CAFC Affirms Non-Infringement Finding for Shopify, Scrapping $40 Million Jury Verdict

The U.S. Court of Appeals for the Federal Circuit (CAFC) on Monday affirmed a district court’s summary judgment of non-infringement and judgment as a matter of law (JMOL) in Shopify Inc. v. Express Mobile, Inc., confirming the rejection of a $40 million jury verdict against Shopify.

Shopify filed a declaratory judgment action in the U.S. District Court for the District of Delaware, seeking a declaration of noninfringement of the claims of U.S. Patent Nos. 9,063,755, 9,471,287, 6,546,397, and 7,594,168, which relate to website design and functionality. Express Mobile counterclaimed for infringement of those patents and additionally asserted U.S. Patent No. 9,928,044 by accusing Shopify’s Theme Editor and its underlying “Liquid” template technology.

The district court granted Shopify’s motion for summary judgment of non-infringement as to the asserted claims of the ‘397 and ‘168 patents before trial. A jury found that
Shopify infringed the asserted claims of each patent in the ’755 patent family and awarded Express Mobile $40 million in damages. The district court later granted Shopify’s post-trial motion for JMOL that no reasonable jury could find that Shopify infringed., and Express Mobile appealed both rulings to the CAFC.

The CAFC first addressed the summary judgment on the ‘397 and ‘168 patents, which relate to browser-based systems for webpage design. A key limitation in the ‘397 patent requires “at least one run time file” that is “downloaded or created when a browser is pointed to a web page or website.”

Express Mobile argued that Shopify’s Liquid template files were the claimed “run time files,” however, Express Mobile’s expert, Dr. Almeroth, conceded that the Liquid template files on Shopify’s servers are not downloaded to a user’s browser. Instead, Express Mobile put forth an “instantiation” theory, arguing that a “copy” of the Liquid template file is created and downloaded. The court found Dr. Almeroth’s testimony that they were “the same file” to be a “conclusory” assertion insufficient to create a genuine issue of material fact.

Furthermore, the court found that even if a copy was created, it did not perform the functions required by the patent. The ‘397 patent requires the run time file to “generate virtual machine commands.” Dr. Almeroth claimed these commands were HTML, JS, and CSS code, but then admitted they were “filled into” the copied file. The CAFC noted that this would mean the files were “generating themselves,” which “does not make sense.” The CAFC affirmed the summary judgment of non-infringement for the ‘397 and ‘168 patents.

The CAFC then reviewed the JMOL on the ‘755 patent family, which relates to systems for generating code to display content on a device. The central issue was the claim limitation of a “defined UI object” that must both receive an input and display an output.

Throughout the trial, Express Mobile had identified the “defined UI object” as individual elements like “buttons, text fields, images, and videos.” Dr. Almeroth pointed out that Express Mobile had failed to show any single UI object that performed both the input and output functions as required by the claims. On JMOL, Express Mobile shifted its theory, arguing for the first time that the entire “product page” or a “YouTube Video widget” was the “defined UI object.”

The district court found no evidence had been presented to the jury to support this new theory, and the CAFC agreed. The court also noted that Dr. Almeroth “never used the words ‘product page’ in his testimony” and that its counsel conceded at oral argument that the expert “never explicitly [said] that the page is the UI object.”

The CAFC rejected Express Mobile’s argument that the jury could have reached this conclusion without expert testimony, noting the technical complexity of the claims. The court also dismissed Express Mobile’s reliance on its attorney’s closing arguments, stating that “[a]ttorney argument is not evidence.” Since Express Mobile failed to meet its burden of proof on the “defined UI object” limitation, the CAFC affirmed the JMOL of non-infringement.

Ultimately, the CAFC dismissed the appeal as moot with respect to several claims from the ‘755, ‘287, ‘044, and ‘397 patents. These claims had previously been found unpatentable by the Patent Trial and Appeal Board (PTAB) in separate inter partes review (IPR) and ex parte reexamination proceedings, which the CAFC had already affirmed. The court dismissed the appeal in part, affirmed in part, and awarded costs to Shopify.

In a statement sent to IPWatchdog, Jean Niehaus, Shopify’s General Counsel, called Express Mobile a patent troll and said that “fighting meritless patent claims protects not just Shopify, but the millions of businesses that rely on us.”