United States Court of Appeals
for the Federal Circuit
__________________________
LEADER TECHNOLOGIES, INC.
Plaintiff-Appellant,
v.
FACEBOOK, INC.
Defendant-Appellee,
__________________________
2011-1366
__________________________
Appeal from the United States District Court for the
District of Delaware in Case No. 08-CV-0862, Judge
Leonard P. Stark.
____________________________
Decided: May 8, 2012
____________________________
DARYL L. JOSEFFER, King & Spalding, LLP, of Wash-
ington, DC, argued for plaintiff-appellant. With him on
the brief was ADAM CONRAD. Of counsel on the brief were
PAUL J. ANDRE and LISA KOBIALKA, Kramer Levin Naf-
talis & Frankel, LLP, of Menlo Park, California.
THOMAS G. HUNGAR, Gibson, Dunn & Crutcher, LLP,
of Washington, DC, argued for defendant-appellee. With
him on the brief were WILLIAM G. JENKS and MICHAEL F.
MURRAY. Of counsel on the brief were HEIDI L. KEEFE and
LEADER TECH v. FACEBOOK 2
MARK R. WEINSTEIN, Cooley, LLP, of Palo Alto, California,
and MICHAEL G. RHODES, of San Francisco, California.
__________________________
Before LOURIE, MOORE, and WALLACH, Circuit Judges.
LOURIE, Circuit Judge.
Leader Technologies, Inc. (“Leader”) appeals from the
district court’s final judgment in favor of Facebook, Inc.
(“Facebook”). The judgment follows a jury trial in which
the jury found that Facebook proved that claims 1, 4, 7, 9,
11, 16, 21, 23, 25, 31, and 32 (the “asserted claims”) of
Leader’s U.S. Patent 7,139,761 (“the ’761 patent”) were
invalid under 35 U.S.C. § 102(b). After trial, the district
court denied Leader’s motion for judgment as a matter of
law or, in the alternative, for a new trial on the invalidity
issues. Leader Techs., Inc. v. Facebook, Inc., 770 F. Supp.
2d 686 (D. Del. 2011). Because substantial evidence
supports the jury’s verdict that Leader offered for sale and
publicly demonstrated the claimed invention prior to the
critical date and because the district court did not abuse
its discretion in denying Leader’s motion for a new trial,
we affirm.
BACKGROUND
I.
This patent case relates to software that allows users
on a network to communicate and collaborate on a large
scale. Leader, a software company founded in the late
1990s, owns the ’761 patent. Prior to filing the applica-
tion that issued as the ’761 patent in December, 2003,
Leader developed a product referred to as
Leader2Leader®, and the central issue in this appeal is
whether the Leader2Leader® product that was publicly
used and on sale prior to December 10, 2002 fell within
3 LEADER TECH v. FACEBOOK
the scope of the asserted claims, thus rendering them
invalid under 35 U.S.C. § 102(b).
The ’761 patent discloses a system that manages data
that may be accessed and created by multiple users over a
network. Broadly, the patent improves upon conventional
systems by associating data “with an individual, group of
individuals, and topical content, and not simply with a
folder, as in traditional systems.” ’761 patent, col.3 ll.29–
31.
The system achieves this improvement by having us-
ers collaborate and communicate through “boards” that
are accessible through an Internet browser and appear as
a webpage. For example, a board for a project might
allow users affiliated with the project to set up meeting
sessions with other users, id. col.15 ll.19–33, upload and
share files, id. col.16 ll.54–64, vote on questions posted on
the board, id. col.15 ll.46–49, or chat with other users, id.
col.17 ll.39–56.
To facilitate those user-facing functions, the data
management system employs metadata. Id. col.9 ll.50–
61. The metadata are “tagged” to data being created to
capture the association between the data and its context.
Id. col.9 ll.53–56. By tagging the data to a particular
context, the system allows users to access the data to
communicate and collaborate. Thus, “[a]s users create
and change their contexts, the data (e.g., files) and appli-
cations automatically follow.” Id. col.7 ll.46–49.
The ’761 patent’s claims are drawn to aspects of the
data management system that enable users to collaborate
and communicate. Claim 9, reproduced below, is exem-
plary of the asserted claims:
LEADER TECH v. FACEBOOK 4
9. A computer-implemented method of
managing data, comprising com-
puter-executable acts of:
creating data within a user environment of
a web-based computing platform via
user interaction with the user envi-
ronment by a user using an applica-
tion, the data in the form of at least
files and documents;
dynamically associating metadata with the
data, the data and metadata stored
on a storage component of the web-
based computing platform, the
metadata includes information re-
lated to the user, the data, the ap-
plication, and the user environment;
tracking movement of the user from the
user environment of the web-based
computing platform to a second user
environment of the web-based com-
puting platform; and
dynamically updating the stored metadata
with an association of the data, the
application, and the second user en-
vironment wherein the user em-
ploys at least one of the application
and the data from the second envi-
ronment.
Id. col.21 ll.38–58. In relation to the Leader2Leader®
product, Leader’s founder, Michael McKibben, testified
that the ’761 patent’s claims cover the “underlying en-
gine,” J.A. 25585–86, which is referred to as Digital
Leaderboard®, Leader, 770 F. Supp. 2d at 717.
5 LEADER TECH v. FACEBOOK
The relevant case history begins in 1999. In August
of that year, McKibben and Jeffrey Lamb conceived the
invention claimed in the patent. Immediately after
conceiving the idea, the inventors began developing
software based on that idea with the goal of building a
commercial product. In total, about fifteen to twenty
people worked on the project. According to Lamb, Leader
completed the project within “a couple of years . . . .
[m]aybe three,” i.e., probably the “2002ish time frame.”
J.A. 24829.
Around that time, Leader offered the Leader2Leader®
product for sale and demonstrated the product to a num-
ber of companies. In January 2002, Leader presented a
white paper to people at the Wright Patterson Air Force
Base offering 20,000 software licenses to the
Leader2Leader® product. In the paper, Leader stated
that it was “already commercializing” the product for
“government, commerce and education,” J.A. 27203, and
that the platform was “operational now with low user
volumes,” J.A. 27207. Leader also represented that the
Digital Leaderboard® software supplied under the
Leader2Leader® brand had been “[f]ully developed.” J.A.
27204.
The white paper also discussed the functionality of
Leader2Leader® powered by the Digital Leaderboard®
system. The paper described the problem with the com-
munications “glass ceiling,” in which data are aggregated
into “silos,” and explained that Leader had “discovered
and fixed a plethora of serious shortcomings and flaws in
prevailing platform assumptions about mere aggregation
vs. true integration of communications technologies.” J.A.
27202. Leader attached to the paper a sample “Big
Board” that depicted analyst collaboration and informa-
tion flow between various agencies and stated that the
LEADER TECH v. FACEBOOK 6
“Input & Display Collaboration Devices” for the system
included a “Browser.” J.A. 27210.
In November 2002, McKibben demonstrated the
Leader2Leader® software to senior staff members at
Boston Scientific, a demonstration that he described as
“flawless.” J.A. 34694. According to Leader’s Vice Presi-
dent of Technologies, to support its clinical trials commu-
nications, Boston Scientific needed “a very secure system”
to support “full document management functions” and
“collaborative meetings/conferences,” among other func-
tionality. J.A. 34694. He summarized that “in a nutshell”
Boston Scientific was looking for Leader2Leader®. J.A.
34694.
By December 8, 2002, Leader had demonstrated and
offered Leader2Leader® to a number of other companies,
including American Express and The Limited. In its
interaction with The Limited, Leader described
Leader2Leader® as the company’s “full suite of technol-
ogy services,” J.A. 34692, and explained that the software
had “potentially strong fits” in managing project resources
and allowing collaboration, among other areas, J.A.
27221. Regarding American Express, according to
McKibben, the head of technology architecture at Ameri-
can Express described the Leader2Leader® product as
“disruptive technology” that will “create its own market.”
J.A. 34692. After seeing the software, American Express
put on hold its collaborative computing initiative and was
considering investing in Leader. J.A. 27216, 34692.
McKibben similarly described Leader’s prospects as
requiring functionality such as “knowledge management,”
“new product design collaboration,” “client collaboration,”
and “file sharing.” J.A. 27215–16.
At the same time, Leader was struggling financially
and was eager to obtain Leader2Leader® customers. By
7 LEADER TECH v. FACEBOOK
December 3, 2002, Leader had deferred employee salaries
and was facing an economic climate in which raising short
term financing “ha[d] never been harder.” J.A. 27215.
McKibben explained to Leader’s employees that a contract
from Boston Scientific, The Limited, or American Express,
among others, would change Leader’s valuation position
with institutional investors. Indeed, according to McKib-
ben, the “most significant factor” that would improve
Leader’s negotiating position in valuation discussions was
“the acquisition of ‘marquee’ paying customers.” J.A.
27216. At that time, Leader also enlisted its prospects’
executives to help it obtain venture capital funding.
However, although Leader and the general economy faced
“rocky financial times,” McKibben explained that “[t]he
bottom line is that we have built the product we said we
would build” and that Leader was making every effort to
sell that product in the marketplace. J.A. 27217.
Leader filed a provisional patent application on De-
cember 11, 2002. On December 10, 2003, Leader filed an
application that issued as the ’761 patent.
II.
In 2008, Leader sued Facebook in the United States
District Court for the District of Delaware, alleging in-
fringement of various claims of the ’761 patent. During
discovery, Facebook served an interrogatory that asked
Leader to identify all products and services that it con-
tended practiced the claims of the ’761 patent. Leader
provided two responses that were at issue during the
litigation. In its First Supplemental Response, Leader
asserted that “Leader2Leader® powered by the Digital
Leaderboard® engine is covered by the ’761 patent.”
Leader, F. Supp. 2d at 717. Thereafter, Leader amended
its response to more specifically state that
“Leader2Leader® powered by the Digital Leaderboard®
LEADER TECH v. FACEBOOK 8
engine is the only product or service provided by Leader
which embodies, either literally or under the doctrine of
equivalents, any of the asserted claims” of the ’761 patent.
Id. McKibben verified those interrogatory responses.
Facebook also deposed McKibben. In his deposition,
McKibben could not identify any iteration of the
Leader2Leader® product that did not fall within the scope
of the claims of the ’761 patent, testifying that “[t]hat was
a long time ago. I – I can’t point back to a specific point.”
Id. at 719.
The interrogatory responses and McKibben’s deposi-
tion testimony were a focus at trial. At trial, McKibben
testified that the interrogatory and Leader’s responses, by
employing the present tense, were directed at whether
Leader2Leader® practiced the ’761 patent’s claims in
2009. McKibben also testified at trial that the
Leader2Leader® product powered by the Digital Leader-
board® engine was covered by the asserted claims in 2007
and 2010, but not prior to December of 2002. Specifically,
McKibben testified at trial that he “vividly remember[ed]”
that the patented technology was not incorporated into
the Leader2Leader® product “until days before” the
December 11, 2002 filing of the provisional patent appli-
cation. J.A. 25708–09; see also Leader, 770 F. Supp. 2d at
722 n.16. On cross-examination, Facebook played McKib-
ben’s inconsistent deposition testimony before the jury.
After the parties argued their positions to the jury,
the jury returned a verdict in favor of Facebook on the on-
sale and public use bars. First, the jury specifically found
that the ’761 patent was not entitled to the priority date
of the provisional patent application, a finding that
Leader does not challenge on appeal. The jury also spe-
cifically found that the asserted claims of the ’761 patent
were invalid on two independent grounds: (1) that the
9 LEADER TECH v. FACEBOOK
invention was subject to an invalidating sale; and (2) that
the invention was subject to an invalidating public use.
The district court thereafter denied Leader’s post-trial
motions for judgment as a matter of law or, in the alter-
native, for a new trial. Specifically, regarding whether
the Leader2Leader® product embodied the asserted
claims prior to the critical date, the district court con-
cluded that McKibben’s discredited trial testimony cou-
pled with the interrogatory responses were sufficient
evidence to support the jury’s verdict of invalidity.
Leader, 770 F. Supp. 2d at 716–22. In addition, the court
pointed to Leader’s offering of the Leader2Leader® prod-
uct in the 2001 to 2002 time period as evidence support-
ing the jury’s verdict. Id. at 722 n.16. Finally, after
exercising its own assessment of the evidence, the court
concluded that the jury’s invalidity verdict was not
against the great weight of the evidence. Id. at 727.
The district court entered judgment against Leader,
from which it timely appealed. We have jurisdiction
under 28 U.S.C. § 1295(a)(1).
DISCUSSION
I.
We apply the law of the regional circuit, here the
Third Circuit, to review the district court’s denial of
Leader’s motion for judgment as a matter of law or for a
new trial. Union Carbide Chem. & Plastics Tech. Corp. v.
Shell Oil Co., 308 F.3d 1167, 1182, 1188 (Fed. Cir. 2002).
Under Third Circuit law, we review de novo the denial of
a motion for judgment as a matter of law, viewing the
record in the light most favorable to the verdict winner
and drawing all reasonable inferences in its favor. Eddy
v. V.I. Water & Power Auth., 369 F.3d 227, 230 (3d Cir.
2004). Under this review, “[a] court must not weigh
LEADER TECH v. FACEBOOK 10
evidence, engage in credibility determinations, or substi-
tute its version of the facts for the jury’s.” Pitts v. Dela-
ware, 646 F.3d 151, 155 (3d Cir. 2011). Instead, we may
reverse the district court’s denial of a motion for judgment
as a matter law only if “the record is critically deficient of
that minimum quantity of evidence from which a jury
might reasonably afford relief.” Trabal v. Wells Fargo
Armored Serv. Corp., 269 F.3d 243, 249 (3d Cir. 2001)
(quoting Powell v. J.T. Posey Co., 766 F.2d 131, 133–34
(3d Cir. 1985)).
We review the denial of a new trial for an abuse of
discretion. Foster v. Nat’l Fuel Gas Co., 316 F.3d 424,
429–30 (3d Cir. 2003). Considered “extraordinary relief,”
Marra v. Phila. Housing Auth., 497 F.3d 286, 309 n.18 (3d
Cir. 2007), a new trial should be granted only if the great
weight of the evidence cuts against the verdict and “where
a miscarriage of justice would result if the verdict were to
stand,” Sheridan v. E.I. DuPont de Nemours & Co., 100
F.3d 1061, 1076 (3d Cir. 1996) (en banc). However,
unlike a sufficiency of the evidence claim, a court in the
motion for a new trial context “does not view the evidence
in the light most favorable to the verdict winner, but
instead exercises its own judgment in assessing the
evidence.” Marra, 497 F.3d at 309 n.18.
Under 35 U.S.C. § 102(b), a patent is invalid if “the
invention was . . . in public use or on sale in this country”
more than one year prior to the date the patent applica-
tion is filed. “Whether a patent is invalid for a public use
or sale is a question of law, reviewed de novo, based on
underlying facts, reviewed for substantial evidence follow-
ing a jury verdict.” Adenta GmbH v. OrthoArm, Inc., 501
F.3d 1364, 1369 (Fed. Cir. 2007). One of those underlying
facts is “whether the subject of the barring activity met
each of the limitations of the claim, and thus was an
embodiment of the claimed invention.” Scaltech Inc. v.
11 LEADER TECH v. FACEBOOK
Retec/Tetra, L.L.C., 178 F.3d 1378, 1383 (Fed. Cir. 1999);
see also Juicy Whip, Inc. v. Orange Bang, Inc., 292 F.3d
728, 736–37, 738 (Fed. Cir. 2002). Because we presume
that an issued patent is valid, 35 U.S.C. § 282, the party
challenging the validity of a patent must prove by clear
and convincing evidence that the product used or on sale
prior to the critical date was embodied by the claimed
invention, Juicy Whip, 292 F.3d at 736–37, 738.
II.
In this case, Leader does not contest that a
Leader2Leader® product was offered for sale and publicly
used prior to December 10, 2002, the critical date. Nor,
for the purposes of the on-sale bar, does Leader contest
that the invention was “ready for patenting” prior to the
critical date. See Pfaff v. Wells Elecs., Inc., 525 U.S. 55,
67–68 (1998). Instead, Leader argues that Facebook
failed to offer clear and convincing evidence that the
version of Leader2Leader® offered for sale or used prior
to December 10, 2002 fell within the scope of the asserted
claims. Specifically, Leader argues that Facebook failed
to offer any evidence, such as expert testimony, source
code, or schematics, to prove when Leader incorporated
the patented technology into the Leader2Leader product.
Indeed, Leader argues that the only evidence at trial was
testimony that showed that Leader did not use or offer for
sale the invention until after the critical date. Leader
asserts that even if the jury found that testimony incredi-
ble, incredible testimony is not affirmative evidence of its
opposite, viz., that the invention was on sale or used prior
to the critical date. Thus, argues Leader, Facebook failed
as a matter of law to prove invalidity by clear and con-
vincing evidence. In the alternative, Leader argues that
the district court abused its discretion in denying its
request for a new trial because the verdict of invalidity
was against the great weight of the evidence.
LEADER TECH v. FACEBOOK 12
Facebook responds that the district court properly en-
tered judgment on the jury’s verdict of invalidity. Specifi-
cally, Facebook points to Leader’s internal documents and
correspondence to potential customers, Leader’s inter-
rogatory responses, and testimony by co-inventors Lamb
and McKibben. Facebook also argues that the jury was
permitted to weigh McKibben’s lack of credibility against
Leader in rendering a verdict. Thus, in light of this
evidence, Facebook argues that the district court properly
denied Leader’s motion for judgment as a matter of law or
for a new trial.
We agree with Facebook that legally sufficient evi-
dence supported the jury’s verdict that the version of
Leader2Leader® demonstrated and offered for sale prior
to the critical date was an embodiment of the asserted
claims. Contrary to Leader’s arguments, the record is not
devoid of the minimum quantity of evidence to support
the jury’s verdict. First, Leader admitted in its interroga-
tory responses that Leader2Leader® powered by the
Digital Leaderboard® engine “embodies” the asserted
claims of the ’761 patent. Leader, 770 F. Supp. 2d at 717.
Leader argues that, by employing the present tense, its
admissions were limited to only the instance of the
Leader2Leader® powered by the Digital Leaderboard®
engine that existed at the time Leader served its re-
sponses on Facebook. But Leader did not qualify its
interrogatory responses in that manner. The responses
did not specify any date ranges nor did they identify
versions or builds of the software—information that
Leader appears to have tracked, J.A. 25761. Indeed,
consistent with a broader reading of Leader’s responses
untethered to the precise moments in which the they were
served, McKibben contended at trial that the
Leader2Leader® powered by the Digital Leaderboard®
engine not only fell within the scope of the asserted claims
13 LEADER TECH v. FACEBOOK
in 2009 when Leader served its responses, but also in
2007, before the lawsuit was initiated, and in 2010 during
the trial. Leader, 770 F. Supp. 2d at 718. Moreover, in
his deposition, McKibben could not identify a single
instance of Leader2Leader® that did not fall within the
scope of the ’761 patent’s claims. Id. at 719.
Coupled with Leader’s admission, the record contains
legally sufficient evidence linking the pre-critical date
software to the software that Leader admitted fell within
the scope of the asserted claims. In its offer to Wright
Patterson in January 2002, Leader offered for sale the
exact software product that Leader admitted fell within
the scope of the asserted claims—the Digital Leader-
board® engine supplied under the Leader2Leader
brand—and described that software as “fully developed”
and “operational.” J.A. 27204, 27207. Like Leader’s
admissions, Leader did not identify a specific build or
version of the software in the offer for sale. Moreover, in
the offer, Leader depicted the fully developed system as
powering a browser-accessible “Big Board” that allows
analysts and agencies to collaborate and share informa-
tion, J.A. 27210, a disclosure that matches the embodi-
ments of the ’761 patent in material respects, e.g., ’761
patent fig. 15, col.5 ll.14–17 (depicting a “screenshot of a
management tool window of a browser used as a user
interface to facilitate user interaction with meeting in-
formation in accordance with the present invention”).
This description is consistent with Leader’s other pre-
critical date documents, which describe the software as
facilitating the same type of user interaction described in
the ’761 patent’s embodiments, such as document man-
agement, id. col.4 ll.24–31, collaborative meetings, id.
col.15 ll.19–33, and file sharing, id. col.16 ll.54–64. Those
documents also state that, by December 3, 2002, Leader
had “flawless[ly]” demonstrated the software, J.A. 34694,
LEADER TECH v. FACEBOOK 14
which contained the company’s “full suite of technology
services,” J.A. 34692, and had been “built,” J.A. 27217.
In addition to Leader’s contemporaneous documents,
Lamb’s trial testimony supports the jury’s finding that the
Leader2Leader® product powered by the Digital Leader-
board® engine that was on sale and demonstrated prior to
the critical date fell within the scope of the asserted
claims. In particular, Lamb testified that, after conceiv-
ing the invention in August 1999, Leader immediately
started to implement the patented technology and com-
pleted the project within “a couple of years . . . . [m]aybe
three.” J.A. 24829.
Finally, regarding the jury’s decision to discredit
McKibben’s trial testimony that the pre-critical date
Leader2Leader® did not fall within the scope of the
asserted claims, we generally agree with Leader that
“[n]ormally,” a witness’s “discredited testimony is not
considered a sufficient basis for drawing a contrary con-
clusion.” Bose Corp. v. Consumers Union of U.S., Inc., 466
U.S. 485, 512 (1984). However, as recounted above, the
record contains substantial evidence that the
Leader2Leader® product that was on sale and in public
use prior to the critical date fell within the scope of the
asserted claims. At a minimum, McKibben’s lack of
credibility fortifies that conclusion and provides an inde-
pendent basis for disbelieving his factual assertions.
In upholding the verdict, we recognize that as a gen-
eral matter a computer scientist can easily modify and
change software code and that two versions of the same
software product may function differently. But, in this
case, Leader fails to point to any contemporaneous evi-
dence in the record that indicates that the
Leader2Leader® powered by the Digital Leaderboard®
engine that existed prior to the critical date was substan-
15 LEADER TECH v. FACEBOOK
tively different from the post-critical date software; in-
deed, the evidence points in the opposite direction. As for
McKibben’s testimony that Leader was constantly revis-
ing the software and just completed the final version right
after the pre-critical date demonstrations and offers for
sale, the jury was entitled to disbelieve such a transpar-
ently convenient assertion in light of all of the evidence
before them. On appeal, we cannot reweigh the evidence
or supplant the record. We are bound by the record
developed below, viewed in the light most favorable to
Facebook, and can only reverse the verdict if the record is
critically deficient of the minimum quantity of evidence
from which the jury might have reasonably rendered a
verdict against Leader. Trabal, 269 F.3d at 249. Even if
we may have reached a different verdict had we sat on the
jury, it is not our role as an appellate court to overturn
the jury’s verdict when it was supported by substantial
evidence.
Similarly, we agree with Facebook that the district
court did not abuse its discretion in denying Leader’s
motion for a new trial. Facebook relied almost exclusively
on Leader’s own admissions to prove invalidity and those
documents, on their face, do not support Leader’s position.
Thus, it was not in error to conclude that the verdict was
not against the great weight of the evidence. Moreover,
Leader fails to cogently explain on appeal why upholding
the verdict would result in a miscarriage of justice.
CONCLUSION
We have considered Leader’s remaining arguments
and conclude that they are without merit. For the forego-
ing reasons, the judgment of the district court is
AFFIRMED