In DDR Holdings, LLC v. Priceline.com LLC and Booking.com B.V., Case Nos. 23-1176, -1177 (Fed. Cir. Dec. 9, 2024), the Federal Circuit affirmed a district court’s judgment of noninfringement, finding that deleting a portion of a definition between a provisional application and a nonprovisional application was evidence that the patentee intended to exclude the deleted language from the claim scope.
According to the opinion, DDR Holdings, LLC (“DDR”) owns U.S. Patent No. 7,818,399 (the ‘399 patent) which relates to generating a composite web page that combines certain visual elements of a host website with content from a third-party merchant. This e-commerce system disclosed in the ‘399 patent includes three main parties: merchants, hosts, and outsource providers. The outsource provider acts as an intermediary between the host and merchant and creates a system that allows consumers to shop in a merchant-controlled storefront within the design of the host website.
DDR sued Priceline.com and Booking.com B.V. (collectively, “Priceline.com”) for infringement of four patents, including the ’399 patent, alleging that the third parties offering services through Priceline.com’s website were merchants. Priceline.com challenged the patents’ validity in petitions for inter partes review (IPR) before the Patent Trial and Appeal Board (PTAB), which found all claims in three of the four patents unpatentable. The PTAB, however, upheld the claims of the ’399 patent. Applying the “broadest reasonable interpretation standard,” the PTAB construed the claim term “merchants” as “producers, distributors, or resellers of the goods or services to be sold.”
Following the IPR decision, the district court addressed claim construction for the ’399 patent. In the district court, the central contention between the parties was whether the constructions of the claim terms “merchants” and “commerce object” should include “goods or services” or just “goods.” Priceline.com proposed that, consistent with the specification, “merchants” should be construed as only including purveyors of goods, while DDR sought to also include purveyors of services. With Priceline.com’s alleged infringement concerning a service, a narrower definition of either claim term limited to “goods” would prevent a finding infringement. The district court agreed with Priceline.com and held that both claim terms were limited to “goods” because the nonprovisional application did not include “services” anywhere within the specification. Based on the district court’s claim construction, the parties stipulated to noninfringement, and DDR appealed.
The Federal Circuit explained that claim terms must be interpreted to have plain and ordinary meaning to one of skill in the art in light of the patent’s specification and prosecution history, citing Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005). The exceptions to this rule are when the patentees act as their own lexicographer and provides their own definition or when the patentees disavow claim scope in the specification or during prosecution. Here, the construction of the term “merchants” depends on the written description of the ‘399 patent and the provisional application. In one section, the provisional application describes merchants as producers of goods to be sold through the outsource provider, while another section of the provisional application describes merchants as producers of products and services. However, the specification of the ‘399 patent merely describes the merchants as producers, distributors, or resellers of goods to be sold through the outsource provider and does not mention merchants as providers of services.
DDR argued that “services” should be included in the constructions because the provisional application to which the ‘399 patent claims priority included reference to “services” and the provisional application was incorporated by reference in the nonprovisional application. DDR explained that it acted as its own lexicographer—thus warranting an exception to the rule that “claim terms are generally given their plain and ordinary meanings to one of skill in the art when read in the context of the specification and prosecution history”—by “providing, in the provisional application, an ‘explicit definition’ of ‘merchants’ to include ‘both goods and services,’ as well as making this definition an ‘explicit part’ of the ’399 patent specification by incorporating the provisional application by reference.”
However, the Federal Circuit rejected DDR’s argument and affirmed the district court’s construction of “merchants” as purveyors of goods alone. The Federal Circuit found the deletion of “services” from the provisional application to the nonprovisional patent specification “highly significant,” and regarded the absence of “services” as a progression of the drafter’s intended meaning of the claim term between the provisional application and the patent specification. See MPHJ Technology Investments v. Ricoh Americas Corp., 847 F.3d 1363 (Fed. Cir. 2017). Essentially, said the Court, the deliberate deletion of “services” from the specification would lead a skilled artisan to believe that “the patentee intended ‘merchants’ to exclude services.”
In affirming the district court, the Federal Circuit relied on an exception to the incorporation-by-reference rule, an exception it articulated in Finjan LLC v. ESET, LLC, 51 F. 4th 1377 (Fed. Cir. 2022). In Finjan, the Court held that the use of a restrictive term in an earlier application that is incorporated by reference does not reinstate that term in the later patent if the term is purposely deleted in the later patent. In this case, the Federal Circuit held that a skilled artisan would have concluded that, after DDR filed its provisional application, its intended meaning of “merchant” evolved to exclude sellers of services. The Court used this same reasoning to construe the claim term “commerce object” as a “a product, a product category, a catalog, or an indication that a product, product category, or catalog should be chosen dynamically,” therefore concluding it did not include services.
DDR also argued that Priceline.com was collaterally estopped from disputing the PTAB’s broader definition of “merchants,” which included services. The Federal Circuit rejected DDR’s collateral estoppel argument because DDR failed to raise the argument in the district court or in its opening brief on appeal. Moreover, the Federal Circuit noted that neither it nor the district court was bound by the PTAB’s constructions because the PTAB had applied the broadest reasonable interpretation standard rather than the Phillips standard.
Thus, the Federal Circuit affirmed the district court’s constructions of “merchants” and “commerce object,” which excluded services, and upheld the noninfringement judgment.