Whitserve, LLC v. Computer Packages, Inc.

Decision Date10 October 2012
Docket NumberNos. 2011–1206,2011–1261.,s. 2011–1206
Citation694 F.3d 10
PartiesWHITSERVE, LLC, Plaintiff/Counterclaim Defendant–Cross Appellant, and Wesley W. Whitmyer, Jr., Third Party Defendant–Cross Appellant, v. COMPUTER PACKAGES, INC., Defendant/Counterclaim Plaintiff–Appellant.
CourtU.S. Court of Appeals — Federal Circuit

OPINION TEXT STARTS HERE

Gene S. Winter, St. Onge Steward Johnston & Reens, LLC, of Stamford, CT, argued for plaintiff/counterclaim defendant-cross appellant and Third party defendant-cross appellant. With him on the brief were Erin R. Woelker, Michael J. Kosma, and Stephen Ball.

John A. Krause, Fitzpatrick, Cella, Harper & Scinto of New York, New York argued for defendant/counterclaim plaintiff-appellant. With him on the brief were Douglas Sharrott, Marc J. Pensabene and Robert J. Czarnecki, Jr. Of counsel was Robert H. Fischer.

Before PROST, MAYER and O'MALLEY, Circuit Judges.

Opinion for the court filed by Circuit Judge O'MALLEY.

Dissenting opinion filed by Circuit Judge MAYER.

O'MALLEY, Circuit Judge.

This patent case, presenting myriad issues, includes an appeal from a jury's finding of willful infringement of four patents, a cross-appeal of the trial court's denial of various post-trial motions, and a separate cross-appeal of a denial of sanctions and attorneys' fees. On the appeal, we affirm the jury's finding of infringement, affirm the jury's finding of no anticipation of most, but not all, claims, and we vacate the jury's damages award and remand for a new trial on damages. On the cross-appeal, we remand for a proper determination of the post-trial motions at issue. As to the separate cross-appeal, we affirm the denial of fees and sanctions.

Background

This case is between WhitServe, LLC (WhitServe), a company owned by Wesley Whitmyer, Jr., and Computer Packages, Inc. (CPi). Mr. Whitmyer is WhitServe's sole principal and employee, and is both an inventor and a practicing patent attorney. CPi is in the business of helping other businesses pay their patent maintenance fees on time. WhitServe sued CPi, alleging that CPi's systems infringe four of its patents, all of which list Whitmyer as their inventor and have been assigned to WhitServe.

The patents at issue are U.S. Patent No. 6,981,007 (the '007 Patent), entitled “Onsite Backup for Internet–Based Data Processing,” and the “'468 Family” of patents: U.S. Patent No. 5,895,468 (the '468 Patent), entitled “System Automating Delivery of Professional Services”; U.S. Patent No. 6,182,078 (the '078 Patent), entitled “System for Delivering Professional Services Over the Internet”; and U.S. Patent No. 6,049,801 (the '801 Patent), entitled “Web Site Providing Professional Services.” The '468 Family is directed to automating the delivery of professional services while the ' 007 Patent covers technology for backing up client data. At trial, WhitServe asserted that CPi's products—Desktop EARS, TERMS, CPi OnLine, Hosted EARS, and Hosted PMS—infringe Whit–Serve's four patents. EARS and TERMS are computer software programs operated by a CPi customer, such as a law firm, to generate and send reminders to its clients of upcoming patent or trademark annuity or maintenance fee deadlines. CPi OnLine, Hosted EARS, and Hosted PMS serve the same purpose, but the CPi software and annuity database are “hosted” on CPi's servers, rather than stored on the client's computers.

CPi answered WhitServe's complaint with affirmative defenses and a counterclaim against WhitServe seeking a declaratory judgment of non-infringement, invalidity and unenforceability. CPi also named Whitmyer as a counterclaim defendant,” asserting that he is the alter ego of WhitServe, that he is the true owner of the asserted patents, and that he personally engaged in inequitable conduct in the prosecution of those patents.1

The primary factual dispute at trial concerned how CPi's products operated, and whether they fell within the '468 Family claims' definition of “automatic.” There was also a dispute over whether the '007 Patent was anticipated by the prior art. The jury found that CPi failed to prove any claims invalid, that CPi's systems infringed the four patents, that CPi's infringement was willful, and that WhitServe was entitled to $8,378,145 in damages.2

After trial, the trial court denied all of WhitServe's requested post-trial relief. First, the court denied Whit–Serve's request for a permanent injunction on the merits, and did not address a request for a compulsory license. WhitServe's requests for enhanced damages and attorneys' fees, prejudgment interest, prejudgment remedy, and disclosure were then dismissed as “moot” in light of the trial court's order entering judgment, in which it stated that [t]he court concludes that the ... jury verdict ... is fair, just, and reasonable and adequately addresses all legal and equitable considerations.” WhitServe's motion for post-trial accounting was denied as “moot” without explanation. The district court later reconsidered WhitServe's “mooted” motions and this time denied them on the merits after stating that the “damages awarded in favor of the plaintiff ... constitute complete compensation with respect to this matter.” The court entered judgment in favor of Whitmyer on the third party complaint “consistent with the jury's verdict,” but denied a motion by Whitmyer seeking fees and sanctions from CPi for the assertion of that claim. The court explained its denial of Whitmyer's motion by stating that he had “failed to set forth facts warranting such relief.” The court also denied as “moot” a series of motions CPi filed seeking judgment as a matter of law (JMOL) and/or a new trial, again on the grounds that the jury verdict was “fair, just and reasonable.”

CPi appealed and WhitServe and Whitmyer each cross-appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

CPi claims that the trial court erred in denying its post-trial motions for JMOL and/or a new trial. It argues that (1) its products do not infringe the ' 468 Family because they do not work “automatically”; (2) the '007 Patent is anticipated by the prior art; and (3) the damages award should be reduced or vacated for a new trial.3 WhitServe cross-appeals on grounds that it should have been granted a permanent injunction or compulsory license against CPi and that it was entitled to prejudgment interest, enhanced damages, attorneys' fees, and a post-trial accounting. Whitmyer cross-appeals requesting his fees and expenses.

Discussion
I. CPi's Appeal

We first address CPi's arguments on appeal. As noted, we affirm the trial court's denial of JMOL on infringement because substantial evidence supports the jury's verdict. We also affirm the denial of JMOL on anticipation on most claims, but reverse-in-part because we find that substantial evidence does not support the jury's finding that Claim 10 of the '007 Patent is not anticipated. We remand for a new trial on damages because the jury's damages verdict is unsupported by the record and the trial court abused its discretion when it failed to order a new damages trial.

This court reviews denial of post-trial motions under regional circuit law, the Second Circuit in this case. See Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 563 F.3d 1358, 1370 (Fed.Cir.2009). The Second Circuit reviews a denial of JMOL de novo. AMW Materials Testing, Inc. v. Town of Babylon, 584 F.3d 436, 456 (2d Cir.2009). Similar to the frequently applied substantial evidence standard,

a district court may set aside the [jury's] verdict pursuant to Rule 50 only where there is “such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or there is such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded men could not arrive at a verdict against him.”

Id. (quoting Cross v. N.Y.C. Transit Auth., 417 F.3d 241, 248 (2d Cir.2005)). The Second Circuit considers the evidence in the light most favorable to the non-moving party and gives that party the benefit of all reasonable inferences that the jury might have drawn in the non-movant's favor. Caceres v. Port Auth., 631 F.3d 620, 622 (2d Cir.2011).

A. Infringement

Claim 1 of '468 Patent is representative of the claims in the '468 Patent Family. It recites:

A device for automatically delivering professional services to a client comprising:

a computer;

a database containing a plurality of client reminders, each of the client reminders comprising a date field having a value attributed thereto;

software executing on said computer for automatically querying said database by the values attributed to each client reminder date field to retrieve a client reminder;

software executing on said computer for automatically generating a client response form based on the retrieved client reminder;

a communication link between said computer and the Internet;

software executing on said computer for automatically transmitting the client response form to the client through said communication link; and,

software executing on said computer for automatically receiving a reply to the response form from the client through said communication link.

'468 Patent col. 6 l. 56 to col. 7 l. 8 (emphases added).

The district court interpreted “automatic” in the claims as:

a process that, once initiated, is performed by a machine without the need for manually performing that process, that is, without the need for human intervention. A machine may still perform the claimed process automatically, even though a human might manually initiate or interrupt the process.

In reaching the conclusion that the term “automatic” as used in claim 1 does not exclude all possible human intervention, the trial court relied on our decision in CollegeNet, Inc. v. ApplyYourself, Inc., 418 F.3d 1225, 1235 (Fed.Cir.2005), where we explained that dishwashers and autopilots could still be automatic even though they must be started by...

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