Summary Judgment Granted Where District Court Determined Patent Was Not Infringed Because Not All of Infringing Steps of Method Patent Were Performed in the United States

November 27, 2013

Automatic Data Processing, Inc. ("ADP") filed a declaratory judgment action against Wellogix, Inc., and Wellogix Technology Licensing LLC ("Wellogix") for a determination that ADP does not infringe a Wellogix method patent on comparing data from purchase orders, field data, and invoices. After the action was filed, ADP moved for summary judgment on the ground that not all of the allegedly infringing steps were performed in the United States.

The district court began its analysis by stating that "[a] machine patent may be infringed if the protected technology is used, sold, or offered for sale 'within the United States.' Unlike a machine patent, a foreign method cannot be patented if its sold or offered for sale in the United States. All steps of the method must be done domestically.'

ADP provided undisputed facts that it uses computers in Canada to perform the required comparison, which the district court found significant in analyzing the summary judgment motion. "Because Automatic uses computers in Canada to compare purchase orders, field data, and invoices, the essential step of the patented method is foreign. Although people in the United States view comparisons made by Canadian processors, those users and their devices do no comparing."

The district court noted that "Wellogix -- through its technician Martin Kaliski -- says the comparison is done by American users, not Canadian servers. It emphasizes that Americans "synchronously" request data and their computers show colored icons indicating discrepancies."

But the district court did not find this sufficient to create a disputed issue of material fact. "The request for a comparison and the display of the results are not the comparison. The request must precede the comparison and the results necessarily follow it. The Canadian computers are the only place where review of data is done."

The district court also rejected Wellogix's argument that formal claim construction is required before summary judgment could be granted. "Wellogix also says the case may not be dismissed without formal claim construction. Formal construction of an intuitive term is hollow and inefficient. Wellogix's proposed construction defines comparing as comparing numerically, graphically, or according to information about the data. This is fatuous; it defines the defined term with the defined term and three uselessly vague modifiers."

Finally, the district court rejected Wellogix's attempt to discredit ADP's technicians. "Wellogix last attacks Automatic's technicians as unqualified. Technicians do not need university education like a doctorate. As Automatic's technicians show, practical experience plus good judgment is often more helpful."

Accordingly, "[b]ecause Canadian servers compare the data and because method patents are presumed not to reach beyond the United States, Automatic did not infringe Wellogix's patent."


Automatic Data Processing, Inc. v. Wellogix, Inc., et al., Case No. H-12-3459 (S.D. Tex. Nov. 20, 2013)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.