Case 2:06-cv-00042-JRG Document 500 Filed 10/03/12 Page 1 of 10 PageID #: 9926
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`DDR HOLDINGS, LLC,
` Plaintiff,
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`vs.
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`HOTELS.COM, L.P., et al.,
` Defendants.
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`CASE NO. 2:06-CV-42-JRG
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is Defendant Digital River, Inc.’s (“Digital River”) Motion for
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`Summary Judgment of Non-Infringement. (Dkt. No. 401.) After carefully considering the
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`parties’ written submissions, the Motion is DENIED.
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`I.
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`BACKGROUND
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`On January 31, 2006, DDR Holdings, LLC (“DDR”) brought this suit against various
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`Defendants, including Digital River, alleging infringement of U.S. Patent Nos. 6,629,135 (“the
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`‘135 patent”), 6,993,572 (“the ‘572 patent”) and 7,818,399 (“the ‘399 patent”), which relate to e-
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`commerce outsourcing. 1 Shortly after this suit was filed, in 2006, DDR filed a request for
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`reexamination of the patents-in-suit, and the Court stayed the litigation pending the outcome of
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`that reexamination. Ultimately, each of the asserted patents survived reexamination.
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`The basis for Digital River’s Motion for Summary Judgment is its claim that DDR made
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`statements to the USPTO during reexamination to avoid prior art which preclude the very
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`infringement theories that DDR now asserts. (Dkt. No. 401.) Digital River contends that DDR
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`persuaded the USPTO that the reexamined claims were allowable over the prior art because they
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`1 Digital River is accused of infringing the ‘135 and ‘572 patents.
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`1
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`DDR Holdings, LLC - Ex. 2017
`Shopify, Inc. v. DDR Holdings, LLC
`IPR2018-01008
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`Case 2:06-cv-00042-JRG Document 500 Filed 10/03/12 Page 2 of 10 PageID #: 9927
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`are specifically limited to a three-party system. (Dkt. No. 401, at 2.) Digital River contends that,
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`despite making such statements, DDR now takes the position that Digital River’s two-party
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`system infringes the asserted claims. Id. DDR responds that Digital River is simply
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`mischaracterizing the statements made during the reexamination, and that the agreed-upon
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`construction of the claims demonstrates that Digital River’s two-party system is capable of
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`infringing the ‘135 and ‘572 patents.
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`The independent claims asserted against Digital River are as follows:
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`An e-commerce outsourcing process providing a host
`website in communication with a visitor computer with context
`sensitive, transparent e-commerce support pages, comprising the
`steps of:
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`a) capturing a look and feel description associated with a
`host website;
`b) providing the host website with a link for inclusion
`within a page on the host website for serving to a visitor
`computer, wherein the provided link correlates the host
`website with a selected commerce object; and
`c) upon receiving an activation of the provided link from
`the visitor computer, serving to the visitor computer an
`e-commerce supported page with a look and feel
`corresponding to the captured look and feel description
`of the host website associated with the provided link
`and with content based on the commerce object
`associated with the provided link.
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`See ‘135 Patent, Claim 8.
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`An e-commerce outsourcing system comprising:
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`a) a data store including a look and feel description
`associated with a host web page having a link
`correlated with a commerce object; and
`b) a computer processor coupled to the data store and in
`communication through the Internet with the host web
`page and programmed, upon receiving an indication
`that the link has been activated by a visitor computer in
`Internet communication with the host web page, to
`serve a composite web page to the visitor computer
`with a look and feel based on the look and feel
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`description in the data store and with content based on
`the commerce object associated with the link.
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`See ‘572 Patent, Claim 13.
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`An e-commerce outsourcing process comprising the steps
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`of:
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`a) storing a look and feel description associated with a
`first website in a data store associated with a second
`website;
`b) including within a web page of the first website, which
`web page has a
`look and
`feel
`substantially
`corresponding to the stored look and feel description, a
`link correlating the web page with a commerce object;
`and
`c) upon receiving an activation of the link from a visitor
`computer to which the web page has been served,
`serving the visitor computer from the second website a
`composite of the first website and having content based
`on the commerce object associated with the link..
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`See ‘572 Patent, Claim 17.
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`In the Claim Construction Order (Dkt. No. 309, at 10-11), the Court established the
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`following definitions:
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`Term
`First web page
`First web site
`Commerce Object
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`Merchant
`Host/owner
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`Outsource provider / e-
`commerce
`outsource
`provider
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`Construction
`Host web page
`Host website
`A third-party merchant’s: catalog, category, product (goods or
`services), or dynamic selection
`Producer, distributor, or reseller of goods or services to be sold
`An operator of a website that engages in Internet commerce by
`incorporating one or more links to an e-commerce outsource
`provider into its web content
`A party, independent from the host associated with the
`commerce object or merchant of the commerce object, that
`provides e-commerce support services between merchant(s)
`and host(s)
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`Among these constructions, Digital River places particular emphasis on the construction of the
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`term “commerce object,” which the parties agreed to mean “a third-party merchant’s: catalog,
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`category, product (goods or services), or dynamic selection.” (Dkt. No. 309, at 10) (emphasis
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`added.) Digital River contends that the addition of third-party to the definition of “commerce
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`object” was necessitated due to arguments DDR made before the USPTO during reexamination,
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`and that such construction means that it takes a three-party (not a two-party) system to infringe
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`the asserted claims. (Dkt. No. 401, at 6.) DDR responds that the term “third -party” does not
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`mean that infringement requires three separate parties, but rather that one element of the system
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`(the outsource provider) be a “third-party” (e.g., independent from) other actors within the
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`system (the host and the merchant). (Dkt. No. 415, at 8.) DDR also points to a clear statement
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`in the common specification of the ‘135 Patent which provides: “[t]hese parties include
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`Merchants, Hosts, and the e-commerce outsource provider. This folds into two parties where
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`one party plays the dual role of Host and Merchant.” ‘135 Patent, col. 21, lines 44-48.
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`II.
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`Applicable Law
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`Summary judgment should be granted “if the movant shows that there is no genuine
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`dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
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`Fed. R. Civ. P. 56(a). Any evidence must be viewed in the light most favorable to the
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`nonmovant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v.
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`S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)). Summary judgment is proper when there is no
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`genuine issue of material fact. Celotex v. Catrett, 477 U.S. 317, 322 (1986). “By its very terms,
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`this standard provides that the mere existence of some alleged factual dispute between the parties
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`will not defeat an otherwise properly supported motion for summary judgment; the requirement
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`is that there be no genuine issue of material fact.” Anderson, 477 U.S. at 247-48. The
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`substantive law identifies the material facts, and disputes over facts that are irrelevant or
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`unnecessary will not defeat a motion for summary judgment. Id. at 248. A dispute about a
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`material fact is “genuine” when the evidence is “such that a reasonable jury could return a
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`verdict for the nonmoving party.” Id.
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`III. DISCUSSION
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`A. Parties’ Contentions
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`The written description of the patents-in-suit, which issued from a common specification,
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`recites that “[t]here are three main parties in the outsourced e-commerce relationship, excluding
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`the end consumer … [the] Merchants, Hosts, and the e-commerce outsource provider.” See ‘135
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`Patent, col. 21, lines 44-46. The crux of the dispute before the Court involves the inter-
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`relationship among these parties. Digital River contends that the merchant, host and e-commerce
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`outsource provider must be distinct and independent entities that are each “third-parties” relative
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`to one another, which justifies Digital River’s arguments that infringement requires a “three-
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`party system.” (Dkt. No. 401.) DDR responds that the crucial inquiry is not the number of
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`“parties” to the system, but rather whether the outsource provider is a “third-party” to both the
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`merchant and the host. (Dkt. No. 415.) According to DDR’s infringement theory, the
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`relationship between the host and the merchant is not relevant to this analysis. Id. The parties
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`have therefore raised a “fundamental dispute regarding the scope of a claim term,” which the
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`Court has a duty to resolve as a matter of law. O2 Micro Int’l Ltd. v. Beyond Innovation Tech.
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`Co., Ltd., 521 F.3d 1351, 1362-62 (Fed. Cir. 2008).
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`Digital River’s basis for its “three-party system” limitation is primarily based on alleged
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`prosecution history estoppel generated during the reexamination of the patents-in-suit before the
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`USPTO. (Dkt. No. 401.) Specifically, Digital River points to statements made by DDR to
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`distinguish the claims of the patents-in-suit from U.S. Patent No. 6,016,504 (“Arnold”), which
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`then served as the basis for the Patent Examiner’s anticipation rejection of the claims. (Dkt. No.
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`401, at 4.) DDR statements relied upon by Digital River include:
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` “The Arnold patent lacks one of the three parties to the subject patent.” See ‘572
`Patent Response to Office Action of Nov. 24, 2008, at 4-5.
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` “The distinctions are crucial, in the context of the patent being reexamined,
`because the patent states, ‘There are three main parties in the outsourced e-
`commerce relationship, excluding the end consumer. These parties include
`Merchants, Hosts, and the e-commerce outsource provider.’” ‘572 Patent Appeal
`Brief of May 18, 2009, at 19.
`
` “Arnold’s link from the host website to the merchant directly does not
`correlate/correspond with a commerce object (as claims 1, 13, and 17 each
`require), because the term “commerce object” in the patent in question, is defined
`as a product of a third-party merchant, not a product sold by the owner of the
`linked page.” ‘135 Patent Appeal Brief of May 9, 2009, at 14.
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` “It just uses the same term, ‘commerce object,’ and from which, you know, it is
`clear that the merchant is a third party….” Record of Oral Hearing of Oct. 21,
`2009, at 10.
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` “I think it is clear that if you read through the specification in its [] entirety and
`including the parts I cited in the Bbrief [sic], you will see that the sense of the –
`you will see that through the specification, in using the term ‘commerce object’ is
`referring to a commerce object of a third-party merchant and that’s the way the
`specification is written.” Id., at 11.
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` “It is the – whole concept of the entirety of the lengthy specification is dealing
`with this notion of an outsource provider intervening between, as an intermediary
`party, between a host and a merchant.” Id., at 12.
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`Digital River argues that the reexamination record “leaves no doubt that the two-party systems
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`were repeatedly disclaimed by DDR.” (Dkt. No. 401, at 6.)
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`DDR responds that the clear and unambiguous language of the written description clearly
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`and unambiguously contemplates a “two-party” system like Digital River’s:
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`There are three main parties in the outsourced e-commerce
`relationship, excluding the end consumer. These parties include
`Merchants, Hosts, and the e-commerce outsource provider. This
`folds into two parties where one party plays the dual role of Host
`and Merchant.
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`Case 2:06-cv-00042-JRG Document 500 Filed 10/03/12 Page 7 of 10 PageID #: 9932
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`See ‘135 Patent, col. 21, ll. 44-48 (emphasis added). According to DDR, this portion of the
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`specification demonstrates that a two-party system could infringe the asserted patents where one
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`party controls the outsource provider and the other serves the dual role of host and merchant.
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`(Dkt. No. 415, at 8-9.) With regard to the prosecution estoppel arguments, DDR argues that all
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`of its statements with regard to “third-parties” was an attempt to distinguish the fact that Arnold
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`lacked the independent outsource provider contemplated by the claims of the asserted patents.
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`Id., at 10. DDR contends that the entire dispute before the patent office regarded whether or not
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`the claims implicitly required an outsource provider (that acted for a Merchant), as opposed to
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`only a Merchant that acted for itself. Id.
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`Digital River replies that the parties’ agreed construction of “outsource provider” is “[a]
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`party … that provides e-commerce support services between merchant(s) and host(s).” (Dkt. No.
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`309, at 11.) Therefore, in a situation where the merchant (e.g., Microsoft) and host (e.g.,
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`Microsoft) are the same, Digital River must “provide e-commerce support services between”
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`Microsoft and Microsoft, which, according to Digital River, “makes no sense.” (Dkt. No. 442, at
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`2.)
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`However, in sur-reply, DDR argues that there is “nothing ‘nonsensical’ about Digital
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`River acting as an Outsource Provider ‘provid[ing] e-commerce support services between’
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`Microsoft acting as a Merchant (a seller of software) and Microsoft acting as a Host (Microsoft
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`has hundreds of thousands of web pages, some of which allow users to click through to Digital
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`River to buy software.)” (Dkt. No. 465, at 4.) DDR notes that the asserted patents explicitly
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`recognize that an Outsource Provider can provide an intermediary service in such a situation
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`(‘135 Patent, col. 21, lines 46-47), the value of which “is evidenced by the fact that Microsoft
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`pays Digital River to provide that precise service.” Id.
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`B. Analysis
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`After carefully considering the parties written submissions and analyzing the complete
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`reexamination file, the Court finds that DDR’s statements distinguishing Arnold on the basis of a
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`“third-party” were directed to the overriding concept that an “outsource provider” must be
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`independent from both the Merchant and the Host, i.e., a “third-party.” While the isolated
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`statements made by DDR before the USPTO initially appear to support Digital River’s
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`arguments for prosecution history estoppel, Digital River’s arguments lose much of their
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`persuasive force when read within the full context of the reexamination file. Within the context
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`of the entire dialogue between DDR and the USPTO, it becomes apparent that DDR did not limit
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`the claims to require three separate parties or entities, but rather DDR laid out a different premise
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`to overcome Arnold, i.e.: that the outsource provider must be independent from the host and
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`merchant – nothing more. This was DDR’s key distinction over Arnold. Notably, Arnold did
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`not contain an independent e-commerce outsource provider and that ultimately lead to the
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`allowance of the claims. DDR’s arguments were solely directed to the concept of demonstrating
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`this distinction.2
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`When viewed as a whole, the reexamination file shows that there is no clear and
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`unambiguous disavowal of claim scope that would preclude the two-party embodiment expressly
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`disclosed in the specification. See ‘135 Patent, col. 21, ll. 44-48 (“This folds into two parties
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`where one party plays the dual role of Host and Merchant.”). Without a review of the full
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`reexamination file, it is arguably plausible that Digital River’s position is correct. However,
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`employing the same exegesis used by scholars to understand everything from Shakespeare to the
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`2 See, e.g., Record of Oral Hearing of October 21, 2009, at 9 (“I mean we are advocating for the commerce object
`being the product of a merchant, meaning a third-party merchant. If you don’t do that and you say the commerce
`object can be the outsource provider’s own product, then, which is, in effect, what the Examiner has said, then it
`would make no sense to add a dependent element that says ‘further providing billing information or contracting with
`the merchant,’ because there would – it wouldn’t be consistent with the use of the same term.’”).
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`bible, the Court reaffirms that context matters. Reading the full reexamination file as opposed to
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`the isolated statements cited by Digital River takes this reader to a different conclusion
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`altogether. This Court’s conclusion is that so long as the e-commerce outsource provider is
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`independent from the host and merchant, the claims can be infringed. See Schwing Gmbh v.
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`Putzmeister Aktiengesellschaft, 305 F.3d 1318, 1324 (Fed. Cir. 2002) (“[a]lthough prosecution
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`history can be a useful tool for interpreting claim terms, it cannot be used to limit the scope of a
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`claim unless the applicant took a position before the PTO that would lead a competitor to believe
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`that the applicant had disavowed coverage of the relevant subject matter.”).
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`Further, the Court does not identify any inconsistency with regard to the argument that
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`the outsource provider must provide e-commerce services “between” the host and the merchant
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`in instances where the host and merchant are controlled by the same entity. As DDR notes, the
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`patent specifically contemplates such a configuration (see ‘135 Patent, col. 21, lines 46-47) and,
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`practically speaking, such an arrangement could occur whenever an entity sells products on a
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`website that it also hosts.
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`For the reasons described above, the Court identifies no clear disavowal of claim scope in
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`the reexamination history that would preclude a finding of infringement simply because one
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`party plays the dual role of host and merchant. The Court therefore expressly REJECTS Digital
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`River’s argument, as a matter of claim construction, that the claims of the asserted patents cannot
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`be infringed by a “two-party” system where one party is the e-commerce outsource provider and
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`another party serves the dual roles of host and merchant.
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`IV. CONCLUSION
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`Having carefully considered the parties’ written submissions, the Court finds that Digital
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`River presents a question of law as to claim construction, but that its asserted construction is in
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`error and does not support granting summary judgment in its favor. Accordingly, Digital River’s
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`Motion for Summary Judgment of Non-Infringement is DENIED, and the Court finds as a
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`matter of law that infringement is possible where the e-commerce outsource provider is
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`independent from the host and merchant, regardless of whether the host and merchant are
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`controlled by the same entity or separate entities.
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