Appeal from the United States District Court for the Eastern District of Pennsylvania in No. 09-CV-4458, Judge Jan E. Dubois.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.
CHRISTOPHER R. BENSON, Fulbright & Jaworski, L.L.P., of Austin, Texas, argued for plaintiff-appellant. With him on the brief were SHEILA KADURA, of Austin, Texas, and JONATHAN S. FRANKLIN, of Washington, DC.
MICHAEL A. MORIN, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC, argued for defendants-appellees. With him on the brief were J. MICHAEL JAKES, NAVEEN MODI, and LUKE J. MCCAMMON, of Washington, DC; and JOSEPH E. PALYS, of Reston, Virginia. Of counsel on the brief was SAMIR N. PANDYA, SAP America, Inc., of Newtown Square, Pennsylvania.
Before NEWMAN, PLAGER, and WALLACH, Circuit Judges. OPINION filed by NEWMAN, Circuit Judge. Dissenting in part opinion filed by WALLACH, Circuit Judge.
Newman, Circuit Judge.
Elcommerce.com, Inc. is the owner of United States Patent No. 6,947,903 (" the '903 patent" ), directed to a system and method of monitoring a supply chain of components in order to coordinate and stabilize the supply of components from various producers. Elcommerce brought suit in the United States District Court for the Eastern District of Texas, charging SAP AG and SAP America, Inc. (collectively " SAP" ) with patent infringement. SAP filed a declaratory judgment counterclaim that the '903 patent is invalid, unenforceable, and not infringed. On SAP's motion, the district court transferred the case to the United States District Court for the Eastern District of Pennsylvania. Elcommerce objected to the transfer on jurisdictional and venue grounds, and on
this appeal elcommerce requests that the Pennsylvania court's judgment be voided and the case returned to Texas for trial.
The Pennsylvania district court construed the claims of the '903 patent, and on this claim construction the court entered summary judgment that the asserted system claims 22-30, 32, 33 and 37 are invalid for indefiniteness under 35 U.S.C. § 112 ¶ 2, based on failure to comply with the requirements of § 112 ¶ 6. The parties stipulated that the district court's claim construction precludes finding that SAP infringes any of the asserted method claims 1, 3, 4, 12, 13, 17-21, 38, 43, 44, 47, 50, 53, or 54. Final judgment was entered of invalidity of the system claims and non-infringement of the method claims.
On appeal by elcommerce, we affirm the district court's construction of the '903 patent's claim terms " independent supply chain sites," " scanning for," " detecting," and " monitoring for changed supply-related data information." On this ground, the parties' stipulation of non-infringement of the method claims is affirmed.
For the system claims the ruling of invalidity is vacated, for the summary judgment was based on an incorrect evidentiary premise. SAP had incorrectly informed the district court that Federal Circuit precedent makes unnecessary consideration of evidence of the knowledge and understanding of the relevant technology by persons of skill in the field of the invention. Thus SAP declined to provide evidence of how such persons would view the description of " structure, materials, or acts" in the specification for performance of the several functions claimed in the form authorized by 35 U.S.C. § 112 ¶ 6. On this absence of evidence, the district court held that every claimed function was devoid of support, and therefore that every system claim is invalid on the ground of indefiniteness. Because invalidity must be proven by clear and convincing evidence, we vacate the court's rulings with respect to the system claims, and remand for determination of validity on an appropriate evidentiary record and standard.
Jurisdiction and Venue
Soon after the filing of suit by elcommerce in the Eastern District of Texas, SAP moved under 28 U.S.C. § 1404(a) for transfer to the Eastern District of Pennsylvania, on SAP's statement that Pennsylvania is the headquarters location of SAP America and the location of its witnesses and documents. Elcommerce objected to the transfer, stating that it is the plaintiff's prerogative to choose the forum, that § 1404(a) favors keeping the action in Texas, that personal jurisdiction over SAP exists in Texas based on SAP's commercial activities in Texas, and that the Eastern District of Pennsylvania lacks personal jurisdiction over elcommerce. The Texas district court granted the transfer.
On arrival in the Eastern District of Pennsylvania, elcommerce again disputed the Pennsylvania court's personal jurisdiction over it, and requested transfer back to Texas. The Pennsylvania court denied the request, stating that " [u]nder law-of-the-case principles, if the transferee court can
find the transfer decision plausible, its jurisdictional inquiry is at an end," quoting Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 819, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988).
Elcommerce appeals the transfer, on the grounds that it is the defendant to SAP's declaratory judgment counterclaims that were filed in Texas and included in the transfer to Pennsylvania, and that judgment cannot be entered against a defendant or its property over which the court does not have personal jurisdiction. Elcommerce states that it does not have minimum contacts with the Eastern District of Pennsylvania or with the state of Pennsylvania, and that minimum contacts are required for personal jurisdiction. Elcommerce cites International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), where the Court explained that " due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Id. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). Thus elcommerce argues that the judgment invalidating its patents via declaratory judgment counterclaim could not properly be decided in Pennsylvania.
Elcommerce also stresses that as plaintiff it is entitled to its choice of forum, and states that Federal Circuit precedent in similar circumstances is explicitly contrary to the transfer. Thus elcommerce states that the Eastern District of Pennsylvania lacked jurisdiction to enter a binding judgment in this suit, and asks that the Pennsylvania judgment be vacated and the case returned to Texas for trial.
SAP proposes first that this court need not be concerned with the question of personal jurisdiction over elcommerce in Pennsylvania, offering the theory that any transfer error is harmless because the dispositive issues on this appeal--claim construction and validity under § 112--are questions of law that the Federal Circuit decides de novo. SAP states that it is irrelevant whether the appealed decision was rendered by a district court in Texas or in Pennsylvania, because on appeal the Federal Circuit decides these questions for itself, with no deference to the district court's rulings.
It is axiomatic that jurisdiction must be present in every tribunal, whether the issue is one of fact or law, and whatever the standard of appellate review. " 'Without jurisdiction the court cannot proceed at all in any cause'; it may not assume jurisdiction for the purpose of deciding the merits of the case." Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (quoting Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)). If jurisdiction is absent in the district court its decision is void, for " [t]he requirement that jurisdiction be established as a threshold matter springs from the nature and limits of the judicial power of the United States and is inflexible and without exception." Steel Co., 523 U.S. at 94-95.
A void decision cannot receive appellate review, even when review is by de novo determination. There must be jurisdiction in the district court to reach an appealable judgment; SAP's proposition of harmless error is meritless.
The transfer to Pennsylvania was founded on the statutory authorization of transfer of civil actions between federal district courts, on specified conditions:
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.
28 U.S.C. § 1404(a) (1996). Absent consent, the transferee forum must be a court in which the action " might have been brought." Hoffman v. Blaski, 363 U.S. 335, 343-44, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960). Elcommerce agrees that it could have sued SAP in the Eastern District of Pennsylvania, but stresses that SAP could not have brought a declaratory judgment action against elcommerce in Pennsylvania.
Elcommerce states that the Pennsylvania judge erroneously concluded that because elcommerce was the plaintiff in the Texas action, personal jurisdiction over elcommerce in Pennsylvania is unnecessary in an action transferred under § 1404(a). Elcommerce recognizes that as plaintiff in Texas it was subject to the Texas court's jurisdiction over any relevant counterclaims filed by the defendant, but argues that its voluntary submission to the jurisdiction of the Texas court does not carry over to an involuntary transfer to a different venue. See Lindahl v. Office of Pers. Mgmt., 470 U.S. 768, 793 n.30, 105 S.Ct. 1620, 84 L.Ed.2d 674 (1985) (" venue considerations come into play only after jurisdiction has been established" ).
Elcommerce stresses that SAP's response to the Texas complaint included declaratory judgment counterclaims, and argues that personal jurisdiction in Pennsylvania was improper because a declaratory judgment action could not have been brought against elcommerce in Pennsylvania. Elcommerce states that without personal jurisdiction a court cannot enter a binding judgment against a defendant, and that it is the defendant to SAP's declaratory judgment counterclaims. Thus elcommerce states that the Pennsylvania court did not have jurisdiction to render the decision here on appeal.
Elcommerce argues that due process principles support its position, citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (" The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgment of a forum with which he has established no meaningful 'contacts, ties, or relations.'" ) (quoting International Shoe, 326 U.S. at 319). Elcommerce states that the Pennsylvania court did not have personal jurisdiction over elcommerce for resolution of the declaratory action, and could not declare the elcommerce patents invalid.
Elcommerce states that the entirety of the Texas action including the declaratory counterclaims could not have been transferred to Pennsylvania, and that since it is generally improper to transfer only part of a pending case, the entire transfer and the decision thereof are void. Elcommerce states that in Hildebrand v. Steck Manufacturing Co., Inc., 279 F.3d 1351 (Fed. Cir. 2002) this court's holding involving claims and counterclaims supports the elcommerce position. SAP responds that Hildebrand is adequately distinguished on its facts.
In Hildebrand this court held that there was not personal jurisdiction over the defendant patentee in a declaratory judgment action filed by the purported infringer. Jurisdiction in that venue was not cured when the patentee later filed suit as plaintiff on the same patent in a different venue. Steck Manufacturing had filed a
declaratory action against the patentee Hildebrand in the Southern District of Ohio, requesting declarations of non-infringement, patent invalidity, and tortious interference with contract. Nine days later Hildebrand filed an infringement suit against Steck in the District of Colorado. The Colorado court granted Steck's motion to transfer the infringement suit to Ohio, citing the " first-filed" rule. Hildebrand refused to participate in Ohio, stating that the Ohio court lacked personal jurisdiction over it. The Ohio court then entered a default judgment against Hildebrand.
On appeal to the Federal Circuit, Hildebrand argued that his suit as plaintiff in Colorado on the same subject matter did not impart or concede personal jurisdiction over Hildebrand as defendant in the previously filed Ohio action. This court agreed, held that the Ohio court lacked personal jurisdiction over Hildebrand, and vacated the Ohio judgment. The court reasoned that Hildebrand could not be sued as defendant in Ohio because he had no minimum contacts with Ohio, and that Hildebrand's subsequent suit as plaintiff in Colorado " do[es] not create a constitutionally adequate basis for personal jurisdiction" in Ohio. Id. at 1356. This court held that the Colorado court's transfer to Ohio of the action filed by Hildebrand in Colorado did not cure the absence of personal jurisdiction over Hildebrand in Ohio.
Elcommerce argues that the jurisdictional posture in this case is analogous, and that Hildebrand established that it is improper to transfer an action from a forum that has voluntary personal jurisdiction over the plaintiff, to a forum that does not have either voluntary or actual personal jurisdiction when the plaintiff is a counterclaim defendant. Elcommerce states that Hildebrand requires that this court return the entire action to Texas, where the district court has jurisdiction of the claims and counterclaims filed by both sides.
We conclude that Hildebrand supports the rulings of the Texas and Pennsylvania district courts. Jurisdiction is determined at the time the complaint is filed. In Hildebrand there was not personal jurisdiction over Hildebrand as defendant in the first-filed action in Ohio, and this flaw was not cured by transfer to Ohio of Hildebrand's later-filed Colorado suit. Here, in the first-filed Texas case there was personal jurisdiction over both the plaintiff elcommerce and the defendant SAP, and elcommerce as plaintiff was subject to the declaratory counterclaims filed by SAP in Texas. This jurisdiction was preserved when the entire action was transferred to Pennsylvania under § 1404(a).
Precedent supports the position that personal jurisdiction over the plaintiff, in the forum in which the plaintiff filed suit, is not lost when the entire case is transferred to a forum in which the plaintiff could have sued this defendant. In In re Genentech, 566 F.3d 1338 (Fed. Cir. 2009) this court applied this principle to a foreign plaintiff and explained that " [t]here is no requirement under § 1404(a) that a transferee court have jurisdiction over the plaintiff or that there be sufficient minimum contacts with the plaintiff; there is only a requirement that the transferee court have jurisdiction over the defendants in the transferred complaint." Id. at 1346.
In Genentech the patentee Sanofi, a company of Germany, filed suit against Genentech in a Texas district court. Genentech requested that the suit be transferred to the Northern District of California. Sanofi argued that as plaintiff it had the right to choose the forum, that personal jurisdiction over Genentech in the Texas court was not disputed, and that the California court would be obliged to waste judicial resources to determine if it possessed
personal jurisdiction over the German plaintiff. Genentech in turn argued the convenience to it and its witnesses of the California venue. The Texas district court granted the transfer and this court affirmed, observing that California is " the clearly more convenient venue." Id. at 1348.
Both Hildebrand and Genentech support the district courts' rulings on the transfer from Texas to Pennsylvania, for the transfer is apt on venue considerations, and the Pennsylvania court possesses jurisdiction to decide the issues raised by the complaint, including the defenses and declaratory counterclaims. We discern no abuse of discretionary authority in the transfer.
The Method Claims
The district court construed various terms in the method and system claims. The parties stipulated that on the district court's claim construction SAP does not infringe any of the asserted method claims.
The '903 patent's method claims set forth steps in monitoring a supply chain of components used in manufacture. The monitoring is for the purpose of facilitating and coordinating the supply of components provided by separate entities. The '903 patent explains that supply problems arise in various ways, such as when entities in the chain maintain their supply-related data in different or uncoordinated formats, and are not readily informed of changes in utilization or need.
The '903 patent includes claims to a method that collects information from each supply site, places the information in a common format, makes the coordinated supply information available to the entities in the supply chain, and detects and alerts the entities to any supply problem. Claim 1 outlines the steps of the method as follows, with the claim construction terms on appeal shown in boldface:
1. A method of monitoring supply chain activity, comprising:
scanning for changed supply-related data at independent supply chain sites within the supply chain;
extracting the supply-related data at the independent supply chain, the data being maintained in plural formats at the supply chain sites, where each of the supply chain sites represents an independent entity in the supply chain;
translating the extracted data into a common format;
uploading the extracted data from each supply chain site to a data collection site, the data collection site collecting the extracted data; and
upon a request from a user associated with one of the supply chain sites, formatting, at the data collection site, a portion of the collected data, retrieved from one of the supply chain sites other than the site of the user, into one of a plurality of views, responsive to criteria selected by the user, for presentation to the user, the portion of formatted data being dependent on access rights granted to ...