District court’s order dismissing the action with prejudice held to be nonfinal due to counterclaimsDecember 17, 2008

In a decision Thursday, the Federal Circuit affirmed a district court's denial of a preliminary injunction, and held it did not have jurisdiction over the remainder of the appeal because there was no final judgment. It was undisputed there was no infringement under the district court's claim construction of the single element at issue. After denying the requested preliminary injunction and granting the defendant's motion for summary judgment of noninfringement, the district court entered an order that stated, among other things, that the "action" was "dismissed with prejudice," and that it was "final and appealable." However, the defendant had asserted counterclaims that were not mentioned in any of the briefing. The Federal Circuit agreed with the district court's claim construction, and affirmed the denial of the preliminary injunction. However, the court held it did not have jurisdiction over the remainder of the appeal, because the defendant's counterclaims were still pending, making the judgment nonfinal. The court did have some advice for the plaintiff and the district court on remand in two footnotes, stating:

While we do not address the district court's grant of summary judgment of noninfringement, we note that the claim construction we affirm herein was the basis for that decision, there being no dispute over infringement of claim 26 under that claim construction.Because we exercise jurisdiction only over the matters discussed above, we do not address the district court's sua sponte dismissal of [the plaintiff's] remaining claims in this appeal. Nevertheless, we suggest that the district court may wish to reconsider that determination in light of the Sixth Circuit's prohibition against sua sponte dismissals except in limited circumstances.

More detail of iLOR, LLC v. Google, Inc. after the jump.iLor owns the patent at issue, which is directed to a "method for adding a user selectable function to a hyperlink." The claimed method "permits the user to interact with a hyperlink in a variety of ways without necessarily having to open and/or follow the hyperlink." iLor sued Google, asserting that Google Reader infringed claim 26 of the patent. iLor sought a preliminary injunction, and Google filed a motion for summary judgment of noninfringement in response.The applicable limitation of claim 26 is "the toolbar being displayable based on a location of a cursor in relation to a hyperlink." The district court construed the limitation to require that the "toolbar is 'automatically displayed' upon the placement of the cursor in proximity to a hyperlink with no further action on the part of a user." It was undisputed that Google Notebook does not automatically display its toolbar upon the placement of a cursor in proximity to a hyperlink, and instead requires the user to click on the hyperlink to display the toolbar. Because of this, the district court denied iLOR's motion for preliminary injunction and granted Google's motion for summary judgment of noninfringment. The district court then entered an order stating:

In accordance with the Order of even date and entered contemporaneously herewith, IT IS HEREBY ORDERED: (1) That this action be, and the same hereby is, DISMISSED WITH PREJUDICE AND STRICKEN FROM THE ACTIVE DOCKET. (2) That all pending motions be, and the same hereby are, DENIED AS MOOT. (3) That all scheduled proceedings be, and the same hereby are, CONTINUED GENERALLY. (4) That this Order is FINAL AND APPEALABLE and THERE IS NO JUST CAUSE FOR DELAY.

iLor appealed.The Federal Circuit first addressed the scope of its jurisdiction. The court interpreted the district court's judgment as neither disposing of Google's counterclaims nor certifying the decision for immediate appeal under Rule 54(b). iLOR argued that a district court's use of the word "action" "robotically signifies all claims, counterclaims, cross-claims, etc. regardless of the context in which that word is used." The Federal Circuit noted that while "action" may be used to denote an entire judicial proceeding, the context in which it is used cannot be ignored. Here, the district court's order granting summary judgment of noninfringment of claim 26 and dismissing the remainder of iLOR's claims clearly disposed of iLOR's half of the case, however, it made no mention of Google's couterclaims. Accordingly, the Federal Circuit interpreted "action" in this context to encompass only iLOR's causes of action, and was therefore not final for purposes of appeal.The Federal Circuit additionally ruled that the district court's order did not certify the entire decision for immediate review. The court adopted the consensus view that use of the recitation "no just cause for delay" is insufficient, by itself, to properly certify an issue for immediate appeal. Further, the court stated it could not discern from the record a reason to justify review of the decision now versus in connection with the final judgment. Accordingly, the Federal Circuit held it did not have jurisdiction to review the district court's decision granting summary judgment as well as the sua sponte dismissal of the remainder of iLOR's claims, and limited its review to the denial of the preliminary injunction.Turning to the preliminary injunction, the Federal Circuit affirmed the district court. The court first noted the language of the claim suggestsed the toolbar is automatically displayed by the presence of a cursor in proximity to the hyperlink, as opposed to requiring further action by a user. The claim recites "the toolbar being displayable based on a location of a cursor in relation to a hyperlink," with no additional language in the claim suggesting additional conditions that may cause display of the toolbar. Further, multiple portions of the specification supported this construction, and there was no disclosure of any emobiment where the user must perform some further action in order to display the toolbar. The prosecution history likewise supported the district court's construction. During prosecution, iLOR distinguished a prior art reference on that basis "that it required further user action for display, not merely locating the cursor proximate to the hyperlink." While not applying directly to claim 26, when iLOR added claim 26, it stated it was "similar to" and "allowable for at least the same reasons" as the claims to which these statements did apply. The Federal Circuit noted that this representation by iLOR as well as its "contemporaneous failure to put the examiner on notice that it was attempting to capture previously surrendered subject matter, renders the representations it made with respect to the [prior art] applicable to claim 26." As a result, the court affirmed the denial of the preliminary injunction.To read the full decision in iLOR, LLC v. Google, Inc., click here.