Judges: Mayer, Linn (author), Moore

[Appealed from E.D. Ky., Senior Judge Hood]

In iLOR, LLC v. Google, Inc., No. 08-1178 (Fed. Cir. Dec. 11, 2008), the Federal Circuit affirmed the district court’s denial of iLOR, LLC’s (“iLOR”) motion for preliminary injunctive relief and dismissed the remaining issues raised in iLOR’s appeal. iLOR is the assignee of U.S. Patent No. 7,206,839 (“the ’839 patent”), which is directed to a “method for adding a user selectable function to a hyperlink.” Claim 26, the only claim at issue in the appeal, recites a method for enhancing a hyperlink, including “providing a user-selectable link enhancement for a toolbar, the toolbar being displayable based on a location of a cursor in relation to a hyperlink.” iLOR sued Google, Inc. (“Google”), alleging that Google’s “Google Notebook” product infringed the ’839 patent. Google counterclaimed, seeking a DJ of noninfringement, invalidity, and unenforceability of the ’839 patent. iLOR then moved for preliminary injunctive relief, requesting that Google be enjoined from using or inducing others to use Google Notebook in a way that infringed claim 26 of the ’839 patent. In response, Google filed a cross-motion for SJ of noninfringement. After construing claim 26, the district court granted Google’s motion for SJ, denied iLOR’s motion for preliminary injunction, and sua sponte ordered that iLOR’s claims pending against Google be dismissed with prejudice. The district court entered judgment, stating that the “action” be dismissed with prejudice and that “this Order is FINAL AND APPEALABLE and THERE IS NO JUST CAUSE FOR DELAY.” Slip op. at 3-4.

On appeal, iLOR argued that the district court’s judgment disposed of all claims and counterclaims, and therefore is final. Thus, according to iLOR, the Court has jurisdiction to address all issues raised below, including the district court’s grant of SJ of noninfringement and sua sponte dismissal of its remaining claims.

The Court rejected this argument and noted that iLOR had improperly relied on Walter Kidde Portable Equipment, Inc. v. Universal Security Instruments, Inc., 479 F.3d 1330 (Fed. Cir. 2007), in arguing that the judgment’s dismissal of the “action” necessarily encompassed all claims at issue in the case—both iLOR’s claims and Google’s counterclaims. In Walter Kidde, the district court had dismissed the “action” without prejudice and without explicitly addressing the defendant’s counterclaims.

The Walter Kidde court stated that “[t]he term ‘action’ encompasses the entire proceedings in the district court, signifying that the order of dismissal terminated [the defendant’s] counterclaims.” Id. at 1335 (alterations in original).

In this case, the Court explained that the word “action,” without further explanation, may generally be used to denote the entire judicial proceeding, including counterclaims, as in Walter Kidde. Since the parties in Walter Kidde had disputed whether the entire proceeding could be dismissed in light of the existence of the counterclaims, it was clear to the Court that the “action” included the claims and counterclaims. The Court, however, denied that Walter Kidde goes so far as to support the proposition that a district court’s use of the word “action” robotically signifies all claims, counterclaims, cross-claims, etc., regardless of the context in which the word is used. The Court instructed that the context in which the word “action” is used cannot be ignored.

In distinguishing the current case from Walter Kidde, the Court stated that the district court’s decision granting SJ of noninfringement and dismissing the remainder of iLOR’s claims “clearly disposes of iLOR’s half of the case,” but “does not dispose of, or mention, Google’s counterclaims.” Slip op. at 6-7. Because the district court’s judgment does not mention Google’s counterclaims, the Court interpreted “action” in the context of this case to encompass only iLOR’s causes of action. The Court also noted that neither the district court’s decision nor the judgment gave any indication that the district court intended to address or dismiss Google’s counterclaims. The Court further explained that, based on precedent, the district court would have clearly abused its discretion by sua sponte dismissing Google’s counterclaims.

Alternatively, iLOR argued that even if Google’s counterclaims remain pending, the district court’s judgment certifies the decision for immediate appeal under Federal Rule of Civil Procedure 54(b), and therefore vests the Court with jurisdiction to consider the district court’s denial of preliminary injunctive relief, grant of SJ of noninfringement, and sua sponte dismissal of iLOR’s remaining claims.

Rule 54(b) states that “the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.” In deciding whether an order from the district court is sufficient to compel appellate jurisdiction under Rule 54(b), the Court adopted the consensus view that “the bare recitation of the ‘no just cause for delay’ standard of Rule 54(b) is not sufficient, by itself, to properly certify an issue for immediate appeal. Rather, it must be apparent, either from the district court’s order or from the record itself, that there is a sound reason to justify departure from the general rule that all issues decided by the district court should be resolved in a single appeal of a final judgment.” Id. at 8 (citations omitted).

Because the district court’s judgment neither cites Rule 54(b) nor sets forth the circumstances justifying immediate appeal of the decision, but merely states that there is no just cause for delay, the Court concluded that it did not have jurisdiction to review the district court’s grant of SJ of noninfringement or sua sponte dismissal of iLOR’s remaining claims. The Court determined that its jurisdiction was limited under 28 U.S.C. § 1292(a)(1) to the district court’s denial of preliminary injunctive relief, which it affirmed.

In so affirming, the Court agreed with the district court that “the toolbar being displayable based on a location of a cursor in relation to a hyperlink” is properly limited to toolbars that are automatically displayed based on the location of the cursor without further user action. The Court also noted that the claim language does not provide any indication that the display of the toolbar is “based in part” on the cursor position, nor does either the claim language or the specification illustrate any other condition which, along with the cursor position, may cause display of the toolbar. Id. at 10. Even assuming there was any ambiguity in the claim language as to whether further user action is contemplated, such ambiguity is eliminated when the claim language is viewed in light of the specification and prosecution history, which do not disclose any embodiment in which the user must further act in order to display the toolbar.

The Court disagreed with iLOR’s contention that, by requiring the cursor to remain proximate to the hyperlink for a predetermined time, as described in the specification, the embodiment contemplates “further user action.” The Court stated that, at best, the specification demonstrates that user inaction upon placing the cursor near the hyperlink may cause the toolbar to display, but there is nothing in the specification that indicates that some further action is required to display the toolbar.

The Court also disagreed with iLOR’s contention that arguments describing aspects of other claims during prosecution of the parent application were inapplicable to claim 26, the claim at issue. During prosecution, iLOR had distinguished a prior art reference on the basis that it required further user action for display and did not merely locate the cursor proximate to the hyperlink. The arguments were made to distinguish claims that contained, inter alia, limitations in the parent application relating to “detecting a cursor in proximity to said hyperlink” and “displaying a graphical toolbar in proximity to said cursor while said cursor is in proximity to said hyperlink,” which are also in claims 1 and 9 of the ’839 patent. Thus, the Court noted that iLOR appeared to concede that the arguments made during prosecution of the parent application are applicable to claims 1 and 9. When iLOR added claim 26 during prosecution, it argued that the claim was “similar to” and “allowable for at least the same reasons” as the pending claims, including claims 1 and 9. The Court concluded that these statements and iLOR’s contemporaneous failure to put the examiner on notice that it was attempting to capture previously surrendered subject matter rendered iLOR’s representations made with respect to the prior art reference applicable to claim 26.