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Fresh From the Bench: Precedential Patent Cases From the Federal Circuit

December 22, 2016

Overview

In the sole precedential case decided this week, the Circuit vacates an IPR determination of invalidity based upon a flawed broadest reasonable interpretation.

In the event the Circuit renders any decisions next week, we’ll probably report those cases the first week in January. Enjoy your holiday!

Pete

D’Agostino v. MasterCard – The panel vacates an IPR determination of anticipation and obviousness of two patents being asserted against MasterCard, based on an unreasonable claim interpretation by the Board. The patents disclose processes for generating limited-use transaction codes to be given to a merchant by a customer, an objective being to enhance security by withholding the customer’s credit card number from the merchant and instead using a transaction code to complete the transaction.

The claims recite a method for performing credit card purchases, including the step:‎

b) receiving a request from said account holder for a transaction code to ‎make a purchase within a payment category that at least limits ‎transactions to a single merchant, said single merchant limitation being ‎included in said payment category prior to any particular merchant being ‎identified as said single merchant‎

The Board ‎found that Cohen meets the single-merchant limitation based on an embodiment that limits credit-card ‎transactions to a particular chain of stores. The Board also found that Cohen discloses the step of ‎defining and designating the “payment category” before the transaction code is generated. ‎

The panel first construes the “single-merchant” limitation to require a separation in time between the communication of one ‎piece of information and the communication of another. The panel finds that both the specification and prosecution history support this construction.

According to the opinion, the single-merchant limitation thus requires, simply, that, when the transaction code is requested, the ‎request limits the number of authorized merchants to one but does not then identify the merchant, such ‎identification occurring only later. The problem with the Board’s conclusion is that Cohen’s teaching falls outside the single-‎merchant limitation. If Target is more than one merchant, then telling the authorizing entity to limit ‎transactions to Target is not limiting the number of merchants ‎to one. If ‎Target instead is one merchant, then telling the authorizing entity to limit transactions to Target is not ‎withholding the identity of the particular merchant—and the Target scenario is for that reason outside the ‎second clause of the claim limitation.

Based upon this claim construction, the panel sets aside the Board’s ruling that Cohen renders invalid the claims at issue.

  
  

John D’Agostino v. MasterCard International, Inc., Case No. 2016-1592, -1593 (December 22, 2016)

 

John D’Agostino owns the ’486 and ’988 patents, the ’988 being a continuation of the ’486. Both patents disclose methods of effecting secure credit-card purchases by minimizing merchant access to credit card numbers.

MasterCard filed two petitions requesting IPR of the two patents. As to both patents, the Board instituted a review of some claims for anticipation by Cohen and of other claims for obviousness over Cohen and Musmanno. After conducting the reviews, the Board cancelled all of the reviewed claims as unpatentable on the grounds on which it instituted review. The Board’s two final written decisions are materially identical for present purposes, so we hereafter cite only the ’988 Decision.

Claim 21 is representative of the “single merchant” claims:

21. A method for implementing a system for performing secure credit card purchases, the method comprising:

a) receiving account information from an account holder identifying an account that is used to make credit card purchases;

b) receiving a request from said account holder for a transaction code to make a purchase within a payment category that at least limits transactions to a single merchant, said single merchant limitation being included in said payment category prior to any particular merchant being identified as said single merchant;

c) generating a transaction code utilizing a processing computer of a custodial authorizing entity, said transaction code associated with said account and reflecting at least the limits of said payment category, to make a purchase within said payment category;

d) communicating said transaction code to said account holder;

e) receiving a request to authorize payment for a purchase using said transaction code;

f) authorizing payment for said purchase if said purchase is within said payment category.

After construing the single-merchant limitation, which is step (b) in representative claim 21, the Board found that Cohen meets the single-merchant limitation through an embodiment that limits credit-card transactions to a particular chain of stores. The Board also found that Cohen discloses the step of defining and designating the “payment category” before the transaction code is generated.

A

The single-merchant limitation clearly requires a separation in time between the communication of one piece of information and the communication of another. The authorizing entity, in being asked for a transaction code, is told that the number of merchants to be covered by that code is one (no more, no less): a “payment category that at least limits transactions to a single merchant” is communicated to the authorizing entity. Critically, though, the “single merchant” must not be identified to the authorizing entity at that time: “said single merchant limitation being included in said payment category prior to any particular merchant being identified as said single merchant.” Only later is the “particular merchant” identified, and the “particular merchant” is identified “as said single merchant.” Identification of a particular merchant may take place, for example, at the subsequent step (f), when the transaction with that merchant is authorized; but it does not take place at the earlier step, when the transaction code for a defined payment category is requested. At that earlier step, the account holder sets the number of authorized merchants at one without identifying the one.

The specification refers to this process as one among several embodiments. “The payment category may also include a multi-transaction authorization wherein more than one purchase may be made from one or a plurality of different merchants, each of which may or may not be identified by the customer and pre-coded in association with the transaction code.”

The prosecution history reinforces the evident meaning of the single-merchant limitation as requiring limiting, to one, the number of merchants that may use the transaction code, without identifying the merchant. In responding to a non-final rejection, Mr. D’Agostino distinguished the Langhans prior art as involving a list of identified approved merchants, stating: “There is no disclosure in Langhans et al. that limits a transaction to a single merchant prior to any particular merchant being identified as the single merchant.” And in a reexamination of the ’988 patent, Mr. D’Agostino said the following in distinguishing Cohen:

Limiting to a particular store or chain of stores is not the same as limiting to a single merchant. A particular store or chain of stores limitation is an identity limitation whereas a single merchant limitation is a numerical limitation. That is, the only way a particular store or chain of stores limitation can be made is by identifying that store or chain of stores from other stores or chain of stores. Conversely, a single merchant limitation is not related to the particular identity of any store or chain of stores, rather it is a numerical limitation that limits use to only one merchant. Stated differently, a particular store or chain of stores limitation is limited to only the identified store or chain of stores, whereas a single merchant limitation is not limited by way of identity.

In the present appeal, this material is relevant as reinforcing the evident meaning of the claim language at issue, whether or not it would meet standards for disclaimer or disavowal.

The single-merchant limitation thus requires, simply, that, when the transaction code is requested, the request limits the number of authorized merchants to one but does not then identify the merchant, such identification occurring only later. This is the claim-construction position that Mr. D’Agostino urged before the Board. Contrary to MasterCard’s contention, the doctrine of waiver does not preclude Mr. D’Agostino from making any of the arguments he has made to us—e.g., offering a new analogy, changing the emphasis on or ways of describing sources of support—in defending the original scope of his claim construction.

The Board departed from or misapplied the above-stated clear meaning when it concluded that the claim limitation covers a situation in which the customer first seeks a transaction code for an identified “chain of stores” and, later, picks a specific store within that chain. The Board stated its point by way of an example it deemed within the claim: the customer could designate the “Target” chain of stores when obtaining a transaction code and only later choose a specific Target store at which to use such a code to obtain authorization of a purchase. (“[A] ‘single merchant’ can be the chain of stores, whereas the ‘particular merchant’ is a single store of that chain of stores.”) The Board read Cohen as disclosing such a scenario and thus teaching the claim limitation at issue.

The problem with the Board’s conclusion is that this scenario necessarily falls outside the single-merchant limitation. If Target is more than one merchant, then telling the authorizing entity to limit transactions to Target is not limiting the number of merchants (whose transactions are to be authorized) to one—and the Target scenario is for that reason outside the initial clause of the claim limitation. If Target instead is one merchant, then telling the authorizing entity to limit transactions to Target is not withholding the identity of the particular merchant—and the Target scenario is for that reason outside the second clause of the claim limitation. Either way, the chain store example fails to satisfy a claim requirement.

The only way to avoid that straightforward logic would be to separate “single merchant” (in the first clause) from “particular merchant” (in the second clause). But, as we have discussed, the claim language of the single-merchant limitation does not allow that separation. Indeed, the second clause speaks expressly of “any particular merchant being identified as said single merchant.”

For that reason, the Board’s chain-store construction and/or finding for purposes of meeting the single-merchant claim limitation, for both anticipation and obviousness purposes, must be set aside.

B

Mr. D’Agostino also challenges the Board’s decisions on a separate ground. The Board agreed that “the claims require designating/selecting a payment category before the generation of the transaction code,” and it found that Cohen meets that requirement. Mr. D’Agostino argues that Cohen does not disclose defining and designating the payment category before the transaction code (in Cohen, the credit card number) is generated. We reject that argument.

Substantial evidence supports the Board’s finding as to Cohen in this respect. It is clear that, in at least one embodiment, Cohen discloses the user providing “what the single use or the customized credit card number is to be used for” in the same telephone call in which the customized card is requested. Cohen also discloses that “the limited use nature of the card (either in a general sense or the specific limitations) . . . may . . . be printed on the card.” Those passages support the finding that Cohen teaches, among other things, that the limitations have been defined and designated before the card is generated. Although Mr. D’Agostino argues that the printing of the physical credit card does not necessarily occur simultaneously with the generating of the credit card number, he provides no citations to the record to suggest that the card number is generated before the card is printed.

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