Katz Litigates 1,975 Patent Claims Against 165 Defendants

Patent litigation is complex but Ronald Katz’s multi-district litigation against 165 defendants establishes a new high water mark in the intellectual property field.  In re Katz Interactive Call Processing Patent Litig., Case No. 2009-1450 (Fed. Cir. Feb. 18, 2011)(available here).  Katz appealed a final judgement from the U.S. District Court for Central California which held numerous claims in Katz’s portfolio invalid or not infringed.

Katz owns a number of patents on interactive call processing systems and call conferencing systems. The 14 patents that Katz asserts in the appeal to the Federal Circuit (the patent appeals court) all relate to interactive call processing systems. The patents fall into four groups; the patents in each group share a common specification. The first group of patents, the “Statistical Interface” group, covers a telephonic interface system for acquiring data from a large group of callers and using that data to identify some subset of the group.  The second group of patents, the “Conditional Interface Plus” group, covers “a telephonic-computer interface system.” The third group of patents, the “Dual Call Mode” group, covers a telephone call processing system for receiving and processing calls relating to a game or contest format.  The last patent, U.S. Patent No. 6,335,965 (“the ’965 patent”), the “Voice-Data” patent, claims a telephone-computer interface system that is designed to receive and identify both digital signals and voice signals from callers.

Katz asserted a total of 1,975 claims from 31 patents against 165 defendants.  The District Court sorted out the defendants into 50 groups of related corporate entities.  The District Court also ordered Katz to select no more than 40 claims per defendant group and to narrow this selection to 16 claims per defendant group after discovery.

“The court further directed that the total number of claims to be asserted against all defendants could not exceed 64 (eight claims for each unique specification including four specifications not at issue in this appeal). However, the court added a proviso that the limitations on the numbers of claims were not immutable. The proviso permitted Katz to add new claims if they ‘raise[d] issues of infringement/validity that [were] not duplicative’ of previously selected claims. Katz added new claims to exceed a total of 64 across all the actions, but the number of claims did not exceed 16 per defendant group.”  Slip Opn. 7.

Katz then moved to sever the non-selected claims and argued that his rights to due process under the law relative to the non-selected claims were violated.  The District Court denied the motion.  The defendants then jointly moved for summary judgment on the issues of anticipation, obviousness, written description, and indefiniteness. In response, the District Court held all the claims selected against defendants to be either invalid or not infringed by the accused devices. The trial court then entered final judgments in favor of defendants.

“The district court granted summary judgment of indefiniteness as to a number of the asserted claims under two different theories. With respect to certain claims that were drafted in the means-plus-function format prescribed by 35 U.S.C. § 112 ¶ 6, the [district] court concluded that the claims were invalid for indefiniteness because the only corresponding structure disclosed in the specification was a general purpose computer and the specification did not disclose an algorithm by which the general purpose computer performed the recited function. We affirm that ruling in part, vacate it in part, and remand for further proceedings. The district court also invalidated several claims as indefinite for claiming both an apparatus and a method of using that apparatus. We affirm that ruling.”  Slip Opn. 15-16.  With respect to the “§ 112 ¶ 6 – indefinite because only a general purpose computer was disclosed,” the Federal Circuit cited WMS Gaming, Inc. v. International Game Technology, 184 F.3d 1339 (Fed. Cir. 1999); Aristocrat Technologies Australia Pty Ltd v. International Game Technology, 521 F.3d 1328 (Fed. Cir. 2008); and Harris Corp. v. Ericsson Inc., 417 F.3d 1241 (Fed. Cir. 2005).

The Federal Circuit construed Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359 (Fed. Cir. 2008)(see earlier blog on this case) which addressed that same § 112 ¶ 6 issue, holding that NetMoneyIn’s claims were invalid.  “The only recited structure for performing that function [in NetMoneyIn] was a ‘bank computer.’ The patentee [therein] contended that the recited structure was sufficient because a person of ordinary skill in the art would understand that a bank computer compares account data and transaction amount data to determine if credit is available. This court rejected that argument on the ground that the specification did not disclose an algorithm to perform the specified function, even though a person of ordinary skill in the art might have been able to devise one.”  Slip Opn. 21-22.  The lesson for practitioners is: no recited algorithm, no valid means-plus-function patent claim.

As for the “indefinite because claim recites apparatus and method of use,” the Federal Circuit stated: “The district court held that Statistical Interface claims … are indefinite under IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1384 (Fed. Cir. 2005), because they claim both an apparatus and a method of use. In IPXL, this court addressed a claim that covered a system with ‘an input means’ and required a user to use the input means. This court held that the claim was indefinite because it was unclear ‘whether infringement . . . occurs when one creates a system that allows the user [to use the input means], or whether infringement occurs when the user actually uses the input means.’” Slip Opn. 24.  “Like the language used in the claim at issue in IPXL (‘wherein . . . the user uses’), the language used in Katz’s claims (‘wherein . . . callers digitally enter data’ and ‘wherein . . . callers provide . . . data’) is directed to user actions, not system capabilities.”  Id. “Katz’s claims, however, create confusion as to when direct infringement occurs because they are directed both to systems and to actions performed by ‘individual callers.’ Katz’s claims therefore fall squarely within the rationale of IPXL and are indefinite.”  Slip Opn. 25.

Other Katz claims were invalidated because his specification did not explain claimed functions and structures.  Other claims were invalidated in light of prior art.

Ultimately, the Court affirmed some rulings by the District Court, reversed others and remanded the case back to the lower court.  It seems Katz lives to fight another day on his “1,975 Patent Claims versus 165 Defendants,” at least to some degree.

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