The Software IP Report

Broadest Reasonable Interpretation of Patent Claims Must Be Logically Consistent

Here is ammunition for patent applicants and patent owners alike when examiners, or challengers in Inter Partes Reviews, rely on broad readings of claim language that go beyond a broadest reasonable interpretation: D’Agostino v. Mastercard International. Inc., No. 2016-1592, 2016-1593 (Fed. Cir. Dec. 22, 2016.  In this case, the Federal Circuit vacated a claim construction by the USPTO’s Patent Trial and Appeal Board (PTAB).  D’Agostino arose from the PTAB’s decision in an Inter Partes proceeding that claims of U.S. Patent Nos. 7,840,486 and 8,036,988 were invalid over prior art.  However, the PTAB’s unreasonable claim construction will have a ring of familiarity to patent prosecutors frustrated by the tendency of many patent examiners to cast logic to the wind when interpreting patent claims.

D’Agostino’s patents are directed to “generating limited-use transaction codes to be given to a merchant by a customer for the purchase of goods and services” instead of providing the customer’s credit card number, thereby securing the credit card number.  One patent was a continuation of the other; the specifications were practically identical.  Claim 21 of the ’988 patent was representative (with the clause of interest in this decision shown in bold):

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.

The PTAB had agreed with Mastercard that “said single limit limitation” was met by a prior art “embodiment that limits credit-card transactions to a particular chain of stores.”  This allowed the prior art reference to further “disclose[] the step of defining and designating the ‘payment category’ before the transaction code is generated.”

The PTAB properly applied the “broadest reasonable interpretation,” but the Federal Circuit rejected the PTAB’s interpretation for three reasons.  First, the patents’ Specifications disclosed the “single merchant limitation”process “as one among several embodiments.”  Second, in the prosecution history for the ’988 patent, the applicant had distinguished prior art on the ground that the prior art did not limit any transaction to a single merchant.  And third, “[t]he decisive problem with the Board’s conclusion” was that reading a chain of stores as a “single merchant” led to a logical inconsistency.

According to the PTAB, the claim language covered a scenario in which a customer designated a chain of stores to obtain a transaction code and “only later” designated a specific store in the chain (Target was the example) at which to use the code for a purchase.  The Federal Circuit described the problem as follows:

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.”

In other words, logic dictated that the PTAB’s decision be vacated and remanded.

Lessons for Practice

Broadest reasonable interpretation does not mean any possible interpretation.  Patent owners will undoubtedly cite this case in future IPRs.  Moreover, patent examiners in ex parte patent prosecution –  even more than the PTAB, dare one say – don’t always heed logical niceties when interpreting patent claims and applying prior art.  But they should, and they must.  This case provides a nice template for forcing claims to be interpreted in a logically consistent way.