Obviousness and Computer Technology as Prior Art: Muniauction, Inc. v. Thomson Corp., 2008 U.S. App. LEXIS 14858 (Fed. Cir. July 14, 2008)
In Muniauction, Inc. v. Thomson Corp., 2008 U.S. App. LEXIS 14858 (Fed. Cir. July 14, 2008), the Appellate Court for the Federal Circuit reversed the district court’s finding of patent validity. The Circuit court ruled that the nexus between the patent claims and secondary considerations was too attenuated to overcome the strong showing of obviousness.
Plaintiff, holder of a patent that directs municipal bond auction methods over the internet, sued defendants for patent infringement. After trial, a jury found that the asserted claims were not obvious and that plaintiff was entitled to nearly $40,000 in lost profits. Defendants filed a motion for judgment as a matter of law or for a new trial arguing that the patent was obvious. The court denied the motions and enhanced the damage award to $76.9 million, awarded $7.7 million in pre-judgment interest and granted a permanent injunction against Defendants.
On appeal, the Federal Circuit evaluated plaintiff’s patent and found that it essentially allowed a municipality (“issuer”) to offer its bonds to underwriters (“bidders”) who purchase the entire bond offerings and thereafter individually resell bonds to the public. The Appellate Court noted that the plaintiff’s patent mentioned several related prior art electronic auction and trading systems, but attempted to distinguish its patent by criticizing the applicability of those systems to financial-based auctions. The court, while recognizing their obligation to “guard against any hindsight bias” held that the use of the internet and web browser technology to conduct electronic auctions was well-established at the time plaintiff’s patent application was filed and that plaintiff’s patent necessarily failed as obvious.
The court next took up the issue of infringement of the remaining dependent claims. Plaintiff sought to proceed under the theory of “joint infringement.” In order to prevail on method infringement, it must prove that each step of the claimed method is performed by the alleged infringer. Here, however, defendant neither performed every step of the claimed methods nor had another party perform steps on its behalf. Therefore, the court held that defendant did not infringe on the patent claims as a matter of law.