Interactive Gift Express, Inc. v. CompuServe, Inc.

Interactive Gift Express, Inc., which later became known as E-Data, Inc. (IGE) (plaintiff), owned a United States patent (the Freeny patent) naming Charles Freeny as the sole inventor. The Freeny patent disclosed and claimed a method and apparatus that allowed a customer to, at a point-of-sale location, designate information to be stored onto a material object, such as a CD-ROM. The Freeny patent required that an information-manufacturing machine (IMM) be present at the point of sale location and that the IMM provide the designated information to the customer by reproducing the information onto the customer’s material object. IGE sued CompuServe, Inc. and other defendants (collectively, CompuServe) for infringement of the Freeny patent. CompuServe was a computer-software company that distributed information online directly to consumers, such that the information was downloaded onto the consumer’s hard disk drive or other storage device, which did not require the consumer to purchase any material object such as a CD-ROM. The district court required IGE to submit a binding claim-construction report, and IGE produced a report addressing disputed interpretations of four claim terms, including the term “point-of-sale location.” IGE defined that term as “a location where a consumer goes to purchase material objects embodying predetermined or preselected information.” The district court accepted IGE’s definition but added that the term “point-of-sale location” could not be the consumer’s home. Given this construction as well as the court’s construction of four other claim terms, IGE stipulated to a judgment of noninfringement, and the court entered that judgment pursuant to the stipulation. IGE then appealed, arguing that the district court had erred in its interpretation of “point-of-sale location” by excluding a consumer’s home from that definition, pointing out that certain excerpts of the Freeny patent specification contemplated a transaction occurring at a consumer’s home, such as through a vending machine. CompuServe responded by arguing that IGE’s own definition of “point-of-sale location,” which the district court had accepted, was binding for reading “where a consumer goes to purchase material objects” and that the word “goes” necessarily meant that the consumer would be somewhere other than home when purchasing the information to be loaded onto the material object.