H-W Technology, L.C. v. Overstock.com, Inc. (Fed. Cir. 2014)

by McDonnell Boehnen Hulbert & Berghoff LLP

Federal Circuit SealEven obvious clerical errors in patent claims can doom your lawsuit if not corrected before suit is filed.  This was evident in H-W Technology, L.C. v. Overstock.com, Inc., issued July 11, 2014, where the Federal Circuit upheld the District Court's judgment in favor of defendant Overstock.com because one of H-W's asserted claims contained a clerical error introduced by the PTO.

And if you were ever wondering whether it might be a good idea to include a pure method limitation in an apparatus claim, the second part of this case makes clear that it is not.

H-W had brought suit against Overstock for infringement of claims 9 and 17 of its 7,525,955 patent.  Several months into the litigation, Overstock informed H-W that claim 9 as issued was missing a limitation.  The error was obvious from the prosecution history and was simply due to what appears to have been a PTO printing error:  the examiner had allowed the claim containing the limitation but the limitation was missing from the issued patent.  Overstock sought and obtained a certificate of correction several months after being informed of the error but did not move to amend its complaint to reflect the correction.

Despite the obvious nature of the error and its immediate correction, the Federal Circuit held that the District Court was powerless to correct the error and, therefore, uncorrected claim 9, which was asserted, was unenforceable.  In reaching this conclusion, the Federal Circuit noted that a district court can correct a patent only if, among other things, "the error is evident from the face of the patent."  Perhaps unfortunately for H-W, the claim was logical and intelligible even without the missing limitation (which appears to have been an optional limitation), and nothing in the claims or specification mandated that the missing limitation necessarily be present.

The Federal Circuit also held that H-W's procurement of a certificate of correction subsequent to filing suit was unavailing.  The Court cited 35 USC § 254, the relevant part of which reads:

Every such patent [i.e., one for which a certificate of correction has been obtained], together with such certificate, shall have the same effect and operation in law on the trial of actions for causes thereafter arising as if the same had been originally issued in such correct form.

The Court noted that the express language of the statute limits the effect of the certificate of correction to causes of action arising after the certificate's issuance.  So, even though the error and its correction were obvious to both parties (such being the general nature of errors correctable by a certificate of correction), the statutory language nevertheless requires correction before suit is brought.

And, so, the error in the claim not being evident from the face of the patent, the courts being powerless to correct the claim, and the certificate of correction being ineffective to cure the claim error after suit was filed, the panel held that uncorrected claim 9 was, in essence, unenforceable.  To hold otherwise, the Court said, "would potentially permit patentees to assert claims that they never asked for not rightly attained.  Such a result would be inequitable and undermine the notice function of patents."

But the Court noted that corrected claim 9 had not been litigated and, therefore, had not been held invalid (and, consequently, reversed the lower court's ruling to that effect).

And if you were ever wondering whether it is a good idea to mix method limitations in an apparatus claim, be assured it is not.  In another semi-interesting bonus holding, the Court found H-W's claim 17 invalid as indefinite because it included method limitations in an apparatus claim.  The claim was directed to "a tangible computer readable medium encoded with a computer program for performing contextual searches on an Internet Phone (IP) phone comprising the steps of . . . ," and recited several steps that the computer program conducted (e.g., receiving search criteria from a user, transmitting the criteria to a server, and receiving a list of merchants matching the criteria).  But included among the steps encoded on the medium were two method limitations:

• "wherein said user completes a transaction with at least one of said merchants . . . ," and

• "wherein said user selects one of said variety of offers . . . ."

The District Court held that the claim was indefinite for combining two statutory classes of invention.  The Federal Circuit affirmed, reasoning that it is unclear when infringement occurs in such a claim.

H-W Technology, L.C. v. Overstock.com, Inc. (Fed. Cir. 2014)
Panel:  Chief Judge Prost and Circuit Judge O'Malley (former Circuit Judge Rader did not participate in the decision)
Opinion by Chief Judge Prost


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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