United States
Court of Appeals for the Federal Circuit | [1] Case No.: 05-1177,-1192 [2] Case Name: LAVA TRADING, INC. V. SONIC TRADING MANAGEMENT, LLC, ET AL. |
Plaintiff-Appellant Lava appealed two stipulated judgments of noninfringement of U.S. Patent No. 6,278,982 from the United States District Court for the Southern District of New York. 
| Lava owns the ’982 patent, which claims software that aggregates and integrates securities trading and order placement information from various alternative trading systems. The issue before the Federal Circuit related to the proper claim construction for the limitation “distributing” found in asserted claim 9 of the patent. The district court held that the limitation required “the distribution of data for all securities in the combined order book.” Before turning to the merits, the Federal Circuit addressed the problems posed by the procedural posture of the case. First, the counterclaims of invalidity and unenforceability were still pending before the district court, which prevented a complete picture of the issues that could be implicated by claim construction. Second, the appeal record was void of any meaningful comparison of the accused products, depriving the Court of the proper context needed for an accurate claim construction. Nevertheless, the Court found that it had jurisdiction to hear the appeal because the district court issued a Rule 54(b) certification. (Judge Mayer dissented, noting that the appeal should have been dismissed because there was no final judgment due to the interrelatedness of the infringement claim and the unresolved unenforceability claim.) On appeal, Lava advanced a claim construction for the limitation “distributing” that was different from the one it advanced before the district court. Lava’s position on appeal was that “distributing” meant: “‘providing to traders combined order book information . . . for one security or more than one security, as desired by traders’ – i.e., a subset of the combined order book.” The defendants argued that estoppel and waiver prevented Lava from changing its claim construction on appeal. But the Federal Circuit disagreed. The Court held that estoppel did not apply, because the claim construction that Lava advocated before the trial court was unsuccessful. Further, the Court held that waiver did not apply, because the technical change did not make any practical difference in the case. Lava’s two theories were similar and did not result in any meaningful change in the defendant’s position or to the evidence relied upon. The Federal Circuit then construed the claim. Relying on the claim language and the embodiments found in the specification, the Court held that one of ordinary skill in the art would not have limited the “distributing” and displaying limitations the way the district court did. Rather, the Court agreed with Lava and found that one of ordinary skill in the art would have interpreted those limitations as covering an embodiment that encompasses only a subset of the combined order book. Thus, the Court remanded the case to the district court.
|