YVONNE GONZALEZ ROGERS, District Judge.
PaymentOne Corporation ("PaymentOne") alleges infringement of three patents: (1) U.S. Patent No. 7,080,049 ("'049 Patent"); (2) U.S. Patent No. 7,848,500 ("'500 Patent"); and (3) U.S. Patent No. 7,848,504 ("'504 Patent") (collectively, "PaymentOne's Patents"). PayPal, Inc. ("PayPal") filed a counterclaim seeking a declaration of non-infringement and invalidity for each of PaymentOne's Patents, and alleging infringement of its own patent, U.S. Patent No. 5,757,917 ("'917 Patent" or "PayPal's Patent"). In response to PayPal's infringement claim, PaymentOne counterclaimed seeking a declaration of invalidity and non-infringement of PayPal's Patent.
The parties request that the Court construe nine claim terms/phrases from the four patents-in-suit. On October 5, 2012, the parties provided a technology tutorial. (Dkt. No. 119.) The Court held a claim construction hearing on December 19, 2012. (Dkt. No. 128.)
Based upon the papers submitted, the arguments of counsel, and for the reasons set forth below, the Court provides the following claim construction.
The parties seek construction of the following claim terms/phrases:
(Amended Joint Claim Construction Statement & Prehearing Statement ["Am. Joint CC Statement" (Dkt. No. 123)] at 3-7.)
To date, the parties have agreed to the construction of certain terms/phrases.
Claim construction is a matter of law to be decided by the Court. Markman v. Westview Instruments, Inc., 517 U.S. 370, 387 (1996) (Determination of infringement is a two-step analysis: first, the Court determines the scope and meaning of the claims; second, the properly construed claims are compared to the accused device.). "[T]he role of a district court in construing claims is . . . to give meaning to the limitations actually contained in the claims, informed by the written description, the prosecution history if in evidence, and any relevant extrinsic evidence." American Piledriving Equipment, Inc. v. Geoquip, Inc., 637 F.3d 1324, 1331 (Fed. Cir. 2011). "Claim construction is a matter of resolution of disputed meanings and technical scope, to clarify and when necessary to explain what the patentee covered by the claims, for use in the determination of infringement." U.S. Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1568 (Fed. Cir. 1997). Thus, claim terms need only be construed "to the extent necessary to resolve the controversy." Wellman, Inc. v. Eastman Chemical Co., 642 F.3d 1355, 1361 (Fed. Cir. 2011) (citing Vivid Techs., Inc. v. American Science & Eng'g, Inc., 200 F.3d 795, 803 (Fed. Cir. 1999).
The starting point in a claim construction analysis is the language of the claims themselves. These define the invention that the patentee may exclude others from practicing. Phillips v. AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005). The general rule is to construe a claim term in a manner consistent with its "ordinary and customary meaning," which is "the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention." Id. at 1312.
"There are only two exceptions to this general rule [that a claim term has its ordinary and customary meaning]: 1) when a patentee sets out a definition and acts as his own lexicographer, or 2) when the patentee disavows the full scope of a claim term either in the specification or during prosecution." Thorner v. Sony Computer Entm't Am. LLC, 669 F.3d 1362, 1365 (Fed. Cir. 2012) (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1580 (Fed. Cir. 1996)). "[A] claim term also will not have its ordinary meaning if the term `chosen by the patentee so deprive[s] the claim of clarity' as to require resort to the other intrinsic evidence for a definite meaning." CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1367 (Fed. Cir. 2002) (quoting Johnson Worldwide Assocs., Inc. v. Zebco Corp., 175 F.3d 985, 990 (Fed. Cir. 1999)).
Claims must be read in view of the specification, of which they are a part and in a manner consistent with the patent's specification. See Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995), aff'd, 517 U.S. 370 (1996). The specification may act as a sort of dictionary, which explains the invention and may define terms used in the claims. Id. The Court also should consider the patent's prosecution history, if it is in evidence. Id. at 980. The prosecution history may "inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it would otherwise be." Phillips, 415 F.3d at 1317 (citing Vitronics Corp., 90 F.3d at 1582-83); see also Chimie, 402 F.3d at 1384 ("The purpose of consulting the prosecution history in construing a claim is to exclude any interpretation that was disclaimed during prosecution.") (internal quotations omitted).
Various doctrines of claim construction are implicated by the parties' arguments below. "`[C]laim differentiation' refers to the presumption that an independent claim should not be construed as requiring a limitation added by a dependent claim." Curtiss-Wright Flow Control Corp. v. Velan, Inc., 438 F.3d 1374, 1380 (Fed. Cir. 2006); Phillips, 415 F.3d at 1315 ("[T]he presence of a dependent claim that adds a particular limitation gives rise to a presumption that the limitation in question is not present in the independent claim."); see Nazomi Commc'ns, Inc. v. Arm Holdings, PLC., 403 F.3d 1364, 1370 (Fed. Cir. 2005) (claim differentiation means that limitations stated in dependent claims are not to be read into the independent claim from which they depend). "[R]eading an additional limitation from a dependent claim into an independent claim would not only make that additional limitation superfluous, it might render the dependent claim invalid." Curtiss-Wright, 438 F.3d at 1380.
"Under the doctrine of prosecution disclaimer, a patentee may limit the meaning of a claim term by making a clear and unmistakable disavowal of scope during prosecution." Purdue Pharma L.P. v. Endo Pharmaceuticals Inc., 438 F.3d 1123, 1136 (Fed. Cir. 2006) (citing Seachange Int'l, Inc. v. C-COR Inc., 413 F.3d 1361, 1372-73 (Fed. Cir. 2005) and Omega Eng'g, Inc. v. Raytek Corp., 334 F.3d 1314, 1323-26 (Fed. Cir. 2003)). A patentee may disavow the scope of the meaning of a claim term by, for example, clearly characterizing the invention in a way to try to overcome rejections based on prior art. See, e.g., Microsoft Corp. v. Multi-Tech Sys., Inc., 357 F.3d 1340, 1349 (Fed. Cir. 2004) (limiting the term "transmitting" to require direct transmission over telephone line because the patentee stated during prosecution that the invention transmits over a standard telephone line, thus disclaiming transmission over a packet-switched network).
The parties' dispute on these terms focuses on whether it is appropriate to limit "communication line" and "subscriber line" to a physical connection by wire or cable, or whether the connection may be wireless. The parties' proposed constructions are shown below with the key differences emphasized:
PaymentOne argues that based on the plain meaning of the terms, the teachings of the specification, and the doctrine of claim differentiation, neither term is limited to a "wire or cable" that "physically connects" a customer's electronic terminal to the local telephone company. The Court outlines each of PaymentOne's three principal arguments in turn:
First, the express language of independent claims 8 and 22 does not restrict the meaning to landlines, telephone lines, cables, or any form of a wire connection. PaymentOne concedes that the "communication line" or "subscriber line" can be a cable or wire connection, but it need not be. A person of ordinary skill in the art ("POSITA") in 2001 would have understood it can be either wireless or wired, and the word "line" itself has a plain and ordinary meaning that includes both groups.
Second, PaymentOne argues the express language in the specification teaches that the electronic terminal (item 24 in Fig. 1, reproduced below) from which a consumer initiates a transaction may be a cellular telephone. The specification at 64:28-33 provides: "In alternative embodiments, the machine may comprise a network router, a network switch, a network bridge, Personal Digital Assistant (PDA), a cellular telephone, a web appliance or any machine capable of executing a sequence of instructions that specify actions to be taken by that machine." (Emphasis supplied.) Thus, communications may logically and technically occur over a wireless network. PaymentOne argues that a POSITA would recognize from this explicit teaching that communications may be wireless.
Further support in the specification exists for a broad construction of an electronic terminal because the specification describes a PC as an "exemplary form[]" of a computer system that could execute the instructions therein. (See '049 Patent, 66:24-28.) In other words, the patent specification contemplates that many machines can be item 24 and the Court cannot impose one embodiment (that which is connected to the local phone company) from the specification as a limitation to claims across the board.
Third, the doctrine of claim differentiation precludes a limitation to a telephone connection in independent claim 8 based on qualifying language in dependent claim 9. These claims provide:
(Emphasis supplied.)
Reading claims 8 and 9 together, PaymentOne argues that an association with a telephone number cannot be imported to the broader "communication line" of claim 8. Further, if the patentee had wanted to "associate" a "telephone account" with a communication or subscriber line, it knew how to use such language in the claims. (Compare '049 Patent, claim 8 ("an account associated with the communication line to which the electronic terminal is connected") with claim 9 ("telephone number associated with the subscriber line").)
PayPal argues that PaymentOne's proposed construction cannot be correct because the underlying premise for the '049 Patent and the teachings therein necessarily require a landline and did not include wireless. PayPal raises three principal arguments in support: first, PayPal argues that the '049 Patent was directed to "bill-to-landline"—that is, it purported to allow consumers making transactions via the internet to charge their home telephone number rather than a credit card. (See '049 Patent, 4:59-64 ("[M]any users are unwilling to submit financial card information to vendors, inter alia, for security reasons. Further, many users who have access to the Internet do not in fact possess financial cards (hereinafter referred to as credit cards) and are thus unable to transact via the Internet.").) In order to provide greater security, "various checks" would be performed to validate the "subscriber line." ('049 Patent, 7:34-36; see id., 18:40-54.) The "communication line" may be the same or may be different from the "subscriber line," but in essence, it is the line that communicates with the internet. (See '049 Patent, Abstract.)
Second, PayPal argues the '049 Patent uses terms that are specific to landlines. (See '049 Patent, 21:46-58.) It also identifies examples in the specification of numbers being either "[u]nbillable" or "[d]enied" in the validation process because they were from cellular telephones. (See excerpts from '049 Patent, Tables 2 & 3 (emphasis supplied).)
PayPal concludes that these codes show there was no infrastructure for billing cellular telephones in 2001.
Third, PayPal asserts that despite the specification's alternative embodiment of a cellular telephone, this reference is too vague to support PaymentOne's construction because (i) it is contrary to the teachings of the patent that necessarily require a landline, and (ii) it does not provide an explanation of how the cellular telephone embodiment would be implemented. In sum, a catch-all cannot be used to teach away from the entire underlying premise of the patent.
The Court is persuaded that PayPal's construction accurately represents the teaching in the '049 Patent, which contemplated that the electronic terminal from which a consumer initiated a transaction was a computer connected to a telephone landline. While a technical term in a patent claim should be construed in accordance with its description in the specification (Phillips, 415 F.3d at 1315), each party here focuses on the most helpful portions of the specification to support its respective position. The only support for PaymentOne's construction is the referenced embodiment at 64:28-33, which provides that rather than a PC (item 24) "the machine may comprise . . . a cellular telephone." (Emphasis supplied.) In addition, there is the specification language at 66:24-28 confirming that the PC is an "exemplary form" of the computer system claimed. Other than the singular reference to a cellular telephone, the specification does not otherwise teach how wireless or cellular embodiments were contemplated. On the other hand, PayPal emphasizes certain instances in the tables where cellular telephones received unbillable or denied codes in the validation process. While PaymentOne argues that there is no support that cellular telephones were categorically denied or declined as unbillable, the Court does not find this argument to be persuasive in light of the description and explanation contained in the tables. Rather, the express teachings of the patent are directed to landline telephones and PaymentOne has failed to identify how a POSITA would understand the claims to apply to cellular embodiments.
Based on the foregoing analysis, the Court provides the following constructions
"subscriber line" means "a communication channel over a wire or cable that facilitates communication between a customer and a telephone company."
The parties dispute whether the process described in these terms/phrases must occur automatically. The parties' proposed constructions are shown below with the key differences emphasized:
PaymentOne argues that based on plain and ordinary meaning, PayPal's proposed use of "automatic" cannot be reconciled with the claim language of "selectively routing." (See Plaintiff's Opening Claim Construction Brief ["PaymentOne's Opening Brief" (Dkt. No. 105)] at 9 (citing Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324, 1330 (Fed. Cir. 2012) and Thorner v. Sony Computer Entm't America LLC, 669 F.3d 1362, 1365-66 (Fed. Cir. 2012) for the proposition that the "stringent" and "exacting" standard for deviating from ordinary scope of claims is not met).) Thus, no support exists for PayPal's proposed limitation that the processes occur automatically.
Next, PaymentOne argues that the prosecution file history of the '049 Patent supports its construction for two reasons. (See Declaration of Katherine K. Lutton in Support of PayPal's Responsive Claim Construction Brief ["Lutton Decl." (Dkt. No. 109-1)], Ex. G.) First, the January 18, 2005 Notice of Allowance of the '049 Patent reflects that the PTO allowed the claims (then-pending claims 19 and 38, which became issued claims 8 and 22) as amended by the PTO examiner. (Id. at ECF pp. 6-8.) The amendments included the phrases that the parties now ask the Court to construe. The PTO examiner's statement of reasons in the Notice of Allowance stated as follows:
(Id. at ECF pp. 9-10.)
PaymentOne emphasizes the fact that the PTO examiner explained that prior art "stop[ped] the process and notifie[d] the user of the failure to validate instead of automatically going to another form of payment." (Id. at ECF p. 10.) "[T]his is much different from saying that the systems of claims 8 and 22 require the automatic rerouting of a payment or transaction processing without user intervention if an initial transaction is not validated." (PaymentOne's Opening Brief at 8 (emphasis supplied).) PaymentOne asserts that the most reasonable interpretation of the allowed claims is that they were approved because they offered some or any form of alternative payment, unlike prior art which offered no such option and stopped the transaction entirely. (Id. at 8-9.)
Second, PaymentOne emphasizes that despite using the word "automatic" in the statement of reasons, the PTO examiner elected not to include that language in the amended claims themselves. If he intended to add such a limitation, he easily could have used such language in the claims. (Plaintiff's Reply Claim Construction Brief ["PaymentOne's Reply Brief" (Dkt. No. 121)] at 6.) The use of the word in other claims of the patent is further support that the decision not to use the word in the claims was deliberate.
PayPal counters a prosecution disclaimer occurred and is reflected in the Notice of Allowance. PayPal contends that the routing referenced in the claims necessarily involves a causal relationship— if or in the event of an invalidation, then the software must take the action of routing processing to a financial card gateway. (PayPal, Inc.'s Responsive Claim Construction Brief ["PayPal's Responsive Brief" (Dkt. No. 109)] at 13-14; Transcript at 65-66 (software and computer systems work by automatic steps or decision trees).) PayPal's primary intrinsic evidence is the "automatic" language contained in the PTO examiner's statement of reasons, which PaymentOne accepted as part of the claim in order to get the patent. This explanation "informs the meaning of the disputed claim language" and demonstrates that the patentee "understood the claims to require a causal relationship" between the steps. (Id. at 15.) The "automatic" aspect is what distinguished the claims from prior art. (Id.)
PayPal next contends that "selectively" and "automatically" can be reconciled in the context of the claims. Specifically, claim 22 uses the word "selectively" twice to address two conditional steps
The Court is not persuaded by PayPal's argument that "automatic" is necessary to clarify that there is a causal relationship between the event of the transaction being invalidated and routing. The claim language itself explains that routing only occurs "if" or "in the event of" invalidation. As such, the word "automatic" is not necessary for the purpose of "clarity," as PayPal argues.
Further, defining the term to include "automatic" is potentially confusing. The parties have stipulated that the term "automatically" (as used in the '500 Patent) means "without human intervention." (Am. Joint CC Statement at 2.) As a consequence and for consistency, a transaction under PayPal's construction would be "routed" without human intervention or the transaction would be processed without human intervention. Notably, the PTO examiner's failure to include "automatically" in the amended claim language is significant. The examiner's use of "automatically" in the statement of reasons is consistent with the above—automatic refers to the fact that routing occurs "if" or "in the event of" invalidation, compared to prior art which would have stopped the process and notified the user of the failure to validate. The fact that the '049 Patent proceeds beyond the invalidation step, whether automatic or otherwise, seems to have been the distinguishing point from the prior art. There is no evidence that the patentee intended to limit the invention to routing that occurred "without human intervention." See Phillips, 415 F.3d at 1317 (prosecution history "provides evidence of how the PTO and the inventor understood the patent" and "can often inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it would otherwise be") (citing Vitronics Corp, 90 F.3d at 1582-83).
Based on the foregoing, the Court provides the following construction:
"selectively route processing of the transaction to a financial instrument gateway in the event of a validation process not validating the subscriber line" means "selectively direct processing of the transaction to a financial instrument gateway in the event that the transaction cannot be charged to the telephone bill."
The substantive dispute over "financial card gateway" and "financial instrument gateway" is whether the transaction must be directed to a user or purchaser's specific credit or debit card. The parties' proposed constructions are shown below with the key differences emphasized:
The parties do not significantly dispute each other's construction of an "access point" versus "entry point." Nor do the parties dispute that the transaction or payment is processed using the financial card or financial instrument.
Both parties focus on dictionary definitions to support their respective positions. PaymentOne relies on the Microsoft® Encarta College Dictionary and The American Heritage Dictionary from 2001 and 2000, respectively, to show that a "gateway" is a generic access point. (PaymentOne's Opening Brief, Exs. 5 & 6.)
Putting aside the dictionary definitions, PaymentOne argues no support exists to impose a limitation to a specific financial card provider that processes transactions with a credit or debit card. In fact, the patent itself describes how financial instruments beyond credit or debit cards can be used for payment. (See '049 Patent, 4:51-56 ("a user or purchaser using the electronic terminal
By contrast, PayPal contends that "financial card gateway" is a term of art, which requires that the gateway be related to a specific payment system. PayPal relies on the MasterCard merchant glossary, which defines "MasterCard Payment Gateway (MPG)" as "[a] gateway hosted by MasterCard and used for routing and settling commercial e-payments between buyers and suppliers." (Lutton Decl., Ex. H. at 3.) PayPal argues that this definition shows that the gateway must be specific. It also argues that this definition trumps PaymentOne's dictionary definitions, because the MasterCard glossary reflects a definition from the relevant technological field, and PaymentOne merely strings together generic dictionary definitions. (PayPal's Responsive Brief at 16-17.)
PayPal also refers to two portions of the specification to support its construction. First, the '049 Patent at 4:57-58 states: "The credit card gateway
The Court finds that the language of the patent does not require reference to a specific process. The term at issue is not particularly technical thereby requiring the narrow construction offered by PayPal.
PayPal's arguments are unavailing. The Court is not persuaded that a glossary, created by a specific card company to refer to internal systems or processes, requires the Court to impose a similarly narrow construction for the purposes of claim construction. Further, while Exhibit H appears to have been accessed in September 2012, there is no indication when this glossary or the relevant definition was prepared, nor whether this glossary was publicly available in 2001.
The specification itself provides that options other than credit or debit cards exist for payment of transactions. ('049 Patent, 4:53-56, 5:50-55 & 6:42-47.) Although these excerpts speak to the providing an additional option of paying by "phone bill," the possibility of other "financial instruments" and "bank accounts" indicate that payment need not necessarily be as limited as PayPal suggests. In sum, PayPal has not presented sufficient evidence to limit the claims to a specific credit or debit card payment system where no such limitation exists in the claim or specification.
For the foregoing reasons, the Court provides the following constructions:
"financial instrument gateway" means "access point through which payments can be made using a financial instrument."
The parties initially disagree as to whether these phrases require construction. Next, the parties dispute whether the phrase "indicative of an option" means the system must "prompt presentation" of the option to charge the second transaction. The parties' proposed constructions are shown below with the key differences emphasized:
PaymentOne contends that no construction is required because the plain meaning speaks for itself—when a payment by telephone number is declined, the system detects an event indicative of an option to charge the transaction to the user using an alternative payment method, such as a credit card.
PaymentOne agrees with PayPal that the specification does not explain the meaning of these phrases, but notes there is language in the specification relevant to this construction. Namely, the codes generated by the system in response to the optional use of a credit card are "an exemplary description and explanation." ('500 Patent, 11:28-30.) PaymentOne argues that PayPal's proposal to require an event that "prompts presentation" is unsupported because (i) the specification only referred to "optional use" and (ii) that reference was intended as an example in the first place, not a mandate. As to its own construction, PaymentOne argues that equating "an event indicative of an option to charge" to "an event relating to the option to charge" stays true to the meaning of the claim term without importing any additional limitations.
PayPal, on the other hand, argues there is no commonplace or self-evident meaning for "an event indicative of an option to charge" and, as such, construction is necessary for a jury.
PayPal bases its construction on language in the specification of the '500 Patent, 11:33-12:30:
PayPal argues that, based on this language, the user has to be presented or provided with the option in order for the user to choose the option. Thus, it is appropriate to construe the phrases such that the system "prompts presentation of an option." PayPal acknowledges there is no other language in the specification that teaches what the claims mean with regard to these phrases.
The Court is not satisfied with either party's construction. As to the proposed constructions, the critical difference is how to construe what it means to "detect an event indicative of an option . . . ." (Emphasis supplied.) In the limited context of the phrases proposed for construction, "indicative of" is not readily understandable. The parties' constructions, however, would do little to aid a jury in understanding what it means for an event to be "indicative of" an option. Specifically, the Court finds PaymentOne's substitution of "relating to" for "indicative of" does not clarify the intended meaning in any manner and that "relating to" is equally ambiguous. At the same time, the Court is not persuaded that the specification supports a limitation that the system must "prompt presentation of an option," as PayPal proposes. The insertion of "prompt presentation" is likely to confuse the jury to the extent that (i) the phrase itself lacks clarity, and (ii) a "prompt" has its own meaning with respect to computers.
The Court believes that when read in the full context of the claims, a jury is more likely to understand what it means for an event to be "indicative of" an option than when reading the proposed phrase in a vacuum. Based on the entire claim language, it is clear that there are two transactions, the first of which is received and charged to a subscriber account associated with the billing telephone number. The system detects a second transaction, but also detects that billing to the prior form of payment—the account associated with the billing telephone number—has been declined. The system detects that this is an event where the user can be provided with an option to charge the second transaction to an alternative payment method, and the second transaction is charged to the alternative payment method—not the subscriber account. The parties' proposed constructions, however, do little to clarify any step set forth in claims 1 and 17.
At this time, the Court has yet to conceive of alternative language that would remove any potential ambiguity that exists from the phrase "indicative of" while remaining true to the intended meaning of those claims. For these reasons, the Court declines to construe this term without prejudice to construe "indicative of" at an appropriate time prior to trial.
PayPal proposed an amended construction following the completion of claim construction briefing. (Transcript at 80-82.) The parties submitted supplemental briefs on this term. Each party presents a construction that it believes stays true to the claims in the patents. The parties' proposed constructions are shown below with the key differences emphasized:
PaymentOne argues that PayPal's amended construction attempts to narrow the meaning of the term in contravention of the doctrine of claim differentiation. (Plaintiff PaymentOne Corporation's Response to PayPal, Inc.'s Revised Proposed Construction of the Terms "Billing Telephone Number (BTN)/BTN" ["PaymentOne's Supplemental BTN Briefing" (Dkt. No. 125)] at 2.) Specifically, PaymentOne asserts that PayPal imposes an overly-narrow requirement that "a transaction recited in the claims in which the terms appear be billed to a `telephone number' (i.e., a telephone account)." (Id. at 2 (emphasis supplied).) Claim 1 of the '500 Patent refers to "charging of the first transaction to the subscriber account associated with the BTN." Dependent claim 4 recites "[t]he method of claim
PayPal argues that plain meaning supports its construction: a billing telephone number is a telephone number that is billed. It asserts PaymentOne's proposed construction attempts to construe the term too broadly as "any type of billing account having any telephone number associated with it." (PayPal, Inc.'s Reply to PaymentOne Corporation's Response to PayPal's Revised Proposed Construction of the Terms "Billing Telephone Number (BTN)/BTN" ["PayPal's Supplemental BTN Briefing" (Dkt. No. 130)] at 1); see Retractable Tech., Inc. v. Becton, Dickinson & Co., 653 F.3d 1296, 1305 (Fed. Cir. 2011) (court must "strive to capture the scope of the actual invention, rather than strictly limit the scope of claims to disclosed embodiments or allow the claim language to become divorced from what the specification conveys is the invention").
The Court agrees with PayPal. PaymentOne has provided no persuasive reason that a billing telephone number is not, effectively, the telephone number billed for a transaction. PaymentOne's attempts to define the term being a telephone number associated with a billing account are likewise unsupported based on plain meaning. Moreover, if the Court were to construe the term as proposed by PaymentOne, it would create redundancies within the relevant claims and potentially confuse the jury. (See, e.g., '500 Patent 42:18-19 (portion of claim 1 would read: "charging the first transaction to a subscriber account associated with the telephone number associated with a billing account").)
Based on the foregoing, the Court will adopt PayPal's proposed construction of the disputed phrase, which the Court believes comports with its plain meaning. However, the Court notes that PayPal's construction does not take into account that at certain steps of the process, such as when a BTN is being obtained, the telephone number will not yet have been "billed." For this reason, the Court believes it is appropriate to include both the future and past tense of "billed" in its construction.
As such, the Court construes a "billing telephone number (BTN)" and "BTN" to mean "telephone number billed or to be billed for the transaction."
The parties have three disputes over the construction of this term/phrase. The primary dispute relates to whether the data to be obtained must be "stored" in the database searched. The parties' proposed constructions are shown below with only the key difference emphasized:
The remaining disputes are secondary: first, the parties agree that the difference between "associated with" and "about" is not significant and each proffers its construction as being more understandable to a jury.
The claims implicated by this term/phrase recite steps of:
PayPal responds that data must reside in a database. (PayPal's Responsive Brief at 21 ("If the data was not stored in the database, then the data could not be obtained by searching the database as required by the undisputed plain language of the claims.").) PayPal further contends that the plain and logical understanding of "data" supports the storage requirement. See Comcast Cable Commc'ns Corp., LLC v. Finisar Corp., No. C 06-04206 WHA, 2007 WL 1052821, at *4 (N.D. Cal. Apr. 6, 2007) ("Both parties agree that th[e] term [`information database'] indicates some grouping of data. Lay jury members would understand the term `information,' and also that a `database' is stored in some fashion."). Moreover, the specification refers to a database and thus supports this plain meaning construction. ('504 Patent, 7:34-37 ("[o]nce the LIDB database or host
PayPal argues that the customer and subscriber are frequently the same person, but there are circumstances where the customer is not the subscriber. This is specifically contemplated by the '504 Patent at 8:45-59, and therefore must be distinguished in the relevant claims as well. (Transcript at 86.)
The Court agrees that by necessity the data must be stored under the teachings of the patent. PaymentOne's argument that the absence of terms that are indicative of "data stored in databases" misses the point. The claims clearly state that the first and second databases are "searched" with certain data in hand in order to obtain another piece of data. The Court cannot conceive, in the context of these claims, how the data could not be stored in the database that it is explicitly searching. The fact that the sought-after data could be obtained from sources other than the first and second databases
As to use of the word "customer" or "subscriber," the Court notes that the information to be "determined" (obtained) is the "[first/second] reference subscriber data." Construing the phrase to refer to a "subscriber" will maintain consistency throughout the claims at hand, which otherwise do not reference a "customer." Moreover, the parties concede that this distinction is unlikely to bear great significance, since customer/subscriber is either used interchangeably in the patent or typically refers to the same person.
Based on the foregoing analysis, the Court adopts PayPal's construction and provides the following construction:
The parties agree that the two pieces of data must "match" each other, but dispute only whether the data must be "separate." The parties' proposed constructions are shown below with only the key difference emphasized:
Claims 1 and 43, which were both implicated in the construction of the last term/phrase, recite the following (the relevant phrase is highlighted):
PaymentOne asserts that no support exists for a limitation requiring that the first and second reference subscriber data be separate from each other. The claims recite steps of searching a first database, then a second database, and after obtaining each piece of data, they are compared. The claims do not, however, speak to the issue of the reference subscriber data being different. PaymentOne concedes that the data "might be different, but . . . they do not have to be, nor do they have to be separate." (PaymentOne's Reply Brief at 11.)
PaymentOne also draws on language in other claims and the specification to support its proposed construction which provides that identity may be verified by checking whether data of the same format corresponds. Specifically, claim 17 recites that the two pieces of data may be in the form of "only one LIDB code." (PaymentOne's Opening Brief at 19; see '504 Patent, claim 17 ("The identity verification method of claim
PayPal's construction is based on the fact that the claims recite four pieces of information: (i) telephone number data; (ii) identification data associated with the user; (iii) first reference subscriber data; and (iv) second reference subscriber data—with the third and fourth pieces of information being obtained by searching a first and second database. PayPal argues that there are two separate steps to follow the method of the claims, wherein the first two pieces of information are used to identify the third and fourth pieces of information. PayPal acknowledges that the data to be compared may have the same "substance" or "value." (PayPal's Responsive Brief at 25; Transcript at 96 ("You might certainly compare two pieces of information with the same value, but not a piece of information with itself.").) However, it seeks to clarify for the jury that these are separate pieces of information. See 3M Innovative Properties Co. v. Avery Dennison Corp., 350 F.3d 1365, 1371 (Fed. Cir. 2003) ("The use of the terms `first' and `second' is a common patent-law convention to distinguish between repeated instances of an element or limitation."). (See Transcript at 96.)
The Court finds the inclusion of the word "separate" to be unsupported and unnecessary for PayPal's stated purpose. The relevant claims recite that two pieces of data are obtained through separate steps or processes—namely, that the first and second databases are searched such that the system can obtain the first and second reference subscriber data that will be compared. However, adding the word "separate" (as PayPal suggests) conveys that the data itself is separate, not the step obtaining the data, and does not recognize, as PayPal acknowledges, that the data itself may have the same value. As proposed, the Court finds that addition of "separate" imposes an unintended meaning and is likely to confuse the jury. The Court does not believe that the claims need further clarification than what the parties have agreed to—that "correspond" means "match."
Based on the foregoing reasons, the Court adopts PaymentOne's construction except for the capitalization of terms contained therein.
"the second subscriber data corresponding to the first reference subscriber data" means "the second reference subscriber data matching the first reference subscriber data."
The parties dispute the scope of the "secure part" of the computer system in the '917 Patent. The parties' proposed constructions are shown below with the key differences emphasized:
Claim 1 recites the following:
PayPal argues that its construction—proposed only to the extent that the Court deems construction necessary—is derived from the language in claim 1 above, which recites two parts of a computer system: the user-accessible (non-secure) portion and the secure part of said computer system. While the patent does not expressly define what is secure, PayPal contends that the specification and drawings confirm what was meant by secure and the "secure part of said computer system."
PayPal explains that the '917 Patent sought to address "security problems" arising from "sending a credit card number over the Internet." ('917 Patent, 1:29-36.) As shown in Figure 1 (reproduced below), the payment system contains two parts: an above-the-line system and a below-the-line system.
(Emphasis supplied.)
Figure 1 indicates that the above and below-the-line systems are separated by a line
The specification further teaches that the above-the-line computer system runs an above-the-line a software program that "provides for communication with users
"The below-the-line program
Based on this intrinsic evidence, PayPal argues that "secure part" of the system cannot be the part of the system accessible to internet users. It must be the portion that the patent figures and specification refer to as the below-the-line system. (See PayPal, Inc.'s Opening Claim Construction Brief [Dkt. No. 104] at 18-20; PayPal, Inc.'s Reply to PaymentOne Corporation's Responsive Claim Construction Brief [Dkt. No. 122] at 8.)
In contrast, PaymentOne argues that the specification, figures, and doctrine of prosecution disclaimer support its constructions. PaymentOne's initial construction defined the "secure part of said computer system" as "a private network, such as an Ethernet network."
To support its initial construction, PaymentOne emphasized that the patent describes figures in the patent such that "[t]he above-the-line computer
At the claim construction hearing, PaymentOne seemed to shift its argument to different portions of the specification to show that certain steps of claim 1 must occur on a private network, as opposed to the internet. Specifically, the specification states that "[t]he communication
PaymentOne also argues that the doctrine of prosecution disclaimer supports its construction. PaymentOne asserts that "the patentee initially attempted to claim a system without the requirement that `communicating to an agent of the seller' and `receiving an authorization code' occur on a private network." (PaymentOne's Responsive Brief at 6.) PaymentOne attached to its Responsive Brief a document purporting to show that "[o]n February 5, 1997, the Patent Office rejected [the patentee's initial claims] as being unpatentable in light of prior art, and, in response, the patentee amended the claims to include a clear delineation between steps that occur on the quasi-public network and those that occur on a secure part of the computer system." (Id. & Ex. A at 2.)
PayPal responds that PaymentOne's reliance on the specification at 10:56-60 only proves that PayPal's construction is appropriate. Claim 1 recites certain steps that occur from the "secure part of said computer system," but it separately recites as a claim term that certain communications with the seller's agent occur "via a secure communication channel" or "via said secure communication channels." The pertinent language reads:
seller's agent via said secure communication channels . . . ('917 Patent, 12:60-67 (emphasis supplied).) PayPal argues that the secure part of the computer system and the secure communication channels are different. (Transcript at 109 ("This secure communication channel . . . is not the secure part of the computer system.").)
The Court agrees with PayPal that no construction is necessary. At this time, neither party proposes a satisfactory construction and the Court nonetheless finds that a jury will understand what is meant by the "secure part of said computer system" in the context of the entire claim.
As to the meaning of the "secure part of said computer system," the Court generally agrees with PayPal's arguments in support of ordinary meaning and its construction. However, PayPal's proposed construction—as drafted—also risks confusing the jury, and for that reason, the Court declines to adopt it. Based on the teachings in the specification, a jury can understand what is the "secure part of said computer system" without construction. The specification and corresponding figures teach that the below-the-line system, as shown in the figures, was considered the "secure side of the firewall" and the "secure part of the payment system." ('917 Patent, 3:51-67 & 4:53-65.) The specification further teaches that the above-the-line system is the publicly accessible part of the payment system. (Id., 4:46-52.) The existence of dual above and below-the-line systems is consistent with the language in claim 1 that the "computer system [is] coupled to said quasi-public network"—i.e., the internet. The steps wherein particular messages occur from a secure part of said computer system does not negate that there is still an above-the-line part of the system that is coupled to the internet. Even if the preferred embodiment for the connection between the above and below-the-line systems is an Ethernet (private) network ('917 Patent, 4:5-8 & 4:21-25), as argued by PaymentOne, this does not limit necessarily the rest of the below-the-line system from being secure.
Further, the Court agrees with PayPal that the "secure communication channel[s]" and "secure part of said computer system" are not the same. Rather, they are separate claim terms in claim 1, wherein claim 1 explicitly references the "secure part of said computer system" as distinct from the "secure communication channel[s]" through which information is exchanged with the seller's agent. ('917 Patent, 12:60-68; see id., 10:50-62 ("below-the-line system
As to PaymentOne's proposed constructions, the Court finds that each construction fails to provide any clarity as to what was meant by the "secure part of said computer system" and unnecessarily focuses on the location of various steps of claim 1. Each construction refers to an "Ethernet network," which is itself neither defined nor explained and may be confused with the term "internet." Further, two of PaymentOne's proposed constructions insert the phrase "computer hardware and software running on a private network," which is inherently confusing and cumbersome. These constructions will not aid a jury in understanding that there are two portions of the computer system: an above-the-line part coupled to the internet and a below-the-line part that is secure.
As to PaymentOne's prosecution disclaimer argument, the Court is not persuaded that Exhibit A supports the specific constructions proposed by PaymentOne. PaymentOne argues that "the patentee disavowed any system in which the steps of `communicating to an agent of the seller' and `receiving an authorization code' occur over the internet." (PaymentOne's Responsive Brief at 6 (emphasis supplied).) The Court agrees that language in the specification supports the argument that communications with the seller's agent must occur off the internet on secure communication channels. (See '917 Patent, 10:56-61 & 11:26-32; see Exhibit A to PaymentOne's Responsive Brief at 9 and Remarks ¶ A.) However, Exhibit A does not support imposing an additional limitation of a "private network" for the "secure part of said computer system." There is no indication that the PTO examiner found the specific location of a "private network" to be dispositive in allowing the claim 1. The Court notes that PaymentOne's arguments appear to be directed to defining "secure communication channel information" or "secure communication channels," but does not directly address what is meant by the "secure part of said computer system."
Based on the foregoing reasons, the Court declines to construe this term as proposed by either party because there is a plain meaning of "secure part of said computer system" that is understandable by a jury. The Court will consider further construction of this term, if necessary, at an appropriate time prior to trial.
For the reasons set forth above, the Court provides the following construction of the disputed claim terms/phrases:
The Court hereby schedules this matter for a Case Management Conference on Monday, September 16, 2013, at 2:00 p.m. in Courtroom 5. The parties shall file an updated Joint Case Management Statement pursuant to this Court's Standing Order in Civil Cases and the Civil Local Rules.
