AMAZON.COM, INC. v. BARNESANDNOBLE.COM, INC. .
UNITED STATES COURT OF APPEALS FOR THE FEDERAL
239 F.3d 1343; 2001 U.S. App. LEXIS 2163; 57 U.S.P.Q.2D (BNA) 1747
February 14, 2001, Decided
JUDGES: Before CLEVENGER, GAJARSA and LINN, Circuit Judges.
CLEVENGER, Circuit Judge.
This is a patent infringement suit brought by Amazon.com, Inc. ("Amazon") against barnesandnoble.com, inc., and barnesandnoble.com llc (together, "BN"). Amazon moved for a preliminary injunction to prohibit BN's use of a feature of its web site called "Express Lane." BN resisted the preliminary injunction on several grounds, including that its Express Lane feature did not infringe the claims of Amazon's patent, and that substantial questions exist as to the validity of Amazon's patent. The United States District Court for the Western District of Washington rejected BN's contentions. Instead, the district court held that Amazon had presented a case showing a likelihood of infringement by BN, and that BN's challenges to the validity of the patent in suit lacked sufficient merit to avoid awarding extraordinary preliminary injunctive relief to Amazon. The district court granted Amazon's motion, and now BN brings its timely appeal from the order entering the preliminary injunction. We have jurisdiction to review the district court's order under 28 U.S.C. § 1292(c)(1) (1994).
After careful review of the district court's opinion, the record, and the arguments advanced by the parties, we conclude that BN has mounted a substantial challenge to the validity of the patent in suit. Because Amazon is not entitled to preliminary injunctive relief under these circumstances, we vacate the order of the district court that set the preliminary injunction in place and remand the case for further proceedings.
This case involves United States Patent No. 5,960,411 ("the '411 patent"), which issued on September 28, 1999, and is assigned to Amazon. On October 21, 1999, Amazon brought suit against BN alleging infringement of the patent and seeking a preliminary injunction.
Amazon's patent is directed to a method and system for "single action" ordering of items in a client/server environment such as the Internet. In the context of the '411 patent, a client/server environment describes the relationship between two computer systems in which a program executing on a client computer system makes a service request from another program executing on a server computer system, which fulfills the request. See col. 1, ll. 10-31; col. 3, ll. 31-33; col. 5, l. 56 to col. 6, l. 21; Fig. 2. Typically, the client computer system and the server computer system are located remotely from each other and communicate via a data communication network.
The '411 patent describes a method and system in which a consumer can complete a purchase order for an item via an electronic network using only a "single action," such as the click of a computer mouse button on the client computer system. Amazon developed the patent to cope with what it considered to be frustrations presented by what is known as the "shopping cart model" purchase system for electronic commerce purchasing events. In previous incarnations of the shopping cart model, a purchaser using a client computer system (such as a personal computer executing a web browser program) could select an item from an electronic catalog, typically by clicking on an "Add to Shopping Cart" icon, thereby placing the item in the "virtual" shopping cart. Other items from the catalog could be added to the shopping cart in the same manner. When the shopper completed the selecting process, the electronic commercial event would move to the check-out counter, so to speak. Then, information regarding the purchaser's identity, billing and shipping addresses, and credit payment method would be inserted into the transactional information base by the soon-to-be purchaser. Finally, the purchaser would "click" on a button displayed on the screen or somehow issue a command to execute the completed order, and the server computer system would verify and store the information concerning the transaction.
As is evident from the foregoing, an electronic commerce purchaser using the shopping cart model is required to perform several actions before achieving the ultimate goal of the placed order. The '411 patent sought to reduce the number of actions required from a consumer to effect a placed order. In the words of the written description of the '411 patent:
The present invention provides a method and system for single-action ordering of items in a client/server environment. The single-action ordering system of the present invention reduces the number of purchaser interactions needed to place an order and reduces the amount of sensitive information that is transmitted between a client system and a server system.
Col. 3, ll. 31-37. How, one may ask, is the number of purchaser interactions reduced? The answer is that the number of purchaser interactions is reduced because the purchaser has previously visited the seller's web site and has previously entered into the database of the seller all of the required billing and shipping information that is needed to effect a sales transaction. Thereafter, when the purchaser visits the seller's web site and wishes to purchase a product from that site, the patent specifies that only a single action is necessary to place the order for the item. In the words of the written description, "once the description of an item is displayed, the purchaser need only take a single action to place the order to purchase that item." Col. 3, ll. 64-66.
The '411 patent has 26 claims, 4 of which are independent. Independent claims 1 and 11 are method claims directed to placing an order for an item, while independent claim 6 is an apparatus claim directed to a client system for ordering an item, and independent claim 9 is an apparatus claim directed to a server system for generating an order. Amazon asserted claims 1-3, 5-12, 14-17, and 21-24 against BN. Although there are significant differences among the various independent and dependent claims in issue, for purposes of this appeal we may initially direct our primary focus on the "single action" limitation that is included in each claim. This focus is appropriate because BN's appeal attacks the injunction on the grounds that either its accused method does not infringe the "single action" limitation present in all of the claims, that the "single action" feature of the patent is invalid, or both.
The district court interpreted the key "single action" claim limitation, which appears in each of the pertinent claims, to mean:
The term "single action" is not defined by the patent specification. . . . As a result, the term "single action" as used in the '411 patent appears to refer to one action (such as clicking a mouse button) that a user takes to purchase an item once the following information is displayed to the user: (1) a description of the item; and (2) a description of the single action the user must take to complete a purchase order for that item.
With this interpretation of the key claim limitation in hand, the district court turned to BN's accused ordering system. BN's short-cut ordering system, called "Express Lane," like the system contemplated by the patent, contains previously entered billing and shipping information for the customer. In one implementation, after a person is presented with BN's initial web page (referred to as the "menu page"), the person can on an icon on the menu page to get to what is called the "product page." BN's product page displays an image and a description of the selected product, and also presents the person with a description of a single action that can be taken to complete a purchase order for the item. If the single action described is taken, for example by a mouse click, the person will have effected a purchase order using BN's Express Lane feature.
BN's Express Lane thus presents a product page that contains the description of the item to be purchased and a "description" of the single action to be taken to effect placement of the order. Because only a single action need be taken to complete the purchase order once the product page is displayed, the district court concluded that Amazon had made a showing of likelihood of success on its allegation of patent infringement.
In response to BN's contention that substantial questions exist as to the validity of the '411 patent, the district court reviewed the prior art references upon which BN's validity challenge rested. The district court concluded that none of the prior art references anticipated the claims of the '411 patent under 35 U.S.C. § 102 (1994) or rendered the claimed invention obvious under 35 U.S.C. § 103 (1994).
BN contends on appeal that the district court committed legal errors that undermine the legitimacy of the preliminary injunction. In particular, BN asserts that the district court construed key claim limitations one way for purposes of its infringement analysis, and another way when considering BN's validity challenges. BN asserts that under a consistent claim interpretation, its Express Lane feature either does not infringe the '411 patent, or that if the patent is interpreted so as to support the charge of infringement, then the claims of the patent are subject to a severe validity challenge. When the key claim limitations are properly interpreted, BN thus asserts, it will be clear that Amazon is not likely to succeed on the merits of its infringement claim, or that BN has succeeded in calling the validity of the '411 patent into serious question. In addition, BN asserts that the district court misunderstood the teaching of the prior art references, thereby committing clear error in the factual predicates it established for comprehension of the prior art references.
Amazon understandably aligns itself with the district court, asserting that no error of claim interpretation and no clear error in fact-finding has occurred that would undermine the grant of the preliminary injunction. We thus turn to the legal gist of this appeal.
V -VI [Omitted-The court holds that Amazon.com meets the burden of asserting the likelihood that BN infringes the "one-click" 411 patent.]
The district court considered, but ultimately rejected, the potentially invalidating impact of several prior art references cited by BN. Because the district court determined that BN likely infringed all of the asserted claims, it did not focus its analysis of the validity issue on any particular claim. Instead, in its validity analysis, the district court appears to have primarily directed its attention to determining whether the references cited by BN implemented the single action limitation.
In this case, we find that the district court
committed clear error by misreading the factual content of the prior art
references cited by BN and by failing to recognize that BN had raised a
substantial question of invalidity of the asserted claims in view of these
prior art references.
When the heft of the asserted prior art is assessed in light of the correct legal standards, we conclude that BN has mounted a serious challenge to the validity of Amazon's patent. We hasten to add, however, that this conclusion only undermines the prerequisite for entry of a preliminary injunction. Our decision today on the validity issue in no way resolves the ultimate question of invalidity. That is a matter for resolution at trial. It remains to be learned whether there are other references that may be cited against the patent, and it surely remains to be learned whether any shortcomings in BN's initial preliminary validity challenge will be magnified or dissipated at trial. All we hold, in the meantime, is that BN cast enough doubt on the validity of the '411 patent to avoid a preliminary injunction, and that the validity issue should be resolved finally at trial.
One of the references cited by BN was the "CompuServe Trend System." The undisputed evidence indicates that in the mid-1990s, CompuServe offered a service called "Trend" whereby CompuServe subscribers could obtain stock charts for a surcharge of 50 cents per chart. Before the district court, BN argued that this system anticipated claim 11 of the '411 patent. The district court failed to recognize the substantial question of invalidity raised by BN in citing the CompuServe Trend reference, in that this system appears to have used "single action ordering technology" within the scope of the claims in the '411 patent.
First, the district court dismissed the significance of this system partly on the basis that "the CompuServe system was not a world wide web application." This distinction is irrelevant, since none of the claims mention either the Internet or the World Wide Web (with the possible exception of dependent claim 15, which mentions HTML, a program commonly associated with both the Internet and the World Wide Web). Moreover, the '411 patent specification explicitly notes that "one skilled in the art would appreciate that the single-action ordering techniques can be used in various environments other than the Internet." Col. 6, ll. 22-24.
More importantly, one of the screen shots in the record (reproduced below) indicates that with the CompuServe Trend system, once the "item" to be purchased (i.e., a stock chart) has been displayed (by typing in a valid stock symbol), only a single action (i.e., a single mouse click on the button labeled "Chart ($ .50)") is required to obtain immediate electronic delivery (i.e., "fulfillment") of the item. Once the button labeled "Chart ($ .50)" was activated by a purchaser, an electronic version of the requested stock chart would be transmitted to the purchaser and displayed on the purchaser's computer screen, and an automatic process to charge the purchaser's account 50 cents for the transaction would be initiated. In terms of the language of claims 2 and 11 in the CompuServe Trend system, the item to be ordered is "displayed" when the screen echoes back the characters of the stock symbol typed in by the purchaser before clicking on the ordering button.
The evidence before us indicates that the billing process for the electronic stock chart would not actually commence until the client system sent a message to the server system indicating that the electronic stock chart had been received at the client system. In its brief, Amazon argues that this feature of the CompuServe Trend system amounts to an additional "confirmation step necessary to complete the ordering process," and that the CompuServe Trend system therefore does not use "single action" technology within the scope of the claims in the '411 patent. However, all of the claims only require sending a request to order an item in response to performance of only a single action. In the CompuServe Trend system, this requirement is satisfied when a purchaser performs the single action of "clicking" on the button labeled "Chart ($ .50)." The claims do not require that the billing process for the item must also be initiated in response to performance of the single action. Furthermore, in the CompuServe Trend system, the "action" of sending a message from the client system to the server system confirming successful reception of the electronic stock chart is performed automatically, without user intervention.
At oral argument, Amazon's counsel articulated three differences between the CompuServe Trend system and the claimed invention. First, Amazon's counsel repeated the district court's reasoning, and asserted that the CompuServe Trend system is not on the Internet or the World Wide Web. As mentioned above, the '411 patent specification indicates that this distinction is irrelevant.
Second, Amazon's counsel claimed that the CompuServe Trend system was different from the claims of the '411 patent because it required a user to "log in" at the beginning of each session, and therefore would not send the claimed "identifier" along with a request to purchase each item. However, claim 11 does not require transmission of an identifier along with a request to order an item. This requirement is found only in claims 1, 6, and 9, and their respective dependent claims.
On its face, the CompuServe Trend reference does not mention transmission of the claimed identifier along with a request to purchase each item. Nor does the evidence in the record at this stage indicate that the CompuServe Trend system transmitted such an identifier. BN has therefore not demonstrated that the CompuServe Trend reference anticipates the asserted claims of the '411 patent requiring transmission of such an identifier with the degree of precision necessary to obtain summary judgment on this point. However, as noted above, validity challenges during preliminary injunction proceedings can be successful on evidence that would not suffice to support a judgment of invalidity at trial. See Helifix, 208 F.3d at 1352, 54 USPQ2d at 1308. The record in this case is simply not yet developed to the point where a determination can be made whether the CompuServe Trend system transmits the claimed identifier along with a request to order an item, or whether this limitation is obvious in view of the prior art. For example, United States Patent No. 5,708,780 ("the '780 patent") (a reference cited by BN which is discussed more fully below), describes "forwarding a service request from the client to the server and appending a session identification (SID) to the request and to subsequent service requests from the client to the server within a session of requests." See '780 patent, col. 3, ll. 12-16.
Moreover, the '411 patent specification itself dismisses the distinction between ordering systems in which an identifier is transmitted along with each request to order an item, and systems in which a user logs in once at the beginning of each session. See '411 patent at col. 10, ll. 6-10 ("The purchaser can be alternatively identified by a unique customer identifier that is provided by the customer when the customer initiates access to the server system and sent to the server system with each message.").
The final distinction drawn by Amazon's counsel between the claimed invention and the CompuServe Trend system was that--according to Amazon--the only reason that a purchaser would "call up" the screen would be to actually order an electronic stock chart, and that therefore an earlier action taken by a purchaser to invoke the screen should count as an extra purchaser action. According to this argument, the CompuServe Trend system would not meet the "single action" limitation because at least two actions would need to be taken to order an item: one action to invoke the ordering screen, and a second action to click on the ordering button. However, as the screen shot plainly indicates, a purchaser could use the display screen for purposes other than to order an electronic stock chart (e.g., to "Lookup" a stock symbol). Furthermore, to the extent that Amazon argues that the CompuServe Trend fails to meet the "single action" limitation due to the "click" necessary to activate the stock chart ordering screen in the first place, Amazon also admits that BN's Express Lane feature fails to meet the same limitation because of the "click" required to proceed from a menu page to a product page when using the Express Lane feature.
As the CompuServe Trend stock chart ordering screen indicates, we note that once a purchaser types in a valid stock symbol, the screen displays both "information identifying the item" (i.e., the stock symbol identifying the desired electronic stock chart) and an indication of the "single action" to be performed to order the identified item (i.e., clicking on the button labeled "Chart ($ .50)"). Therefore, the substantial question of invalidity raised by the CompuServe Trend reference is the same regardless of whether one considers claims explicitly requiring that both of these pieces of information be displayed (i.e., claims 2 and 11) or claims requiring that only the "information identifying the item" be displayed (i.e., claims 1, 6, and 9).
In view of the above, we conclude that the district court erred in failing to recognize that the CompuServe Trend reference raises a substantial question of invalidity. Whether the CompuServe Trend reference either anticipates and/or renders obvious the claimed invention in view of the knowledge of one of ordinary skill in the relevant art is a matter for decision at trial.
In addition to the CompuServe Trend system, other prior art references were cited by BN, but ultimately rejected by the district court. For example, BN's expert, Dr. Lockwood, testified that he developed an on-line ordering system called "Web-Basket" in or around August 1996. The Web-Basket system appears to be an embodiment of a "shopping cart ordering component": it requires users to accumulate items into a virtual shopping basket and to check these items out when they are finished shopping. Because it is an implementation of a shopping cart model, Web Basket requires several confirmation steps for even pre-registered users to complete their purchases.
However, despite the fact that Web-Basket is an embodiment of a shopping cart model, it is undisputed that Web-Basket implemented the Internet Engineering Task Force ("IETF") draft "cookie" specification, and stored a customer identifier in a cookie for use by a web server to retrieve information from a database. In other words, when a user first visited the Web-Basket site, a cookie (i.e., a file stored by the server system on the client system for subsequent use) was used to store an identifier on the user's computer. The first time that a user purchased an item on the Web-Basket site, the information entered by the user necessary to complete the purchase (e.g., name, address) would be stored in a database on the server system indexed by an identifier stored in the cookie on the client system. On subsequent visits, the cookie could be used to retrieve the user identifier, which would serve as the key to retrieve the user's information from the database on the server system.
At the preliminary injunction stage, based on Dr. Lockwood's declaration and testimony during the hearing, BN argued that the Web-Basket reference--combined with the knowledge of one of ordinary skill in the art at the relevant time--renders obvious the claimed invention. n1
The district court concluded that the Web-Basket system was "inconsistent with the single-action requirements of the '411 patent" because "it requires a multiple-step ordering process from the time that an item to be purchased is displayed." However, as discussed earlier, the undisputed evidence demonstrates that the accused BN Express Lane feature also requires a multiple-step ordering process (i.e., at least two "clicks") from the time that an item to be purchased is first displayed on the menu page, yet the district court concluded that BN's Express Lane feature infringed all of the asserted claims of the '411 patent. The district court's failure to recognize the inconsistency in these two conclusions was erroneous.
Moreover, the district court did not address the "cookie" aspects of the Web-Basket reference, and failed to recognize that a reasonable jury could find that the step of storing purchaser data on the server system for subsequent retrieval indexed by an identifier transmitted from the client system was anticipated and/or rendered obvious by the Web-Basket reference.
The district court dismissed BN's obviousness defense, apparently based on an alleged "admission" by BN's expert. In a section of its opinion entitled "Summary of Prior Art," the district court stated:
On the question of obviousness, the Court finds that the differences between the prior art references submitted by Defendants and the '411 patent claims are significant. Moreover, there is insufficient evidence in the record regarding a teaching, suggestion, or motivation in the prior art that would lead one of ordinary skill in the art of e-commerce to combine the references. The Court finds particularly telling Dr. Lockwood's admission that it never occurred to him to modify his Web Basket program to enable single-action ordering, despite his testimony that such a modification would be easy to implement. This admission serves to negate Dr. Lockwood's conclusory statements that prior art references teach to one of ordinary skill in the art the invention of the '411 patent.
Thus, the district court apparently based its conclusion of nonobviousness on Dr. Lockwood's "admission" that he personally never thought of combining or modifying the prior art to come up with the claimed "single action" invention. This approach was erroneous as a matter of law. Whatever Dr. Lockwood did or did not personally realize at the time based on his actual knowledge is irrelevant. The relevant inquiry is what a hypothetical ordinarily skilled artisan would have gleaned from the cited references at the time that the patent application leading to the '411 patent was filed. See Kimberly-Clark Corp. v. Johnson & Johnson, 745 F.2d 1437, 1453, 223 USPQ 603, 612-14 (Fed. Cir. 1984) (discussing the origin and significance of the hypothetical ordinarily skilled artisan in detail).
BN also presented as a prior art reference an excerpt from a book written by Magdalena Yesil entitled Creating the Virtual Store that was copyrighted in 1996. Before the district court, BN argued that this reference anticipated every limitation of claim 11. Before this court, BN also alleges that many other claim limitations are disclosed in the reference, but that there was insufficient time to prepare testimony concerning these limitations, given the district court's accelerated briefing and hearing schedule at the preliminary injunction stage.
In general terms, the reference apparently discusses software to implement a shopping cart ordering model. However, BN focuses on the following passage from Appendix F of the book:
Instant Buy Option
Merchants also can provide shoppers with an Instant Buy button for some or all items, enabling them to skip check out review. This provides added appeal for customers who already know the single item they want to purchase during their shopping excursion.
The district court dismissed the significance of this passage, stating that "read in context, the few lines relied on by Defendants appear to describe only the elimination of the checkout review step, leaving at least two other required steps to complete a purchase." However, the district court failed to recognize that a reasonable jury could find that this passage provides a motivation to modify shopping cart ordering software to skip unnecessary steps. Thus, we find that this passage, viewed in light of the rest of the reference and the other prior art references cited by BN, raises a substantial question of validity with respect to the asserted claims of the '411 patent.
Another reference cited by BN, a print-out from a web page describing the "Oliver's Market" ordering system, generally describes a prior art multi-step shopping cart model. BN argued that this reference anticipates at least claim 9. The reference begins with an intriguing sentence:
A single click on its picture is all it takes to order an item.
Read in context, the quote emphasizes how easy it is to order things on-line. The district court failed to recognize that a reasonable jury could find that this sentence provides a motivation to modify a shopping cart model to implement "single-click" ordering as claimed in the '411 patent. In addition, the district court failed to recognize that other passages from this reference could be construed by a reasonable jury as anticipating and/or rendering obvious the allegedly novel "single action ordering technology" of the '411 patent. For example, the reference states that "our solution allows one-click ordering anywhere you see a product picture or a price." The reference also describes a system in which a user's identifying information (e.g., username and password) and purchasing information (e.g., name, phone number, payment method, delivery address) is captured and stored in a database "the very first time a user clicks on an item to order," and in which a corresponding cookie is stored on the client system. In this system, the stored information may be retrieved automatically during subsequent visits by reading the cookie. All of these passages further support BN's argument that a substantial question of validity is raised by this prior art reference, either alone or in combination with the other cited references.
The final reference considered by the district court is the '780 patent, entitled "Internet server access control and monitoring systems." Based on a patent application filed in the United States before the application that matured into Amazon's '411 patent, the '780 patent qualifies as prior art pursuant to 35 U.S.C. § 102(e) (1994). Before the district court, BN argued that this reference anticipated at least claim 1 of the '411 patent.
In the preferred embodiment described in the '780 patent, a user browses the web conventionally, and a content server provides web documents to the user and determines when the user seeks access to "controlled" content, i.e., web pages for which the user needs authorization to browse. '780 patent, col. 7, ll. 35-38. The '780 patent describes a system in which controlled pages are returned to the user's browser when an authorized request is received by the content server. We note that the '780 patent describes "forwarding a service request from the client to the server and appending a session identification (SID) to the request and to subsequent service requests from the client to the server within a session of requests." Id. at col. 3, ll. 12-16.
We conclude that the district court failed to recognize that a reasonable jury could find that such "items" (i.e., controlled pages) fall within the scope of the claimed invention, and that delivery of these controlled pages based on receiving an authorized request from a user's browser may constitute a "single action ordering component" within the meaning of the claims in the '411 patent. Therefore, the '780 patent is yet another prior art reference cited by BN which tends to raise a substantial question of validity, either alone or in combination with the other cited references.
The district court also cited certain "secondary considerations" to support its conclusion of nonobviousness. Specifically, the district court cited (1) "copying of the invention" by BN and other e-commerce retailers following Amazon's introduction of its "1-Click (R) " feature, and (2) "the need to solve the problem of abandoned shopping carts." First, we note that evidence of copying Amazon's "1-Click (R) " feature is legally irrelevant unless the "1-Click (R) " feature is shown to be an embodiment of the claims. To the extent Amazon can demonstrate that its "1-Click (R) " feature embodies any asserted claims of the '411 patent under the correct claim interpretation, evidence of copying by BN and others is not sufficient to demonstrate nonobviousness of the claimed invention, in view of the substantial question of validity raised by the prior art references cited by BN and discussed herein.
With respect to the abandoned shopping carts, this problem is not even mentioned in the '411 patent. Moreover, Amazon did not submit any evidence to show either that its commercial success was related to the "1-Click (R) " ordering feature, or that single-action ordering caused a reduction in the number of abandoned shopping carts. Therefore, we fail to see how this "consideration" supports Amazon's nonobviousness argument.
While it appears on the record before us that
Amazon has carried its burden with respect to demonstrating the likelihood
of success on infringement, it is also true that BN has raised substantial
questions as to the validity of the '411 patent. For that reason, we must
conclude that the necessary prerequisites for entry of a preliminary injunction
are presently lacking. We therefore vacate the preliminary injunction and
remand the case for further proceedings.
VACATED AND REMANDED
n1 On appeal, BN asserts that a defense of anticipation had been raised based on the Web-Basket system by Dr. Lockwood's claim charts. However, our review of the record indicates that Dr. Lockwood admitted that at least one claim limitation in each of the independent claims may not have been anticipated by the Web-Basket system. Therefore, at this stage, we address only the obviousness issues related to the Web-Basket system.
1. You can find the actual patent at issue in this case either
at the U.S. Patent Office or on the
Delphion Patent Server.