Writing software in the United States is not making the claimed medium, so it cannot carry foreign use into the royalty

2024-03-27Fed. Cir.

Brumfield v. IBG LLC, 97 F.4th 854 (Fed. Cir. Mar. 27, 2024) (precedential) (Taranto, J., joined by Prost and Hughes, JJ.), No. 2022-1630, affirming the judgment of the United States District Court for the Northern District of Illinois, No. 1:10-cv-00715 (Kendall, J.)

Trading Technologies sued Interactive Brokers over its BookTrader trading tool, and four patents reached this appeal: United States Patent Nos. 6,766,304, 6,772,132, 7,676,411 and 7,813,996. The district court held the asserted claims of the '411 and '996 patents ineligible under Section 101 of Title 35 of the United States Code, and a jury awarded $6,610,985 on method and computer-readable-medium claims of the '304 and '132 patents. The Federal Circuit affirmed in an opinion by Judge Taranto. The '411 and '996 claims, which unlike claims upheld in a 2017 nonprecedential decision permit automatic movement of the price axis, are directed to the abstract idea of receiving and displaying market information to place an order. On damages, the panel held that WesternGeco LLC v. ION Geophysical Corp. supersedes the 2013 Power Integrations framework and governs foreign-conduct damages for infringement under Section 271(a), including a reasonable royalty. A patentee seeking a larger royalty because of foreign conduct that is not itself infringing must at least show why that conduct increases the value of the domestic infringement. The expert's theory that Interactive Brokers made the accused product in the United States was properly excluded because it rested on designing and programming the software, "software in the abstract" in the Supreme Court's phrase, rather than on making a claimed medium or performing a claimed method.

What it changesThe damages holding is the one that matters for software and model patents. Code written in the United States and run abroad produces foreign revenue, and this decision says that revenue enters a reasonable royalty only through a domestic act of infringement the patentee can tie to it, such as the copies made on domestic servers and the domestic sales the district court allowed here. Writing the code is not one of those acts, because the claims cover a medium or a method and not the software as such. For portfolios on deployed models, the claim set should include claims that read on what a provider does on its own servers in the United States, such as training, hosting and serving the model, and the infringement analysis for licensing should identify the domestic act behind each revenue stream. The eligibility holding repeats settled law: a display claim survives only if it requires the feature that solves a technical problem.

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Burbage Law is the practice of Jon Burbage, a registered patent attorney. 342 United States patents have issued from applications he wrote; the full list is on the Patents page. More about Jon Burbage.

This is general information about a published decision, agency guidance or piece of legislation. It is not legal advice and does not create an attorney-client relationship. Items concerning offices outside the United States are reported for information only and are not counsel on the law of those countries.