In affirming the district court’s holding that the defendants infringed the asserted claims in connection with one service product, but not two others, the U.S. Court of Appeals for the Federal Circuit outlined the procedures for applying many recent precedential decisions on claim construction infringement and willfulness. Trading Technologies Int’l, Inc. v. eSpeed, Inc. et al., Case Nos. 08-1392, -1392, -1422 (Fed. Cir. Feb. 25, 2010) (Rader, J.).

Plaintiff Trading Technologies International, Inc. (TT) sued eSpeed, alleging infringement of its patents relating to software for displaying the market for a commodity traded in an electronic exchange. More specifically, the patents are directed to displaying trading values in a static manner to allow a user to have confidence that an offer is being made at an intended price. In prior technologies, the trading values would change dynamically with market changes causing users difficulty in entering an order at the appropriate price.

The defendants, collectively eSpeed, provide an electronic exchange for trading commodities and design and sell trading platforms for use with their electronic exchanges.

The parties disputed whether certain eSpeed offerings included the claimed “static display of prices” or “static price axis.” The dispute concentrated on the way the accused platforms re-center the price levels when market values change and subsequently move away from the center of the display. Following a four week trial, the jury found that on of the older platforms willful infringed and awarded TT $3.5 million in damages based on a reasonable royalty. After the jury trial, the district court held a two-day bench trial on inequitable conduct. The trial court ruled the TT did not engage in inequitable conduct. The district court also denied eSpeed’s judgment as a matter of law (JMOL) motions on validity, indefiniteness, priority date and patent misuse, but vacated the jury’s finding of willful infringement and remitted the damages award to about $2.5 million.

Claim Construction and Literal Infringement

The Federal Circuit initially reviewed the trial court’s findings about the meaning of the disputed claim term “static.” The trial court, based on a review of the prior art, assessed the meaning of the claim term to a person of ordinary skill in the art and the prosecution history concluded that the term “static,” as used in the claims, required a manual re-centering command to be entered by a user to change the price axis of the display. On appeal, TT argued for a construction of the word “static” that did not mean immovable. However, the Federal Circuit affirmed the construction of the trial court. In re-applying the affirmed construction, the Federal Circuit also affirmed the non-infringement determination in relation to certain of eSpeed’s platforms. The Federal Circuit opined that because those platforms lack “price levels that do not change positions unless a manual re-centering command is received,” the products did not literally infringe the patents-in-suit.

Doctrine of Equivalents

The district court concluded that TT was estopped from relying on the doctrine of equivalents. The trial court reasoned that claim vitiation and prosecution history estoppel barred assertion of infringement by equivalents. On review, the Federal Circuit stated that claim vitiation applies when there is a “clear, substantial difference or a difference in kind” between the claim limitation and the accused product and that it does not apply if there is a “subtle difference in degree.” The Federal Circuit affirmed the determination that a price axis that moves only in response to the trader’s instruction versus a price axis that adjusts itself without prompting is not a subtle difference. The Federal Circuit then confirmed that an accused platform’s automatic re-centering feature is substantially different from the claimed invention and cannot fall within the scope of the claims under the doctrine of equivalents without “doing violence” to the “static” claim element. Accordingly, the Federal Circuit affirmed the trial court’s judgment that TT could not rely on the doctrine of equivalents to show that either of the non-literally infringing platforms infringed the patents-in-suit under the doctrine of equivalents.

Willful Infringement

TT argued that, because eSpeed began redesigning certain of its platforms immediately after the suit commenced and replaced an accused product with another, eSpeed should have been found to willfully infringe the asserted patents. The Federal Circuit, reviewing the trial court’s grant of the JMOL motion without deference, while viewing all the evidence in the light most favorable to the nonmoving party (in accordance with the law of the Seventh Circuit), affirmed the trial court and held that prompt redesign efforts and complete removal of infringing products in a span of a few months, if anything, supported a determination that eSpeed was not objectively reckless and did not willfully infringe the patents-in-suit.