Nuance Communications, Inc. v. ABBYY USA Software House, Inc.

United States Court of Appeals
for the Federal Circuit
______________________

NUANCE COMMUNICATIONS, INC.,
A DELAWARE CORPORATION,
Plaintiff-Appellant

v.

ABBYY USA SOFTWARE HOUSE, INC., A
CALIFORNIA CORPORATION, ABBYY SOFTWARE,
LTD., A CYPRUS CORPORATION, ABBYY
PRODUCTION LLC, A RUSSIA CORPORATION,
LEXMARK INTERNATIONAL, INC.,
A DELAWARE CORPORATION,
Defendants-Cross-Appellants
______________________

2014-1629, 2014-1630
______________________

Appeals from the United States District Court for the
Northern District of California in No. 3:08-cv-02912-JSW,
Judge Jeffrey S. White.
______________________

Decided: February 22, 2016
______________________

DEANNE MAYNARD, Morrison & Foerster LLP, Wash-
ington, DC, argued for plaintiff-appellant. Also represent-
ed by MARC A. HEARRON; MICHAEL ALLEN JACOBS, BROOKS
M. BEARD, San Francisco, CA.
2 NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE

ERIK R. PUKNYS, Finnegan, Henderson, Farabow,
Garrett & Dunner LLP, Palo Alto, CA, argued for defend-
ants-cross-appellants. Also represented by NICHOLAS D.
PETRELLA, LILY LIM; DON O. BURLEY, DONALD ROBERT
DUNNER, EDWARD ROBERT YOCHES, Washington, DC;
Defendants-cross-appellants ABBYY USA Software
House, Inc., ABBYY Software Ltd., ABBYY Production
LLC also represented by PETER J. KIRK, ABBYY USA
Software House, Inc., Milpitas, CA; MEGAN OLESEK,
Duane Morris LLP, Palo Alto, CA.
______________________

Before PROST, Chief Judge, DYK and CHEN, Circuit
Judges.
PROST, Chief Judge.
This case involves optical character recognition
(“OCR”) technology. Nuance Communications Inc. (“Nu-
ance”) sued ABBYY USA Software House, Inc., ABBYY
Software, Ltd., ABBYY Production LLC, and Lexmark
International, Inc. (collectively, “ABBYY”) in the United
Stated District Court for the Northern District of Califor-
nia. Although Nuance asserted eight patents in its com-
plaint, before trial Nuance narrowed its case and
ultimately only tried three patents: U.S. Patent Nos.
6,038,342 (“’342 patent”), 5,381,489 (“’489 patent”), and
6,742,161 (“’161 patent”). The jury returned a verdict of
non-infringement and judgment was entered against
Nuance. Nuance appeals the judgment, arguing that a
new trial on the ’342 patent is warranted because the
district court improperly adopted a dictionary definition
for disputed claim limitations in the ’342 patent. Nuance
also contends that it was denied due process when the
district court entered final judgment against Nuance as to
all of its patents, even those that Nuance chose not to
assert at trial, and thus seeks remand for a second trial
on the untried patents. For the reasons stated below, we
affirm the district court’s rulings.
NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE 3

BACKGROUND
OCR technology is used to discern characters in digi-
tal images of text, like a scanned document, and to trans-
late the text into a format where it can be searched or
edited. OCR systems analyze characters in the scanned
image using various techniques, including template
matching, feature analysis, and context analysis. Tem-
plate matching involves comparing a character in the
digital image with templates of known characters. If
there is no matching template, then feature analysis is
used, which examines the characteristics of unknown
characters to determine what they are. Sometimes tem-
plate matching and feature analysis result in more than
one possible character—such as a lowercase or uppercase
“S”—in which case context analysis is used. Context
analysis looks to the character’s special context and
linguistic context to determine the correct character.
I. THE ’342 PATENT AND ABBYY’S ACCUSED PRODUCT
The only dispute on the merits in this case concerns
the ’342 patent. The ’342 patent is directed to OCR
systems and methods. It describes two “recognition”
processes—template matching and feature analysis. The
novelty of the invention is that it uses the results of the
feature analysis to build new templates that can later be
used in the first step of template matching. ’342 patent
col. 16 ll. 35–38. By using templates generated through
feature analysis, the invention allows for template match-
ing to recognize many more characters than it otherwise
would be able to. The asserted claims of the ’342 patent
recite that an unknown character is “identified” or “recog-
nized” with or using a character-recognition process. For
example, independent claim 4 recites:
4. In an optical recognition system having a fea-
ture analysis process for identifying an unknown
character, said optical character recognition sys-
tem for identifying characters in a medium, a
4 NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE

method for constructing a template library for use
while processing said medium, said method com-
prising the steps of:
(a) identifying said unknown character with said
feature analysis process;
(b) building a template for said unknown charac-
ter subsequent to having identified said unknown
character; and
(c) storing said template in said template library.
’342 patent col. 27 l. 62–col. 28 l. 6 (emphasis added).
ABBYY’s accused product, FineReader, uses OCR
technology. It begins by breaking down individual lines of
text into fragments. Each fragment is then examined for
division points, called “vertices” which are endpoints of
“arcs.” Each arc corresponds to a “grapheme” image,
which is a particular shape but not necessarily a charac-
ter. FineReader examines each fragment and considers
all combinations of grapheme images that could be com-
bined to make a word. “Classifiers” then produce a list of
“guesses” based on the combinations of grapheme images
and provide a confidence value for each guess indicating
how likely it is that the guess is correct. FineReader then
performs a type of context analysis where it converts the
grapheme guesses into characters and generates a list of
possible words with associated confidence intervals.
FineReader performs several more tests, including anal-
yses based on linguistic information, to rank the word
guesses. FineReader repeats that process for each frag-
ment and after processing all of the fragments on a given
line of text, it selects the best word candidates for each
fragment.
II. PROCEDURAL HISTORY
Nuance originally asserted over 140 claims from eight
patents against ABBYY. Three of those patents involved
NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE 5

OCR technology: U.S. Patent No. 5,261,009 (“’009 pa-
tent”), the ’342 patent, and the ’489 patent (collectively,
“the OCR-patents”). The other five patents did not relate
to OCR technology: U.S. Patent Nos. 5,131,153 (“’053
patent”), 5,436,983 (“’983 patent”), 6,810,404 (“’404 pa-
tent”), 6,820,094 (“’094 patent”), and the ’161 patent
(collectively, “the non-OCR patents”). The district court
held a first Markman hearing on the three OCR patents.
After issuing the first claim construction order, the dis-
trict court asked the parties to propose case management
scheduling for the rest of the case. It referred the case
management conference to a special master who recom-
mended, as Nuance proposed, that the court proceed with
claim construction on the non-OCR patents and that the
parties proceed through discovery, mediation, and then
trial on both sets of patents. It further adopted Nuance’s
proposal that Nuance would limit its total patents at trial
to four, and the total claims to fifteen. The district court
adopted the special master’s recommendations.
Nuance selected the ’342 patent, the ’489 patent, the
’009 patent, and the ’161 patent for expert discovery and
trial, thus selecting both OCR and non-OCR patents.
Ultimately, Nuance narrowed its case even further and
only went to trial on seven claims from three patents (the
’342 patent, the ’489 patent, and the ’161 patent). The
jury found non-infringement and the district court en-
tered final judgment against Nuance on August 26, 2013.
Eight months later, in a motion by ABBYY to compel
costs, Nuance responded that the costs award should be
stayed until its remaining patents had been tried. Nu-
ance indicated that the completed trial was only the
“initial” trial and it had reserved its right to try the other
patents in a subsequent trial.
The district court rejected Nuance’s arguments and
granted the motion to compel costs. The court noted that
it entered judgment “[a]fter a full and fair trial on the
issues selected by Nuance for its case-in-chief” and that
6 NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE

the final judgment “did not exempt any of Nuance’s
causes of action or reserve judgment on any of Nuance’s
patents that it chose not to pursue at trial.” J.A. 22. The
court further stated that it “afforded Nuance the oppor-
tunity to pursue discovery and claim construction on all
its patents” but that it “agreed with Nuance’s proposal
that it would conduct a single trial” on a “manageable set”
of patents. J.A. 22. The court also noted that Nuance
failed to make any timely objections to the special mas-
ter’s report which indicated that there would be a single
trial on both the OCR and non-OCR patents. The court
continued, “Although in the initial stages of this case, the
Court kept the option open to Nuance to pursue discovery
and claim construction on all of its originally asserted
patents, there was never any mention that there would be
serial trials.” J.A. 23. Indeed, the court noted that “ac-
cording to its own representations, Nuance selected its
‘best’ and ‘strongest’ patents for trial.” Id.
Nuance now appeals. We have jurisdiction under 28
U.S.C. § 1295(a)(1).

DISCUSSION
We review a district court’s claim construction under
the standard set forth in Teva Pharmaceuticals USA, Inc.
v. Sandoz, Inc., 135 S.Ct. 831, 841 (2015). A district
court’s case management decisions are reviewed for abuse
of discretion, including legal and constitutional error.
Nuance raises two issues on appeal. First, with re-
spect to the ’342 patent, Nuance contends that a new trial
is warranted because the district court failed to resolve
the parties’ claim construction dispute before trial and
because the district court adopted a dictionary definition
contrary to the intrinsic evidence for disputed claim
limitations. Second, Nuance argues that it was denied
due process when the district court entered final judg-
ment against Nuance as to all of its patents, including
those that were not asserted at trial, and thus seeks
NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE 7

remand for a second trial on the untried patents. We
address each of these issues in turn.
I. CLAIM CONSTRUCTION
The parties originally disputed the constructions for a
number of terms in the ’342 patent, including “identify-
ing” and “recognizing.” They agreed, however, that the
two terms were synonymous and thus should have the
same construction. ABBYY initially proposed that “iden-
tifying” had a special meaning and referred only to identi-
fication by template matching and feature analysis.
Nuance disagreed, explaining that “identifying” is “a
simple word that is used every day and there is no indica-
tion that the inventors intended to use this term different-
ly from its commonly understood meaning.” J.A. 519.
Nuance further argued that there is “simply no restriction
in the specification” warranting departure from the plain
and ordinary meaning. J.A. 520. The district court
agreed with Nuance and thus construed the term “identi-
fying” to mean “identifying.” J.A. 9.
The parties then took discovery and prepared for trial
using the court’s construction. It became apparent during
summary judgment briefing, however, that the parties
disagreed as to the plain and ordinary meaning of “identi-
fying,” or at least its application to the accused devices.
Nuance’s expert asserted that one of FineReader’s classi-
fiers, which produces a list of grapheme guesses, was
identical to the claimed “feature analysis.” ABBYY’s
expert disagreed, saying that the classifier does not
“identify a character” but instead generates guesses of
graphemes with associated confidence values. He further
stated that FineReader does not identify a character until
the very end of the process: it is only after context analy-
sis and after the best word candidate is selected that
FineReader identifies a particular character. Based on
these competing understandings of what is meant to
“identify” a character, Nuance asked the district court to
8 NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE

allow briefing on the meaning of “identify” so that the
dispute could be resolved before trial. ABBYY opposed,
saying the term had already been construed.
The district court, after noting that it had already
conducted two claim construction hearings in this case,
said that it was “too late to do a construction” and that it
was “unnecessary.” J.A. 1368. Instead, the court said it
was going to rely on the “very experienced trial counsel
here” and ordered the parties “to arrive at a mutually
agreed upon—quote, unquote—‘ordinary meaning’ of the
term ‘identify.’” Id. The court said that if the parties
could not agree, it would “either use a Black’s Law Dic-
tionary definition, or some other definition, or just tell the
jury to use its ordinary meaning.” J.A. 1368–69. The
parties could not agree. ABBYY, citing a dictionary
definition, proposed “to establish the identity of” as the
construction for “identify.” Nuance proposed “identifying
(finally or tentatively),” or, alternatively proposed that
court instruct the jury as follows: “‘Identifying’ has its
plain and ordinary meaning. Many times an identified
character is still ambiguous.” J.A. 1436. In an order
resolving pretrial submissions, the court, without further
explanation, stated that it “adopts the plain and ordinary
meaning of the terms ‘identifying’ and ‘recognizing’ as the
same: ‘to establish the identity of.’” J.A. 16. The court
instructed the jury accordingly.
On appeal, Nuance maintains that the district court
failed to resolve the parties’ claim construction dispute
before trial in violation of O2 Micro International Ltd. v.
Beyond Innovation Technology Co., 521 F.3d 1351 (Fed.
Cir. 2008). We disagree. At the Markman hearing, the
district court found in Nuance’s favor by adopting the
plain and ordinary meaning of the term “identifying.”
The fact that shortly before trial Nuance became dissatis-
fied with its own proposed construction and sought a new
one does not give rise to an O2 Micro violation. See
Akamai Techs., Inc. v. Limelight Networks, Inc., 805 F.3d
NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE 9

1368, 1376 (Fed. Cir. 2015) (finding no O2 Micro error
where “the parties agreed in the stipulation as to both the
meaning and the scope of the term during claim construc-
tion” and concluding that the defendant could not “argue
at the jury instruction stage . . . that the construction was
somehow too broad”).
As described above, Nuance initially proposed the use
of plain and ordinary meaning for “identifying” because it
contended that the intrinsic evidence provided “no indica-
tion that the inventors intended to use this term different-
ly from its commonly understood meaning.” J.A. 519.
The district court considered the intrinsic evidence and
agreed that the disputed terms should be given their
plain and ordinary meaning. J.A. 9 (stating that “the
term identifying appears through portions of the patents
that do not allude to the specific processing and may be
analyzed according to any one of a number of techniques”
and thus construing the term “‘identifying to mean:
‘identifying’”). Essentially, after the district court adopted
Nuance’s proposal, Nuance reversed course and tried to
get a new construction of disputed terms shortly before
trial, which the district court properly denied given the
parties’ earlier agreement and the lack of any good cause
for revisiting the claim construction. See Akamai, 805
F.3d at 1376; O2 Micro Int’l Ltd. v. Monolithic Power Sys.,
Inc., 467 F.3d 1355, 1366 (Fed. Cir. 2006).
Nuance further contends that the district court erred
in adopting a dictionary definition for the disputed terms
that it says conflicts with the intrinsic evidence. But
Nuance has shown no harm justifying a new trial. Nu-
ance points to various portions of the specification that
indicate that “identifying” includes ambiguous identifica-
tions. In other words, Nuance argues that the term
“identify” does not mean that the recognition process
must identify one final character; instead, “identify” also
encompasses narrowing the possible choices to a class of
characters for further analysis. The district court’s con-
10 NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE

struction is not in conflict with Nuance’s proposal. One
could “establish the identity of” a single character or a
class of characters. The operative words in the claims,
then, are not “identifying” or “recognizing,” but instead
are the object of those words—what is being identified or
recognized. And that is exactly what the parties argued
over at trial—Nuance contended that ABBYY’s software
satisfies the “identifying an unknown character” limita-
tion when its recognition process picks out a class of
characters, while ABBYY presented evidence to the
contrary. The district court did nothing to limit Nuance’s
ability to present its evidence on this issue, and its in-
struction to the jury did not prevent the jury from fully
considering each party’s position. After weighing the
evidence, the jury agreed with ABBYY. Thus, even if the
district court did err in adopting a dictionary definition
for the disputed terms, Nuance is not entitled to a new
trial because it is clear that “correction of the errors in
[the] jury instruction on claim construction would not
have changed the result, given the evidence presented.”
Teleflex Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1328
(Fed. Cir. 2002). 1
II. DUE PROCESS
Nuance also argues that the district court violated its
due process rights by entering judgment against it on all
of its patents, even those that were not tried before the
jury. ABBYY responds that there is no due process viola-
tion because Nuance voluntarily narrowed the case to its
best patents and is now simply trying to get a second bite
at the apple since it lost at trial. Although clearer guid-
ance from the district court as to the consequences of
Nuance’s decision to narrow the case might have been

1 Because we affirm the district court’s claim con-
struction, we do not reach ABBYY’s conditional cross-
appeal.
NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE 11

preferable, ultimately the responsibility was on Nuance to
timely notify the district court as to any objection to the
court’s procedures. Because it did not do so, and instead
made the tactical litigation decision to move forward only
on a subset of patents without contemporaneous objection,
Nuance is not entitled to another trial on the remaining
patents.
The course of dealings below indicates that, from the
outset, Nuance only intended to have a single trial on a
subset of patents that would be representative of all
asserted patents. For example, Nuance consistently
opposed multiple trials in its case management confer-
ence statements. See J.A. 5358 (opposing defendants’
proposal to sever the action in two because it would
“unnecessarily consume additional judicial resources,
including multiple separate trials involving the same
parties, the same products and the same witnesses”); J.A.
7095 (same); J.A. 7114 (same). Indeed, after the district
court decided to hold two Markman hearings—one on the
OCR patents and a second one on the non-OCR patents—
Nuance reiterated its concern about multiple trials:
My concern is that having multiple trials could be
very expensive. I would think that we could have
a Markman process, maybe have a subsequent
Markman process and, perhaps, by then do sum-
mary judgments or whatever, we get to a man-
ageable set for one trial.
J.A. 475–76. Moreover, in the back-and-forth with the
district court regarding a case management plan, Nu-
ance’s counsel stated that, although it expected to proceed
with Markman hearings on all of its patents, it only
intended to have a single trial on a limited number of its
“best” patents:
But the reality of it is . . . if we have good time
limits on us and we’re going to focus on what’s
important at trial, the most I [have] ever gone to
12 NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE

trial with are three patents. . . . So . . . although,
we believe, we have good infringement claims on
all this, you hope to focus so you don’t have multi-
ple trials. You hope to go ahead and have one tri-
al on our best patents, go forward and that would
hopefully take care of everything. We are not
suggesting that we believe we’re willing to with-
draw these patents from the case, but because
we’re trying to focus this case down to something
that’s manageable for Markman and something
that’s manageable at trial, those are two different
issues.
J.A. 419. Indeed, Nuance’s counsel’s main concern was
not whether the trial would be limited to a subset of
patents, but who would make that decision—Nuance or
ABBYY:
If we’re forced to go forward on a sub-set of pa-
tents we don’t view to be the strongest ones, our
incentive is to continue to litigate after that. Like
I said, I’ve been in a couple of these cases, the
thought is in narrowing the case to be manageable
for trial, you need to allow the plaintiff to effec-
tively go on what they believe to be their strongest
patents. If you do that and either win or lose that
will typically resolve the whole dispute.
J.A. 421; see also id. at 420 (“We’d like to have our day in
court on all . . . patents. That’s not a reality. We’re going
to try to set up a plan, we’re going to come up with repre-
sentative claims.”).
Consequently, Nuance elected on its own, without
instruction from the court, to “move forward” on six
patents with “no more than 24 representative claims.”
J.A. 402–04. Nuance also asked for flexibility in substi-
tuting different representative claims later in the case,
and, indeed, Nuance did later substitute two of its previ-
ously selected patents for the ’489 and ’009 patents. In
NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE 13

fact, in response to the court’s order to the parties to
provide proposals on case management, Nuance further
voluntarily narrowed its case to four patents and fifteen
claims. Nuance stated in its proposed schedule that this
“should further reduce the issues for the parties and the
court following fact discovery if mediation is unsuccessful
in resolving the case.” J.A. 665. The special master,
assigned by the district court to handle the remainder of
the case management procedure, agreed with Nuance’s
proposal:
[T]he Special Master recommends all parties pro-
ceed through discovery, mediation, and then trial
on both the [OCR patents] and the [non-OCR pa-
tents]. Before beginning expert discovery, howev-
er, Plaintiff will limit the total patents to 4 and
the total claims to 15 out of those 4 patents.
J.A. 691. The reference to “proceed[ing]” to trial covered
all patents in the case, and clearly contemplated reducing
the number to four patents at trial. There was no refer-
ence to a second trial. Indeed, nowhere in the special
master’s recommendations—which the district court
adopted in full—was a suggestion that there would be
more than one trial. To the contrary, the special master’s
recommendation resolved the dispute over multiple trials
and concluded that a single trial on a subset of repre-
sentative patents was warranted. Nuance did not object
to the special master’s recommendations—which, of
course, is not surprising, given that Nuance itself pro-
posed the single-trial procedure—nor did it clarify that it
intended to seek a second trial on the unselected patents.
And ultimately, Nuance did not utilize its full allotment—
it went to trial on fewer than half of the fifteen claims
that it could have and on only three patents instead of
four.
Nuance argues that it never abandoned its unselected
patents or stipulated that the judgment on the selected
14 NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE

patents would apply to all of its patents. For support, it
points to a number of statements it made before the
district court regarding its right and intention to try all of
its patents. See, e.g., J.A. 419–20 (Nuance’s counsel
stating that he was putting some patents “on the side
burner for now” and that those patents would not be “in
the first trial”); id. at 421 (Nuance’s counsel warning the
court that if ABBYY forced Nuance to move forward on
only a subset of its patents, then that could result in “two
trials”); id. at 666 (Nuance stating in a joint case-
management report that, “[i]f the case is unable to be
resolved before trial, it is only fair that Nuance—not any
of the Defendants—be able to select the patents for the
first (and hopefully only) trial in this case”). Nuance
made those statements, however, well before the district
court adopted the single-trial procedure proposed by
Nuance and recommended by the special master. Indeed,
those statements were made in the context of moving
forward on all patents for Markman, not trial. And that
is exactly what the district court did: it allowed Nuance to
select terms from all of its patents for claim construction,
from which Nuance—not ABBYY—then selected its “best”
and “strongest” patents for a single trial.
Nuance further contends that it expressly reserved its
rights as to all patents, including those that were not
selected for trial. Nuance points to its submission to the
district court regarding its selection of patents for trial, in
which Nuance stated that it would “postpone resolution of
its infringement case” as to the unselected patents and
that it “reserves its rights to reassert them against
ABBYY and/or Lexmark at a later time in this suit or a
future suit(s).” J.A. 727. But such a boilerplate reserva-
tion of rights is insufficient to overcome the clear recom-
mendation from the special master for one trial—to which
Nuance did not object—and the significant record evi-
dence indicating Nuance’s intention to have a single trial
on a subset of its best patents.
NUANCE COMMUNICATIONS v. ABBYY USA SOFTWARE HOUSE 15

Finally, Nuance relies on In re Katz Interactive Call
Processing Patent Litigation, 639 F.3d 1303 (Fed. Cir.
2011) to support its position. In that case, we approved a
district court’s order limiting the number of patent claims
that the patentee could assert at trial where the patentee
was given the opportunity assert additional claims beyond
the limit by showing that they raised unique legal issues.
Id. at 1311–12. Because the patentee did not make such a
showing, we concluded that there was no due process
violation when the district court entered final judgment
as to all patents and claims, even those that were not
selected for trial. Id. We recognized, however, that had
the patentee shown the district court that the excluded
claims presented unique legal issues, these claims’ exclu-
sion could violate due process. Id. at 1312–13.
Nuance contends that, here, all parties agree that the
unselected patents raised unique infringement questions,
and thus the district court erred in not allowing Nuance
to try all of its patents. That is not enough. In order to
merit a reversal, Nuance would need to show that it acted
below to protect its due process rights. The record below
shows that as the district court winnowed the case, Nu-
ance made no motion, objection, or assertion otherwise
that any limits on the number of claims or patents it
could assert deprived it of any due process rights to
adjudication on each unique legal issue its operative
complaint presented. Instead, the record shows that
Nuance actively participated in structuring the winnow-
ing process and never objected until it had already lost at
trial. There has therefore been no due process violation
and the district court properly found that Nuance was not
entitled to a second trial on the unselected patents.
CONCLUSION
For the foregoing reasons, we affirm the district
court’s rulings.
AFFIRMED