The Software IP Report

Divided Infringement and Non-Infringement

A patent claim for configuring a “satellite” credit card of a main credit card was not infringed directly by any defendant, nor was the claim directly infringed by any third party, and therefore it could not be indirectly infringed.  Spendingmoney LLC v. American Express Co., No. 3:08cv1376 (D. Conn. March 27, 2012).  The claim of U.S. Patent No. 5,864,830 at issue was directed to a “data processing method of configuring a satellite spending card linked to a host credit card and issued by an issuer, the host credit card being held by a host cardholder and having an available balance defined in an associated host account data processing record of a data processing device, a predetermined spending capacity of the satellite card being selectively determined by the host cardholder.”  The plaintiff alleged that certain products of American Express and Visa infringed this claim.

Based on the court’s claim constructions, the question of direct infringement turned on usage restrictions on the accused cards and whether they functioned as credit cards.  The court explained that “[i]t is not enough that the defendant‟s card was capable of infringing the patent.”  Rather, the plaintiff had to “present evidence that the apparatus actually infringed the ‟830 Patent.”  The accused American Express card “did not have the functionality of a credit card, and therefore was not a satellite card.”

Visa had an additional defense: non-party banks, and not Visa, were the issuers of the “Visa” cards accused of infringement.  Therefore, the court said, “because Visa does not perform the step of ‘issuing the satellite card,’ Visa has not performed all of the steps of the patented method.”  The plaintiff argued that “Visa is still liable for direct infringement under a theory of joint infringement.”  The court thus considered of whether Visa exercised “direction or control” over third parties’ alleged infringing steps under the rubric established by the Federal Circuit in BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), and Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008).  Here, there was “enough evidence in the record that Visa directed and controlled the banks’ issuance of the Visa Buxx card that a reasonable jury could find Visa jointly liable for any infringement.”  However, Visa’s “card did not have the functionality of a credit card,” and therefore “was not a satellite spending card, and there was no infringement.”

Next, even if the Visa did not directly infringe, the plaintiff alleged indirect infringement under theories of both contributory infringement and infringement by inducement.  However, “[i]n order for a plaintiff to succeed on a claim of indirect infringement, it must prove direct infringement by someone.”  Here, the plaintiff had “not demonstrated that any party directly infringed the patent,” and therefore necessarily cannot demonstrate that Visa was an indirect infringer.”

The defendants’ motions for summary judgment of non-infringement were granted.

The Dog That Did Not Bark in the Night.

Claim construction was complete.  The case was ripe for summary judgment motions on the issue of infringement, and surely, therefore, was also ripe for a motion of invalidity under 35 U.S.C. § 101.  Look at the patent claims (found at the link provided above).  One would think that a motion for Section 101 invalidity would have been a quite viable option.  Yet no such motion was made.