On January 22, 2013, in Soverain Software LLC v. Newegg Inc., No. 2011-1009, the Federal Circuit (Newman, Prost, and Reyna) reversed a decision by the Eastern District of Texas that had upheld the validity of a computer-implemented invention over an obviousness challenge. This case suggests that computer-implemented patents may face increased scrutiny on obviousness grounds.
Soverain Software brought suit against Newegg for infringing patents relating to an electronic commerce system involving network-based sales. During trial, Newegg presented expert testimony on prior art that involved a pre-Internet network sales system. Although the district court did not discuss the claims or the prior art, it sustained the claims’ validity.
The Federal Circuit held that the district court erred in ruling that Newegg (through its expert) had not presented a prima facie case of obviousness for all three patents. Analyzing the second Graham factor — the difference between the prior art and the claimed invention — the Federal Circuit rejected the patent owner’s proposed distinction of the prior art because such distinction was neither embodied in the claims nor reflected in the claim construction. The Federal Circuit also ruled that simply conducting known methods through an Internet web browser was obvious. The Federal Circuit ultimately held that the patent owner failed to rebut the prima facie case of obviousness and invalidated all three patents.