United States Court of Appeals for the Federal Circuit
2008-1505, -1524
SOURCE SEARCH TECHNOLOGIES, LLC,
Plaintiff-Appellant,
v.
LENDINGTREE, LLC,
IAC/INTERACTIVECORP, and SERVICEMAGIC, INC.,
Defendants-Cross Appellants.
Jeffrey I. Kaplan, Kaplan Gilman Gibson & Dernier LLP, of Woodbridge, New
Jersey, argued for plaintiff-appellant. With him on the brief was Michael R. Gilman.
Claude M. Stern, Quinn Emanuel Urquhart Oliver & Hedges, LLP, of Redwood City,
California, argued for defendants-cross appellants. With him on the brief were Evette D.
Pennypacker; Robert B. Wilson, Aaron S. Kaufman and James E. Baker, of New York,
New York, and Linda J. Brewer, of San Francisco, California.
Appealed from: United States District Court for the District of New Jersey
Senior Judge Dickinson R. Debevoise
United States Court of Appeals for the Federal Circuit
2008-1505, -1524
SOURCE SEARCH TECHNOLOGIES, LLC,
Plaintiff-Appellant,
v.
LENDINGTREE, LLC,
IAC/INTERACTIVECORP, and SERVICEMAGIC, INC.,
Defendants-Cross Appellants.
Appeal from the United States District Court for the District of New Jersey in case no.
04-CV-4420, Senior Judge Dickinson R. Debevoise.
___________________________
DECIDED: December 7, 2009
___________________________
Before RADER, PLAGER, and SCHALL, Circuit Judges.
RADER, Circuit Judge.
The United States District Court for the District of New Jersey held that the
asserted claims of U.S. Patent No. 5,758,328 (“’328 patent”) were infringed but invalid
on obviousness grounds. See Source Search Techs., LLC v. LendingTree, LLC, Case
No. 04-CV-4420 DRD, 2007 WL 1302443 (D.N.J. May 2, 2007) (“Summary Judgment
on Infringement”). Because genuine issues of material fact bar summary judgment on
both obviousness and infringement, this court vacates and remands.
I.
Source Search Technologies, LLC (“SST”) is the owner by assignment of the
’328 patent, which was filed on February 22, 1996, and issued on May 26, 1998. The
’328 patent claims a computerized procurement service for matching potential buyers
with potential vendors over a network. Under the claimed system, the buyer submits a
request for quotation (“RFQ”) for a standard good or service, which is then broadcast
via the network to certain vendors. ’328 patent col.2 ll.42-47. The vendors who receive
the RFQ are selected based on filter criteria set by the buyer, the seller, and/or the
network operators. Id. The selected vendors then submit responses to the RFQ to the
network which in turn communicates the responses to the buyer. Id. col.2 ll.50-51.
The ’328 patent claims to solve the “too much” or “too little” information problem
commonly associated with running searches over a network or system—e.g., Google or
Westlaw. With respect to the “too much” situation, a user will enter broad search terms
into the system which yield an unmanageable number of “hits” or results. Because of
the excessive number of search results, the user cannot locate the specific target in a
reasonable time or with reasonable accuracy. Correspondingly, in the “too little”
situation, the user enters narrow search terms which yield few, or no, results for the
initial inquiry.
The ’328 patent addresses these problems by using buyer, vendor, and network
criteria to return both a manageable and a sufficient number of search results. The
network envisioned by the ’328 patent is the internet. Id. col.4 ll.61-65. Buyers and
vendors complete a sign-up application on a webpage to give relevant information about
the prospective member. Id. col.4 l.67-col.5 l.3.
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Once registered, a buyer or vendor may submit or receive, respectively, RFQs
for goods or services. “[T]o ensure there is no confusion as to what buyers are
requesting and what sellers are offering” the goods and services must be “standard
items.” Id. col.3 ll.63-65. To this end, the network contains pre-programmed menus
and submenus classifying products and services into categories corresponding to their
standard commercial identifications. Id. col.4 ll.12-16.
When a buyer submits an RFQ, the network applies pre-set filter conditions
defined by the buyer, vendor, and/or system to determine which vendors are capable of
quoting on the RFQ. Id. col.5 ll.9-12. The buyer may set certain qualifications
necessary for a vendor to receive the RFQ—e.g., vendor location. Id. col.5 l.12.
Similarly, the vendor may also narrow the eligible RFQs by designating certain types of
buyers it wishes to do business with—e.g., government agencies. Id. col.5 ll.12-15.
Lastly, the network itself can choose to filter or prioritize results based on pre-selected
criteria or business objectives—e.g., vendor reliability. Id. col.5 ll.21-25. In this way, the
procurement service narrows the field of vendors who will receive and subsequently bid
on an RFQ. With this knowledge, vendors are more willing to provide quotations
because their chances of successfully completing a transaction are increased. Buyers
too are benefited because the system returns only a reasonable number of quotes.
LendingTree LLC (“LendingTree”), a subsidiary of IAC/InterActiveCorp, operates
the website www.lendingtree.com. The website refers prospective borrowers to
potential lenders for a variety of home, auto, and personal loans. Prospective
borrowers access the website, select a type of loan, and fill out a “qualification form”
(“QF”) containing a variety of financial information about the borrower. The website
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describes the QF as a “request for a loan pre-qualification.” Lenders wishing to affiliate
with the website provide LendingTree with information indicating the type of loan the
lender may extend and the type of borrower likely to receive approval from the lender.
LendingTree’s website then uses the information submitted by the lenders along
with the QF to match the borrower with potential lenders. If many lenders match the
borrower’s submitted profile, the website will limit its results to five potential lenders with
preference given to those lenders with high customer satisfaction scores and previous
success rates. A prospective borrower who is not matched with any lender is free to
complete a new loan request at any time.
Once prospective lenders are identified, the website sends an email to the
borrower containing the names and information of the lenders reviewing the borrower’s
application. When a lender responds with a loan offer, the website sends the borrower
an email containing details about the offer. LendingTree plays no further role in the
process once the loan offers are sent to the borrower. The borrower and lender are free
to contact one another on their own to complete the loan process. Verification of the
QF, examination of W-2 forms, and all other steps regarding loans take place without
the help of LendingTree.
In March 2006, SST initiated this action against LendingTree and ServiceMagic
Inc., alleging that websites operated by each infringed the ’328 patent. Initially, SST
asserted claims 1-7 and 11-14. Over the course of litigation, however, SST dropped
claims 4-7 and 11-12. On appeal, only claim 14 remains at issue. Claim 14 is
dependent on claim 13 which in turn is dependent on claim 12. Each is stated below:
12. A method of purchasing goods or services over a data network
comprising the steps of:
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- Communicating over said data network, to a filter means,
at least one request for a quotation from a potential buyer of said
goods or services; filtering, at said filter means the at least one
request in order to ascertain a set of sellers potentially capable of
supplying said goods or services; and
- Obtaining, from at least one of said potential sellers, over a
data network, quotes to supply said goods or services, and
forwarding said quotes to said potential buyer, wherein at least part
of the quote information is stored at a location remote from said
filter means.
13. The method of claim 12 further comprising the step of accepting
filtering conditions from said potential buyer, and utilizing said filtering
conditions from said potential buyer, and utilizing said filtering
conditions in said step of filtering to determine a subset of potentially
capable sellers.
14. The method of claim 13 wherein said set is limited by said filter
conditions and by a predetermined maximum number from which a
bid is to be received.
Id. col. 9 l.45–col.10 l.16 (emphases added). Because claim 14 was not asserted
against ServiceMagic, it is no longer a party to this appeal.
Following a Markman hearing, the district court construed several disputed terms
in the asserted claims. Only two are relevant for this appeal. The trial court construed
“request for a quotation” to mean “a request for the price and other terms of a particular
transaction in sufficient detail to constitute an offer capable of acceptance.” The district
court also construed “goods or services” to mean “standardized articles of trade and
performances of work for another.” Source Search Techs., LLC v. LendingTree, LLC,
Case No. 04-CV-4420 DRD, 2006 WL 2990363, at *9, 16 (D.N.J. Oct. 16, 2006) (“Claim
Construction Order”).
Over the next several months, the parties submitted three summary judgment
motions and cross motions: (1) infringement of claims 1-3 and 12-14 by LendingTree;
(2) invalidity of all claims on obviousness grounds; and (3) invalidity of all claims based
2008-1505, -1524 5
on indefiniteness. SST also moved to strike the supplemental expert report of
LendingTree’s expert, Dr. Walter Scacchi, for its untimely reliance on previously
undisclosed prior art—the “bricks and mortar” prior art. The district court granted SST’s
summary judgment motion of infringement, granted LendingTree’s summary judgment
motion of invalidity on obviousness grounds, and denied LendingTree’s motion for
invalidity based on indefiniteness. That is, the district court found the patent infringed
but invalid. In addition, the district court denied SST’s motion to strike Dr. Scacchi’s
supplemental report.
SST and LendingTree timely appealed each adverse judgment. This court has
jurisdiction under 28 U.S.C. § 1295(a)(1).
III.
This court reviews a grant of summary judgment without deference. Johns
Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1353 (Fed. Cir. 1998); Conroy v. Reebok
Int’l Ltd., 14 F.3d 1570, 1574 (Fed. Cir. 1994). Thus, this court must decide for itself “if
the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In reviewing a genuine issue of
material fact, this court draws all justifiable inferences in the nonmovant’s favor.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
2008-1505, -1524 6
A.
Obviousness is a question of law based on underlying findings of fact. The
factual determinations for obviousness include: (1) the scope and content of the prior
art, (2) the characteristics and understanding of an individual of ordinary skill in the
relevant field of art at the time of invention, (3) the differences between the claimed
invention and the prior art, and (4) the evidence of secondary factors, also known as
objective indicia of non-obviousness. Graham v. John Deere Co., 383 U.S. 1, 17-18
(1966). In reviewing a district court's summary judgment of non-obviousness, this court
also recognizes the movant’s burden to prove invalidity by clear and convincing
evidence. See Monarch Knitting Mach. Corp. v. Sulzer Morat GmbH, 139 F.3d 877, 881
(Fed. Cir. 1998).
The district court’s grant of summary judgment of obviousness was based on two
sets of prior art references: the “e-commerce” prior art and the “bricks and mortar” prior
art. The former refers to early e-commerce systems employing the internet for access
and distribution. The latter refers to pre-internet referral services, such as home
contractor networks or social services networks, used by consumers to help locate a
suitable service provider for a particular project.
The district court relied on three e-commerce prior art systems to support its
finding of obviousness. First, the FAST system was a parts-procurement service that
accepted “requests for quotation” from clients, solicited responses from registered
suppliers to fill those requests, and returned the supplier responses to clients. This
system procured goods that varied from electronic components to hand tools. Upon
receipt of a request by a client, the FAST system would send a query to all registered
2008-1505, -1524 7
vendors within its database who could potentially fill the request. To help broaden its
search, FAST personnel could also manually access un-registered vendor databases or
contact vendors directly via phone or email. Once FAST received responses to the
requests from the vendors, it would send an email to the client listing all vendors who
submitted quotes and their corresponding quote prices. Thus, the FAST system did not
filter which vendors received a client’s request in any meaningful way or subsequently
limit the list of potential vendors sent back to the client. The purpose of the system was
to simply return the lowest possible quote regardless of any pre-set qualifications
designated by the client, vendors, or system.
To place an order, the client had two options. The user could first submit a
separate purchase order to FAST which would then forward the purchase order to the
vendors via email or fax. Alternatively, the user could preauthorize FAST to select the
vendor who returned the lowest quote and automatically submit a purchase order to that
vendor. In either case, however, the quotes submitted by vendors were “non-binding,
inventory availability responses, not contractual offers.” In other words, vendors were
not contractually bound by the responses submitted to the FAST system. Once a
purchase order was received, a vendor could reject the offer or attempt to renegotiate
its terms.
The second prior art system relied upon by the district court was IQUEST—a
document-searching system where users could enter queries to locate various
publications and articles. Once the user selected a particular database in which to
query, IQUEST would run a search and return all matching results. Aside from
database selection, the system did not filter results. Nor did this system send or receive
2008-1505, -1524 8
quotes. Rather, IQUEST charged subscribers a one-time fee per search depending on
the selected database.
The third prior art system was the Federal Acquisition Computer Network,
FACNET. FACNET was a federally run procurement service for government agencies.
A government agency wishing to make a purchase would submit a request for a quote
electronically to the system. The system would then solicit vendors across all its
databases to bid on the quote. Vendors, in turn, would respond to the request with
quotes which were then ranked in order of price by the system and communicated to
the requesting agency. This system had the goal of increasing vendor competition by
broadening the vendor network and ensuring solicitation of a maximum number of
offers.
The district court also relied on an article appearing in a 1992 issue of
Communications of the Association of Computing Machinery (“ACM”) magazine. The
article discusses generally the need for information filtering to act as a mediator
between information sources and their users. As described therein, an information filter
can act as a “third party” in the communication line between users and sources passing
only information it deems relevant to individual users.
In addition to these e-commerce references, the district court placed significant
weight on the “bricks and mortar” prior art. According to LendingTree, for years prior to
the ’328 patent, consumers used referral systems that inherently embodied all the
elements of claim 14 except that a person, rather than a computer, did the “filtering.”
LendingTree highlights two such referral systems.
2008-1505, -1524 9
With home contractor networks, homeowners wishing to perform home repair or
improvement would contact a referral company who would match the homeowner with a
contractor based on mutual terms provided by each party. For example, a homeowner
wishing to remodel his kitchen would call a referral system and provide information
pertaining to the desired project—e.g., location, project type, and budget. The referral
system would then search its database of vendors who had previously provided
information regarding the type of services they provided—e.g., job specialties or
locations serviced. After obtaining a full list of potential contractors, the referral system
would typically return only a pre-set number, around three or five, back to the
homeowner. From there, the homeowner was free to call the contractor to setup an
appointment and obtain a quote for the project.
Social service networks matched up individuals to providers of services for
various needs such as housing, attorney referrals, counseling, and childcare. A client
would call a particular social service network and provide information relating to the type
of service desired. The social service network typically kept all its information regarding
the providers in a card file. The service representative would then use the information
submitted by the clients to match them with a particular provider who could meet their
needs. Upon identifying a suitable provider, the representative would forward that
information to the client who could then contact the provider directly. On occasion, the
representative would contact the provider directly to setup an appointment on the
client’s behalf.
As a threshold issue, SST argues that LendingTree is estopped from relying on
the bricks and mortar prior art for failure to raise it in a timely manner. Whether judicial
2008-1505, -1524 10
estoppel applies is a matter of regional circuit law. Wang Labs., Inc. v. Applied
Computer Scis, Inc., 958 F.2d 355, 358 (Fed. Cir. 1992). Under Third Circuit law,
judicial estoppel is an “extraordinary remed[y] to be invoked when a party’s inconsistent
behavior will otherwise result in a miscarriage of justice.” Oneida Motor Freight, Inc. v.
United Jersey Bank, 848 F.2d 414, 424 (3d Cir. 1988). The Third Circuit reviews the
application of judicial estoppel under an abuse of discretion standard. Klein v. Stahl
GMBH & Co. Maschinefabrik, 185 F.3d 98, 109 (3d Cir. 1999).
Notably, LendingTree did not cite to any bricks and mortar reference until after
service of its opening invalidity expert report. Thus, only supplemental invalidity expert
reports referred to the bricks and mortar references. SST seeks estoppel based on this
delay. LendingTree, for its part, contends that the belated addition was strictly due to
new developments in the case, specifically the Supreme Court’s decision in KSR
International Co. v. Teleflex Inc., 550 U.S. 398 (2007), and the district court’s “modified”
construction of the term “goods or services” in a summary judgment order.
While LendingTree’s proffered grounds for modifying its invalidity contentions are
questionable, the district court did not abuse its discretion by allowing LendingTree to
rely on the bricks and mortar prior art. Despite its current objections to the bricks and
mortar references, SST waited nearly nine months after being served with the
supplemental expert report to raise any objection with the district court. In the time that
followed, SST had ample opportunity to conduct full discovery on the bricks and mortar
prior art. SST did so. As such, no “miscarriage of justice” occurred.
Turning to the ultimate question at hand, this court finds that the district court
erred in its finding of obviousness. Genuine issues of material fact bar entry of
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summary judgment. Specifically, factual disputes prevent a conclusion on the
obviousness of claim 14, viewed as a whole, in light of the prior art. Claim 14, through
independent claim 12, requires the e-commerce system to obtain “quotes” from
potential sellers and to forward “said quotes” to the potential buyer. Although the district
court did not construe the term “quotes,” it did construe the term “request for a
quotation” to mean “a request for the price and other terms of a particular transaction in
sufficient detail to constitute an offer capable of acceptance.” Claim Construction Order,
2006 WL 2990363 at *9. The district court therefore intended “quote” to mean “price
and other terms of a particular transaction in sufficient detail to constitute an offer
capable of acceptance.” Significantly, neither party contests that construction on
appeal.
In its opinion finding the asserted claims obvious, the district court stated:
The FAST system . . . acquired competing quotes from multiple online
vendors and returned them to the customer through the electronic data
interchange. . . . Once the queries had been sent out, FAST returned
quotes from suppliers directly to the customer.
The record shows that some of these points about this critical prior art reference remain
in factual dispute. For instance, the record reflects that the “quotes” forwarded back to
the potential customers in the FAST system were “non-binding, inventory availability
responses, not contractual offers.” Thus, even where a FAST customer pre-authorized
the system to submit an offer on their behalf, this prior art system did not forward a
“quote” from a seller, as the term was effectively construed by the district court. Indeed,
the potential seller retained the option to reject or to renegotiate the terms of the offer.
As well, when the FAST system placed an order automatically, the system would
necessarily never send a “quote” back to the buyer as required by the district court’s
2008-1505, -1524 12
construction. Similarly, none of the other prior art e-commerce systems on the record
returned “quotes,” as defined in claim 14, to its users.
Nor do the bricks and mortar references fill the gap by supplying a qualifying
“quote.” Quite the opposite, those referral systems had even greater points of
difference in comparison to claim 14. The clients of these prior art services contact the
“network” which in turn connects them with service providers. After establishing a
connection between the client and service provider, these systems left the burden on
the client to set up an appointment with the provider. Only at a meeting between the
client and service provider would a quote, in any meaningful sense of the word, arise.
The prior art referral systems, however, had nothing to do with this post-connection
process or any later “quote.” The record explains this difference between the claimed
invention and the prior art. Unlike the ’328 patent, the referral systems of the bricks and
mortar prior art involved non-fungible, non-commodity services that could not be
quantified or quoted immediately over the phone. In other words, a referral system
would have no way to know the cost to remodel a kitchen without first notifying a
contractor to visit the location and put together an estimate. Similarly, a referral system
would have no way to know the cost of representing a client in a legal proceeding
without first sending an attorney to ascertain the specific facts in the dispute.
For this reason, among others, LendingTree’s argument that the ’328 patent
discloses nothing more than a computerized version of the bricks and mortar prior art
fails. But cf. Leapfrog Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1162 (Fed. Cir.
2007) (“We agree with the district court that one of ordinary skill in the art of children's
learning toys would have found it obvious to combine the Bevan device with the SSR to
2008-1505, -1524 13
update it using modern electronic components in order to gain the commonly
understood benefits of such adaptation, such as decreased size, increased reliability,
simplified operation, and reduced cost.”). Simply computerizing the bricks and mortar
referral systems would not yield the invention taught in the ’328 patent. If a prior art
attorney-referral network was computerized, a potential client would still have to provide
all the details of their desired representation before obtaining a quote. These details
would undoubtedly be given directly to the attorney—not the referral network.
Combining the bricks and mortar references with any of the e-commerce systems
produces the same conclusion. In simple terms, none of the prior art discloses a
qualifying “quote” that is directly forwarded to a client. Even if the prior art included a
quoting feature, a person with ordinary skill in this art would still have to take the further
step of equating the “filtering” done by human judgment in the bricks and mortar
systems with the search results of the e-commerce procurement services. The record
shows that the prior art lacked any meaningful filtering process in all of the e-commerce
prior art. Indeed, the claimed invention places great emphasis on addressing this
problem. A person of ordinary skill in this art may not have even recognized the
problem addressed by the filtering feature of the claimed invention in 1996, at the dawn
of the internet era. And even if the problem was apparent to one of ordinary skill, a
solution may not have been a straightforward step. The article in the ACM publication
does generally discuss filtering in the computer context, but does not apply those
general filtering methods to the ’328 patent’s context of matching buyers with vendors.
More specifically, that article does not teach the use of specifications submitted by the
buyer, vendor, and network. Nor does it suggest that these specifications might be
2008-1505, -1524 14
simultaneously used to filter one set of results. Thus, even beyond the problem of no
“quote” in the prior art systems, the claimed invention’s filtering system presents factual
issues preventing a conclusion that one of ordinary skill in 1996 would find the
advances of the ’328 patent easy, obvious, routine, or within the grasp of a common
sense application of prior art to the apparent problems.
In sum, the district court erred in finding claim 14 obvious in view of the prior art
e-commerce systems and the bricks and mortar referral services. Genuine issues of
material fact related to the understanding of a person of ordinary skill, the character and
number of the differences between the claimed invention and the prior art, and even the
scope of those prior art references prevent a grant of summary judgment. Without
resolution of these factual issues, the trial court cannot venture to reach a legal
conclusion that a person having ordinary skill would have known to combine those
references to achieve the system taught in claim 14.
B.
Turning to infringement, the district court found that LendingTree’s website
infringed claim 14 of the ’328 patent. LendingTree challenges this finding because its
service lacks two limitations in claim 14: “request for a quotation” and “goods and
services.”
As explained above, the district court construed “request for a quotation” to mean
“a request for the price and other terms of a particular transaction in sufficient detail to
constitute an offer capable of acceptance.” Claim Construction Order, 2006 WL
2990363, at *9. LendingTree contends that its website does not infringe claim 14
2008-1505, -1524 15
because it only provides prequalification responses—not actual offers—to its
customers.
As an initial matter, SST argues that LendingTree is collaterally estopped from
arguing that its website does not provide “quotes” to its customers. The basis for SST’s
argument is a decision in a different case involving LendingTree and a third party
company IMX. See IMX, Inc. v. LendingTree, LLC, 469 F. Supp. 2d 203 (D. Del. 2007).
In that case, the district court rejected LendingTree’s contention that its website did not
meet the claim limitation “bid,” which was construed to mean “an offer to make a loan.”
“Because the application of collateral estoppel is not a matter within the exclusive
jurisdiction of this court, this court applies the law of the circuit in which the district court
sits.” Bayer AG. v. Biovail Corp., 279 F.3d 1340, 1345 (Fed. Cir. 2002). The Third
Circuit has described the doctrine of collateral estoppel as “preclud[ing] the relitigation
of an issue that has been put in issue and directly determined adversely to the party
against whom the estoppel is asserted.” Melikian v. Corradetti, 791 F.2d 274, 277 (3d
Cir. 1986). Application of the doctrine requires the presence of four factors: “(1) the
identical issue was previously adjudicated; (2) the issue was actually litigated; (3) the
previous determination was necessary to the decision; and (4) the party being
precluded from relitigating the issue was fully represented in the prior action.” Raytech
Corp. v. White, 54 F.3d 187, 190 (3d Cir. 1995). This court reviews whether the district
court properly applied the doctrine of collateral estoppel for an abuse of discretion. Id.
(“We review for abuse of discretion whether the district court properly applied the
doctrine of collateral estoppel.”).
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In this case, the district court declined to apply the estoppel doctrine. This court
perceives no abuse of discretion in that decision. Significantly, the IMX litigation
involved an unrelated patent, with different asserted claims, and dissimilar claim
constructions. In other words, the issues presented in the IMX case were wholly
different from those in this case.
Turning to the merits, this court again perceives that a material issue of fact bars
summary judgment that LendingTree’s website meets the “request for quote” limitation.
To restate from above, users of the LendingTree website fill out a four- to five-page
qualification form before applying for a loan. The “Licenses and Disclosures” page of
the website explains that the form is “NOT an application for credit” but rather “a request
for a loan qualification.” The glossary page of the website defines the term
“qualification:”
[T]he initial process to see if you have enough cash and sufficient income
to meet the requirements of the lender for a loan you want. Qualification
is not an approval because it does not include your credit history.
Qualified borrowers can be turned down if they have poor credit history.
The “Frequently Asked Questions” page adds:
After you accept an offer, you will need to communicate with the Lender
directly (via mail, email or phone) to complete the loan process. You will
need to verify the information you provided through our site through W-2
forms, pay stubs, house appraisals etc. You also need to sign the official
application forms from the Lender and schedule a closing.
These references indicate that the buyer must take significant steps before
closing a loan.
On the other hand, the record supports a finding that the LendingTree website
returns an “offer capable of acceptance” to users. Lenders affiliated with LendingTree
receive specialized software in advance to help create an interface where the data and
2008-1505, -1524 17
terms associated with a potential loan can more readily be established before
forwarding to the user. The ’328 patent describes a similar process. See ’328 patent
col.6 ll.46-52 (“Any operating system may be resident on the computer. Programming
for the buyer’s and vendor’s computer type equipment would be appropriate to the
variety of goods and services buyers and vendors wish to sell over the network and
would change as new goods and services come into existence and old ones are
discontinued.”).
LendingTree also explains to its lenders that any “conditional offer for the Loan
Product type requested” must contain “any conditions which must be satisfied before
the Lender is obligated to provide the Loan Product to the Site User.” This language
suggests that the forwarded offer contains all material terms for acceptance by the user.
The LendingTree website often refers to “offers” forwarded to users. In addition, the
’328 patent arguably envisions conditions, such as credit verification, that must still be
satisfied before a transaction is complete:
Shipping companies can be included in the process if a credit purchase
conditions the vendor’s payment on the confirmation from the shipper that
the delivery has been received and accepted by the buyer. The quotation
system would verify the buyer’s credit and notify the vendor of the
purchase order and credit code.
’328 patent col. 6 ll.12-17.
As this court has repeatedly instructed in the past, “[i]t is axiomatic that claims
are construed the same way for both invalidity and infringement.” Amgen Inc. v.
Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1330 (Fed. Cir. 2003); see also
Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001)
(“Because the claims of a patent measure the invention at issue, the claims must be
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interpreted and given the same meaning for purposes of both validity and infringement
analyses.”); C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1363 (Fed. Cir. 1998)
(“Claims must be interpreted the same way for determining infringement as was done to
sustain their validity.”); Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1576
(Fed. Cir. 1995) (“Claims may not be construed one way in order to obtain their
allowance and in a different way against accused infringers.”); Beachcombers, Int’l, Inc.
v. WildeWood Creative Prods., Inc., 31 F.3d 1154, 1163 (Fed. Cir. 1994) (“We have
already interpreted the claims for purposes of assessing their validity. The same claim
interpretation of course applies to the infringement analysis.”). In that connection, this
court has found that a material issue of fact precludes summary judgment on
obviousness because the prior art does not contain a “request for a quotation” feature.
The same analysis applies to infringement. Under the district court’s construction, a
“quote” effectively means a “price and other terms of a particular transaction in sufficient
detail to constitute an offer capable of acceptance.” This record shows factual issues
regarding the “quotes,” if any, forwarded to buyers by LendingTree’s website. Without
the presence of undisputed facts showing that LendingTree site provides “quotes” as in
claim 14, this court must vacate the district court’s summary judgment on this point.
The district court construed the term “goods or services” to mean “standardized
articles of trade and performances of work for another.” LendingTree first argues that
the loans offered on its websites are not a good or a service. To the contrary,
LendingTree’s website provides a location where potential borrowers can seek
particular types of loans. These loans are simply a debtor’s promise to repay a sum of
money to a lender in exchange for the lender’s promise to advance a sum of money to
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the debtor. In advancing the money, the lender is offering a service to the borrower—
namely, a financial service. The ’328 patent expressly contemplates similar types of
services. See ’328 patent col. 2 ll.3-7 (“In yet another existing system a seller, such as
an insurance agency, offers to provide buyers premium quotations from the insurance
carriers for which the agency is an agent.” (emphasis added)).
LendingTree also contests the district court’s holding that loans are “standard”
services because the majority of loans are customized to the borrower’s means and
needs. This court also detects no merit in that argument. According to the ’328 patent’s
specifications, “[s]tandardization of product or service descriptions is essential to avoid
confusion . . . .” Id. col.4 ll.9-11. The district court properly relied on this language in
the patent. A loan is a “standard” item because both the borrower and lender have a
shared understanding of the promises made and the financial services offered. In other
words, this court perceives no fundamental likelihood of misunderstanding in the
transaction. Even if borrowers submit and receive different types of information to and
from lenders, the transaction remains within the realm of a standard financial operation.
Thus, this court sustains the trial court’s summary judgment that LendingTree’s website
meets the “good or services” limitation.
C.
The last question presented is one of indefiniteness. “The statutory requirement
of particularity and distinctness in claims is met only when [the claims] clearly
distinguish what is claimed from what went before in the art and clearly circumscribe
what is foreclosed from future enterprise.” United Carbon Co. v. Binney & Smith Co.,
317 U.S. 228, 236 (1942). A claim term pinned solely on the “unrestrained, subjective
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opinion of a particular individual purportedly practicing the invention” will not suffice.
Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1350 (Fed. Cir. 2005).
Absolute clarity, however, is not necessary. “If the meaning of the claim is discernible,
even though the task may be formidable and the conclusion may be one over which
reasonable persons will disagree, we have held the claim sufficiently clear to avoid
invalidity on indefiniteness grounds.” Exxon Research & Eng'g Co. v. United States,
265 F.3d 1371, 1375 (Fed. Cir. 2001). Only claims “not amenable to construction” or
“insolubly ambiguous” are indefinite. Id.
LendingTree asserts that the district court’s construction of “goods or services”
introduces a subjective element into claim 14 that renders it indefinite. More
specifically, LendingTree argues that a person practicing the claimed invention would
not be able to differentiate between “standard” and “non-standard” “goods or services.”
Beyond its conclusory statements and bald assertions, LendingTree offers no support
for this position. Of course a person wishing to practice the invention will not know the
exact terms of the “good or service” until the specific market or network is chosen.
Upon that choice, however, the “good or service” comes into clear focus. To hold
otherwise would require the patent to list every possible good or service. This court
does not load the indefiniteness requirement with this unreasonable baggage. Although
at times difficult to determine the bounds of a “standard” product or service, a person
having ordinary skill in the art will possess an understanding of the system that will
supply an objective definition to the various markets and applications of the system.
See Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 624 (Fed. Cir.
1985) (“If the claims, read in light of the specification, reasonably apprise those skilled in
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the art both of the utilization and scope of the invention, and if the language is as
precise as the subject matter permits, the courts can demand no more.” (quoting
Georgia-Pacific Corp. v. United States Plywood Corp., 258 F.2d 124, 136 (2d Cir.
1958))).
This court does not judge indefiniteness according to the subjective impressions
of any particular user of the system, as LendingTree urges. Instead, this court
measures indefiniteness according to an objective measure that recognizes artisans of
ordinary skill are not mindless “automatons.” KSR, 550 U.S. at 421 (“A person of
ordinary skill is also a person of ordinary creativity, not an automaton.”). From that
vantage point, a skilled artisan will understand the markets and the system enough to
determine what is a “standard” item. This court therefore does not accept
LendingTree’s contentions.
IV.
For the above-stated reasons, this court vacates-in-part, affirms-in-part, and
remands. The district court’s grant of summary judgment of invalidity and infringement
are vacated except to the extent that the latter grant forecloses LendingTree’s argument
that its website does not offer “goods or services.” This court also affirms the district
court’s grant of summary judgment on the charges of indefiniteness.
VACATED-IN-PART, AFFIRMED-IN-PART, AND REMANDED.
COSTS
Each party shall bear its own costs.
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