Federal District Court Opinions
FURNACE BROOK LLC v. OVERSTOCK.COM, INC., (S.D.N.Y. 2006)
FURNACE BROOK LLC, Plaintiff, v. OVERSTOCK.COM, INC.
Defendant. No. 05 Civ. 7329 (CLB). United States District
Court, S.D. New York. September 27, 2006
Memorandum and Order Markman Hearing
CHARLES BRIEANT, District Judge
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 Page 2 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, Page 3 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: Page 4
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 Page 5 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 “telephone” in
1995 would have been commonly understood to include a
cellular telephone.
Furnace Brook argues that Overstock’s interpretation
excluding cellular phones asks the Court to limit a claim
to the embodiments disclosed in the specification, as is
forbidden under claim construction law. While it is
improper to import into a claim limitations that are not
part Page 6 of the claim, see Superguide, supra, it is
nevertheless permissible to look to the specification for
explanation and understanding, even where the claim
language is broader than an embodiment. In this case, there
is no dispute that cellular technology was known and
developing in the relevant years, and there is no mention
of cellular technology in the patent claims or
specification.
As just set forth, the specification describes the
telephone terminal as being a standard customer telephone
unit, which may be hard-wired or portable, along with other
features. It describes a “speaker phone arranged to free
the user from the normal telephone handset” as an example
of an audio unit. Fairly read in the context of the
invention and claim language, as informed by the
specification language, the term “portable” reveals that
the hard-wired user telephone may have a detachable
handset, which does not by itself broaden the term
“telephone terminal” to include a cellular phone. The Court
need not and does not at this stage of the litigation
consider whether the use of a cellular phone would invoke
the doctrine of equivalence if the phone comported in all
meaningful respects with the telephone terminal claimed in
the patent. While Furnace Brook complains that Overstock
has not produced evidence to show that cellular telephones
were not considered standard telephones in 1995, Furnace
Brook has not produced evidence to show that they were. It
is well known that the claims of the patent define the
invention to which the patentee is entitled the right to
exclude. In the absence of any reference whatever to
cellular telephones or cellular technology, this 1995
patent is not read to claim such. This patent, as explained
by the specification, claims landline telephones, which may
or may not have a portable or detachable handset. Page 7
Furnace Brook contends and Overstock denies that a
telephone terminal could also be a computer. The use of the
words “between said user’s telephone terminal and said
computer system” in Claim One shows that a computer was not
contemplated at the user end. When the Patentee intended to
talk about a computer, he did so by using the word
computer, as was frequently used when describing the
retailer end of the invention, but never used when
describing the customer end of the invention. A computer is
beyond the specified embodiments, which do not limit, but
explain this patent’s claim of a telephone terminal as a
standard telephone with display screen or as a touch tone
telephone associated with a cable TV.
Although the prosecution history is generally not as useful
a guide to a claim’s meaning as the specification, it is
worth here noting that in the prosecution history, the
Examiner proceeded to describe the unique combination of
concepts that ultimately allowed the patent to issue,
specifically the “combination of all of the systems into a
method of creating an interactive catalogue where the user
is given the option of including data from his transactions
into a customer marketing profile data file.” Id.
The prosecution history includes the following statement by
the patent examiner following the amendments filed on
December 27, 1996:
The use of a telephone and a computer to communicate a
catalogue over the phone lines is known in the art.
Similarly, the use of a phone system as a survey tool is
also known. Further, it is known that purchases are often
analyzed for data relating to the consumer.
Notice of Allowability at 2, OSTKFB001618. Page 8
The Examiner then proceeded to describe the unique
combination of concepts that ultimately allowed the patent
to issue:
However, the prior art does not teach the combination of
all of the above systems into a method of creating an
interactive catalogue where the user is given the option
of including data from his transactions into a customer
marketing profile data file.
Id.
The notice of allowance makes plain that on one end is a
computer and on the other end is a telephone, which, the
patent makes clear, may or may not be associated with a
cable TV system. Furnace Brook argues that because the
claims do not require two computers does not necessarily
mean that two computers could not be used in the invention.
But as just noted, the statements of the patent examiner,
when allowing the patent to issue make clear that the
unique nature of the invention was the combined interaction
of a telephone and computer in communicating a catalog over
the phone lines, where the user has the option of whether
to include “data from his transactions into a customer
marketing profile.” It would defy the notice purpose of
patents to find a user-end computer claimed in this patent.
As earlier noted, Furnace Brook argues that the terms
telephone terminal, customer terminal means, and user
terminal are used interchangeably because they all mean the
same thing. The Court disagrees. As explained infra, the
Court concludes that the patentee’s use of “customer
terminal means” evidences that at the customer end may only
be a telephone terminal or a telephone-associated cable-TV.
This is supported by the use of the term “plurality of
customer terminal means” in Claim 5. Page 9
The Court concludes that neither a cellular telephone nor
a computer on the user end is claimed by the `832 Patent.
Because the terms standard customer telephone unit
(hard-wired or portable), standard commercial handset,
touchtone pad, a display unit and an audio unit are the
named elements that comprise a telephone terminal, the
Court concludes that “telephone terminal” means a “standard
landline telephone unit, which has a standard commercial
handset, a touchtone pad, a display unit and an audio unit,
and which may have a cordless handset.”
Customer Terminal Means
Furnace Brook contends that “customer terminal means”
should be construed in the same way as “telephone
terminal,” which they assert means “a customer’s terminal,
whether hard wired or portable.” Overstock contends that
“customer terminal means” is 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, or alternatively is an interactive
hookup with a touchtone telephone and a cable TV system to
selectively display the requested catalog data and menu on
a particular TV channel.”
“Customer Terminal Means” first appears in Claim Five,
which recites, in part:
An improved interactive computerized catalog system
comprising: central data processing means for storing and
selectively addressing digitized graphic catalog data, a
plurality of customer terminal means for displaying
alphanumeric data during interactive communications
between the terminal and central data processor means,
switchable communication means activated by individual
ones of said plurality of customer terminal means for
selectively interconnecting ones of said plurality of
customer terminal means with said central data processing
means, . . .
`832 Patent at 11: 32-44. Claim Seven recites: Page 10
The improved interactive computer catalog system of claim
5 wherein said customer terminal means comprise display
means for displaying alphanumeric and graphic data and
further including data entry means including a key pad for
entering alphanumeric data for transmission to said
central data processor means.
`832 Patent at 12: 4-9. “Customer terminal means” also
appears several other times in Claim Eight.
Overstock contends, and the Court agrees, that the claim
does not provide the structure for performing the function
“for displaying alphanumeric data,” or “for displaying
alphanumeric and graphic data,” and that this term is
therefore a “means-plus-function” element, and that the
claim scope is therefore limited to the structures
disclosed in the specification, and their equivalents.
An element in a claim for a combination may be expressed
as a means or step for performing a specified function
without the recital of structure, material, or acts in
support thereof, and such claim shall be construed to
cover the corresponding structure, material, or acts
described in the specification and equivalents thereof.
35 U.S.C. § 112. See also Intel Corp. v. VIA Techs.,
319 F.3d 1357, 1367 (Fed. Cir. 2003) (means-plus-function
claims are allowed, but their scope is limited to the
specific structures disclosed in the specification and
their equivalents). “Means-plus-function claiming applies
only to purely functional limitations that do not provide
the structure that performs the recited function.” Phillips
v. AWH Corp., 415 F.3d 1303, 1311 (Fed. Cir. 2005)
(citation omitted). The specification provides:
The user terminal may be the type described in
conjunction with FIG. 1 or alternatively may be an
interactive hookup with a touch tone telephone and a cable
TV system to selectively display the requested catalog
data and menu etc. on a particular TV channel.”
`832 Patent 7:5-9. Page 11
The only structures disclosed for the user terminal, which
the Court reads to be the same as the customer terminal
means, are the “telephone terminal” in figure 1 and the
“interactive hookup with a touch tone telephone and a cable
TV system.” The patent includes references to dialing
toll-free 800 numbers, and connecting via a telephone
exchange. Because this term is subject to Paragraph 6 of
Section 112 of the Patent Law, the Court accordingly limits
the term to corresponding structures disclosed in the
specification and their equivalents.
The Court concludes that a “customer terminal means” is
“either a standard landline telephone unit, which has a
standard commercial handset, a touchtone pad, a display
unit and an audio unit, and which may have a cordless
handset, or is an interactive hookup with a touchtone
telephone and a cable TV system to selectively display the
requested catalog data and menu on a particular TV
channel.”
Selective Communication Link
“Selective Communication Link” is recited in Claim One, as
cited supra. Furnace Brook’s proposed construction of
“selective communication link” and “switchable
communications means” is “a communication link via an
online interactive communications network.” Overstock’s
proposed construction of “selective communication link” is
“a dial-up connection through a telephone exchange or a
private branch exchange (” PBX”) to a telephone network
such that it is not the Internet.” Furnace Brook argues
that Overstock’s construction imports embodiments into the
claims and ignores intrinsic evidence of other
embodiments. Page 12
Selective communication link is recited in Claim One as a
component of one step of the improved interactive
computerized catalog process. The specific step is
“establishing a selective communication link initiated by a
user between said user’s telephone terminal and said
computer system.” `832 Patent at 10: 62-64. The
specification teaches:
In response to a customer initiating a request by dialing
a predetermined 800 telephone number, the telephone
exchange signals the central data processor that a user
has requested service and the processor in response
thereto retrieves the digital catalog data selected by the
user inquiry for transmission via the telephone exchange
and communication link to the user’s terminal.
`832 Patent at 3: 20-26. It also teaches in relation to the
telephone-associated cable-TV, that
As was described in conjunction with FIG. 1, a
user/customer would establish a communication path from a
user TV terminal through the communication system[,] for
example a PBX telephone exchange network, marketed by
AT&T. . . . which is functionally and structurally similar
to the apparatus described in connection with FIGS. 1 and
4.
`832 Patent at 6: 64-7: 5.
It is evident that the selective communications link is
the telephone line connection established between the
user’s terminal and the retailer-end computer. The Court
adopts an interpretation similar to Overstock’s proposal
and concludes that a “selective communication link” is “a
dial-up connection through a telephone exchange or a
private branch exchange to a telephone network.”
Switchable Communication Means
As earlier noted, Furnace Brook contends that a
“switchable communication means” is the same as a
“selective communication link,” and is “a communication
link via an online interactive communications network.”
Overstock contends that “switchable communication Page 13
means” is also a means plus function claim and should be
interpreted to be a “dial-up connection through a telephone
exchange or a private branch exchange or PBX to a telephone
network such that it is not the internet.”
The relevant element of Claim 5 provides that the improved
computerized catalog system is comprised, inter alia, of:
switchable communications means activated by individual
ones of said plurality of customer terminal means for
selectively interconnecting ones of said plurality of
customer terminal means with said central data processing
means.
`832 Patent at 11: 40-44.
Overstock contends that this term is also a “means plus
function” element because the claim does not provide the
structure for performing the function of “selectively
interconnecting” and that the claim scope is accordingly
limited to the disclosed structure and its equivalents. The
Court agrees that the term switchable communication means
is subject to Paragraph 6 of Section 112 of the Patent Law,
and accordingly limits the term to corresponding structures
disclosed in the specification and their equivalents.
The function of a switchable communications means is to
interconnect a customer user terminal to the central data
processing means. The structures disclosed for
interconnecting a customer terminal means to a central data
processor are an 800 telephone number, a dial-up connection
through a telephone exchange or a private branch exchange.
The internet was known in 1995, but is not mentioned in the
`832 patent. Nor is it mentioned in the prior art cited in
the Page 14 `832 patent. The Court does not find the
patent’s use of the term “online” to indicate that the
internet or the world wide web is a selective communication
link or switchable communications means claimed in the
patent. Rather, the use of “online” indicates being “live”
or connected via a telephone line. For example, the patent
specification describes that “an order processor may be
located at Regal’s warehouse in Ontario or may be coupled
online via a normal telephone network to a site of the
central data processor.” `832 Patent at 3: 51-54.
Accordingly, a “switchable communication means” is a
“dial-up connection through either a telephone exchange or
a private branch exchange to a telephone network.”
Data Regarding an Order Transaction
Furnace Brook’s proposed construction for this term is
“information relating to a customer’s order.” Overstock’s
proposed construction for this term is “customer name,
address and order placed.”
Furnace Brook argues, and the Court agrees, the language of
the specification indicates that a customer may first
authorize the addition of his name and address to a
customer data file, and secondly, may authorize an update
of the customer profile data to include any order then
placed. Specifically, the specification provides:
Preferably as part of the initial menu displayed at the
customer’s telephone terminal, a request for the
customer’s approval to include the customer’s name and
address in a customer data file is made. If the customer
signals his approval, e.g., by depressing an appropriate
key at the customer terminal, the customer’s name and
address will be automatically added to the customer data
file. In addition, if authorized by the customer, the
customer’s profile data would be updated to include any
order placed at that time.
`832 Patent at 8:10-19. Page 15
The specification teaches that a customer who has agreed
to have his name and address recorded by the retailer, may
additionally agree to have a profile updated to record the
order placed. Accordingly, “data regarding an order
transaction” is “the order placed by the customer.”
Selectively Elect to be Included In or to be Excluded From
Furnace Brook asserts that this term should be interpreted
to mean “selectively elect, by, for example, depressing
the appropriate key on the customer terminal, to be
included in, or to be excluded from.” Overstock asserts
that this term should be interpreted to mean “when placing
an order, a customer using a telephone terminal may elect
to have his/her name added or deleted by activating a
computer code at the customer telephone terminal.” Claim
One recites, in part:
. . . enabling a user when placing an order to
selectively elect to be included in or to be excluded from
said customer profile marketing data file created as part
of a completed catalog product or services order
transaction.
`832 Patent at 11: 12-15.
A customer elects to have his or her name deleted from a
computer file after placing an order “by electronically
activating a marketing data delete file” and that customer
gives his or her approval to having data included in a
customer data file by “depressing an appropriate key at the
customer terminal.” Accordingly, “selectively elect to be
included in or to be excluded from” is a “customer’s
acceptance or denial of an invitation to have his name and
address, and, if applicable, his order placed, retained in
a customer profile by the retailer.” Page 16
The interpretations of the asserted claims of United
States Patent No. 5,721,832 are as set forth above.
SO ORDERED.
[fn1] As addressed infra, Furnace Brook asserts that the
term “customer terminal means” should be interpreted in the
same way. Page 1