NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition is not citable as precedent. It is a public record. 

## United States Court of Appeals for the Federal Circuit

04-1571, 05-1153 IP INNOVATION, L.L.C., Plaintiff-Appellant,

v. ECOLLEGE.COM, Defendant-Appellee, and DIGITALTHINK, INC., Defendant-Appellee, and DOCENT, INC., Defendant-Cross Appellant.

__________________ _________ DECIDED: November 29, 2005

__________________ _________ Before NEWMAN, RADER, and DYK, Circuit Judges

. RADER, Circuit Judge

. On summary judgment, the United Stat es District Court for the Southern District of Texas determined t hat the defendants did not in fringe U.S. Patent No. 4,877,404 (the ’404 patent). Finding no reversible error, this court affirms the decision of the district court.I. On May 29, 2002, IP Innovation, t he owner of the ’404 patent, sued WebCT and Thomson Learning for infringem ent of the ’404 patent. IP Innovation later amended its c o mplaint to add six addi tional defendants. Five of the eight defendants eventually settled. Only eCollege .com, DigitalThink, and Docent (the defendants ) continued to litigate the case against them. Before trial, the district cour t granted summary judgment of noninfringement to the defendants because the accused products do not satisf y two limitations under the court’ s claim construction. Se e IP Innovation, L.L.C. v

. WebCT, Inc. , Civil Action No. H-02-2031 (S.D. Tex. Jul. 1, 2004) ( Summary Judgment Order ); IP Innovation, L.L. C. v. WebCT, Inc. , Civil Ac tion No. H-02- 2031 (S.D. Tex. Jan. 12, 2004) ( First Claim Construction Order ); IP Innovation, L.L.C. v. WebCT, Inc. , Civil Ac tion No. H-02-2031 (S.D. Tex. Feb. 10, 2004) ( Second Claim Constr uction Order ); IP Innovation, L.L.C. v. WebCT, Inc. , Civil Action No. H-02-2031 (S.D. Tex. Mar. 5, 2004) ( Amended Claim Construction Order ). The district court reached its cl aim c onstruction after a Markman hearing and extens ive briefing by the parties, though it provided no explanation in its orders for the meaning attr ibuted to the claims. After prevailing on summary judgm ent, the defendants unsuccessfully moved for attorney fees. IP Innovation, L.L.C. v. WebCt, Inc. , Civil Action No. H02-2031 (S.D. Tex. O c t. 4, 2004) ( Order Denying Attorney Fees ). IP Innovation appeals the grant of summa ry judgment of non-infri ngement. Docent cross

04-1571, 05-1153 2appeals the denial of a ttorney fees. This court has jurisdiction under 28 U.S.C. § 1295(a)(1) (2000). II. This court reviews a district court’ s grant or denial of summary judgment under the law of the regional c i rcuit. Chamberlain Group, Inc. v. Skylink Techs., Inc. , 381 F

. 3d 1178, 1191 (Fed. Cir. 2004). Un der the law of th e United St ates Court of Appeals for the Fifth Circuit, this court reviews the grant or denial of summary judgment without deference. Condrey v. Suntrust Bank Of Georgia , --- F.3d ---, 2005 WL 2857452, at *4 (5 th Cir. 2005) (citation omitted). In an exceptional cas e , a cour t may award attorney fees. See 35 U.S.C. § 285. “Although the determination of w hether a case is exceptional is a question of fact revi ewed for clear error, this court reviews a district court's decision to award attorney fees in an exceptional c a se only for abuses of discretion.” Cybor Corp. v. FAS Techs., Inc. , 138 F.3d 1448, 1460 (Fed. Cir. 1998) (en banc). This court reviews a dist rict court’s denial of a motion for sanctions under the law of the regional circuit. Se e Nystrom v. Trex Co. , 2005 WL 2218632 (Fed. Cir. 2005) (citation omitted). The Fifth Ci rcuit reviews the denial of a motion for sanctions f o r an abus e of discretion. Test Masters Educ. Serv. Inc. v. Singh , --- F.3d ---, 2005 WL 2650945, at *16 (5 th Cir. 2005) (citation omitted). III. Infringement entails a tw o-step process: “First, the court determines the scope and meaning of the patent claims asse rted . . . [and second,] the properly

04-1571, 05-1153 3construed claims are compared to t he allegedly infringing device. ” Cybor Corp. , 138 F.3d at 1454 (citat ions omitted). “St ep one, claim c o nstruction, is a qu estion of law, that we review de nov o. Step two, comparison of the claims to the accused device, is a question of fact, and requires a determi nation that every claim limitation or it s equivalent be found in the accu sed device.” N. Am. Container, Inc. v. Plastipak Packaging, Inc. , 415 F.3d 1335, 1344 (Fed. Cir. 2005) (internal citati ons omitted). In Phillips , this court explained: “It is a ‘bedr ock principle’ of patent law that ‘the claims of a patent define the inventio n to which t h e patentee is entitled the right to exc l ude.’” Phillips v. AWH Corp. , 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc) (quoting Innova/Pure Water, Inc. v. Safa ri Water Filtr a tion Sys., Inc. , 381 F.3d 1111, 1115 (F ed. Cir. 2004)). Thus, this cour t’s analysis begins wit h a review of the claim terms which “ ‘ ar e generally given t heir ordinary and customary meaning.’” Id. (quoting Vitronics Corp. v. Conceptronic, Inc. , 90 F.3d 1576, 158 2 (Fed. Cir. 1996)). “The inq u iry in to how a person of ordinary sk ill in the art understands a claim term provides an objective baseline from which to begin c l aim interpretation.” Id. “Importantly, the person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed ter m appears, but in the context of the entir e patent, including the specification.” Id. In the ’404 patent, the parti es dispute the district court’s interpretation of two limitations: (1) embedded in a series of interrelated screens (the embe dded limitation); and (2) operativ ely c onnected ( t he operatively connected limitat ion).

04-1571, 05-1153 4The embedded limitation appears in all three of the ’404 patent’s independent claims. Claim 1 is representative: 1. An interactive com puter softwar e system permitting a user to t a ke a pre-selected computer course or access a pictorial data bas e , comprising:

. . . . (c) a graphics computer sub-system oper atively connected to said host computer sub-system, said gr aphics computer sub-system exec uting said cours e upon int e rr ogation by said host computer sub-system wherein said course includes a series of interrelated pictures displayed by said graphi cs computer sub-system, said series of pictures defining a c o ur se responsive to input data from the user and interactively dialo guing with the user as the us er progresses through said pre-sele cted course or data base; and (d) wherein said pre-selected comput er cou r se compri ses a distributed program embedded in said series of interrel a ted pictures

. ’404 patent , col. 8, l. 49-col. 9, l. 3 (emphasis added). The district concluded: In claims 1, 11, and 14 of the ’ 404 Patent, “embedded in a s e ries of interrelated screens” means: The patent covers a program whos e graphic elements include their instructions in a single file for each screen with all of the control codes being directly accessible on the consumer screen. Amended Claim Construction Order , slip op. at 1 (emphasis added). The specification supports the district court’s interpretation. Turning first to the bac kground section, prior art system s suffere d from a s a ving format that was unalterable during the use of the program. ’404 paten t, col. 1, ll. 11-15. Specifically, “[r]eferen ces to pictures [in prior art systems] are e m bedded in the control program along with all the other progra mming codes nec essary to c r eate a functional course.” Id. , col. 1, ll. 40-43 (emphasis added). In contrast: The present invention inv e rts the normal c onstruction of a c o urse. Where prior art systems embed pict ure references int o a control program , thus, producing a large ex ec utable file containing thousands of programmi ng language command lines, the present

04-1571, 05-1153 5invention embeds the control commands necessar y to run the course into the graphic pictur es t he author and operator see

. These control commands are ca lled microscripts, and may be visible or invis i ble graphical el ements of the com p lete picture presented to the human operator. Id. , col. 1, ll. 51-60 (emphasis added). Th us, “the invention . . . execut[es ] the distributed ‘progr am’ that is embedded into the numerou s pictures or screens , as opposed to the more universal ‘compiled’ program [of pri o r art syste m s].” Id. , c o l. 5, ll. 45-50 (emphasis added). T hese pictures or screens may, in turn, be stored on a disk as individual ASCII coded files, t hough each picture file is to be totally self-contained such that modification of one does not af fect the others. Id. , col. 1, l. 68-col. 2, l. 3; col. 2, ll. 28-29. Thus, the inventor specified that “the invent ion” requires an ass o ciation of command codes with indiv i dual pictures or screens. Moreover the invention permits alteration of each picture or screen (e.g., by c hanging the associat ed command codes) without affecti ng the other pictures or screens. The district court properly articulat ed that the invention’s graphic elem ents (i.e., pictures and screens) must include their own instr u ctions, which allows independent modification of each graphic element. In addition, the district court also pr operly de termined that the instructions (i.e., command codes) for a given picture or screen must be stored in a single file. IP Innovation c oncedes that the spec ification only disc los e s a “single file” embodiment, see id. , col. 1, l. 68-col. 2, l. 3, but argues against importing this limitation into the language of the claims. The ’404 patent, however, repeatedly uses the phrase “the present invention” or “the in vention of the present disclos ure” in describing its inventiv e features (including the embedded

04-1571, 05-1153 6limitation), rather than the phrase “in the present embodim ent” or “in one embodiment.” See , e.g. , id. , col. 1, ll. 51-52; col. 2, ll . 16-20, 53-59, 62-64; c o l. 3, ll. 11, 45-47, 56-60; col. 5, ll. 47- 50, 57-58; col. 7, ll. 17-25. In contrast, the ’404 patent uses the term “embodiment” in reference to non -inventive features, such as the graphic monitor and memory components. See , e.g. , id. , col. 4, ll. 63- 66. The only other reference to “embodime nts” in the ’404 patent is common boilerplate language t hat does not specific ally address the inve ntive features in any detail. Id. , col. 4, ll . 17-28; col

. 8, ll. 43-47. Thus, the ’404 patent does not discl ose multiple embodiments having different implementations of the embedded limitation as s uggested by IP Innovation. Rather, the 404 patent’s narrow characterization of what “the invention” covers in reference to t he embedded limitation supports a construction requiring location of all of the command codes for a gi ven picture or screen within a single file. Finally, the district court also pr operly determined that the command codes for a given picture or screen must be directly acc e ssible from the computer screen. IP Innovation contends that this feature has absolutely no relation to the term “embedded.” To the contrary, the ’404 patent states: “[t]he microscript may be embedded anywhere in the pi xel pattern of the screen .” Id. , col. 2, ll. 30-31 (emphasis added). Embedding t he microscript in the pixe l pattern of the screen means that it must be directly accessibl e without reference to another file. In other words, a user need not access anot her file to obtain the command code when it is already present in the pixel pattern of the sc reen. This discussion in

04-1571, 05-1153 7the specific ation supports the dis t rict cour t’s requirement that the code be dir e ctly assessable on the screen. The prosec ution histor y confirms the dist rict court’s interp retation. During prosecution, the ’404 patent applicant amended the claims to incorporat e the “embedded” limitation to traverse a prior art rejection. The applicant also included remarks that distinguis hed the c l aimed invention over prior art touch screen dis p lays, whic h alleged ly did not disclose the “Mi croScript principle as disclosed and claimed by the Applicant[.]” Contras t ing the claimed invention from these prior art displays, the ’404 pat ent applicant ex plained: “[t]his invention visibly, physically, and electronically connects the button to its command, embodied as a MicroScript” by embedding t he MicroScript code in each picture or screen. This explanation reaffirms the district cour t’s construction requiring direct accessibility of the command code. In brief, the district court proper ly construed the embedded limitation to mean providing graphical elem ents (i.e., indiv i dual pictures or screens) with corresponding instructions (i.e., command code) in a single file for each graphica l element, such that all of the control codes for a given graphic a l element are directly acc e ssible on the consumer screen. The narrow characterization of the invention in the specification and f ile wr apper do not permit IP Innovation’s broader interpretation. As to the operatively c onnected limitation, this li mitation appears in two of the ’404 patent’s three independent claims. Claim 1 is representative:

04-1571, 05-1153 81. An interactive computer software system permitti ng a user to take a pre-selected c o mputer cour se or access a pictorial data base, comprising:

. . . . (c) a graphics comput er sub-system operatively connected to said host computer sub-system, said graphics c o mputer sub-syste m exec uting s a id course upon interr ogation by said host computer sub-system wherein said course in cludes a series of interrelated pictures displayed by said gr aphics computer sub-system, said series of pictures defining a c ourse responsive to input data from the user and int e ractively dialoguing with the us er as the user progresses through said pre- selected course or data base;

. . . . ’404 patent, col. 8, l. 49-col. 9, l. 3 (emphasis added). The district court construed the operativ ely c onnec ted limitation to mean “the graphics computer subsystem communicates with the host computer subsystem through an unmediated mechanism.” Amended Claim C onstruction Order , slip op. at 1. To the contrary, the broad l anguage “oper atively c o nnected” do es not re quire communication through an unmediated mechanism. Claims 1 and 11 us e the phrase “operatively co nnected” to descr ibe the communications that take plac e betw een a graphics c o mputer sub-system and a host computer sub-system during operation. The c l aim language does not state or suggest, however, that these communications must be done on a nonmediated c o mmunication mechanism. While the specificati on does contemplate a non-mediated communication mechanism , see ’404 patent, col. 4, ll. 58-59, the particular communication mechanism in any given system has nothing to do with the ’404 patent’s improvement over the prior art. In ot her words, the manner in which the host syste m and the graphics system communicate has no bearing on the modific a tion of one picture or scr een without affecting the other screens.

04-1571, 05-1153 9This feature was the ’404 pat ent’s key innovation as outlined in t h e specific ation and prosecution history. Thus , this c ourt agrees with IP Innovation that the operatively connected limitation does no t require communication over an unmediated communication mechanism. Having determined the proper interp retation of the disputed claim limitations, the analysis shi fts to an examination of th e accused p r oducts. In all of the acc u sed products, an HTML file for the first screen is downloaded and displayed when a us er initiates the pr ogr am. Once the first screen has been displayed, a user then selects a hyperlin k t o navigate to the next screen, whic h causes the browser t o download an HTM L file for the nex t scr een and display that next s c reen for the user. Thes e scr eens may be edit ed independently, without affecting the other screens. Acco rdingly, IP Innovation contends that these screens satisf y the embedded limitat ion as claimed. IP Innovation acknowledges, however, that a hyperlink it self is not the actual command code located in t he HTML file, but submits a hyperlink is a graphica l representation of the command code which c an be made v i sible using a “right click ” function t hat is analogous to the transcriber functi on disc losed in the ’404 pat ent. See ’404 patent, col. 7, l. 62-col. 8, l. 6. Contrary to IP Innovation’s contention, the transcriber function dis c losed in the ’404 patent has nothing in common with the right click function in the accused products. Rather, the disclos ed tran scriber function conver ts unreadable command code to a hum an readable font. Notably, the command code in the ’404 p a ten t is still “ e mbedded” in the p i xe l format of the screen prio r to

04-1571, 05-1153 10transcription, albeit in an unreadable format. ’ 404 patent, col. 7, l. 58-col. 8, l. 15. In other words, the code is lit erally pres ent on the screen b u t ille gib l e (e.g., converted to hash m a rks or rendered in a color that matches the backgr ound color). In contrast, th e command code in an HTML file is not physically present on the screen. Rather, HTML files direct a browser to retrieve various graphic files and arrange those graphic files in rela tion to text in generating a screen displayed f o r the user. The generated sc reen does not actually contain the HTML com m and codes themselv es; inst ead, the gener ated screen is simply a picture created based on the command codes contained in the HTML file. By way of analogy, a building does not cont ain its archit ectural blueprints “embedded” thereon. Rather, blueprints determine the lo cation of various pieces to assemble the building, similar to the m anner in whic h an HTML file is used to create a picture in the accused products. In contrast, IP Innovation’s disclosed transcriber is analogous to a magnifying gl ass used to read the fine print at the bottom of a form contract – the text is physically “ e mbedded” thereon, but is simply so small tha t it is inv i sible to the naked eye unt il “converted” or “transcribed” to a larger size . F o r at least this reason , the distric t court properly concluded that the accus ed products do not satisfy the embedded limitation, and thus properly granted summary judgm ent of no literal infringement. In addition, the accused products do not satisfy the embedded limitation under the Doctrine of Equiva lents (DOE). Rather, be cause t he ’404 patent applicant added the embedded limit ation and argued t h is dist inction in traversing the noted prior art rejection during prosec ution, DOE coverage is unavailable.

04-1571, 05-1153 11See F e sto Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. , 535 U.S. 722, 736 (2002) (narrowing am endment for purposes of patentability); Eagle Comtronics, Inc. v. Arrow Communication Labs., Inc. , 305 F.3d 1303, 1316 (Fed. Cir. 2002) (argument-based estoppel); Elkay Mfg. Co. v. EBCO Mfg. Co. , 192 F.3d 973, 979 (Fed. Cir. 1999) (argument- based estoppel). There has been no showing that any of the so-called Festo exceptions to prosecuti on history estoppel applies here. Se e Festo Corp. , 535 U. S. at 740- 41; Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co. , 344 F.3d 1359, 1368 (Fed. Cir. 2003) (en banc). Thus, the district court properly granted summary judgment of non-infr ingement under the DOE as well. Finally, because this court concludes the accused products do not satisfy the embedded limitation literally or under the DOE, thi s court need not address whether or not the acc u sed products satisfy the operativ ely connected limitation. Therefore this court affirms the grant of summary judgment of non-infringement. IV. In Docent’s cross appeal, Docent a lleges the district court abused its discretion in denying its motion for attorney fees. Specifically, Docent argues that it presented the distri ct court with substantial evidence demonstrating the baseless nature of IP Innovation’s suit. Docent faults IP Innovation for not explaining the nature of its case or its infringement position after receiving Docent’s s ource code. Essentially, Do cent argues that IP Innovation should have stipulated to non-infringem ent rather than forcing t he defendants to brief the

04-1571, 05-1153 12summary judgment is sues. Doc ent accuses IP Innovation of being a patent “ t roll” that sought to exact a settlement to avoid litigation expenses. Contrary to Docent’s position, IP Innovation provided bot h the trial court and this court with a plaus ible infringem ent theory under the claim construction adopted by the district court and also under IP Innovation’s proposed claim construction. While both courts rejected IP Innovation’s theories, they were not so implausible as to suggest the district court abused its discretion in denyin g the attorney fee award. Moreover, five companies with product s similar t o the defendant’s products took a license t o the patented technology, whic h inferentially supports IP Innovation’s argument that it had reas onable grounds upon whic h to initially bring suit against Docent. Thus, this record does not suggest that the district court abused its di s c retion in denying Doc e nt’s motion for attorney fe es. V. In conclusion, because the district court properly determined that the accused products do not satisfy the embedded limitation, this court affirms the grant of summary judgment of non-infringement to th e defendants. Additionally, because the district court did not abuse it s discretion in denying Docent’s motion for attorney fees, this cour t also affirms the denial of the fee award requested by Docent.

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