Netscape Commc'ns Corp. v. Valueclick Inc

• Decision Date: 02 April 2010
• Docket Number: No. 1:09cv225.,1:09cv225.
• Citation: 704 F.Supp.2d 544
• Parties: NETSCAPE COMMUNICATIONS CORP., Plaintiff,v.VALUECLICK, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

704 F.Supp.2d 544

NETSCAPE COMMUNICATIONS CORP., Plaintiff,v.VALUECLICK, INC., et al., Defendants.

No. 1:09cv225.

United States District Court,

E.D. Virginia,

Alexandria Division.

April 2, 2010.

Robert Leo Burns, II, Nicholas James Nugent, Umar Arshad, Finnegan Henderson Farabow Garrett & Dunner LLP, Reston, VA, Charles Brandon Rash, Philip A. Riley, Finnegan Henderson Farabow Garrett & Dunner LLP, Washington, DC, for Plaintiff.

Sheila Mary Costin, Amy Sanborn Owen, Richard Evans Craig, Cochran & Owen LLC, Vienna, VA, Philip James Meitl, Bryan Cave LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

In this patent infringement suit, plaintiff claims that defendants ¹ wilfully infringed, and continue to infringe, U.S. Patent No. 5,774,670 (“the '670 patent”), colloquially known as the “Internet cookies” patent. Following full briefing and argument, the disputed patent claim terms were construed pursuant to Markman v. Westview Instruments, Inc., 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996). See Netscape Commc'ns Corp. v. ValueClick, Inc. (Netscape I), 684 F.Supp.2d 678 (E.D.Va.2009) (Mem. Op.). The parties thereafter filed various cross-motions for summary judgment, which motions were partially resolved in a Memorandum Opinion dated January 29, 2010. See Netscape Commc'ns Corp. v. ValueClick, Inc. (Netscape II), 684 F.Supp.2d 699 (E.D.Va.2010) (Mem. Op.) (hereinafter “the Memorandum Opinion”). ² At issue here is plaintiff's motion for reconsideration with respect to the entry of summary judgment in favor of defendants on a single issue, namely that claim 1 of the ' 670 patent is invalid under the statutory on-sale bar pursuant to 35 U.S.C. § 102(b).

I.

Under the Supreme Court's seminal decision in Pfaff v. Wells Electronics, Inc., 525 U.S. 55, 119 S.Ct. 304, 142 L.Ed.2d 261 (1998), a party invoking the § 102(b) statutory on-sale bar must prove (i) a commercial offer for sale of an invention that is (ii) ready for patenting prior to the statutory one-year period i.e., the “critical date.” The first Pfaff requirement is further separated into two distinct, constituent elements: (i) a commercial offer for sale, and (ii) a sufficient degree of identity between the subject of the offer for sale and the patented invention. See Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1353 (Fed.Cir.2002). Importantly, both prongs of the Pfaff test must be proven by clear and convincing evidence. Clock Spring, L.P. v. Wrapmaster, Inc., 560 F.3d 1317, 1325 (Fed.Cir.2009).

After considering the parties' pleadings, memoranda and exhibits submitted in support of their various motions for summary judgment, and the representations made by counsel in the course of the September 25, 2009 and December 18, 2009 hearings, the Memorandum Opinion found certain facts to be undisputed and material with respect to the on-sale bar analysis. See Netscape II, 684 F.Supp.2d at 704-09. Based on these factual findings, the Memorandum Opinion then found, by clear and convincing evidence, that claim 1 of the '670 patent was invalid under the § 102(b) on-sale bar because: (i) plaintiff had made a commercial offer to MCI Communications Corp. (“MCI”) in September 1994; (ii) the subject of the offer was sufficiently identical to the method disclosed in claim 1; and (iii) the method disclosed in claim 1 was “ready for patenting” prior to October 6, 1994. Id. at 709-19.

In its motion for reconsideration, plaintiff argues that there was insufficient evidence of identity between the method disclosed in claim 1 and the subject of the offer to MCI, but does not challenge the fact of a commercial offer. Moreover, plaintiff contends that the invention was not “ready for patenting” prior to October 6, 1994. Notably, in moving for reconsideration plaintiff relies on some arguments rejected in the Memorandum Opinion, and additionally makes new arguments not raised in the earlier summary judgment briefs, including chiefly the application of the evidentiary corroboration requirement.³ The parties fully briefed and argued the issues at a March 26, 2010 hearing, at which time the motion was taken under advisement. Accordingly, the matter is ripe for disposition.

II.

At the threshold, the parties challenge the proper standard of review applicable to plaintiff's motion for reconsideration. Plaintiff moves for reconsideration under Rules 54(b), 59(e), and 60(b)(6), Fed.R.Civ.P. Motions for reconsideration pursuant to Rules 59(e) and 60(b)(6) are considered to be requests for an “extraordinary remedy” reserved only for “extraordinary circumstances” in which: (i) there is an intervening change in the law; (ii) new evidence not available at trial has been discovered; or (iii) a clear error of law must be corrected in order to prevent manifest injustice. See Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir.1998) (setting standards for motion pursuant to Rule 59(e)); Dowell v. State Farm Fire & Cas. Auto. Ins. Co., 993 F.2d 46, 48 (4th Cir.1993) (limiting relief under Rule 60(b)(6) to “extraordinary circumstances”). By contrast, a motion for reconsideration filed under Rule 54(b), Fed.R.Civ.P.,⁴ does not require a showing of extraordinary circumstances.

The Fourth Circuit has made clear that where, as here, the entry of partial summary judgment fails to resolve all claims in a suit, Rule 54(d)-not Rule 59(e) or 60(b)-governs a motion for reconsideration:

[A]n order of partial summary judgment is interlocutory in nature. See, e.g., 11 Moore's Federal Practice § 56.40[3] (Matthew Bender 3d ed.) (“A partial summary judgment order is interlocutory....”). Motions for reconsideration of interlocutory orders are not subject to the strict standards applicable to motions for reconsideration of a final judgment. See 12 Moore's Federal Practice § 60.23 (“Rule 60(b) does not govern relief from interlocutory orders....”).

Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514-15 (4th Cir.2003). And while doctrines such as law of the case guide a district court's discretion to reconsider an earlier partial summary judgment ruling, it is clear that “[t]he ultimate responsibility of the federal courts, at all levels, is to reach the correct judgment under law.” Id.

Accordingly, the motion at bar is properly brought only pursuant to Rule 54(d), Fed.R.Civ.P., and therefore plaintiff is not required to make a showing of extraordinary circumstances. Instead, the goal here “is to reach the correct judgment under law.” Id.

III.

Plaintiff first argues that the summary judgment record does not support a finding, based on clear and convincing undisputed evidence, that there is sufficient identity between the subject of the MCI offer for sale and claim 1 of the '670 patent. The Memorandum Opinion determined that the record evidence, considered as a whole, satisfied the clear and convincing standard because “the ultimate factfinder [would have] an abiding conviction that the truth of [the claimants'] factual contentions are highly probable.” Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1360 n. 5 (Fed.Cir.2007) (citations and quotation marks omitted). Here, plaintiff contends: (i) that the Memorandum Opinion did not address whether two Markman claim term definitions-namely the “said http server” limitation and the sequence of steps disclosed in the claim 1 method-were offered to MCI; (ii) that the Memorandum Opinion incorrectly concluded that the “state object” claim limitation was offered for sale; (iii) that, to the extent testimonial evidence supports a finding of identity, evidence corroborating this testimony is lacking or insufficient; and (iv) that the record contains disputed material facts. These arguments are addressed in turn.

A.

In Netscape I, the claim term “said http server” was construed to mean “the same http server that received the request from the http client.” Netscape I, 684 F.Supp.2d at 695. In addition, it was determined that the steps of the method disclosed in claim 1 should be construed, as follows: (i) request for a file by the http client; (ii) transfer of the file from the http server to the http client; (iii) transfer of the state object from the http server to the http client; and (iv) storage of the state object by the http client. See id. at 696-98. These Markman claim constructions were based chiefly on the patent's teaching that http servers are passive entities. See id. at 695, 697 (recognizing that passivity of http server is central to claim construction). Plaintiff correctly asserts that certain of these Markman claim term definitions were not explicitly addressed in the Memorandum Opinion. Nonetheless, clear and convincing undisputed record evidence supports the conclusion that these claim limitations, as defined in the Markman process, were included in the offer for sale. The dispositive principle here is inherency.

The doctrine of inherent anticipation is most commonly invoked with respect to prior art references, as in the context of a patent examiner's rejection of a patent application on the ground that the claimed invention was in the prior art,⁵ or in the context of a claim of invalidity on grounds that a patented invention was used or described in a printed publication under 35 U.S.C. § 102(a)- (b).⁶ Yet, the Federal Circuit has extended the doctrine of inherent anticipation to the § 102(b) on-sale bar context, explaining that

there is no requirement that the offer [for sale] specifically identify these limitations. Nor is there a requirement that [the inventor/assignee] must have recognized the significance of these limitations at the time of offer. If the process that was offered for sale inherently possessed each of the claim limitations, then the process was on sale, whether or not the seller recognized that his process possessed the claimed characteristics.

Scaltech Inc. v. Retec/Tetra, L.L.C., 178 F.3d 1378, 1384 (Fed.Cir.1999) (internal citations omitted); see also

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