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Claim construction from different case against different defendant applies in subsequent case
June 03, 2008

In a decision yesterday, the Federal Circuit affirmed a district court's construction of a patent claim in an infringement case. However, the court vacated the district court's grant of summary judgment of noninfringement and remanded. The Federal Circuit held that a prior interpretation of the claim in a suit against a different alleged infringer required the claim construction adopted by the district court. The court declined to address a second issue of claim construction, namely whether the claim preambles were limiting, instead letting the district court address it in the first instance. The court further held it was error for the district court to deny the plaintiff's 56(f) motion, as the plaintiff had not had sufficient initial opportunity for discovery. The court also held that a direct conflict in the declarations in the summary judgment record was sufficient to produce a material fact dispute, making summary judgment inappropriate.More concerning Metro. Life Ins. Co. v. Bancorp Servs., L.L.C. after the jump.Bancorp Services, L.L.C. owns a patent concerning a method and system to administer a specific type of life insurance policy that businesses purchase on the lives of their employees, knows as Business Owned Life Insurance ("BOLI") or Corporate Owned Life Insurance ("COLI") policies. A problem arises with the BOLI policies, where businesses have a problem reporting the cash surrender value of the policy, but this may be avoided by purchasing a stable value protected ("SVP") policy. This allows the owner of an SVP BOLI insurance policy to report a smoothed, guaranteed value, known as the "book value," in its accounting statements. The patent deals with calculating the differences between the book values and the market values of the policies to calculate the credits, which indicate how much the protected writer must guarantee and pay should the policy be paid out prematurely.Bancorp accused MetLife of infringing its patent. In February 2000, MetLife filed a declaratory judgment action, seeking a declaratory judgment of noninfringment and invalidity. The case was transferred to the Eastern District of Missouri where Bancorp had three other cases pending dealing with the same patent, and the case was stayed pending the outcome of an appeal in one of the other cases. After the Federal Circuit ruled in favor of Bancorp in that case, Bancorp filed an infringement action against MetLife, which was consolidated with the transferred declaratory judgment action. The district court lifted the stay in February of 2005.No significant discovery had taken place in the declaratory judgment action before the stay was lifted. In April 2005, MetLife file a motion for summary judgment of noninfringement. In response, Bancorp filed a motion pursuant to Rule 56(f), seeking additional discovery, and also filed an opposition to the motion. The court denied Bancorp's motion request for additional discovery, and originally denied MetLife's motion, but upon request for reconsideration, granted the motion for summary judgment. As part of its order, the court adopted the Federal Circuit's construction of the term "calculating surrender value protected investment credits" from the earlier appeal. Bancorp appealed.The Federal Circuit unsurprisingly affirmed the district court's claim construction, given that it was the construction it had provided in the earlier case that was appealed. Interestingly, the court treated the issue as resolved, despite the fact that MetLife was not a party to that case, and thus issue preclusion would not apply to MetLife. Bancorp also contended that the district court erred in further limiting the claims through words in the claim preambles. The Federal Circuit refused to address this on appeal because the district court did not address the issue, and remanded the case to the district court to determine whether the preamble was limiting in the first instance.Notwithstanding its affirmance of the district court's claim construction, the Federal Circuit vacated the district court's grant of summary judgment. The court held that Bancorp's Rule 56(f) motion should have been granted because Bancorp did not have adequate opportunity to conduct discovery in the infringement action. Because Bancorp filed the infringement action while the declaratory judgment action was stayed, and no discovery schedule had been set in the infringement action As stated by the court (internal citation omitted): "When, as here, there has been no adequate initial opportunity for discovery, a strict showing of necessity and diligence that is otherwise required for a Rule 56(f) requestion for additional discovery does not apply."Further, the court held that the district court erred in determining that Bancorp failed to raise a genuine issue of material fact even on the present record. There was a dispute between the witnesses as to whether MetLife's program performed the calculations that may have resulted in infringement. The direct conflict in the declarations amounted to a material fact that made summary judgment inappropriate. As a result, the court vacated the grant of summary judgment and remanded the case for further consideration.

To read the full decision in Metro. Life Ins. Co. v. Bancorp Servs., L.L.C., click here.

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