iLOR, LLC v. Google, Inc.

United States Court of Appeals for the Federal Circuit

2008-1178

ILOR, LLC,

Plaintiff-Appellant,

v.

GOOGLE, INC.,

Defendant-Appellee.

David E. Schmit, Frost Brown Todd LLC, of Cincinnati, Ohio, argued for plaintiff-

appellant.

Frank E. Scherkenbach, Fish & Richardson P.C., of Boston, Massachusetts,

argued for defendant-appellee. With him on the brief were Kurt L. Glitzenstein, and

John A. Dragseth, of Minneapolis, Minnesota. Of counsel was Shelley K. Mack, of

Redwood City, California.

Appealed from: United States District Court for the Eastern District of Kentucky

Senior Judge Joseph M. Hood

United States Court of Appeals for the Federal Circuit

2008-1178

ILOR, LLC,

Plaintiff-Appellant,

v.

GOOGLE, INC.,

Defendant-Appellee.

Appeal from the United States District Court for the Eastern District of Kentucky in case

no. 5:07-CV-109, Senior Judge Joseph M. Hood.

__________________________

DECIDED: December 11, 2008

__________________________

Before MAYER, LINN, and MOORE, Circuit Judges.

LINN, Circuit Judge.

iLOR, LLC (“iLOR”) appeals from a judgment of the U.S. District Court for the

Eastern District of Kentucky, iLOR, LLC v. Google, Inc., No. 5:07-CV-109, Doc. 71 (E.D.

Ky. Nov. 30, 2007), which dismissed the “action” with prejudice after the district court

denied iLOR’s motion for preliminary injunctive relief on claim 26 of U.S. Patent No.

7,206,839 (“the ’839 patent”) and granted Google, Inc.’s (“Google’s”) motion for

summary judgment of noninfringement of that claim, iLOR, LLC v. Google, Inc., No.

5:07-CV-109, Doc. 70 (E.D. Ky. Nov. 30, 2007) (“Decision”). As a threshold matter, the

finality of the judgment, which controls the scope of our review, is at issue. We

conclude that the judgment is not final, and as a result, we exercise jurisdiction only

over the district court’s denial of preliminary injunctive relief. On the merits, we

conclude that the district court correctly construed the sole claim limitation at issue, and

did not abuse its discretion by denying iLOR’s motion for preliminary injunctive relief

because noninfringement was undisputed under that construction. Thus, we affirm the

district court’s denial of injunctive relief and dismiss the remaining issues raised in this

appeal, which relate to matters that remain before the district court.

I. BACKGROUND

iLOR is the assignee of the ’839 patent, which is directed to a “method for adding

a user selectable function to a hyperlink.” As stated in the abstract, the method

described in the claims “permits the user to interact with a hyperlink in a variety of ways

without necessarily having to open and/or follow the hyperlink.” Claim 26, the only claim

at issue in this appeal, recites:

A method for enhancing a hyperlink, comprising:

providing a user-selectable link enhancement for a toolbar, the toolbar

being displayable based on a location of a cursor in relation to a hyperlink

in a first page in a first window of an application, wherein said first page is

associated with a first uniform resource locator (URL), wherein said

hyperlink is associated with a second URL and a second page, wherein

said user-selectable link enhancement is adapted to display a graphical

element based on said first URL;

receiving an indication of a first user selection of said link enhancement;

and

as a result of said first user selection,

capturing said first URL associated with said first page; and

displaying a graphical element, said graphical element associated

with said captured first URL, said graphical element adapted to

cause said first page to be displayed as a result of a second user

selection of said graphical element.

iLOR sued Google alleging that Google’s “Google Notebook” product infringed

the ’839 patent. Google counterclaimed, seeking a declaratory judgment of

noninfringement, invalidity, and unenforceability of the ’839 patent. iLOR subsequently

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moved for a preliminary injunction. Relying only on claim 26, iLOR requested that

Google be enjoined from using or inducing others to use Google Notebook in a way that

infringed that claim. Google filed a cross-motion in response for summary judgment of

noninfringement. In the course of resolving these motions, the district court focused, as

the parties did, only on claim 26. The only disputed limitation of that claim was “the

toolbar being displayable based on a location of a cursor in relation to a hyperlink,”

which the district court construed to require that the “toolbar is ‘automatically displayed’

upon the placement of the cursor in proximity to a hyperlink with no further action on the

part of a user.” Decision at 14. Because it was undisputed that Google Notebook does

not automatically display its toolbar, but instead requires the user to right-click on the

hyperlink to display the toolbar, the district court granted Google’s motion for summary

judgment of noninfringement and denied iLOR’s motion for preliminary injunction. Id. at

20-21.

In the decision resolving these motions, the district court also sua sponte ordered

“that [iLOR’s] claims pending against [Google] in this matter shall be and the same

hereby are dismissed with prejudice.” Id. at 21 (emphasis omitted).

Contemporaneously with entry of the decision, the district court also entered the

judgment, which reads, in full:

In accordance with the Order of even date and entered

contemporaneously herewith,

IT IS HEREBY ORDERED:

(1) That this action be, and the same hereby is, DISMISSED

WITH PREJUDICE AND STRICKEN FROM THE ACTIVE DOCKET.

(2) That all pending motions be, and the same hereby are,

DENIED AS MOOT.

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(3) That all scheduled proceedings be, and the same hereby

are, CONTINUED GENERALLY.

(4) That this Order is FINAL AND APPEALABLE and THERE

IS NO JUST CAUSE FOR DELAY.

iLOR timely appealed from the district court’s decision and judgment.

II. DISCUSSION

A. Standard of Review

Claim construction is a question of law, see Markman v. Westview Instruments,

Inc., 52 F.3d 967, 970-71 (Fed. Cir. 1995) (en banc), aff’d, 517 U.S. 370 (1996), over

which we exercise plenary review. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448,

1456 (Fed. Cir. 1998) (en banc).

A district court’s decision granting, denying, or modifying an injunction in a patent

case is reviewed for abuse of discretion. Lab. Corp. of Am. Holdings v. Chiron Corp.,

384 F.3d 1326, 1331 (Fed. Cir. 2004).

B. Analysis

1. Jurisdiction

“Federal courts are not courts of general jurisdiction; they have only the power

that is authorized by Article III of the Constitution and the statutes enacted by Congress

pursuant thereto. For that reason, every federal appellate court has a special obligation

to ‘satisfy itself . . . of its own jurisdiction . . . .’” Bender v. Williamsport Area Sch. Dist.,

475 U.S. 534, 541 (1986) (citations omitted). Thus, before reaching the parties’

arguments, we must first address the scope of our jurisdiction, which depends on how

the judgment is construed. iLOR contends that the judgment disposes of all claims and

counterclaims and therefore is final. Thus, according to iLOR, we have jurisdiction

under 28 U.S.C. § 1295(a)(1) to address all issues raised below, including the district

2008-1178 4

court’s grant of summary judgment of noninfringement and the district court’s sua

sponte dismissal of its remaining claims. Alternatively, iLOR argues that if it does not

dispose of Google’s counterclaims, the judgment certifies the decision for immediate

appeal under Federal Rule of Civil Procedure 54(b), and consequently vests us with

jurisdiction to consider—in addition to the denial of the preliminary injunction—the grant

of summary judgment of noninfringement and the dismissal of iLOR’s remaining claims.

Google contends that the judgment neither disposes of its counterclaims nor meets the

requirements under Rule 54(b) to certify the decision for immediate appeal. Thus,

according to Google, our jurisdiction is limited under 28 U.S.C. § 1292(a)(1) to the

district court’s denial of preliminary injunctive relief.

We agree with Google. We do not interpret the judgment to dispose of Google’s

counterclaims or to certify the decision for immediate appeal under Rule 54(b). iLOR’s

contention that the judgment dismisses Google’s counterclaims rests largely on its

argument that the judgment’s dismissal of the “action” necessarily encompasses all

claims at issue in the case—both iLOR’s claims and Google’s counterclaims. For this

contention iLOR relies upon our decision in Walter Kidde Portable Equipment, Inc. v.

Universal Security Instruments, Inc., 479 F.3d 1330 (Fed. Cir. 2007). iLOR’s reliance

on Walter Kidde in this case is misplaced.

In Walter Kidde, we addressed the propriety of a district court’s grant of a

plaintiff’s motion to voluntarily dismiss pursuant to Rule 41(a)(2) over the objection of a

defendant who had filed counterclaims. The plaintiff in Walter Kidde had filed a Rule

41(a)(2) motion to dismiss the “action” so that it could correct a jurisdictional deficiency

and refile the case. Walter Kidde, 479 F.3d at 1334. The defendant objected and

2008-1178 5

requested dismissal with prejudice or without prejudice but with conditions. Id. The

district court dismissed the “action” without prejudice, and without further comment on

the nature of the dismissal. Id. at 1334, 1335. Because the district court’s order did not

explicitly address the defendant’s counterclaims, the defendant argued on appeal that

the judgment was not final and thus not appealable. We disagreed, stating that “[t]he

term ‘action’ encompasses the entire proceedings in the district court, signifying that the

order of dismissal terminated [the defendant’s] counterclaims.” Id. at 1335.

iLOR appears to contend that following Walter Kidde, a district court’s use of the

word “action” robotically signifies all claims, counterclaims, cross-claims, etc.,

regardless of the context in which that word is used. Walter Kidde did not go so far.

Indeed, our primary citation for the proposition that “action” included the defendant’s

counterclaims was a Second Circuit case which stated that “[t]he word ‘action,’ without

more, is arguably broad enough to encompass any type of judicial proceeding, including

counterclaims.” See Local Union No. 38, Sheet Metal Workers’ Int’l Ass’n AFL-CIO v.

Pelella, 350 F.3d 73, 81 (2d Cir. 2003) (emphases added, citation omitted). We agree

that the word “action,” without further explanation, may generally be used to denote the

entire judicial proceeding, including counterclaims. Thus, in Walter Kidde, where the

parties disputed whether the entire proceeding could be dismissed under Rule 41 in

light of the existence of those counterclaims, it was clear when the district court granted

the motion to dismiss the “action” that the “action” included both the plaintiff’s claims

and the defendant’s counterclaims.

But the context in which the word “action” is used cannot be ignored. The district

court’s decision, which grants summary judgment of noninfringement of claim 26 and

2008-1178 6

dismisses the remainder of iLOR’s claims with prejudice, clearly disposes of iLOR’s half

of the case. But it does not dispose of, or mention, Google’s counterclaims. This is

unremarkable, because the counterclaims were not implicated in assessing the

propriety of iLOR’s motion for preliminary injunction or Google’s motion for summary

judgment of noninfringement. The judgment was entered contemporaneously with and

for the purpose of effectuating the district court’s decision. Because the judgment

makes no mention of Google’s counterclaims, we interpret “action” in the context of this

case to encompass only iLOR’s causes of action. Perhaps the district court thought it

was unnecessary to reach Google’s counterclaims due to the decision, or perhaps it

was unaware that the counterclaims were pending. That is unclear. What is clear,

however, is that neither the decision nor the judgment gives any indication that the

district court intended to address or dismiss Google’s counterclaims. Since the district

court would have clearly abused its discretion by sua sponte dismissing Google’s

counterclaims, see Catz v. Chalker, 142 F.3d 279, 286 (6th Cir. 1998) (permitting sua

sponte dismissals only where the parties have had ample notice of the court’s intent to

dismiss or have had an opportunity to address the issues raised by the dismissal), we

decline to interpret the judgment to do so.

Alternatively, iLOR argues that even if Google’s counterclaims remain pending,

the district court certified the decision for immediate appeal under Rule 54(b), thereby

rendering it reviewable. Rule 54(b) provides that “the court may direct entry of a final

judgment as to one or more, but fewer than all, claims or parties only if the court

expressly determines that there is no just reason for delay.” Whether an order is

sufficient to confer appellate jurisdiction under Rule 54(b) is a question of Federal

2008-1178 7

Circuit law. See Storage Tech. Corp. v. Cisco Sys., Inc., 329 F.3d 823, 830 (Fed. Cir.

2003). While we have never directly addressed the question, the consensus view,

which we hereby adopt, is that the bare recitation of the “no just cause for delay”

standard of Rule 54(b) is not sufficient, by itself, to properly certify an issue for

immediate appeal. See 10 James Wm. Moore et al., Moore’s Federal Practice §

54.23[2] (3d ed. 2008) (“[T]he rule calls for the exercise of the court’s discretion and if

that exercise is to be subject to meaningful appellate review, the court of appeals must

be informed of the basis for the court’s certification of the judgment. The district court

should not simply declare that there is ‘no just reason for delay,’ but should set forth the

justification for that determination.”); see also Corrosioneering, Inc. v. Thyssen Envtl.

Sys., Inc., 807 F.2d 1279, 1282 (6th Cir. 1986) (“[T]o avoid a finding of abuse of

discretion . . . a district court should do more than just recite the Rule 54(b) formula of

‘no just reason for delay.’”). Rather, it must be apparent, either from the district court’s

order or from the record itself, that there is a sound reason to justify departure from the

general rule that all issues decided by the district court should be resolved in a single

appeal of a final judgment. Cf. Ebrahimi v. City of Huntsville Bd. of Educ., 114 F.3d

162, 166-67 (11th Cir. 1997) (“[W]hen a sound basis for the certification is not obvious

and the district court merely repeats the language of the Rule or frames its certification

in conclusory terms, we have little choice but to dismiss the appeal for lack of a final

judgment.”).

The judgment here neither cites Rule 54(b) nor sets forth the circumstances

justifying immediate appeal of the decision; it merely states that there is no just cause

for delay. Nor can we discern from the record a sensible reason to justify review of the

2008-1178 8

decision now, instead of in connection with the final judgment. For these reasons, we

do not have jurisdiction pursuant to Rule 54(b) to review the district court’s decision

granting summary judgment and sua sponte dismissing the remainder of iLOR’s claims.

Because there is neither a final judgment nor an appealable judgment under Rule 54(b),

we limit our review to the district court’s denial of preliminary injunctive relief. 1 See 28

U.S.C. § 1292(a)(1).

2. Preliminary Injunction

The district court construed the “displayable” limitation to require that the “toolbar

is ‘automatically displayed’ upon the placement of the cursor in proximity to a hyperlink

with no further action on the part of a user.” Decision at 14. Based on its construction

of this limitation, the district court concluded that iLOR could not demonstrate a

reasonable likelihood of success on the merits and accordingly denied its motion for

preliminary injunction. Id. at 21. iLOR argues that the specification and prosecution

history do not support the district court’s construction of the “displayable” limitation.

According to iLOR, “displayable” means that “the toolbar can become visible (but

doesn’t necessarily in fact become visible) when the cursor is positioned in a certain

relationship to the enhanced hyperlink, regardless of whether additional user action . . .

is necessary to cause the toolbar to actually display,” Appellant’s Br. at 12, and that

1

We recognize that under limited circumstances in conjunction with the

consideration of the denial of a request for preliminary injunctive relief, we may exercise

discretion, under the doctrine of appellate pendent jurisdiction, to review other

interlocutory orders, which ordinarily would be nonappealable standing alone. See

Intermedics Infusaid, Inc. v. Regents of the Univ. of Minn., 804 F.2d 129, 134 (Fed. Cir.

1986); see also Procter & Gamble Co. v. Kraft Foods Global, Inc., No. 2008-1105, slip.

op. at 6 (Fed. Cir. Dec. 5, 2008). The parties in this case have not requested us to

exercise such discretion, and we decline to do so sua sponte.

2008-1178 9

under this construction of the term it is entitled to a preliminary injunction. Google

counters that the claim language, the specification, and the prosecution history all

support the district court’s construction, thus rendering noninfringement (and lack of

likelihood of success on the merits) undisputed.

We agree with the district court that “the toolbar being displayable based on a

location of a cursor in relation to a hyperlink” is properly limited to toolbars that are

automatically displayed based on the location of the cursor without further user action.

The language of the claim itself suggests that the toolbar is automatically displayed, as

opposed to requiring some further action on the part of the user. The claim recites, “the

toolbar being displayable based on a location of a cursor in relation to a hyperlink.”

(emphasis added). While iLOR contends that the emphasized language is merely a

necessary, as opposed to a sufficient, condition for display of the toolbar, the claim

language does not provide any indication that the display is “based in part” on the

cursor position, nor does either the claim language or the specification illustrate any

other condition which, along with the cursor position, may cause display of the toolbar.

Assuming for the sake of argument, however, that the language of the claim is

ambiguous as to whether further user action is contemplated, such ambiguity is

eliminated when the claim language is viewed in light of the specification and

prosecution history.

The abstract of the ’839 patent, for example, provides that “[w]hen the cursor has

remained near the hyperlink for a predetermined time period, a toolbar is displayed

containing one or more link enhancements that the user may select.” (emphasis

added). Similarly, the specification states that:

2008-1178 10

The Enhanced Hyperlink toolbar may be designed to appear when a user

“mouses-over” a hyperlink. Alternatively, the toolbar may display with the

page or the toolbar may appear when the cursor or pointer is in a

predetermined area around the hyperlink. Preferably the toolbar is

presented to the user instantly on mouse-over, or after the user keeps the

mouse pointer on the hyperlink (or banner ad) for a predetermined time,

for example one to three seconds. A short time delay prevents the

browser from becoming jumbled with too much information if the user

simply desires to click through on any given hyperlink.

’839 patent, col. 3, l. 60 – col. 4, l. 3; see also id., col. 5, ll. 35-41 (“[T]he user selects a

hyperlink in block 102 by moving a cursor either ‘over’ or near a hyperlink that the user

wishes to select. When the cursor is ‘over’ or near a hyperlink, the program displays a

toolbar which illustrates the link enhancements available for that particular hyperlink in

block 104.”); id., col. 7, ll. 37-42 (similar); id., col. 8, ll. 10-20 (similar). The specification

does not disclose any embodiment in which the user must further act in order to display

the toolbar, such as by right-clicking. iLOR disagrees, pointing to the excerpts above

and contending that by requiring the cursor to remain proximate to the hyperlink for a

predetermined time, the embodiment contemplates “further user action.” We disagree.

At best, the specification demonstrates that user inaction upon placing the cursor near

the hyperlink may cause the toolbar to display. There is nothing in the specification,

however, that indicates that some further action, such as right-clicking, is required to

display the toolbar.

The prosecution history of the ’839 patent confirms that iLOR contemplated

display of the toolbar without further user action. During prosecution of the ’839 patent’s

parent application, iLOR distinguished a prior art reference (“Newfield” or “the Newfield

reference”) on the basis that it required further user action for display, not merely

locating the cursor proximate to the hyperlink:

2008-1178 11

Newfield does not teach detecting a cursor in proximity to a hyperlink.

Instead, Newfield teaches that a user must click on or select a hyperlink to

access the breadth-first search system of Newfield. In contrast, the

present invention detects a cursor in proximity to the hyperlink. Therefore

Newfield does not teach detecting a cursor in proximity to a hyperlink.

J.A. at 641 (emphasis in original, citation omitted). iLOR contends that these arguments

are inapplicable to claim 26 because it describes different aspects of the invention than

the claims at issue during prosecution of the parent application.

We disagree that these representations are inapplicable to claim 26. The

arguments made above were made to distinguish claims that contained, inter alia,

limitations relating to “detecting a cursor in proximity to said hyperlink” and “displaying a

graphical toolbar in proximity to said cursor while said cursor is in proximity to said

hyperlink.” Id. at 634, 640. Notably, these limitations are present in independent claims

1 and 9 of the ’839 patent, and iLOR appears to concede that the arguments made

during prosecution of the parent application are applicable to these claims. See

Appellant’s Br. at 49 & n.24. When iLOR added claim 26 during prosecution, it argued

that the claim was “similar to” and “allowable for at least the same reasons” as the

pending claims, including claims 1 and 9. iLOR’s representation that this newly added

claim was similar to the pending claims, and its contemporaneous failure to put the

examiner on notice that it was attempting to capture previously surrendered subject

matter, renders the representations it made with respect to the Newfield reference

applicable to claim 26. See Hakim v. Cannon Avent Group, PLC, 479 F.3d 1313, 1317-

18 (Fed. Cir. 2007). These representations confirm that the claims, including claim 26,

contemplate display of the toolbar without further user action.

2008-1178 12

The parties do not dispute the denial of preliminary injunctive relief if the district

court’s construction of the “displayable” limitation is sustained. Thus, we affirm the

district court’s denial of injunctive relief. 2

III. CONCLUSION

For the foregoing reasons, we affirm the district court’s denial of preliminary

injunctive relief and dismiss the remaining issues raised in this appeal, which relate to

matters that remain before the district court.3

AFFIRMED-IN-PART and DISMISSED-IN-PART

COSTS

No costs.

2

While we do not address the district court’s grant of summary judgment of

noninfringement, we note that the claim construction we affirm herein was the basis for

that decision, there being no dispute over infringement of claim 26 under that claim

construction.

3

Because we exercise jurisdiction only over the matters discussed above,

we do not address the district court’s sua sponte dismissal of iLOR’s remaining claims

in this appeal. Nevertheless, we suggest that the district court may wish to reconsider

that determination in light of the Sixth Circuit’s prohibition against sua sponte dismissals

except in limited circumstances. See Catz, 142 F.3d at 286.

2008-1178 13