IP Law Daily, PATENT—Fed. Cir.: Non-infringement stipulation lacked sufficient detail in dispute over WAN tech, (Mar 13, 2023)

By Anne H. Gibson, J.D., LL.M.

Claim construction by the district court must also be revised because it “requires the impossible.”

A stipulation of non-infringement entered into by the parties to a patent infringement case related to wide area networks (WANs) involving online retail giant Amazon.com was ambiguous and therefore defective, the U.S. Court of Appeals for the Federal Circuit has held. The stipulation was based on two claim construction rulings by the district court, but did not specify which claims were impacted by which constructions, the aspects of the constructions that were controlling, or the grounds for non-infringement. The Federal Circuit also found that one of the district court’s claim construction rulings was not reasonable because it “requires the impossible,” and so must be revised. The Federal Circuit vacated the stipulated judgement and remanded for further proceedings (AlterWAN, Inc. v. Amazon.com, Inc., March 13, 2023, Dyk, T.).

AlterWAN, Inc. is the owner of two patents related to improvements to implementing WANs, U.S. Patent Nos. 8,595,478 (the ‘478 patent) and 9,015,471 (the ‘471 patent). The patents are asserted to improve on problems of latency and lack of security in current WAN technology by creating “private tunnels” that provide high bandwidth pathways between sites. AlterWAN sued Amazon.com, Inc. and Amazon Webservices, Inc. (collectively, Amazon) for infringing on these patents. At the claim construction phase, the parties disagreed about the definitions of two terms, “non-blocking bandwidth” and “cooperating service provider.” The district court provided constructions for the terms and the parties agreed to a stipulated judgment that there was no infringement under those constructions. AlterWAN appealed.

“Non-blocking bandwidth.” The term “non-blocking bandwidth” appeared in claims 1, 13, and 14 of the ‘471 patent. The court noted that the “specification explains that ‘the quality of service problem that has plagued prior attempts is solved by providing nonblocking bandwidth (bandwidth that will always be available and will always be sufficient).’” AlterWAN argued that this meant that the bandwidth would be sufficient and available when Internet service was available. However, Amazon argued that the use of the word “always” meant the bandwidth “will always be available and will always be sufficient,” as in the specification, and that this includes times when the Internet is inoperable. The district court agreed with this construction.

“Cooperating service provider.” The term “cooperating service provider” appeared in claims 1, 6, 10, 18, 42, 51, and 63 of the ‘478 patent and in claim 19 of the ‘471 patent. While AlterWAN argued that this term should be construed as a “service provider whose transmission equipment is coupled to [one or more transmission] path[s],” Amazon argued that it should be construed as a “service provider that agrees to provide non-blocking bandwidth.” The district court initially construed the term as a “service provider that agrees to provide blocked bandwidth.” However, at the summary judgment stage, the parties both argued that “blocked bandwidth” should be replaced with other terms, and the district court, agreeing with Amazon, altered the definition to a “service provider that agrees to provide non-blocking bandwidth.”

After the summary judgment hearing, the parties filed a stipulation and order of non-infringement. The stipulation stated that, “[u]nder the Court’s constructions of ‘cooperating service provider’ and ‘non-blocking bandwidth,’ Amazon has not infringed, and does not infringe, the ’478 and ’471 patents.” AlterWAN appealed.

Ambiguous stipulation. The Federal Circuit first turned in its analysis to the question of the specificity of the stipulation. “In past cases, we have held that stipulated judgments are defective if they are ambiguous in material respects,” the court stated, citing Jang v. Boston Science Corp., 532 F.3d (Fed. Cir. 2008). The court found that the stipulation was not specific enough to resolve the claim construction issues.

First, it noted that the claims of the ’471 patent that were still at issue on appeal were not specified. Further, the court found that it was not possible to determine whether the judgment rested on the definition of “non-blocking bandwidth” or “cooperating service provider” or both, especially as the definition of “cooperating service provider” includes the term “non-blocking bandwidth.” In particular, the court found that, “[i]t is unclear whether, under the stipulation, Amazon prevails on infringement if either construction is correct or only if both are correct.”

AlterWAN argued that the judgment of non-infringement resulted from the construction of “non-blocking bandwidth.” Because the district court’s definition required that “non-blocking bandwidth” be available to the customer even when the Internet was down, which is impossible for any system to provide, there was no way for Amazon to infringe on the patent. AlterWAN argued that the district court failed to add a qualifier to the construction of this term, such as “while the network is operational,” and that the judgment of non-infringement rested solely on that failure.

Amazon, however, argued that any change in the construction of “non-blocking bandwidth” would not impact the judgment of non-infringement. Its view was that it did not infringe on the patent because it provides the customer only the amount of bandwidth the customer has purchased. “Since Amazon does not ensure that bandwidth is always sufficient to meet the customer’s needs, Amazon does not infringe.”

The Federal Circuit pointed out the danger of stipulations of non-infringement that do not “indicat[e] the exact basis for non-infringement.” In this case, the court could not determine the basis for the original judgment, because the stipulation did not specify how the claim construction rulings relate to the alleged infringement, the court explained.

Reasonable construction. Because the case would be remanded for further proceedings, the Federal Circuit clarified its view of the standard for construing “non-blocking bandwidth.” Although courts “may not redraft claims,” they are not “require[d] [] to depart from common sense in claim construction.” The district court’s construction of “non-blocking bandwidth” that requires a system to provide bandwidth when the Internet is down is not reasonable, the court held. The statement in the specification that bandwidth “will always be available,” must be read in context, and that means that it only applies when the Internet is operable. The court did not give a full definition of “non-blocking bandwidth,” but required that the district court construct such a definition that included the specified limitation.

The Federal Circuit vacated the stipulated judgment of non-infringement and remanded for further proceedings.

The Case is No. 22-1349.

Attorneys: C. Graham Gerst (Global IP Law Group) for AlterWAN, Inc. J. David Hadden (Fenwick & West, LLP) for Amazon.com, Inc. and Amazon Web Services, Inc.

Companies: AlterWAN, Inc.; Amazon.com, Inc.; Amazon Web Services, Inc.

Cases: Patent FedCirNews DelawareNews GCNNews