Petition for Writ of Certiorari — Cave Consulting Group, LLC, Petitioner v. OptumInsight, Inc.

Supreme Court briefNov 2, 2018

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No. 18-

IN THE

Supreme Court of the United States

CAVE CONSULTING GROUP, LLC,

Petitioner,

OPTUMINSIGHT, INC.,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals for the

Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

RICHARD L. BROPHY*

MARC W. VANDER TUIG

ARMSTRONG TEASDALE LLP

7700 Forsyth Boulevard

St. Louis, MO 63105

(314) 621-5070

rbrophy@armstrongteasdale.com

Counsel for Petitioner

November 2, 2018

*Counsel of Record

QUESTION PRESENTED

Congress requires inventors seeking patent

protection to specifically identify what they regard as

their invention in a patent claim. The Patent Office

relies on the claim language chosen by inventors to

decide whether or not to grant a patent. When

patent disputes arise, courts must construe this

claim language to define the metes and bounds of the

patentee’s exclusionary rights. The line drawn by

this claim construction process also determines

patent validity.

Separately, Congress requires inventors to provide

a specification containing a written description of the

invention. This description serves a different

purpose than the claim: it must teach the public how

to make and use the invention and identify the

inventor’s best mode of practicing the invention.

May a court construe a patent claim in a way that

contradicts its plain and ordinary meaning by relying

on statements in the specification that do not

constitute lexicography or disavowal?

PARTIES TO THE PROCEEDING

All parties to the proceeding are identified in the

caption.

RULE 29.6 STATEMENT

Cave Consulting Group, Inc. (successor to Cave

Consulting Group, LLC following a 2012 merger) has

no parent company and no publicly held company

owns 10 percent or more of its stock.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED...........................................i

PARTIES TO THE PROCEEDING ........................... ii

RULE 29.6 STATEMENT .......................................... ii

TABLE OF CONTENTS ........................................... iii

TABLE OF APPENDICES .......................................vii

TABLE OF AUTHORITIES ....................................... ix

OPINIONS BELOW .................................................... 1

JURISDICTION .......................................................... 1

STATUTORY PROVISIONS INVOLVED ................. 1

INTRODUCTION ........................................................ 2

STATEMENT OF THE CASE .................................... 4

The U.S. Patent Office Issued

CCGroup a Patent with Claims That

Expressly Cover Physician

Efficiency Scoring Methodology

Using Either Direct Or Indirect

Standardization ............................................. 4

II.

CCGroup Sued OptumInsight—a

Competitor Infringing the ’126

Patent Using a Direct

Standardization Methodology—and

the District Court Construed the

Claims to Cover Both the Direct and

Indirect Standardization

Methodologies ................................................ 7

III. At Trial, the Jury Found that the

Inventors Possessed Both Direct and

Indirect Standardization in

Rejecting the Written-Description

Invalidity Challenge under the

District Court’s Construction ........................ 9

IV. The Federal Circuit Narrowly

Construed the Claims Based on Its

View of the “Actual Invention”

Described in the Specification and

Reversed the Jury Verdict ........................... 10

REASONS FOR GRANTING THE

PETITION ............................................................ 11

The Federal Circuit’s SpecificationBased Approach to Claim

Construction Ignores the Primacy of

the Claims Required by § 112 and

this Court’s Precedent ................................. 11

A. “The Name of the Game is the

Claim” ..................................................... 11

B. Statements in the Specification

Cannot Trump Unambiguous

Claim Language Absent

Lexicography or Disavowal .................... 14

C. A Split Has Developed at the

Federal Circuit: Now a Sizable

Faction Views the Specification

as Scope-Limiting—Even Absent

Disavowal or Lexicography .................... 16

D. This Case Typifies the Flawed

and Arbitrary Results that Occur

When Courts Attempt to

“Tether” a Claim to the

Specification ............................................ 23

E. The Concerns Underlying the

Federal Circuit’s SpecificationBased Approach Are Properly

Addressed through the Validity

Analysis, Not Claim

Construction ........................................... 24

II.

This Case is an Ideal Vehicle to

Resolve this Fundamental Issue ................. 27

A. The Claims Here Unmistakably

Pronounce Dr. Cave’s Intention

to Include at Least Direct and

Indirect Standardization as the

Subject Matter that He “Regards

as His Invention” .................................... 27

B. The Federal Circuit Expressly

Noted that It Was Not Relying

on Either the Disavowal or

Lexicography Exceptions for Its

Narrow Claim Construction ................... 28

C. This Case Spotlights the Error in

the Federal Circuit’s

Specification-Based Approach to

Claim Construction ................................ 29

1. This case presents the issue

better than previous cases ................ 30

2. The Federal Circuit

maintained its blinkered

focus on the specification

despite the logical and legal

barriers to its narrow claim

construction ....................................... 31

D. This Case Highlights the Undue

Uncertainty Caused by the

Federal Circuit’s Flawed Claim

Construction Analysis, which

Continues to Erode the PublicNotice Function of Patent Claims .......... 35

CONCLUSION .......................................................... 38

vii

TABLE OF APPENDICES

Page

APPENDIX A — OPINION OF THE

UNITED STATES COURT OF

APPEALS FOR THE FEDERAL

CIRCUIT, DATED MARCH 21, 2018 ................. 1a

APPENDIX B — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF

CALIFORNIA, SAN JOSE DIVISION,

FILED SEPTEMBER 7, 2016 ........................... 20a

APPENDIX C — JUDGMENT OF THE

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF

CALIFORNIA, SAN JOSE DIVISION,

FILED APRIL 6, 2015 ....................................... 90a

APPENDIX D — SPECIAL VERDICT

FORM OF THE UNITED STATES

DISTRICT COURT FOR THE

NORTHERN DISTRICT OF

CALIFORNIA, SAN JOSE DIVISION,

FILED APRIL 3, 2015 ....................................... 92a

APPENDIX E — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF

CALIFORNIA, SAN JOSE DIVISION,

FILED FEBRUARY 23, 2015 ............................ 97a

APPENDIX F — ORDER OF THE UNITED

STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF

CALIFORNIA, SAN JOSE DIVISION,

FILED FEBRUARY 20, 2015 ......................... 102a

viii

APPENDIX G — CLAIM CONSTRUCTION

ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE

NORTHERN DISTRICT OF

CALIFORNIA, SAN JOSE DIVISION,

FILED JUNE 7, 2013 ...................................... 155a

APPENDIX H — DENIAL OF REHEARING

OF THE UNITED STATES COURT OF

APPEALS FOR THE FEDERAL

CIRCUIT, DATED AUGUST 14, 2018............ 198a

APPENDIX I — STATUTORY

PROVISIONS ................................................... 199a

TABLE OF AUTHORITIES

Page(s)

Cases

AllVoice Computing PLC v.

Nuance Commc’ns, Inc.,

504 F.3d 1236 (Fed. Cir. 2007) ............................ 34

Ariad Pharm., Inc. v. Eli Lilly and Co.,

598 F.3d 1336 (Fed. Cir. 2010) ...................... 25, 35

Arlington Indus., Inc. v.

Bridgeport Fitting, Inc.,

632 F.3d 1246 (Fed. Cir. 2011) ................ 20, 21, 24

Atlantic Research Mktg. Sys., Inc. v. Troy,

659 F.3d 1345 (Fed. Cir. 2011) ...................... 25, 26

Aventis Pharma S.A. v. Hospira, Inc.,

675 F.3d 1324 (Fed. Cir. 2012) ............................ 15

Azure Networks, LLC v. CSR PLC,

771 F.3d 1336 (Fed. Cir. 2014) ............................ 21

Becton, Dickinson and Co. v.

Retractable Techs., Inc.,

568 U.S. 1085 (2013) ............................................ 30

Cave Consulting Grp., Inc. v.

Truven Health Analytics Inc.,

No. 3:15-cv-2177, 2016 WL 2902234

(N.D. Cal. May 13, 2016) ................................... 8, 9

Cimiotti Unhairing Co. v. Am. Fur Ref. Co.,

198 U.S. 399 (1905) ........................................ 12, 29

Cont’l Paper Bag Co. v. E. Paper Bag Co.,

210 U.S. 405 (1908) .............................................. 11

Envtl. Designs v. Union Oil Co. of Cal.,

713 F.2d 693 (Fed. Cir. 1983) .............................. 13

General Elec. Co. v.

Wabash Appliance Corp.,

304 U.S. 364 (1938) .............................................. 36

Golden Bridge Tech., Inc. v. Apple Inc.,

758 F.3d 1362 (Fed. Cir. 2014) ............................ 15

Graver Tank & Mfg. Co. v.

Linde Air Prods. Co.,

336 U.S. 271 (1949) ........................................ 12, 29

Hill-Rom Servs., Inc. v. Stryker Corp.,

755 F.3d 1367 (Fed. Cir. 2014) ............................ 15

Howe Mach. Co. v. Nat’l Needle Co.,

134 U.S. 388 (1890) ........................................ 12, 29

ICU Med., Inc. v. Alaris Med. Sys., Inc.,

558 F.3d 1368 (Fed. Cir. 2009) ............................ 26

In re Koller,

613 F.2d 819 (C.C.P.A. 1980)..........................33-34

Interdigital Commc’ns, LLC v. ITC,

690 F.3d 1318 (Fed. Cir. 2012) ...................... 21, 22

Johnson & Johnston Assocs., Inc. v.

R.E. Serv. Co., Inc.,

285 F.3d 1046 (Fed. Cir. 2002) ............................ 14

Markman v. Westview Instruments, Inc.,

517 U.S. 370 (1996) .............................................. 35

Markman v. Westview Instruments, Inc.,

52 F.3d 967 (Fed. Cir. 1995) ................................ 13

Motion Picture Patents Co. v.

Universal Film Mfg. Co.,

243 U.S. 502 (1917) ........................................ 12, 29

Nat’l Recovery Tech., Inc. v.

Magnetic Separation Sys., Inc.,

166 F.3d 1190 (Fed. Cir. 1999) ............................ 25

O’Reilly v. Morse,

56 U.S. 62 (1853) .................................................. 26

On Demand Mach. Corp. v.

Ingraham Indus.,

442 F.3d 1331 (Fed. Cir. 2006) ................ 17, 18, 24

Pacing Techs., LLC v. Garmin Int’l, Inc.,

778 F.3d 1021 (Fed. Cir. 2015) ............................ 15

Phillips v. AWH Corp.,

415 F.3d 1303 (Fed. Cir. 2005) .................... passim

Raytheon Co. v. Roper Corp.,

724 F.2d 951 (Fed. Cir. 1983) .............................. 13

Retractable Techs,

659 F.3d 1369 (Fed. Cir. 2011) ............................ 36

Retractable Techs., Inc. v.

Becton Dickinson & Co.,

653 F.3d 1296 (Fed. Cir. 2011) .................... passim

Smith v. Snow,

294 U.S. 1 (1935) ............................................ 12, 29

SRI Int’l v. Matsushita Elec. Corp. of Am.,

775 F.2d 1107 (Fed. Cir. 1985) ............................ 13

Straight Path IP Grp., Inc. v.

Sipnet EU S.R.O.,

806 F.3d 1356 (Fed. Cir. 2015) ...................... 15, 35

Thorner v. Sony Comput. Entm’t Am. LLC,

669 F.3d 1362 (Fed. Cir. 2012) .......... 15, 18, 28, 29

Toro Co. v. White Consol. Industries, Inc.,

199 F.3d 1295 (Fed. Cir. 1999) ...................... 19, 20

xii

Toshiba Corp. v. Imation Corp.,

681 F.3d 1358 (Fed. Cir. 2012) ............................ 15

Trs. of Columbia Univ. in City of New York

v. Symantec Corp.,

811 F.3d 1359 (Fed. Cir. 2016) ...................... 20, 31

Unwired Planet, LLC v. Apple Inc.,

829 F.3d 1353 (Fed. Cir. 2016) ............................ 15

Vitronics Corp. v. Conceptronic, Inc.,

90 F.3d 1576 (Fed. Cir. 1996)) ............................. 15

Wasica Fin. GmbH v. Cont’l Auto. Sys., Inc.,

853 F.3d 1272 (Fed. Cir. 2017) ...................... 15, 29

White v. Dunbar,

119 U.S. 47 (1886) .............................. 12, 14, 23, 29

Statutes and Other Authorities

28 U.S.C. § 1254(1) ...................................................... 1

35 U.S.C. § 101 .......................................................... 24

35 U.S.C. § 102 .................................................... 24, 26

35 U.S.C. § 103 .................................................... 24, 26

35 U.S.C. § 112 .................................................. passim

35 U.S.C. § 282 .......................................................... 33

Giles S. Rich, The Extent of the Protection

and Interpretation of Claims—American

Perspectives, 21 Int’l Rev. Indus. Prop. &

xiii

Greg Reilly, Judicial Capacities and Patent

Claim Construction: An Ordinary Reader

Standard, 20 Mich. Telecomm. & Tech. L.

Rev. 243 (2014) ..................................................... 36

J.P. Federico, Commentary on the New

Patent Act, 75 JPTOS 161 (1993)........................ 11

R. Polk Wagner, The Two Federal Circuits,

43 Loy. L.A. L. Rev. 785 (2010) ........................... 19

Russell B. Hill & Frank P. Cote, Ending the

Federal Circuit Crapshoot: Emphasizing

Plain Meaning in Patent Claim

Interpretation, 42 IDEA 1 (2002) ........................ 36

PETITION FOR A WRIT OF CERTIORARI

Petitioner Cave Consulting Group, Inc.

(“CCGroup”) respectfully petitions for a writ of

certiorari to the United States Court of Appeals for

the Federal Circuit.

OPINIONS BELOW

The claim construction order of the United States

District Court for the Northern District of California

is reproduced in the appendix to this petition (App.)

at App. 156a–197a. The Federal Circuit panel

decision is available at App. 1a–19a, and reported at

725 Fed. App’x 988. The order of the court of appeals

denying rehearing en banc is reproduced at App.

198a–199a.

JURISDICTION

A panel of the court of appeals entered judgment on

March 21, 2018. App. 1a. A timely petition for

rehearing en banc was denied on August 14, 2018.

App. 199a. This Court has jurisdiction under 28

U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

Section 112 of the Patent Act defines the role and

requirements of the specification: “The specification

shall contain a written description of the invention,

and of the manner and process of making and using

it, in such full, clear, concise, and exact terms as to

enable any person skilled in the art to which it

pertains, or with which it is most nearly connected,

to make and use the same, and shall set forth the

best mode contemplated by the inventor of carrying

out his invention.” 35 U.S.C. § 112, ¶1.1

Section 112 also defines the role and requirements

of the claim(s) that must conclude the specification:

“The specification shall conclude with one or more

claims particularly pointing out and distinctly

claiming the subject matter which the applicant

regards as his invention.” 35 U.S.C. § 112, ¶2.

INTRODUCTION

Claim construction is the single most important

issue underlying patent disputes. It defines the

boundary of the patent monopoly. And the line

drawn by claim construction determines whether the

claim is valid or invalid, infringed or not infringed.

Yet because the specification’s2 role in claim

construction remains uncertain, claim-construction

outcomes vary widely from one court to the next.

1 Section 4(c) of the Leahy-Smith America Invents Act (“AIA”)

made minor wording changes to § 112 and added subheadings

(a) through (f) to the six paragraphs of this statutory section.

Pub. L. No. 112–29, sec. 4(c), 125 Stat. 284, 296 (2011).

Paragraph 1 of 35 U.S.C. § 112 was replaced with newly

designated § 112(a) and paragraph 2 was replaced with § 112(b)

Section 4(e) of the AIA applied this change “to any patent

application that is filed on or after” September 16, 2012. Id.,

sec. 4(e), 125 Stat. at 297. Because the application resulting in

CCGroup’s ’126 patent was filed before that date, the pre-AIA

version of § 112 applies here. The changes to § 112 do not

impact the issues raised in this petition.

2 Under § 112, the specification technically includes both the

written description portion and the claims. Often, however, the

term “specification” is used to refer to just the written

description separate from the claims. That is how the term

“specification” is used in this petition.

This case exemplifies the problem caused by the

Federal Circuit’s non-uniform claim-construction

precedent and provides an ideal opportunity to fix it.

Under longstanding precedent from this Court, the

claims alone define the scope of the patent right.

Limitations from the specification may not be read

into the claims. The only exceptions to this bedrock

principle are if the specification reveals (1)

lexicography (when the patentee gives a special

definition to a claim term) or (2) disavowal (when the

patentee intentionally excludes subject matter from

the scope of a claim).

Nevertheless, some courts (and specifically some

Federal Circuit panels) will deviate from the plain

meaning of a claim term to conform the claim scope

to the court’s interpretation of the “actual invention”

described in the specification. This approach violates

35 U.S.C. § 112, which dictates that the claims

identify “the subject matter which the applicant

regards as his invention.” It also contradicts this

Court’s controlling precedent, ignores the primacy of

claim language, and creates uncertainty. This

uncertainty undermines the notice function of patent

claims, leads to unpredictable outcomes, and results

in protracted litigation—increasing costs and

draining judicial resources.

Here, the Federal Circuit used this approach. The

Federal Circuit found no lexicography or disavowal,

but nonetheless narrowed the scope of an

unambiguous claim term to “tether the claims” to its

view of what the inventor “actually invented.” This

subjective assessment was based solely on the court’s

view of certain statements in the patent

specification. The Federal Circuit’s conscious

disregard of the plain meaning of the claim language

chosen by the inventors is unmistakable. Indeed, the

Federal Circuit construed the term so narrowly that

it no longer encompasses the scope explicitly

mandated by dependent claims. To justify this odd

result, the Federal Circuit held that the plain

meaning of these dependent claims was not

significant because they were added during

prosecution of the patent application.

This case highlights the persistent, irreconcilable

split at the Federal Circuit concerning the proper

role of the specification in claim construction.

CCGroup respectfully requests the Court to grant its

petition and resolve this important issue.

STATEMENT OF THE CASE

I. The U.S. Patent Office Issued CCGroup a Patent

with Claims That Expressly Cover Physician

Efficiency Scoring Methodology Using Either

Direct Or Indirect Standardization.

The patent at issue in this case, U.S. Patent No.

7,739,126 (“the ’126 patent”), claims a method of

determining physician efficiency that requires a step

of calculating “weighted episode of care statistics”

(“Weighting Term”).3 The independent claims

3 For example, claim 22 contains this Weighting Term:

22. A method implemented on a computer system of

determining physician efficiency, the method comprising:

obtaining medical claims data stored in a computer readable

medium on the computer system;

performing patient analysis using said obtained medical

claims data to form episodes of care utilizing the computer

system;

broadly cover the use of any statistical weighting

technique. The dependent claims confirm this fact

by expressly covering direct-standardization and

indirect-standardization weighting techniques:

26. The method in claim 22 wherein:

the calculating of weighted episode of

care statistics across medical conditions

utilizes direct standardization.

C.A. Appx. 1460 (’126 patent) at 112:26–28

(emphasis added).

27. The method in claim 22 wherein:

performing output process based on performed patient

analysis utilizing the computer system, the output process

comprising:

assigning episodes of care to physicians; and

applying a first maximum duration rule to identify episodes

of care;

assigning at least one physician to a report group utilizing the

computer system;

determining eligible physicians and episode of care

assignments utilizing the computer system;

calculating condition-specific episode of care statistics

utilizing the computer system;

calculating weighted episode of care statistics across medical

conditions utilizing a predefined set of medical conditions for a

specific specialty type utilizing the computer system; and

determining efficiency scores for physicians from said

calculated condition-specific episode of care statistics and said

weighted episode of care statistics calculated across medical

conditions utilizing the computer system.

C.A. Appx. 1460 (’126 patent) at 112:7–8 (emphasis added); see

also Claim 29, id. at 112:60–61.

the calculating of weighted episode of

care statistics across medical conditions

utilizes indirect standardization.

Id. at 112:15–17 (emphasis added).

Dependent claims 23 and 26 in the ’126 patent

were added to the application during prosecution as

claims 26 and 27, respectively. See C.A. Appx. 850.

These claims narrowed the independent claim by

further limiting the scope of the Weighting Term to

one of the two specific weighting techniques.

Finding that these new claims did not add new

matter, the examiner proceeded to examine them on

the merits. The examiner subsequently rejected both

dependent claims 26 and 27, as indefinite under the

second paragraph of 35 U.S.C. § 112.

In response, CCGroup explained these two

different techniques for calculating weighted episode

of care statistics:

Claim 26 was rejected for reciting

“calculating weighted episode statistics

across medical conditions utilizes

indirect standardization”. The

examiner considered it unclear how the

calculation utilizes indirect

standardization. One embodiment of

the present invention, describes how the

calculation utilizes indirect

standardization. See STEP 24 –

Calculate Peer Group Weighted Episode

Statistics Across Medical Condition

(¶¶[0254]-[0262])[.]

Claim 27 was rejected for reciting

“calculating weighted episode statistics

across medical conditions utilizes direct

standardization”. The examiner

considered it unclear how the

calculation utilizes direct

standardization. The direct

standardization method utilizes each

physician’s episode distribution weight

to calculate the physician and peer

group weighted episode statistics.

C.A. Appx. 850 (emphasis in original).

After receiving this explanation of the two specific

methods for calculating weighted episode of care

statistics, the examiner allowed the claims and the

Patent Office issued the ’126 patent. Given this

history, it is beyond dispute that the inventors

intentionally claimed at least the two weighting

techniques identified in these dependent claims and

explicitly discussed with the examiner.

II. CCGroup Sued OptumInsight—a Competitor

Infringing the ’126 Patent Using a Direct

Standardization Methodology—and the District

Court Construed the Claims to Cover Both the

Direct

and

Indirect

Standardization

Methodologies.

CCGroup4 filed this lawsuit in 2011 against

OptumInsight, a subsidiary of UnitedHealthcare.

OptumInsight infringes CCGroup’s ’126 patent using

a direct standardization methodology. Judge Davila

construed the claims and confirmed that the

4 CCGroup is a small company whose founder, Dr. Douglas

Cave, invented the methodology for physician efficiency

systems described in the ’126 patent.

Weighting Term covers any statistical weighting

technique, including use of both direct and indirect

standardization. App. 159a–165a.

After considering the claims, specification, and

prosecution history, Judge Davila concluded that this

intrinsic evidence did not reveal that Dr. Cave

disavowed the use of direct standardization with his

invention. The discussion of indirect standardization

in the specification, Judge Davila concluded, merely

addressed the preferred embodiment of the

invention. App. 164a. And the exchange with the

examiner during prosecution made it clear “that Dr.

Cave intended both direct and indirect

standardization to be claimed in the ’126 patent.”

App. 161a (“The purpose of this exchange was to

explain and support both direct and indirect

standardization so that a patent reciting both

methods would issue.”). Judge Davila construed

“weighted episode of care statistics” to mean “cost or

length of care statistics for a group of medical

conditions calculated using the relative importance

of each condition to the others of the group.” App.

165a.

Judge Davila was not the only U.S. District Court

Judge to reach this conclusion. After analyzing the

intrinsic record,5 Judge Illston also construed the

term “weighted episode of care” in Cave Consulting

Grp., Inc. v. Truven Health Analytics Inc., No. 3:15cv-2177, 2016 WL 2902234, at *4–7 (N.D. Cal. May

13, 2016). After analyzing the intrinsic record,

5 The patent at issue in the Truven case was U.S. Patent No.

8,768,726, a patent that claims priority to the ’126 patent at

issue in this case.

Judge Illston concluded that the Weighting Term

covered any type of weighting, including indirect and

direct standardization—rejecting OptumInsight’s

disclaimer argument. Id. Judge Illston noted

Truven’s arguments that the specification failed to

provide enabling or written-description support for

direct standardization, but aptly concluded that

“these arguments are misplaced in the context of

claim construction . . . .” Id. at *6 n.7.

III. At Trial, the Jury Found that the Inventors

Possessed

Both

Direct

and

Indirect

Standardization in Rejecting the WrittenDescription Invalidity Challenge under the

District Court’s Construction.

Based on the district court’s claim construction,

CCGroup litigated this case through trial and

obtained a jury verdict in its favor on infringement

and numerous validity issues. The jury awarded

damages to CCGroup of $12,325,000. The jury

rejected OptumInsight’s written-description

challenge under § 112.6 Thus, the jury found that

the specification supported the full scope of the

Weighting Term—including both direct and indirect

standardization. Judge Davila agreed, denying

OptumInsight’s motion for judgment as a matter of

law on this issue. App. 38a–45a. This factual issue

was appealed by OptumInsight, but not decided by

the Federal Circuit.

See App. 94a.

IV. The Federal Circuit Narrowly Construed the

Claims Based on Its View of the “Actual

Invention” Described in the Specification and

Reversed the Jury Verdict.

The parties’ claim-construction arguments before

the district court and the Federal Circuit focused on

whether or not there was a clear and unmistakable

disavowal of direct-standardization weighting. But

the Federal Circuit decided the case on different

grounds never raised by OptumInsight at the district

court or on appeal. The court limited the claim scope

to a particular embodiment based on its view of the

“actual invention” described in the specification.

The Federal Circuit based its decision on four key

findings:

(1) It concluded that the disavowal exception

(on which OptumInsight’s appeal was based) did not

apply.

(2) It should “constru[e] the claim limitation in

question to ‘tether the claims to what the

specification[] indicate[s] the inventor actually

invented.”

(3) It discounted the relevance of the

dependent claims solely because they were added

after the filing of the original application.

(4) And it disregarded the inventor’s

statements in the prosecution history as contrary to

its view of the “actual invention” in the specification.

App. 13a–18a. Based on these findings, the Federal

Circuit excluded direct-standardization weighting

from the claims—ignoring dependent claims directed

to that very form of weighting—and reversed the

verdict.

REASONS FOR GRANTING THE PETITION

I. The

Federal

Circuit’s

Specification-Based

Approach to Claim Construction Ignores the

Primacy of the Claims Required by § 112 and this

Court’s Precedent.

A. “The Name of the Game is the Claim.”

In 1870, Congress required patent applicants to

“particularly point out and distinctly claim” their

invention. Act of July 8, 1870, ch. 230, § 26, 16 Stat.

198, 201. This statutory mandate confirmed the

primacy of the claim language when defining the

metes and bounds of the inventor’s right to exclude.

Cont’l Paper Bag Co. v. E. Paper Bag Co., 210 U.S.

405, 419 (1908) (“the claims measure the invention”).

And in the Patent Act of 1952, Congress reaffirmed

the importance of the claims in defining the

invention—by memorializing the claim’s role in a

separate paragraph of § 112: “The specification shall

conclude with one or more claims particularly

pointing out and distinctly claiming the subject

matter which the applicant regards as his invention.”

35 U.S.C. § 112, ¶2; J.P. Federico, Commentary on

the New Patent Act, 75 JPTOS 161, 186 (1993)

(reprinted from 35 U.S.C.A. (1954 ed.)) (“In the new

statute the clause relating to the claim has been

made a separate paragraph to emphasize the

distinction between the description and the

claim . . . .”).

When there is a conflict between clear and

unambiguous claim language and statements in the

specification, the claim language wins. See, e.g.,

White v. Dunbar, 119 U.S. 47, 52 (1886); Howe

Mach. Co. v. Nat’l Needle Co., 134 U.S. 388, 394

(1890) (“Doubtless a claim is to be construed in

connection with the explanation contained in the

specification . . . but, since the inventor must

particularly specify and point out [what] he claims as

his own invention or discovery, the specification and

drawings are usually looked at only for the purpose

of better understanding the meaning of the claim,

and certainly not for the purpose of changing it, and

making it different from what it is.”); Cimiotti

Unhairing Co. v. Am. Fur Ref. Co., 198 U.S. 399, 410

(1905) (“In making his claim the inventor is at

liberty to choose his own form of expression, and

while the courts may construe the same in view of

the specifications and the state of the art, they may

not add to or detract from the claim.”); Motion

Picture Patents Co. v. Universal Film Mfg. Co., 243

U.S. 502, 510 (1917) (“It is to the claims of every

patent, therefore, that we must turn when we are

seeking to determine what the invention is . . . .”);

Smith v. Snow, 294 U.S. 1, 11 (1935) (“We may take

it that, as the statute requires, the specifications just

detailed show a way of using the inventor’s method,

and that he conceived that particular way described

was the best one. But he is not confined to that

particular mode of use, since the claims of the

patent, not its specifications, measure the

invention.”); Graver Tank & Mfg. Co. v. Linde Air

Prods. Co., 336 U.S. 271, 277 (1949) (refusing to

narrow the unambiguous claim language based on

the specification, noting that the Court has

“frequently held that it is the claim which measures

the grant to the patentee.”).

Congress formed the Federal Circuit in 1982 and

granted it exclusive jurisdiction over patent appeals

to promote greater uniformity and consistency in

patent law. Early decisions of the Federal Circuit

promoted consistency by endorsing the primacy of

the claim language, as the Court had emphasized.

Envtl. Designs v. Union Oil Co. of Cal., 713 F.2d 693,

699 (Fed. Cir. 1983) (“The claim, not the

specification, measures the invention. . . .

Environmental’s argument that claim 1 must include

a limitation found in the specification is thus legally

unsound.”) (emphasis added); Raytheon Co. v. Roper

Corp., 724 F.2d 951, 957 (Fed. Cir. 1983) (“In arguing

that claims must be read in light of the specification,

that prevention of backflow is the ‘essence’ of

Torrey’s invention, and that all claims must

therefore be read as including the quoted limitation

of claim 1, Raytheon confuses the respective roles of

the specification and claims.”).

There was no uncertainty as to the separate

functions served by the specification and the claims:

“Specifications teach. Claims claim.” SRI Int’l v.

Matsushita Elec. Corp. of Am., 775 F.2d 1107, 1121

n.14 (Fed. Cir. 1985). When it came to defining the

scope of the patent right, Judge Rich (a founding

judge on the Federal Circuit) best summed it up:

“[T]he name of the game is the claim.” Giles S. Rich,

The Extent of the Protection and Interpretation of

Claims—American Perspectives, 21 Int’l Rev. Indus.

Prop. & Copyright L. 497, 499, 501 (1990).

On multiple occasions since its formation, the en

banc Federal Circuit has seemingly confirmed this

principle. Markman v. Westview Instruments, Inc.,

52 F.3d 967, 980 (Fed. Cir. 1995) (“The written

description part of the specification itself does not

delimit the right to exclude. That is the function and

purpose of claims.”); Johnson & Johnston Assocs.,

Inc. v. R.E. Serv. Co., Inc., 285 F.3d 1046, 1052 (Fed.

Cir. 2002) (“Consistent with its scope definition and

notice functions, the claim requirement presupposes

that a patent applicant defines his invention in the

claims, not the specification. After all, the claims,

not the specification, provide the measure of the

patentee’s right to exclude.”); Phillips v. AWH Corp.,

415 F.3d 1303, 1312 (Fed. Cir. 2005).

This “bedrock principle” is so well established that

courts often recite it without fully appreciating its

import. This principle does not simply identify the

starting place for the claim-construction process; it

establishes the primacy of claim language in the

hierarchy of intrinsic evidence.

B. Statements in the Specification Cannot Trump

Unambiguous

Claim

Language

Absent

Lexicography or Disavowal.

The specification plays an important role in the

claim-construction process too. Claims “must be read

in view of the specification, of which they are a part.”

Phillips, 415 F.3d at 1315. Words have different

meanings in different contexts. So it is important to

understand how the language in the claim is used in

the context of the specification. Id. But this context

cannot alter the plain meaning of the claim or

contradict the inventor’s intent, captured by the

language carefully chosen to identify the subject

matter regarded as the invention. Id. at 1323

(recognizing the “danger of reading limitations from

the specification into the claim.”); White, 119 U.S. at

51–2 (“The context [provided in the specification]

may, undoubtedly, be resorted to, and often is

resorted to, for the purpose of better understanding

the meaning of the claim; but not for the purpose of

changing it, and making it different from what it

is.”).

The Federal Circuit has identified two specific

exceptions to the general rule that the scope of plain

and unambiguous claim language cannot be limited

by statements in the specification. First, “the

specification may reveal a special definition given to

a claim term by the patentee that differs from the

meaning it would otherwise possess.” Phillips, 415

F.3d at 1316. In those instances, the patentee’s

lexicography controls. Id. Second, “the specification

may reveal an intentional disclaimer, or disavowal,

of claim scope by the inventor.” Id. In these

instances, the inventor’s expressed intention to limit

the claim scope controls. Id. These are the only two

exceptions identified by the Federal Circuit in

Phillips. Id.7 Neither exception was invoked in this

case.

See also Thorner v. Sony Comput. Entm’t Am. LLC, 669 F.3d

1362, 1365 (Fed. Cir. 2012) (citing Phillips, 415 F.3d at 1313

and Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1580

(Fed. Cir. 1996)); Wasica Fin. GmbH v. Cont’l Auto. Sys., Inc.,

853 F.3d 1272, 1282 (Fed. Cir. 2017); Straight Path IP Grp.,

Inc. v. Sipnet EU S.R.O., 806 F.3d 1356, 1361 (Fed. Cir. 2015);

Unwired Planet, LLC v. Apple Inc., 829 F.3d 1353, 1358 (Fed.

Cir. 2016); Golden Bridge Tech., Inc. v. Apple Inc., 758 F.3d

1362, 1365 (Fed. Cir. 2014); Hill-Rom Servs., Inc. v. Stryker

Corp., 755 F.3d 1367, 1371 (Fed. Cir. 2014); Toshiba Corp. v.

Imation Corp., 681 F.3d 1358, 1369 (Fed. Cir. 2012); Aventis

Pharma S.A. v. Hospira, Inc., 675 F.3d 1324, 1330 (Fed. Cir.

2012); Pacing Techs., LLC v. Garmin Int’l, Inc., 778 F.3d 1021,

1024 (Fed. Cir. 2015).

C. A Split Has Developed at the Federal Circuit:

Now a Sizable Faction Views the Specification

as Scope-Limiting—Even Absent Disavowal or

Lexicography.

The Federal Circuit has applied an alternate claim

construction methodology in some cases. Under this

alternate framework, the specification may be used

to narrow the scope of a claim term’s plain and

ordinary meaning based on what the court views as

the “actual invention” described in the

specification—regardless of whether the statements

in the specification meet the stringent requirements

of the lexicography or disavowal exceptions.

For example, in Retractable Techs., the Federal

Circuit narrowly construed the claim term “hollow

syringe body” to be limited to a one-piece body based

on statements in the specification. Retractable

Techs., Inc. v. Becton Dickinson & Co., 653 F.3d

1296, 1304–05 (Fed. Cir. 2011). The Federal Circuit

reversed the district court, which found that the

term “body” encompassed one-piece or multiple-piece

structures. In doing so, the Federal Circuit did not

rely on a disavowal or lexicography rationale.

Instead, it held that claim construction requires

courts to look to the specification to determine the

outer bounds of the patent rights: “In reviewing the

intrinsic record to construe the claims, we strive to

capture the scope of the actual invention, rather than

strictly limit the scope of the claims to disclosed

embodiments or allow the claim language to become

divorced from what the specification conveys is the

invention.” Id. at 1305. According to the Federal

Circuit in Retractable Techs., courts must construe

claims in a manner that “tether[s] the claims to what

the specifications indicate the inventor actually

invented.” Id.

Similarly, in On Demand Mach. Corp., the Federal

Circuit expressly found that its en banc Phillips

decision “stressed the dominance of the specification

in understanding the scope and defining limits of the

terms used in the claim.” On Demand Mach. Corp. v.

Ingraham Indus., 442 F.3d 1331, 1337–38 (Fed. Cir.

2006). The On Demand court broadly pronounced

that “[i]n general, the scope and outer boundary of

claims is set by the patentee’s description of his

invention.” Id. at 1338, 1340 (“the claims cannot be

of broader scope than the invention that is set forth

in the specification.”).

Sitting en banc in 2005, the Federal Circuit

attempted to resolve the significant uncertainty

surrounding the proper approach to claim

construction. The Phillips decision, however, offered

a little something for both camps.

On the one hand, the en banc Phillips court noted

the primacy of the claims:



“It is a ‘bedrock principle’ of patent law that

‘the claims of a patent define the invention to

which the patentee is entitled the right to

exclude.’”

“The written description part of the

specification itself does not limit the right to

exclude. That is the function and purpose of

claims.”

Phillips, 415 F.3d at 1312 (citations omitted).

But on the other hand, the Phillips court also

emphasized the importance of the specification in the

claim construction process:



“[C]laims ‘must be read in view of the

specification, of which they are a part.’”

“[T]he specification ‘is always highly relevant

to the claim construction analysis. Usually, it

is dispositive; it is the single best guide to the

meaning of a disputed term.’”

Id. at 1315.

Therefore, the Phillips decision failed to resolve the

dispute over the proper role of the specification in

the claim-construction analysis. Indeed, cases after

Phillips have cited it to justify conflicting positions

on both sides of the ongoing dispute. Compare On

Demand, 442 F.3d at 1337 (“Thus the court in

Phillips, resolving conflict, stressed the dominance of

the specification in understanding the scope and

defining the limits of the terms used in the claim.”)

with Thorner, 669 F.3d at 1365 (“The words of a

claim are generally given their ordinary and

customary meaning as understood by a person of

ordinary skill in the art when read in the context of

the specification and prosecution history. . . . There

are only two exceptions to this general rule: 1) when

a patentee sets out a definition and acts as his own

lexicographer, or 2) when the patentee disavows the

full scope of a claim term either in the specification

or during prosecution.”) (citing Phillips, 415 F.3d at

1313).

The failure of the Federal Circuit to resolve this

split was immediately apparent. In fact, in his

dissent in Phillips, Judge Mayer regretted the fact

that the en banc effort had done nothing to resolve

the uncertainty: “after proposing no fewer than

seven questions, receiving more than thirty amici

curiae briefs, and whipping the bar into a frenzy of

expectation, we say nothing new, but merely restate

what has become the practice over the last ten

years—that we will decide cases according to

whatever mode or method results in the outcome we

desire, or at least allows us a seemingly plausible

way out of the case.” Phillips, 415 F.3d at 1330

(emphasis added); see also R. Polk Wagner, The Two

Federal Circuits, 43 Loy. L.A. L. Rev. 785, 793–94

(2010) (describing Phillips as “a masterful example of

contradictory rules hedged by multiple disclaimers

that the rules did not really matter”).

The cases before and after Phillips consistently

evidence this marked split at the Federal Circuit and

the need for this Court to establish certainty as to

whether and how the specification serves to limit the

scope of the claims during claim construction:

Category #1: Exemplary cases limiting the plain

meaning of the claims based on the specification

In Retractable Techs., the claim language of the

independent claim covered a retractable syringe

having a “body.” The issue was whether the “body”

could have multiple pieces or had to be a “one-piece

body.” A dependent claim in that case expressly

required a “one-piece body.” 653 F.3d at 1305. The

Federal Circuit ignored the doctrine of claim

differentiation in favor of its decision to “tether” the

claims to specific embodiments taught in the

specification. See id. (“In this case, while the claims

leave open the possibility that the recited ‘body’ may

encompass a syringe body composed of more than

one piece, the specifications tell us otherwise.”).

In Toro Co. v. White Consol. Industries, Inc., the

Federal Circuit considered whether a claim that

recited a cover “including” a restriction ring should

be construed to require that the ring be attached to

the cover. 199 F.3d 1295, 1299–1302 (Fed. Cir.

1999). The specification described an embodiment

with the ring permanently attached to the cover and

listed advantages of permanent attachment. Id. at

1303–04. The Federal Circuit concluded that the

term “including” required attachment, relying on the

written description and drawings in the specification.

Id. at 1301. In his dissent, Judge Rader contended

that the majority’s interpretation of “including”

“cannot be justified by examination of the ordinary

meaning of that word or of its accepted use in patent

claims, or, especially, by a careful reading of the ’528

patent.” Id. at 1302.

In Trs. of Columbia Univ. in City of New York v.

Symantec Corp., the district court narrowly

construed the term “byte sequence feature” based on

statements in the specification, even though there

was no explicit definition or disavowal. 811 F.3d

1359, 1366–67 (Fed. Cir. 2016). The Federal Circuit

affirmed, rejecting the argument that a claim term’s

plain and ordinary meaning can be overcome in only

two circumstances: when the patentee has expressly

defined a term or has expressly disavowed the full

scope of the claim in the specification and the

prosecution history. Id. at 1363.

Category #2: Exemplary cases refusing to limit

the plain meaning of claims based on the

specification absent disavowal or lexicography

In Arlington Indus., Inc. v. Bridgeport Fitting, Inc.,

the majority rejected an attempt to limit the scope of

the term “spring metal adaptor” to a split spring

metal adaptor, i.e., one that has an opening that

results from not forming a complete circle. 632 F.3d

1246, 1256 (Fed. Cir. 2011). Even though the

specification only described the split-adaptor

embodiment, the claims were not so limited.

Therefore, the majority gave the unambiguous

language of the claims the breadth that was staked

out. Id. (“[t]he written description part of the

specification itself does not delimit the right to

exclude. That is the function and purpose of the

claims.”). In his dissent, Judge Lourie protested that

the plain meaning of the claims extended beyond his

view of the invention described in the specification.

Id. at 1257–58.

In Azure Networks, LLC v. CSR PLC, the Federal

Circuit found that the claim term “MAC Address”

was entitled to its accustomed meaning in the

industry. 771 F.3d 1336, 1347–50 (Fed. Cir. 2014).

Reversing the district court’s narrow, specificationbased construction, the Federal Circuit held that

“[d]eparture from the ordinary and customary

meaning is permissible only when the patentee has

acted as his own lexicographer or disavowed claim

scope in the specification or during the prosecution

history.” In his dissent, Judge Mayer disagreed,

finding that the specification “repeatedly and

unambiguously” referred to a narrow sense of “MAC

Address.” Id. at 1350–51. In his opinion, patent

claims cannot “enlarge what is patented beyond what

the inventor described [in the specification] as the

invention.” Id. at 1352.

Similarly, in Interdigital Commc’ns, LLC v. ITC,

the Federal Circuit gave the claim term “code” its

plain and ordinary meaning despite the

specification’s repeated references to “spreading

codes.” 690 F.3d 1318, 1324–27 (Fed. Cir. 2012).

According to the court, “the inventors’ failure to

include a reference to the alternative embodiment in

the specification does not justify excluding that

embodiment from the coverage of the claims.” Id. at

1328. The court held that “[t]he plain meaning of

claim language ordinary controls unless the patentee

acts as his own lexicographer and provides a special

definition for a particular claim term or the patentee

disavows the ordinary scope of a claim term either in

the specification or during prosecution.” Id. at 1324.

Therefore, the court reversed the ITC’s claim

construction, which limited “code” to “spreading

code.” Id. at 1330. Judge Newman dissented,

finding that the specification’s repeated reference to

“spreading code” should have limited the outer scope

of the claim. Id. at 1330–35. According to Judge

Newman, failing to include the alternative

embodiment from the specification should have

precluded the claim from covering it. Id. at 1335.

The Federal Circuit’s decision in this case has

widened the chasm between these two approaches.

Like prior panel decisions that rely heavily on the

specification in determining claim scope, the court

used its view of the “actual invention” described in

the specification to trump the plain meaning of the

claim language—even though there was no

disavowal or lexicography. But this Federal Circuit

panel pushed the envelope even further: its narrow,

specification-based claim construction effectively

read numerous dependent claims entirely out of the

patent. Specifically, the Federal Circuit excluded

direct standardization from the claims, even though

dependent claims expressly stated that direct

standardization was part of the claimed invention.

This result demonstrates the utter lack of uniformity

and predictability under the Federal Circuit’s

current approach to claim construction.

D. This Case Typifies the Flawed and Arbitrary

Results that Occur When Courts Attempt to

“Tether” a Claim to the Specification.

Relying on decisions falling into Category #1 above,

the panel determined that the independent claims of

the ’126 patent cover only indirect standardization—

a scope far narrower than explicitly claimed. The

panel decided this narrowing was necessary to

“tether” the claims to the descriptions provided in

the specification. In reality, however, this simply

narrowed the claims to a particular embodiment

taught in the specification. Describing this practice

as “tethering” makes it no more permissible under

this Court’s claim construction precedent. See, e.g.,

White, 119 U.S. at 51–52 (“The context [provided in

the specification] may, undoubtedly, be resorted to,

and often is resorted to, for the purpose of better

understanding the meaning of the claim; but not for

the purpose of changing it, and making it different

from what it is.”) (emphasis added).

The panel’s approach to claim construction in this

case demonstrates just how problematic and

unpredictable the results of tethering can be. In

addition to narrowing the scope of the claims based

on its purely subjective, lay assessment of the “actual

invention” described in the specification, the panel’s

decision (1) was not based on any argument

advanced by OptumInsight or briefed by the parties

at the district court or on appeal; (2) directly

contradicted explicit dependent claim language

covering direct standardization; (3) conflicted with

the construction approved by two different district

courts; and (4) ignored the jury’s finding that the

patent contains written description support for both

direct and indirect standardization.

E. The Concerns Underlying the Federal Circuit’s

Specification-Based Approach Are Properly

Addressed through the Validity Analysis, Not

Claim Construction.

There is no dispute that the government should

only reward inventors with patent rights covering

subject matter that they actually invented. This

axiom seems to be the primary spur for the Federal

Circuit’s specification-based approach to claim

construction. Judge Lourie succinctly articulated

this concern in his dissent in Arlington Indus.:

The bottom line of claim construction

should be that the claims should not

mean more than what the specification

indicates, in one way or another, the

inventors invented.

632 F.3d at 1258.

The specification is the heart of the

patent. In colloquial terms, “you should

get what you disclose.”

Id. at 1257; see also On Demand Mach. Corp., 442

F.3d at 1340 (“the claims cannot be of broader scope

than the invention that is set forth in the

specification.”).

But concerns that an inventor has staked out the

claimed subject matter too broadly are necessarily

and appropriately addressed by the statutory

provisions set forth under §§ 101, 102, 103, and 112.

The claim scope resulting from the unambiguous

claim language intentionally used by the inventor is

no doubt fair game for scrutiny under these statutory

sections. Indeed, the sole purpose for the written

description and enablement requirements is to

address this very problem. Ariad Pharm., Inc. v. Eli

Lilly and Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010)

(en banc); Atlantic Research Mktg. Sys., Inc. v. Troy,

659 F.3d 1345, 1354 (Fed. Cir. 2011) (“The purpose of

the written description requirement is to ensure that

the scope of the right to exclude, as set forth in the

claims, does not overreach the scope of the inventor’s

contribution to the field of art as described in the

patent specification.”) (citation omitted); Nat’l

Recovery Tech., Inc. v. Magnetic Separation Sys.,

Inc., 166 F.3d 1190, 1195–96 (Fed. Cir. 1999) (“The

enablement requirement ensures that the public

knowledge is enriched by the patent specification to

a degree at least commensurate with the scope of the

claims.”).

If claims were limited through claim construction

to what was disclosed in the specification, then no

claim would ever be found invalid under § 112 for

want of adequate written description.8 Yet inventors

are frequently penalized for broadly claiming subject

matter that extends beyond the support in their

8 Judge Rader (former Chief Judge of the Federal Circuit)

described this irreconcilable inconsistency between the Federal

Circuit’s specification-based claim construction approach and

the written description invalidity doctrine as “an undeniable

conflict of monumental proportions.” Ariad Pharm., 598 F.3d at

1364 (Rader, J., dissenting-in-part and concurring-in-part).

specification.9 The penalty, however, is a loss of

patent rights resulting from an invalidity ruling—

not a narrow claim construction. As this Court held

in O’Reilly v. Morse, “He can lawfully claim only

what he has invented and described, and if he claims

more his patent is void.” 56 U.S. 62, 121 (1853).

Under the second paragraph of § 112, the claims

identify the subject matter that the inventor regards

as the invention. In construing the claims, a court is

determining the metes and bounds intentionally

staked out by the inventor in the claims. The

statutory patentability requirements amply address

any concerns that an inventor has set these

boundaries too broadly. For example, if this subject

matter turns out not to constitute an actual

invention (i.e., is not novel or would have been

obvious to one of ordinary skill in the art), then the

claim is invalid under § 102 or § 103. If the subject

matter identified by the inventor broadly covers an

abstract idea or law of nature, the claim is invalid

under § 101. And if the inventor claims subject

matter that is not adequately described or enabled

by the description in the specification, then invalidity

under the first paragraph of § 112 results.

9 See, e.g., Atlantic Research Mktg. Sys., 659 F.3d at 1354–55

(refusing to narrow the plain meaning of the claims, then

finding that the resulting scope lacked written-description

support in the specification); ICU Med., Inc. v. Alaris Med. Sys.,

Inc., 558 F.3d 1368, 1377–78 (Fed. Cir. 2009) (invalidating

claims whose plain meaning covered “spikeless” valve

configurations that were not adequately described in the

specification, which only described valves having spikes).

II. This Case is an Ideal Vehicle to Resolve this

Fundamental Issue.

A. The Claims Here Unmistakably Pronounce Dr.

Cave’s Intention to Include at Least Direct

and Indirect Standardization as the Subject

Matter that He “Regards as His Invention.”

This case epitomizes the flawed specification-based

approach to claim construction. Here, there is no

dispute as to what the inventor regarded as his

invention when submitting his claims under § 112,

¶2. In his claims, Dr. Cave used the term “weighted

episode of care statistics” broadly. He purposefully

did not limit it to the indirect standardization

methodology described as his best mode in the

specification. Removing any possibility for doubt,

Dr. Cave also included dependent claims that

expressly covered direct standardization and another

set of dependent claims that expressly covered

indirect standardization. C.A. Appx. 1460.

To summarize the claim structure that Dr. Cave

employed here, consider the following analogy:

Independent Claim 1

“A Ballpoint Pen”

Blue Ink Pen

Red Ink Pen

Green Ink Pen

Purple Ink Pen

• Etc.

•

Dependent Claim 2

Dependent Claim 3

“Wherein the

ink is Red”

“Wherein the

ink is Blue”

The language Dr. Cave chose to particularly point

out and distinctly claim the subject matter that he

“regards as his invention” leaves no doubt as to the

intended scope. Just as the configuration of

independent and dependent claims above require the

independent claim to cover at least red ink and blue

ink pens, so too do the claims of the ’126 patent

mandate that the independent claims cover both

indirect and direct standardization techniques.

B. The Federal Circuit Expressly Noted that It

Was Not Relying on Either the Disavowal or

Lexicography Exceptions for Its Narrow Claim

Construction.

In many cases, it can be difficult to ascertain

whether or not a court’s narrow claim construction

ruling was based on the lexicography or disavowal

exceptions. Here, by contrast, it is indisputable that

the Federal Circuit’s claim-construction ruling did

not apply either exception.

In response to CCGroup’s arguments as to why

there was no disavowal here, the Federal Circuit

concluded that the “law does not require explicit

redefinition or disavowal when the description itself

is affirmatively limiting.” App. 16a.10 The Federal

Circuit then expressly found that “a finding of a

10 The lexicography exception requires that an inventor “‘clearly

set forth a definition of the disputed claim term’ other than its

plain and ordinary meaning.” Thorner, 669 F.3d at 1365

(citations omitted). “It is not enough for a patentee to simply

disclose a single embodiment or use a word in the same manner

in all embodiments, the patentee must ‘clearly express an

intent’ to redefine the term.” Id. The Federal Circuit did not

invoke the lexicography exception in this case. App. 13a–18a.

disclaimer is not correct when, as here, the

description of the invention itself is affirmatively

limiting, and is without any indication that direct

standardization is within the scope of the invention.”

Id. (underlining added). The use of the specification

to limit claim scope in this manner is impossible to

reconcile with the actual claim language—expressly

covering direct standardization. See C.A. Appx. 1460

(’126 patent) at 112:27–29, 113:4–6. The intended

claim scope here is unmistakable and unambiguous.

C. This Case Spotlights the Error in the Federal

Circuit’s Specification-Based Approach to

Claim Construction.

The Federal Circuit narrowly construed the claim

because it believed that the specification showed the

“actual invention” did not include using direct

standardization. The rule followed by the Federal

Circuit here violates § 112 and the Court’s precedent.

See, e.g., White, 119 U.S. at 52; Howe Mach. Co., 134

U.S. at 394; Cimiotti Unhairing Co., 198 U.S. at 410

(1905); Motion Picture Patents Co., 243 U.S. at 510;

Smith, 294 U.S. at 11; Graver Tank, 336 U.S. at 277.

The Federal Circuit’s decision here also cannot be

reconciled with post-Phillips Federal Circuit cases,

like Thorner, recognizing that “absent a clear

disavowal or alternative lexicography by a patentee,

he or she ‘is free to choose a broad term and expect to

obtain the full scope of its plain and ordinary

meaning.’” Wasica, Inc., 853 F.3d at 1281–82

(quoting Thorner, 669 F.3d at 1367). This split needs

to be resolved to establish uniformity on this

important issue. Under the correct legal standard,

the district court’s claim construction was correct

and should have been affirmed.

1. This case presents the issue better than

previous cases.

This case presents a better vehicle for resolving

this issue than prior cases. For example, this case is

a better vehicle than Becton, Dickinson and Co. v.

Retractable Techs., Inc., 568 U.S. 1085 (2013)

(denying cert). In Retractable Techs., the claim

language of the independent claim covered a

retractable syringe having a “body.” The issue was

whether the “body” could have multiple pieces or had

to be a “one-piece body.”

A dependent claim in that case expressly required

a “one-piece body.” Retractable Techs., 653 F.3d at

1305. Under the doctrine of claim differentiation,

however, this merely gave rise to an implication that

“body,” as used in the independent claim, was

intended to encompass more than just one-piece

bodies. Id. The court expressly noted that “none of

the claims expressly recite a body that contains

multiple pieces.” Id. Because of this, the court

believed that it could graft the one-piece limitation

from the specification onto the arguably ambiguous

claim term “body.” See id. (“In this case, while the

claims leave open the possibility that the recited

‘body’ may encompass a syringe body composed of

more than one piece, the specifications tell us

otherwise.”). Had an express claim to a multiplepiece body been present, it would have foreclosed the

possibility that the claims were not intended to

encompass this subject matter. Therefore, though

driven by a desire to tether the claims to what the

specification indicated the inventor “actually

invented,” the court would not have reached the

same conclusion if the hypothetical “multiple piece

body” claim was present. See id.11

This case embodies the exact hypothetical posed in

Retractable Techs.: the dependent claims expressly

require direct-standardization weighting. Therefore,

the dependent claim does not give rise to a mere

presumption or inference that the independent claim

term is broader than the dependent claim, but

instead demonstrates that the independent claim

must be at least as broad as the dependent claims.

Because both weighting techniques are explicitly

included in separate dependent claims, the subject

matter defined in both of these claims is necessarily

encompassed by the independent claim. The Federal

Circuit erred by ignoring this express claim language

and instead narrowing the independent claim to a

specific embodiment based on its subjective

interpretation of the “actual invention” taught by the

specification.

2. The Federal Circuit maintained its

blinkered focus on the specification despite

the logical and legal barriers to its narrow

claim construction.

This case reveals the extent to which some courts

will exploit the specification to disregard the

intended meaning of the claim and reach a desired

11 Similarly, the other case relied on by the Federal Circuit

expressly noted that “construing the independent claim to

exclude material covered by the dependent claim would be

inconsistent.” Trs. of Columbia Univ. v. Symantec Corp., 811

F.3d 1359, 1370 (Fed. Cir. 2016). That is precisely the result of

the Federal Circuit’s claim construction in the present case.

result.12 The Federal Circuit’s claim construction in

this case effectively erased or invalidated the

dependent claims expressly covering direct

standardization. Under § 112, ¶4 (Pre-AIA), “[a]

claim in dependent form shall be construed to

incorporate by reference all the limitations of the

claim to which it refers.” But the Panel excised the

subject matter of the dependent claim from the scope

of the independent claim, as illustrated below:

District Court’s Construction

Independent claim

“weighted episode of care statistics”

Dependent claim

“direct standardization”

Dependent claim

“indirect standardization”

Other weighting techniques

Federal Circuit’s Claim Construction

Dependent claim

“direct standardization”

Other weighting techniques

Independent claim

“weighted episode of

care statistics”

Dependent claim

“indirect standardization”

See Phillips, 415 F.3d at 1330 (H. Mayer, dissenting).

This illogical result violates fundamental tenets of

claim construction by eliminating the directstandardization claims from the patent without

overcoming the presumption of validity under

§ 282.13 Under the ink-pen analogy, the Federal

Circuit read blue pens out of the scope of the

independent claim, despite the existence of a

dependent claim specifically directed to the blue-ink

embodiment.

Perhaps recognizing that the dependent claims14

logically foreclosed its conclusion, the Federal Circuit

disregarded them as “later-added dependent claims”

that must yield to the claim scope “prescribed by the

specification.” App. 17a (“Although generally not

dispositive, the fact that the dependent claims . . .

were added after the filing of the original application

is significant here.”). To support its decision, the

Federal Circuit incorrectly relied on precedent

regarding whether claims constitute part of the

original disclosure for purposes of determining

compliance with the written-description requirement

under § 112. Id. (citing In re Koller, 613 F.2d 819,

13 The district court recognized that limiting the independent

claims to indirect standardization would “read out the nine

dependent claims relying on direct standardization.” App.

162a.

14 These dependent claims were added during prosecution and

accompanied by an explanation of the direct and indirect

standardization techniques being claimed. See C.A. Appx. 850.

The district court found that this prosecution history made it

“clear that Dr. Cave intended both direct and indirect

standardization to be claimed in the ’126 patent.” App. 161a.

The Federal Circuit improperly brushed aside this intrinsic

evidence as contrary to its view of the specification.

823 (C.C.P.A. 1980)). But the Federal Circuit cited

no authority for giving the plain meaning of claim

language less weight in the claim-construction

analysis for non-original claims than for original

claims.

The Federal Circuit’s unsupported rule would have

broad-ranging consequences for inventors who—

during patent prosecution—engage in an ongoing

negotiation with the Patent Office. During this

process, non-original claim language is routinely

added through amendments and new claims. The

idea that such language is less entitled to its plain

meaning than original claim language is illogical,

legally baseless, and fraught with negative

repercussions for future patent prosecution before

the Patent Office and claim construction before the

courts.

The Federal Circuit also relied heavily on the fact

that the specification attributes potential errors to

direct standardization to justify its narrow

construction. See App. 16a (citing ’126 patent at

1:50–51, 2:32–34). This rationale also lacks legal

support. The possible error resulting from direct

standardization was only one of ten different errors

that were attributed to the prior-art systems and

addressed by the patented system. C.A. Appx. 1405

(’126 patent) at 1:46–59. But “the fact that a patent

asserts that an invention achieves several objectives

does not require that each of the claims be construed

as limited to structures that are capable of achieving

all of the objectives.” Phillips, 415 F.3d at 1327; see

also AllVoice Computing PLC v. Nuance Commc'ns,

Inc., 504 F.3d 1236, 1248 (Fed. Cir. 2007) (“[E]very

claim need not contain every feature taught in the

specification.”).

Indeed, as the specification explains, there were a

number of problems in the field at the time of the

invention. The Federal Circuit has cautioned

against “giving invention-defining effect to

specification language included for other descriptive

and enablement purposes.” See Straight Path IP,

806 F.3d at 1361. With the specification, inventors

strive to provide the public with a robust disclosure

for purposes of enabling the practice of the invention

and disclosing their best mode. A patentee’s rights

should not be subject to the whim of a particular

court’s view of the “actual invention” gleaned from

this disclosure—especially when the patent uses

clear and unambiguous language in its claims to

delineate the scope of its exclusionary rights. See

Ariad Pharm., 598 F.3d at 1347 (“Claims define and

circumscribe, the written description discloses and

teaches.”); Phillips, 415 F.3d at 1323 (“To avoid

importing limitations from the specification into the

claims, it is important to keep in mind the purposes

of the specification are to teach and enable those of

skill in the art to make and use the invention and to

provide a best mode for doing so.”).

D. This Case Highlights the Undue Uncertainty

Caused by the Federal Circuit’s Flawed Claim

Construction Analysis, which Continues to

Erode the Public-Notice Function of Patent

Claims.

Uniformity is critical for our patent system.

Markman v. Westview Instruments, Inc., 517 U.S.

370, 390 (1996) (“The limits of a patent must be

known for the protection of the patentee, the

encouragement of the inventive genius of others and

the assurance that the subject of the patent will be

dedicated ultimately to the public.”) (quoting General

Elec. Co. v. Wabash Appliance Corp., 304 U.S. 364,

369 (1938)). Judges and commentators alike have

noted the uncertainty caused by the Federal Circuit’s

methodological split.15

This case exemplifies the extreme inefficiencies and

adverse effects caused by this uncertainty—even for

plainly worded claims. CCGroup disclosed Dr.

Cave’s inventive methodology for physician efficiency

systems to the public in exchange for patent

protection. The Patent Office issued the ’126 patent

to CCGroup in 2010.

CCGroup filed this lawsuit in 2011 against

OptumInsight, a subsidiary of UnitedHealthcare

infringing CCGroup’s patented methodology.

CCGroup litigated this case through trial and

obtained a jury verdict in its favor on infringement

and numerous validity issues. CCGroup has

See, e.g. Retractable Techs, 659 F.3d 1369, 1370 (Fed. Cir.

2011) (Moore, J., dissenting from denial of rehearing en banc)

(noting this conflict and citing articles addressing it); Greg

Reilly, Judicial Capacities and Patent Claim Construction: An

Ordinary Reader Standard, 20 Mich. Telecomm. & Tech. L. Rev.

243, 260–64 (2014) (describing the split and noting the

attendant problems of “high reversal rates, unpredictability

before litigation, uncertainty in litigation, appellate panel

dependence, disincentives to settle, and increased litigation and

costs.”); Russell B. Hill & Frank P. Cote, Ending the Federal

Circuit Crapshoot: Emphasizing Plain Meaning in Patent

Claim Interpretation, 42 IDEA 1, 1 (2002) (describing the

“palpable inter-panel tension” at the Federal Circuit on this

issue, which “encourages wasteful litigation and saps judicial

resources”).

invested significant time and money in reliance on

the scope of its patent rights—which are described in

unambiguous claim language examined and

approved by the Patent Office. Two district courts

reinforced CCGroup’s reliance, by affirming that the

claims indeed meant what they said. The jury found

that OptumInsight infringed CCGroup’s patent and

upheld the patent’s validity under this meaning.

Then, earlier this year, a three-judge panel of the

Federal Circuit concluded that, in its view, the

“actual invention” described in the specification

differed from the plain claim language—a position

OptumInsight had not even pursued before the

district court or on appeal.

This case exposes just how volatile the boundaries

defining U.S. patent rights are under the Federal

Circuit’s inconsistent claim-construction precedent.

More stability and predictability is needed.

CONCLUSION

CCGroup respectfully requests the Court to grant

its petition and clarify the proper role of the

specification in claim construction.

Respectfully submitted,

/s/ Richard L. Brophy

RICHARD L. BROPHY*

MARC W. VANDER TUIG

ARMSTRONG TEASDALE LLP

7700 Forsyth Boulevard

St. Louis, MO 63105

(314) 621-5070

rbrophy@armstrongteasdale.com

Counsel for Petitioner

November 2, 2018

*Counsel of Record

APPENDIX

Appendix A — Appendix

opinionAof the UNITED

STATES COURT OF APPEALS FOR THE

FEDERAL CIRCUIT, DATED MARCH 21, 2018

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

2017-1060

CAVE CONSULTING GROUP, LLC,

Plaintiff-Appellee,

OPTUMINSIGHT, INC., FKA INGENIX, INC.,

Defendant-Appellant.

March 21, 2018, Decided

Appeal from the United States District Court for the

Northern District of California in No. 5:11-cv-00469-EJD,

Judge Edward J. Davila.

Before Lourie, Dyk, and Taranto, Circuit Judges.

Lourie, Circuit Judge.

OptumInsight, Inc. (“Optum”) appeals from the final

judgment by the United Stated District Court for the

Northern District of California. See Cave Consulting Grp.,

LLC v. OptumInsight, Inc., No. 5:11-cv-00469-EJD (N.D.

Appendix A

Cal. Apr. 6, 2015), ECF No. 370; J.A. 1. The judgment

follows a jury verdict in favor of Cave Consulting Group,

LLC (“Cave”) that U.S. Patent 7,739,126 (“the ’126 patent”)

is not invalid and was infringed by Optum, awarding Cave

$12,325,000 in damages. See Cave Consulting Grp., LLC

v. OptumInsight, Inc., No. 5:11-cv-00469-EJD (N.D. Cal.

Apr. 3, 2015), ECF No. 366; J.A. 81-85.

On appeal, Optum challenges the district court’s

various rulings, including a claim construction order, see

Cave Consulting Group, Inc. v. Ingenix, Inc., No. 5:11-cv00469-EJD, 2013 U.S. Dist. LEXIS 80634, 2013 WL

2467930 (N.D. Cal. June 7, 2013) (“Claim Construction

Order”), orders on summary judgment motions, see Cave

Consulting Grp., LLC v. OptumInsight, Inc., No. 5:11-cv00469-EJD, 2015 U.S. Dist. LEXIS 21514, 2015 WL 740379

(N.D. Cal. Feb. 20, 2015) (“SJ Order”); Cave Consulting

Group v. Optuminsight, Inc., No. 5:11-cv-00469-EJD,

2015 U.S. Dist. LEXIS 192202 (N.D. Cal. Feb. 23, 2015),

ECF No. 293; J.A. 77-79, an order on Daubert motions,

see Cave Consulting Group, LLC v. OptumInsight, Inc.,

No. 5:11-cv-00469-EJD, 2015 U.S. Dist. LEXIS 21514,

2015 WL 13413389 (N.D. Cal. Feb. 20, 2015) (“Daubert

Order”), an order on certain pre-trial motions, see Cave

Consulting Grp., LLC v. OptumInsight, Inc., No. 5:11-cv00469-EJD (N.D. Cal. Mar. 16, 2015), ECF No. 332; J.A.

80, and an order on motion for judgment as a matter of

law (“JMOL”) or for a new trial, see Cave Consulting Grp.,

LLC v. OptumInsight, Inc., No. 5:11-cv-00469-EJD, 2016

U.S. Dist. LEXIS 120932, 2016 WL 4658979 (N.D. Cal.

Sept. 7, 2016) (“Post-trial Order”). Because the district

court erred in its claim construction, we reverse in part,

vacate in part, and remand.

Appendix A

Background

Cave owns the ’126 patent, which discloses “[a] method

for measuring physician efficiency and patient health

risk stratification.” ’126 patent Abstract. The ’126 patent

describes that a physician’s “efficiency,” i.e., the cost of

care by a physician compared to that of a peer group,

can be determined by analyzing relevant medical claims

data. Id. col. 1 ll. 13-46, col. 7 l. 4-col. 9 l. 26. Independent

claims 22 and 29 are at issue in this appeal; claim 22 reads

as follows:

22. A method implemented on a computer

system of determining physician efficiency, the

method comprising:

obtaining medical claims data stored

in a computer readable medium on the

computer system;

performing patient analysis using said

obtained medical claims data to form

episodes of care utilizing the computer

system;

performing output process based on

performed patient analysis utilizing

the computer system, the output

process comprising:

assigning episodes of care to

physicians; and

Appendix A

apply i ng a f i rst ma x i mum

du r at ion r u le t o ide nt i f y

episodes of care;

assigning at least one physician

to a repor t g roup uti l i zi ng the

comput er syst em; det er m i n i ng

eligible physicians and episode of care

assignments utilizing the computer

system;

calculating condition-specific episode

of care statistics utilizing the computer

system;

calculating weighted episode of care

statistics across medical conditions

utilizing a predefined set of medical

conditions for a specific specialty type

utilizing the computer system; and

determining efficiency scores for

physicians from said calculated

condition-specific episode of care

statistics and said weighted episode

of care statistics calculated across

medical conditions utilizing the

computer system.

Id. col. 111 l. 55-col. 112 l. 14 (emphases added).

Similarly, claim 29 requires “[a] computer program

product” that “perform[s] the acts of” the identical steps

of the method delineated in claim 22. Id. col. 112 ll. 38-67.

Appendix A

The ’126 patent describes its method as employing

what it calls a “marketbasket” based on physicians’

specialties and discloses calculating “weighted episode

statistics” of a peer group and of a physician to determine

the physician’s efficiency score. Id. col. 92 l. 27-col. 94 l. 47.

In particular, the ’126 patent describes that according to

its method of using the “marketbasket,” “regardless of a

physician’s (or peer group’s) actual episode work effort, the

rule standardizes each physician’s actual work effort to a

static set of weight factors,” and that its method “allows

for an apples-to-apples comparison of one physician’s

marketbasket results to another physician’s marketbasket

results.” Id. col. 73 ll. 51-53, 57-61. The patent further

states that its calculation of “weighted episode statistics”

using the “marketbasket” is “referred to as the indirect

standardization rule” and that “[t]he system of the present

invention uses an indirect standardization technique for

weighting together the episodes within the core group of

medical conditions.” Id. col. 92 ll. 37-41.

As background, the ’126 patent discusses the prior art

methods that “use a physician’s actual episode composition.”

Id. col. 1 ll. 50-51. The patent further discusses, inter alia,

a type of measurement error, which “occurs in most if not

all current efficiency measurement systems, occurs when

the physician’s actual episode composition is used.” Id. col.

2 ll. 32-34. On the other hand, the patent states that, in

calculating a peer group’s “weighted episode statistics,”

its method “does not use the peer group’s actual episode

composition to calculate the weighted average. Instead,

the predetermined standard marketbasket weights are

used.” Id. col. 93 ll. 12-14. Similarly, in calculating an

individual physician’s “weighted episode statistics,” the

Appendix A

patent states that “the same indirect standardization

weighting calculations are performed using the physician’s

condition-specific utilization and charges per episode and

the same specialty-specific marketbasket weights.” Id.

col. 93 ll. 31-35.

In 2011, Cave filed suit against Ingenix, Inc., Optum’s

predecessor, in the Northern District of California, alleging

infringement of the ’126 patent. Optum counterclaimed,

asserting its own patents against Cave. They were found

not to have been infringed and that issue is not before us

in this appeal. It is undisputed that Cave and Optum both

develop and market software and services that are used

to measure efficiency of healthcare providers. Appellant’s

Br. 3-4; Appellee’s Br. 2-3.

In August 2012, the district court held a claim

construction hearing. In June 2013, the court issued an

order construing, inter alia, certain claim limitations

of the ’126 patent. See Claim Construction Order,

2013 U.S. Dist. LEXIS 80634, 2013 WL 2467930. The

court construed “weighted episode of care statistics” in

claims 22 and 29 as “cost or length of care statistics for a

group of medical conditions calculated using the relative

importance of each condition to the others of the group,”

adopting Cave’s proposed construction. 2013 U.S. Dist.

LEXIS 80634, [WL] at *2-4. In so doing, the court rejected

Optum’s proposal to construe the limitation as requiring

a usage of “predetermined weight factors” rather than

the actual episode composition. Id. Such requirement

would exclude direct standardization from the scope of the

claim, and the district court reasoned that doing so would

“essentially read out the nine dependent claims that rely

on direct standardization.” 2013 U.S. Dist. LEXIS 80634,

Appendix A

[WL] at *4. The court, however, agreed with Optum and

declined to construe the limitation “determining eligible

physicians and episode of care assignments” in claims 22

and 29, adopting the plain meaning of the language of the

claim limitation. 2013 U.S. Dist. LEXIS 80634, [WL] at

*5-6. In construing these claim limitations, the district

court did not rely on any extrinsic evidence. See 2013 U.S.

Dist. LEXIS 80634, [WL] at *2-6.

In February 2015, the district court issued orders on

the parties’ motions, including their respective motions to

exclude, see Daubert Order, 2015 U.S. Dist. LEXIS 21514,

2015 WL 13413389, and summary judgment motions on

infringement and validity, see SJ Order, 2015 U.S. Dist.

LEXIS 21514, 2015 WL 740379. In its summary judgment

order, the district court determined, inter alia, that

Optum had not shown invalidity or noninfringement of

the ’126 patent at the summary judgment stage. SJ Order,

2015 U.S. Dist. LEXIS 21514, 2015 WL 740379, at *3-12,

*14-15. The court first rejected Optum’s argument that

the ’126 patent was invalid for anticipation, being on sale

or in public use under § 102(b), or due to prior invention

by Optum under § 102(g).1 U.S. Dist. LEXIS 21514, [WL]

at *3-12.

As for Optum’s noninfringement arguments, the

court rejected them. It determined that they were either

an attempt to relitigate the claim limitations already

construed, or dependent upon the plain meaning of

1. The ’126 patent was filed before the effective date of the

Leahy-Smith America Invents Act (“AIA”), Pub. L. 112-29, 125 Stat.

284 (2011), and is governed by the prior versions of certain sections

of Title 35, including §§ 102 and 112, see id., Pub. L. 112-29, §§ 3(n)

(1), 4(e), 125 Stat. at 293, 297.

Appendix A

the limitations not construed by the court and must be

understood by the jury from the viewpoint of a skilled

artisan. 2015 U.S. Dist. LEXIS 21514, [WL] at *14-15. Thus,

the court ruled that, beyond the limitation specifically

construed, namely, “weighted episode of care statistics,”

the remaining language of “calculating weighted episode

of care statistics across medical conditions utilizing

a predefined set of medical conditions,” which Optum

argued it did not meet, should be understood by the jury

according to how a person of ordinary skill in the art would

read the limitation. Id. The court also rejected Optum’s

noninfringement argument regarding other limitations,

including “determining eligible physicians and episode

of care assignments,” which the court had decided not to

construe. 2015 U.S. Dist. LEXIS 21514, [WL] at *15.

Thereafter, the court issued an order clarifying its

SJ Order, and granted “[Cave’s] motion for summary

judgment of validity of the ’126 patent under § 102(a), (b),

and (g) for the same reasons set forth in the Order.” J.A.

77-79. The court also granted Cave’s motion to exclude

from trial Optum’s arguments on whether a certain order

of steps should be required to meet the “determining

eligible physicians and episode of care assignments”

limitation. J.A. 80.

A jury trial was held in March 2015, and, as relevant to

this appeal, the jury was instructed on the meaning of the

claim limitations as construed in the Claim Construction

Order and presented with the questions of invalidity of

the ’126 patent for inadequate written description of

“weighted episode of care statistics” under § 112 and

Appendix A

infringement of claims 22 and 29 by Optum’s Impact

Intelligence software product. Cave Consulting Grp., LLC

v. OptumInsight, Inc., No. 5:11-cv-00469-EJD (N.D. Cal.

Apr. 1, 2015), ECF No. 357; J.A. 13444-50. In addition to

the claim limitations construed in the Claim Construction

Order, the jury was also instructed on the meaning of

“predefined set of medical conditions.” J.A. 13446-47; see

also Post-trial Order, 2016 U.S. Dist. LEXIS 120932, 2016

WL 4658979, at *5. At the conclusion of the trial, the jury

found, inter alia, that the limitation “weighted episode of

care statistics” does not lack adequate written description

support, and that claims 22 and 29 were infringed by

Optum. J.A. 82. The jury awarded Cave $12,325,000 in

damages. J.A. 83.

Following the jury trial, the parties filed post-trial

motions. The district court denied all but part of Cave’s

motion to amend the judgment, awarding prejudgment

interest, supplemental damages, and post judgment

interest. Post-trial Order, 2016 U.S. Dist. LEXIS 120932,

2016 WL 4658979, at *25-26.

As relevant here, the district court denied Optum’s

motion for JMOL of noninfringement, noting that Optum

did not seek construction of the “calculating weighted

episode of care statistics across medical conditions

utilizing a predefined set of medical conditions for a

specific specialty type” limitation or make any argument

before the jury on its plain and ordinary meaning. Posttrial Order, 2016 U.S. Dist. LEXIS 120932, 2016 WL

4658979, at *4-5. The court concluded that the jury’s

infringement verdict was supported by the substantial

10a

Appendix A

evidence of Cave’s expert testimony that Optum performed

that limitation. Id. The court further determined that

the jury reasonably found that the limitation “weighted

episode of care statistics” construed as covering both

direct and indirect standardizations was supported by

adequate written description because the ’126 patent’s

critical description of direct standardization was not an

express disclaimer of direct standardization. 2016 U.S.

Dist. LEXIS 120932, [WL] at *7-9.

Optum timely appealed. We have jurisdiction pursuant

to 28 U.S.C. § 1295(a)(1).

Discussion

On appeal, Optum challenges the district court’s

claim construction, denial of summary judgment of

noninfringement, and, after the jury trial, denial of JMOL

of noninfringement. Optum alternatively argues that the

district court erred in granting summary judgment when

it concluded that the ’126 patent is not invalid for being in

public use or on sale under § 102(b) or due to prior invention

by Optum under § 102(g), which were raised as affirmative

defenses. Appellant’s Br. 56; Oral Argument at 1:56-2:38,

Cave Consulting Grp., LLC v. OptumInsight, Inc., No. 171060 (Fed. Cir. Feb. 12, 2018), http://oralarguments.cafc.

uscourts.gov/default.aspx?fl=2017-1060.mp3. Optum also

challenges the calculation of the damages award.

We conclude that the district court erred in its

construction of “weighted episode of care statistics,” which

resulted in an erroneous finding of infringement based on

11a

Appendix A

undisputed facts. As such, we need not evaluate Optum’s

challenge to the damages determination, which is now

moot. Moreover, because the issue of invalidity under §

102(b) and (g) were raised only as affirmative defenses

and because neither party is seeking an adjudication on

those issues in case of a finding of noninfringement, we

do not reach the invalidity issues under § 102(b) or (g).

See Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S.

83, 99-102, 113 S. Ct. 1967, 124 L. Ed. 2d 1 (1993). As

the Supreme Court noted in Cardinal Chemical, “[a]n

unnecessary ruling on an affirmative defense is not the

same as the necessary resolution of a counterclaim for a

declaratory judgment.” Id. at 93-94. Invalidity was not

raised here as a counterclaim.

Furthermore, because our construction of the

“weighted episode of care statistics” limitation is

dispositive of the infringement issue based on undisputed

facts, we need not discuss the proper construction of

the “determining eligible physicians and episode of care

assignments” limitation, or whether Optum has waived

its claim construction argument for that limitation, as

Cave has argued.

We will discuss the construction of “weighted episode

of care statistics” and infringement issues in turn. We

apply the law of the regional circuit in patent appeals

“unless the issue pertains to or is unique to patent law.”

AbbVie Deutschland GmbH & Co. v. Janssen Biotech,

Inc., 759 F.3d 1285, 1295 (Fed. Cir. 2014) (internal

quotation marks and citation omitted). We review a district

court’s denial of a motion for JMOL under the law of the

12a

Appendix A

regional circuit in which it sits, here, the Ninth Circuit.

See SimpleAir, Inc. v. Sony Ericsson Mobile Commc’ns

AB, 820 F.3d 419, 424 (Fed. Cir. 2016). The Ninth Circuit

reviews a denial of JMOL de novo, viewing “the evidence

in the light most favorable to the nonmoving party” and

“draw[ing] all reasonable inferences in that party’s favor,”

and a jury’s verdict for substantial evidence. EEOC v.

Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir.

2009) (internal quotation marks and citation omitted). A

grant of post-verdict JMOL is proper only if “there is no

legally sufficient basis for a reasonable jury to find for

that party on that issue.” Winarto v. Toshiba Am. Elecs.

Components, Inc., 274 F.3d 1276, 1283 (9th Cir. 2001)

(quoting Reeves v. Sanderson Plumbing Prods., Inc., 530

U.S. 133, 149, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000))

(internal quotation marks and citation omitted).

“The ultimate construction of claim language is a

question of law reviewed de novo, based upon underlying

factual determinations reviewed for clear error.”

SimpleAir, 820 F.3d at 425 (citing Teva Pharms. USA, Inc.

v. Sandoz, Inc., 135 S. Ct. 831, 837-39, 190 L. Ed. 2d 719

(2015)). In construing claims, courts follow the principles

set forth in Phillips v. AWH Corp., starting with the

language of the claims “read in view of the specification, of

which they are a part.” 415 F.3d 1303, 1315 (Fed. Cir. 2005)

(en banc) (quoting Markman v. Westview Instruments,

Inc., 52 F.3d 967, 979 (1995) (en banc), aff’d, 517 U.S.

370, 116 S. Ct. 1384, 134 L. Ed. 2d 577 (1996)) (internal

quotation marks omitted). Accordingly, if a district court’s

claim construction was based only on intrinsic evidence,

and was reached without making any underlying factual

13a

Appendix A

findings relying on extrinsic evidence, as the court did

here, we review the court’s claim construction without

deference. SimpleAir, 820 F.3d at 425 (citing Teva, 135

S. Ct. at 842; CardSoft, LLC v. VeriFone, Inc., 807 F.3d

1346, 1350 (Fed. Cir. 2015)).

“Where an infringement verdict relies on an incorrect

claim construction, and no reasonable jury could have

found infringement under the proper claim construction,

this court may reverse the district court’s determination

with respect to JMOL without remand.” Id. (citing Finisar

Corp. v. DirecTV Grp., Inc., 523 F.3d 1323, 1333 (Fed.

Cir. 2008)).

Construction of “weighted episode of care statistics”

Optum argues that the district court erred in its claim

construction because this limitation when read in light of

the specification excludes direct standardization. Optum

contends that the patentee distinguished his invention

from, and disparaged the prior art methods that use, direct

standardization, and repeatedly referred to his invention

as using indirect standardization. Optum notes that at

the time of filing, the specification, including the original

claims, did not purport to claim direct standardization

as part of the invention, and that only after five years

following the filing date, did the patentee add dependent

claims reciting “direct standardization.” According to

Optum, the district court erred in relying on these lateradded dependent claims in construing the independent

claims. Optum further argues that the district court’s

construction cannot stand because, if the claim limitation

14a

Appendix A

is interpreted to include direct standardization, it would

lack adequate written description.

Cave responds that the district court did not err in

its claim construction because the method using indirect

standardization described in the specification is merely

a preferred embodiment, as demonstrated in the patent

itself and prosecution history. Cave argues that because the

language of the independent claims itself is not limiting and

because direct standardization is one way of “weight[ing],”

the limitation should be construed to include direct

standardization. Cave further contends that the dependent

claims that specifically recite “direct standardization”

support its reading of the independent claims, as noted

by the district court. Cave also urges that the description

of the prior art methods using direct standardization,

which in some cases may lead to error according to the

specification, does not amount to a disclaimer, which must

be clear and unmistakable. According to Cave, because

direct standardization was a known weighting technique,

the written description requirement was met under the

court’s claim construction despite the patent’s critical

reference to direct standardization.

We agree with Optum that the district court erred

in construing “weighted episode of care statistics” as

including direct standardization. The district court

first discussed that the critical description of direct

standardization in the patent does not necessarily amount

to a disclaimer. Claim Construction Order, 2013 U.S.

Dist. LEXIS 80634, 2013 WL 2467930, at *4. In reaching

the conclusion that the claim limitation should include

15a

Appendix A

direct standardization, however, the district court’s only

support was from the dependent claims, based on the

reasoning that the court should differentiate the scope

of the dependent claims from that of the independent

claims to preserve the validity of the dependent claims.

Id. The error underlying this analysis is the district

court’s presumption of a broad and non-limiting reading

of “weighted episode of care statistics” with respect to

direct versus indirect standardization.

Claim language is not read in isolation. Phillips, 415

F.3d at 1315. Here, the claim limitation when read in

light of the specification elucidates the meaning of the

claim language as used by the patentee. As both parties

agree, the ’126 patent describes its method as one that

employs indirect standardization. Cave characterizes this

undisputed fact as the patent’s description of merely one

embodiment, presumably one out of many. However, this

contention is unpersuasive. The patent in its specification

affirmatively limits its method to one that uses one

particular technique, namely, indirect standardization,

as opposed to another used in prior art methods.

Cave does not identify, nor do we find, any indication

in the ’126 patent’s description that its invention employs

direct standardization, and, other than the dependent

claims, Cave’s support for including direct standardization

comes exclusively from the description of the prior

art methods in the background section. See Appellee’s

Br. 31-32. Indeed, the ’126 patent repeatedly and

consistently describes that the calculation of “weighted

episode statistics” according to its method uses indirect

16a

Appendix A

standardization. ’126 patent col. 92 ll. 39-41, col. 93 ll. 1214, 31-35. Moreover, the patent’s distinguishing its method

that uses indirect standardization from the purportedly

error-generating prior art methods that use direct

standardization further demonstrates that the scope of

this “weighted” feature of the invention is affirmatively

limited to indirect standardization. Compare id., with id.

col. 1 ll. 50-51, col. 2 ll. 32-34; see also Retractable Techs.,

Inc. v. Becton, Dickinson & Co., 653 F.3d 1296, 1305 (Fed.

Cir. 2011) (construing the claim limitation in question to

“tether the claims to what the specifications indicate the

inventor actually invented”).

Cave’s argument that finding a disclaimer through

a “clear and unmistakable” disavowal is required for

Optum’s argument to prevail is also unpersuasive.

Contrary to Cave’s contention, although “[i]n general,

statements about the difficulties and failures in the prior

art, without more, do not act to disclaim claim scope,”

Retractable Techs., 653 F.3d at 1306 (emphasis added),

“[o]ur case law does not require explicit redefinition or

disavowal” when the description itself is affirmatively

limiting, Trs. of Columbia Univ. in City of N.Y. v.

Symantec Corp., 811 F.3d 1359, 1363 (Fed. Cir. 2016).

Here, the specification does more than discuss certain

disadvantages of the prior art methods. It distinguishes

its invention from them, particularly pointing out what the

invention does not use. Thus, we conclude that a finding of

a disclaimer is not correct when, as here, the description of

the invention itself is affirmatively limiting, and is without

any indication that direct standardization is within the

scope of the invention.

17a

Appendix A

Furthermore, certain canons of claim construction

apparently employed by the district court also do not

compel a contrary result. Canons of claim construction,

such as the doctrine of claim differentiation and the

canon of interpreting claims to preserve their validity,

are not absolute. See, e.g., Howmedica Osteonics Corp. v.

Zimmer, Inc., 822 F.3d 1312, 1323 (Fed. Cir. 2016) (noting

that the doctrine of claim differentiation merely creates

“a rebuttable presumption that may be overcome by a

contrary construction dictated by the written description

or prosecution history”) (citation omitted). Although

generally not dispositive, the fact that the dependent

claims relied upon by Cave were added after the filing of

the original application is significant here. It is true that the

written description and the originally filed claims are part

of the specification. In re Koller, 613 F.2d 819, 823 (CCPA

1980). And, had the originally filed application, including

the original claims, in any way indicated that its invention

included direct standardization, the later-added dependent

claims specifically claiming “direct standardization” could

have lent support to Cave’s contention that the independent

claims cover direct standardization. However, in view of

the specification’s consistently limiting description, we

conclude that these interpretive canons, despite the lateradded dependent claims, cannot overcome the claim scope

that is unambiguously prescribed by the specification.

The prosecution history also does not require

a different conclusion. Cave’s only reference in the

prosecution history is a single passing remark by the

applicant that states that the disclosed calculation that

uses indirect standardization is “[o]ne embodiment of the

present invention.” J.A. 850. This remark alone, with no

18a

Appendix A

substantive elaboration on what the patented invention is,

has little value. As discussed above, we decline to adopt

Cave’s argument relying on its post-hoc characterization

of the entirety of what is disclosed in the patent as only

“one embodiment.”

We therefore conclude that the district court erred in

construing “weighted episode of care statistics” and that

that limitation does not encompass direct standardization.

We also conclude that the jury verdict that there was no

lack of written description support in the patent cannot

stand to the extent that it relied on the erroneous claim

construction.

II. Infringement

It is undisputed that Optum’s method performs direct

standardization. Appellant’s Br. 37 (quoting J.A. 1318586 (Cave’s closing argument)). Furthermore, Cave does

not argue that any factual dispute remains if “weighted

episode of care statistics” is interpreted to exclude

direct standardization. Oral Argument at 29:10-23, Cave

Consulting Grp., No. 17-1060 (Fed. Cir. Feb. 12, 2018).

The jury’s infringement verdict was based on the

district court’s erroneous construction of “weighted

episode of care statistics,” J.A. 13444-50, applied

to the undisputed fact that Optum performs direct

standardization. As such, the infringement verdict cannot

stand as a matter of law because no reasonable jury could

find that Optum infringes claims 22 and 29 of the ’126

patent under the correct construction of “weighted episode

19a

Appendix A

of care statistics,” which excludes direct standardization.

See SimpleAir, 820 F.3d at 425.

We therefore conclude that Optum does not infringe

claims 22 and 29 of the ’126 patent as a matter of law.

Conclusion

For the foregoing reasons, we reverse the district

court’s claim construction in part, vacate the jury verdict

to the extent that it was based on the district court’s

incorrect claim construction, and vacate the judgment

of infringement and award of damages. We remand with

instructions to enter judgment of noninfringement in

favor of Optum.

REVERSED IN PART, VACATED IN PART,

AND REMANDED

Costs

Costs to Optum.

20a

B the United

Appendix B —Appendix

oRdeR of

StAteS diStRiCt CoURt foR the noRtheRn

diStRiCt of CALifoRniA, SAn JoSe diViSion,

fiLed SepteMBeR 7, 2016

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

Case No. 5:11-cv-00469-EJD

CAVE CONSULTING GROUP, LLC,

Plaintiff,

OPTUMINSIGHT, INC.,

Defendant.

September 7, 2016, Decided

September 7, 2016, Filed

oRdeR:

denYinG defendAnt’S Motion

foR JUdGMent AS A MAtteR of LAW

oR foR neW tRiAL;

denYinG pLAintiff’S Motion

foR JUdGMent AS A MAtteR of LAW

oR foR neW tRiAL;

21a

Appendix B

denYinG Motion foR peRMAnent

inJUnCtion And to Set onGoinG

RoYALtY RAte;

GRAntinG pLAintiff’S Motion

to AMend JUdGMent; And

denYinG Motion to SUppLeMent ReCoRd

Re: Dkt. Nos. 379, 383, 385-6, 385-8, 449

Plaintiff Cave Consulting Group, LLC, (“Plaintiff”

or “CCGroup”) brought the instant action for patent

infringement against Defendant OptumInsight, Inc.,

f/k/a Ingenix, Inc., (“Defendant” or “Optum”). After ten

days of trial, the jury returned a verdict in Plaintiff’s

favor, awarding $12.3 million in royalty damages. Dkt

No. 366. Now before the court are (1) Defendant’s Motion

for Judgment as a Matter of Law and, alternatively, for a

New Trial pursuant to Federal Rule of Civil Procedure

50(b) (“Defendant’s JMOL”); (2) Plaintiff’s Motion for

Judgment as a Matter of Law and, alternatively, for a

New Trial (“Plaintiff’s JMOL”); (3) Plaintiff’s Motion

for Permanent Injunction and to Set Ongoing Royalty

Rate; (4) Plaintiff’s Motion for Prejudgment Interest,

Supplemental Damages, and Post Judgment Interest; and

(5) Plaintiff’s Administrative Motion to Supplement the

Record Regarding Its Motion for Permanent Injunction

and to Set Ongoing Royalty Rate (“Plaintiff’s Motion

to Supplement the Record”). Dkt. Nos. 379, 383, 385-6,

385-8, 449.

22a

Appendix B

Having reviewed the parties’ pleadings and the trial

record, the Court DENIES Defendant’s JMOL, DENIES

Plaintiff ’s JMOL, DENIES Plaintiff ’s Motion for

Permanent Injunction and to Set Ongoing Royalty Rate,

GRANTS IN PART AND DENIES IN PART Plaintiff’s

Motion for Prejudgment Interest, Supplemental Damages,

and Post Judgment Interest, and DENIES Plaintiff’s

Motion to Supplement the Record.

BACKGRoUnd

CCGroup is a California corporation with its principal

place of business in San Mateo, California. Dkt. No. 89 at

2. Optum is a Delaware corporation with its principal place

of business in Minnesota. Id. CCGroup is the owner by

assignment of all right, title, and interest in the U.S. Patent

No. 7,739,126 (“the Cave ’126 patent” or “the ’126 patent”).

Dkt. No. 311 at 2. Optum is the owner by assignment of

all right, title, and interest in U.S. Patent No. 7,222,079

(“the Seare ’079 patent” or “the ’079 patent”). Id.

CCGroup and Optum both develop and market

software and services used to evaluate various parameters

of healthcare delivery, including the efficiency of

healthcare providers. Id. The patents-in-suit are related

to technology for measuring and evaluating physician

efficiency. Id. “Efficiency” means comparing the cost of

care provided by an individual physician to the cost of

care provided by a relevant peer group. See Dkt. No. 139

at 3:10-11.

23a

Appendix B

the patent Claims

Relevant here are asserted claims 22 and 29 of the’126

patent,1 which state as follows:

22. A method implemented on a computer

system of determining physician efficiency, the

method comprising:

obtaining medical claims data stored

in a computer readable medium on the

computer system;

performing patient analysis using said

obtained medical claims data to form

episodes of care utilizing the computer

system;

performing output process based on

performed patient analysis utilizing

the computer system, the output

pr o c e s s compr i si ng : a s sig n i ng

episodes of care to physicians; and

applying a first maximum duration

rule to identify episodes of care;

assigning at least one physician to a

report group utilizing the computer

1. Claims 22 and 29 are identical other than the preamble,

which is not relevant for purposes of this motion. CCGroup has

withdrawn claims 1, 9, 10, and 11.

24a

Appendix B

system;

determining eligible physicians and

episode of care assignments utilizing

the computer system;

calculating condition-specific episode

of care statistics utilizing the computer

system;

calculating weighted episode of care

statistics across medical conditions

utilizing a predefined set of medical

conditions for a specific specialty type

utilizing the computer system; and

determining efficiency scores for

physicians from said calculated

condition-specific episode of care

statistics and said weighted episode

of care statistics calculated across

medical conditions utilizing the

computer system.

Dkt. No. 89-1 (“’126 Patent”) at 111:55-112:14.

Asserted claim 1 of the Seare ’079 patent teaches the

following:

1. A computer-implemented process for

processing medical claims including the steps

of:

25a

Appendix B

(a) reading medical claim data, input as at

least one of a plurality of data records, into a

computer memory;

(b) validating each of the at least one of a

plurality of data records for at least one of a

diagnosis code and a treatment code;

between the at least one of a diagnosis code and

a treatment code in the validated at least one

of a plurality of data records and pre-defined

episode treatment categories; and

(d) grouping the validated at least one of

a plurality of data records to an episode

treatment category based upon the pre-defined

relationship, each episode treatment category

having a dynamic time window defining a time

period which validated at least one of plurality

of data records may be grouped to an episode

treatment category.

Dkt. No. 89-2 (“’079 Patent”) at 38:44-61.

CCGroup alleges that Optum infringes two claims of

the ’126 patent. Dkt. No. 311 at 2. Claim 22 is a method

claim, and CCGroup contends that Optum uses that

method when it operates its Impact Intelligence software.

Id. Claim 29 is a product claim, and CCGroup contends

that Optum infringes that claim when it makes, uses, or

licenses to others its Impact Intelligence product. Id.

26a

Appendix B

Optum denies that it has infringed claim 22 or 29 of the

’126 patent and argues that, in addition, the claims are

invalid, which is a defense to infringement. Id.

On the other hand, Optum seeks money damages from

CCGroup for allegedly infringing claim 1 of the Seare ’079

patent. Id. Claim 1 is a method claim, and Optum argues

that CCGroup infringed claim 1 of the ’079 patent when

it used its Cave Grouper software product. Id. CCGroup

denies that it has infringed claim 1 of the ’079 patent and

argues that, in addition, the claim is invalid. Id. at 3.

B. procedural history

This suit is an outgrowth of a lawsuit filed by Optum

against CCGroup in Minneapolis, Minnesota. Optum

dismissed the Minnesota lawsuit. CCGroup filed its

Complaint in this Court seeking a declaratory judgment

on the patent infringement allegations made against it by

Optum. Dkt. No. 89 at 5-7.

In its Second Amended Complaint (“SAC”), CCGroup

claimed that Optum infringes its Cave ’126 patent, and

sought a declaratory judgment that CCGroup does not

infringe a family of Optum patents (the “Seare Patents”)

including the Seare ’126 patent and that the Seare Patents

are invalid. Dkt. No. 89. In its Answer to CCGroup’s SAC,

Optum claimed that it does not infringe the ’126 patent

and that the ’126 patent is invalid, and counterclaimed

that CCGroup directly infringes the Seare Patents. Dkt.

No. 96.

27a

Appendix B

On August 9, 2012, the Court held a claim construction

hearing. Dkt. No. 92. The Court construed “weighted

episode of care statistics” to mean “cost or length of care

statistics for a group of medical conditions calculated

using the relative importance of each condition to the

others of the group.” Id. at 6. The Court ruled that the

ordinary meaning of “determining eligible physicians and

episode of care assignments” applied. Id. at 9. The Court

construed “maximum duration rule” to mean a “rule based

on a maximum time period(s) that is used to group claim

data pertaining to a patient’s medical condition(s) into an

episode(s) of care.” Id. at 11.

CCGroup moved for summary judgment of validity of

the ’126 patent, summary judgment of noninfringement of

the Seare Patents, and summary judgment of invalidity

of the Seare Patents. Dkt. No. 148. Optum moved for

summary judgment of noninfringement of the ’126 patent,

summary judgment of invalidity of the ’126 patent, and

summary judgment of validity of the Seare Patents. Dkt.

No. 139. The Court granted summary judgment that the

Seare Patents were valid over one of CCGroup’s prior art

references, but denied summary judgment on all other

grounds. Dkt. No. 281. Before trial, the parties narrowed

their claims related to the Seare Patents to a claim by

CCGroup that the ’079 patent is invalid and a counterclaim

by Optum that CCGroup infringes the ’079 patent. Dkt.

No. 271 at 2-3.

The trial began on March 10, 2015. Dkt. No. 319.

Following 10 days of trial, the jury returned a verdict in

Plaintiff’s favor on its claim for infringement of the ’126

28a

Appendix B

patent, awarding $12.3 million in royalty damages. Dkt

No. 366. The jury also returned a verdict in CCGroup’s

favor on Optum’s counterclaim for infringement of the

Seare patent. Id. Now before the Court are various posttrial motions from both parties. Dkt. Nos. 379, 383, 385-6,

385-8, 449.

ii. LeGAL StAndARd

Federal Rule of Civil Procedure 50 permits a district

court to grant judgment as a matter of law “when the

evidence permits only one reasonable conclusion and the

conclusion is contrary to that reached by the jury.” Ostad

v. Or. Health Scis. Univ., 327 F.3d 876, 881 (9th Cir. 2003)

(citing Monroe v. City of Phoenix, 248 F.3d 851, 861 (9th

Cir. 2001)). A party seeking judgment as a matter of law

after a jury verdict must show that the verdict is not

supported by “substantial evidence,” meaning “relevant

evidence that a reasonable mind would accept as adequate

to support a conclusion.” Callicrate v. Wadsworth Mfg.,

Inc., 427 F.3d 1361, 1366 (Fed. Cir. 2005) (citing Gillette

v. Delmore, 979 F.2d 1342, 1346 (9th Cir. 1992)). The court

must “view the evidence in the light most favorable to the

nonmoving party . . . and draw all reasonable inferences

in that party’s favor.” EEOC v. Go Daddy Software, Inc.,

581 F.3d 951, 961 (9th Cir. 2009) (alteration in original)

(quoting Josephs v. Pac. Bell, 443 F.3d 1050, 1062 (9th

Cir. 2006)).

A new trial is appropriate under Rule 59 “only if the

jury verdict is contrary to the clear weight of the evidence,

is based upon false or perjurious evidence, or to prevent a

miscarriage of justice.” Molski v. M.J. Cable, Inc., 481 F.3d

29a

Appendix B

724, 729 (9th Cir. 2007) (quoting Passantino v. Johnson &

Johnson Consumer Prods., 212 F.3d 493, 510 n.15 (9th Cir.

2000)). A court may deny a motion for a new trial so long

as there was some reasonable basis for the jury’s verdict.

Id. (citations omitted). However, “the absolute absence

of evidence to support the jury’s verdict makes [refusal

to grant a new trial] an error in law.” Id. (alteration in

original) (quoting Urti v. Transp. Commercial Corp., 479

F.2d 766, 769 (5th Cir. 1973)).

iii.

diSCUSSion

optum’s JMoL

Optum moves for judgment as a matter of law that

(1) Optum’s Impact Intelligence product does not infringe

claims 22 and 29 of Plaintiff’s ’126 patent; (2) claims 22 and

29 of the ’126 patent are invalid for failing to satisfy the

written description requirement; (3) the jury’s damages

verdict represents an improper windfall, is contrary to

the governing law, and is contrary to the evidence at trial;

and (4) Plaintiff’s Cave Grouper product infringes claim

1 of Optum’s ’079 Patent. Dkt. No. 379 at 1. The Court

disagrees on all points for the following reasons.

infringement

Utilizing a Predefined Set of Medical

Conditions

Optum first argues that its Impact Intelligence

product does not infringe the asserted claims of the

’126 patent. As above, those claims teach “calculat[ing]

30a

Appendix B

weighted episode of care statistics across medical

conditions utilizing a predefined set of medical conditions

for a specific specialty type.” ’126 Patent at 112:7-10,

60:63. Optum contends that the asserted claims require

“utilizing a predefined set” in the process of calculating

“weighted episode of care statistics.” Dkt. No. 379 at 3.

At trial, Optum argues, CCGroup improperly separated

“utilizing” from the step of “calculating.” Id. Therefore,

Optum argues that the jury’s verdict of infringement is

not supported by substantial evidence.

In its reply, Optum further argues that the parties’

dispute centers on claim construction, so that the Court

should construe the proper scope of the claim term

at issue. Dkt. No. 417 at 4. Optum did not request a

construction for the phrase “calculating weighted episode

of care statistics across medical conditions utilizing a

predefined set of medical conditions for a specific specialty

type.” To the extent Optum seeks such a construction

now, Optum’s request is untimely. “When issues of claim

construction have not been properly raised . . . , it is

improper for the district court to adopt a new or more

detailed claim construction in connection with the JMOL

motion.” Hewlett-Packard Co. v. Mustek Sys., Inc., 340

F.3d 1314, 1320 (Fed. Cir. 2003). “In other words, where

the parties and the district court elect to provide the

jury only with the claim language itself, . . . it is too late

at the JMOL stage to argue for or adopt a new and more

detailed interpretation of the claim language and test the

jury verdict by that new and more detailed interpretation.”

Id. at 1320-21. Here, the Court did not interpret the claim

limitation for the jury. See Dkt. No. 357 at 21-23.

31a

Appendix B

“Where, as here, parties ‘did not seek construction’

of the terms at issue, courts give those terms their

‘“ordinary and customary meaning . . . to a person of

ordinary skill in the art in question at the time of the

invention.”’” Apple, Inc. v. Samsung Elecs. Co., No.

12-cv-0630-LHK, 2014 U.S. Dist. LEXIS 22938, 2014

WL 660857, at *3 (N.D. Cal. Feb. 20, 2014) (alteration in

original) (quoting Belden Techs. Inc. v. Superior Essex

Commc’ns LP, 733 F. Supp. 2d 517, 545 (D. Del. 2010)).

“[T]he ‘ordinary meaning’ of a claim term is its meaning

to the ordinary artisan after reading the entire patent.”

Phillips v. AWH Corp., 415 F.3d 1303, 1321 (Fed. Cir. 2005)

(en banc). “At trial, parties may introduce evidence as to

the plain and ordinary meaning of terms not construed

by the court, as long as the evidence does not amount to

arguing claim construction to the jury.” Icon-IP Pty Ltd.

v. Specialized Bicycle Components, Inc., 87 F. Supp. 3d

928, 945 (N.D. Cal. 2015) (citing Mediatek Inc. v. Freescale

Semiconductor, Inc., No. 11-cv-5341-YGR, 2014 U.S. Dist.

LEXIS 31461, 2014 WL 971765, at *4 (N.D. Cal. Mar. 5,

2014)); see also Cordis Corp. v. Boston Scientific Corp.,

561 F.3d 1319, 1337 (Fed. Cir. 2009) (holding it “improper”

to argue claim construction to the jury).

Here, the Court construed “predefined set of medical

conditions” to mean “any set of medical conditions for a

specialty that is defined in advance of processing.” Dkt.

No. 357 at 23. For any words in the claims for which the

Court had not provided a definition, the Court instructed

the jury to apply the plain and ordinary meaning of those

words as understood by one having ordinary skill in the

art. Id.; see also ePlus, Inc. v. Lawson Software, Inc., 700

32a

Appendix B

F.3d 509, 520 (Fed. Cir. 2012) (“In the absence of such a

construction, however, the jury was free to rely on the

plain and ordinary meaning . . . .”).

As indicated above, the parties’ dispute centers on

whether Impact Intelligence utilizes a predefined set

of medical conditions for a specific specialty type in the

process of calculating weighted episode of care statistics

across medical conditions. According to Optum, the set of

medical conditions Impact Intelligence uses to calculate

weighted episode of care statistics is not predefined,

because it is not known until after episode attribution is

complete. Dkt. No. 379 at 3-10. In other words, Optum

contends that, because the set of medical conditions

utilized to calculate weighted episode of care statistics

across medical conditions in Impact Intelligence is not

defined in advance of processing, Impact Intelligence does

not meet the claim limitations at issue. Id.

However, as CCGroup points out, the jury did hear

evidence that Impact Intelligence relies on a predefined

set of medical conditions and that it utilizes that predefined

set in calculating weighted episode of care statistics. Dkt.

No. 398 at 6-7. That evidence took the form of testimony

from CCGroup’s expert witness, Dr. Bryan Bergeron (“Dr.

Bergeron”), who told the jury that Impact Intelligence

satisfies these claim limitations. Trial Tr. 852:14-858:20.

Although Optum contends that CCGroup improperly

separated the “calculating” and “utilizing” halves of the

claims, Dr. Bergeron conceded that, under the claims

at issue, “we are required to use a predefined set of

conditions in our calculations.” Id. at 853:11-12.

33a

Appendix B

Dr. Bergeron then described for the jury how Impact

Intelligence “base[s] [its] calculations on that predefined

set of conditions.” Id. at 853:12-21. More specifically, Dr.

Bergeron testified as follows:

Q. And would you describe for the jury what

is running down the side of this table, please,

Dr. Bergeron?

A. That’s what is defined in the first part of this,

this highlighted area in the limitation. Those

are the medical conditions, hard to read, but, for

example, I think it says ischemia heart disease

with valve surgery is one of the conditions that’s

going to be defined in the predefined set of

medical conditions in cardiology.

...

If we stick with cardiology, these are the medical

conditions here associated with cardiology, yes.

And it marks those conditions that are selected.

So in cardiology in our predefined set, we’re not

going to consider in our predefined set or we

are throwing away things with the X’s. But the

ones with the X marked are these conditions

that are considered in a predefined set.

Q. So, in other words, in the universe of

conditions that could apply, and obviously this

table goes on for pages and pages, instead of

looking at that universe, Impact Intelligence is

34a

Appendix B

looking at a certain predefined set of medical

conditions for each specialty type; is that

correct?

A. That’s correct.

Id. at 854:16-855:18.

In short, Dr. Bergeron opined that, of all the medical

conditions potentially associated with a particular

specialty, Impact Intelligence uses only a predefined

subset of those conditions when calculating weighted

episode of care statistics. Dr. Bergeron also explained

how Impact Intelligence uses the predefined set of medical

conditions for each specialty type. The jury could have

found that the use that Dr. Bergeron described fell within

the plain and ordinary meaning of the word “utilizing.”

As a result, the Court concludes that Dr. Bergeron’s

testimony provided substantial evidence such that the

jury could have found that Impact Intelligence performs

the step of “calculating weighted episode of care statistic

across medical conditions utilizing a predefined set of

medical conditions for each specialty.”

Applying a Maximum duration Rule

to identify episodes of Care

Next, Optum asserts that there was no evidence that

Impact Intelligence “appl[ies] a first maximum duration

rule to identify episodes of care,” as the asserted claims

require. ’126 Patent at 111:66-67, 112:51-52. Optum

contends that, to identify episodes of care, Impact

35a

Appendix B

Intelligence uses ICD-9 codes and not a maximum

duration rule. Dkt. No. 379 at 14; Trial Tr. 1203:16-1205:22.

Optum does not dispute that Impact Intelligence uses a

maximum duration rule, but Optum argues that Impact

Intelligence uses that rule only to form, and not to identify,

episodes of care. Dkt. No. 379 at 13-14.

Once again, the parties’ disagreement boils down to

the interpretation of a single word in the asserted claims.

As with “utilizing,” the parties did not offer “identify” for

construction by the Court. The Court therefore instructed

the jury that the term should have its plain and ordinary

meaning to a person having ordinary skill in the art.

Dkt. No. 357 at 23. As such, the issue is whether Impact

Intelligence uses maximum duration rules to “identify”

episodes of care, interpreting the term in keeping with

its plain and ordinary meaning.

Optum explains that Impact Intelligence uses

ICD-9 codes to pull “key information” from a lookup

table including the condition name and number, whether

the condition is acute or chronic, and the dynamic time

window period associated with that condition. Trial Tr.

1203:16-1205:22. Optum argues that Impact Intelligence

does not have any rule that would identify an episode of

care based on its length; rather, the ICD-9 code identifies

both the medical condition and window period for an

episode of care. Dkt No. 379 at 14 (citing Trial Tr. 1375:1118, 1376:1-5).

However, CCGroup argues that it introduced into

evidence the Impact Intelligence Concepts Guide, which

36a

Appendix B

shows that Impact Intelligence uses a maximum duration

rule to identify episodes of care for chronic conditions: “If

more than 12 months of data are included in the grouping,

[Impact Intelligence] can identify multiple chronic episodes

for these patients, covering the services provided during

each included 12 months of data.” TX8.060. CCGroup also

points to the testimony of Dr. Daniel Dunn (“Dr. Dunn”),

whom Optum had designated as knowledgeable about

the functionality of Impact Intelligence. In deposition

testimony presented to the jury, Dr. Dunn testified that

“[a] clean period is used to identify which episodes can be

considered to be complete.” Trial Tr. 756:25-757:1. 2

In his live testimony, Dr. Dunn further explained that

the “dynamic time window or clean period . . . allows you

to identify when an episode starts and ends, and while an

episode is still ongoing, then it allows services to gather

to that episode.” Id. at 1205:25-1206:6. He offered the

example of acute bronchitis:

So, for example, acute bronchitis has a dynamic

time window of 60 days, and once the episode

starts, essentially ETG [(episode treatment

groups)] is looking for a break in time, meaning

that if it doesn’t see any further services within

that 60-day period, it’s going to say this episode

is complete and we can end it.

And at some time later the episode could start

again, but that episode for acute bronchitis has

ended.

2. A “clean period” is an example of a maximum duration

rule. Trial Tr. 826:9-828:31.

37a

Appendix B

If it does see a service that’s in that 60-day

period, it’s going to continue the episode, move

it forward and look for another 60-day period

to again look to see if there’s an absence of

clinically relevant activity.

So that allows both ETG’s to decide when

services should be added to an episode and

continue the episode on, and it also lets us

understand when an episode is complete.

Id. at 1206:7-20. Dr. Bergeron also testified to the jury that

Impact Intelligence uses two separate maximum duration

rules, one for acute episodes, and one for chronic episodes

to identify episodes of care. Id. at 821:5-831:7.

The jury heard substantial evidence that Impact

Intelligence uses a maximum duration rule to identify

episodes of care. The ’126 patent itself describes using

maximum duration rules in the same way that Impact

Intelligence does. See ’126 Patent at 51:8-19. Whether

Impact Intelligence also uses ICD-9 codes in this process is

irrelevant. The Court concludes that substantial evidence

supports the jury’s finding that Impact Intelligence

performs the step of “applying a first maximum duration

rule to identify episodes of care.”

Accordingly, Optum’s motion for JMOL or new trial

on infringement is DENIED because there is sufficient

evidence that supports the jury’s verdict of infringement.

See Johnson v. Paradise Valley Unified Sch. Dist., 251

F.3d 1222, 1227 (9th Cir. 2001).

38a

Appendix B

ii.

Written description

Optum contends that no reasonable jury could

conclude that claims 22 and 29 of the ’126 patent satisfy

the written description requirement with respect to

“weighted episode of care statistics” or “applying a first

maximum duration rule to identify episodes of care.” Dkt.

No 379 at 15.

To meet the written description requirement, the

specification “must clearly allow persons of ordinary skill

in the art to recognize that [the inventor] invented what is

claimed.” Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d

1336, 1351 (Fed. Cir. 2010) (en banc) (alteration in original)

(quoting Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, 1563

(Fed. Cir. 1991)). “In other words, the test for sufficiency

is whether the disclosure of the application relied upon

reasonably conveys to those skilled in the art that the

inventor had possession of the claimed subject matter as of

the filing date.” Id. (citing Vas-Cath, 935 F.2d at 1563). The

“test requires an objective inquiry into the four corners

of the specification from the perspective of a person of

ordinary skill in the art.” Id. “Because the specification

is viewed from the perspective of one of skill, in some

circumstances, a patentee may rely on information that is

‘well-known in the art’ for purposes of meeting the written

description requirement.” Boston Sci. Corp. v. Johnson

& Johnson, 647 F.3d 1353, 1366 (Fed. Cir. 2011) (quoting

Falko-Gunter Falkner v. Inglis, 448 F.3d 1357, 1366-68

(Fed. Cir. 2006)). An accused infringer must show the lack

of written description by clear and convincing evidence.

Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336,

1351 (Fed. Cir. 2011) (citing ICU Med., Inc. v. Alaris Med.

39a

Appendix B

Sys., Inc., 558 F.3d 1368, 1376 (Fed. Cir. 2009)).

direct and indirect Standardization

When construing the claim term “weighted episode

of care statistics,” the Court considered whether the

term covered two competing approaches to assigning

weights to medical conditions: indirect standardization

and direct standardization. Dkt. No. 92 at 3-6. The

preferred embodiment in the ’126 patent teaches indirect

standardization, whereby weights are predetermined

values that are loaded into the system. ’126 Patent at

92:29-93:27. By contrast, in a direct standardization

approach, weights are assigned based on the actual mix of

medical conditions treated by a physician or the physician’s

peer group, as reflected in the data loaded into the system.

Id. at 2:32-43. The ’126 patent includes dependent claims

that use both indirect and direct standardization. E.g.,

id. at 112:15-37. Citing these claims, the Court concluded

that the claim term covered both direct and indirect

standardization. Dkt. No. 92 at 6.

Optum now contends that the ’126 patent’s specification

does not satisfy the written description requirement with

respect to direct standardization. Dkt. No. 379 at 16-18.

In particular, Optum observes that the specification

references direct standardization only in the background

section of the patent, describing it as prior art that can

create error. ’126 Patent at 2:32-43. The specification

indicates explicitly that the preferred embodiment “does

not use” direct standardization. Id. at 93:12-14. Optum

concludes that the disclosure of the ’126 patent does not

provide notice to the person of ordinary skill that the

40a

Appendix B

inventor possessed an invention covering both direct and

indirect standardization, and therefore that there is no

adequate written description for claims 22 and 29 of the

’126 patent. 3

“[A] patent claim is not necessarily invalid for lack

of written description just because it is broader than the

specific examples disclosed.” Martek Biosciences Corp.

v. Nutrinova, Inc., 579 F.3d 1363, 1371 (Fed. Cir. 2009)

(citations omitted); see also Phillips, 415 F.3d at 1323

(citation omitted) (noting that the Federal Circuit “ha[s]

expressly rejected the contention that if a patent describes

only a single embodiment, the claims of the patent must

be construed as being limited to that embodiment”). Even

if the specification criticizes a potential embodiment, it

may still disclose that embodiment. For example, in Bard

Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 670

F.3d 1171 (Fed. Cir. 2012), the Federal Circuit considered a

patent claiming a biomedical apparatus. The specification

taught that embodiments “having wall thicknesses in the

range between 0.2 and 0.8 millimeters . . . have exhibited

excellent mechanical properties” and that those “falling

outside these ranges have been found to be marginal or

clinically unacceptable.” Id. at 1188-89. Nevertheless, the

Federal Circuit found that the specification adequately

disclosed embodiments outside the preferred range. Id.

3. To be clear, Optum and its expert admit that the term

“weighted episode of care statistics,” which appears in the claims

themselves, has written description support in the specification.

Trial Tr. 1542:10-18. Their issue is with direct standardization

only. See Dkt. No. 379 at 16-18.

41a

Appendix B

In another Federal Circuit case, Spine Solutions, Inc.

v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305

(Fed. Cir. 2010), abrogated on other grounds by Halo

Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 195 L. Ed.

2d 278 (2016), the patent specification at issue noted that an

embodiment falling within the claim would render a desired

outcome “particularly difficult.” Id. at 1315. The Federal

Circuit still rejected a written description challenge on

the grounds that the criticism “d[id] not rise to the level

of an express disclaimer sufficient to limit the scope of

the claims,” because “[d]isavowal requires expressions

of manifest exclusion or restriction, representing a clear

disavowal of claim scope.” Id. (quoting Epistar Corp. v.

Int’l Trade Comm’n, 566 F.3d 1321, 1335 (Fed. Cir. 2009)).

Taken together, Bard and Spine Solutions suggest that a

specification’s criticism of an embodiment falling within

a claim does not invalidate the claim for lack of written

description unless the specification explicitly disclaims

the less preferred embodiment.

Optum relies most heavily on a pair of Federal Circuit

cases: LizardTech, Inc. v. Earth Resource Mapping, Inc.,

424 F.3d 1336 (Fed. Cir. 2005), and Tronzo v. Biomet, Inc.,

156 F.3d 1154 (Fed. Cir. 1998). In LizardTech, the claim at

issue was “directed to creating a seamless array of DWT

[(discrete wavelet transform)] coefficients generically.”

424 F.3d at 1345. However, the specification only

described “a particular method for creating a seamless

DWT, as opposed to using the disfavored, nonseamless

prior art, and it [taught] only that method of creating a

seamless array.” Id. Aside from that single method, the

specification did not “contemplate[] a more generic way

42a

Appendix B

of creating a seamless array of DWT coefficients.” Id. at

1344. The Federal Circuit recognized that a claim is not

invalid for lack of written description “simply because the

embodiments of the specification do not contain examples

explicitly covering the full scope of the claim language.”

Id. at 1345 (citing Union Oil Co. v. Atl. Richfield Co., 208

F.3d 989, 997 (Fed. Cir. 2000)). Even so, the court found

that the specification gave no indication that the inventor

possessed more than one way of creating a seamless DWT.

Id. As a result, the court invalidated the patent for lack

of written description. Id. at 1345-46.

For two reasons, the Court agrees with CCGroup that

LizardTech is inapposite. First, the ’126 patent discusses

direct standardization at some length, indicating that the

inventor was aware of that approach. ’126 Patent at 2:323:36. In LizardTech, by contrast, the specification disclosed

only one method for creating a seamless DWT, and it did

not teach one of skill in the art “how to make a seamless

DWT generically.” 424 F.3d at 1345. Second, undisputed

trial testimony showed that direct standardization was

well known in the art as of the filing date of the ’126

patent. Trial Tr. 379:17-21, 1560:6-14, 1564:16-19. The

prior art described in the LizardTech specification, on

the other hand, created only nonseamless DWTs; there

was no indication that a person of ordinary skill in the art

would have known how to create a seamless DWT using

any other method than that taught in the specification. 424

F.3d at 1343, 1345. LizardTech therefore does not dictate

the result here.

Tronzo hits closer to the mark. The technology at

43a

Appendix B

issue in that case related to artificial hip sockets that

include cup implants to be inserted into a hip bone.

Tronzo, 156 F.3d at 1156. In the embodiments described

in the specification, the cups had a conical shape. Id. at

1159. The only reference to differently shaped cups was

in a recitation of the prior art, which the specification

described as inferior while touting the advantages of a

conically shaped cup. Id. As a result, the Federal Circuit

held that the patent at issue “disclose[d] only conical

shaped cups and nothing broader.” Id.

CCGroup attempts to distinguish Tronzo on procedural

grounds. Dkt. No. 398 at 19-20. In Tronzo, the patentee

first claimed a narrow invention restricted to conically

shaped cups and then later, in a continuation application,

added broader claims for generically shaped cups. 156

F.3d at 1158. Here, however, the original application

included the broad claims at issue. Although CCGroup

has described the facts accurately, the distinction is not

persuasive. Ultimately, the Tronzo court had to decide

whether the specification “reasonably convey[ed] to one

of skill in the art that the inventor possessed the laterclaimed subject matter at the time the parent application

was filed.” 156 F.3d at 1158 (citing Vas-Cath, 935 F.2d at

1563). This Court faces essentially the same question here.

A more helpful touchstone for resolving the question is

an opinion from another court in this district. In Rambus

Inc. v. Hynix Semiconductor Inc., 569 F. Supp. 2d 946

(N.D. Cal. 2008), Judge Whyte examined the Federal

Circuit’s holdings in Tronzo and LizardTech at length. Id.

at 995-96. Ordinarily, of course, the core of the written

44a

Appendix B

description requirement “is that the specification must

demonstrate to a person of ordinary skill that the patentee

possessed what it claimed.” Id. at 996 (citing Pandrol

USA, LP v. Airboss Ry. Prods., Inc., 424 F.3d 1161, 1165

(Fed. Cir. 2005)). Judge Whyte recognized the inherent

conflict that Tronzo presented: “[b]y suggesting that

that claims covering generic shapes did not satisfy the

written description requirement because the patentee

specifically distinguished them, it seems inescapable that

the patentee actually did, in fact, possess devices of other

shapes.” Id. at 996. To reconcile this conflict, Judge Whyte

“interpret[ed] the Tronzo line of the Federal Circuit’s

written description case law as invalidating claims

to a genus where the written description specifically

distinguished its embodiment from the genus or expressly

disclaims other members of the genus.” Id. at 996.

Under this standard, although it is a close question,

the Court concludes that the ’126 patent adequately

disclosed direct standardization as an approach for

assigning weight to medical conditions. Optum is correct

that the preferred embodiment in the specification uses

indirect standardization. ’126 Patent at 92:29-93:27. But,

again, a claim is not invalid for lack of written description

“simply because the embodiments of the specification do

not contain examples explicitly covering the full scope of

the claim language.” LizardTech, 424 F.3d at 1345 (citing

Union Oil, 208 F.3d at 997). Optum is also correct that

the specification contains a lengthy criticism of the direct

standardization approach. Id. at 2:32-3:35. However, under

Bard and Spine Solutions, mere criticism does not rise

to the level of disavowal. See Bard, 670 F.3d at 1188-89.

45a

Appendix B

The ’126 patent’s specification contains no “expressions

of manifest exclusion or restriction, representing a clear

disavowal of claim scope.” Spine Solutions, 620 F.3d at 1315

(quoting Epistar, 566 F.3d at 1335). And unlike Tronzo, the

’126 patent does not describe indirect standardization as

an “extremely important aspect” of the claimed invention.

156 F.3d at 1159. Because the patentee did not expressly

disclaim direct standardization, the claims covering that

approach are not invalid for lack of written description.

The jury reasonably found that Optum failed to prove by

clear and convincing evidence that the claim terms at issue

lack written description support.

Applying a first Maximum duration

Rule to identify episodes of Care

Optum argues that the word “identify” was added

to the asserted claims during patent prosecution, and

therefore, reflects a substantial departure from what is

described in the patent. Dkt. No. 379 at 18-19. Specifically,

Optum argues that the ’126 patent describes using a

maximum duration rule to cut off episodes of care at a

maximum allowable duration, which is different from

using a maximum duration rule to identify episodes of

care. Id. As such, Optum asserts that there is no written

description support for this added claim language.

However, Optum’s expert witness, Dr. Bill Thomas

(“Dr. Thomas”), acknowledged that the ’126 patent

specification uses the word “identify” to describe the

application of a maximum duration rule in building

episodes of care. Trial Tr. 1501:11-25. Dr. Thomas

46a

Appendix B

also acknowledged that Optum’s other witnesses and

documents had used the word “identify” to describe the

function of the Impact Intelligence maximum duration

rules in forming episodes of care. Id. at 1510:9-1512:10.

Although Dr. Thomas believed that this usage was

“imprecise” and “incorrect,” id. at 1510:7-10, the jury still

had substantial evidence to support its verdict on both of

these terms. The Court thus finds Optum’s arguments

unpersuasive.

Accordingly, the Court DENIES Optum’s JMOL as to

its written description challenges. Furthermore, because

Optum has not shown that the jury’s verdict was “contrary

to the clear weight of the evidence, . . . based upon false

or perjurious evidence, or . . . a miscarriage of justice,”

its motion for a new trial is DENIED as well. Molski, 481

F.3d at 729 (quoting Passantino, 212 F.3d at 510 n.15).

iii. Reasonable royalty damages

Optum argues that the Court should award a new

trial on damages because the jury’s damages verdict

was excessive. Dkt. No. 379 at 19-34. Optum’s damages

arguments primarily focus on whether CCGroup’s

damages expert, Michael Lewis (“Lewis”), performed

a proper reasonable royalty analysis. Generally, Optum

argues that the damages verdict should be vacated

for five reasons: (1) CCGroup’s application of the

entire market value exception was legally improper,

(2) CCGroup’s bargaining range floor was improperly

based on lost profits, (3) CCGroup’s two-supplier market

assumption was not supported by substantial evidence, and

47a

Appendix B

(4) CCGroup improperly included CCGroup’s unpatented

products in its damages calculation. Id.

Additionally, Optum contends that Lewis’ use of the

midpoint of the reasonable royalty bargaining range

was arbitrary and improper. Id. at 34 (citing Trial Tr.

1014:11-1015:5). As CCGroup points out, Optum waived

this argument by failing to raise the objection at trial or

in its motions to exclude Lewis’ testimony. See Ericsson,

Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1228-29 (Fed.

Cir. 2014); Dkt. No. 398 at 34-35. Finally, Optum contends

that the Court should vacate the jury’s award on the sole

ground that it represented a windfall to CCGroup. Dkt.

No. 379 at 20-21; Dkt. No. 417 at 10. Although Optum is

right about the purpose of patent damages, it cites no

authority for the proposition that a court may overturn a

jury award on this basis alone. Instead, this background

principle underlies the substantive rules governing patent

damages that the Federal Circuit has elaborated. The

Court therefore considers Optum’s challenges in light of

these substantive rules.

Upon a finding of infringement, the patentee is entitled

to “damages adequate to compensate for the infringement,

but in no event less than a reasonable royalty for the use

made of the invention by the infringer.” 35 U.S.C. § 284;

see also Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554

(Fed. Cir. 1995) (en banc). When a patentee is unable to

prove entitlement to lost profits or an established royalty

rate, “it is entitled to ‘reasonable royalty’ damages based

upon a hypothetical negotiation between the patentee and

the infringer when the infringement began.” Unisplay,

48a

Appendix B

S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 517 (Fed. Cir.

1995). “This hypothetical construct seeks the percentage

of sales or profit likely to have induced the hypothetical

negotiators to license use of the invention.” Minco, Inc.

v. Combustion Eng’g, Inc., 95 F.3d 1109, 1119 (Fed. Cir.

1996).

A reasonable royalty is determined by examining

the factors set forth in Georgia-Pacific Corp. v. United

States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970),

which are: (1) royalties the patentee receives for licensing

the patent in suit, (2) rates the licensee pays for other

comparable patents, (3) the exclusivity and restriction

terms, (4) the licensor’s policy of maintaining its patent

monopoly by not licensing the invention to others, (5) the

commercial relationship between the two parties, (6) effect

of selling the patented specialty in promoting sales of

other products, (7) duration of patent and term of license,

(8) established profitability of the products made under

the patent, (9) advantages of the patented component over

old components, (10) the nature of the patented invention,

(11) the extent to which the infringer has used the

invention, (12) the portion of profit customarily allowed for

use of the invention, (13) the portion of profit attributable

to the invention, (14) expert testimony, and (15) outcome

from hypothetical arm’s length negotiation at the time

of infringement. Id. at 1119-20. Although this analysis

“necessarily involves an element of approximation and

uncertainty, a trier of fact must have some factual basis

for a determination of a reasonable royalty.” Unisplay, 69

F.3d at 517. The amount of damages based on a reasonable

royalty is an issue of fact, and the jury’s damages award is

reviewed under the substantial evidence standard. Micro

49a

Appendix B

Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1394 (Fed. Cir.

2003) (citing SmithKline Diagnostics, Inc. v. Helena Labs.

Corp., 926 F.2d 1161, 1164 n.2 (Fed. Cir. 1991)).

Here, CCGroup’s expert, Lewis, testified that

CCGroup’s reasonable royalty damages were in the range

from $12.15 to 13.45 million. Trial Tr. 999:1-5. This was

the royalty amount that CCGroup and Optum would

have agreed to in a hypothetical negotiation taking place

on June 15, 2010, the date that CCGroup’s ’126 patent

issued. Id. at 1001:20-22. Lewis testified that the “floor”

for the hypothetical negotiation was calculated from the

incremental profit CCGroup would have made if Impact

Intelligence had not been on the market during 2011-2014,

an amount of $5.6 million. Id. at 1007:23-1008:14, 1060:181061:23. Next, Lewis calculated that Optum’s profits from

Impact Intelligence during the 2011-2014 damages period

were $17.7 million, which he testified would be the ceiling

for the hypothetical negotiation. Id. at 1011:14-22, 1069:231070:4. Finally, Lewis used the midpoint between the $5.6

million floor and the $17.2 million ceiling to generate the

$12.15-13.45 million reasonable royalty damages range

based on the Georgia-Pacific factors. Id. at 996:3-9,

1015:14-1027:24. The jury ultimately awarded damages

of $12,325,000. Dkt. No. 366 at 2.

Optum’s damages-related arguments generally

address the methodology Lewis used in reaching his

conclusion (i.e., Lewis’ use of CCGroup’s foregone economic

benefit as the floor for the hypothetical negotiation

bargaining range, his use of a two-supplier market, and

his failure to apportion CCGroup’s damages calculation)

- arguments the Court already considered and rejected

50a

Appendix B

in denying Optum’s Daubert motion. See Dkt. No. 280 at

12-14. Specifically, the Court found that Lewis’ approach

“incorporates a methodology previously accepted by the

court for determining the hypothetical bargaining range,”

and that different approaches to estimating a reasonable

royalty can produce admissible testimony; when that

occurs, it is up to the parties to expose their relative

strengths and weaknesses at trial. Id. at 14. Optum’s

motion amounts to a renewal of the same argument.

Also, in her expert report, Optum’s damages expert,

Catharine Lawton (“Lawton”) disclosed her opinion as

to the amount of reasonable royalty damages CCGroup

should recover for infringement of the ’126 patent. Id. at

10-13. However, Optum did not offer Lawton’s competing

damages calculation at trial to the jury for a determination

of a reasonable royalty.

entire market value rule

Optum argues that Lew is calculated Optum’s

incremental profits based on the market value of the entire

Impact Intelligence product and did not apportion his

damages calculation to focus on the accused components

of Impact Intelligence. Dkt. No. 379 at 27-30. Specifically,

Optum argues that only the physician efficiency component

of the Impact Intelligence, the Provider Network

Assessment (“PNA”) module, is relevant to claims 22

and 29 of the ’126 patent. Neither the other components

of the PNA module nor the other four modules of Impact

Intelligence have anything to do with the asserted claims.

Trial Tr. 1603:17-20. As such, Optum argues that Lewis

51a

Appendix B

should not have used all of the revenue from the entire

Impact Intelligence product as the basis for his damages

calculation. Dkt. No. 379 at 29.

Under 35 U.S.C. § 284, patent damages are limited to

“damages adequate to compensate for the infringement.”

35 U.S.C. § 284. For reasonable royalties, the damages must

reflect “the use made of the invention by the infringer.”

Id . Therefore, “ where multi-component products

are involved, the governing rule is that the ultimate

combination of royalty base and royalty rate must reflect

the value attributable to the infringing features of the

product, and no more.” Ericsson, 773 F.3d at 1226 (citing

VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326 (Fed.

Cir. 2014)). In general, “royalties [must] be based not on

the entire product, but instead on the ‘smallest salable

patent-practicing unit.’” LaserDynamics Inc. v. Quanta

Computer Inc., 694 F.3d 51, 67 (Fed. Cir. 2012) (quoting

Cornell Univ. v. Hewlett-Packard Co., 609 F. Supp. 2d 279,

283, 287-88 (N.D.N.Y. 2009)).

However, a “narrow exception,” known as the “entire

market value rule,” applies where “it can be shown that the

patented feature drives the demand for an entire multicomponent product.” Id. (citing Rite-Hite Corp. v. Kelley

Co., Inc., 56 F.3d 1538, 1549 (Fed. Cir. 1995) (en banc)). The

unpatented components must be sold with the patented

components, and they “must function together . . . in some

manner so as to produce a desired end product or result.”

Rite-Hite, 56 F.3d at 1550. “[W]here the entire value of a

machine as a marketable article is ‘properly and legally

attributable to the patented feature,’ the damages owed to

52a

Appendix B

the patentee may be calculated by reference to that value.”

Ericsson, 773 F.3d at 1227 (quoting LaserDynamics, 694

F.3d at 67). This “evidentiary principle . . . help[s] our

jury system reliably implement the substantive statutory

requirement of apportionment of royalty damages to

the invention’s value”; it strikes “an appropriate balance

between the probative value of admittedly relevant

damages evidence and the prejudicial impact of such

evidence caused by the potential to mislead the jury into

awarding an unduly high royalty.” Id. at 1226-27.

Basis for customer demand

“For the entire market value rule to apply, the

patentee must prove that ‘the patent-related feature is

the “basis for customer demand.”’” Lucent Techs., Inc.

v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009)

(quoting Rite-Hite, 56 F.3d at 1549). “It is not enough

to merely show that the [patented feature] is viewed

as valuable, important, or even essential to the use of

the [overall product].” VirnetX, 767 F.3d at 1326-27

(alterations in original) (quoting LaserDynamics, 694

F.3d at 68). “Instead, . . . ‘a reasonable royalty analysis

requires a court to . . . carefully tie proof of damages to

the claimed invention’s footprint in the market place.’” Id.

at 1327 (second alteration in original) (quoting ResQNet.

com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010)).

A patentee may invoke the entire market value rule only

if the patentee shows that “the patented feature creates

the basis for customer demand or substantially creates

the value of the component parts.” Id. at 1326 (quoting

Versata Software, Inc. v. SAP Am., Inc., 717 F.3d 1255,

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1268 (Fed. Cir. 2013)).

For example, in Marine Polymer Technologies Inc.

v. HemCon Inc., 672 F.3d 1350 (Fed. Cir. 2012) (en banc)

(opinion of Lourie, J.), a five-judge panel of the Federal

Circuit affirmed for an equally divided en banc court the

jury’s application of the entire market value rule. The

jury heard evidence pertaining to the “importance” of

the patented functionality in the end products and “its

significance for market demand.” Id. at 1360. Notably,

the plaintiff had also presented testimony from witnesses

for both parties, including the defendant’s president,

describing the patented functionality as “critical” to the

core function of the accused products. Id.

As in HemCon, the jury here heard substantial

evidence from both parties’ witnesses that the physician

efficiency scoring methodology is the basis for demand

for the Impact Intelligence product. Trial Tr. 405:1215, 704:12-25, 1715:16-20. At his deposition, Dr. Bruce

MacGibbon (“Dr. MacGibbon”), Optum’s product portfolio

manager for Impact Intelligence, described the PNA

module generally, and “the provider performance piece”

specifically, as the key to customer demand for Impact

Intelligence:

QUESTION: Is there any one module that

customers value more than the others?

ANSWER: You know, I think historically

and where the product started was that first

provider module. That was the original seed

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Appendix B

that started this years ago.

And so that the PNA, this provider performance

piece, that was the one that was the seed. That’s

where the thing started, and then as time went

on these other pieces were kind of built and

added.

So I think that was kind of the core and that’s

what started it. And so I think that’s probably

the one that — at least the early customers,

that’s all they had. So my guess is that that’s

the — you know, that’s what most customers

probably want.

Id . at 70 4:12 -25. At tr ial, Dr. MacGibbon again

acknowledged that the PNA module, with its “physician

efficiency scoring capability,” “was the seed around

which Impact Intelligence grew.” Id. at 1715:9-20.

In the same vein, Dr. MacGibbon also testified that

“Impact Intelligence, when originally it was created,

. . . the beginning of it was around physician efficiency

measurement.” Id. at 1716:23-1717:2. Finally, he agreed

that physician efficiency scoring was “the big one for

customers deciding whether to use Impact Intelligence.”

Id. at 1722:24-1723:1.

Dr. Douglas Cave (“Dr. Cave”) also testified at trial

that stable and supportable physician efficiency scores

resulting from the methodology of the ’126 patent (i.e.,

the infringing functionality of Impact Intelligence) are

the market driver in physician efficiency scoring software.

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Appendix B

Id. at 405:12-17. Dr. Cave testified that he was unaware of

anyone other than CCGroup and Optum offering stable

scores, a necessity for meaningful physician scoring. Id. at

408:22-409:1. CCGroup has identified sufficient evidence

from which Lewis and the jury could have concluded that

the patented technology was not just “valuable, important,

or even essential to the use of” Impact Intelligence, but

that it also “create[d] the basis for customer demand” for

the entire product. VirnetX, 767 F.3d at 1326-27 (quoting

LaserDynamics, 694 F.3d at 68; Versata, 717 F.3d at 1268).

Single unit

The jury also heard evidence that the unpatented and

patented portions of Impact Intelligence are sold together

as a single integrated product. In deposition testimony

that was played to the jury at trial, Dr. McGibbon testified

as follows:

QUESTION: When Impact Intelligence is sold

to customers, do customers typically request

all five of these? Can I call them modules? Is

that fair?

ANSWER: Yeah. The four -- four of them come

out of the box. . . . So when they buy the product,

they get those four out of the box.

QUESTION: Okay. All the time?

ANSWER: Yes.

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Appendix B

QUESTION: Is it most typically sold with those

first four categories or do customers more often

want to customize the modules for Impact

Intelligence?

ANSWER: There’s no real customization in

the product itself. They can configure it, but,

you know, like I said, they get those four out of

the box, and they can use them. They can have

different people at their organization use one

module versus another module.

...

QUESTION: Is it fair to say that when a

customer says we want physician efficiency

scoring that the product that Optum offers to

the customer is Impact Intelligence?

ANSWER: We’ll normally start with Impact

Intelligence, yes.

Id. at 703:14-705:15.

Most importantly, Dr. MacGibbon testified that,

when customers buy the Impact Intelligence product,

they always get four of the Impact Intelligence modules,

including the PNA module, “out of the box.” Id. at 703:14703:21, 1719:17-20. Dr. MacGibbon also testified that

Optum did not offer customers the option to purchase

the other modules of Impact Intelligence without the

PNA module, so that every Impact Intelligence customer

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Appendix B

received the physician efficiency capability. Id. at 704:1-8,

1720:1-8. Nor did Optum value the modules separately.

Id. at 717:22-718:5, 1719:17-19. Although customers could

disable and enable certain modules, they still formed a

single “standard product.” Id. at 1719:17-1720:8.

On the basis of the testimony above, Lewis concluded

that the physician efficiency scoring mechanism taught in

the ’126 patent drove demand for the Impact Intelligence

product as a whole and that the product was sold as a single

unit. Id. at 1025:5-13. As discussed above, trial evidence

supported that opinion. The Court is mindful that the

entire market value rule is only a “narrow exception.”

LaserDynamics, 694 F.3d at 67. Nevertheless, given the

facts of this case, the Court concludes that Lewis’ opinion

based on the entire market value rule does not require a

new trial on damages.

Lewis’ bargaining range floor analysis

Optum also argues that Lewis improperly used

CCGroup’s lost profits for the 2011-2014 damages period to

set the “floor” for the hypothetical negotiation bargaining

range. Dkt. No. 379 at 21-23. On this point, both parties

cite Apple, Inc. v. Samsung Elecs. Co., Ltd., No. 5:12-cv00630, 2014 U.S. Dist. LEXIS 24506, 2014 WL 794328

(N.D. Cal. Feb. 25, 2014), in which the court rejected

the defendant’s contention that the plaintiff’s expert,

in setting the bargaining range for the hypothetical

negotiation, improperly looked at the profits the plaintiff

would lose by entering into a license. 2014 U.S. Dist.

LEXIS 24506, [WL] at *21-22. Optum contends that this

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Appendix B

case is different because Apple concerned “anticipated”

lost profits, whereas Lewis analyzed “actual” profits for

the 2011-2014 damages period. Dkt. No. 379 at 21-22.

In Apple, Judge Koh held that it was proper for a

damages expert assessing reasonable royalties to consider

lost profits on transactions that occurred during the

damages period:

In [Rite-Hite], the Federal Circuit expressly

upheld a claim for reasonable royalties based

on the profits the patentee would have expected

to lose as a result of a license. The patentee

(Rite-Hite) successfully premised its claim

for lost profits by tracing back Rite-Hite

and the infringer’s (Kelley) competition on

“specific transactions.” For a subset of those

transactions, however, Rite-Hite “had not

proved that it contacted the Kelley customer

prior to the infringing Kelley sale,” and,

accordingly, was not entitled to lost profits on

those particular sales. Nonetheless, the Federal

Circuit affirmed an award of reasonable

royalties to Rite-Hite for those sales “equal

to approximately fifty percent of Rite-Hite’s

estimated lost profits per unit sold to retailers.”

The Federal Circuit, sitting en banc, rejected

the contention that Rite-Hite could not rely on

estimated lost profits to support its reasonable

royalty award, holding that “the fact that the

award was based on and was a significant

portion of the patentee’s profits also does not

make the award unreasonable.”

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Appendix B

2014 U.S. Dist. LEXIS 24506, 2014 WL 794328, at *22

(quoting Rite-Hite, 56 F.3d at 1554-55). Under Apple and

Rite-Hite, in conducting a hypothetical reasonable royalty

analysis, Lewis was entitled to consider the profits that

CCGroup could have earned from selling its product to

customers that actually purchased Impact Intelligence

instead. That is precisely what Lewis did. Trial Tr.

1060:18-1061:17. Optum’s argument that this methodology

was improper is unpersuasive.

two-supplier market

Optum contends that Lewis’ damages testimony was

based on his assumption that CCGroup’s EfficiencyCare

and Optum’s Impact Intelligence were the only two

products in the market for “stabilized” physician efficiency

scoring. Dkt. No. 379 at 23-26. Optum argues that Lewis’

testimony was based on speculation, not evidence, and the

proper remedy is to vacate the verdict. Id. at 26.

At trial, Dr. Cave testified that CCGroup would gain all

or mostly all of Optum’s customers if Impact Intelligence

were no longer on the market. Trial Tr. 408:22-409:13.

Relying on this testimony, Lewis conservatively estimated

that, if Impact Intelligence were not on the market,

CCGroup would capture 6 to 12 of Optum’s 17 licensees in

the health plan payer market. Id. at 1047:7-1048:7.

Optum now points to testimony that other competitors

offered products that included physician efficiency

measurement. Id. at 1784:15-1785:8. Optum also notes

that only 4 of CCGroup’s 24 non-renewing customers

purchased Impact Intelligence. Id. at 1862:11-1864:16.

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Appendix B

However, at their heart, these arguments only go to the

weight that the jury should have accorded Lewis’ opinion,

not its admissibility. Because Optum had the opportunity

to cross-examine Lewis at trial to uncover these defects,

the issues that Optum identifies did not justify excluding

his opinion entirely. See Micro Chem., 317 F.3d at 1392; i4i

Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 856 (Fed. Cir.

2010). After hearing Optum’s criticism, the jury credited

Lewis’ testimony anyway. They were entitled to do so.

Optum also contends that CCGroup had the burden

to “reconstruct the market to show, hypothetically,

‘likely outcomes with infringement factored out of the

economic picture.’” Crystal Semiconductor Corp. v.

TriTech Microelectronics Int’l, Inc., 246 F.3d 1336, 1355

(Fed. Cir. 2001) (quoting Grain Processing Corp. v.

American Maize-Products Co., 185 F.3d 1341, 1350 (Fed.

Cir. 1999)). However, the cases that Optum cites impose

this requirement only in the context of calculating lost

profits, a remedy that CCGroup did not seek. See Crystal

Semiconductor, 246 F.3d at 1354-56; Grain Processing,

185 F.3d at 1349-50. Lewis’ reliance on Dr. Cave’s

testimony does not provide grounds for a new trial.

Unpatented products

Optum argues that Lewis included unpatented

products in setting the “f loor” for the hypothetical

negotiation. Dkt. No. 379 at 26-27. As such, Optum

contends that the jury’s verdict, based on Lewis’ testimony

improperly awarded CCGroup damages on unpatented

products, in violation of Rite-Hite. Id. (citing Rite-Hite,

56 F.3d at 1550).

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Appendix B

In estimating what CCGroup would have been willing

to accept in a hypothetical royalty negotiation, Lewis

considered the profits that CCGroup would be giving up

by licensing its technology to O

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