· Home

Recent Cases United States Court of Appeals for the Federal Circuit 01-1320, -1402, -1448 ULEAD SYSTEMS, INC. (a California Corporation), Plaintiff-Cross Appellant, and ULEAD SYSTEMS, INC. (a Taiwan Corporation), Cross Defendant-Cross Appellant, v. LEX COMPUTER & MANAGEMENT CORP., Defendant/Cross Claimant-Appellant. Kenneth L. Wilton, Small Larkin, LLP, of Los Angeles, California, argued for plaintiff-cross appellant and cross defendant-cross appellant. With him on the brief were Jon E. Hokanson and Jill S. Schwartz. William J. Brutocao, Sheldon & Mak, of Pasadena, California, argued for defendant/cross claimant-appellant. With him on the brief was Jeffrey G. Sheldon. Appealed from: United States District Court for the Central District of California Judge Dickran Tevrizian United States Court of Appeals for the Federal Circuit 01-1320, -1402, -1448 ULEAD SYSTEMS, INC. (a California Corporation), Plaintiff-Cross Appellant, and ULEAD SYSTEMS, INC. (a Taiwan Corporation), Cross Defendant-Cross Appellant, v. LEX COMPUTER & MANAGEMENT CORP., Defendant/Cross Claimant-Appellant. ___________________________ DECIDED: December 9, 2003 ___________________________ Before NEWMAN, DYK and PROST, Circuit Judges. Opinion for the court filed by Circuit Judge DYK. Concurring in part and dissenting in part opinion filed by Circuit Judge NEWMAN. DYK, Circuit Judge. Lex Computer & Management Corp. (“Lex”) appeals the decision of the United States District Court for the Central District of California, granting summary judgment that United States Patent No. 4,538,188 (“the ’188 patent”) is unenforceable and expired because Lex falsely claimed status (and paid maintenance fees) as a small entity. Lex also appeals the district court’s award of attorneys’ fees under 35 U.S.C. § 285 to Ulead Systems, Inc., a California corporation, (“Ulead-California”) and Ulead Systems, Inc., a Taiwan corporation (“Ulead-Taiwan”). Ulead-California and Ulead-Taiwan cross-appeal claiming that they should have been awarded additional attorneys’ and expert witness fees. We conclude that summary judgment of inequitable conduct was improper because a genuine dispute of material fact remains as to Lex’s intent to deceive. We also hold that the erroneous payment of small entity fees may be excused under 37 C.F.R. § 1.28(c), so long as the patentee is not guilty of inequitable conduct relating to its inaccurate assertion of small entity status. Consequently, we vacate the decision of the district court, including the award of attorneys’ fees, and remand for trial. On the cross appeal we affirm the district court’s refusal to impose sanctions based on Lex’s alleged failure to conduct a pre-filing investigation and dismiss as moot the cross-appeal in other respects. BACKGROUND In 1980, Congress amended the patent laws to require for the first time the payment of periodic maintenance fees to maintain the life of a patent. Act of December 12, 1980, Pub. L. No. 96-517, § 2, 1980 U.S.C.C.A.N. (94 Stat.) 3015, 3017-18 (codified as amended at 35 U.S.C. § 41 (2000)). Further amendments in 1982 imposed substantial increases in filing, processing, maintenance and issue fees. Concerned that this new legislation would be overly burdensome to individuals, non-profit organizations and smaller businesses, Congress provided a discount for small entities. Act of August 27, 1982, Pub. L. No. 97-247, § 1, 1982 U.S.C.C.A.N. (96 Stat.) 317, 317. This discount for small entities was eventually made permanent. Act of Nov. 6, 1986, Pub. L. No. 99-607, § 1(b)(2), 1986 U.S.C.C.A.N. (100 Stat.) 3470, 3470 (codified as amended at 35 U.S.C. § 41(h) (2000)). Pursuant to its rulemaking authority under 35 U.S.C. § 41, the Patent and Trademark Office (“the PTO”) adopted rules governing claims to small entity status. 47 Fed. Reg. 40,134, 40,139-40 (Sept. 10, 1982) (codified as amended at 37 C.F.R. §§ 1.27, 1.28 (1983)). The PTO rules define a “small entity” as a small business concern, independent inventor, or non-profit organization. 37 C.F.R. § 1.9(f) (1993).[1] “Small business concern” is defined in accordance with the definition established by the Small Business Administration (“SBA”). Id. at § 1.9(d). The applicable SBA regulation states as follows: a small business concern for purposes of paying reduced fees . . . to the Patent and Trademark Office means any business concern (1) whose number of employees, including those of its affiliates, does not exceed 500 persons and (2) which has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey or license, any rights in the invention to any person who could not be classified as an independent inventor if that person had made the invention, or to any concern which would not qualify as a small business concern or a nonprofit organization under this section. 37 C.F.R. § 1.9(d) (quoting 13 C.F.R. § 121.12(a)) (emphases added). In the present case, it is undisputed that Lex has never had more than twenty employees and qualified as a small entity when it acquired the ’188 patent by assignment on May 21, 1986. Lex properly paid the first maintenance fee on the ’188 patent at the reduced rate in 1988. However, on February 15, 1993, Lex granted a non-exclusive license to Adobe Systems Incorporated (“Adobe”), a company with more than 500 employees, and later granted non-exclusive licenses to at least two more large entities. It is undisputed that the grant of the Adobe license and the other licenses to large entities disqualified Lex from claiming small entity status and paying reduced fees. It is also undisputed that on November 1, 1993, Lex submitted the second maintenance fee for the ’188 patent to the PTO along with a petition to accept delayed payment and a verified statement claiming small entity status. The verified statement stated: “no rights to the invention are held by any person . . . who could not qualify as a small business concern under 37 CFR 1.9(d).” (App. at 523.) The PTO granted the petition and reinstated the patent on November 15, 1993. On September 28, 1998, Lex submitted a petition to accept delayed payment of its third maintenance fee. That petition stated that “small entity status for this patent has been checked and is still in effect.” (App. at 525.) The PTO granted the petition and again reinstated the ’188 patent on April 26, 1999. Lex admits that it paid both the second and third maintenance fees and claimed the reduced rate for small entities even though it was not entitled to claim small entity status. On July 21, 1998, Ulead-California filed this action seeking declaratory judgment of non-infringement, invalidity, and unenforceability of the ’188 patent. Lex counterclaimed for infringement of the ’188 patent. Ulead Sys., Inc. v. Lex Computer & Mgmt. Corp., 130 F. Supp. 2d 1137, 1141 (C.D. Cal. 2001) (“Ulead I”). Lex later joined Ulead-Taiwan and filed a cross-claim for infringement of the ’188 patent. Id. On December 26 and 28 of 2000, Ulead-California and Ulead-Taiwan respectively moved for summary judgment that the ’188 patent is unenforceable, invalid and/or expired.[2] Id. Ulead set forth two grounds in these motions: (1) that the ’188 patent is unenforceable and/or invalid because of Lex’s misrepresentations of small entity status to the PTO and (2) that the ’188 patent had expired because Lex failed to pay the correct maintenance fees and did not pay the incorrect small entity fee in “good faith” as required by the PTO regulation. See Id. at 1142. Immediately thereafter, Lex acted to correct the error in fee payment by submitting the balance of the deficiency to the PTO, in accordance with the procedures for correcting erroneous underpayment set forth in 37 C.F.R. § 1.28(c). The PTO accepted payment, and on January 5, 2001, announced by letter that “[a]fter meeting with the Office of Petitions it was determined that [Lex’s] request to change status to large entity under patent number 4,538,188 will be approved.” (App. at 1650.) Lex opposed summary judgment on the ground that it did not intend to mislead the PTO to believe it was entitled to small entity status. Lex also argued that the ’188 patent was not expired because the PTO had properly excused its erroneous claim to small entity status (and underpayment of fees) under § 1.28(c). On January 23, 2001, the district court granted summary judgment for Ulead on both of the asserted grounds. The court held that the patent was unenforceable because Lex had committed inequitable conduct and there was no genuine issue of fact relating to either the materiality of Lex’s misrepresentation of small entity status or its intent to deceive. Id. at 1143-46. The court also held that the patent had expired due to failure to pay the full maintenance fees and that Lex could not correct this error under § 1.28(c) because its claim to small entity status had been in bad faith. Id. at 1147. Based upon its conclusion that Ulead had proven, by clear and convincing evidence, that Lex was guilty of inequitable conduct and bad faith, the district court held this to be exceptional case under 35 U.S.C. § 285. Ulead Sys., Inc. v. Lex Computer & Mgmt. Corp., 151 F. Supp. 2d 1192, 1205 (C.D. Cal. 2001) (“Ulead II”). Ulead was awarded attorneys’ fees and costs in the amount of $470,084.37. Id. at 1215. However, the court refused to award attorneys’ fees incurred for a related litigation that Lex had filed against Ulead in New York. Id. at 1211. Ulead was also denied deposition-related expert witness fees, id. at 1213, and attorneys’ fees that it spent to prepare additional summary judgment motions of invalidity and non-infringement that were not considered by the district court, id. at 1211. Furthermore, the court declined to impose sanctions for Lex’s alleged vexatious litigation and failure to conduct a pre-filing investigation. Id. at 1213-14. Lex timely appealed. Ulead timely cross-appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1). DISCUSSION “Summary judgment is proper in a case where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” DH Tech., Inc. v. Synergystex Int’l, Inc., 154 F.3d 1333, 1339 (Fed. Cir. 1998). We review a district court’s grant of summary judgment without deference. Dayco Prods., Inc. v. Total Containment, Inc., 329 F.3d 1358, 1362 (Fed. Cir. 2003). I This case presents significant questions concerning the standards for rendering patents unenforceable for misconduct before the PTO in connection with claims of small entity status. Under our precedent, inequitable conduct rendering a patent unenforceable arises when there is “evidence of affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive.” Dayco, 329 F.3d at 1362 (quoting Purdue Pharma L.P. v. Boehringer Ingelheim GMBH, 237 F.3d 1359, 1366 (Fed. Cir. 2001)); see also Kingsdown Med. Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 872 (Fed. Cir. 1988). After threshold findings of materiality and intent have been established by clear and convincing evidence, the court must weigh them to determine if equity warrants a finding of inequitable conduct. Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995). Thus, “inequitable conduct is a broader, more inclusive concept than . . . common law fraud.” Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1069 (Fed. Cir. 1998). A finding of . . . fraud requires higher threshold showings of both intent and materiality than does a finding of inequitable conduct. Moreover, unlike a finding of inequitable conduct, a finding of . . . fraud may not be based upon an equitable balancing of lesser degrees of materiality and intent. Rather, it must be based on independent and clear evidence of deceptive intent together with a clear showing of reliance. Id. at 1070-71 (citation omitted). Historically issues of unenforceability have arisen in cases involving inequitable conduct occurring in the prosecution of patents. See, e.g., Purdue, 237 F.3d 1359; Kingsdown, 863 F.2d 867. But, we see no reason why the doctrine should not extend into other contexts, like the present one, where the allegation is that inequitable conduct has occurred after the patent has issued and during the course of establishing and paying the appropriate maintenance fee. In this context, it is equally important that the PTO receive accurate information from those who practice before it. II However, at the outset, we must determine whether the applicable PTO rule was designed to establish a different standard than our traditional standard for inequitable conduct. We conclude that it was not, and thus, do not need to decide whether our standard or the standard in the PTO rule should prevail in the event of a conflict. See Dayco, 329 F.3d at 1364. From the origin of the small entity system, the PTO has been concerned that small entity status might be abused by unqualified entities. Its initial regulations addressed this problem, warning that: (d)(1) Any attempt to fraudulently (i) establish status as a small entity or (ii) pay fees as a small entity shall be considered as a fraud practiced or attempted on the Office. (2) Improperly and through gross negligence (i) establishing status as a small entity or (ii) paying fees as a small entity shall be considered as a fraud practiced or attempted on the Office. See §§ 1.56(d) and 1.555 of this part. 37 C.F.R. § 1.28(d) (1983) (emphases added). In promulgating this rule, the PTO announced that this provision was “strictly limited” to fraudulent or grossly negligent conduct. 47 Fed. Reg. at 40,138. As originally drafted, the PTO standard was plainly not the same as the standard we have adopted for inequitable conduct. In particular, the rule stated that “gross negligence” would amount to “a fraud practiced . . . on the Office.” 37 C.F.R. § 1.28(d) (1983). Our cases, in contrast, have made clear that a finding of gross negligence does not, by itself, establish the intent threshold. See, e.g., Kingsdown, 863 F.2d at 876 (en banc in relevant part). In Kingsdown, the district court inferred intent to deceive based on the applicant’s grossly negligent conduct. Id. at 873. We reversed and explained that “a finding that particular conduct amounts to ‘gross negligence’ does not of itself justify an inference of intent to deceive; the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive.” Id. at 876 (en banc in relevant part). However, the PTO amended its rule in 1992, and the conduct at issue in this case occurred after the amendment. The rule was amended to delete the references to gross negligence and read as follows: (d)(1) Any attempt to fraudulently (i) establish status as a small entity or (ii) pay fees as a small entity shall be considered as a fraud practiced or attempted on the Office. (2) Improperly and with intent to deceive (i) establishing status as a small entity, or (ii) paying fees as a small entity shall be considered as a fraud practiced or attempted on the Office. 37 C.F.R. § 1.28(d) (1993) (emphasis added).[3] The PTO explained its intent behind this amendment stating that: Proposed § 1.28(d)(2) retains the reference to fraud practiced or attempted on the Office, but removes any reference to sections which currently provide for rejections based on fraud. Further, the reference to “gross negligence” is proposed to be replaced by references to “intent to deceive” to reflect binding precedent of the U.S. Court of Appeals for the Federal Circuit. See, e.g., Kingsdown Medical Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867, 9 USPQ 2d 1384 (Fed. Cir. 1988) (en banc). 56 Fed. Reg. 37,321, 37,323 (Aug. 6, 1991). As noted above, Kingsdown discarded the notion that gross negligence alone satisfies the intent to deceive threshold for inequitable conduct. 863 F.2d at 876 (en banc in relevant part); see also Baxter Int’l, Inc. v. McGaw, Inc., 149 F.3d 1321, 1329 (Fed. Cir. 1998); Halliburton Co. v. Schlumberger Tech. Corp., 925 F.2d 1435, 1439 n.3 (Fed. Cir. 1991). Thus, the PTO’s amendment removed any inconsistencies with our inequitable conduct precedent. We hold that our traditional standard for inequitable conduct is applicable to PTO proceedings involving the payment of maintenance fees as a small entity—and that a threshold determination of both materiality and intent and a balancing of the two are required. The burden is on the party asserting inequitable conduct to establish it by “clear and convincing evidence.” Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1233 (Fed. Cir. 2003). III There is no serious question here as to materiality, as the district court found. In its reply brief, Lex challenges Ulead’s argument that the false declaration of small entity status was material, arguing that Lex’s misrepresentation had “no bearing on patentability.” (Def.-Appellant Reply Br. at 11.) While Lex is correct that the affidavit did not induce issuance of the patent, the misrepresentation that Lex qualified as a small entity was material to the PTO’s acceptance of reduced maintenance fees, and thus, survival of the patent. As such, at least a threshold level of materiality has been established as a matter of law. See Gen. Electro Music Corp. v. Samick Music Corp., 19 F.3d 1405, 1411 (Fed. Cir. 1994) (“[T]here is no room to argue that submission of false affidavits is not material.”) (quoting Rohm & Haas Co. v. Crystal Chem. Co., 722 F.2d 1556, 1561 (Fed. Cir. 1983)); Paragon Podiatry Lab., Inc. v. KLM Labs., Inc., 984 F.2d 1182, 1193 (Fed. Cir. 1993) (explaining that concealment of information uniquely in the applicant’s possession is particularly egregious because the PTO has no way of securing this information on its own). There are, however, genuine issues of material fact as to intent. “To satisfy the intent to deceive element of inequitable conduct, ‘the involved conduct, viewed in light of all the evidence, including evidence of good faith, must indicate sufficient culpability to require a finding of intent to deceive.’” Paragon, 984 F.2d at 1189 (quoting Kingsdown, 863 F.2d at 876 (en banc in relevant part)). Direct evidence of deceptive intent is not required; rather it is usually inferred from the patentee’s overall conduct. Id. at 1189-90. Although inequitable conduct is a matter for the court, rather than the jury to resolve, summary judgment is inappropriate if there are geniune issues of material fact. Id. at 1190. Lex admits that it was not entitled to small entity status when it filed its affidavit of small entity status and paid reduced fees in 1993 and 1997. But, it claims that these were innocent errors and that it was grossly negligent at worst, and that it did not have an intent to deceive. To support this argument, Lex cites the deposition of its president, Mr. Haberman, who testified that he was unaware that Lex was not a small entity when he signed the 1993 verified statement claiming small entity status (the “1993 declaration”). Lex also refers to the declaration of its patent counsel, Mr. Weiner, who stated that although he was aware of the PTO rule in question, he was unaware of the existence of the licenses that caused the loss of small entity status. Ulead I, 130 F. Supp. 2d at 1145-46. Ulead argues that Lex remained intentionally ignorant of the law and that Lex’s false statements to the PTO support an inference of intent to deceive. The district court agreed with Ulead; it rejected the testimony offered by Lex as “self-serving and inconsistent with the documentary evidence,” and it found that the circumstantial evidence was sufficient to establish intent on summary judgment. Ulead I, 130 F. Supp. 2d at 1146. We conclude that the evidence before the district court raises genuine issues on the question of intent. A. Haberman’s Testimony Mr. Haberman testified that, while he was aware of the language of the declaration, he was not aware that a non-exclusive license to a large entity would result in a loss of the licensor’s small entity status. Mr. Haberman is a lawyer. The district court relied on the fact that Haberman, while primarily a real estate lawyer, had taken patent law review courses and twice sat unsuccessfully for the patent bar examination, and on the language of the 1993 declaration, along with Haberman’s admission that Lex’s licensees had “rights” in the ’188 patent, to discredit this testimony. Ulead I, 130 F. Supp. 2d at 1145. However, there was no evidence that Haberman had studied the law concerning small entity status or the language of the regulation itself prior to signing the 1993 declaration. Moreover, the language of the form declaration itself does not unambiguously notify the reader that granting a non-exclusive license to a large entity will result in forfeiture of small entity status. The 1993 declaration stated: If the rights held by the above identified small business concern are not exclusive, each individual, concern or organization having rights to the invention is listed below and no rights to the invention are held by any person . . . who could not qualify as a small business concern under 37 CFR 1.9(d).[4] (App. at 523 (footnote omitted).) The 1993 declaration refers to “rights to the invention,” but unlike the regulations does not refer to licensing. See 37 C.F.R. § 1.9(d) (quoting 13 C.F.R. § 121.12(a)). “It is well settled that a non-exclusive licensee of a patent has only a personal and not a property interest in the patent.” In re CFLC, Inc., 89 F.3d 673, 679 (9th Cir. 1996) (quoting Gilson v. Republic of Ireland, 787 F.2d 655, 658 (D.C. Cir. 1986). Here, drawing all reasonable inferences in Lex’s favor, the declaration could be construed to refer only to the proprietary rights that remained exclusively owned by Lex. Mr. Haberman’s testimony is consistent with this interpretation of the 1993 declaration. Haberman testified that the language of the affidavit required disclosure of any other entities with ownership rights in the ’188 patent, but not non-exclusive licensees who only had rights to use the invention. Haberman’s testimony that he was unaware that a non-exclusive license could result in forfeiture of small entity status, in light of the ambiguous language of the form declaration, is sufficient to create a genuine issue as to Lex’s intent. B. Weiner’s Declaration Lex’s patent counsel, Mr. Weiner, also testified that he did not intend to deceive the PTO. (App. at 1646.) Lex admits that Weiner understood the law. However, it argues that Weiner was unaware, until after Ulead raised the issue in this case, that Lex had entered into any licenses with companies having more than 500 employees. Id. In his declaration, Mr. Weiner explained that he did not directly represent Lex in acquiring any of its licenses and, as a result, was unaware that Lex had finalized license agreements with any companies having more than 500 employees. (App. at 1644.) The district court discounted this declaration because of Weiner’s statement that he had “checked” the small entity status and it was still in effect. Ulead I, 130 F. Supp. 2d at 1146. The court found that “either Mr. Weiner did not ask the right questions or he was not provided the right answers.” Id. But this assessment is more telling of negligence then any actual intent to deceive. If Mr. Weiner was truly ignorant of the facts, as his declaration states, then his testimony raises a genuine issue for trial. On summary judgment “[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); see also Stark v. Advanced Magnetics, Inc., 29 F.3d 1570, 1575-76 (Fed. Cir. 1994). The district court did not do that here. Mr. Haberman and Mr. Weiner’s testimony that they were unaware of Lex’s loss of small entity status creates an issue of fact. Their testimony is not merely conclusory. Moreover, it is supported by the fact that the amount of money Lex saved by paying maintenance fees as a small entity was relatively miniscule in comparison to the value of the ’188 patent.[5] The mere fact that no action to correct the mistake was taken prior to the commencement of this litigation is simply beside the point if Lex was previously unaware of the mistake. The existence of gross negligence might be inferred from the undisputed facts, but as the district court recognized, gross negligence is not, in and of itself, sufficient to satisfy the intent element of inequitable conduct.[6] E.g. Ulead I, 130 F.Supp. 2d at 1144; Baxter, 149 F.3d at 1329; Kingsdown, 863 F.2d at 876 (en banc in relevant part). In a particular case, the question of whether an inference of actual intent can be supported by evidence of gross negligence and other evidence can only be determined after a hearing at which the credibility of the witnesses is assessed. A trial on the issue of intent is required, and if a threshold level is found, the district court must balance materiality and intent to determine if Lex has committed inequitable conduct. IV The district court in this case granted summary judgment on the alternate ground that the ’188 patent expired for failure to pay maintenance fees. It reasoned that section 1.28(c) allows the PTO to excuse the erroneous establishment of small entity status or payment of small entity fees only if these actions were taken in good faith. Ulead I, 130 F. Supp. 2d at 1147; see 37 C.F.R. § 1.28(c) (2001). Although the PTO accepted Lex’s payment of the maintenance fee deficiency, the district court concluded that Lex’s original claim of small entity status and its payment of reduced-maintenance fees were in bad faith. Ulead I, 130 F. Supp. 2d at 1147. We hold that the district court properly held that section 1.28(c) governs, but that it has misunderstood the applicable regulation. In DH Technology, we held that the statute and regulations barring reinstatement of a patent for failure to timely pay issuance fees within the allowed grace period do not apply to underpayments resulting from erroneous claims of small entity status. 154 F.3d at 1342. Rather, we held that when a party inaccurately claims small entity status, the question of whether a patent has expired for failure to pay the full issuance fee is exclusively governed by section 1.28(c). Id. We see no basis for distinguishing the provisions dealing with the payment of maintenance fees, namely 35 U.S.C. § 41 and 37 C.F.R. § 1.378, from those involving payment of issuance fees. Indeed, the MPEP specifically indicates that section 1.28(c) governs when maintenance fees are improperly paid as a small entity. MPEP § 509.03, at 500-42 (8th ed. 2001) (“A maintenance fee improperly paid as a small entity where small entity status has been established but is no longer appropriate will be treated as a matter under 37 CFR 1.28(c) and will not be considered to involve expiration of the patent under 37 CFR 1.378.”). As with issuance fees, the sole provision governing expiration for failure to pay the full maintenance fee because of an erroneous claim to small entity status is section 1.28(c) of the regulations. However, we conclude that section 1.28(c) does not authorize or require an inquiry into good faith. The regulation in effect at the time Lex sought to correct its erroneous payment of small entity maintenance fees provided that: If status as a small entity is established in good faith, and fees as a small entity are paid in good faith, in any application or patent, and it is later discovered that such status as a small entity was established in error, or that through error the Office was not notified of a loss of entitlement to small entity status as required by § 1.27(g)(2), the error will be excused upon: compliance with the separate submission and itemization requirements of paragraphs (c)(1) and (c)(2) of this section, and the deficiency payment requirement of paragraph (c)(2) of this section. 37 C.F.R. § 1.28(c) (2001) (emphases added). The PTO views the submission of “[a] fee deficiency payment under § 1.28(c) . . . as a representation by the party submitting the payment that small entity status was established in good faith and that the original payment of small entity fees was made in good faith.” 62 Fed. Reg. 53,132, 53,135 (Oct. 10, 1997) (emphasis added). However, the PTO does not view the regulation as obligating it to conduct, and in fact does not conduct, inquiries into whether the patentee has satisfied the good faith error standard. Id.; see also Abraham Hershkovitz, Petitions Practice Within the Patent and Trademark Office on Patent Matters, 80 J. Pat. & Trademark Off. Soc’y 171, 180 (March 1998) (“As an explanation of the error in the original payment is no longer necessary, any paper submitted under § 1.28(c) will be placed in the file without review.”).[7] In other words, the PTO does not view section 1.28(c) as requiring it to make an inquiry into the patentee’s good faith as a condition to accepting the late payment. Under such circumstances there is no basis to construe the regulation as mandating such an inquiry by the district court in order to determine whether the patent has expired, and we hold that a district court has no such obligation or authority. The submission of the deficiency fee payment, when accepted by the PTO, is effective to correct the patentee’s error. To be sure, if the patentee makes a request to correct incorrect payment of fees as a small entity knowing that it does not satisfy the good faith error standard of section 1.28(c), the patentee may be found to have engaged in inequitable conduct. We addressed this very issue in DH Technology. While the language of that opinion refers to a determination of the patentee’s “good faith” by the district court, we made clear that the only pertinent inquiry is “whether [the patentee] fraudulently established status as a small entity or fraudulently paid the small entity issue fee.” DH Technology, 154 F.3d at 1343. Thus, the question here is whether Lex committed inequitable conduct by knowingly misrepresenting that it was entitled to have the error excused under section 1.28(c). Ulead, of course, bears the burden of establishing inequitable conduct by clear and convincing evidence. Here, as explained above, this burden has not been met on summary judgment because genuine issues of fact remain as to intent. CONCLUSION For the foregoing reasons, we vacate the district court’s grant of summary judgment of unenforceability, invalidity and/or expiration of the ’188 patent because there are genuine issues of material fact remaining as to intent.[8] We remand for further consideration of the issue of inequitable conduct and the remaining issues of invalidty and infringement. Having vacated on the merits, we also vacate the district court’s finding of exceptional case and award of attorneys’ fees. On the cross-appeal, we affirm the district court’s denial of sanctions for failure to conduct a pre-filing investigation. Ulead agrees that, in this case, sanctions cannot be imposed under Rule 11 of the Federal Rules of Civil Procedure, and we decline to impose a special, pre-filing investigation requirement independent of Rule 11. Ulead has not appealed the district court’s refusal to award fees for alleged vexatious litigation. We dismiss as moot the remainder of the cross-appeal since the district court’s finding of inequitable conduct has been vacated. VACATED AND REMANDED COSTS No costs.  United States Court of Appeals for the Federal Circuit 05-1088 AQUATEX INDUSTRIES, INC., Plaintiff-Appellant, v. TECHNICHE SOLUTIONS, Defendant-Appellee. Jack A. Wheat, Stites & Harbison, of Louisville, Kentucky, argued for plaintiff-appellant. With him on the brief was Joel T. Beres. Of counsel on the brief were Richard S. Myers, Jr., James R. Michels and Alexandra T. MacKay, of Nashville, Tennessee. James A. DeLanis, Baker Donelson Bearman Caldwell & Berkowitz, P.C., of Nashville, Tennessee, argued for defendant-appellee. With him on the brief was W. Edward Ramage. Appealed from: United States District Court for the Middle District of Tennessee Chief Judge Robert L. Echols United States Court of Appeals for the Federal Circuit 05-1088 AQUATEX INDUSTRIES, INC., Plaintiff-Appellant, v. TECHNICHE SOLUTIONS, Defendant-Appellee. __________________________ DECIDED: August 19, 2005 __________________________ Before MAYER, GAJARSA, and DYK, Circuit Judges. MAYER, Circuit Judge. AquaTex Industries, Inc. (“AquaTex”) appeals the judgment of the United States District Court for the Middle District of Tennessee, AquaTex Indus. Inc. v. Techniche Solutions, No. 02-CV-914 (M.D. Tenn. Sept. 27, 2004), granting summary judgment of noninfringement in favor of Techniche Solutions (“Techniche”). Because there was no literal infringement, and because the district court improperly determined that prosecution history estoppel barred infringement under the doctrine of equivalents, we affirm-in-part, reverse-in-part, and remand. Background AquaTex initiated this action against Techniche for contributory infringement of United States Patent No. 6,371,977 (“the ’977 patent”). AquaTex is the assignee of the ’977 patent entitled “Protective Multi-Layered Liquid Retaining Composite.” Both parties market multi-layered, liquid-retaining composite material for evaporative cooling garments. AquaTex contends that Techniche’s evaporative cooling garments and products infringe the ’977 patent either literally or under the doctrine of equivalents. The ’977 patent claims a method of cooling a person through evaporation by providing a multi-layered, liquid-retaining composite material comprising a fiberfill batting, and either hydrophilic polymeric fibers or hydrophilic polymeric particles. The technology is suited for use in a wide variety of items such as protective garments, blankets, and compresses. In general terms, practice of the patented method involves soaking a composite material in a liquid for a matter of minutes, wringing out the excess liquid, and then placing the material or garment against a person for cooling by evaporation. The ’977 patent specification describes the invention as including: a basic configuration of a multi-layered, liquid-retaining composite material comprising of: a conductive layer which is adapted for placement in close proximity to, or indirect contact with the body of the wearer; a filler layer impregnated [with] a fiberfill batting material and with liquid absorbent particles, fibers, or a combination of both; a retainer layer for retention of the filler layer between the conductive layer and the retention layer; and, if needed, an outside protective layer attached to, or placed adjacent to, the outermost surface of the retention layer. ’977 patent, col. 3, ll. 31-44. The patent includes 35 claims. Independent claims 1 and 9 are disputed in this case. Claim 1 reads: A method of cooling a person by evaporation, comprising: 05-1088 2 providing a multi-layered, liquid-retaining composite material comprising a fiberfill batting material, and hydrophilic polymeric fibers that absorb at least about 2.5 times the fiber’s weight in water; soaking said multi-layered composite in a liquid; employing said multi-layered, liquid-retaining composite material as a garment or a flat sheet and evaporatively cooling said person. ’977 patent, col. 13, ll. 64-67 & col. 14, ll. 1-6 (emphasis added). Similarly, claim 9 requires the water-absorbent layer to comprise “a fiberfill batting material and hydrophilic polymeric particles.” The specification of the ’977 patent describes a “filler layer impregnated [with] a fiberfill batting material and with liquid absorbent particles, fibers, or a combination of both[.]” col. 3, ll. 37-39. Further, the specification states: With respect to the liquid absorbent fibers, the blend is a combination of a superabsorbent polymeric fiber and a fiberfill or batting. The particular fiberfill is not known to be critical. That is, any commercial fiberfill may be used as long as it does not adversely affect the performance of the end composite. Accordingly, when the end composite is to be used as or part of a fire retardant garment, the fiberfill or batting is chosen accordingly. In such a case, the fiberfill is typically comprised of a flame and heat resistant material such as woven aramid and/or polybenzamidazole (“PBI”) fibers. That is, the fiberfill is selected from a group consisting of an aramid polymer fabric material, as [a] blend of aramid polymer fabric materials, a polybenzamidazole material, and a blend of aramid polymer fabric and polybenzamidazole materials. For other non-flame retardant applications, commercial fiberfill such as DuPont DACRON® available from DuPont, or polyester fiberfill products from Consolidated Textiles, Inc. of Charlotte, N.C. Additionally, U.S. Pat. Nos. 5,104,725; 4,304,817; and 4,818,599; all of which [are] incorporated by reference, disclose fiberfill fibers and blends suitable for certain applications of the present invention. ’977 patent, col. 3, ll. 45-65. The commercial fiberfill examples described in the specification are all synthetic or man-made materials. Likewise, the three United States patents incorporated by reference each discloses and teaches the use of synthetic polyester fiberfill or synthetic polyester fiberfill blends. 05-1088 3 During prosecution of the ’977 patent the United States Patent and Trademark Office initially rejected AquaTex’s current claims 1 and 9 as anticipated by United States Patent No. 4,897,297 (“the ’297 patent”). The rejection focused on the ’297 patent’s disclosure of a method for cooling a person using a multi-layered, liquid-retaining composite material comprising a fiberfill batting material. The examiner noted that the disclosed fiberfill batting material was a “mixture of synthetic polymer pulp or wood pulp, which is a fiber.” In response to the office action, AquaTex traversed the rejection by distinguishing the ’297 patent and by adding an additional claim limitation. AquaTex contended that: “The ’297 Patent discloses a compress that is made from an elastic fabric and comprises a hydrogel-forming polymeric material. The absorbent polymer filler material may be particulate, and may be accompanied by a diluent filling material.” Important to our analysis, AquaTex stated “the ’297 Patent fails to disclose or suggest the fiberfill batting and polymeric fibers and/or particles of the composite material in the claimed method. Additionally, the ’297 Patent fails to disclose or suggest the evaporative cooling method of the present invention.” Addressing an obviousness rejection by the examiner based upon the ’297 patent, AquaTex similarly pointed out that “the ’297 Patent does not cool by evaporation, and is elastic.” AquaTex amended current claims 1 and 9 to specify cooling a person “by evaporation” to distinguish the ’297 patent. As discussed in the office action response, the combination of materials within the ’297 patent is designed to retain liquid and insignificant amounts of evaporation would occur over long periods of time. AquaTex contrasted the evaporative cooling method of the claimed invention which is designed to 05-1088 4 release rather than retain moisture. The examiner withdrew the rejection and allowed the ’977 patent to issue. Techniche’s accused products use Vizorb®, which is manufactured by Buckeye Technologies. Vizorb® is a commercially available composite material primarily containing cellulose fluffed pulp, but also incorporating both natural and synthetic fibers. In particular, it is manufactured from wood cellulose, superabsorbent polymer, bicomponent fiber, cellulose based carrier sheet, and a chemical binder. Physically, Vizorb’s® fibers are between three to six millimeters in length and the product is glued together. The superabsorbent in Vizorb® is generally referred to as a powder. It is typically used in feminine hygiene products, baby diapers, and adult incontinence products, not as filler for furniture, pillows, or sleeping bags. Techniche moved for summary judgment on the ground that its accused product does not infringe AquaTex’s ’977 patent literally or by application of the doctrine of equivalents. AquaTex correspondingly moved for partial summary judgment that Techniche’s products do infringe its ’977 patent. The trial court construed “fiberfill” from the perspective of one of ordinary skill in the art to encompass synthetic fibers, and not natural fibers or a combination of synthetic and natural fibers. The court based its claim construction analysis on the ordinary meaning of the claim term “fiberfill” as elicited from a number of technical and industry dictionaries. Further, the court examined the specification of the ’977 patent to reach the determination that the commercial fiberfill batting contemplated by the patentee must consist of polyester or other synthetic fibers. It also found that AquaTex disavowed the claim scope of natural fibers during prosecution of the ’977 patent by 05-1088 5 stating in its office action response that “the ’297 Patent fails to disclose or suggest the fiberfill batting and polymeric fibers and/or particles of the composite material in the claimed method.” The court concluded that AquaTex was barred from asserting any doctrine of equivalents claim because it disavowed the use of wood pulp or a mixture of synthetic and natural fibers as fiberfill in the water-absorbent layer. It reasoned that prosecution history estoppel barred AquaTex from asserting that “fiberfill batting material” could be partially comprised of natural fibers. The court granted Techniche’s motion for summary judgment of noninfringement, denied its request for attorney fees,* and denied AquaTex’s motion for sanctions, which is not at issue in this appeal. AquaTex appeals and our jurisdiction is pursuant to 28 U.S.C. § 1295(a)(1). Discussion We review a district court’s grant of summary judgment de novo. Vanmoor v. Wal-Mart Stores, Inc., 201 F.3d 1363, 1365 (Fed. Cir. 2000). “Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Id. (citations omitted). Summary judgment is improper “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “In the context of a grant of summary judgment of no infringement, this court reviews the entire infringement inquiry without deference.” Salazar v. Procter & Gamble Co., 2005 U.S. App. LEXIS 1351, at *5 (Fed. Cir. July 8, 2005) (citing Omega Eng’g, Inc. v. Raytek * Because Techniche failed to cross appeal on this issue properly, we decline to consider it. See Radio Steel & Mfg. Co. v. MTD Prods., Inc., 731 F.2d 840, 844 (Fed. Cir. 1984) (“[A] party will not be permitted to argue before us an issue on which it has lost and on which it has not appealed, where the result of acceptance of its argument would be a reversal or modification of the judgment rather than an affirmance.”). 05-1088 6 Corp., 334 F.3d 1314, 1320 (Fed. Cir. 2003)). Application of prosecution history estoppel to limit the doctrine of equivalents presents a question of law that this court also reviews without deference. Glaxo Wellcome, Inc. v. Impax Labs., Inc., 356 F.3d 1348, 1351 (Fed. Cir. 2004). Because the ’977 patent claims the use of evaporative cooling garments, rather than the actual multi-layer fabric itself, AquaTex’s cause of action is one for contributory infringement under 35 U.S.C. § 271(c). Although not directly infringing, a party may still be liable for inducement or contributory infringement of a method claim if it sells infringing devices to customers who use them in a way that directly infringes the method claim.** R.F. Del., Inc. v. Pac. Keystone Techs., Inc., 326 F.3d 1255, 1267 (Fed. Cir. 2003). “Liability for either active inducement of infringement or for contributory infringement is dependent upon the existence of direct infringement.” Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 774 (Fed. Cir. 1993). “An infringement analysis entails two steps. First, the meaning and scope of the asserted patent claims is determined, and then the properly construed claims are compared to the accused product or process.” Ranbaxy Pharms., Inc. v. Apotex, Inc., 350 F.3d 1235, 1239-40 (Fed. Cir. 2003) (citing Cybor Corp. v. FAS Techs., Inc., 138 ** The trial court determined that in order for contributory infringement to exist, Vizorb®, a component of Techniche’s products, must not have any substantial noninfringing uses. Contributory infringement liability arises when one “sells within the United States . . . a[n] . . . apparatus for use in practicing a patented process, constituting a material part of the invention . . . and not a staple article or commodity of commerce suitable for substantial noninfringing use . . . .” 35 U.S.C. § 271(c) (2000). From the record before us, the “apparatus for use in practicing” the claimed methods is Techniche’s multi-layered product. The proper question is not whether Vizorb® is a staple article of commerce, which is readily apparent, but whether the accused Techniche products are “suitable for substantial noninfringing use[s].” 05-1088 7 F.3d 1448, 1454 (Fed. Cir. 1998) (en banc)). Claim construction is a question of law reviewed de novo. Cybor Corp., 138 F.3d at 1456. To ascertain the meaning of a disputed claim term “the words of a claim are generally given their ordinary and customary meaning,” as would be understood by “a person of ordinary skill in the art in question at the time of the invention, i.e., as of the effective filing date of the patent application.” Phillips v. AWH Corp., 415 F.3d 1303, __, (Fed. Cir. 2005) (en banc). The specification is of central importance in construing claims because “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.” Id. at *24. Where, as here, the disputed claim term is technical or a term of art, “[t]he best source for understanding [it] is the specification from which it arose, informed, as needed, by the prosecution history.” Id. at *30 (quoting Multiform Desiccants, Inc. v. Medzam Ltd., 133 F.3d 1473, 1478 (Fed. Cir. 1998)). Along with the intrinsic evidence of record, including the prosecution history, extrinsic evidence can be useful in claim construction and “technical dictionaries may provide [help] to a court ‘to better understand the underlying technology’ and the way in which one of skill in the art might use the claim terms.” Id. at *38 (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1584 (Fed. Cir. 1996)). The claim limitation disputed by the parties is “fiberfill batting material,” and the primary issue is whether it should be construed to encompass only synthetic fibers as the trial court held. Resolution of the claim construction issue then controls whether Vizorb® constitutes “fiberfill” as required by the ’977 patent for literal infringement 05-1088 8 because Vizorb® contains a combination of natural and synthetic fibers. Whether Techniche is liable for contributory infringement depends upon this issue. Turning to the specification of the ’977 patent, we examine the context of the term “fiberfill” in the claims themselves. Both claims 1 and 9 call for a method of cooling a person by evaporation through use of “a multi-layered, liquid-retaining composite material comprising a fiberfill batting material, and hydrophilic polymeric fibers [particles in claim 9] . . . .” As used in this context, the fiberfill batting material, in conjunction with other polymeric fibers or particles, must be capable of liquid retention and evaporation. The claims, however, offer little guidance as to the underlying composition of “fiberfill batting material” apart from the functions it must be capable of performing. The written description, on the other hand, does provide guidance as to the composition of “fiberfill batting material.” In the detailed description of the invention, AquaTex dictated that “[t]he particular fiberfill is not known to be critical. That is, any commercial fiberfill may be used as long as it does not adversely affect the performance of the end composite.” ’977 patent, col. 3, ll. 47-50. From this statement, the patentee has informed the public that any commercial fiberfill that is capable of performing the claimed functions will suffice. The written description continues by describing numerous examples of commercial grade fiberfill, all of which are comprised entirely of synthetic materials. Because AquaTex chose to incorporate by reference the teachings of three United States Patents to define the scope of the term “fiberfill,” these publications are highly relevant to one of ordinary skill in the art for ascertaining the breadth of the claim term. In United States Patent No. 4,304,817, the specification teaches that “[p]olyester fiberfill 05-1088 9 is used commercially in many garments and other articles because of its desirable thermal insulating and aesthetic properties . . . . Most commercial polyester fiberfill has been in the form of crimped polyester staple fiber.” col. 1, ll. 11-16. Similarly, the remaining two patents describe “fiberfill” in terms of a synthetic, normally polyester, fiber for use as a filling material. None of the patents discusses the possibility of using natural fibers as commercial fiberfill batting. “In addition to consulting the specification . . . a court ‘should also consider the patent’s prosecution history, if it is in evidence.’” Phillips, 415 F.3d at __ (quoting Markman v. Westview Instr., Inc., 52 F.3d 967, 980 (Fed. Cir. 1995) (en banc)). In interpreting “fiberfill,” the trial court relied heavily upon statements made during prosecution of the ’977 patent as a clear disavowal of natural fibers for use as “fiberfill batting material.” The prosecution history, however, is ambiguous and does not directly address the composition of “fiberfill.” Thus, we disagree with the trial court that AquaTex’s arguments foreclose potential compositions of fiberfill, and we decline to give the prosecution history much weight. See Phillips, 415 F.3d at __ (because the prosecution history represents an ongoing negotiation, “it often lacks the clarity of the specification and thus is less useful for claim construction purposes”). Particularly, the examiner represented that the prior art ’297 patent contained a blend of fiberfill batting comprised of synthetic polymer pulp and wood pulp. Instead of addressing the composition of the fiberfill batting in the prior art, AquaTex chose to traverse the rejection by distinguishing how the overall composition of materials was used, and by pointing out that the prior art composition of materials was designed to retain liquid for long periods of time. The representations made during prosecution neither support nor 05-1088 10 discredit any particular meaning of the term “fiberfill.” They are not a clear disavowal of claim scope. The extrinsic evidence of record, in the form of technical dictionaries, supports construing “fiberfill” as a purely synthetic fiber because it is consistently defined as such. The definitions given in all but one of the dictionaries relied upon by the trial court define “fiberfill” as either a synthetic fiber or as a man-made material used as a filler for various items. The contradictory source was a chemical dictionary that simply gave two examples of natural materials that could constitute “fiberfill.” Other extrinsic industry sources examined by the trial court lend support to construing “fiberfill” as a synthetic or polyester fill material. The United States Customs Service, in its publication “Fiber Trade Names and Generic Terms” Nov. 1999, lists “Fiberfill” as a “Fiber Trade Name” for the generic term “Polyester.” Similarly, the United States International Trade Commission issued a ruling that polyester staple fiber is known in the industry as “fiber for fill.” Certain Polyester Staple Fiber from Korea and Taiwan, Investigation Nos. 731-TA-825-826 (Final) (May 5, 2000). While we adhere to the adage that limitations from the specification must not be imported into the claims, see, e.g., Nazomi Communications, Inc. v. ARM Holdings, PLC, 403 F.3d 1364, 1369 (Fed. Cir. 2005), based upon the teachings of the specification, one of ordinary skill in the textile manufacturing industry would understand that commercial “fiberfill batting material” is made of synthetic or polyester fibers. The combined teachings within the specification of the ’977 patent, the patents incorporated by reference, and the consistent interpretations in the industry publications would lead one skilled in the art to this conclusion. Therefore, we affirm the district court’s 05-1088 11 determination that the accused Techniche products do not literally infringe claims 1 and 9 of the ’977 patent. However, “[t]he doctrine of equivalents allows the patentee to claim those insubstantial alterations that were not captured in drafting the original patent claim but which could be created through trivial changes.” Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 733 (2002) (“Festo II”). Infringement under the doctrine of equivalents requires that the accused product contain each limitation of the claim or its equivalent. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 40 (1997). An element in the accused product is equivalent to a claim limitation if the differences between the two are insubstantial. The analysis focuses on whether the element in the accused device “performs substantially the same function in substantially the same way to obtain the same result” as the claim limitation. Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 608 (1950) (internal quotation omitted). Prosecution history estoppel can prevent a patentee from relying on the doctrine of equivalents when the patentee relinquishes subject matter during the prosecution of the patent, either by amendment or argument. Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d 1373, 1376-77 (Fed. Cir. 1999). “The doctrine of prosecution history estoppel limits the doctrine of equivalents when an applicant makes a narrowing amendment for purposes of patentability, or clearly and unmistakably surrenders subject matter by arguments made to an examiner.” Salazar, 2005 U.S. App. LEXIS 13517, at *6; see Festo II, 535 U.S. at 736 (narrowing amendment for purposes of patentability); Eagle Comtronics, Inc. v. Arrow Communication Labs., Inc., 305 F.3d 1303, 1316 (Fed. Cir. 2002) (argument-based estoppel). 05-1088 12 While at least one claim limitation was added here to overcome an anticipation rejection during the prosecution of the patent, Techniche does not allege amendment-based estoppel. Instead it asserts argument-based estoppel. To invoke argument-based estoppel, the prosecution history “must evince a clear and unmistakable surrender of subject matter.” Pharmacia, 170 F.3d at 1377 (internal quotation omitted). To determine if subject matter has been relinquished, an objective test is applied, inquiring “whether a competitor would reasonably believe that the applicant had surrendered the relevant subject matter.” Cybor Corp., 138 F.3d at 1457. We do not see the clear and unmistakable surrender of subject matter required to invoke argument-based prosecution history estoppel. During prosecution of the ’977 patent AquaTex stated that “the ’297 Patent fails to disclose or suggest the fiberfill batting and polymeric fibers and/or particles of the composite material in the claimed method.” Techniche and the trial court believe this argument limited claim coverage of fiberfill to only synthetic fibers. The argument, however, does not address or even relate to the composition of the fiberfill batting. Rather, it was based on the ’297 patent not teaching or suggesting the overall composition of materials, or the use of the disclosed compress to cool a person through evaporation. The compress of the ’297 patent was designed to retain much of its liquid over long periods of time, thus giving the material a high heat capacity and a high insulative value. ’297 patent, col. 6, ll. 24-55. The claimed invention of the ’977 patent achieves cooling through evaporation. The arguments made during prosecution, and the corresponding addition of the claim limitation “by evaporation,” indicate that AquaTex was distinguishing the overall method of cooling of its claimed invention from that of the ’297 patent. The subject 05-1088 13 matter surrendered by the narrowing amendment bears no relation to the composition of the fiberfill batting material. There is no indication in the prosecution history whether or not AquaTex agreed or disagreed with the examiner’s statement that the fiberfill found in the prior art comprised natural fibers. Thus, the trial court erred in holding that prosecution history estoppel barred AquaTex from asserting infringement under the doctrine of equivalents. Upon remand the trial court must consider whether or not each limitation of the claims in dispute, or its equivalent, is present in the accused Techniche products. See Graver Tank, 339 U.S. at 608. Conclusion Accordingly, the judgment of the United States District Court for the Middle District of Tennessee is affirmed-in-part, reversed-in-part, and the case is remanded for further proceedings consistent with this opinion. COSTS No costs. AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED United States Court of Appeals for the Federal Circuit 04-1285 AT&T CORP., Plaintiff-Appellee, v. MICROSOFT CORPORATION, Defendant-Appellant. Stephen C. Neal, Cooley Godward LLP, of Palo Alto, California, argued for plaintiff-appellee. With him on the brief were Jonathan G. Graves and Nathan K. Cummings, of Reston, Virginia. Of counsel on the brief was Laura A. Kaster, AT&T Corp., of Bedminster, New Jersey. Dale M. Heist, Woodcock Washburn LLP, of Philadelphia, Pennsylvania, argued for defendant-appellant. With him on the brief were David R. Bailey and Lynn B. Morreale. Of counsel on the brief were James H. Carter and James T. Williams, Sullivan & Cromwell LLP, of New York, New York, and Thomas Andrew Culbert, Microsoft Corporation, of Redmond, Washington. John D. Vandenberg, Klarquist Sparkman, LLP, of Portland, Oregon, for amici curiae Wacom Technology Corporation, et al. Frank E. Scherkenbach, Fish & Richardson P.C., of Boston, Massachusetts, for amici curiae Adobe Systems, Inc., et al. With him on the brief was Kurt L. Glitzenstein. Of counsel on the brief was Jennifer K. Bush, of San Diego, California. Appealed from: United States District Court for the Southern District of New York Judge William H. Pauley III United States Court of Appeals for the Federal Circuit 04-1285 AT&T CORP., Plaintiff-Appellee, v. MICROSOFT CORPORATION, Defendant-Appellant. ____________________ DECIDED: July 13, 2005 ____________________ Before MAYER, LOURIE, and RADER, Circuit Judges. Opinion for the court filed by Circuit Judge LOURIE. Dissenting opinion filed by Circuit Judge RADER. LOURIE, Circuit Judge. Microsoft Corporation (“Microsoft”) appeals from the judgment of the United States District Court for the Southern District of New York in favor of AT&T Corp. (“AT&T”), holding that Microsoft was liable for infringement of AT&T’s United States Reissue Patent 32,580 under 35 U.S.C. § 271(f) for copies of the Windows® operating system that had been replicated abroad from a master version sent from the United States. AT&T Corp. v. Microsoft Corp., No. 01-CV-4872 (S.D.N.Y. Mar. 5, 2004). We affirm. BACKGROUND To facilitate international distribution of its flagship product, Microsoft supplies a limited number of master versions of the Windows® software to foreign computer manufacturers and authorized foreign “replicators,” who, pursuant to their licensing agreements with Microsoft, replicate the master versions in generating multiple copies of Windows® for installation on foreign-assembled computers that are then sold to foreign customers. The master versions are created in the United States and are sent abroad on so-called “golden master” disks or via electronic transmissions. The master versions of Windows® thus exported incorporate certain speech codecs,1 which, when installed on a computer, are alleged to infringe AT&T’s ’580 patent. During the course of AT&T’s suit against Microsoft for patent infringement, Microsoft moved in limine to exclude evidence of purported liability under 35 U.S.C. § 271(f) arising from foreign sales of Windows®. In support of its motion, Microsoft argued that: (1) software is intangible information such that it could not be a “component” of a patented invention within the meaning of § 271(f); and (2) even if the Windows® software were a “component,” no actual “components” had been “supplied” from the United States as required by § 271(f) because the copies of Windows® installed on the foreign-assembled computers had all been made abroad. By stipulation, the parties subsequently converted Microsoft’s motion in limine into a motion for partial summary judgment of noninfringement under § 271(f), which the district court denied on the basis that neither the jurisprudence surrounding § 271(f) nor 1 A “speech codec” is a software program that codes a speech signal into a more compact form, and decodes it back into a signal that sounds like the original. (Am. Compl. 14; J.A. 142). 04-1285 2 its legislative history supported Microsoft’s reading of the words “component” and “supplied.” Reasoning that the patentability of software was well-established and that the statute did not limit “components” to tangible structures, the district court rejected Microsoft’s argument that software could not be a “component” of a patented invention under § 271(f). As for copies made abroad from a master version sent from the United States, the district court ruled that such copies were not shielded from § 271(f) in light of the statute’s purpose of prohibiting the circumvention of infringement through exportation. The parties thereafter agreed to the entry of a stipulated final judgment holding Microsoft liable for infringement under § 271(f), while expressly reserving Microsoft’s right to appeal that issue. This appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). DISCUSSION On appeal, Microsoft argues that the district court erred in its determination of infringement under § 271(f), insisting that the master versions of the Windows® software that it exports for copying abroad are not “components” within the meaning of § 271(f). It also argues that liability under § 271(f) should not attach to the copies of Windows® made abroad because those copies are not “supplied” from the United States. The first question, i.e., whether software may be a “component” of a patented invention under § 271(f), was answered in the affirmative in Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005), which issued while the instant appeal was pending. In that case, we held that “[w]ithout question, software code alone qualifies as an invention eligible for patenting,” and that the “statutory language did not 04-1285 3 limit section 271(f) to patented ‘machines’ or patented ‘physical structures,’” such that software could very well be a “component” of a patented invention for the purposes of § 271(f). Id. at 1339. The remaining question, then, is whether software replicated abroad from a master version exported from the United States—with the intent that it be replicated—may be deemed “supplied” from the United States for the purposes of § 271(f). That question is one of first impression, the answer to which turns on statutory interpretation, an issue of law that we review de novo. Romero v. United States, 38 F.3d 1204, 1207 (Fed. Cir. 1994). The statute at issue, 35 U.S.C. § 271(f), provides that: (1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. (2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. 35 U.S.C. § 271(f) (2000) (emphases added). In its briefs, Microsoft maintains that no liability attaches under § 271(f) for foreign-replicated copies of Windows® because they are not “supplie[d] or cause[d] to be supplied in or from the United States.” According to Microsoft, a foreign-replicated copy made from a master version supplied from the United States has actually been 04-1285 4 “manufactured” abroad by encoding a storage medium with the Windows® software. We disagree that no liability attaches. When interpreting a statutory provision “[w]e start, as always, with the language of the statute,” giving the words “their ordinary, contemporary, common meaning, absent an indication Congress intended them to bear some different import.” Williams v. Taylor, 529 U.S. 420, 431 (2000) (internal quotation marks and citations omitted). As the statute sets forth no specific definition of the word “supplied,” we accordingly look to its “ordinary, contemporary, common meaning,” which is necessarily context-dependent. In the present case, § 271(f) is being invoked in the context of software distribution. Therefore, in order for us to properly construe the “supplie[d] or cause[d] to be supplied in or from the United States” requirement, we must look at the way software is typically “supplied.” Given the nature of the technology, the “supplying” of software commonly involves generating a copy. For example, when a user downloads software from a server on the Internet, the server “supplies” the software to the user’s computer by transmitting an exact copy. Uploading a single copy to the server is sufficient to allow any number of exact copies to be downloaded, and hence “supplied.” Copying, therefore, is part and parcel of software distribution. Accordingly, for software “components,” the act of copying is subsumed in the act of “supplying,” such that sending a single copy abroad with the intent that it be replicated invokes § 271(f) liability for those foreign-made copies.2 2 The dissent grounds its disagreement on a purported distinction between the statutory term “supplies” and such terms as “copying,” “replicating,” or “reproducing.” Whatever the distinction in other contexts, we are interpreting a statutory term in the 04-1285 5 context of the facts before us. To decide otherwise would emasculate § 271(f) for software inventions. Obtaining foreign patents would surely alleviate some avoidance of American law, but we must construe our statutes irrespective of the existence or nonexistence of foreign patents. Indeed, Microsoft has taken full advantage of the replicable nature of software to efficiently distribute Windows® internationally. At the same time, however, Microsoft posits that § 271(f) liability should attach only to each disk that is shipped and incorporated into a foreign-assembled computer. See Tr. of Dec. 12, 2003 Hearing, at 16:10-17 (J.A. 359). We reject this theory of liability as it fails to account for the realities of software distribution. “[T]he appellate process is not a mere academic exercise,” Rosemount, Inc. v. Beckman Instruments, Inc., 727 F.2d 1540, 1543 (Fed. Cir. 1984), and we cannot disregard the nature of the relevant technology and business practices underlying a particular litigation. It is inherent in the nature of software that one can supply only a single disk that may be replicated—saving material, shipping, and storage costs—instead of supplying a separate disk for each copy of the software to be sold abroad. All of such resulting copies have essentially been supplied from the United States. Where there are competing interpretations of a statute that imposes liability for certain acts, an interpretation that allows liability to attach only when a party acts in an unrealistic manner is unlikely to be correct. See Haggar Co. v. Helvering, 308 U.S. 389, 394 (1940) (“A literal reading of [a statute] which would lead to absurd results is to be avoided . . . .”). We therefore reject Microsoft’s reading of § 271(f). We also reject Microsoft’s argument that Pellegrini v. Analog Devices, Inc., 375 F.3d 1113 (Fed. Cir. 2004), compels reversal. Pellegrini held that liability under § 271(f) may exist only where a component itself—as opposed to instructions for manufacturing 04-1285 6 the component or management oversight—has been “supplie[d] or cause[d] to be supplied in or from the United States.” Pellegrini, 375 F.3d at 1118. In the present case, what is being supplied abroad is an actual component, i.e., the Windows® operating system, that is ready for installation on a computer to form an infringing apparatus—not instructions to foreign software engineers for designing and coding Windows®. Thus, Pellegrini does not control this case. Additionally, we cannot accept Microsoft’s suggestion that software sent by electronic transmission must be treated differently for purposes of § 271(f) liability from software shipped on disks, see Tr. of Dec. 12, 2003 Hearing, at 8:8-17 (J.A. 351), as it would amount to an exaltation of form over substance. Liability under § 271(f) does not depend on the medium used for exportation: a disk is merely a container that facilitates physical handling of software, much like bottles for liquids or pressurized cylinders for gases. As we emphasized in Eolas, the applicability of § 271(f) is not limited to “structural or physical” components. Eolas, 399 F.3d at 1339 (“[E]very component of every form of invention deserves the protection of section 271(f).”). Therefore, whether software is sent abroad via electronic transmission or shipped abroad on a “golden master” disk is a distinction without a difference for the purposes of § 271(f) liability. Liability under § 271(f) is not premised on the mode of exportation, but rather the fact of exportation. Our interpretation of “supplie[d] or cause[d] to be supplied in or from the United States” in the context of software comports with Congress’s motivation for enacting § 271(f). It is a well-established principle that “[i]n expounding a statute, we must . . . 04-1285 7 look to the provisions of the whole law, and to its object and policy.” United States v. Heirs of Boisdore, 49 U.S. (8 How.) 113, 122 (1850). In 1984, Congress enacted § 271(f) in response to the Supreme Court’s ruling in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), that exposed a loophole in § 271 that allowed potential infringers to avoid liability by manufacturing the components of patented products in the United States and then shipping them abroad for assembly. As explained in the Congressional Record: [Section 271(f)] will prevent copiers from avoiding U.S. patents by supplying components of a patented product in this country so that the assembly of the components may be completed abroad. This proposal responds to the United States Supreme Court decision in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), concerning the need for a legislative solution to close a loophole in patent law. H.R. 6286, Patent Law Amendments Act of 1984, 130 Cong. Rec. 28069 (Oct. 1, 1984). At the time of its enactment, § 271(f) was touted as a “housekeeping-oriented” measure, without which “the patent system would not be responsive to the challenges of a changing world and the public would not benefit from the release of creative genius.” Id. However, it is clear from the legislative history that § 271(f), which “close[d] a loophole,” was remedial in nature, such that it “should be construed broadly to effectuate its purposes.” Tcherepnin v. Knight, 389 U.S. 332, 336 (1967). Congress obviously intended the statute to have an extraterritorial effect to the extent that the exportation was facilitated by acts in the United States, and the acts at issue here originating from the United States can be understood to be similarly within the meaning of the statute. Were we to hold that Microsoft’s supply by exportation of the master versions of the Windows® software—specifically for the purpose of foreign replication—avoids infringement, we would be subverting the remedial nature of § 271(f), permitting a 04-1285 8 technical avoidance of the statute by ignoring the advances in a field of technology—and its associated industry practices—that developed after the enactment of § 271(f). It would be unsound to construe a statutory provision that was originally enacted to encourage advances in technology by closing a loophole, in a manner that allows the very advances in technology thus encouraged to subvert that intent. Section 271(f), if it is to remain effective, must therefore be interpreted in a manner that is appropriate to the nature of the technology at issue. For this reason, we find Microsoft’s lock-and-key hypothetical, in which a single master key is sent abroad for mass replication, to be unpersuasive and irrelevant to this case. A lock-and-key assembly is a different type of technology from software, with different uses, such that its mode of mass production and consequent manner of supply abroad could very well be different from the way Microsoft conveniently hypothesizes it to be. While it is clear that a software manufacturer would want several million exact copies of a specific software program generated abroad for distribution, it is unclear why a lock-and-key manufacturer would want several million exact copies of a specific key made, as the point of having a lock-and-key assembly is to allow access control by a few keys. We prefer an interpretation of § 271(f) that is informed by actual industry practices, not by hypothetical scenarios that have no bearing on the technical realities of the invention at issue. Finally, Microsoft’s impassioned recitation of a parade of horribles that may befall the domestic software industry—such as the relocation of manufacturing facilities overseas—provides an insufficient basis for reaching a different result in this case. After all, the enactment of § 271(f) could have been similarly thought to result in the 04-1285 9 , 458 U.S. 564, 576 (1982). Therefore, “[t]he remedy for any dissatisfaction with the results in particular cases lies with Congress” and not with this court. Id. export of jobs, and Congress still enacted that provision. Moreover, possible loss of jobs in this country is not justification for misinterpreting a statute to permit patent infringement. More importantly, however, “[i]t is enough that Congress intended that the language it enacted would be applied as we have applied it.” Griffin v. Oceanic Contractors, Inc. We have considered Microsoft’s other arguments and conclude that they are either unpersuasive or unnecessary for resolution of this appeal. CONCLUSION For the foregoing reasons, the judgment of the district court holding Microsoft liable under § 271(f) is AFFIRMED. 04-1285 10 United States Court of Appeals for the Federal Circuit 04-1285 AT&T CORP., Plaintiff-Appellee, v. MICROSOFT CORPORATION, Defendant-Appellant. RADER, Circuit Judge, dissenting. This court today determines that supplying a single “component” of a patented invention from the United States gives rise to endless liability in the United States under § 271(f) for products manufactured entirely abroad. To my eyes, this judgment disregards the existing international scheme of patent law with potential consequences beyond a “parade of horribles [in] the domestic software industry.” Therefore, although agreeing that software may be a component of a patented invention under § 271(f) and that electronic transmissions of software from the United States must receive the same treatment as software shipped from the United States on disks, I respectfully dissent from the proposition that foreign manufacture of a mere component of a patented product creates liability in the United States under § 271(f). As noted by this court, section 271(f) imposes liability on anyone who “without authority supplies . . . from the United States . . . the components of a patented invention . . . in such a manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent . . . .” Today’s judgment turns on the meaning of “supplies.” This court purports to construe that term according to its “ordinary, contemporary, common meaning.” The ordinary meaning of “supplies,” however, does not include “copying,” “replicating,” or “reproducing” – in effect “manufacturing.” The act of supplying is separate and distinct from copying, reproducing, or manufacturing. Thus, this court provides extraterritorial expansion to U.S. law by punishing under U.S. law “copying” that occurs abroad. While copying in Düsseldorf or Tokyo may indeed constitute infringement, that infringement must find its remedy under German or Japanese law. Each manufacture of a patented product constitutes a separate and distinct act of infringement. Microsoft “supplied” a master disc to New York, Düsseldorf, and Tokyo. The district court properly assessed damages against Microsoft under § 271(a) for each copy of the master manufactured and implemented into an infringing product in New York.1 Similarly, section 271(f) attaches liability to each individual export from the United States of components of an incomplete invention for assembly abroad. As for manufacturing copies in Düsseldorf and Tokyo for the German and Japanese markets, those acts create liability only under German or Japanese law. Nonetheless, this court extends § 271(f) to cover extraterritorial copying in Düsseldorf and Tokyo. This extraterritorial expansion of U.S. patent law contravenes the precedent of this court and the Supreme Court that expressly confines the rights conferred by Title 35 to the United States and its Territories. See Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641, 650 (1915) (“The right conferred by a patent under our law is confined to the 1 Microsoft might also be liable for supplying the master to Düsseldorf and Tokyo if copies made in those overseas locations are sold back into the U.S. market. See 35 U.S.C. § 217(a) & (c) (prohibiting importing into the United States patented inventions or components thereof). 04-1285 2 , 208 U.S. 260, 265 (1908))); United States and its Territories (Rev. Stat., § 4884) and infringement of this right cannot be predicated on acts wholly done in a foreign country.” (citing United Dictionary Co. v. Merriam Co.accord Int’l Rectifier Corp. v. Samsung Elecs. Co., 361 F.3d 1355, 1360 (Fed. Cir. 2004); Pellegrini v. Analog Devices, Inc., 375 F.3d 1113, 1117 (Fed. Cir. 2004); Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1251 (Fed. Cir. 2000); see Waymark Corp. v. Porta Sys. Corp., 245 F.3d 1364, 1367-68 (Fed. Cir. 2001) (holding that liability under § 271(f) attaches with mere shipment of the component from the United States and does not consider the presence or absence of acts occurring abroad). Again this extraterritorial expansion flows from this court’s broad construction of “supplies.” This court reasons that the “nature of the technology” justifies a different, unordinary, and uncommon construction of that term. Thus, this court distinguishes intangible software components from tangible components on the grounds that “the ‘supplying’ of software commonly involves generating a copy.” To the contrary, copying and supplying are separate acts with different consequences – particularly when the “supplying” occurs in the United States and the copying occurs in Düsseldorf or Tokyo. As a matter of logic, one cannot supply one hundred components of a patented invention without first making one hundred copies of the component, regardless of whether the components supplied are physical parts or intangible software. Thus, copying and supplying are different acts, and one act of “supplying” cannot give rise to liability for multiple acts of copying. The court’s proposition today that “the ‘supplying’ of software commonly involves generating a copy” does not actually distinguish software components from physical 04-1285 3 components of other patented inventions. The only true difference between making and supplying software components and physical components is that copies of software components are easier to make and transport. The ease of copying a patented component is not the proper basis for making distinctions under § 271(f). Possibly recognizing defects in its reasoning, this court limits its novel uncommon construction of “supplies” to “software ‘components,’ [because for those inventions] the act of copying is subsumed in the act of ‘supplying,’ . . . .” Rather than “according the same treatment to all forms of invention,” Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325, 1339 (2005) (citing TRIPS Agreement, Part II, Section 5 (1994) (“Patents shall be available and patent rights enjoyable without discrimination as to the place of invention[ ] [and] the field of technology . . . .”) (emphases added)), this court creates a new rule that foreign copying of a component of a patented invention shipped from the U.S. gives rise to liability in the U.S. Apparently this rule applies only to software inventions. This application of “supplies” solely to software components ignores this court’s case law that refuses to discriminate based on the field of technology. Id. The language of § 271(f) does not discriminate based on field or form of technology, yet this court invents such a distinction. This court also declines to treat software the same as other inventions because a literal application of § 271(f) “fails to account for the realities of software distribution . . . and [this court] cannot disregard the nature of the relevant technology and business practices underlying a particular litigation.” However, in Pellegrini an American corporation provided the instructions and corporate oversight that “cause[d] the components of the patented invention to be supplied,” but no part of the accused 04-1285 4 products ever entered or exited the United States. 375 F.3d at 1118. Thus, the production of the infringing products in Pellegrini was “facilitated by acts in the United States.” Despite economic harm to the plaintiff and economic benefit to the defendant both in the United States, this court strictly construed § 271(f) to “appl[y] only where components of a patent[ed] invention are physically present in the Untied States and then either sold or exported . . . .” Id. at 1117. This court should exercise the same restraint demonstrated in Pellegrini by refusing to broaden § 271(f) to accommodate the “nature of the relevant technology and business practices underlying a particular litigation.” In fact, the “realities of software distribution” or “nature of the relevant technology and business practices” theory amounts to the following: “section 271(f) liability attaches if this court perceives that the patented component is cheaper or more convenient to replicate abroad than to ship from the United States.” In sum, this “nature of the business” theory has no statutory support and may well not even be based on an accurate understanding of the nature of the software business. Furthermore, this court’s dismissal of Pellegrini because Microsoft supplied an actual component of the patented invention and not merely instructions as in Pellegrini does not reconcile the holding of Pellegrini with today’s ruling. Pellegrini holds that “the language of § 271(f) clearly contemplates that there must be an intervening sale or exportation; there can be no liability under § 271(f) unless components are shipped from the United States for assembly.” 375 F.3d at 1117. In the case before this court Düsseldorf and Tokyo distributors copy the components supplied from the United States and then install those copies into the infringing products. The German and Japanese 04-1285 5 manufacturers do not install the actual component “supplied” from the U.S. (the master disc). Instead, they install a copy made in Düsseldorf or Tokyo. Thus, under Pellegrini liability cannot attach under § 271(f) because the components actually assembled into the infringing products were never literally “shipped from the United States.” To my eyes, today’s ruling departs from the holding of Pellegrini. The majority also purports to construe § 271(f) to “comport with Congress’[s] motivation for enacting § 271(f).” Apart from the impossibility of divining Congressional intent divorced from the language of the law, this court’s reasoning misses the policy behind § 271(f). Congress enacted § 271(f) in response to the Supreme Court’s holding in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972). Deepsouth held that making and shipping component parts of a patented combination invention did not constitute “making” the patented invention in the United States. Id. at 527-29 (“We cannot endorse the view that the ‘substantial manufacture of the constituent parts of a machine’ constitutes direct infringement when we have so often held that a combination patent protects only against the operable assembly of the whole and not the manufacture of its parts.”). Thus, because Deepsouth was not “making” the invention in the United States before exportation, there was no direct infringer in the United States to enable a charge of contributory infringement. Id. at 527. Deepsouth let U.S. manufacturers escape infringement by making and exporting less than the complete patented invention. Section 271(f) closed that loophole by attaching liability to U.S. manufacturers for making and exporting components of the patented invention. Nothing in § 271(f) or its enacting documents expresses an intent to attach liability to manufacturing activities occurring wholly abroad. This court’s ruling, however, 04-1285 6 does exactly that: It holds Microsoft liable for the activities of foreign manufacturers making copies of the patented component abroad. To the contrary, § 271(f) protects only components “supplied in or from the United States.” This language limited § 271(f) to ensure it would not embrace manufacturing or copying activities occurring abroad. The “supplied in and from the United States” limitation would be wholly unnecessary, and indeed would contradict the intent of the law, if the law intended, as this court holds today, to regulate activities occurring in Düsseldorf or Tokyo. Had Congress intended to give extraterritorial effect to U.S. patent laws, it would have expressly stated so. Instead, Title 35 expressly limits liability under § 271(f) to activities occurring in the United States that result in the literal shipment of components “in or from the United States.” As a final refusal to confront the central issues of this case, the court today dismisses Microsoft’s lock-and-key hypothetical as “irrelevant,” as merely a scenario “without bearing on the technical realities.” To the contrary, just as computers easily can make copies of software components of patented computer products, key replication machines easily can make copies of the key component of a patented lock product. A computer needs a master copy to replicate the software; similarly, a key replication machine needs a master copy to replicate the key. Thus, under a fair presentation of the hypothetical, a U.S. manufacturer supplies a single master key of a patented lock invention from the United States. Foreign manufacturers then copy that key for foreign sale as part of the patented lock product.2 I doubt that the U.S. 2 The court’s dismissal of the “key” hypothetical is easily addressed by adjusting the facts of the hypothetical. Consider a lock-and-key combination that recognizes the voice of the key’s rightful owner. Only after confirming the identity of the 04-1285 7 manufacturer who supplied the single master key would be liable under § 271(f) for the multiple infringing lock products manufactured and sold abroad. Yet this court creates liability under indistinguishable circumstances. owner does the lock expose the opening for the key and the key expose the teeth necessary to rotate the locking mechanism. Thus, each lock and key may have the same shape, thereby decreasing manufacturing costs, and yet allow access to a limited number of persons. Other possible scenarios further highlight difficulties with this court’s holding. For example, this court’s holding would seem to impose liability under § 271(f) for foreign-manufactured copies on an individual who purchased a copy of AT&T’s patented software and then shipped it overseas knowing that it would be copied and sold in Düsseldorf or Tokyo. The same problem might arise if the individual ships the purchased software to Düsseldorf with no intention of making further copies, but the Düsseldorf distributor of its own accord then makes and sells foreign copies. Before this opinion, the law would have suggested that AT&T would need to resort to German law and courts to determine any infringement for the copies manufactured and sold in Düsseldorf, but apparently this court purports to change that basic tenet of patent law. This court reinforces one point several times, namely that its judgment reaches a just result by imposing liability for multiple infringing acts by foreign manufacturers on a U.S. “supplier” of a single patented component. This emphasis suggests that AT&T might otherwise have no remedy for infringement occurring wholly outside the United States. AT&T, however, is not left without remedy. AT&T can protect its foreign markets from foreign competitors by obtaining and enforcing foreign patents. Section 271(f) protects foreign markets from domestic competitors. Section 271(f) does not, or at least did not until today, protect foreign markets from foreign competitors. This 04-1285 8 , 375 F.3d at 1117. court’s expansion of § 271(f) to offer protection to foreign markets from foreign competitors distorts both the language and the policy of the statute. This court should accord proper respect to the clear language of the statute and to foreign patent regimes by limiting the application of § 271(f) to components literally “shipped from the United States.” Pellegrini For the foregoing reasons, I must respectfully dissent. United States Court of Appeals for the Federal Circuit 04-1422, -1610 SANDISK CORPORATION, Plaintiff-Appellant, v. MEMOREX PRODUCTS, INC. (formerly doing business as Memtec Products, Inc.), Defendant-Appellee, and PRETEC ELECTRONICS CORPORATION, Defendant-Appellee, and POWER QUOTIENT INTERNATIONAL CO., LTD., Defendant, and RITEK CORPORATION, Defendant-Appellee. Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC, argued for plaintiff-appellant. With him on the brief were Thomas H. Jenkins, of Washington, DC, and Erik R. Puknys, of Palo Alto, California. Of counsel on the brief were Michael A. Ladra and James C. Yoon, Wilson Sonsini Goodrich & Rosati P.C., of Palo Alto, California; and Michael A. Berta and Ariana M. Chung-Han, of San Francisco, California. Jon B. Streeter, Keker & Van Nest, LLP, of San Francisco, California, for defendant-appellee Memorex Products, Inc. (formerly doing business as Memtec Products, Inc.). Of counsel was G. Whitney Leigh. -2- Ronald C. Finley, Mount & Stoelker, P.C., of San Jose, California, argued for defendant-appellee Pretec Electronics Corporation. With him on the brief were Daniel S. Mount, Alfredo A. Bismonte, and Justin T. Beck. Alan D. Smith, Fish & Richardson P.C., of Boston, Massachusetts, argued for defendant-appellee Ritek Corporation. With him on the brief was Charles H. Sanders. Appealed from: United States District Court for the Northern District of California Chief Judge Vaughn R. Walker United States Court of Appeals for the Federal Circuit 04-1422, -1610 SANDISK CORPORATION, Plaintiff-Appellant, v. MEMOREX PRODUCTS, INC. (formerly doing business as Memtec Products, Inc.), Defendant-Appellee, and PRETEC ELECTRONICS CORPORATION, Defendant-Appellee, and POWER QUOTIENT INTERNATIONAL CO., LTD., Defendant, and RITEK CORPORATION, Defendant-Appellee. _______________________ DECIDED: July 8, 2005 _______________________ Before RADER, GAJARSA, and DYK, Circuit Judges. GAJARSA, Circuit Judge. SanDisk appeals the district court’s judgment of no infringement in favor of Memorex, Pretec, and Ritek. The district court granted summary judgment that various Flash memory devices made by these defendants did not infringe independent claims 1 or 10 – or various claims depending therefrom – in SanDisk’s U.S. Patent No. 5,602,987 to Flash EEprom systems. The trial court ruled that the claims at bar did not contemplate or allow for a Flash memory system in which some EEprom memory cells are grouped into sectors that are not partitioned into user and overhead data portions. As the record showed that the defendants’ products contained sectors of memory cells lacking such partitions, the trial court determined that these defendants could not infringe. We conclude that the trial court misread the claims at issue, and erred in finding a prosecution disclaimer in support of its reading. We further reject the contention that judicial estoppel forecloses SanDisk’s claim construction arguments on appeal. Thus, we vacate the judgment and remand for further proceedings. I. A. SanDisk Corp. (“SanDisk”) owns U.S. Patent No. 5,602,987 to Flash EEprom systems (“the ’987 patent”).1 The ’987 patent issued on February 11, 1997, and describes methods for using EEproms as non-volatile solid state computer memory. A non-volatile memory retains its contents even after power is shut off. This “flash memory” has many applications, including the memory used in digital cameras, PDAs, memory sticks or MP3 players. 1 Electrically erasable programmable read only memory (EEprom). 04-1422, -1610 - 2 - Flash EEproms can sustain only a limited number of writes and erases before they fail. The ’987 system and methods include innovations directed at improving flash memory performance and extending EEprom life. The patent focuses, in particular, on improving the memory system architecture over the prior art. The memory architecture generally concerns how the memory system solves the problem of storing or retrieving specific information from the memory cells. See ’987 patent, col. 5, ll. 4-21. If the architecture can be designed to minimize the number of times each EEprom memory cell is erased and rewritten, then that solution can extend the useful life of the integrated circuit. If the architecture allows for faster operations, then the EEprom performance will improve. The ’987 patent addresses these issues in at least two ways relevant to this appeal. First, it introduces a multi-sector erase function. In earlier systems either every memory cell in an EEprom would be written or erased in one operation, or only a single “sector” could be erased in one operation. See ’987 patent, col. 4, ll. 46-63. Where not all the information was to be erased, systems that operated only on the entire chip had to read that information out, store it in a temporary location (typically a different, volatile memory or RAM), erase the entire chip, and then write the information back into the EEprom memory. Id. The other approach, operating sequentially on individual sectors, proved time-consuming. The ’987 patent describes a different way of organizing the memory storage, and in particular arranges memory cells into “sectors” akin to the physical “sectors” used for storage on magnetic disk drives. The ’987 patent allows the operator to select multiple sectors for simultaneous erase. The defining feature of the “sector” of memory cells is 04-1422, -1610 - 3 - that all cells within the sector are erased together. See ’987 patent, col. 1, ll. 65-66 (“[A]n array of Flash EEprom cells on a chip is organized into sectors such that all cells within each sector are erasable at once.”); id. at col. 5, ll. 9-11 (“The memory in each Flash EEprom chip is partitioned into sectors where all memory cells within a sector are erasable together.”). Put differently, the “sector” is the “basic unit of erase.” The ’987 patent illustrates this architecture, as implemented on a single EEprom or integrated circuit (chip), in Fig. 3A: Although the block diagram in Fig. 3A illustrates the description of multiple sectors on a single chip, the multi-sector erase feature is not limited to individual EEproms. As the ’987 patent notes, “the selected sectors [for erase] may be confined to one EEprom chip or be distributed among several chips in a system. The sectors that were selected will all be erased together.” ’987 patent, col. 5, ll. 16-19. Because this allows more intelligent use of the memory, avoiding needless erases, it improves performance and extends the operational life of the EEproms. As the patent explains, “[t]his is faster and more efficient than prior art schemes where all the sectors must be erased every time or only one sector at a time can be erased. The invention further 04-1422, -1610 - 4 - allows any combination of sectors selected for erase to be deselected and prevented from further erasing during the erase operation.” ’987 patent, col. 2, ll. 4-7. Second, the architecture described in the ’987 patent further requires “partitioning” the “sectors” into at least two components – one for “user data,” and a second for “overhead.” “User data” means the information that the processor stores or on which it operates. “Overhead data” refers to administrative information used by the memory controller, such as data address information (typically the information included in a header), memory cell defect maps, error correction code, and so on. The memory allocation in a “typical” sector is illustrated in Fig. 5: SanDisk argues that this feature “improves the reliability of Flash EEprom memory systems.” The written description explains, The memory architecture has a typical sector 401 organized into a data portion 403 and a spare (or shadow) portion 405. The data portion 403 is memory space available to the user. The spare portion 405 is further organized into an alternative defects data area 407, a defect map area 409, a header area 411 and an ECC and others area 413. These areas contain information that could be used by the controller to handle the defects and other overhead information such as headers and ECC. ’987 patent, col. 8, ll. 43-50. 04-1422, -1610 - 5 - B. In 1998 SanDisk accused Lexar Media Inc. (“Lexar”) of infringing claims 1 and 10 of the ’987 patent. The action was assigned to Judge Breyer in the Northern District of California. On March 4, 1999, Judge Breyer issued a claim construction order interpreting the “user data and overhead data portions.” He expressly limited the order to “those terms and issue[s] discussed by both parties in their memoranda and at the claim construction hearing.” SanDisk Corp. v. Lexar Media, Inc., No. C 98-01115 CRB, 1999 WL 129512, at *2 (N.D. Cal. Mar. 4, 1999). With that caveat, Judge Breyer ruled that the partitioning and user data / over head data limitations meant that Each non-volatile memory sector must have at least one user data portion and one overhead data portion, but is not limited to only one data user portion and only one overhead data portion. Id. at *3. SanDisk eventually obtained a judgment of infringement against Lexar. C. In October 2001, SanDisk sued four Flash memory system manufacturers: Memorex Products, Inc. (“Memorex”); Pretec Electronics Corp. (“Pretec”); Ritek Corp. (“Ritek”); and Power Quotient International Co., Ltd., for infringing the ’987 patent, claims 1 and 10 (and various dependent claims). In due course Power Quotient was dismissed from suit. SanDisk sought a preliminary injunction based on Judge Breyer’s claim construction. The defendants opposed, and the trial court denied the motion. In assessing the partitioning limitation, the trial court heavily relied on the prosecution history: 04-1422, -1610 - 6 - SanDisk specifically limited its claim to include only those devices in which each sector within a memory cell array contains both overhead and user data. SanDisk cannot now argue that only some of the sectors of a memory cell array need to contain user data and overhead data. On September 30, 2003, the district court construed claims 1 and 10 to require that every cell in the memory device be grouped into a sector, and every sector be partitioned into user and overhead data portions. See SanDisk Corp. v. Memorex Prods., Inc., No. C-01-4063 VRW, slip. op. at 34 (N.D. Cal. Apr. 20, 2004) (“Pretec SJ Order”) (“[T]he court’s claim construction requires all sectors within the memory array to be partitioned.”). Although the trial court’s claim construction considered the claim language and the written description, the court relied primarily on a finding of prosecution disclaimer. Id. at 28 (“[T]he court finds that SanDisk clearly and unmistakably disclaimed coverage of systems in which only some of the sectors in the array were partitioned into at least user data and overhead portions.”); see also id. at 16-29. With that claim construction the trial court granted Ritek summary judgment of non-infringement, because Ritek had presented evidence that their products include some sectors that are not partitioned. Pretec and Memorex moved for summary judgment on the same ground. The court granted Pretec’s motion on April 20, 2004, and Memorex’s motion on May 13, 2004, after each party supplemented the record with evidence about their devices. The trial court entered judgment of no infringement. SanDisk timely appealed. Ritek and Pretec separately oppose. Memorex joins in Pretec’s opposition. Pretec adopts Ritek’s arguments in opposition by reference, but did not file a separate joinder. The court has jurisdiction under 28 U.S.C. § 1295(a)(1) (2000). 04-1422, -1610 - 7 - II. The court reviews de novo the trial court’s summary judgment of no infringement. Hilgraeve Corp. v. McAfee Assocs., Inc., 224 F.3d 1349, 1352 (Fed. Cir. 2000). Summary judgment is proper only if the movants are entitled to judgment as a matter of law, and no genuine issue of material fact requires a determination by a fact-finder. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). In this case there are no disputed material facts at issue. The judgment turns solely on claim construction, which the court reviews de novo. See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en banc). A. The court’s claim construction ascribes claim terms the meaning they would be given by persons of ordinary skill in the relevant art at the time of the invention. See 35 U.S.C. § 112; Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1116 (Fed. Cir. 2004). Claim construction begins with the language of the asserted claims. See Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). The relevant claim language in this case appears identically in independent claims 1 and 10. It provides, A method of operating a computer system including a processor and a memory system, wherein the memory system includes an array of non- volatile floating gate memory cells partitioned into a plurality of sectors that individually include a distinct group of said array of memory cells that are erasable together as a unit, comprising: providing said memory array and a memory controller within a card that is removably connectable to the computer system, said controller being connectable to said processor for controlling operation of the array when the card is connected to the computer system, 04-1422, -1610 - 8 - partitioning the memory cells within the individual sectors into at least a user data portion and an overhead portion . . . . ’987 patent, col. 16, ll. 24-37 (claim 1, emphases added); see also id. at col. 17, ll. 30-44 (claim 10). Although SanDisk also asserted claims 2, 5, 6, 12, and 15 of the ’987 patent, each depends from claim 1 or 10 and incorporates the forgoing limitations in relevant part. The parties do not dispute, and the trial court correctly noted, that the preamble recited above is limiting.2 Reviewing the partitioning requirement, the trial court concluded that claim 1 and claim 10 require every Flash EEprom memory cell within an actual device to be grouped into a sector that is partitioned into user and overhead data portions. SanDisk argues that this construction misreads the plain language of the claim. The argument proceeds on two levels. First, by its plain language, claims 1 and 10 require only that the claimed memory system contain some memory cells, grouped into sectors, partitioned into user and overhead data portions. Nothing in the claims precludes additional memory cell configurations, which need not contain such partitioned sectors. Second, claims 1 and 10 are self-evidently drawn to claimed methods. It is fully consistent with practicing the claimed invention to make additional, unclaimed use of Flash EEprom memory cells, so long as each limitation is satisfied. We agree. The invention is claimed using non-restrictive terminology. The memory system “includes” an array of “non-volatile floating gate memory cells” which are “partitioned 2 That is, because “when read in the context of the entire claim” the preamble “recites limitations of the claim . . . or . . . is ‘necessary to give life, meaning, and vitality’ to” claims 1 and 10, the trial court properly treated the language as limiting. Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1305 (Fed. Cir. 1999). 04-1422, -1610 - 9 - into a plurality of sectors.” The claimed method requires “partitioning the memory cells within the individual sectors into at least a user data portion and an overhead portion.” As a patent law term of art, “includes” means “comprising.” See Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1344-45 (Fed. Cir. 2003); Hewlett-Packard Co. v. Repeat-O-Type Stencil Mfg. Corp., Inc., 123 F.3d 1445, 1451 (Fed. Cir. 1997). Neither includes, nor comprising, forecloses additional elements that need not satisfy the stated claim limitations. Nor does the choice of articles—“an array” of memory cells, “a plurality of sectors,” “said array of memory cells,” “the memory cells,” or “the individual sectors”—compel a different conclusion. These groupings of Flash EEprom memory cells provide an antecedent basis for various steps of the claimed method, but nothing in their recitation excludes other configurations of memory cells on a physical device that, in some part, practices the claimed methods. Thus, nothing in the language of claims 1 or 10 prevents the use of Flash EEproms containing cells that are not grouped into partitioned sectors. B. SanDisk further argues that the ’987 patent specification is inconsistent with the trial court’s claim construction because, among other reasons, it excludes at least two preferred embodiments: one involving storing a sector defect map in Flash EEprom memory cells, and another involving using Flash EEprom cells as a write memory cache. As explained below, the court need only consider the sector defect map to conclude that SanDisk is correct. The court must always read the claims in view of the full specification. See Vitronics, 90 F.3d at 1582. A claim construction that excludes a preferred embodiment, 04-1422, -1610 - 10 - ’987 patent, col. 11, ll. 57-60. Although the defect map may be stored in spare, defect-free portions of the affected sector, at some point there will be too many defects to keep the defect map in that location. “Thus, it is preferable in another embodiment to locate the sector map in another memory maintained by the controller. moreover, “is rarely, if ever, correct.” Vitronics, 90 F.3d at 1583; see also C.R. Bard, Inc. v. U.S. Surgical Corp., 388 F.3d 858, 865 (Fed. Cir. 2004). The ’987 patent specification describes an embodiment involving a sector defect map, which, in brief, contains information mapping defective memory sectors into good ones. See The memory may be located in the controller hardware or be part of the Flash EEprom memory.” ’987 patent, col. 11, l. 65 – col. 12, l. 1 (emphasis added). SanDisk argues that because the sector defect map would contain only overhead data, the portions of the Flash EEprom memory used in the preferred embodiment would not be partitioned into user data and overhead data portions as required by according claims 1 or 10. As the district court’s claim construction would foreclose that possibility, the claim construction must be wrong. The trial court rejected this argument. It ruled, instead, The fact that the sector defect map contains only overhead data does not prove that the embodiment contemplates sectors with only overhead data. Although the sector defect map is composed entirely of overhead data, the court finds that the sector defect map is located entirely within the overhead portion of a single sector. We find this reasoning misplaced. In its brief to this court Ritek concedes that the sector defect map could be located in “a part of memory outside the array of sectors partitioned into a user data and overhead portions, i.e., in an unsectored part of the memory.” Ritek Br. at 43-44. If 04-1422, -1610 - 11 - Ritek is correct, then the trial court’s claim construction must be wrong. The claims must allow, instead, for Flash EEprom memory cells that are not sectored, or not partitioned, according to the claimed methods. But since Ritek concedes this point, and both Pretec and Memorex join Ritek’s argument, there is no dispute left for the court to resolve. In sum, the trial court’s speculative treatment of the preferred embodiment is unsupported by the patent specification, not grounded in the record, and contrary to the reading suggested by all parties. We conclude that SanDisk is correct in faulting the trial court’s claim construction. Ritek contends that the only sectors described in the ’987 patent specification are partitioned as illustrated in Fig. 5. Thus, Ritek concludes, the invention is directed only to partitioned sectors. We find this reasoning misplaced for at least two reasons. First, as noted above the language of claims 1 and 10 does not preclude other, unclaimed organizations of Flash EEprom memory cells. Thus, even if the court concluded that Fig. 5 shows the only partitioning consistent with the claimed methods that would not preclude use of other organizations in the memory system. Second, it is axiomatic that without more the court will not limit claim terms to a preferred embodiment described in the specification. Laitram Corp. v. Cambridge Wire Cloth Co., 863 F.2d 855, 865 (Fed. Cir. 1988) (“References to a preferred embodiment, such as those often present in a specification, are not claim limitations.”). The ’987 patent specification plainly describes the sector partitioning illustrated at Fig. 5 as a “typical” sector organization. See ’987 patent, col. 8, ll. 43-45. It is a preferred embodiment of the sector organization claimed in the claim 1 and 10 methods. In short, Ritek’s argument is misplaced. The specification does not contradict the plain meaning of claims 1 and 10. 04-1422, -1610 - 12 - C. The prosecution history does not compel a contrary result. The court must always consult the prosecution history, when offered in evidence, to determine if the inventor surrendered disputed claim coverage. See Medrad, Inc. v. MRI Devices Corp., 401 F.3d 1313, 1319 (Fed. Cir. 2005) (“We cannot look at the ordinary meaning of the term ... in a vacuum. Rather, we must look at the ordinary meaning in the context of the written description and the prosecution history.”). After consulting the prosecution history, the trial court ruled that SanDisk disclaimed any method or device in which Flash EEprom memory cells were not grouped into partitioned sectors. Ritek urges the court to affirm this analysis. SanDisk, however, maintains that the trial court erred in this conclusion. Instead, SanDisk argues, nothing in the prosecution history provides a clear and unmistakable disclaimer as found by the district court. On reviewing the relevant arguments to the examiner, we agree with SanDisk. 1. When the patentee makes clear and unmistakable prosecution arguments limiting the meaning of a claim term in order to overcome a rejection, the courts limit the relevant claim term to exclude the disclaimed matter. See Omega Eng’g, Inc. v. Raytek Corp., 334 F.3d 1314, 1324 (Fed. Cir. 2003) (“[W]here the patentee has unequivocally disavowed a certain meaning to obtain his patent, the doctrine of prosecution disclaimer attaches and narrows the ordinary meaning of the claim congruent with the scope of the surrender.”); Standard Oil Co. v. Am. Cyanamid Co., 774 F.2d 448, 452 (Fed. Cir. 1985) (“[T]he prosecution history (or file wrapper) limits the interpretation of claims so as to 04-1422, -1610 - 13 - exclude any interpretation that may have been disclaimed or disavowed during prosecution in order to obtain claim allowance.”). As this court has explained, The doctrine of prosecution disclaimer [precludes] . . . patentees from recapturing through claim interpretation specific meanings disclaimed during prosecution. See Schriber-Schroth Co. v. Cleveland Trust Co., 311 U.S. 211, 220-21 (1940) (“It is a rule of patent construction consistently observed that a claim in a patent as allowed must be read and interpreted with reference to claims that have been cancelled or rejected, and the claims allowed cannot by construction be read to cover what was thus eliminated from the patent.”); Crawford v. Heysinger, 123 U.S. 589, 602-04 (1887); Goodyear Dental Vulcanite Co. v. Davis, 102 U.S. 222, 227 (1880); cf. Graham v. John Deere Co., 383 U.S. 1, 33 (1966) (ruling, in addressing the invalidity of the patents in suit, that “claims that have been narrowed in order to obtain the issuance of a patent by distinguishing the prior art cannot be sustained to cover that which was previously by limitation eliminated from the patent”). . . . . As a basic principle of claim interpretation, prosecution disclaimer promotes the public notice function of the intrinsic evidence and protects the public's reliance on definitive statements made during prosecution. See Digital Biometrics, Inc. v. Identix, Inc., 149 F.3d 1335, 1347 (Fed. Cir. 1998). Omega, 334 F.3d at 1323-24. An ambiguous disclaimer, however, does not advance the patent’s notice function or justify public reliance, and the court will not use it to limit a claim term’s ordinary meaning. See id. at 1324 (collecting cases). There is no “clear and unmistakable” disclaimer if a prosecution argument is subject to more than one reasonable interpretation, one of which is consistent with a proffered meaning of the disputed term. See Golight, Inc. v. Wal-Mart Stores, Inc., 355 F.3d 1327, 1332 (Fed. Cir. 2004) (finding no disclaimer because “the statements in the prosecution history are subject to multiple reasonable interpretations, they do not constitute a clear and 04-1422, -1610 - 14 - unmistakable departure from the ordinary meaning of the term [at issue]”); Cordis Corp. v. Medtronic AVE, Inc., 339 F.3d 1352, 1359 (Fed. Cir. 2003) (concluding that a statement made during prosecution “is amenable to multiple reasonable interpretations and it therefore does not constitute a clear and unmistakable surrender”). The question, therefore, is whether any of SanDisk’s prosecution arguments to the examiner have no reasonable interpretation other than to disavow any memory system in which Flash EEprom memory cells are not grouped into partitioned sectors. 2. In this case the relevant prosecution argument responded to an obviousness rejection. The ’987 patent issued from application Ser. No. 174,768 (“the ’768 application”). On December 7, 1995, the examiner rejected original claims 79 (which issued as claim 1) and 85 (which issued as claim 10) in the ’768 application as obvious under Burke in view of Yorimoto. The examiner explained that Burke – an Australian patent, No. AU-B-22536/83 – taught a memory system including “an array of cells which are inherently partitioned into a plurality of sectors because Burke’s array is to ‘emulate’ a magnetic disk which has sectors.” As the examiner explained, Yorimoto – European patent application No. 86114972.2, Pub. No. 0 220 718 – “teaches partitioning the cells with a sector into portions, each portion is for storing a specific type of information.” Rejecting claim 85 (issued claim 10), the examiner concluded, It would have been obvious to one having ordinary skill in the art at the time the invention was made to use Yorimoto’s memory (of EEPROM type) and Yorimoto’s memory cells partitioning in place of Burke’s memory. The artisan would have been motivated to use Yorimoto’s EEPROM in the place of Burke’s memory because Yorimoto’s EEPROM can be partitioned into sectors and Burke’s emulation inherently suggests 04-1422, -1610 - 15 - that the emulating memory should be able to emulate the sectors of Burke’s magnetic disk. SanDisk argued that the examiner was mistaken. In particular, SanDisk explained: The memory cell array is divided into sectors, with the cells within each sector being erasable together as a unit. Stored in each sector is a sectors [sic] worth of user data and some overhead information (a header) about the sector and/or about the user data stored in the sector. (quoted at Pretec SJ Order, slip. op. at 25). Relying heavily on SanDisk’s description of “each sector”, the trial court concluded that SanDisk was referring to every sector on the ’987 patent EEproms. Id. at 26. Ritek contends that the trial court’s analysis was correct, and with this language SanDisk disclaimed its current claim construction. We disagree, and find no clear and unmistakable disclaimer in this passage. The trial court’s and Ritek’s reasoning assumes its conclusion. The quoted passage begins with the proviso that “The claims are directed to a flash EEPROM system[.]” If, when viewed in context, SanDisk used this passage to describe the memory cell array – and, in particular, the claimed sector organization subject to the methods in original claims 79 and 85 – then there is no prior reason why that memory cell array or the discussion of it should be presumed to exhaust every cell on every EEprom in the “memory system” recited in the claim preambles. Given the open language in the claims, there is no reason for the court to read the prosecution argument with such a presumption in mind. Put differently, the reference to “each sector” means “each sector” subject to the claimed method, and no more. In short, SanDisk’s reading of this prosecution argument is at least reasonable. Thus, focusing 04-1422, -1610 - 16 - on this passage alone, there is no “clear and unmistakable surrender” within the meaning of Golight. The trial court further reasoned that because SanDisk sought to emulate a disk drive with the claimed memory system, it followed that SanDisk intended to group every Flash EEprom memory cell into a partitioned sector. The trial court focused on the following prosecution argument, responding to the obviousness rejection of original claim 79: The claims in this application each define more than the desire to make a semiconductor memory system look on the host system side of the memory controller to be a disk drive. They define a way of configuring and using a semiconductor memory on the memory side of the controller in a way similar to a disk drive. Claim 79 defines a flash EEPROM system with an array that is divided into sectors of cells that are erasable together as a unit. This is not new by itself but is a particular type of memory . . . to be used to emulate a disk drive. None of the . . . cited references suggest use of such a type of memory. The only mention of an EEPROM system is by Yorimoto et al. but their embodiments appear to be generically described for use with either an EEPROM or a battery backed volatile RAM. Nothing is said by Yorimoto et al. of a flash EEPROM system that is operated with sectors of cells that are erasable together as a unit. It is the use of this type of memory that allows the memory itself to be operated very similarly to that of a disk drive, with individual sectors that store both user data and overhead data (a header for the sector). It is the operation of the flash EEPROM memory by the memory controller with the sectored and partitioned characteristics of a disk drive memory that is novel and non-obvious. Ritek contends that the trial court correctly read this passage to disclaim the claim construction set forth above. Again, we disagree. First, as with the last passage, this argument is directed to explicating the claimed invention. It does not purport to exclude from the “memory system” other configurations of Flash EEprom memory cells. Even though SanDisk identifies the novel invention as “operation of the flash EEPROM memory by the memory controller 04-1422, -1610 - 17 - with the sectored and partitioned characteristics of a disk drive memory,” that statement goes to the claimed memory organization. Second, the fact that with the claimed invention SanDisk sought to emulate a disk drive memory storage configuration does not compel the conclusion that SanDisk required every Flash EEprom memory cell in the “memory system” recited in the claims to be grouped into partitioned sectors. The trial court’s reasoning, in short, relies on a false analogy. Though every memory cell on a disk drive might have a physical location in a partitioned sector, it does not follow that to “emulate” that function every memory cell in a Flash EEprom array must also be so grouped. To the contrary, the organization of memory cells in the Flash EEprom is physically limited only by the requirement of a simultaneous erase by sector; in other respects, the cells are grouped into sectors by a logical allocation. Thus, while physical organization of memory on a disk drive might require every memory cell to be placed in a partitioned sector, the physical organization of memory cells on an EEprom does not. The prosecution history as a whole confirms this point. In an earlier passage, SanDisk argued: The claimed memory system looks to the host computer as if it was a disk drive system, similar to the goal stated in the cited Burke patent. But a significant difference is the claimed operation of the flash EEPROM array with many incidents of a disk system. It is divided into sectors that are operated as a unit, including overhead data (a header) as well as user data, and, in some of the claims, the overhead data is read from an addressed sector before user data is written into that sector. (emphases added). The passage focuses on the claimed operation of the flash EEprom memory cell array, the subject of claims 1 and 10; it does not address itself to unclaimed uses of the memory cells. Moreover, according to SanDisk, that particular 04-1422, -1610 - 18 - EEprom configuration was not obvious from combining Burke, which emulated a disk drive, and Yorimoto, which claimed an EEprom array: This is quite different from the way that semiconductor memory arrays are usually operated. . . . The present claims . . . define a disk like approach to semiconductor memory operation. The fact that the system of the Burke patent may look to the host system as a disk memory system does not mean that its array is operated in sectors, with headers, etc., as claimed. . . . . . . [T]he flash EEPROM system employed in the present invention, unlike typical RAMs, do have memory operations that can benefit from auxiliary information. The provision for making such information available in a header of each sector in the context of a solid state memory is part of the present invention. An underlying assumption made throughout the Examiner’s Action is that it is inherent in the system of the cited Burke reference to operate its volatile RAM array with sectors, and thus obvious to include overhead data (headers) in individual sectors. This premise, and thus all the rejections based upon it, is respectfully submitted to be incorrect. Contrary to the position taken in the Examiner’s Action, it is submitted that the fact that Burke’s system looks to the host system as a disk drive memory does not compel this conclusion. The alleged inherent Burke disclosure upon which nearly all the grounds of rejection are based does not exist. In other words, it was novel to organize the cells into partitioned sectors for purposes of the claim, but the claimed purpose of emulating a disk drive did not compel sorting every memory cell – even those not subject to the claimed method – in that fashion. In sum, we conclude that SanDisk did not unmistakably surrender the grouping of Flash EEprom memory cells into non-partitioned sectors. The prosecution history is consistent with the plain meaning of claims 1 and 10, and does not compel the trial court’s contrary reading. 04-1422, -1610 - 19 - D. Ritek argues that equity requires judicially estopping SanDisk from arguing the claim construction discussed above because SanDisk argued, in earlier litigation and on preliminary injunction in this action, that claims 1 and 10 required every memory cell in the Flash EEprom memory to be grouped into partitioned sectors.3 Thus, according to Ritek, “SanDisk should be estopped from playing fast and loose with the courts by changing the meaning of its patent claims simply because its interests have changed now that it knows how Ritek’s products work.” Ritek Br. at 25-26. We find this argument misplaced. Judicial estoppel is an equitable doctrine that prevents a litigant from “perverting” the judicial process by, after urging and prevailing on a particular position in one litigation, urging a contrary position in a subsequent proceeding – or at a later phase of the same proceeding – against one who relied on the earlier position. See Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001); Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1565 (Fed. Cir. 1996). It is within the trial court’s discretion to invoke judicial estoppel and preclude an argument. Id. Here, the trial court did not apply the doctrine and the appellees ask this court, in its appellate jurisdiction, to find an estoppel. As the Supreme Court recently explained, Where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him. 3 Pretec adopted Ritek’s arguments by reference. Memorex filed a joinder in Pretec’s brief. Each appellee thus relies on Ritek’s judicial estoppel argument. 04-1422, -1610 - 20 - New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (cit. omitted); see also id. at 749-50 (collecting cases). In New Hampshire, the Supreme Court identified several factors guiding the decision to apply judicial estoppel: (1) the party’s later position must be “clearly inconsistent” with the earlier position; (2) the party must have succeeded in persuading a court to adopt the earlier position in the earlier proceeding; and (3) the courts consider “whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” Id. at 751. These factors, while not exclusive, must guide the court’s application of its equitable powers. Id. Ritek’s judicial estoppel argument loses force when tested against these criteria. First, in the Lexar litigation, SanDisk never advanced a claim construction that was “clearly inconsistent” with the partitioning analysis discussed above. The trial court in Lexar therefore cannot be said to have adopted such a position at SanDisk’s urging. The district court here recognized that very point in its summary judgment and claim construction order. As it noted, “SanDisk’s argument [for the analysis set forth above] draws some strength from the limited nature of the Lexar court’s construction. The Lexar court did not explicitly construe the broader phrase from the patent [citing partitioning step]. The Lexar court limited its construction to the ‘user data and overhead data portions’ of claims 1 and 10.” As SanDisk observes, the issue before Judge Breyer in Lexar was whether the sectors subject to the claim 1 and claim 10 methods were limited to a single user and data portion, or whether those sectors could be further partitioned. In short, Lexar involved a different dispute concerning the claim terms. 04-1422, -1610 - 21 - Second, SanDisk’s arguments at preliminary injunction in this action were no more “clearly inconsistent” than the arguments in Lexar. In support of preliminary injunction, SanDisk argued that the preamble to claims 1 and 10 required “partitioning the array of non-volatile memory sector cells into at least a user data region and an overhead data region.” SanDisk further argued, invoking the Lexar construction of “partitioned”, that the claim required “each non-volatile memory sector must have at least one user data portion and one overhead data portion, but is not limited to only one data user portion and only one overhead data portion.” As explained above, these arguments are directed to the claimed method, and the claims do not preclude additional memory cells that are not organized according to that method. Moreover, at preliminary injunction SanDisk plainly urged the Lexar claim construction, and that analysis did not extend to the issue at bar. Thus, there was no inconsistency between the arguments at preliminary injunction, and the disputed construction now on appeal. In sum, the factual premise of Ritek’s argument is misplaced. There is no basis for judicial estoppel here. Moreover, the equities do not favor applying judicial estoppel to prevent claim construction arguments from evolving after preliminary injunction. The law provides, for example, that the trial court is free to revisit an initial claim construction adopted for preliminary injunction, recognizing that a preliminary construction made without full development of the record or issues should be open to revision. See Gillette Co. v. Energizer Holdings, Inc., 405 F.3d 1367, 1375 (Fed. Cir. 2005). After discovery the court expects the parties to refine the disputed issues and learn more about the claim terms and technology, at which point a more accurate claim construction can be 04-1422, -1610 - 22 - attempted. That is precisely what happened here. If, as it appears, SanDisk initially thought every memory cell on the accused Ritek products came within the claimed method, then there was no occasion to consider whether other, non-sectored or non-partitioned sectors of memory cells could be used in conjunction with claims 1 or 10. Thus, the present dispute only became an issue after further discovery. Applying judicial estoppel here would subvert the useful function of pre-trial discovery and motion practice in focusing issues for trial. In sum, judicial estoppel does not prevent SanDisk from maintaining its current claim construction arguments. E. The parties further dispute the meaning of “array” as used in claims 1 and 10. The trial court determined that “array” meant a collection of Flash EEprom memory cells on one or more EEprom chips. SanDisk argues, to the contrary, that by the plain meaning expressed in technical dictionaries “array” refers only to a collection of cells on a single integrated circuit or chip. Ritek argues that the ’987 patent uses array in a specific sense, at odds with the plain meaning, but consistent with the trial court’s interpretation. Ritek further argues that judicial estoppel applies, with special force, to the proper reading of “array”. As noted above, the difference does not alter the trial court’s judgment of no infringement. The judgment does not depend on the choice between these disputed meanings of “array”. It turns, instead, on the district court’s reading of the partitioning requirements in the claims. Because this court reviews judgments rather than claim construction orders, we find it unnecessary at this point to decide this dispute. 04-1422, -1610 - 23 - III. Pretec urges the court to affirm the judgment of no infringement in view of its arguments concerning the meaning of “corresponds” in claims 1 and 10. Pretec made the same claim construction and infringement arguments to the trial court after the relevant cut-off dates under the Northern District’s Patent Local Rules and the trial court’s scheduling order. The district court refused to entertain Pretec’s untimely arguments. As explained in Genentech, Inc. v. Amgen, Inc., 289 F.3d 761, 774 (Fed. Cir. 2002), this court gives broad deference to the trial court’s application of local procedural rules in view of the trial court’s need to control the parties and flow of litigation before it. “[T]his court defers to the district court when interpreting and enforcing local rules so as not to frustrate local attempts to manage patent cases according to prescribed guidelines.” Id. The district court’s application of the local rules are within its sound discretion, and when reviewing that exercise of discretion “this court determines whether (1) the decision was clearly unreasonable, arbitrary, or fanciful; (2) the decision was based on an erroneous conclusion of law; (3) the court's findings were clearly erroneous; or (4) the record contains no evidence upon which the court rationally could have based its decision.” Id. None of these criteria for setting aside the district court’s ruling are satisfied here. In sum, Pretec shows no abuse of discretion in the district court’s ruling, and indeed we discern none.4 IV. The district court erred in its claim construction. The limiting preambles in claims 1 and 10 are written in open language, and the claims are not limited to memory 4 We do not decide whether, at trial on the merits, Pretec can or should be precluded from presenting these claim construction and non-infringement arguments. 04-1422, -1610 - 24 - systems in which every memory cell is grouped into a partitioned sector. The judgment of no infringement rests on an erroneous claim construction, and the court vacates it. The case is remanded for further proceedings. VACATED AND REMANDED Each side shall bear its own costs. United States Court of Appeals for the Federal Circuit 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 LG ELECTRONICS, INC., Plaintiff-Appellant, v. BIZCOM ELECTRONICS, INC., COMPAL ELECTRONICS, INC., and SCEPTRE TECHNOLOGIES, INC., Defendants-Cross Appellants, and EVEREX SYSTEMS, INC., Defendant-Appellee, and FIRST INTERNATIONAL COMPUTER INC. and FIRST INTERNATIONAL COMPUTER OF AMERICA, INC., Defendants-Cross Appellants, and Q-LITY COMPUTER, INC., QUANTA COMPUTER, INC., and QUANTA COMPUTER USA, INC., Defendants-Cross Appellants. Richard G. Taranto, Farr & Taranto, of Washington, DC, argued for plaintiff-appellant. On the brief was Michael J. Schaengold, Patton Boggs LLP, of Washington, DC. William J. Anthony, Jr., Orrick, Herrington & Sutcliffe LLP, of Menlo Park, California, argued for defendants-cross appellants Bizcom Electronics, Inc., et al. With him on the brief were Eric L. Wesenberg, Kaiwen Tseng, Matthew J. Hult and Rowena Y. Young. 2 Joseph L. Strabala, Law offices of Joseph L. Strabala, of San Francisco, California for defendant-appellee Everex Systems, Inc., joined in the co-defendants’ briefs. Ronald S. Lemieux, Paul, Hastings, Janofsky & Walker LLP, of Palo Alto, California for defendants-cross appellants First International Computer, Inc., et al. Of counsel on the brief was James M. Smith, Squire, Sanders & Dempsey L.L.P., of Palo Alto, California. Terry D. Garnett, Paul, Hastings, Janofsky & Walker LLP, of Los Angeles, California for defendants-cross appellants Q-Lity Computer, Inc., et al. With him on the brief were Vinent K. Yip, Maxwell A. Fox, Peter J. Wied, Sang N. Dang and Jay C. Chiu. Of counsel was Jeffrey D. Mills, Fulbright & Jaworski L.L.P., of Austin, Texas. Joel E. Lutzker, Schulte Roth & Zabel LLP, of New York, New York, for amicus curiae Minebea Co., Ltd. With him on the brief were David H. Kagan and Richard Chern. Steven E. Feldman, Welsh & Katz, Ltd., of Chicago, Illinois, for amicus curiae Papst Licensing GmbH & Co. KG. Appealed from: United States District Court for the Northern District of California Judge Claudia Wilken United States Court of Appeals for the Federal Circuit 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 LG ELECTRONICS, INC., Plaintiff-Appellant, v. BIZCOM ELECTRONICS, INC., COMPAL ELECTRONICS, INC., and SCEPTRE TECHNOLOGIES, INC., Defendants-Cross Appellants, and EVEREX SYSTEMS, INC., Defendant-Appellee, and FIRST INTERNATIONAL COMPUTER INC. and FIRST INTERNATIONAL COMPUTER OF AMERICA, INC., Defendants-Cross Appellants, and Q-LITY COMPUTER, INC., QUANTA COMPUTER, INC., and QUANTA COMPUTER USA, INC., Defendants-Cross Appellants. __________________________ DECIDED: July 7, 2006 __________________________ 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 2 Before MICHEL, Chief Judge, NEWMAN, and MAYER, Circuit Judges. MAYER, Circuit Judge. LG Electronics, Inc. (“LGE”) appeals from the final judgment of the United States District Court for the Northern District of California, which granted summary judgment of noninfringement of U.S. Patent Nos. 4,918,645; 5,077,733; 4,939,641; 5,379,379; and 5,892,509 in favor of Bizcom Electronics, Inc.; Compal Electronics, Inc.; Sceptre Technologies, Inc.; First International Computer, Inc.; First International Computer of America, Inc.; Q-Lity Computer, Inc.; Quanta Computer, Inc.; Quanta Computer USA, Inc.; and Everex Systems, Inc. (collectively “defendants”). LG Elecs., Inc. v. Ausustek Computer, Inc., Nos. C-01-1375, -1552, -1594, -2187 (N.D. Cal. Jan. 31, 2005); LG Elecs., Inc. v. Ausustek Computer, Inc., Nos. C-01-1375, -1594, -2187, -1552 (N.D. Cal. Nov. 30, 2004); LG Elecs., Inc. v. Ausustek Computer, Inc., 248 F. Supp. 2d 912 (N.D. Cal. 2003); LG Elecs., Inc. v. Ausustek Computer, Inc., Nos. C-01-326, -1375, -1594, - 2187, -1552 (N.D. Cal. Aug. 20, 2002) (“Intel I”). LGE also appeals and defendants cross appeal various claim construction rulings by the trial court. LG Elecs., Inc. v. Ausustek Computer, Inc., Nos. C-01-00326, -01375, -01594, -02187, -01552 (N.D. Cal. Aug. 20, 2002) (“Claim Construction Order”). Defendants First International Computer, Inc.; First International Computer of America, Inc.; Q-Lity Computer, Inc.; Quanta Computer, Inc.; and Quanta Computer USA, Inc. also cross appeal the denial of summary judgment based on their implied license defense. LG Elecs., Inc., 248 F. Supp. 2d 912. 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 3 Background LGE is the owner of patents relating to personal computers, including U.S. Patents Nos. 4,918,645 (disclosing systems and methods that increase the bandwidth efficiency of a computer’s system bus); 5,077,733 (claiming, in relevant part, a method that controls the access of a device to a bus shared by multiple devices); 4,939,641 (claiming, in relevant part, a system for ensuring that outdated data is not retrieved from memory); 5,379,379 (claiming a system and method for ensuring that outdated data is not retrieved from memory); and 5,892,509 (claiming networked computers capable of sharing certain video images). LGE sued defendants alleging infringement of these patents. Defendants purchase microprocessors and chipsets from Intel or its authorized distributors and install them in computers. Intel is authorized to sell these products to defendants under an agreement with LGE. However, pursuant to this agreement, Intel notified defendants that, although it was licensed to sell the products to them, they were not authorized under that agreement to combine the products with non-Intel products. LGE brought suit against defendants, asserting that the combination of microprocessors or chipsets with other computer components infringes LGE’s patents covering those combinations. LGE did not assert patent rights in the microprocessors or chipsets themselves. After construing the patent claims, the trial court granted summary judgment of noninfringement of each patent. It determined that there was no implied license to any defendant, but that, with the exception of the ’509 patent, LGE’s rights in any system claims were exhausted. The court also found that LGE was contractually barred from 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 4 asserting infringement of the ’509 patent against defendants. It found the ’645, ’733, and ’379 patents not infringed after applying its claim construction to the accused methods and devices. We have jurisdiction under 28 U.S.C. § 1295(a)(1). Discussion “We review the trial court's grant of summary judgment without deference, reapplying the same standard as the trial court.” Lacavera v. Dudas, 441 F.3d 1380 (Fed. Cir. 2006) (citing Star Fruits S.N.C. v. United States, 393 F.3d 1277, 1281 (Fed. Cir. 2005)). Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). We review claim construction de novo. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en banc). I. Implied License1 “In a suit for patent infringement, the burden of proving the establishment of an implied license falls upon the defendant.” Bandag, Inc. v. Al Bolser's Tire Stores, Inc., 750 F.2d 903, 924 (Fed. Cir. 1984) (citing Bassick Mfg. Co. v. Adams Grease Gun Corp., 54 F.2d 285, 286 (2d Cir. 1931)). To prevail, defendants were required to establish that the products have no noninfringing uses and that “the circumstances of the sale . . . ‘plainly indicate that the grant of a license should be inferred.’” Met-Coil 1 First International Computer, Inc.; First International Computer of America, Inc.; Q-Lity Computer, Inc.; Quanta Computer, Inc.; and Quanta Computer USA, Inc. are the defendants challenging the trial court’s implied license ruling. 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 5 Sys. Corp. v. Korners Unlimited, Inc., 803 F.2d 684, 686 (Fed. Cir. 1986) (quoting Bandag, Inc., 750 F.2d at 925). The trial court found, and we agree, that Intel’s sales of its licensed products to defendants do not warrant the inference of a license with respect to the asserted patents. Regardless of any noninfringing uses, Intel expressly informed them that Intel’s license agreement with LGE did not extend to any of defendants’ products made by combining an Intel product with non-Intel products. In light of this express disclaimer, no license can be implied. II. Patent Exhaustion The patents asserted by LGE do not cover the products licensed to or sold by Intel; they cover those products when combined with additional components. The trial court, nevertheless, found that the system claims in all patents except the ’509 patent were exhausted, but that the exhaustion doctrine did not apply to the method claims. We reverse the trial court’s holding with respect to the system claims and affirm with respect to the method claims. It is axiomatic that the patent exhaustion doctrine, commonly referred to as the first sale doctrine, is triggered by an unconditional sale. See Mitchell v. Hawley, 83 U.S. 544, 547 (1873). “[A]n unconditional sale of a patented device exhausts the patentee's right to control the purchaser’s use of the device thereafter. The theory behind this rule is that in such a transaction, the patentee has bargained for, and received, an amount equal to the full value of the goods. This exhaustion doctrine, however, does not apply to an expressly conditional sale or license. In such a transaction, it is more reasonable to infer that the parties negotiated a price that reflects only the value of the ‘use’ rights 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 6 conferred by the patentee.” B. Braun Med. Inc. v. Abbott Labs., 124 F.3d 1419, 1426 (Fed. Cir. 1997) (discussing Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 708 (Fed. Cir. 1992)) (emphasis added and citations omitted). There are two sales at issue here. First, prior to this litigation, LGE granted Intel a license covering its entire portfolio of patents on computer systems and components. This transaction constitutes a sale for exhaustion purposes. See United States v. Masonite Corp., 316 U.S. 265, 278 (1942). Second, with LGE’s authorization, Intel sold its microprocessors and chipsets to each defendant. Notably, this sale involved a component of the asserted patented invention, not the entire patented system. The trial court issued two orders on patent exhaustion. The first is unclear about which sale the court relied upon in holding LGE’s system patent rights exhausted with respect to defendants, but we understand it to be LGE’s license to Intel. Intel I at 9-10. However, the second order, which reaffirmed the first, clearly relied on Intel’s sale of its microprocessors and chipsets to defendants as the exhausting sale. LG Elecs., Inc., 248 F. Supp. 2d at 917. In finding the unconditional sale requirement satisfied, the court concluded that although “LGE is entitled to impose conditions on the sale of the essential components of its patented products does not mean that it actually did so here. To the contrary, defendants’ purchase of the microprocessors and chipsets from Intel was unconditional, in that defendants’ purchase of the microprocessors and chipsets from Intel was in no way conditioned on their agreement not to combine the Intel microprocessors and chipsets with other non-Intel parts and then sell the resultant products.” Id. at 916-17. We disagree. 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 7 The LGE-Intel license expressly disclaims granting a license allowing computer system manufacturers to combine Intel’s licensed parts with other non-Intel components. Moreover, this conditional agreement required Intel to notify its customers of the limited scope of the license, which it did. Although Intel was free to sell its microprocessors and chipsets, those sales were conditional, and Intel’s customers were expressly prohibited from infringing LGE’s combination patents. Cf. N.Y. U.C.C. Law § 2-202 (allowing contracts to be supplemented by consistent additional terms unless the writing is intended to be complete and exclusive). The “exhaustion doctrine . . . does not apply to an expressly conditional sale or license,” B. Braun Med. Inc., 124 F.3d at 1426, so LGE’s rights in asserting infringement of its system claims were not exhausted. Conversely, the trial court declined to find LGE’s asserted method claims exhausted. Several defendants contest this ruling on cross-appeal, and we reject their challenge. Based on the above reasoning, even if the exhaustion doctrine were applicable to method claims, it would not apply here because there was no unconditional sale. However, the sale of a device does not exhaust a patentee’s rights in its method claims. Glass Equip. Dev., Inc. v. Besten, Inc., 174 F.3d 1337, 1341 n.1 (Fed. Cir. 1999) (citing Bandag, Inc., 750 F.2d 903, 924 (Fed. Cir. 1984)). The court was correct. III. ’509 Patent The ’509 patent discloses a system of networked computers capable of sharing video images. The trial court’s exhaustion ruling did not extend to the ’509 patent; 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 8 instead it granted summary judgment of noninfringement on the ground that LGE was contractually barred from asserting infringement of the ‘509 patent claims against defendants. This conclusion was based on a non-assertion provision in a contract between LGE and Microsoft, which barred LGE from suing “[Microsoft], its suppliers, their subsidiaries, or their licensees.”2 The court concluded that defendants were included within this class of parties. Because a genuine issue of material fact exists as to whether defendants fall within the protection of this contract provision, we reverse the trial court’s grant of summary judgment of noninfringement. In determining whether LGE is barred under the LGE-Microsoft agreement from suing defendants for infringement, the dispositive issue is whether each defendant is a Microsoft licensee. Defendants are third-party installers (“TPIs”) that assemble computers for original equipment manufacturers (“OEMs”). The OEMs have licenses with Microsoft, and it is undisputed that defendants were authorized to install Microsoft’s products on the systems they manufacture. It is unclear, however, whether defendants’ authorization was under “have made” rights of the OEMs’ agreements with Microsoft, whereby the OEM would be authorized to use a third party for completing work on its 2 The relevant contract provision provides: {As partial consideration for the rights granted to [[LGE] under the License Agreement(s), [LGE] agrees not to (A) sue, or (B) bring, prosecute, assist or participate in any judicial, administrative or other proceedings of any kind against [Microsoft], its Suppliers, their subsidiaries, or their licensees (including without limitation [original equipment manufacturer] customers and end users) for infringement of [LGE’s] Patents . . . which occurs during the Immunity period . . . on account of the manufacture, use, sale, or distribution of . . . [the product’s licensed to LGE by Microsoft].} 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 9 behalf, or whether such authorization was as a sublicensee. If the work was authorized solely by an OEM’s have made rights, and if that OEM were not authorized to grant sublicenses under its agreement with Microsoft, then defendants may not be “licensees” protected by the LGE-Microsoft non-assertion provision. Cf. Cyrix Corp. v. Intel Corp., 77 F.3d 1381, 1388 (Fed. Cir. 1996) (distinguishing “have made rights” from sublicenses). A genuine issue of material fact exists as to each defendant’s status. On remand, defendants must establish that LGE is contractually barred from pursuing infringement claims against them. See McCoy v. Mitsuboshi Cutlery, Inc., 67 F.3d 917, 920 (Fed. Cir. 1995). Although the parties have relied on the LGE-Microsoft agreement in arguing whether or not defendants are Microsoft licensees, that agreement is not the proper focus. It is the agreements between each OEM and each defendant, and those between Microsoft and the OEM hiring each defendant that matter. The record indicates that FIC was both a TPI and an OEM. As an OEM, it had a license from Microsoft, and therefore falls squarely within the scope of protected parties under the non-assertion provision. However, the contract provision only bars suit against Microsoft licensees for infringement “on account of” the manufacture, use, sale, or distribution of Microsoft’s products. LGE does not dispute that there is no infringement absent the Microsoft software in the accused devices, since the software satisfies some, but not all, limitations of the ’509 patent claims. However, LGE argues that any infringement was not “on account of” the use of Microsoft products. The trial court rejected this argument, essentially reading the “on account of language” as a “but for” requirement. 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 10 The “on account of” language, however, is not susceptible of only one interpretation. According to the Supreme Court in construing this phrase in an unrelated statute, “the phrase ‘on account of’ does not unambiguously define itself.” O’Gilvie v. United States, 519 U.S. 79, 82 (1996) (construing 26 U.S.C. § 7405 (b)). Here, too, the degree of causation required by this contract term is unclear. Because proper construction requires factual considerations, we reverse the trial court’s grant of summary judgment. Scott Galvanizing, Inc. v. Nw. EnviroServices, Inc., 844 P.2d 428, 433 (Wash. 1993); see also BNC Mortgage, Inc. v. Tax Pros, Inc., 46 P.3d 812, 819-820 (Wash. Ct. App. 2002) (“If the contract's written words have two or more reasonable meanings (i.e., are ‘ambiguous’) when read in context, a court may not grant summary judgment or direct a verdict; instead, it must put the case to a trier of fact.”) (citations omitted). The parties also dispute the trial court’s construction of several claim terms in the ’509 patent. Claim 35, from which asserted claims 45 and 51 depend, contains the limitation of “a control unit for controlling the communication unit, wherein the control unit comprises a [central processing unit (“CPU”)] and a partitioned memory system.” LGE contends that the trial court erroneously construed the term “control unit” as a means-plus-function limitation. “‘[A] claim term that does not use ‘means’ will trigger the rebuttable presumption that § 112 ¶ 6 does not apply.’” Lighting World, Inc. v. Birchwood Lighting, Inc., 382 F.3d 1354, 1358 (Fed. Cir. 2004) (quoting CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1369 (Fed. Cir. 2002)). This presumption can be rebutted “by showing that the claim element recite[s] a function without reciting sufficient structure for performing 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 11 that function.” Watts v. XL Sys., 232 F.3d 877, 880 (Fed. Cir. 2000) (citing Rodime PLC v. Seagate Tech., Inc., 174 F.3d 1294, 1302 (Fed. Cir. 1999)). However, the presumption “is a strong one that is not readily overcome.” Lighting World, Inc., 382 F.3d at 1358. Here, the claim limitation at issue does not use the term “means,” and the presumption against means-plus-function treatment is not overcome. The claim itself provides sufficient structure, namely “a CPU and a partitioned memory system,” for performing the stated function, “controlling the communication unit.” See id. at 1359-60. Thus, the proper construction of “control unit” is “a combination comprising a CPU and a partitioned memory system capable of controlling the communication unit.” Defendants contend on cross appeal that the trial court also misconstrued claim 35 by not requiring multiple displays. In particular, they contend that the preamble term “image processing system” requires multiple displays in light of the prosecution history. However, the claim language does not include this limitation, and the trial court properly refused to read it into the claim. Moreover, the body of the claim provides for “a display.” KCJ Corp. v. Kinetic Concepts, Inc., 223 F.3d 1351, 1356 (Fed. Cir. 2000) (“This court has repeatedly emphasized that an indefinite article ‘a’ or ‘an’ in patent parlance carries the meaning of ‘one or more’ in open-ended claims containing the transitional phrase ‘comprising.’”) (citations omitted). Claim differentiation also supports the trial court’s construction because dependent claim 38 adds the limitation of the “image processing system further compris[ing] at least first and second displays coupled to the CPU of the image processing system.” See Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005) (“Differences among claims can also be a useful guide in 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 12 understanding the meaning of particular claim terms.” (citing Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533, 1538 (Fed. Cir. 1991))). The prosecution history relied upon by defendants does not compel a different construction. The patentee made arguments during prosecution to distinguish claims in the parent application to the ’509 patent, which expressly required multiple displays, over the prior art. These arguments, however, do not compel reading a multiple display limitation into the ’509 patent, which does not expressly require multiple displays. See Elkay Mfg. Co. v. Ebco Mfg. Co., 192 F.3d 973, 980 (Fed. Cir. 1999) (“When multiple patents derive from the same initial application, the prosecution history regarding a claim limitation in any patent that has issued applies with equal force to subsequently issued patents that contain the same claim limitation.” (emphasis added)). IV. ’645 patent The ’645 patent discloses a digital computer system that has devices called agents that are interconnected by a system bus. The claimed system and corresponding method require one agent, the requesting agent, to request access to a memory stored on another agent, called the replying agent. The requested data is organized as a matrix of memory cells, having column and row coordinates. The “memory controller” of the replying agent processes the request from the requesting agent by asserting a plurality of memory address control signals, including at least one row address strobe (“RAS”) signal and one column address strobe (“CAS”) signal. This “page mode memory access” operates by the assertion of an entire row of data followed by the assertion and deassertion of multiple column addresses. By the RAS signal 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 13 accessing an entire row followed by the assertion and deassertion of particular column addresses, this page mode memory access differs from the conventional memory access, which separately accessed each memory cell by asserting its individual row address and column address. In the claimed invention, after the data is accessed, it is then transferred to the requesting agent over the system bus. LGE alleged infringement of system claims 1-4 and 6 and method claims 12-15 and 17. The trial court granted summary judgment of noninfringement of all asserted claims, concluding that the RAS/CAS signals in defendants’ devices did not travel over the system bus. However, the ’645 patent claims do not contain a limitation requiring that the strobe signals travel over the system bus. Moreover, the specification does not suggest that the strobe signals must travel over the system bus. To the contrary, Figure 5 shows an embodiment of the invention in which the strobe signals travel only internally within the replying agent, not across the system bus. In an attempt to impose this limitation on the claims, defendants rely on the prosecution history. While the prosecution history is relevant to claim construction, “it often lacks the clarity of the specification and thus is less useful for claim construction purposes.” Phillips, 415 F.3d at 1317 (citations omitted). Here, defendants point to statements in the prosecution history that the prior art does not teach “a page mode type of access over a system bus from a requesting agent to a replying agent.” While we agree that this and other statements in the prosecution history lack ideal clarity, we do not find that they rise to the level of disclaiming or limiting the scope of the express claim language. Therefore, the trial court erred in construing the ’645 claims to require the RAS and CAS signals to travel over the system bus. In addition, there is a genuine 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 14 issue of material fact as to whether the accused devices and methods utilize strobe signals. LGE’s expert submitted an affidavit that the accused devices employ strobe signals, which precludes summary judgment. In the alternative, defendants contend that LGE failed to present evidence of an “end of access signal.” This signal, which is required by the claims, is generated by the requesting agent and received by a detecting means coupled to the memory address control signal asserting means. When the detection means receives this end of access signal, the operation is halted. Defendants contend that LGE failed to establish the existence of a genuine issue of material fact as to whether the accused devices contain this limitation. However, the trial court did not consider this argument, and we will not address this factual issue in the first instance. LGE also argues that the trial court’s construction of the “requesting agent” claim limitation was in error. The court construed this term as “a device coupled to the system bus that requests access to a memory located on a replying agent.” Claim Construction Order at 6-9. LGE contends that an industry standard, which was incorporated into the specification by reference, provides the proper claim construction of this term. ’645 patent col. 3 ll. 51-56.3 The incorporated standard explicitly defines the term 3 The specification provides: Although the method and apparatus of the invention will be described herein in the context of a Multibus II environment, it should be appreciated that the invention may be practiced in many digital computer systems having a bus for transferring data between at least two agents interconnected upon the bus. The operating characteristics of the Multibus II are described in a document entitled “High 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 15 “requesting agent” as “an agent that has entered into the arbitration function for bus access.” Defendants contend, however, that the patentee did not act as its own lexicographer by incorporating this industry standard by reference. The trial court did not accept LGE’s proposed construction, concluding that it was a preferred embodiment and did not limit the claimed invention. The difference in the two constructions is temporal: LGE’s proposed construction defines an agent as a requesting agent only when it is engaged in arbitration for bus access, whereas the trial court’s construction defines a requesting agent regardless of whether it is actively engaged in arbitration. Performance 32-Bit Bus Standard P1296” which was produced by the IEEE microprocessor standards committee P1296 working group, Jun. 20, 1986, draft 2.0, the disclosure of which is incorporated herein in its entirety. ’645 patent col. 3 ll. 45-56. We have recognized that the “[i]nterpretation of descriptive statements in a patent's written description is a difficult task, as an inherent tension exists as to whether a statement is a clear lexicographic definition or a description of a preferred embodiment.” E-Pass Techs., Inc. v. 3COM Corp., 343 F.3d 1364, 1369 (Fed. Cir. 2003). “Thus in determining whether a statement by a patentee was intended to be lexicographic, it is important to determine whether the statement was designed to define the claim term or to describe a preferred embodiment.” Id. We agree with the trial court and defendants that the patentee did not act as its own lexicographer here. Instead, the industry standard was incorporated as a preferred embodiment. The specification makes this clear by explaining that “[a]lthough the method and apparatus of the invention will be described herein in the context of a Multibus II environment, it should 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 16 be appreciated that the invention may be practiced in many digital computer systems having a bus for transferring data between at least two agents interconnected upon the bus.” ’645 patent col. 3 ll. 45-49. Chimie v. PPG Industries, Inc., 402 F.3d 1371 (Fed. Cir. 2005), does not compel a different result. In Chimie, we were confronted with the claim terms “dust-free and non-dusting.” After concluding that these terms were relative and could only be understood by comparison with the prior art, we concluded that only one standard was disclosed in the specification for making such a comparison. We limited these claim terms to the disclosed standard. Here, however, there is no relative term that cannot be understood without reference to an industry standard. But, this does not end our inquiry. The proper claim construction is “the ordinary and customary meaning . . . that the term would have to a person of ordinary skill in the art in question at the time of the invention, i.e., as of the effective filing date of the patent application.” Phillips, 415 F.3d at 1313 (citations omitted). “When prior art that sheds light on the meaning of a term is cited by the patentee, it can have particular value as a guide to the proper construction of the term, because it may indicate not only the meaning of the term to persons skilled in the art, but also that the patentee intended to adopt that meaning.” Arthur A. Collins, Inc. v. N. Telecom Ltd., 216 F.3d 1042, 1045 (Fed. Cir. 2000). Although we have concluded that the patentee did not expressly adopt the definition of “requesting agent” in the incorporated industry standard, that standard remains relevant in determining the meaning of the claim term to one of ordinary skill in the art at the time the patent application was filed, and it is treated as intrinsic evidence for claim construction purposes, see V-Formation, Inc. v. Benetton Group SpA, 401 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 17 F.3d 1307, 1311 (Fed. Cir. 2005) (“This court has established that ‘prior art cited in a patent or cited in the prosecution history of the patent constitutes intrinsic evidence.’”) (citations omitted). Here, the trial court erred by failing to give proper weight to the incorporated industry standard; it failed to consider the standard as intrinsic evidence of the meaning to one of ordinary skill in the art as of the filing date. After considering the standard, in addition to the patent claims and specification, we conclude that LGE’s proffered definition based on the standard is correct. Thus, we construe “requesting agent” as “an agent that has entered into the arbitration function for bus access.” This construction is entirely consistent with the specification, which provides that “at one time in the operation of the system . . . the requesting agent 12 may be a replying agent, and that the replying agent 16 may at that time be a requesting agent.” ’645 patent col.4 ll. 8-11. This language makes clear that the classification of an agent depends upon the function the agent is performing at any given time, i.e., whether it is engaged in arbitration at a given moment. V. ’733 patent The ’733 patent discloses a rotating priority system that provides multiple computer devices alternating access to a system bus, which is the pathway over which the various components of a computer system transmit data. This system addresses the problem of “hogging,” in which one component of a computer system monopolizes 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 18 access to the system bus. The asserted claims of the ’733 patent, method claims 15-19,4 establish a rotating priority system that limits each device’s access to the bus. In particular, claim 15 sets forth two steps of the method as “counting a number of accesses by the device to the bus” and then “in response to a predetermined number of accesses to the bus, giving another [device] the highest priority.” The trial court granted summary judgment of noninfringement of the ’733 patent, holding that the claim limitation of “counting a number of accesses by the device to the bus” was not practiced in the accused method. The court construed the claim limitation “counting a number of accesses” as “counting the number of times a device gains use of the bus.” Claim Construction Order at 38-41. The parties do not directly challenge this construction, but LGE argues that a genuine issue of material fact exists as to whether the accused method performed this step. LGE argues that the master latency timer (“MLT”) in defendants’ accused devices performs this step. MLTs count clock signals when an anchor node has possession of 4 Claim 15, the only independent claim at issue, provides: A method for determining priority of access to a bus among a set of devices coupled to the bus, each device being represented for priority purposes by a node in a group of nodes and each node having a priority relative to a single node currently having the highest priority, the method comprising the steps of: receiving an access request in a node from a represented device; determining whether any node with a higher priority has received an access request; if no such node has received an access request, permitting the device to access the bus; counting a number of accesses by the device to the bus; and in response to predetermined number of accesses to the bus, giving another node the highest priority. 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 19 the bus. Defendants contend that although an MLT limits the time duration of bus access by a device, it does not count the number of accesses by the device. Defendants also contend that, in some instances, the MLTs continue counting when clock signals pass even if no access to the bus is taking place, such as during WAIT periods when no data is being placed on the bus. LGE responds that the bus is accessed even during WAIT periods, regardless of whether any data is placed on the bus, because the device has access to the bus. LGE points out that the purpose of the invention is to eliminate “hogging” the bus, and that the bus is “being hogged” even during WAIT periods. Further, LGE argues that, under the trial court’s construction, a device still has “use of the bus” during a wait period. LGE points to the discussion in the ’733 patent relating to Figure 8. ’733 patent col. 21. In this preferred embodiment, the description includes a programmable node grant counter NGCNT 720. The description explains that when certain conditions are met, an enable count input is asserted and during a bus access cycle a transition of a clock signal causes NGCNT 720(1) to increment by one count. Therefore, when certain criteria are met, a clock signal can create an access count. There is a genuine issue of material fact as to whether the accused devices count the number of accesses. See Ranbaxy Pharms., Inc. v. Apotex, Inc., 350 F.3d 1235, 1240 (Fed. Cir. 2003) (“Infringement, both literal and under the doctrine of equivalents, is a question of fact.” (citing Insituform Techs., Inc. v. Cat Contracting, Inc., 161 F.3d 688, 692 (Fed. Cir. 1998))). The central issue is whether the bus is accessed on each clock signal so that the clock signals, in effect, count the number of accesses to the bus. The trial court agreed that LGE’s argument is consistent with its claim 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 20 construction, but found that it failed to present evidence supporting its position. To the contrary LGE presented sufficient expert testimony on this issue to avoid summary judgment. LGE’s expert testified that some type of signal is asserted with each clock signal, and, if proven, this would in effect make the MLTs count accesses. The summary judgment is vacated. VI. ’641 patent The ’641 patent discloses a system for ensuring that the most current data is retrieved from the main memory. Because individual devices can update data in their own local cache memory without immediately writing the new data back to the main memory, data in the main memory can be “stale.” Therefore, the system claimed in the ’641 patent monitors the data being transferred over the bus, and if data stored in the cache matches the address of the data being transferred, a hold signal is asserted. Then, the data being transferred is compared with the data on the cache. If there is a difference, the data stored on the cache, which is the most recent data, is also transferred. The trial court concluded the ’641 patent claims asserted were not infringed based on its patent exhaustion holding, which we reverse above. However, LGE contends that the trial court also improperly construed claims 1, 5, and 14. In particular, LGE disputes the trial court’s construction of “cache memory means” (in claims 1 and 5) and “cache memory” (in claim 14), which were construed as “one of at least two high speed memories located close to the CPU of a computer to give the CPU faster access to blocks of data than could be taken directly from the larger, slower main memory and 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 21 never using valid/invalid bits.” Claim Construction Order at 18-22. LGE contends that the trial court improperly read claims 1 and 14 as requiring at least two caches. It also contends that the trial court improperly read in the limitation that neither cache uses valid/invalid bits. We agree with LGE that the trial court erred in reading the limitation of at least two high speed memories into claims 1 and 14. Unlike claim 5, which expressly requires at least two cache memory means, claims 1 and 14 have no such express limitation. Cf. Phillips, 415 F.3d at 1314 (“Differences among claims can also be a useful guide in understanding the meaning of particular claim terms.” (citing Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533, 1538 (Fed. Cir. 1991))). To the contrary, claims 1 and 14 only require one or more CPUs and a cache memory coupled between the CPU and the bus. Because the claims expressly cover one central processing unit, they logically also cover systems with only one cache coupled between that single central processing unit and the bus. Defendants rely on the fact that the written description describes a system with multiple caches. However, as we explain in more detail below, the patent application initially described two inventions, and these statements relate to the other invention that is not claimed in the ’641 patent. We also agree with LGE that the trial court improperly read the limitation of never using valid/invalid bits into the claims. The patent’s background section suggests that valid/invalid bits were used to manage data in systems with more than one cache. In particular, it explains that the purpose of the invalid bit is to redirect a processor attempting to access an address in its cache to another cache with a more updated memory associated with that address. ’641 patent col. 1 ll. 44-52. The claims at issue 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 22 do not themselves expressly include or exclude the use of valid/invalid bits. Defendants, however, contend that the trial court’s construction is supported by the specification and prosecution history. The specification states that “a further object of this invention [is] to provide a cache memory system wherein the use of valid/invalid data indicators are avoided.” ’641 patent col. 1 ll. 65-67. It further states that “[i]t should be kept in mind during the following description, that the invention maintains data integrity by assuring that cache data is always the most up-to-date in the system. Thus, there never is a ‘valid’ or ‘invalid’ indication with respect to any cache data as it is always assured that if data is provided by a cache, that it invariably is valid (i.e. most up-to-date).” Id. col. 3 ll. 27-33. Defendants are correct that reviewing the specification in construing claims is appropriate, Phillips, 415 F.3d at 1315-17, but such review need not be done in the abstract. Here, as noted above, the original patent application disclosed two inventions. As the examiner observed, one invention was “drawn to a cache system for updating each copy of the data stored in a plurality of caches when the data is modified,” and the other was drawn to “a cache system for sending the most current data to a requestor by monitoring the address of a data on a data bus for detecting whether the [data] is stored and modified in the cache.” The patent examiner concluded that these two inventions were distinct and required the applicant to elect one invention. The applicant ultimately limited the original application to the latter group of claims, which issued as the ’641 patent, and the other claim group was separated into a different application, which ultimately issued as U.S. Patent No. 5,097,409. 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 23 Here, the discussion of valid/invalid bits in the specification was relevant to multi-cache systems, because the patent’s background provides that “[s]o long as a write back cache is utilized with only one processor, data management is straight forward. However, when more than one central processor uses the same main memory, data management problems multiply.” ’641 patent col. 1 ll. 39-43. The patent explains that the data management problems in multiple CPU systems are a result, at least in part, of their containing more than one cache memory. Managing data in multiple cache systems was the subject of the invention not elected during prosecution and, therefore, the statements in the specification referring to valid/invalid bits are not relevant to the invention ultimately claimed in the ’641 patent. Cf. Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1311 (Fed. Cir. 1999) (observing that a written description describing multiple inventions may not be relevant “in toto” to each of those inventions). Indeed, the unelected claims expressly contained the limitation that the “cache memory means hav[e] no provisions for indicating the invalidity of said data units,” whereas the elected claims contained no such limitation. For the same reasons, we do not find that the patentee disavowed the use of valid/invalid bits under the doctrine of specification disclaimer. “[T]he specification may reveal an intentional disclaimer, or disavowal, of claim scope by an inventor. In that instance, . . . the inventor has dictated the correct claim scope, and the inventor’s intention, as expressed in the specification, is regarded as dispositive.” Phillips, at 1316; see also SciMed Life Sys. v. Advanced Cardiovascular Sys., 242 F.3d 1337, 1341 (Fed. Cir. 2001). However, because the statements relied upon by defendants relate to 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 24 the invention not elected during prosecution, there is no clear disavowal with respect to the invention actually claimed in the ’641 patent. VII. ’379 patent Like the ’641 patent, the ’379 patent claims a system and method for ensuring that the most current data, as opposed to “stale” data, is retrieved from memory. The claimed invention relates to how a memory controller coordinates requests to read data from the memory and requests to write data to the memory. Generally, when a read request is asserted that corresponds to a buffered write request, the write request must go first to ensure that what is read from memory is the most current data. The invention disclosed in the ’379 patent does this by comparing the address of each read request to the buffered write requests, noting any matches, halting read execution when there is a match, and executing the buffered write requests. LGE contends that the trial court erred in construing system claims 1 and 23 as requiring all write requests to be executed after a match is detected, as opposed to executing any number of write requests until the write request corresponding to the matching read request is executed. We agree. The claim language does not require all write requests to be executed after a match is detected. Moreover, claim 2, which depends from claim 1, expressly requires the execution of all write requests, as does independent method claim 7. See Phillips, 415 F.3d at 1314 (recognizing the utility of claim differentiation). In addition, the claim limitation at issue is written in means-plus function-claim language (“means for . . . causing an execution of buffered write requests”). Because the recited function is clear on its face, it was improper to 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 25 incorporate the additional functional limitation of executing “all” buffered write requests. Smiths Indus. Med. Sys., Inc. v. Vital Signs, Inc., 183 F.3d 1347, 1357 (Fed. Cir. 1999); see also Wenger Mfg., Inc. v. Coating Mach. Sys., Inc., 239 F.3d 1225, 1233 (Fed. Cir. 2001) (“[A] court may not import functional limitations that are not recited in the claim . . . .”). LGE also disputes the trial court’s grant of summary judgment of noninfringment of method claim 7.5 This claim explicitly requires the step of buffering “each” read 5 Claim 7 provides: In an information processing system having a system bus for coupling together a plurality of bus connections, one of the bus connections being a memory control unit coupled to one or more memory units, the memory control unit being responsive to address and data signal lines of the system bus for writing information units to and for reading information units from the memory units, a method of reading and writing the information units comprising the steps of: buffering write requests, including write addresses, as they are received from the system bus; buffering read requests, including read addresses, as they are received from the system bus; comparing when received each read address against buffered write addresses, if any, to determine if a received read address has an address value within a predetermined range of address values of a buffered write address; if a received address is determined not to be within the predetermined range of addresses of any buffered write addresses then: first executing in sequence all buffered read requests; and then executing in sequence all buffered write requests; else if a received address is determined to have an address value within the predetermined range of address values of any buffered write address: first executing in sequence all buffered read requests up to but not including the received read request 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 26 request and then comparing that read request to the buffered write addresses. If the read request matches a write request, then the claim provides for the following steps: executing all buffered read requests up to the matching request; then executing “all buffered write requests;” and then executing the matching read request. If, however, the comparison of the read request does not yield a match to a buffered write request, then all read requests are executed. Defendants contend, and LGE does not appear to dispute, that the accused devices do not operate in this manner. Instead, they contend that when a buffered read request matches a buffered write request, their devices do not execute “all” write requests before executing the matching read request, but instead only execute the write requests up to the one matching the read request, and then execute the matching read request. which was determined to be within the predetermined range; then executing all buffered write requests; and then executing the buffered read request which was determined to be within the predetermined range. The trial court concluded, and we agree, that there was no literal infringement of this claim. The claimed method requires handling each read address in one of two ways depending on whether the read request matches a write request. The second way, which applies when the pending read request matches a pending write request, is to execute all write requests before executing the read request. LGE contends that when the matching write request happens to be the last in the buffer, all write requests are in fact executed before the matching read request. Although LGE correctly asserts that any practice of the claimed method would be infringement, Bell Commc’ns Research, Inc. v. Vitalink Commc’ns Corp., 55 F.3d 615, 622 (Fed. Cir. 1995), the claim 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 27 must be considered in its entirety. Here, the claim requires each read request to be compared with the buffered write requests, and then one of two alternatives be followed. Because the claim was drafted with this limitation, the fact that the accused device occasionally operates in such a manner does not amount to literal infringement of claim 7. For infringement to be found, the claim requires the accused device to operate in this manner in response to “each” read request. The trial court also found, as a matter of law, that there was no infringement under the doctrine of equivalents. In doing so, it rejected LGE’s argument that performing all of the write requests up to (and including) the one matching the read request is an insubstantial difference from the claim limitation of performing all write requests before executing the incoming read request. The trial court reasoned that LGE’s equivalence theory would vitiate the claim limitation of performing “all” write requests before an incoming read request matching a write request. The doctrine of equivalents operates under the “all limitations rule,” whereby “equivalence [is] assessed on a limitation-by-limitation basis, as opposed to from the perspective of the invention as a whole.” Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1358 (Fed. Cir. 2005) (citing Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 29 (1997)). This doctrine, by its very nature, extends beyond the patent’s literal claim scope, because otherwise a finding of no literal infringement would be a foreordained conclusion of no infringement at all. Ethicon Endo-Surgery v. U.S. Surgical Corp., 149 F.3d 1309, 1317 (Fed. Cir. 1998). At the same time, however, “[i]f our case law on the doctrine of equivalents makes anything clear, it is that all claim 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 28 limitations are not entitled to an equal scope of equivalents.” Moore U.S.A., Inc. v. Standard Register Co., 229 F.3d 1091, 1106 (Fed. Cir. 2000). “There is no set formula for determining whether a finding of equivalence would vitiate a claim limitation, and thereby violate the all limitations rule. Rather, courts must consider the totality of the circumstances of each case and determine whether the alleged equivalent can be fairly characterized as an insubstantial change from the claimed subject matter without rendering the pertinent limitation meaningless.” Freedman Seating Co., 420 F.3d at 1359 (citations omitted). LGE contends that performing some of the write requests is a permissible equivalent to performing all write requests, and that while performing no write requests may vitiate the claim language, performing some does not. As discussed above, there is inevitably a range of equivalents for performing all write requests, even if that range is narrow. See Ethicon Endo-Surgery, 149 F.3d at 1317. If substantially all or nearly all write requests are performed by the accused devices before each matching read request, then the doctrine of equivalents would be fully applicable without vitiating the claim language. Although such scope would be outside of the claim’s literal scope, which is true in any doctrine of equivalents analysis, it would not be inconsistent with the language of the claim. Therefore, a genuine issue of material fact exists as to whether the accused device can function within the narrow range of equivalents that we have described above, and we vacate the trial court’s grant of summary judgment of noninfringement on this ground. 05-1261, -1262, -1263, -1264, -1302, -1303, -1304 29 Conclusion Accordingly, the judgment of the United States District Court for the Northern District of California is affirmed in-part, reversed in-part, and vacated in-part. The case is remanded for further proceedings in accordance with this opinion. COSTS LGE shall have its costs. AFFIRMED-IN-PART, REVERSED-IN-PART, VACATED-IN-PART, AND REMANDED

---

[1] The 1993 versions of 37 C.F.R. §§ 1.9 and 1.28(d) and 13 C.F.R. § 121.12 are applicable to the issue of Lex’s erroneous claim of small entity status that was first made in November of 1993. The 2001 version of 37 C.F.R. § 1.28(c) applies to the expiration issue and the repayment of deficient maintenance fees because the petition to correct status was filed in December of 2000. Citations herein are to the pertinent versions of the regulations.

[2] Since the motions for summary judgment were jointly filed and substantively identical, the opinion, from this point onward, will collectively refer to Ulead-California and Ulead-Taiwan as “Ulead.”

[3] The text of section 1.28(d) was moved to section 1.27(h) in 2000; that provision remains identical to the 1993 version. See 37 C.F.R. § 1.27(h) (2002).

[4] This language is essentially identical to that of the form “Verified Statement Claiming Small Entity Status” appearing in the Manual of Patent Examining Procedure (“MPEP”) when Lex filed the 1993 declaration. See MPEP § 509.03 at 500-16 (5th ed., rev. 15 1993).

[5] Lex saved $2,515 by paying small entity second and third maintenance fees for the ’188 patent, and approximately $14,000 in maintenance fees on its entire patent portfolio. Reply Br. for Def.-Appellant at 4. For comparison, Lex received $600,000 from licensing its patents to Adobe and has earned several million dollars in royalties from its other licenses.

[6] Curiously, in its opinion on sanctions, the district court appears to have found intent based on its finding that Lex’s conduct was grossly negligent or willfully blind, relying on our opinion in Reactive Metals and Alloys Corp. v. ESM, Inc., 769 F.2d 1578 (Fed. Cir. 1985), as holding that “gross negligence is sufficient.” Ulead II, 151 F. Supp. 2d at 1204-05. To the extent that Reactive suggested that a finding of gross negligence standing alone is sufficient to satisfy the intent prong of inequitable conduct, it has been overruled by the en banc portion of our decision in Kingsdown, 863 F.2d at 876 (en banc in relevant part).

[7] The PTO continues to make the article available on its website as an explanation of PTO petitions practice. See http://www.uspto.gov/web/offices/pac/dapp/ opla/petprac.pdf.

[8] The district court found the ’188 patent “unenforceable and/or invalid” based upon inequitable conduct. Ulead, 130 F. Supp. 2d at 1142, 1146. Although the practical effect is generally the same, inequitable conduct renders a patent unenforceable rather than invalid. Minn. Mining and Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 976 F.2d 1559, 1569 (Fed. Cir. 1992). Thus, there was no basis for granting summary judgment of invalidity because of inequitable conduct.