Pickholtz v. Rainbow Technologies, Inc.
| Citation | 284 F.3d 1365 |
| Decision Date | 03 April 2002 |
| Docket Number | No. 01-1173.,01-1173. |
| Parties | Andrew PICKHOLTZ, Plaintiff-Appellant, v. RAINBOW TECHNOLOGIES, INC. and Software Security, Inc., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals for the Federal Circuit |
Vincent M. DeLuca, Rothwell, Figg, Ernst & Manbeck, P.C., of Washington, DC, argued for plaintiff-appellant. With him on the brief were Brent O. Hatch, Hatch, James & Dodge, P.C., of Salt Lake City, UT; and Mark F. James. Of counsel on the brief was Andrew Pickholtz, of San Francisco, CA.
Thomas L. Blasdell, Foley & Lardner, of Los Angeles, CA, argued for defendants-appellees. With him on the brief was John R. Hamilton, Foley & Lardner, of Orlando, FL.
James C. Turner, HALT — An Organization of Americans for Legal Reform, of Washington, DC, for amicus curiae HALT. Of counsel on the brief were Thomas M. Gordon and Steven E. Serdikoff.
Before MAYER, Chief Judge, LOURIE and DYK, Circuit Judges.
Andrew Pickholtz appeals from the decisions of the United States District Court for the Northern District of California denying his motion for summary judgment of infringement and granting the defendants' ("Rainbow's") motion for summary judgment of noninfringement of Pickholtz's U.S. Patent 4,593,353. Pickholtz also appeals from the denial of his motion for attorney fees resulting from Rainbow's discovery misconduct. Because the court erred in construing the claims of the '353 patent, we reverse the court's grant of summary judgment in favor of Rainbow. Because there exist genuine issues of material facts under the proper claim construction, we affirm the court's denial of Pickholtz's motion for summary judgment. Because the court abused its discretion in refusing to award attorney fees to Pickholtz, we vacate that decision. We remand for further consideration of the infringement issue under the proper claim construction and the attorney fee issue under the court's inherent power.
Pickholtz is the inventor and owner of the '353 patent, which is directed to an apparatus for the prevention of piracy of computer software. The invention prevents computer software on an external memory device (e.g., a magnetic disc) from executing on a computer unless the software is authorized to do so. '353 patent, abstract. The authorization check involves two authorization codes recorded on the external memory device along with the protected software. Id. The authorization codes are members of the same pseudorandom sequence, and the computer is equipped with a pseudorandom number ("PRN") generator that generates that sequence. Id. at col. 3, ll. 37-54. Before the invention enables execution of the software from the external media device, the first authorization code is read from the external media device and used to initialize the PRN generator. Id. From that initial condition, the PRN generator operates, thereby creating another PRN. Id. Only if that PRN matches the second authorization code on the external media device is the software allowed to execute. Id.
The '353 patent illustrates the invention in Figure 1, which the patent describes as "a block diagram representation of a computer system including software protection, in accordance with the present invention." Id. at col. 2, ll. 57-59 (emphasis added).
As the patent describes that figure, a "computer system 10" comprises a central processing unit ("CPU") 12 in communication with a main memory 14. Id. at col. 2, l. 66 — col. 3, l. 1 (emphasis added). For additional details regarding possible embodiments of the CPU 12 and the main memory 14, the patent references two general microprocessor textbooks. Id. at col. 3, ll. 4-17. The computer system 10 also comprises a disc 18, on which is stored the protected software and the two authorization codes, as well as a PRN generator 22, which is preferably a hardware module encased in plastic, epoxy, or radiation opaque material to prevent inspection and tampering. Id. at col. 3, ll. 37-54, col. 5, ll. 21-32. Alternatively, the PRN generator 22 may be implemented in software. Id. at col. 5, ll. 21-32.
Pickholtz originally submitted claims to the Patent and Trademark Office ("PTO") defining the invention as a method and an apparatus for use with a "data processing system." However, Pickholtz changed his claims substantially before they were allowed. The examiner assigned to Pickholtz's patent application rejected all claims under 35 U.S.C. § 103 as being unpatentable over U.S. Patent 4,446,519, issued to David C. Thomas. Briefly, Thomas disclosed software that, when loaded into a computer's working memory, would generate a PRN to be sent to an electronic security device (ESD) on a plug-in circuit board for verification before enabling execution of the software. '519 patent at col. 1, l. 61 — col. 2, l. 16. In response to the rejection, Pickholtz replaced the pending claims with new claims, which were allowed essentially as submitted, and argued that Thomas lacked (1) a PRN generator device "located in the computer"; (2) a sealed casing on the PRN generator device; and (3) a second authorization code stored on an external memory. The examiner then allowed the claims, and the PTO issued the '353 patent. Claim 1, the only independent claim in the '353 patent, defines the invention as an apparatus for use with a "computer" and specifies that the PRN generator device is "located in the computer":
1. A software protection apparatus using first and second authorization codes and a pseudorandom number, said software protection apparatus for use with a computer, comprising:
an external memory device having computer software and a first authorization code and a second authorization code at selected data locations, wherein said second authorization code is part of a pseudorandom sequence;
means for reading said external memory device, said reading means located in the computer;
pseudorandom number generator device located in the computer and coupled to said reading means, for generating a pseudorandom number in response to said reading means reading said first authorization code from said external memory device, said first authorization code being read prior to execution of said computer software, said pseudorandom number generator device including a sealed casing, thereby preventing identification of the pseudorandom number generator algorthim [sic];
processing means located in the computer and coupled to said reading means and said pseudorandom number generator device, for comparing the pseudorandom number generated by said pseudorandom number generator device with the second authorization code read from selected data locations in said external memory device, said processing means generating an enable signal in response to a positive comparison of the pseudorandom number with the second authorization code for enabling execution of the computer software stored in said external memory device.
'353 patent at col. 6, ll. 2-34 (emphasis added).
Pickholtz, who is an attorney, brought suit pro se against Rainbow alleging that Rainbow infringed the '353 patent by its manufacture and sales of certain computer dongles, which are small devices that externally connect to a computer port. Rainbow's dongle, under the control of a driver program, acts as a hardware key, hindering any unauthorized use of computer software. The driver program detects the presence of the dongle and exchanges encrypted information with it, preventing execution of a protected software program unless the dongle is attached to a port of the computer. Pickholtz alleged that the Rainbow dongle contains a PRN generator device as recited in claim 1, such that a computer with a Rainbow dongle attached and with its driver program executing infringes claim 1. Rainbow disputed the allegation that its dongle contains a PRN generator and argued that, even accepting that allegation, the dongle's PRN generator would not be "located in the computer," as the claim requires. Thus, a critical issue before the district court was construction of the term "computer" and the phrase "located in the computer" in claim 1.
Pickholtz proposed a broad construction of the term "computer," viz., "one or more processing units and the memory, peripherals and other devices connected electronically to and communicating with the processing units." Pickholtz v. Rainbow Techs., Inc., No. C 98-2661, slip op. at 5 (N.D.Cal. Apr. 28, 2000) (). Pickholtz supported that construction with technical literature and expert testimony. Rainbow proposed a narrower definition: a CPU and main memory, sans peripherals. Id. The district court adopted Rainbow's construction as the unambiguous meaning of the term on the basis of the patent's intrinsic evidence. Id. at 5-6 (). In arriving at that construction, the district court focused on two aspects of the intrinsic evidence. First, when describing Figure 1, the patent uses the term "computer system" to describe that collection of a CPU, main memory, a PRN generator, and a disc peripheral, whereas the claim uses the term "computer." From that distinction, the court concluded that a "computer" is different from a "computer system." Id. at 5. Secondly, the phrase "located in the computer" would be surplusage if the term "computer" were construed as broadly as Pickholtz proposed. Id. at 5-6. The court also read Pickholtz's prosecution remarks traversing the Thomas rejection as drawing a distinction between a "computer" and peripherals...
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