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DDR Holdings, LLC v. Hotels.com, L.P.

United States Court of Appeals, Federal Circuit

December 5, 2014

DDR HOLDINGS, LLC, Plaintiff-Appellee,
v.
HOTELS.COM, L.P., CENDANT TRAVEL DISTRIBUTION SERVICES GROUP, INC., EXPEDIA, INC., TRAVELOCITY.COM, L.P., SITE59.COM, LLC, INTERNATIONAL CRUISE & EXCURSION GALLERY, INC., OURVACATIONSTORE, INC., INTERNETWORK PUBLISHING CORPORATION, AND ORBITZ WORLDWIDE, LLC, Defendants, AND NATIONAL LEISURE GROUP, INC. AND WORLD TRAVEL HOLDINGS, INC., Defendants-Appellants, AND DIGITAL RIVER, INC., Defendant

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[Copyrighted Material Omitted]

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Appeal from the United States District Court for the Eastern District of Texas in No. 06-CV-0042, Judge J. Rodney Gilstrap.

LOUIS J. HOFFMAN, Hoffman Patent Firm, of Scottsdale, Arizona, argued for plaintiff-appellee. On the brief was IAN B. CROSBY, Susman Godfrey LLP, of Seattle, Washington.

NORMAN H. ZIVIN, Cooper & Dunham LLP, of New York, New York, argued for defendants-appellants, National Leisure Group, Inc., et al. With him on the brief was TONIA A. SAYOUR.

Before WALLACH, MAYER, and CHEN, Circuit Judges. OPINION filed by Circuit Judge CHEN. Dissenting opinion filed by Circuit Judge MAYER.

OPINION

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Chen, Circuit Judge.

Defendants-Appellants National Leisure Group, Inc. and World Travel Holdings, Inc. (collectively, NLG) appeal from a final judgment of the United States District Court for the Eastern District of Texas entered in favor of Plaintiff-Appellee DDR Holdings, LLC (DDR). Following trial, a jury found that NLG infringes the asserted claims of U.S. Patent Nos. 6,993,572 (the '572 patent) and 7,818,399 (the '399 patent). The jury also found the asserted claims of the '572 and '399 patents are not invalid. The district court denied NLG's renewed motion for judgment as a matter of law (JMOL) on, inter alia , noninfringement and invalidity of the asserted patents. The district court subsequently entered a final judgment consistent with the jury's findings on infringement, validity, and damages, and awarded DDR pre- and postjudgment interest and costs. We affirm the district court's denial of NLG's motions for JMOL of noninfringement and invalidity of the '399 patent. Because we conclude that the '572 patent is anticipated as a matter of law, we reverse the district court's denial of JMOL on the validity of the '572 patent, and remand to the district court for further proceedings consistent with our decision.

I. Background

DDR is the assignee of the '572 and '399 patents. The '572 and '399 patents are both continuations of U.S. Patent No. 6,629,135 (the '135 patent), which has a priority date of September 17, 1998. Each of these patents is directed to systems and methods of generating a composite web page that combines certain visual elements of a " host" website with content of a third-party merchant. For example, the generated composite web page may combine the logo, background color, and fonts of the host website with product information from the merchant. '135 patent, 12:46-50.

The common specification of the patents-in-suit explains that prior art systems allowed third-party merchants to " lure the [host website's] visitor traffic away" from the host website because visitors would be taken to the third-party merchant's website when they clicked on the merchant's advertisement on the host site. Id. at 2:26-30. The patents-in-suit disclose a system that provides a solution to this problem (for the host) by creating a new web page that permits a website visitor, in a sense, to be in two places at the same time. On activation of a hyperlink on a host website--such as an advertisement for a third-party merchant--instead of taking the visitor to the merchant's website, the system generates and directs the visitor to a composite web page that displays product information from the third-party merchant, but retains the host website's

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" look and feel." Id. at 3:9-21. Thus, the host website can display a third-party merchant's products, but retain its visitor traffic by displaying this product information from within a generated web page that " gives the viewer of the page the impression that she is viewing pages served by the host" website. Id. at 2:56-63, 3:20-22.

Representative claim 13 of the '572 patent recites:

13. An e-commerce outsourcing system comprising:
a) a data store including a look and feel description associated with a host web page having a link correlated with a commerce object; and
b) a computer processor coupled to the data store and in communication through the Internet with the host web page and programmed, upon receiving an indication that the link has been activated by a visitor computer in Internet communication with the host web page, to serve a composite web page to the visitor computer wit[h] a look and feel based on the look and feel description in the data store and with content based on the commerce object associated wit[h] the link.

System claim 13 requires that the recited system provide the host website with a " link" that " correlate[s]" the host website with a " commerce object." The " commerce object" is the product or product catalog of the merchant. '135 patent, 3:7-13. After recognizing that a website visitor has activated the link, the system retrieves data from a " data store" that describes the " look and feel" of the host web page, which can include visual elements such as logos, colors, fonts, and page frames. Id. at 12:46-50. The claimed system then constructs a composite web page comprising a " look and feel" based on the look and feel description in the data store along with content based on product information from the associated merchant's product catalog.

The '399 patent is directed to a similar system with a greater emphasis on a " scalable [computer] architecture" to serve " dynamically constructed [web] pages" associated with multiple host website and merchant pairs. '135 patent, 3:32-36. Representative claim 19 of the '399 patent recites:

19. A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:
(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages;
(i) wherein each of the first web pages belongs to one of a plurality of web page owners;
(ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and
(iii) wherein the selected merchant, the outsource provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;
(b) a computer server at the outsource provider, which computer server is coupled to the computer store and programmed to:
(i) receive from the web browser of a computer user a signal indicating activation of one of the links displayed by one of the first web pages;

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(ii) automatically identify as the source page the one of the first web pages on which the link has been activated;
(iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and
(iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) information associated with the commerce object associated with the link that has been activated, and (B) the plurality of visually perceptible elements visually corresponding to the source page.

Similar to claim 13 of the '572 patent, system claim 19 of the '399 patent requires that a " data store" hold " visually perceptible elements" (or " 'look and feel' elements" ) that " visually . . . correspond" to a host web page. The host web page must include a link associated with a " buying opportunity" with a merchant. Once a visitor activates this link, the claimed system generates and transmits to the website visitor's web browser a composite web page that includes product information of the merchant and the " look and feel" of the host website (i.e., " the plurality of visually perceptible elements visually corresponding to the [host web] page" ).

Claim 19 further requires that the data store must store " look and feel" descriptions for multiple hosts and that each link must be associated with a particular merchant's product catalog. Claim 19 also requires that the merchant, system operator, and host website be " third parties with respect to one another." When a website visitor activates a link associated with a merchant's product catalog, the claimed system identifies the host web page and then transmits a composite web page using the proper " look and feel" elements of the host website in the data store and the product information from the associated merchant.

The '572 patent issued on January 31, 2006. On the same day, DDR filed suit against NLG, Digital River, Inc. (Digital River), and nine other defendants, asserting infringement of various claims of the '135 and '572 patents. NLG is a travel agency that sells cruises in partnership with travel-oriented websites and major cruise lines through the Internet. DDR's suit accused NLG of infringing the '135 and '572 patents by providing a system for cruise-oriented (host) websites that allows visitors to book cruises on major cruise lines (merchants). Joint Appendix (J.A.) 261. In particular, when a visitor on one of these cruise-oriented (host) websites clicks on an advertisement for a cruise, NLG's system generates and directs the visitor to a composite web page that incorporates " look and feel" elements from the host website and product information from the cruise line (merchant).

DDR's suit was stayed during the pendency of an ex parte reexamination of the '135 and '572 patents requested by DDR that was based on prior art identified by the defendants. Shortly after the U.S. Patent and Trademark Office confirmed the validity of the '135 and '572 patents and the stay was lifted, the '399 patent issued on October 19, 2010. DDR subsequently amended its complaint to assert infringement of this patent by several of the defendants, including NLG.

During Markman proceedings, the parties stipulated to a construction of several terms, including " look and feel," which appears in each of the asserted claims of the '572 patent, and " visually perceptible elements," which appears in each of the asserted claims of the '399 patent. J.A. 542. For " look and feel," the parties agreed to a

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construction of: " A set of elements related to visual appearance and user interface conveying an overall appearance identifying a website; such elements include logos, colors, page layout, navigation systems, frames, 'mouseover' effects, or others elements consistent through some or all of the website." Id. For " visually perceptible elements," the parties agreed to a construction of: " look and feel elements that can be seen." Id. The defendants, however, expressly reserved their rights to argue that both the " look and feel" and " visually perceptible elements" terms are indefinite, but offered the stipulated constructions " in the alternative." Id.

Between June 2012 and January 2013, DDR settled with all defendants except for NLG and Digital River. The case eventually proceeded to a jury trial in October 2012. At trial, DDR accused NLG and Digital River of direct and willful infringement of claims 13, 17, and 20 of the '572 patent, and accused NLG--but not Digital River--of direct and willful infringement of claims 1, 3, and 19 of the '399 patent. DDR also accused NLG and Digital River of inducing infringement of claim 17 of the '572 patent.

The jury found that NLG and Digital River directly infringed the asserted claims of the '572 patent and that NLG directly infringed the asserted claims of the '399 patent, but that NLG and Digital River's infringement was not willful. The jury found that NLG and Digital River did not induce infringement of claim 17 of the '572 patent. The jury also found that the asserted claims were not invalid. The jury determined DDR was entitled to $750,000 in damages from both NLG and Digital River for infringing DDR's patents.

At the conclusion of trial, NLG and Digital River renewed motions for JMOL pursuant to Rule 50(b) of the Federal Rules of Civil Procedure (FRCP) on several grounds. NLG contended the asserted claims of the '572 and '399 patents are invalid under 35 U.S.C. § 101 because the claims are directed to patent-ineligible subject matter and invalid under 35 U.S.C. § 112 ¶ 2[1] because the terms " look and feel" and " visually perceptible elements" are indefinite. NLG also contended that neither the jury's finding of infringement nor its award of damages was supported by substantial evidence. NLG also alleged the district court made several unfair and prejudicial evidentiary rulings.

Digital River contended that the asserted claims of the '572 patent are invalid as either anticipated under 35 U.S.C. § 102, obvious under 35 U.S.C. § 103, or indefinite under 35 U.S.C. § 112 ¶ 2. Digital River also contended that the jury's finding of infringement was not supported ...


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