CAFC Judges Split on Indefiniteness Analysis for Identity Theft Patent

“Given how broadly the specification defines users and transactions, the intrinsic evidence does not support construing ‘transaction partner’ to mean ‘seller.'” – CAFC

CAFCThe U.S. Court of Appeals for the Federal Circuit (CAFC) today held that certain claims of a patent for a system to protect against identity theft and fraud were invalid for indefiniteness. Judge Schall dissented-in-part, explaining that he would not have found the claims indefinite based on the intrinsic evidence.

U.S. Patent No. 9,361,658 is owned by Mantissa Corporation and is titled “System and Method for Enhanced Protection and Control Over the Use of Identity.” Mantissa sued First Financial Corporation and First Financial Bank, N.A. in the U.S. District Court for the Northern District of Illinois, alleging infringement of certain claims.

The parties mainly disputed two terms during claim construction: (1) “transaction partner” and (2) “OFF.” The district court relied on First Financial’s expert testimony to conclude that “transaction partner” was indefinite, after finding that the expert used was a person of ordinary skill in the art (POSA). Mantissa argued that the expert did not have “at least three years of experience in the field of systems for processing and authorizing transactions in a financial account over a computer network,” and therefore was not a POSA. While both parties spent a lot of time arguing about whether the expert was or was not a POSA, the CAFC majority held that it was not necessary to resolve that disagreement because the issue of indefiniteness could be resolved on the intrinsic evidence alone.

Turning to the intrinsic evidence then, the CAFC held that “[h]ere the intrinsic evidence establishes that the claims are indefinite.” The court explained that the term “transaction partner” does not appear in either the specification or “in the claims or specification in U.S. Application No. 11/115,239, the application to which the ’658 patent claims priority.” Instead, “the term first appeared in a preliminary amendment filed almost nine years later,” said the court, and neither that amendment nor exchanges between the patent examiner and the applicant dealt with the meaning of “transaction partner.” There is no commonly accepted definition of term, either.

Mantissa argued that a POSA would know that a “transaction partner” means a seller, but the CAFC majority said that, while that  construction “may make sense in some contexts, such as if the user is a credit card company seeking permission from a service provider for a transaction partner to access a financial account maintained by the credit card company and the transaction partner is a seller seeking to process a charge to an individual’s credit card account,” the claims and specification are not limited in such a way. “Given how broadly the specification defines users and transactions, the intrinsic evidence does not support construing ‘transaction partner’ to mean ‘seller,’” wrote the court. The CAFC further found that Mantissa’s alternately proposed construction of “transaction partner” to mean “a party to a transaction” only made the problem worse.

As to the construction of the term “OFF,” the court held that it did not have jurisdiction to review that construction because the district court’s decision “did not rest on any such determination.” The parties asked the court to address the construction of “OFF” because the term is “pending claim construction under the same patent-in-suit in at least three parallel litigations,” and Mantissa agreed “to be bound by the claim construction on the two overlapping terms/phrases in” this case, but the CAFC said “We have refrained, and are indeed prohibited, from issuing opinions in such circumstances.” The court cited to Personalized User Model, LLP v. Google Inc., to support this conclusion, which said that “…we may not provide an advisory opinion on the meaning of a claim term that does not affect the merits of this appeal and thus is not properly before us.”

Judge Schall dissented-in-part, arguing that the specification and claims do reveal the meaning of “transaction partner.” While he disagreed with Mantissa’s construction of “seller,” he said that in his view, the correct construction is “party to a transaction.” While the majority found the “specification provides ‘multiple parties to each transaction,’ i.e., the user, the identity owner, the service provider, or a third party, any one of which could be a ‘party to a transaction,’” Schall said “the claim language clarifies that a ‘transaction partner’ is something or someone that could enter into a transaction using the financial account, authorization for the use of which must be obtained, and would not be the service provider, entity, or financial account owner.” A POSA could would thus be informed of the scope of the invention with reasonable certainty, said Schall. He did, however, concur with the majority’s holding that it lacked jurisdiction to consider the construction of “OFF.”



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