Court Opinion

ID: 2748672
Source: CourtListenerOpinion
Date Created: 2014-11-06 17:01:08.555035+00
Date Added: 2024-06-11T10:16:40.201593
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

              WALKER DIGITAL, LLC,
                Plaintiff-Appellant,

                           v.

 MICROSOFT CORPORATION AND GOOGLE, INC.,
             Defendants-Appellees.
            ______________________

                      2013-1584
                ______________________

    Appeal from the United States District Court for the
District of Delaware in No. 11-CV-0311, Judge Richard G.
Andrews.
                 ______________________

              Decided: November 6, 2014
               ______________________

     MARC A. FENSTER, Russ August & Kabat, of Los Ange-
les, California, argued for plaintiff-appellant. With him
on the brief was BENJAMIN T. WANG.

    MICHAEL J. MALECEK, Kaye Scholer LLP, of Palo Alto,
California, argued for all defendants-appellees. With him
on the brief for defendant-appellee Google Inc. was
TIMOTHY CHAO. Of counsel was ROBERT MAGEE, Kaye
Scholer LLP, of Palo Alto, California. Of counsel on the
brief were DARYL JOSEFFER, King & Spalding LLP, of
2            WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION

Washington, DC; and ADAM CONRAD, of Charlotte, North
Carolina. On the brief for defendant-appellee Microsoft
Corporation were FRANK E. SCHERKENBACH, Fish &
Richardson P.C., of Boston, Massachusetts; JASON W.
WOLFF and RYAN P. O’CONNOR, of San Diego, California;
and JOHN A. DRAGSETH of Minneapolis, Minnesota. Of
counsel on the brief was ISABELLA FU, Microsoft Corpora-
tion, of Redmond, Washington.
                 ______________________

    Before LOURIE, DYK, and WALLACH, Circuit Judges.
LOURIE, Circuit Judge.
     Walker Digital, LLC (“Walker Digital”) appeals from a
stipulated judgment of noninfringement following a
decision of the United States District Court for the Dis-
trict of Delaware construing the claim limitation “auction”
in U.S. Patent 7,801,802 (the “ʼ802 patent”). See Walker
Digital, LLC v. Google, Inc., No. 11-311-RGA, 2013 WL
4647313 (D. Del. May 22, 2013) (“Claim Construction
Order”); id., ECF No. 176 (D. Del. July 25, 2013) (“Final
Judgment”). Because Microsoft Corporation and Google
Inc. (collectively, “the Defendants”) do not infringe even
under a modified construction, we affirm the judgment of
noninfringement.
                       BACKGROUND
     Walker Digital is the assignee of the ʼ802 patent,
which relates to a method and system of automated proxy
bidding in online auctions. In an online auction, a bidder
may place a bid either manually or via an automated
proxy. If using a proxy, the bidder must specify when to
place the bid and at what price. The ʼ802 patent de-
scribes a “bid generator” as the proxy that places a bid
according to the bidder’s specifications. ʼ802 patent col. 5
ll. 7–8. The “auction server” then processes that bid using
“an indication of the auction, the bidder, and the bid
price.” Id. col. 4 ll. 62–63. To achieve “natural and com-
WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION            3

petitive” bidding behavior, the patent teaches that proxies
place their bids “according to an amount of time left in the
auction,” rather than immediately after another’s bid
surpasses a certain price threshold. Id. [57] (abstract).
     The Defendants operate online auctions for advertis-
ing space, using search keywords to trigger the display of
advertisements. 1 When a user enters a triggering search
keyword, the Defendants run a “near instantaneous
auction” that finishes “within a fraction of a second” to
select the winning advertisement. J.A. 136. In selecting
the winning advertisement, the Defendants consider the
participating advertisers’ bids, which reflect the prede-
termined price each advertiser would pay for a user to
click on its ad after a search query, and numerous factors,
such as the relevance of the ad to the keyword and the
likelihood a user will click on the ad. J.A. 136, 186. The
Defendants then display the winning advertisement on
the search results page. E.g., J.A. 191. The Defendants’
auctions for advertising space operate continuously. See,
e.g., Walker Digital, LLC v. Google Inc., No. 11-311-RGA,
ECF No. 175, at 2 (D. Del. July 24, 2013) (“Stipulated
Judgment”).
   Walker Digital sued the Defendants in the District
Court for the District of Delaware, asserting that the
Defendants infringed the ʼ802 patent. The Defendants
moved to dismiss the complaint and for Rule 11 sanctions.
The court denied the motion without prejudice and or-

   1     The described auction specifically depicts
Google’s accused “AdWords,” “AdSense,” and related
systems. Walker Digital, LLC v. Google Inc., No. 11-311-
RGA, ECF No. 173, at 1 (D. Del. July 19, 2013). Mi-
crosoft’s Advertising adCenter system operates in a
similar fashion. Id., ECF No. 175, at 1–2 (D. Del. July 24,
2013)
4            WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION

dered limited early claim construction briefing on the
claim limitation “auction.” J.A. 362.
    Claim 1 is representative and reads as follows:
    1. A method comprising:
       storing a rule for automatically placing a bid by a
       bid generator for an item for a bidder in an auc-
       tion, the rule associated with the bidder and hav-
       ing a condition specifying that the bid is to be
       placed by the bid generator according to an
       amount of time left in the auction;
       determining that the rule is satisfied;
       determining that the highest bid in the auction is
       not from the bidder; and
       placing the bid.
ʼ802 patent col. 15 ll. 26–35 (emphases added). After the
accelerated Markman hearing, the parties filed additional
claim construction briefing and the court held a second
Markman hearing on additional claim terms. Notably,
the parties agreed to construe “the highest bid in the
auction is not from the bidder” as “the highest offer re-
ceived for the item is not from the bidder.” J.A. 764 (em-
phasis added).
    The district court issued a combined Markman ruling
and construed “auction” to mean “a public or private sale
in which goods or services of a seller may be sold to a
bidder through a bidding process. An auction consists of
one sale.” Claim Construction Order, 2013 WL 4647313,
at *1. The court reasoned that if “auction” involved
multiple sales, the claimed method would not function as
intended because the proxy, placing a bid “according to an
amount of time left in the auction,” could bid against itself
or bid on an item already sold. Id. Moreover, the court
found that the specification’s limited list of things needed
to process a bid, namely, an indication of the auction, the
WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION            5

bidder, and the bid price, supported a single-sale con-
struction. Id. at *2. If “auction” contemplated multiple
sales, the court reasoned, then more information would be
needed to determine which item the bidder desired. Id.
    After the court issued its claim construction order, the
parties stipulated to a judgment of noninfringement.
Final Judgment, ECF No. 176. Walker Digital appealed
from that judgment, challenging the court’s claim con-
struction. We have jurisdiction pursuant to 28 U.S.C. §
1295(a)(1).
                         DISCUSSION
    Claim construction is a matter of law, which we
review on appeal without formal deference. Lighting
Ballast Control LLC v. Philips Elecs. N.A. Corp., 744 F.3d
1272, 1285–86 (Fed. Cir. 2014) (en banc); Cybor Corp. v.
FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en
banc). The words of a claim generally receive “their
ordinary and customary meaning as understood by one of
ordinary skill in the art.” Phillips v. AWH Corp., 415 F.3d
1303, 1312–13 (Fed. Cir. 2005). If, however, the patentee
has clearly and unmistakably disavowed claim scope or,
acting as a lexicographer, has expressly defined the
disputed claim term in the specification or prosecution
history, then we will deviate from the claim term’s ordi-
nary and customary meaning. Edwards Lifesciences LLC
v. Cook Inc., 582 F.3d 1322, 1329 (Fed. Cir. 2009) (quoting
CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359,
1366–67 (Fed. Cir. 2002)). Because a patent is a fully
integrated written instrument, the claims “must be read
in view of the specification, of which they are a part.”
Phillips, 415 F.3d at 1315 (quoting Markman v. Westview
Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en
banc), aff’d, 517 U.S. 370 (1996)).
    Walker Digital argues that the district court erred by
limiting “auction” to only one sale. According to Walker
Digital, the broad definition provided in the specification
6            WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION

controls; none of the claims, the remainder of the specifi-
cation, or the file history manifestly limit “auction” to only
one sale. Rather, Walker Digital suggests, the specifica-
tion “repeatedly refers to auctions in which multiple goods
or services are auctioned,” and the term “auction” as-
sumed its understood meaning from the art as “not lim-
ited to one sale.” Appellant’s Br. 18, 21. Walker Digital
further argues that the court incorrectly limited the plain
meaning of “auction” because of an unjustified belief that
the claimed method would not function properly if “auc-
tion” included a multi-sale event. Id. at 16–18.
     The Defendants respond that, while “auction” may
generally include a multi-sale event, the claim language
and specification necessarily limit “auction” to only one
sale. The Defendants contend that the agreed-upon
construction of “the highest bid in the auction” as “the
highest offer received for the item” effectively equated
“auction” and item, and thus limited the term “auction” to
the single sale of one item. Appellees’ Br. 13–14, 22–24.
Moreover, the Defendants argue that the “amount of time
left in the auction” limitation only functions properly if
“auction” means a single sale. Id. at 18–21.
    We agree with Walker Digital that the district court
incorrectly limited “auction” to only one sale. The district
court should have instead given the term its ordinary and
customary meaning. Here, the ordinary and customary
meaning of “auction” includes a multi-sale event. Indeed,
both parties and the district court agree that the plain
meaning of “auction” involves any number of sales. See
Claim Construction Order, 2013 WL 4647313, at *2 n.2
(“In common English usage . . . , auction can mean either
a ‘sale’ or the event at which multiple sales take place.”);
see also J.A. 1118; Appellant’s Br. 23–24; Appellees’ Br.
15. We find no reason in the intrinsic record to depart
from that meaning. See Vitronics Corp. v. Conceptronic,
Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996) (explaining that
WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION             7

a claim term should assume its ordinary and customary
meaning unless the intrinsic record compels otherwise).
     Beginning with the claim language itself, there is no
evidence to limit “auction” to only one sale. The claims
contain several other limitations referring to an auction,
e.g., “according to an amount of time left in the auction”
and “the highest bid in the auction is not from the bidder,”
yet remain indifferent to the number of sales involved in
the “auction.” See, e.g., ’802 patent col. 15 ll. 27–31.
Indeed, the claims generally contemplate a multi-sale
auction involving a proxy that places a bid “for an item for
a bidder in an auction.” Id. col. 15 l. 28 (emphases add-
ed). Thus, the claim language does not imply that “auc-
tion” is limited to a single sale.
     The specification and file history also do not purport
to limit “auction” to only one sale. Walker Digital did not
clearly and unmistakably disavow an “auction” involving
multiple sales during prosecution. See, e.g., J.A. 213
(highlighting Walker Digital’s decision to overcome the
prior art by adding a time limitation, not by limiting
“auction” to a single sale). Nor did Walker Digital limit
“auction” to only one sale in the specification by stating
that is “the invention.”
     First, the specification defines “auction” as “a public
or private sale in which goods or services of a seller may
be sold to a bidder through a bidding process.” ’802
patent col. 4 ll. 46–48. That definition embraces an
understanding of “auction” that involves multiple sales.
Walker Digital highlights the definition’s plural “goods or
services” to argue that “auction” can involve multiple
sales. Appellant’s Br. 18–19. While we agree with the
district court that a single sale can include multiple
“goods and services,” Claim Construction Order, 2013 WL
4647313, at *2, we nevertheless agree with Walker Digi-
tal that “auction” is not limited to a single sale. Compare
’802 patent, col. 4 ll. 46–48, with id. col. 4 ll. 53–55. The
8             WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION

specification defines auction as the sale of “goods and
services.” Id. col. 4 ll. 46–48. The specification then
defines “bid,” however, in a singular tense, as “includ[ing]
an offered price for the good or service being auctioned.”
Id. col. 4 ll. 53–55. A “bid” thus corresponds to the single
sale of a particular “good or service,” whereas “auction”
may correspond to multiple sales of numerous “goods and
services.”
     Next, and contrary to the Defendants’ contentions,
“auction” and item are not equivalent terms. The agreed
upon construction of “the highest bid in the auction”
merely underscores that the claimed method works on an
item-by-item basis; it does not limit the claimed method to
auctions involving only one sale. As the specification
states, “[a]n auction behavior may be specified by deter-
mining the auction behavior according to information
about the auction, which may include information about
an item, information about a seller and/or information
about bidders.” Id. col. 3 ll. 2–6. An “auction” can thus be
identified for purposes of the claimed invention by refer-
encing any item for sale during the auction. That under-
standing permeates the specification. For example, the
auction database, which stores information about present
and past auctions, “may include an item identifier.” Id.
col. 8 ll. 64–67; see also id. col. 8 ll. 55–59 (indicating that
Figure 7 contains a table with a record that “includes a
bidder identifier 704 and an item identifier 706 or other
identifier of the auction”). And a proxy bidder relies on “a
maximum bid” and “an indication of the item or auction”
to know when and how to place its bid. See id. col. 10 ll.
63–66 (referencing Figure 13’s flowchart, which describes
how a proxy bidder works). Item and “auction” are there-
fore not interchangeable; rather, both are used to inform
the proxy bidder about the larger auction infrastructure.
    Finally, Figure 18 similarly contemplates an “auction”
involving multiple sales of multiple items. Figure 18
contains a block diagram depicting the “initialization of
WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION              9

the auction.” Id. fig. 18; id. col. 13 ll. 12–15. “As indicat-
ed at 1800, initialization of the auction uses the seller
database 1802, item database 1804 and auction database
1806.” Id. col. 13 ll. 14–16. The item database for the
“auction,” as further depicted in Figure 5, stores “one or
more records for each item being auctioned, with one
record for each item being auctioned.” Id. fig. 5; id. col. 8
ll. 26–31. The “auction” thus sells multiple items and
begins only after the item database records and monitors
each item for sale. As Figure 15 then depicts, once the
“auction” finishes, the item database updates, storing the
selling price for each item sold. Id. fig. 15; id. col. 11 ll.
56–57. While the “auction” may sell just one item in a
single sale, a construction that forecloses the more clearly
contemplated multi-sale “auction” improperly restricts the
scope of the claimed invention.
     Contrary to the district court’s findings, the patented
method still functions as claimed even if “auction” in-
volves multiple sales. As the district court properly
found, the parties, having agreed to construe “highest bid
in the auction,” “therefore, agree that, in the context of
the highest bid, the bid must be for the particular item
being sold in that auction. Claims must be interpreted
consistently so the term ‘time left in the auction’ must
likewise be interpreted as the time remaining to place
bids for the item.” Claim Construction Order, 2013 WL
4647313, at *1. The time limitation thus applies on an
item-by-item basis. Indeed, Figure 8 depicts as much, as
the item identifier indicates a start time and an end time
for the sale of a particular item. ʼ802 patent fig. 8. Thus,
the bid need only be placed according to an amount of
time left for the sale of a particular item, and not accord-
ing to the time left for the larger multi-sale auction, for
the method to function properly. The district court’s
concerns about a proxy bidding either against itself or for
an item already sold are thus not compelling.
10           WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION

    Moreover, the district court’s emphasis on the specifi-
cation’s limited list of items is unnecessarily narrow. Put
in context, the court’s referenced passage states:
     The bids may be received by the auction manager
     100 in any number of ways, including, but not lim-
     ited to, any data discernable by the auction man-
     ager as a bid, such as a message in any format of
     any communication protocol. To process a bid, the
     auction server uses an indication of an auction,
     the bidder, and the bid price. A bid from a bidder
     may itself include any one or more of these pieces
     of information. Any information that the auction
     server can infer or derive need not be included in
     the bid itself.
Id. col. 4 ll. 62–66. When a bidder registers with the
auction server, the bidder “registers for an auction for an
item.” Id. col. 8 ll. 14–16. Information about the bidder
thus includes information about the item of interest.
Moreover, a bidder may submit a bid in a variety of
formats with a variety of indicators, and the auction
server is more than capable of deriving or inferring which
item the bid is for in a particular auction. Even so, “an
indication of the auction” simply suggests which auction
the item is being sold in, for a bidder may participate in
multiple auctions at the same time. That language does
not require “auction” to be only a single sale.
     Accordingly, the district court incorrectly limited
“auction” to only one sale. Because the intrinsic record
does not limit “auction” in that way, we modify the dis-
trict court’s claim construction and instead construe
“auction” to mean “a public or private sale in which goods
or services of a seller may be sold to a bidder through a
bidding process.”
    Nonetheless, in the circumstances of this case, we
consider the district court’s claim construction to be
harmless error. As discussed above, the Defendants’
WALKER DIGITAL, LLC   v. MICROSOFT CORPORATION         11

products still do not infringe, even under the modified
claim construction. As the district court noted, the
claimed method functions on an item-by-item basis, with
each proxy placing a bid according to an amount of time
“remaining to place bids for the item.” Claim Construc-
tion Order, 2013 WL 4647313, at *1. The Defendants’
auctions, however, are “instantaneous,” with the larger
auction system operating continuously; they do not func-
tion according to any “time remaining” limitation as to an
individual item. J.A. 191; see also Stipulated Judgment,
ECF No. 175, at 3 (stipulating to a judgment of nonin-
fringement because the “accused advertising services do
not meet the ‘according to the amount of time left in the
auction limitation,’” which applies on an item-by-item
basis irrespective of whether “auction” is only a single
sale). We thus affirm the judgment of noninfringement.
                        CONCLUSION
    For the foregoing reasons, we modify the district
court’s claim construction and affirm the judgment of
noninfringement.
                        AFFIRMED