ED of Texas Adopts Magistrate’s Claim Construction in Finding No Infringement of Debit Card Patents

“[I]t is a stretch of grammar to propose a construction of the simple word ‘unmodified’ that is divorced from the meaning actually implied by the word itself, which is without modification.” – District court


claim construction - https://depositphotos.com/59930373/stock-photo-payment-machine-and-credit-card.htmlOn March 16, the United States District Court for the Eastern District of Texas Marshall Division adopted the Report and Recommendation (R&R) of a magistrate judge and granted two motions of non-infringement for Simon Property Group L.P. (Simon) and Blackhawk Network, Inc. (Blackhawk).

AlexSam, Inc. filed suit for patent infringement against Simon and Blackhawk, alleging infringement of U.S. Patent No. 6,000,608 (the ‘608 patent). AlexSam asserted that “[t]he ‘608 Patent covers a variety of important technologies relating to the debit card industry,” and “[t]he multifunction card system disclosed in the ‘608 Patent enabled consumers and retailers to use existing point-of-sales devices, the existing banking infrastructure, and a bank identification number (BIN) to perform financial transactions.” AlexSam, Inc. v. Simon Property Group L.P., No. 2:19-CV-331-JRG, (E.D. Tex. 2021). Simon and Blackhawk motioned for summary judgment of non-infringement. A magistrate judge recommended granting both the Simon and the Blackhawk motions. In response, plaintiff, AlexSam filed objections, which Simon and Blackhawk responded to.

Claim Construction

In its objections, AlexSam contended that the R&R “offers a different understanding of the claim term ‘unmodified’ than is stipulated to by the parties.” The court concluded that the R&R did not offer a new claim construction of the term “unmodified.” Instead, the R&R provided that the parties agreed that “‘unmodified existing standard point-of-sale device’ is ‘a terminal, for making purchases, that is of the type in use as of July 10, 1997, and has not been reprogrammed, customized or otherwise altered with respect to its software or hardware for use in the card system.” While the R&R did not provide a new claim construction for the term “unmodified,” it did clarify the scope of the term in view of the Federal Circuit’s decision in IDT and the evidence AlexSam needed to meet its burden on patent infringement. Alexsam, Inc. v. IDT Corp., 715 F.3d 1336 (Fed. Cir. 2013).

AlexSam also argued about the nature of the Stimson reference. The court reasoned that the R&R properly determined the claim construction in view of Datastream, noting that “it is a stretch of grammar to propose a construction of the simple word ‘unmodified’ that is divorced from the meaning actually implied by the word itself, which is without modification.” AlexSam, Inc. v. Datastream Card Servs. Ltd., No. 2:03-cv-337, 2005 WL 6220095 (E.D. Tex. 2005). Therefore, the court concluded that the R&R and Datastream correctly determined that it was improper to limit “unmodified” to mean “other than for use in a closed system.”

According to AlexSam, the R&R incorrectly concluded that its position on claim construction had been rejected in IDT and Datastream. However, the court reasoned that AlexSam was effectively requesting a new claim construction that would interpret the term “for use in the card system” inconsistently from the agreed upon Datastream construction which provided that the term meant an “unmodified existing standard POS device.” The court noted that in Datastream, AlexSam’s contention that “unmodified existing standard retail point of sale (POS) device means a device as a standalone POS terminal, cash register with POS interfacing, computer with POS interfacing or other similar device that recognizes bank identification numbers, other than for use in a closed system.” Accordingly, the court agreed with the R&R and the court in Datastream and decided not to limit the term “unmodified” to mean “other than for use in a closed system.”

Evidence

AlexSam also argued that the R&R failed to examine the totality of the evidence in a light most favorable to the nonmoving party, AlexSam. The R&R noted that AlexSam proffered substantially the same evidence here as in IDT. In both instances, AlexSam relied upon expert testimony. In the IDT decision, the court recognized that Alexsam’s experts only testified in a cursory manner and did not provide the required evidence. The R&R recognized that there was not relevant difference between the evidence AlexSam presented in IDT and the evidence produced here. The court here adopted the R&R’s position that while AlexSam provided more technical details in support of its infringement position, the evidence provided was indistinguishable from the insufficient evidence offered in IDT.

Finally, AlexSam asserted that to make a “change to the construction of ‘unmodified’ at the summary judgment stage violates AlexSam’s due process rights.” However, the court determined that it had not changed the term’s construction. Therefore, AlexSam had not been deprived of “an opportunity of learning of the Court’s alternative interpretation of this claim term.” The court found this objection, along with the others to be without merit. Therefore, the court granted both Simon’s and Blackhawk’s motions for non-infringement.

 

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