Court Opinion

ID: 4183478
Source: CourtListenerOpinion
Date Created: 2017-07-05 15:01:47.255605+00
Date Added: 2024-06-11T13:13:11.871129
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

           PARALLEL NETWORKS, LLC,
                Plaintiff-Appellant

                           v.

    KAYAK SOFTWARE CORPORATION, DBA
KAYAK.COM, ORBITZ, LLC, ORBITZ WORLDWIDE,
 INC., ORBITZ WORLDWIDE, LLC, ORBITZ AWAY
 LLC, SHOEBUY.COM, INC., WOLVERINE WORLD
                   WIDE INC.,
            Defendants-Cross-Appellants
              ______________________

                 2015-1681, 2016-1944
                ______________________

    Appeals from the United States District Court for the
Eastern District of Texas in Nos. 6:10-cv-00111-RWS,
6:10-cv-00275-RWS, 6:10-cv-00491-RWS, Judge Robert
Schroeder III.
                ______________________

                 Decided: July 5, 2017
                ______________________

   TIMOTHY J.H. CRADDOCK, Klemchuk LLP, Dallas, TX,
argued for plaintiff-appellant.

   DAVID BRANDON CONRAD, Fish & Richardson P.C.,
Dallas, TX, argued for defendants-cross-appellants. Also
2         PARALLEL NETWORKS, LLC    v. KAYAK SOFTWARE CORP.

represented by RICARDO BONILLA, NEIL J. MCNABNAY;
JOHN A. DRAGSETH, Minneapolis, MN.
               ______________________

    Before DYK, BRYSON, and CHEN, Circuit Judges.
CHEN, Circuit Judge.
     This case returns to us from the United States Dis-
trict Court for the Eastern District of Texas (district
court), where Parallel Networks, LLC (Parallel Networks)
asserted U.S. Patent No. 6,446,111 (ʼ111 Patent) against
more than 100 defendants for their use of certain applets
on their websites. Over Parallel Networks’ opposition, the
district court granted summary judgment of non-
infringement for Kayak Software Corp., d/b/a Kayak.com
(Kayak); Orbitz LLC, Orbitz Worldwide, Inc., Orbitz
Worldwide, LLC, Orbitz Away LLC (collectively, Orbitz);
and Wolverine World Wide, Inc. (Wolverine), because
their accused applets did not meet the “executable applet”
claim limitation in the ʼ111 Patent. Shoebuy.com LLC
(Shoebuy) also moved for summary judgment of non-
infringement. In response, Parallel Networks proposed
that it would dismiss its infringement claim against
Shoebuy with prejudice, if Shoebuy agreed to dismiss its
invalidity counterclaim with prejudice. After the parties
failed to reach an agreement, the district court dismissed
both the infringement claim and invalidity counterclaim
with prejudice. With the merits resolved, all defendants
moved for attorneys’ fees, pursuant to 35 U.S.C. § 285
(2012), but the district court denied that motion. We
agree with the district court in all respects, but for its
dismissal of Shoebuy’s invalidity counterclaim with
prejudice. We, therefore, affirm in part and reverse in
part.
                       BACKGROUND
    Because we write for the parties, familiarity with the
facts of this case, including all proceedings at the district
PARALLEL NETWORKS, LLC   v. KAYAK SOFTWARE CORP.           3

court, is presumed. Previously, we “construe[d] the
asserted claims of the ʼ111 [P]atent to require that the
applet be executable or operable when it is generated and
before it is first transmitted to the client, which means it
must include both the particularized data and the func-
tionality.” Parallel Networks, LLC v. Abercrombie & Fitch
Co., 704 F.3d 958, 968 (Fed. Cir. 2013). We explained
that if “the client needs to ‘obtain’ information in order to
execute” the applet, then “no ‘executable’ or ‘operable’
applet is generated and . . . transferred from the server to
the client, as the patent requires.” Id. at 970.
    Given our construction and understanding of the ’111
Patent, the district court here granted summary judg-
ment of non-infringement in favor of Kayak, Orbitz, and
Wolverine, because Parallel Networks admitted that
these defendants’ accused applets, once they reached the
client, relied on resources that were “transmitted sepa-
rately” (external resources) for the applet to be executa-
ble. J.A. at 11. The accused applets, therefore, were not
executable applets as required by the patent claims.
    As to Kayak, the district court had to resolve whether
Kayak’s accused applet in fact relied on external re-
sources to be executable at the client. Id. at 15–16. In
opposing Kayak’s motion for summary judgment of non-
infringement, Parallel Networks explained, through its
expert, that Kayak’s accused applet relied on external
resources to be executable. See id. But later, in a surre-
ply brief, Parallel Networks changed its position and
argued, again through its expert, that the accused applet
did not rely on external resources to be executable. See
id. The district court rejected Parallel Networks’ attempt
to backtrack from its earlier explanation as to how Kay-
ak’s accused applet is executable. See id.
   Parallel Networks undertook a different strategy with
Shoebuy. Instead of opposing Shoebuy’s summary judg-
ment motion of non-infringement, Parallel Networks
4         PARALLEL NETWORKS, LLC    v. KAYAK SOFTWARE CORP.

offered to dismiss its infringement claim with prejudice,
provided that Shoebuy did the same for its invalidity
counterclaim. See id. at 3409 & n.3. The parties could
not reach an agreement about dismissal as they came to
an impasse over the particulars of a covenant not to sue
on the ʼ111 Patent (covenant). The district court ulti-
mately dismissed both the infringement claim and the
invalidity counterclaim with prejudice, relying on the
purported existence of a covenant. See id. at 3409–10.
Shoebuy sought reconsideration to change the dismissal of
its invalidity counterclaim to one without prejudice,
contending that the district court erroneously found that
there was a covenant. See id. at 3411–12. The district
court declined to reconsider its decision. See id. at 3412.
     Finally, all of these defendants moved for attorneys’
fees under § 285, arguing that the case was exceptional
because Parallel Networks pursued an infringement
theory against these defendants that was foreclosed by
our prior opinion in this case and because Parallel Net-
works litigated the case unreasonably by merely seeking
to force settlements with no intention of testing the merits
of its case. See id. at 3415–18. The district court denied
the motion, finding nothing exceptional about either
Parallel Networks’ infringement theory or its litigation
strategy. See id.
    Parallel Networks appeals the district court’s entry of
summary judgment of non-infringement in favor of Kay-
ak, Orbitz, and Wolverine, as well as the district court’s
refusal to permit Parallel Networks to amend its descrip-
tion of how Kayak’s accused applet is executable. All
defendants cross-appeal the district court’s denial of
attorneys’ fees pursuant to 35 U.S.C. § 285. Shoebuy
cross-appeals the district court’s dismissal of its invalidity
counterclaim with prejudice. We have jurisdiction under
28 U.S.C. § 1295(a)(1) (2012).
PARALLEL NETWORKS, LLC   v. KAYAK SOFTWARE CORP.            5

                        DISCUSSION
                         A. Appeal
     We review a grant of summary judgment in accord-
ance with the law of the regional circuit, here the Fifth
Circuit. Ineos USA LLC v. Berry Plastics Corp., 783 F.3d
865, 868 (Fed. Cir. 2015). The Fifth Circuit reviews de
novo a district court’s grant of summary judgment. Id.
(citing Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261
(5th Cir. 2007)).
    As an initial matter, the district court correctly pro-
hibited Parallel Networks from revising its explanation of
how Kayak’s accused applet is executable in the midst of
summary judgment briefing. Parallel Networks cannot
assert that Kayak’s accused applet relies on external
resources to be executable while opposing Kayak’s sum-
mary judgment motion, and then assert to the contrary
that it does not in the surreply, without justification.
S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 495 (5th
Cir. 1996) (“It is well settled that this court does not allow
a party to defeat a motion for summary judgment using
an affidavit that impeaches, without explanation, sworn
testimony.” (citations and footnote omitted)); see also
Parallel Networks, 704 F.3d at 970 (ipse dixit testimony
from Parallel Networks’ expert was insufficient to pre-
clude summary judgment). No adequate justification was
ever provided, and so there was no genuine issue of mate-
rial fact that Kayak’s accused applet relies on external
resources. Compare J.A. at 3009–10, with id. at 3357–58.
    The district court also correctly held that the accused
applets of Kayak, Orbitz, and Wolverine could not in-
fringe the ʼ111 Patent because the accused applets are not
executable once they are transmitted from a server to a
client device. The executable applet claimed in the patent
“cannot be finalized at the client, whether by an ‘external
program,’ a ‘web server application,’ or some other mech-
anism.” Parallel Networks, 704 F.3d at 969; see also id. at
6         PARALLEL NETWORKS, LLC   v. KAYAK SOFTWARE CORP.

970 (“The fact that the client needs to ‘obtain’ information
in order to execute, however, confirms that no ‘executable’
or ‘operable’ applet is generated and then transferred
from the server to the client, as the patent requires.”). As
Parallel Networks admitted, the accused applets rely on
external resources to be executable after they are trans-
mitted to the client, which necessarily means that they
are not executable applets as claimed in the patent. See
id. at 970 (“The fact that the client needs to ‘obtain’
information in order to execute, however, confirms that no
‘executable’ or ‘operable’ applet is generated and then
transferred from the server to the client, as the patent
requires.”).
    According to Parallel Networks, the district court
erred in entering summary judgment because we made
clear in our earlier decision that “whether an applet is
‘executable’ is determined by looking at how the applet
performs on an intended client device.” Appellant Br. at
15. This argument misunderstands our earlier decision
as we “construe[d] the asserted claims of the ʼ111 [P]atent
to require that the applet be executable or operable when
it is generated and before it is first transmitted to the
client, which means it must include both the particular-
ized data and the functionality.” Parallel Networks, 704
F.3d at 968 (emphasis added).
    In sum, the district court correctly entered summary
judgment of non-infringement in favor of Kayak, Orbitz,
and Wolverine.
                     B. Cross-Appeal
          1. Attorneys’ Fees Under 35 U.S.C. § 285
    A district court may award attorneys’ fees to prevail-
ing parties in an exceptional case. See 35 U.S.C. § 285.
“[A]n ‘exceptional’ case is simply one that stands out from
others with respect to the substantive strength of a par-
ty’s litigating position (considering both the governing law
PARALLEL NETWORKS, LLC    v. KAYAK SOFTWARE CORP.            7

and the facts of the case) or the unreasonable manner in
which the case was litigated.” Octane Fitness, LLC v.
ICON Health & Fitness, Inc., __ U.S. __, 134 S. Ct. 1749,
1756 (2014). The “[d]istrict court[] may determine wheth-
er a case is ‘exceptional’ in the case-by-case exercise of
[its] discretion, considering the totality of the circum-
stances.” Id. “[A] ‘nonexclusive’ list of ‘factors’” to consid-
er    include     “frivolousness,   motivation,       objective
unreasonableness (both in the factual and legal compo-
nents of the case) and the need in particular circumstanc-
es to advance considerations of compensation and
deterrence.” Id. at __, 1756 n.6 (quoting Fogerty v. Fanta-
sy, Inc., 510 U.S. 517, 534 n.19 (1994)). Considering the
degree of deference we give to district courts on this
matter, we cannot say that the district court abused its
discretion by not deeming the case exceptional. 1
    The defendants first contend that the district court
abused its discretion in concluding that Parallel Networks
had a plausible infringement theory because their applets
were no different than those accused applets we previous-
ly held were non-infringing. But that is not quite so. The
accused applets we examined in our earlier decision were
“missing at least one portion of the functional code or data
when the applet [was] transferred to the client” and used
“a link” as a placeholder to retrieve the missing portion.
Parallel Networks, 704 F.3d at 968. We explained that
the ’111 Patent does not contemplate such applets. See
id. at 967 (explaining that the ’111 Patent “does not
describe . . . a scenario in which, in response to a request,

    1   Judge Leonard E. Davis initially presided over the
case, but left the judiciary before the case concluded. The
case was then reassigned to Judge Robert W. Schroeder
III. Judge Schroeder’s finding reflects consideration of
not only his impression of the case, but also that of Judge
Davis.
8         PARALLEL NETWORKS, LLC    v. KAYAK SOFTWARE CORP.

only part of the applet is generated (with a placeholder for
the rest) and is transmitted to the client, which then tries
to execute it and, finding it non-executable and inopera-
ble, follows a link back over the network to retrieve the
additional data and/or functionality that is needed for the
applet to run.” (emphasis added)). The defendants, how-
ever, do not dispute that their accused applets do not
contain a “link” for retrieval of additional data and/or
functionality after transmission to the client to be execut-
able. Thus, some daylight existed between the accused
applets from our earlier decision and the accused applets
here.
    The defendants also contend that the district court
abused its discretion in concluding that Parallel Networks
did not litigate the case unreasonably because Parallel
Networks primarily instituted the case to extract nui-
sance value settlements rather than to litigate the merits.
They assert that the district court had at one point agreed
with that assessment. We disagree. There is no evidence
that Parallel Networks sought to avoid litigating the
merits or that the district court had ever opined that
Parallel Networks was seeking nuisance value settle-
ments. See J.A. at 3741 (Judge Davis: “[O]ne thing I am
not interested in encouraging in this [c]ourt is the suing of
a great number of defendants for basically a shakedown-
cost-of-defense-type settlement. I am not saying that is
going on in this case.” (emphasis added)).
           2. Dismissal of Invalidity Counterclaim
    In deciding the propriety of a dismissal of a counter-
claim with or without prejudice, we apply the law of the
regional circuit, here the Fifth Circuit. See Univ. of
Pittsburgh v. Varian Med. Sys., Inc., 569 F.3d 1328, 1331
(Fed. Cir. 2009) (citing H.R. Techs., Inc. v. Astechnologies,
Inc., 275 F.3d 1378, 1384 (Fed. Cir. 2002)). The Fifth
Circuit reviews a district court’s dismissal of a counter-
claim with prejudice for an abuse of discretion. See, e.g.,
PARALLEL NETWORKS, LLC   v. KAYAK SOFTWARE CORP.         9

Hyde v. Hoffmann-La Roche, Inc., 511 F.3d 506, 509 (5th
Cir. 2007); Elbaor v. Tripath Imaging, Inc., 279 F.3d 314,
317–18 (5th Cir. 2002).
   Shoebuy argues that the district court abused its dis-
cretion because it dismissed the invalidity counterclaim
with prejudice on the mistaken premise that Parallel
Networks and Shoebuy had entered a covenant. We agree
with Shoebuy that the dismissal of the counterclaim
should be without prejudice. The district court’s finding
that these particular parties agreed to a covenant was
clearly erroneous, especially given that Parallel Networks
does not insist that such a covenant exists. We, therefore,
reverse the dismissal of Shoebuy’s invalidity counterclaim
with prejudice on this ground.
                       CONCLUSION
    We have considered the parties’ remaining arguments
in support of the relief they request on appeal, but find
them unpersuasive. For the foregoing reasons, we affirm
in part and reverse in part.
   AFFIRMED IN PART AND REVERSED IN PART
                          COSTS
   No costs.