The broadest reasonable interpretation of a patent claim does not extend to a legally incorrect interpretation

D’Agostino v. MasterCard International,  (Fed. Cir. Dec. 22, 2016) (Before Taranto, Linn, and Stoll, J.) (Opinion for the court, Taranto, J.)

In a December 22, 2016 decision, the Federal Circuit vacated a decision by the Patent Trial and Appeal Board (“The Board”) in two inter partes review (IPR) proceedings. The Court reversed the Board’s decision that the claims at issue were unpatentable for anticipation and obviousness.

John D’Agostino owns the ’486 patent and ’988 patent. Both patents disclose processes for generating limited-use transaction codes to be given to a merchant by a customer for the purchase of goods and services. The objective of the patents is to enhance security for the customer by withholding the customer’s credit card number from the merchant and using the transaction code to complete the transaction. MasterCard filed two IPR petitions. The Board ultimately canceled all of the challenged claims as unpatentable on the grounds of anticipation and obviousness. D’Agostino appealed.

The claims of the ’486 and ’988 patents fall into two categories – those for “limiting a number of transactions to one or more merchants,” and those for “limit[ing] transactions to a single merchant.”  Since the multiple merchant claims are unpatentable if the single merchant claims are unpatentable, the Board relied only on the single merchant claims in its decisions. The Board found that the ’462 patent to Cohen met the single-merchant limitation through an embodiment that limits credit card transactions to a particular chain of stores.  Under the Board’s claim construction for “single merchant,” Cohen disclosed the step of defining and designating the “payment category” before the transaction code is generated. The Board did not rely on any independent alternative grounds for its decisions.

In its review, the Federal Circuit emphasized that “[t]he protocol of giving claims their broadest reasonable interpretation . . . does not include giving claims a legally incorrect interpretation.” Instead, “claims should always be read in the light of the specification and teachings in the underlying patent.”

The Court explained that the single merchant limitation simply requires that when the transaction code is requested, the request limits the number of authorized merchants to one, but does not identify the merchant. This identification occurs later. The Board departed from or misapplied this plain meaning. Instead, the Board concluded that the limitation covers a different situation in which the customer first seeks a transaction code for an identified “chain of stores” (e.g. Target) and later picks a specific store within that chain (selected store).  The Board read Cohen as disclosing this scenario. The Court disagreed, holding that the “problem with the Board’s conclusion is that this scenario necessarily falls outside the single-merchant limitation.” First, the Court reasoned that if Target is more than one merchant, telling the authorizing entity to limit transactions to Target is not limiting the number of merchants to one. Therefore, the Target scenario is outside the initial clause of the claim limitation (limiting the number of merchants to one). The Court then reasoned that if Target is instead considered one merchant, telling the authorizing entity to limit transactions to Target is not withholding the identity of the particular merchant. Therefore, the hypothetical Target scenario is also outside the second clause of the claim limitation (withholding the identity of the single merchant). As a result, the Court found that the Board’s construction and/or finding for purposes of meeting the single-merchant claim limitation must be set aside.

Finally, the Court rejected D’Agostino’s argument that Cohen does not disclose defining and designating the payment category (in Cohen, the credit card number) before the transaction code is generated. The Court agreed with the Board that 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 may be printed on the card. This supports that Cohen teaches designating the authorized use of the card before the card is generated.

The broadest reasonable interpretation of a patent claim does not extend to a legally incorrect interpretation. When the claim as a whole expressly excludes a particular result, a claim term cannot be interpreted so broadly as to encompass that result.

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