On Thursday, July 5th, the Court of Appeals for the Federal Circuit denied a motion for a panel rehearing in Parallel Networks v. IBM, leaving in place a Rule 36 affirmance of the district court’s order of non-infringement on summary judgement. However, given the issues raised by Parallel Networks in its petition for panel rehearing, many of which point to significant misunderstandings of the technology at issue in the case, a person could reasonably question whether the judges of the Federal Circuit thoughtfully considered this petition, or whether they have the technical capacity to understand that innovation in question. .
A corrected petition for panel rehearing filed by Parallel Networks on June 12th argued that the Federal Circuit panel of Circuit Judges Pauline Newman, Alan Lourie and Jimmie Reyna overlooked or misapprehended two material facts. First, the accused product, IBM’s WebSphere Application Server, included all of the instructions necessary to dynamically generate a web page. Second, the resolution of Parallel Networks’ direct infringement claims did not resolve that firm’s indirect infringement claims. Both of these points were contrary to IBM’s own representations in the oral hearing before the Federal Circuit panel.
Parallel Networks first filed suit against IBM in 2013 in the District of Delaware, asserting two patents:
- U.S. Patent No. 5894554, titled System for Managing Dynamic Web Page Generation Requests by Intercepting Request at Web Server and Routing to Page Server Thereby Releasing Web Server to Process Other Requests. It claims a computer-implemented method for managing a dynamic web page generation request to a web server in a way that enables the efficient management of dynamic web pages for companies which may store hundreds of such pages on a web site.
- U.S. Patent No. 6415335, titled System and Method for Managing Dynamic Web Page Generation Requests. It covers a computer-implemented method for managing a dynamic web page generation request to a web server by routing a request from a web server to a page server, processing the request at the page server while the web server processes other requests, and dynamically generating a web page in response to the request.
In the district court, Parallel Networks accused IBM of direct, induced and contributory infringement of both the ‘554 and ‘335 patents. IBM allegedly committed direct infringement based on the manufacture, sale and distribution of its WebSphere application integration software products. Parallel Networks argued that IBM induced infringement of the patents by encouraging customers to make use of the infringing aspects of WebSphere and that IBM participated in contributory infringement through the sale of specific features, code and components within WebSphere to IBM’s customers. Parallel Networks’ appeal to the Federal Circuit followed after the district court entered a summary judgement of non-infringement as to the direct, induced and contributory infringement claims, each claim being denied on independent grounds.
At oral arguments in front of the Federal Circuit panel in the case, the appellate judges evidenced a great deal of misunderstanding with respect to the technology involved, especially where it came to the difference between web pages and web servers. After Parallel Networks’ counsel identified elements of representative claims from the asserted patents present in IBM’s WebSphere, Judge Reyna asked, “You’re saying that those web pages are the web servers?” Parallel Networks’ counsel explained that the technical elements being described at that time were page servers, not web pages. In response, Judge Reyna asked, “So a web page and a page server are the same thing?” Parallel Networks’ counsel again responded no, “the web page is what would be produced by the page server and could be viewed in a web browser.”
While this may seem to be harmless confusion, this confusion allowed counsel for IBM to not only significantly muddy the waters and sow further unwarranted confusion during oral argument, but it also lead to counsel for IBM making argument directly opposite of arguments made during the trial.
For example, during oral argument at the Federal Circuit counsel for IBM argued that WebSphere does not generate web pages and that third-party software is required for the generation of web pages. That, however, was not what IBM argued at trial about WebSphere technology. During oral argument at the district court on the motion for summary judgement, counsel for IBM stated that, “there is functionality in the software that can be configured to act as a page server, we are not denying that.” The term “page server” had been construed at district court to be defined as “page-generating software that generates a dynamic Web page.” Thus, IBM rather clearly changed its argument while on appeal, and quite possibly did that in order to capitalize on the misunderstanding of Judge Reyna.
But did Judge Reyna really fail to understand the importance that a web page and the page server are not the same thing as the Federal Circuit adjourned to deliberate? Did he and the other judges on the panel continue to have this important, yet fundamental misconception during deliberations? Did the reality that a web page and a page server are not the same thing become appreciated and understood by the Federal Circuit panel, or did this fundamental misconception perpetuate itself up to and through the decision making process? Did counsel for IBM managed to mislead the panel? Did the panel even realize that IBM had made the exact opposite argument about WebSphere technology at the district court?
The sad, and rather inexplicable reality is it is impossible to know whether the Federal Circuit was mislead, simply didn’t understand the technology, or was even hoodwinked. The Federal Circuit relied on a Rule 36 Summary Affirmance, which means no one will ever know why they did what they did, just that they decided that Parallel Networks should lose and IBM should win. Indeed, Rule 36 has become a plague on the patent system in recent years; the Federal Circuit version of a king deciding and the people not have the right to know why — only that a decision has been made.
For those unfamiliar with that rather un-American sounding Rule 36 Summary Affirmance, a Rule 36 decision literally takes up less than one page and a half of text. Only 1 phrase is at all substantive. It simply reads: “AFFIRMED. See Fed. Cir. R. 36.” The remainder of Rule 36 Summary Affirmance includes the heading (i.e., case caption) and the date the order was entered by the Clerk of Court. Who knows why the Federal Circuit did what they did. No explanation, nothing to challenge, no ability to question the reasoning because there is no reasoning at all.
As understandable as the need for a mechanism to quickly resolve cases is for a court as substantially overloaded as the Federal Circuit, there is something fundamentally wrong with using a Rule 36 judgment and providing no insight into even which rationale applied that allowed the Court to invoke Rule 36 in the first place. This is particularly true where during oral arguments there seems to be a fundamental and important misunderstanding of the technology involved, a thorough and correct understanding of which is required in order to reach a proper decision.
The use of a Rule 36 judgment presents a real and growing problem for the patent community. And a problem that will only continue to grow. As serious questions continue to be asked about whether it is appropriate for the Federal Circuit to use Rule 36 to affirm decisions of the Patent Trial and Appeal Board (PTAB), and that issue works its way to a final resolution by the Supreme Court, the Federal Circuit seems to be using Rule 36 less with respect to PTAB appeals and more with respect to appeals from district court litigation.
Parties to these cases — whether appeals from the PTAB or from the district courts — have invested a great deal of time and effort to prepare and brief these cases, as well as a great deal of money, and all they get is a one sentence decision that provides no insight into the Court’s thought process or analysis? That certainly doesn’t coincide with any sense of fairness, and hardly seems in keeping with traditional notions of American justice.
Image Source: Deposit Photos.