Federal Circuit Applies Phillips to Limit Gift Card Claim Construction

Every Penny Counts, Inc. v. American Express, Visa, Green Dot, MasterCard, First Data, etc. (Federal Circuit 2009)

Dr. Burke is a psychoanalyst who never liked change. I'm not talking Obama style change. No, Burke patented a method for donating leftover change ("excess cash") to charities (or to store it in a separate savings account.)

Burke's company (EPC) sued a host of defendants. who sell gift cards -- alleging that the retail sale of gift cards along with merchandise infringe upon his patents because the gift card sales “loading value onto accounts at a point-of-sale terminal.” EPC's argument was that the purchaser was using "excess cash" to buy the gift card.

On appeal, the Federal Circuit rejected the patentee's argument for a broad claim construction - instead holding that the claimed "excess cash" was an “amount selected by the payor beyond the total amount due at the point of sale.”

Looking at the specification as “the primary basis for construing the claims,” the appellate panel noted that the specification repeatedly described the method's purpose as allowing someone to conveniently donate to charities or to painlessly save money. From the specification:

In current shopping situations a clerk inputs the price of all items in a cash register and the latter totals the price. The consumer offers either the exact amount of cash or a sum exceeding the price, and the clerk enters that amount. The cash register then subtracts the price from the cash.

The excess cash offers the customers an opportunity to save small amounts of money painlessly. It also affords the consumer to donate [sic] small amounts of money to charity.

Interpreting this, the Federal Circuit determined that the claimed "excess cash" must be only what is left over after all items (including gift cards) are paid for. "Where the consumer does not offer a sum in excess of the total displayed on the cash register, then there is no excess cash."

Non-infringement affirmed.

Notes:

• Read the Opinion: 08-1434.pdf.
• The Federal Circuit remarked that EPC wasted its appellate time arguing process - that it didn't get a fair chance to argue claim-construction below. Claim construction is reviewed de novo, and the appellant needs to focus on why it should win on the merits, not on whether the district court was listening. "EPC has surprisingly little to say about what it alleges is substantively wrong with the district court’s construction, or why its proposed construction would be better on the merits. Instead, it attempts to assign error to the district court’s construction on a number of procedural grounds. Principally, it argues that the court erred by (1) spending a portion of the claim construction hearing considering the meaning of the phrase “sales price,” which was not a disputed claim term; and (2) using the accused products to tailor a construction of the patent claims that would make it impossible for EPC to prove infringement. Neither of these arguments has merit."
• As a rule, the Federal Circuit is respectful to both parties as well as their arguments and positions. Here, Senior Judge Cudahy went about as far as the Court ever does by describing Burke's invention only within quotation marks (Burke's "invention") and once referring to the "'invention', such as it is." The court more explicitly showed its disdain by awarding costs to the defendants.
• Some of you may have heard of Bank of America's "Keep the Change" program. According to the company brochure: "Each time you buy something with your Bank of America Check Card, we'll round your purchase to the nearest dollar amount and transfer the difference from your checking account to your savings account. You get to keep the change and grow your savings. What could be easier?" EPC's litigation against BOA continues.

Comments

[Caveat Constructor]

Quite honestly, the plaintiff is lucky he didn't get his patent invalidated. Putting aside that the plaintiff's broad claim construction probably had prior art out there, the CAFC has been more than willing to invalidate patents with broad claim construction under 112 first (for lack of either enablement - Leibel Flarsheim - or written description - ICU Medical). A refusal to adaopt the broad claim construction here was generous.

[How about me next? I'm available!]

First Posner now Cudahy? I can understand bringing in patent-experienced district court judges like Whyte, Saris, O'Grady, etc., but I hope this is not a growing trend to allow other appellate judges sit at the CAFC.

[Just Visiting]

The court was not generous. It's nearly impossible invalidate claims on appeal when the only issue being appealed is infringement.

[Paul F. Morgan]

I don't know how old the patent is, but I recall an old British movie in which a software programmer got rich by diverting rounded off single pennies from the bank's transactions into his own accounts.

[The Patent Game]

Just Visiting - tell that to Stephen Comiskey, who got his patent invalidated on appeal on a ground neither party raised.

[Gideon Pope Lives]

Gotta love this . . .

""""Cudahy went about as far as the Court ever does by describing Burke's invention only within quotation marks (Burke's "invention") and once referring to the "'invention', such as it is." The court more explicitly showed its disdain by awarding costs to the defendants."""""

This is awesome.

Now if you assert your presumptively valid patent, not only do you get the bum treatment from the CAFC, you get slapped with costs.

Costs!

That'll teach them trolls and other small players to try to come in and push around the big boys with their Ebayed "patents" and their "arguments" about "infringement"!!!

One small step for the defendant, one giant step for the continued power shift to the corporate interests that run America.

Think about it. Next small timer who approaches an attorney about taking a suit on contingency against a big player - first thing he should be told is, "you know, there's recent precedent that, if you attempt to assert your patent and the judges don't think your "invention" is much of an "invention," you might end up paying costs to the other side."

What are typical costs for a Fed Cir appeal after a trial?

Couple mill?

Hah!

What we really need to do is to use the already existing "large entity/small entity" distinction to develop two separate legal paradigms.

Small entity? Please move to the "license only, and only if you're lucky line."

Large entity? Who would you like to sue?

[Alan McDonald]

It's about time a troll got hit for costs for trying to stretch patent claims to cover the world.

Maybe the next troll will think twice before filing another overbroad suit.

What we really need is district court judges with the guts to grant Rule 11 sanctions even before discovery.

[MaxDrei]

Is anybody out there getting the idea yet, how best to secure the public policy objective that, when a patent issues out of the PTO, it's of high enough "Quality" to justify the award of injunctive relief against parties performing acts within the ambit of any one of its claims. Inculcate in the minds of Applicants and their attorneys that, from now on, the mantra "Be Careful What You Ask For" runs all the way, from soup to nuts, from filing at the PTO to issuing proceedings in the District Court. Simple self-interest works much better than any number of Rules governing Duty of Candor, Applicant-funded searches, IDS and all the rest.

[Just an ordinary inventor(TM)]

What’s obvious to one may not be obvious to another – ah, there’s the rub.

Whether or not some thing is obvious is a subjective question,
no matter what test is applied – unless, unless you require some evidence in the method of testing.

Oh, but the Supremes gave us the subjective KSR test, so now we are back to

what’s obvious to one may not be obvious to another – ah, there’s the rub.

[36 Chambers]

The loser in an infringement case should always have to pay the costs of the winner. At the very least, it should be mandatory that a plaintiff pay the defendant's legal costs if the plaintiff's patent is invalidated during the case.

[ThisMortalCoil]

To be or not to be … inventive
That is the question
Whether ‘tis nobler in the mind
To suffer the slings and arrows of outrageous infringement
Or to take up writs and, by litigating, end them…

[Just an ordinary inventor(TM)]

Hello 36 Chambers,

That’s just plain silly.
Why not make the PTO pay since they granted the patent.
That’s just as silly.

[in-house]

I don't know how old the patent is, but I recall an old British movie in which a software programmer got rich by diverting rounded off single pennies from the bank's transactions into his own accounts.

Posted by: Paul F. Morgan | May 03, 2009 at 08:34 PM

Paul, this concept was repeated in Superman III (1983), where Richard Pryor's charracter rounds off banking transactions from a Lex Luthor corp. (Lex eventually hires him to build a supercomputer to battle Superman).

And then again in Office Space (1999).

[MaxDrei]

Those legal costs to be paid out, by the loser, to the winner, to include the ones run up during the discovery phase, right? And JAOI, I hope your illustrious European counsel is a bit more confident about what is and is not obvious at the EPO than you are, about what is or is not obvious at the SCOTUS.

[Paul F. Morgan]

In the U.S., the "costs" normally paid by any loser are normally a very small percentage of total litigation costs. See in particular the cost items listed in Title 28 Sections 1920-22. They do not include attorney fees.

[ThisMortalCoil]

PSA or KSR
That's another question
Whether 'tis nobler in the mind
To identify the closest prior art and formulate an objective technical problem
Or to just sniff it and see

Heck, why not just toss a coin? OK, best of three...

[Patently_Blingin]

The Court's analysis of Phillips is superficial and appears to import limitations from preferred embodiments into the claims.

[get off my lawn]

Patently_Blingin: What's a "preferred" embodiment? Is there any definition of this term, anywhere? What would make one of the disclosed embodiments "preferred," and how could you tell this from the specification?

[Anon E. Moose]

I wouldn't worry about the BoA suit. Assuming they are stil around, they'll likely be judgement-proof. In any case, the "Keep the Change" obviously doesn't fit within the scope of the claim as the CAFC just construed it... the amount is not selected by the cardholder, it is set by the merchant clearing bank. The battle just shifted to whether BoA or the cardholder is the payor.

[Patently_Blingin]

They obviously thought that the language they relied upon should limit all embodiments, no? Or are you saying that there are other embodiments, supporting a broader interpretation of "excess cash", that the Court ignored?

[Malcolm Mooney]

Excess cash is excess cash and should include any cash in the person's possession that is not used to buy the merchandise in question. So if you buy a banana, milk, and loaf of bread, and then realize that you have some excess cash and so you buy a candy bar as a gift for your child, then the buying of the candy bar is obviously infringement of my patent.

I keep hearing people talk about obviousness and anticipation and stuff. I don't even know what that stuff is but it sounds very technical. All I know is the PTO gave me this patent and I'm doing what anyone with a patent would do under the circumstances. And yes I've also filed an application on my business model for making money with a patent.

/Dr. Burke off

[get off my lawn]

Patent attorneys sometimes refer to the disclosed embodiments in the specification as "preferred embodiments." Has anyone ever seen a definition of what the word "preferred" means in this context?

[Just an ordinary inventor(TM)]

Good question.

Last application I filed, I just said "another embodiment" for all embodiments.

I guess calling all embodiments "preferred embodiments" is also safe.

[get off my lawn]

The embodiments disclosed in the application are no more "preferred" than any other embodiments (including infringements) that do not happen to be disclosed in the application.

I just wonder why some people seem to automatically refer to the specification as being "the preferred embodiments."

[Actual Inventor]

Just an ordinary inventor(TM) Wrote:

"Whether or not some thing is obvious is a subjective question,
no matter what test is applied – "

As an "Actual Inventor" I look for and use "Teaching Away" as a very objective and power test for non obviousness.

[Just an ordinary inventor(TM)]

Hi Actual Inventor,

Finally, we agree on something.
However, "Teaching Away" is as rare a a hen's tooth.

[Actual Inventor]

get off my lawn wrote: " Patent attorneys sometimes refer to the disclosed embodiments in the specification as "preferred embodiments." Has anyone ever seen a definition of what the word "preferred" means in this context?"

I don't know what Patent Attorneys mean, and most likely they don't either, but as an "Actual Inventor", I use the term to mean there are other possible embodiments of the invention other the ones described in the specification. For this reason every embodiment I refer to in the spec is a preferred embodiment, including the best mode of invention.

[Actual Inventor]

Just an ordinary inventor(TM) wrote: "Hi Actual Inventor, Finally, we agree on something. However, "Teaching Away" is as rare a a hen's tooth."

Well, If an invention is not pioneering, prolific, and extraordinary enough to have teaching away references, then perhaps its not worthy of patent protection.

[Alun Palmer]

The preferred embodiments are those you actually discuss in the spec. The only exception is if you are silly enough to actually describe one or more, but not all of them, as "preferred" in so many words, which I don't recommend.

Alun Palmer, Patent Agent

[MaxDrei]

Somebody wants a "definition" of "preferred embodiment". Well, I know what "preferred" means and I don't see any ambiguity there. But as to what an "embodiment" is, now there I regularly encounter ambiguity when I read specifications written in the USA. It is one of those words that patent drafters use all the time, without first engaging the brain and calling to mind the ordinary day to day meaning of the word. I know what an "illustrated embodiment" is, namely, a pinpoint within the envelope of the inventive concept. But drafters follow the words "In one embodiment, the invention comprises...." followed by an all-encompassing (boundary, peripheral, call it what you will) statement of the perceived inventive concept, and that's doing violence to ordinary language. Of course I know why they do it, so I know who's to blame for the violence visited on the English language by all those innocent drafters as they just try to do the best for their clients.

[Actual Inventor A.K.A. "Smarter Than Most Patent Attorneys"]

Did you actually read the specification? All I could find was the link to the decision. I would be curious if the specification contained any boiler plate style disclaimers such as the following...

"While the description contains much specificity, this should not be construed as limitations on the scope but rather as an exemplification of the presently preferred embodiments thereof. Many other ramifications and variations are possible within the teachings of the invention."

Such disclaimers, along with other phrases like, "One example includes but is not limited to" And of course strategic use of words such as, "preferably", "can", and "may" all give room for arguing a broader claim scope when enforcing your patent. However if the applicant did not have any liberating disclaimers and language in the application then they indeed left themselves wide open to having their claim scope nailed shut during an infringement case.

Also, if the issue was broader interpretation of "excess cash" then why didn't the inventors simply act as their own lexicographer and write a broad definition? Again I need to read the actual application to see what really happened here.

[Leopold Bloom]

"Also, if the issue was broader interpretation of 'excess cash' then why didn't the inventors simply act as their own lexicographer and write a broad definition?"

Probably because nobody thought of the ridiculously broad "interpretation" of excess cash (or the ridiculously distorted interpretation of "sales price") until the litigation target had been identified.

It's easy to re-write the specification after the case is lost.

[MaxDrei]

Now it's getting fun. Why doesn't every Applicant (smarter than most patent attorneys) habitually write into the app definitions like: When in my claim I write "black" I mean any colour under the sun, including white. Or would that be getting silly? Fact is, like most people, inventors want it both ways, namely, a narrow definition to bamboozle through to issue, but thereafter a wide claim interpretation, for use when hunting down infringers. The claim is just like Mario Franzosi's long-haired white cat, slim as a snake until it's through the issue gate, but then it sets all its long hair on end, to appear twice its previous size, when intimidating those who won't back down.

[Malcolm Mooney]

Bloom: "Probably because nobody thought of the ridiculously broad "interpretation" of excess cash (or the ridiculously distorted interpretation of "sales price") until the litigation target had been identified."

You must really love big corporations to ridicule a little guy like me who is only trying to take them down a notch.

/Mr. Burke off

[Jules Winnfield]

"However if the applicant did not have any liberating disclaimers and language in the application then they indeed left themselves wide open to having their claim scope nailed shut during an infringement case."

I wouldn't rely on "liberating disclaimers" much. Such things are inherent in a patent disclosure and following interpretations aren't they? Every claim limitation is given its broadest reasonable interpretation. Reasonable being the key word there.