Elcommerce.Com, Inc. v. Sap AG

• Citation: 745 F.3d 490
• Decision Date: 24 February 2014
• Docket Number: No. 2011–1369.,2011–1369.
• Parties: ELCOMMERCE.COM, INC., Plaintiff–Appellant, v. SAP AG and SAP America, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

745 F.3d 490

ELCOMMERCE.COM, INC., Plaintiff–Appellant,

v.SAP AG and SAP America, Inc., Defendants–Appellees.

No. 2011–1369.

United States Court of Appeals,Federal Circuit.

Feb. 24, 2014.

Christopher R. Benson, Fulbright & Jaworski, L.L.P., of Austin, TX, argued for plaintiff-appellant. With him on the brief were Sheila Kadura, of Austin, TX, and Jonathan S. Franklin, of Washington, DC.

Michael A. Morin, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC, argued for defendants-appellees. With him on the brief were J. Michael Jakes, Naveen Modi, and Luke J. McCammon, of Washington, DC; and Joseph E. Palys, of Reston, VA. Of counsel on the brief was Samir N. Pandya, SAP America, Inc., of Newtown Square, PA.

Before NEWMAN, PLAGER, and WALLACH, Circuit Judges.

Opinion for the court filed by NEWMAN, Circuit Judge.

Dissenting in part opinion filed by WALLACH, Circuit Judge.

NEWMAN, Circuit Judge.

Elcommerce.com, Inc. is the owner of United States Patent No. 6,947,903 (“the '903 patent”), directed to a system and method of monitoring a supply chain of components in order to coordinate and stabilize the supply of components from various producers. Elcommerce brought suit in the United States District Court for the Eastern District of Texas, charging SAP AG and SAP America, Inc. (collectively “SAP”) with patent infringement. SAP filed a declaratory judgment counterclaim that the '903 patent is invalid, unenforceable, and not infringed. On SAP's motion, the district court transferred the case to the United States District Court for the Eastern District of Pennsylvania. Elcommerce objected to the transfer on jurisdictional and venue grounds, and on this appeal elcommerce requests that the Pennsylvania court's judgment be voided and the case returned to Texas for trial.

The Pennsylvania district court construed the claims of the '903 patent, and on this claim construction the court entered summary judgment that the asserted system claims 22–30, 32, 33 and 37 are invalid for indefiniteness under 35 U.S.C. § 112 ¶ 2, based on failure to comply with the requirements of § 112 ¶ 6. The parties stipulated that the district court's claim construction precludes finding that SAP infringes any of the asserted method claims 1, 3, 4, 12, 13, 17–21, 38, 43, 44, 47, 50, 53, or 54. Final judgment was entered of invalidity of the system claims and non-infringement of the method claims.¹

On appeal by elcommerce, we affirm the district court's construction of the ' 903 patent's claim terms “independent supply chain sites,” “scanning for,” “detecting,” and “monitoring for changed supply-related data information.” On this ground, the parties' stipulation of non-infringement of the method claims is affirmed.

For the system claims the ruling of invalidity is vacated, for the summary judgment was based on an incorrect evidentiary premise. SAP had incorrectly informed the district court that Federal Circuit precedent makes unnecessary consideration of evidence of the knowledge and understanding of the relevant technology by persons of skill in the field of the invention. Thus SAP declined to provide evidence of how such persons would view the description of “structure, materials, or acts” in the specification for performance of the several functions claimed in the form authorized by 35 U.S.C. § 112 ¶ 6. On this absence of evidence, the district court held that every claimed function was devoid of support, and therefore that every system claim is invalid on the ground of indefiniteness. Because invalidity must be proven by clear and convincing evidence, we vacate the court's rulings with respect to the system claims, and remand for determination of validity on an appropriate evidentiary record and standard.

IJurisdiction and Venue

Soon after the filing of suit by elcommerce in the Eastern District of Texas, SAP moved under 28 U.S.C. § 1404(a) for transfer to the Eastern District of Pennsylvania, on SAP's statement that Pennsylvania is the headquarters location of SAP America and the location of its witnesses and documents. Elcommerce objected to the transfer, stating that it is the plaintiff's prerogative to choose the forum, that § 1404(a) favors keeping the action in Texas, that personal jurisdiction over SAP exists in Texas based on SAP's commercial activities in Texas, and that the Eastern District of Pennsylvania lacks personal jurisdiction over elcommerce. The Texas district court granted the transfer.²

On arrival in the Eastern District of Pennsylvania, elcommerce again disputed the Pennsylvania court's personal jurisdiction over it, and requested transfer back to Texas. The Pennsylvania court denied the request,³ stating that “[u]nder law-of-the-case principles, if the transferee court can find the transfer decision plausible, its jurisdictional inquiry is at an end,” quoting Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 819, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988).

Elcommerce appeals the transfer, on the grounds that it is the defendant to SAP's declaratory judgment counterclaims that were filed in Texas and included in the transfer to Pennsylvania, and that judgment cannot be entered against a defendant or its property over which the court does not have personal jurisdiction. Elcommerce states that it does not have minimum contacts with the Eastern District of Pennsylvania or with the state of Pennsylvania, and that minimum contacts are required for personal jurisdiction. Elcommerce cites International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), where the Court explained that “due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Id. at 316, 66 S.Ct. 154 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). Thus elcommerce argues that the judgment invalidating its patents via declaratory judgment counterclaim could not properly be decided in Pennsylvania.

Elcommerce also stresses that as plaintiff it is entitled to its choice of forum, and states that Federal Circuit precedent in similar circumstances is explicitly contrary to the transfer. Thus elcommerce states that the Eastern District of Pennsylvania lacked jurisdiction to enter a binding judgment in this suit, and asks that the Pennsylvania judgment be vacated and the case returned to Texas for trial.

A

SAP proposes first that this court need not be concerned with the question of personal jurisdiction over elcommerce in Pennsylvania, offering the theory that any transfer error is harmless because the dispositive issues on this appeal—claim construction and validity under § 112—are questions of law that the Federal Circuit decides de novo. SAP states that it is irrelevant whether the appealed decision was rendered by a district court in Texas or in Pennsylvania, because on appeal the Federal Circuit decides these questions for itself, with no deference to the district court's rulings.

It is axiomatic that jurisdiction must be present in every tribunal, whether the issue is one of fact or law, and whatever the standard of appellate review. “ ‘Without jurisdiction the court cannot proceed at all in any cause’; it may not assume jurisdiction for the purpose of deciding the merits of the case.” Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (quoting Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)). If jurisdiction is absent in the district court its decision is void, for “[t]he requirement that jurisdiction be established as a threshold matter springs from the nature and limits of the judicial power of the United States and is inflexible and without exception.” Steel Co., 523 U.S. at 94–95, 118 S.Ct. 1003.

A void decision cannot receive appellate review, even when review is by de novo determination. There must be jurisdiction in the district court to reach an appealable judgment; SAP's proposition of harmless error is meritless.

B

The transfer to Pennsylvania was founded on the statutory authorization of transfer of civil actions between federal district courts, on specified conditions:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

28 U.S.C. § 1404(a) (1996). Absent consent, the transferee forum must be a court in which the action “might have been brought.” Hoffman v. Blaski, 363 U.S. 335, 343–44, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960). Elcommerce agrees that it could have sued SAP in the Eastern District of Pennsylvania, but stresses that SAP could not have brought a declaratory judgment action against elcommerce in Pennsylvania.

Elcommerce states that the Pennsylvania judge erroneously concluded that because elcommerce was the plaintiff in the Texas action, personal jurisdiction over elcommerce in Pennsylvania is unnecessary in an action transferred under § 1404(a). Elcommerce recognizes that as plaintiff in Texas it was subject to the Texas court's jurisdiction over any relevant counterclaims filed by the defendant, but argues that its voluntary submission to the jurisdiction of the Texas court does not carry over to an involuntary transfer to a different venue. See Lindahl v. Office of Pers. Mgmt., 470 U.S. 768, 793 n. 30, 105 S.Ct. 1620, 84 L.Ed.2d 674 (1985) (“venue considerations come into play only after jurisdiction has been established”).

Elcommerce stresses that SAP's response to the Texas complaint included declaratory judgment counterclaims, and argues that personal jurisdiction in Pennsylvania was improper because a declaratory judgment action could not have been brought...