Resqnet.Com, Inc. v. Lansa, Inc.

Citation594 F.3d 860
Decision Date05 February 2010
Docket NumberNo. 2009-1030.,No. 2008-1366.,No. 2008-1365.,2008-1365.,2008-1366.,2009-1030.
PartiesRESQNET.COM, INC., Plaintiff-Appellant, and Kaplan & Gilman, LLP and Jeffrey I. Kaplan, Esq., Sanctioned Parties-Appellants, v. LANSA, INC., Defendant-Cross Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Jeffrey I. Kaplan, Kaplan Gilman & Pergament, LLP, of Woodbridge, NJ, argued for plaintiff-appellant and sanctioned parties-appellants. With him on the brief was Michael R. Gilman.

James H. Hulme, Arent Fox, LLP, of Washington, DC, argued for defendant-cross appellant. With him on the brief was Janine A. Carlan. Of counsel was Leo M. Loughlin.

Before NEWMAN, LOURIE, and RADER, Circuit Judges.

PER CURIAM.

The United States District Court for the Southern District of New York ruled that U.S. Patent No. 6,295,075 (the '075 patent), owned by ResQNet.com, Inc., is valid and is infringed by Lansa, Inc. The district court also ruled that ResQNet's U.S. Patent No. 5,831,608 (the '608 patent) is not infringed. The court awarded damages of $506,305 for past infringement based on a hypothetical royalty of 12.5%, plus prejudgment interest. The court denied ResQNet's motion for a permanent injunction, and imposed a license, at a royalty of 12.5%, for future activity covered by the '075 patent. The court assessed sanctions under Rule 11 against ResQNet and its counsel. We affirm the district court's rulings on the issues of validity and infringement, and reverse the imposition of sanctions. On Lansa's cross-appeal, we vacate the damages award and remand for redetermination of damages.

BACKGROUND

This litigation began in 2001. The district court issued a claim construction order, ResQNet.com, Inc. v. Lansa, Inc., No. 01 Civ. 3578(RWS), 2002 WL 31002811 (S.D.N.Y. Sept. 5, 2002). Thereafter, on November 4, 2002 a Consent Judgment was entered to enable appeal of the claim construction to the Federal Circuit, and also dismissing two of the five patents in suit. J.A. 265-68. On appeal, this court modified the district court's claim construction. ResQNet.com, Inc. v. Lansa, Inc., 346 F.3d 1374 (Fed.Cir.2003) (ResQNet I). On Lansa's motion filed in September 2004, Rule 11 sanctions were imposed. ResQNet.com, Inc. v. Lansa, Inc., 382 F.Supp.2d 424, 457 (S.D.N.Y. 2005) (ResQNet II). The appeal of the sanctions order was dismissed by this court, on the ground that the appeal was not ripe because the merits of the underlying litigation had not yet been decided. ResQNet.com, Inc. v. Lansa, Inc., 138 Fed. Appx. 312 (Fed.Cir.2005). A bench trial was conducted, with judgment reported at ResQNet.com, Inc. v. Lansa, Inc., 533 F.Supp.2d 397 (S.D.N.Y.2008) (ResQNet III), corrected on reconsideration, J.A. 56-61 (Mar. 17, 2008). The district court declined to withdraw the sanctions. ResQNet.com, Inc. v. Lansa, Inc., No. 01 Civ. 3578(RWS), 2008 WL 4376367 (Sept. 25, 2008) (ResQNet IV). This appeal and cross-appeal followed, with ResQNet's attorneys joining in the appeal of the sanctions order.

The Technology

The technology relates to screen recognition and terminal emulation processes that download a screen of information from a remote mainframe computer onto a local personal computer (PC). Before the use of PCs, each computer user would connect to the mainframe using a so-called "dumb terminal," which displayed information received from the mainframe and sent all data entries back to the mainframe for processing. Because a dumb terminal's monitor usually was a monochromatic green color, the display was called a "green screen." PCs came to replace dumb terminals, with the PC using software to facilitate communication to and from the mainframe, and processing the information into a graphical user interface (GUI) format. The GUI format displays and receives information to and from the user, and sends and receives information in the manner understood by the mainframe. The ResQNet patents facilitate recognition of the information that the mainframe sends to the PC. The technology is more fully described in ResQNet I, 346 F.3d at 1375-76.

The accused product is a terminal emulator program called "NewLook," developed by Looksoftware Proprietary Limited in Australia, and sold by Lansa in the United States. As described more fully in ResQNet III, 533 F.Supp.2d at 406-07, the NewLook product creates a GUI using a dynamic architecture whereby the software automatically converts green screens into GUI screens without using a table lookup or otherwise recognizing the actual screen being displayed. The NewLook program has two "editions." The standard edition of NewLook is designed for use on a personal computer, and is typically used by a user running a special application. The developer or professional edition of NewLook is used by a programmer or developer to create overrides to change how elements are displayed.

ResQNet charged Lansa with infringement of five patents: the '608 patent, the '075 patent, U.S. Patent No. 5,812,127 (the '127 patent), U.S. Patent No. 5,792,659 (the '659 patent), and U.S. Patent No. 5,530,961 (the '961 patent). The '127 and '659 patents were removed from the complaint, with prejudice, by the Consent Judgment filed on November 4, 2002. The '127 and '608 patents are relevant to the Rule 11 sanctions. Substantive issues concerning the '608 and '075 patents are presented in this appeal.

I The '608 Patent

The '608 patent is entitled "User Interface for a Remote Terminal." Claim 1, the only claim, is as follows:

1. Apparatus for implementing a computer terminal to be connected to a remote computer, said apparatus comprising:

means for identifying a particular user logged on to said remote computer through said computer terminal;

means for identifying, based upon a position, length and type of each of a plurality of fields, a particular screen to be displayed to said user; and

a plurality of special function keys, each key performing a specified function, the specified function performed by each key being determined by the particular user logged on and the particular screen identified to be displayed.

The claim was construed in ResQNet I, 346 F.3d at 1382-83. On remand, the district court ruled that the '608 patent is not infringed, finding that the NewLook products do not meet the first and third of the three clauses of claim 1. With respect to the first clause, the "means for identifying a particular user," the district court found that the '608 patent is directed to the situation whereby each user can assign its own values to the function key depending on the user's needs, whereas NewLook allows only for key customization for an entire group of users. For example, NewLook allows a programmer to change the function of the F1 button for a specific screen, but once the function is changed, every user of that screen will have the same function assigned to its F1 button. With respect to the third clause, the "special function keys" set by each user for each screen, the district court found that NewLook does not meet this limitation, even if the activities of the users are considered to supplement the activities of the NewLook product under theories of induced or contributory or split infringement.

ResQNet argues that NewLook uses the same means, for identifying users and determining key function, as are shown in the '608 patent. ResQNet argues that the district court's interpretation of the '608 patent claim to exclude the NewLook technology would also exclude the preferred embodiment set forth in the '608 specification. ResQNet states that NewLook allows a developer or an administrator to re-assign functions of various keys, whereby NewLook allows for different key functions depending on the user. ResQNet states that even when the NewLook programmer does not perform the customization of special function keys, this is performed by the user. Thus ResQNet argues that the district court misconstrued and misapplied the limitations of claim 1.

Lansa responds that in NewLook the function of each key is the same for all users and varies only depending on the screen, and thus that the third claim element is not performed by any user. Clear error has not been shown in the district court's finding that the NewLook system does not remap keys for specific screens. On this finding, the NewLook technology does not infringe claim 1 of the '608 patent.

II

The '075 Patent

Claim 1 of the '075 patent is as follows:

1. The method of communicating between a host computer and a remote terminal over a data network comprising steps of:

establishing a first communication session between said terminal and a communications server via a first communications channel;

downloading, from said server to said terminal, communications software for communicating between said terminal and said host and a plurality of specific screen identifying information;

utilizing said communications software to implement a second communications session between said terminal and said host via a second communications channel independent of said server;

receiving a screen from said host to said terminal;

if said received screen matches one of the plurality of specific screen identifying information, displaying a customized GUI screen; and

if said received screen does not match one of the plurality of specific screen identifying information, displaying a default GUI screen.

In the '075 method, specific screen identifying information is downloaded from a communications server to a remote terminal, along with communications software, and is used to identify information from the communications server. The district court held the '075 patent to be valid, and infringed by the NewLook products. Lansa appeals both rulings.

As to validity, Lansa argues that the claimed subject matter would have been obvious based on prior art that the district court excluded, and also that the claimed invention is barred or rendered obvious by Lansa's advertisement for sale and use of an early...

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