Soverain Software LLC v. Newegg Inc., No. 2011-1009 (Fed Cir., Jan. 22, 2013).

http://caselaw.findlaw.com/us-federal-circuit/1620869.html

Sovereign brought a patent infringement suit against Newegg for infringement of certain claims in three U.S. patents, all relating to electronic commerce in which a merchant’s products are offered and purchased online. The district court refused to permit the question of obviousness to be decided by the jury, and then held that the claims in the patents are not invalid on the grounds of obviousness.

On appeal, the Federal Circuit held that the record rendered the patents obvious as a matter of law, concluding that the claimed inventions did no more than adapt well-known business-transaction methods to the Internet.

The court’s analysis of the obviousness question considered three groups of claims in the asserted patents. The first group, called the “shopping cart” claims cover an online purchasing system in which products are offered online by a merchant, a buyer designates products for purchase, and payment for the designated products is initiated upon the buyer’s request for checkout.

The primary reference against the first group was the CompuServe Mall system described in two books and elsewhere. Sovereign’s expert witness attempted to distinguish the reference by arguing that the CompuServe system lacked two of the claimed features: a “shopping cart message having a product identifier” and a “shopping cart database.” Neither of these distinctions held up, however, when viewed in light of the agreed claim construction, and in light of how a person skilled in the art would have implemented the CompuServe System online.

The second group of claims, referred to as “hypertext statement” claims, cover the aspect of an online shopping system in which the client computer receives transaction statements from the server computer, in response to a request from the client computer. The Sovereign expert witness argued that the hypertext statement rendered the claims at issue nonobviousness, because there was no way of obtaining transactions details online in the CompuServe system. The more reasonable view, which the court adopted, is that “hypertext and URLs are basic functionalities of the World Wide Web and that anyone who wanted to move shopping onto the web would know they had to use URLs to tie things together and deliver information.”

The third group of claims, identified as “session identifier” claims, included a feature that allowed the user, upon verification of the transaction, to use a session identification to access the user’s file for the given transaction. Here the court considered U.S. patent 5,560,008 to Johnson, which taught session identifiers, concluding (with a nod to KSR) that “we discern no distinction between the claimed session identifier and Johnson.”