Construction Downturn

Digital-Vending Serv. Int’l, LLC v. Univ. of Phoenix

Add the Federal Circuit to the list of places with a bleak outlook for new construction-especially for those whose proposed development is a new claim construction argument on appeal. In Digital-Vending Services International, LLC v. University of Phoenix, the patent holder argued that it could seek a claim construction different from what it had proposed below because the district court had "construed the claim language in a manner different than the construction proposed by either party." Rejecting that argument, the court instead confirmed its long line of precedent precluding a party from changing the scope of its claim construction on appeal. But, because the court's majority gave another claim within the patent a broader interpretation than the one used by the district court, the patent holder didn't have to backfill its entire case.

The patents at issue in Digital-Vending covered a registration-based restricted access method of internet content delivery based on multi-level computer architecture. Patent holder Digital-Vending brought suit against various on-line education providers alleging infringement of its patents. Accused infringers Capella Education and Walden University settled. Third defendant Phoenix International, however, filed a motion for summary judgment of non-infringement. The district court granted the motion and Digital-Vending appealed.

First, instead of challenging the district court's construction, Digital-Vending sought to overturn the district court's grant of summary judgment by arguing for a new, more narrow construction of the patent term "content managed by the architecture." Digital-Vending claimed it could advance a construction far more limited in scope than the one it originally propounded because the district court had adopted a claim construction neither party argued. Citing precedent preventing consideration of new claim constructions on appeal, the court rejected this argument. Because the district court's construction of the term had not been appealed, the Federal Circuit affirmed that portion of the summary judgment of non-infringement.

But the appeals court did vacate the lower court's construction regarding its interpretation of the term "registration server." While the patent claims referred to a "registration server being further characterized in that it is free of content managed by the architecture," the patent specification did not. The majority found this was a deliberate choice not to disavow the claim scope. It rejected the district court's more limited construction-and, consequently, vacated that court's resulting summary judgment. The dissent objected to the majority's broad interpretation.

Digital-Vending certainly dashes almost all hopes of getting a new construction permit on appeal. Instead, both patent holders and accused infringers seeking to dig into a lower court's claim construction will fare better by following the Federal Circuit's established blueprint-and thereby avoid the costs and unexpected delays that sometimes follow building on a shaky foundation.

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