there are factual disputes on two issues: whether "common sense" would have taught step (D), and the presence of a long-felt need. It argues that common sense or knowledge "must be rooted in evidence and factual findings," because they play "the same role as the inquiry into whether the prior art contains any teaching, suggestion or motivation (`TSM') that would have led a person of ordinary skill to produce the claimed invention." Perfect Web's Br. 48-49. Perfect Web contends that the district court improperly viewed the invention through a hindsight-tinted lens, misconstrued step (D) to mean "try, try again," and discounted expert testimony that the patent was not a common-sense advance. Perfect Web also claims that the field of email marketing had an unmet need for the invention because the industry previously relied on "oversending," which involved sending an excess of messages to ensure delivery to the desired quantity of recipients, in the process wasting resources and annoying consumers without guaranteeing delivery.

In response, InfoUSA reiterates its position that step (D) was a common-sense addition to steps (A)-(C), citing its experts' opinions. It also argues that repetition of the selection and transmission steps would have been obvious to try because there were, at most, two or three predictable solutions at the time for ensuring e-mail delivery. Finally, InfoUSA claims that Perfect Web's assertion of long-felt need lacks evidentiary support or sufficient weight to overcome an otherwise strong case of obviousness.

A. "Common Sense"

In rejecting rigid application of the "teaching, suggestion, or motivation" test for obviousness, the Supreme Court observed that common sense can be a source of reasons to combine or modify prior art references to achieve the patented invention. In KSR, the Court offered guidance that has now been cited repeatedly:

When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under § 103.

550 U.S. at 421, 127 S.Ct....

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