Finding that the Patent Trial and Appeal Board’s (PTAB’s) claim construction was “unreasonable,” the US Court of Appeals for the Federal Circuit vacated two PTAB inter partes review decisions. D’Agostino v. Mastercard International, Inc., Case Nos. 16-1592; -1593 (Fed. Cir., Dec. 22, 2016) (Taranto, J).

This appeal concerns patents that describe processes for generating codes that customers provide to merchants when purchasing goods and services. The dispute centers on the PTAB’s interpretation of the “single merchant limitation” in the claims. The Federal Circuit found that this limitation requires that the authorizing entity, when asked for a transaction code, be told that the number of merchants to be covered by that code is one, and that the “particular merchant” be identified in a separate transaction. This interpretation is reinforced by the prosecution history and one of the embodiments in the written description. The Court found that the PTAB, despite properly applying the broadest reasonable interpretation standard to its claim construction, departed from the clear meaning of the claim term when it concluded that the claim limitation covers a situation in which the customer first seeks a transaction code for an identified “chain of stores” and later picks a specific store within that chain for the transaction. This scenario, the Court found, falls outside the single-merchant limitation as described by the claims and written description. Contrary to the PTAB’s construction, the “particular merchant” referred to in the claims is the particular “single merchant” and not a merchant that is later chosen from a potential group of merchants. 

The Federal Circuit explained that in applying its erroneous claim construction, the PTAB found that the claimed scenario is disclosed by an earlier patent and, therefore, D’Agostino’s patent is anticipated and obvious. Because the PTAB’s claim interpretation was incorrect, the Court vacated and remanded the PTAB’s findings of anticipation and determinations of obvious for further proceedings.