IP Law Daily New trial denied to Nuance Communications in OCR patent dispute with ABBYY Software
Monday, February 22, 2016

New trial denied to Nuance Communications in OCR patent dispute with ABBYY Software

By Mark Engstrom, J.D.

Software developer Nuance Communications was not entitled to a new trial on its patent infringement claims against ABBYY USA Software House and related entities—after a jury returned a verdict of non-infringement—because correcting the alleged errors in a jury instruction on claim construction would not change the jury’s ultimate findings, the U.S. Court of Appeals for the Federal Circuit has ruled (Nuance Communications, Inc. v. ABBYY USA Software House, Inc., February 22, 2016, Prost, S.). The circuit court further ruled that the district court did not deny due process to Nuance by entering a judgment, against Nuance, on five patents that were never tried before the jury. The judgment of the district court was affirmed.

Nuance Communications sued ABBYY USA Software House, ABBYY Software, ABBYY Production, and Lexmark International (collectively, “ABBYY”) for patent infringement. Nuance originally asserted eight patents in its complaint, but narrowed its case before trail and ultimately tried only three patents: U.S. Patent Nos. 6,038,342 and 5,381,489 (on optical character resolution—or “OCR”—technology) and U.S. Patent No. 6,742,161 (on document recognition and processing in a distributed computing environment). The jury returned a verdict of non-infringement and the court entered judgment against Nuance.

Nuance appealed the judgment of the district court. According to Nuance, a new trial on the ’342 OCR patent was warranted because the district court had improperly adopted a dictionary definition for the disputed claim terms “identifying” and “recognizing.” Nuance also argued that a new trial was warranted because the district court had denied due process to Nuance when the court entered a final judgment, against Nuance, on the five patents that Nuance had chosen not to assert at trial. On appeal, the only dispute on the merits involved Nuance’s ’342 patent, which was directed to systems and methods of OCR. ABBYY’s accused product, FineReader, used OCR technology.

Claim construction. The parties had competing understandings of what was meant by “identifying” a character. In an order resolving pretrial submissions, the district court adopted the “plain and ordinary meaning” of the disputed terms “identifying” and “recognizing.” According to the district court, the meaning of those terms was identical: “to establish the identity of.” The district court instructed the jury accordingly.

On appeal, Nuance argued that the district court failed to resolve the parties’ claim construction dispute before trial, in violation of the Federal Circuit’s 2008 decision in O2 Micro International Ltd. v. Beyond Innovation Technology Co., 521 F.3d 1351.

The circuit court disagreed. At the parties’ Markman hearing, the district court found in Nuance’s favor by adopting the plain and ordinary meaning of the term “identifying.” The fact that Nuance became dissatisfied with its own proposed construction shortly before trial—and therefore sought a new claim construction—did not create a violation of O2 Micro.

Nuance also argued that the district court had erred when it adopted a dictionary definition that “conflict[ed] with the intrinsic evidence.” Nuance, however, failed to show any harm that would justify a new trial.

Finally, the operative words in the asserted claims were not the words “identifying” or “recognizing”; the operative words were the object of the words “identifying” or “recognizing” (i.e., whatever was being identified or recognized). That, the circuit court explained, was exactly what the parties had argued about at trial. Nuance argued that ABBYY’s software satisfied the “identifying an unknown character” limitation when the software’s recognition process picked out a class of characters. ABBYY argued and presented evidence to the contrary.

The district court did nothing to limit Nuance’s ability to present its own evidence on that issue, the circuit court explained, and the court’s jury instruction did not prevent the jury from fully considering each party’s position. After weighing the evidence, the jury agreed with ABBYY.

Therefore, even if the district court had erred in adopting a dictionary definition for the disputed claim terms, Nuance was not entitled to a new trial because the correction of the alleged errors in the jury instruction would not have changed the final result, given the evidence that was presented.

Due process. Nuance argued that the district court had violated its due process rights by entering judgment against Nuance on all of its patents—even those that were not tried before the jury. ABBYY argued that due process was not violated because Nuance had “voluntarily” narrowed its case to its three best patents.

The circuit court acknowledged that the district court could have offered “clearer guidance” regarding the consequences of Nuance’s decision to narrow its case. Nevertheless, Nuance had the responsibility to timely notify the district court about any objection to the court’s procedures. Because it failed to do so—and instead made a tactical decision to move forward, without a contemporaneous objection, on a subset of the eight original patents—Nuance was not entitled to a second trial on the remaining patents.

Ultimately, the district court had winnowed the case, but Nuance failed to make a motion, objection, or assertion that any limits on the number of claims or patents that it could assert would deprive the company of its due process rights to the adjudication of each unique legal issue that its complaint had presented.

According to the Federal Circuit, Nuance had actively participated in the structuring of the winnowing process, but it never objected to the process until it lost at trial. For that reason, no due process violation was committed. In the circuit court’s view, the district court had properly ruled that Nuance was not entitled to a second trial on the five remaining patents.

The case is Nos. 2014-1629 and 2014-1630.

Attorneys: Deanne Maynard (Morrison & Foerster LLP) for Nuance Communications, Inc. Erik R. Puknys (Finnegan, Henderson, Farabow, Garrett & Dunner, LLP) for ABBYY USA Software House, Inc.; ABBYY Software, Ltd.; ABBYY Production LLC; and Lexmark International, Inc.

Companies: Nuance Communications, Inc.; ABBYY USA Software House, Inc.; ABBYY Software, Ltd.; ABBYY Production LLC; Lexmark International, Inc.

MainStory: TopStory Patent FedCirNews

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