Stipulated Judgment must be Unambiguous; and the Canon of Common Sense Claim Construction

by Dennis Crouch

AlterWAN sued Amazon for patent infringement back in 2019, asserting two patents claiming claiming wide-area-network improvements. US8595478 and US9015471.  As the case moved forward, the district court issued a claim construction that favored Amazon.  And, at that point, the parties entered a “stipulated judgment” of non-infringement; and the Judge signed the order. AlterWAN essentially admitted that it would lose under the district court’s construction of the terms “cooperating service provider” and “nonblocking bandwidth;” but reserved the right to appeal the issues.

On appeal, the Federal Circuit has refused to hear the substantive patent claim– and rather found the stipulated judgment defective, being “ambiguous in material aspects.” The appellate panel particularly asked for the following to be included within the stipulated judgment:

1. A statement as to whether the patentee needs to win on both claim construction issues in order to recover; and, what does a middle-ground  construction look like in terms of infringement.
2. A listing of the claims that remain at issue on appeal.

In the case, the court heard oral arguments, but the parties disagreed as to each of these issues.

The Federal Circuit is a court of appeals that reviews judgments by a lower tribunal. The problem here though is that the stipulation is such that the appellate panel cannot “ascertain the basis for the judgment challenged on appeal.” Quoting Jang v. Bos. Sci. Corp., 532 F.3d 1330 (Fed. Cir. 2008).

Before remanding, the appellate panel noted a major problem with the district court claim construction – that it rendered the invention inoperable. It “effectively requires a system to provide bandwidth even when the Internet is inoperable.”  Despite cases like Chef America, the Federal Circuit here suggested that “common sense” is an important canon of claim construction. And that the claims should not be interpreted in an inoperable manner absent unambiguous claim language.

Chef America does not require us to depart from common sense in claim construction. Here, the claim language itself does not unambiguously require bandwidth to be available even when the Internet is inoperable.

Slip Op., citing Chef Am., Inc. v. Lamb-Weston, Inc., 358 F.3d 1371 (Fed. Cir. 2004) (heating “to” a temperature vs. heating “at” a temperature).

Bringing all this together, the Federal Circuit vacated the stipulated judgment of non-infringement and also suggested a new claim construction.  The case is now back before the Judge Noreika (D.Del.) who will likely ask for new claim construction briefing as well as summary judgment motions.