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

Federal CircuitD’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.



The Author

Robert Schaffer

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

Joseph Robinson has over 20 years of experience in all aspects of intellectual property law. He focuses his practice in the pharmaceutical, life sciences, biotechnology, and medical device fields. His practice encompasses litigation, including Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in a variety of patent and trademark disputes in many different jurisdictions, and has also served as appellate counsel before the Court of Appeals for the Federal Circuit. Joe also focuses on complex inter partes matters before the U.S Patent and Trademark Office, inventorship disputes, reexaminations and reissues. His experience includes numerous interferences, a particular advantage in new U.S. Patent and Trademark Office post-grant proceedings. He also counsels on patent–related U.S. Food and Drug Administration issues, including citizen petitions, Orange Book listing, and trademark issues. For more information and to contact Joe please visit his profile page at the Troutman Sanders website.

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  1. Eric Berend December 31, 2016 11:10 am

    Humpty Dumpty sits in pieces at the bottom of the wall, having suffered a Great Fall.

    Apparently, with their recent rulings, the CAFC has decided to scurry about in partial cleanup of the errant “pieces”. Seems a rather Sisyphusian task at this points; considering that there are still those forces ready to push Humpty down to the ground, if he should ever get up to the top of that Wall, again.

    There’s another classic expression about being ‘careful what you wish for’. Well, after five years since enactment of the AIA and some three years since their incredibly ignorant and slow realization of the self-inflicted danger threatening their own patent interests, the pharmaceutical industry still doesn’t have that special exemption they were so sure their K Street ‘shotgun riders’ would deliver on command; in much the same manner as their influential ‘heavy lifting’ was a critical enabler of that law’s passage.

    And finally it was a good season for Orwell once again, who would recognize when “some inventors are more equal than others” *[1]: there was one Elon Musk, sure to be involved when there’s a prospect of U.S. government financing of favored tech darlings such as his precious little self. Yes, the man who lifted Tesla off of the true inventor of what was originally the “M5” electric car, Martin Eberhard – through the distinctly NON-innovative conversion of a $6.3 Million convertible bond issue; and then, had to be sued to restore Mr. Eberhard’s name as an actual founder of the company – made sure he was seen in such “mighty” company.

    Some things never change. The inventors and actual innovators, are here merely to be fleeced by the ‘sharp boys’, the “Trust Combines”, the “Bright Young Men”, the “Young Turks’: the TITANS OF BUSINESS! (‘…and don’t you forget it!’)

    And, speaking of classic sayings, Trump’s election was perceived as a ‘coal in one’s (Christmas) stocking’ by more than just the usual “liberal” bastions: the degree of political panic shown by the rhetorical denizens against U.S. patent respectability, in pushing for that “big tech” meeting with President-elect Trump, was a rare moment of schadenfreude for true inventors *[2]. The most revelatory moment? There was Tim Cook, putting on a reluctant, sour face in the guise of a faux-apology to his ‘constituency’ about even meeting with Trump at all: some key words in his little speech “justifying” his company’s participation, there? N.B.: “…to try to stop the people suing when they don’t do anything as a company.” * [3][4]

    * – (footnotes)
    [1] Tim Cook and Elon Musk were favored with a separate meeting with Trump, aside from the larger assembly. Still think just because the Clinton campaign was the main focus of the “Big Tech” push for political influence, there would be the prospect of some relief for inventors in U.S. Patent law, in 2017 and beyond? Think again: this time, it’s personal; and there are so many less layers to reach, which now will apparently be taken up by the biggest infringers of individual inventors.

    [2] the real-life, living and breathing kind; not the tawdry ‘innovation (so-called) by committee and legal dept.’ scientist/engineer-assembly-line trained-serf version practiced by “Big Pharma”, “Big Tech” (largely computer-based), “Big Chem” (Monsanto, Dupont, etc.), and so forth.

    [3] this, from a company that eschews the American worker, supports quasi-slave labor in China and uses the U.S. market and its favorable laws and protections to gain an enormous fortune, much of which is kept overseas in defiance of U.S. taxation.

    [4] Interestingly, the reporting of Business Insider, USA Today, The Mercury News, CNNtech, FoxBusiness, The Guardian, Huffington Post and The Intercept fails to mention these truthful words, while the more business-traditional site of Fortune and the patent-antagonistic sites of TechCrunch had no problem writing out the actual speech, as written.