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Furnace Brook LLC v. Overstock.Com

September 27, 2006

FURNACE BROOK LLC, PLAINTIFF,
v.
OVERSTOCK.COM, INC. MARKMAN HEARING DEFENDANT.



The opinion of the court was delivered by: Charles L. Brieant, U.S.D.J.

Memorandum and Order

On March 7, 2006, the Court held a claim construction hearing in accordance with Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc), aff'd 516 U.S. 370 (1996), on U.S. Patent No. 5,721,832, entitled Method and Apparatus for an Interactive Catalog System. On May 26, 2006, the parties appeared before the Court for a hearing on separate motions filed in this case. On that date, the parties informed the Court that their mediation efforts following the Markman hearing in March were unsuccessful, and accordingly that construction of the disputed claims by the Court was indeed necessary.

Plaintiff, Furnace Brook is a New York corporation with its principal place of business in New York. Edward R. Gomez is the President and sole owner of Furnace Brook, LLC. Overstock is a Delaware corporation with a principal place of business in Utah. Overstock operates a website "overstock.com," through which people make online purchases of discount, name-brand merchandise for sale primarily over the internet. Furnace Brook is the owner by assignment of U.S. Patent No. 5,721,832, entitled Method and Apparatus for an Interactive Computerized Catalog System ("the '832 patent"), which issued in 1998. Familiarity of the reader with all prior proceedings and decisions by this Court in this litigation is presumed. The Court will address the six disputed claims for which construction was argued before the Court at the Markman hearing. See March 6, 2006, Transcript at 2, 22.

"It is a 'bedrock principle' of patent law that 'the claims of a patent define the invention to which the patentee is entitled the right to exclude.'" Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005). The purpose of a Markman hearing is to allow a court to examine and resolve disputes over the scope and meaning of the claim language in the patent. "[T]he interpretation and construction of patent claims, which define the scope of the patentee's rights under the patent, is a matter of law exclusively for the court." Markman, 52 F.3d at 970-71. When construing claim language, a court should look first at the claims themselves, then the specifications, and finally the prosecution history of the patent if in evidence. Id. at 980. These three sources, referred to as "intrinsic evidence" are the "most significant source[s] of the legally operative meaning of the disputed claim language." Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). If the meaning of the language within the claim is still unclear, extrinsic evidence, such as expert and inventor testimony, dictionaries, and learned treatises, can be used "to aid the court in coming to a correct conclusion" as to the "true meaning of the language employed in the patent." Markman, 52 F.3d at 980. However, extrinsic evidence should only be "used for the court's understanding of the patent, not for the purpose of varying or contradicting the terms of the claims." Id. at 981.

There is a "heavy presumption" that the claim terms carry their ordinary meaning as viewed by one having ordinary skill in the art. Rexnord Corp. v. Laitram Corp., 274 F.3d 1336, 1341 (Fed. Cir. 2001). This presumption can be rebutted where (1) the patentee clearly established a definition of the term differently from its customary meaning, Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996); (2) where a claim term deprives the claim of clarity such that there is no means by which the scope of the claim may be ascertained from the language used, Bell Atlantic Network Services, Inc. v. Covad Communications Group, 262 F.3d 1258, 1268 (Fed. Cir. 2001); or (3) the patentee disavowed an interpretation of a claim during prosecution. See Texas Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193, 1204 (Fed. Cir. 2002).

"Importantly, the person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification." Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005). However, [t]he written description [] is not a substitute for, nor can it be used to re-write, the chosen claim language. Specifications teach. Claims claim. Though understanding the claim language may be aided by the explanations contained in the written description, it is important not to import into a claim limitations that are not a part of the claim. For example, a particular embodiment appearing in the written description may not be read into a claim when the claim language is broader than the embodiment.

Superguide Corp. v. DirecTV Enters., 358 F.3d 870, 875 (Fed. Cir. 2004)(citations and quotations omitted).

Purpose of the Patent

The patent's Abstract provides:

The present invention relates to an improved method and apparatus for an interactive, computerized catalog system in which a customer can selectively access video and audio catalog data from a computerized catalog memory that permits a customer to peruse an entire catalog of products or services or select specific portions from specific catalogs or services and if desired place an order which is processed electronically and from which customer profile marketing data is selectively generated. '832 Patent at 1. The patent's Summary of Invention provides, inter alia:

It is an object of the present invention to provide an improved method and apparatus for an interactive, computerized electronic catalog system. It is another object of the present invention to overcome the difficulties, shortcomings and inefficiencies presented by the prior art electronic catalog systems. It is yet another objective of the present invention to provide an improved, cost efficient interactive electronic catalog process and system which provides efficient product and service selectivity to prospective customers and which selectively generates market profile data of user/customers.

Id.

Telephone Terminal

The first disputed term of the patent is "telephone terminal." Furnace Brook asserts that the term "telephone terminal" should be interpreted to mean "a customer's terminal, whether hard wired or portable."*fn1 Overstock asserts that the term "telephone terminal" should be interpreted to mean "a standard customer telephone unit which may be hardwired or portable and has a standard commercial handset, a touchtone pad, a display unit and an audio unit such that it is not a computer system or personal computer."

The term "telephone terminal" first appears in Claim One, which recites, in part: An improved interactive computerized catalog process comprising the steps of: storing digitized graphic catalog data in a selectively addressable computer system memory, generating a menu of catalog products and services comprising catalog data available for selective viewing at any user's telephone associated terminal screen, establishing a selective communication link initiated by a user between said user's telephone terminal and said computer system, transmitting said menu of catalog products and services to a user's telephone terminal in response to a user's initial request, ... '832 Patent at 10: 54-67. The specification explains:

The telephone terminal 13 comprises a standard customer telephone unit which may be hard wired or portable and has a standard commercial handset 20 and touchtone pad 21, a display unit 24 preferably capable of displaying alphanumeric and graphic data and an audio unit 23 such as the speaker phone arranged to free the user from the normal telephone handset. '832 Patent at 4:7-13. It goes on to describe that:

There are several commercially available screen phones, for example Northern Telephone's Vista 300 phone or Bellcore's Mediacom System which both include digital data terminal features utilizable in accordance with applicants' improved interactive catalog system. '832 Patent at 4:14-18.

The parties dispute whether the patent covers the use of a cellular phone or a computer by the consumer. Overstock contends that it does not, and that the use of a cell phone or computer instead of a "standard commercial handset and touchtone pad" would not infringe on the patent. Transcript at 27. Furnace Brook responds that the term ...


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