Net MoneyIN v. Verisign (Fed. Cir. 2008)

According to the Federal Circuit, in order for a reference to anticipate a claim, the reference must teach all of the claimed elements together; teaching all the elements in separate embodiments is not enough for anticipation under 35 U.S.C. § 102. Additionally, a general purpose computer or microprocessor alone cannot provide sufficient structure for means-plus-function language.

This case involves systems for processing credit card transactions over the Internet and for addressing security concerns not present in direct retail transactions. A working document entitled Internet Keyed Payments Protocol (the “iKP reference”) sets forth standards on “how payments may be accomplished efficiently, reliably[,] and securely.” The iKP reference sets forth two standard models, or protocols, to enable Internet-based secure electronic payments while utilizing the existing financial infrastructure for payment authorization and clearance. Unsatisfied with the early approaches taken by others, inventor and patent attorney Mark Ogram set out to create a new payment model to remedy what he perceived as two deficiencies in the prior art protocols: “the fact that the customer had to send confidential information over the Internet to an unknown merchant; and the fact that credit card issuers imposed onerous financial requirements on merchants.” Ogram filed a patent application directed to a payment model utilizing a financial processing entity, and the patent application ultimately resulted in U.S. Patent Nos. 5,822,737 (“the ’737 patent”) and 5,963,917 (“the ’917 patent”). Shortly after filing the patent application, Ogram formed Net MoneyIN (“NMI”).

NMI filed suit for infringement of the ’737 and ’917 patents against a number of parties alleged to compete in the Internet credit card processing field, including Verisign, Inc. and eProcessing Network (collectively, “Verisign”). During claim construction, among other things, the district court invalidated claims 1, 13, and 14 of the ’737 patent, which contain limitations in means-plus-function format, as lacking corresponding structure and thus indefinite under 35 U.S.C. § 112 2. The district court then addressed two motions for summary judgment: (1) the district court granted Verisign’s motion for summary judgment that it did not induce infringement of NMI’s patents, and (2) the district court granted Verisign’s motion for summary judgment of invalidity, based on the argument that the iKP reference anticipated claim 23 of the ’737 patent under 35 U.S.C. § 102(a).As to the question regarding the means-plus-function language, the Federal Circuit found that the district court correctly concluded that claims 1, 13, and 14 of the ’737 patent are indefinite under 35 U.S.C. § 112 2. The court explained that a patent applicant who employs means-plus-function language “must set forth in the specification an adequate disclosure showing what is meant by that language. If an applicant fails to set forth an adequate disclosure, the applicant has in effect failed to particularly point out and distinctly claim the invention as required by the second paragraph of section 112.” The court continued that “[t]o avoid purely functional claiming in cases involving computerimplemented inventions, we have ‘consistently required that the structure disclosed in the specification be more than simply a general purpose computer or microprocessor. Because general purpose computers can be programmed to perform very different tasks in very different ways, simply disclosing a computer as the structure designated to perform a particular function does not limit the scope of the claim to the corresponding structure, material, or acts that perform the function.’” Thus, the Federal Circuit upheld the district court’s decision that claims 1, 13, and 14 of the ’737 patent were indefinite.

As to the district court’s conclusion that the iKP reference anticipated claim 23 of the ’737 patent, the Federal Circuit reversed. The Federal Circuit described that the iKP reference discloses two separate protocols for processing an Internet credit card transaction, but neither of these protocols contains all five links arranged or combined in the same way as claimed in the ’737 patent. The Federal Circuit also noted that the district court was wrong to combine parts of the separate protocols shown in the iKP reference to conclude that claim 23 was anticipated. The Federal Circuit stated, “Granted, there may be only slight differences between the protocols disclosed in the iKP reference and the system of claim 23. But differences between the prior art reference and a claimed invention, however slight, invoke the question of obviousness, not anticipation.” Because the parties did not contend that the iKP reference disclosed all of the limitations recited in the claim arranged or combined in the same way as in the claim, and because it was in error for the district court to find anticipation by combining different parts of the separate protocols in the iKP reference “simply because they were found within the four corners of the document,” the Federal Circuit reversed the district court’s grant of summary judgment of invalidity as to claim 23 of the ’737 patent.

Practice Tip:

When reviewing the rejection of a patent application or as a defense to infringement, a reference cited for allegedly anticipating the claimed subject matter should be carefully reviewed. In order for a reference to anticipate a claim, it must disclose all elements of the claim arranged and combined in the same way as claimed. An examiner cannot pick and choose different elements from different embodiments to argue that a reference anticipates a claim. Furthermore, when drafting a patent application, extra care should be taken to ensure that the specification includes sufficient structure that corresponds to any means-plus-function claim language. This is particularly important when the means-plusfunction language is performed by a computer since disclosing the computer in general, with nothing else, may not provide sufficient support for means-plus-function language.