D'Agostino v. Mastercard International , 844 F.3d 945 ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
JOHN D’AGOSTINO,
Appellant
v.
MASTERCARD INTERNATIONAL
INCORPORATED,
Appellee
______________________
2016-1592, 2016-1593
______________________
Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in Nos.
IPR2014-00543, IPR2014-00544.
______________________
Decided: December 22, 2016
______________________
ROBERT GREENSPOON, Flachsbart & Greenspoon, LLC,
Chicago, IL, argued for appellant. Also represented by
JOSEPH CARL DRISH.
ELIOT DAMON WILLIAMS, Baker Botts LLP, Palo Alto,
CA, argued for appellee. Also represented by ROBERT C.
SCHEINFELD, New York, NY.
______________________
Before TARANTO, LINN, and STOLL, Circuit Judges.
2 D’AGOSTINO v. MASTERCARD INTERNATIONAL
TARANTO, Circuit Judge.
This case involves method claims of two patents that
disclose processes for generating limited-use transaction
codes to be given to a merchant by a customer for the
purchase of goods and services, an objective being to
enhance security for the customer by withholding the
customer’s credit card number from the merchant and
using the transaction code to complete the transaction
instead. In two inter partes review proceedings, the
Patent Trial and Appeal Board of the United States
Patent and Trademark Office decided that the disputed
claims are unpatentable for anticipation and obviousness.
Because the Board’s decisions rest on an unreasonable
claim interpretation, we vacate the decisions and remand
for further proceedings.
I
John D’Agostino owns U.S. Patent Nos. 7,840,486 and
8,036,988. The ’988 patent is a continuation of the ’486
patent. Both patents disclose methods of effecting secure
credit-card purchases by minimizing merchant access to
credit card numbers. ’988 patent, abstract; ’486 patent,
abstract. The written descriptions of the two patents are
materially identical.
MasterCard International Incorporated filed two peti-
tions with the PTO requesting inter partes review of the
two patents under 35 U.S.C. ch. 31. Regarding the ’988
patent, the Board, as delegee of the PTO Director, 37
C.F.R. §§ 42.4, 42.108, instituted a review of claims 1–10,
15–25, 27–33, and 35–38 for anticipation by U.S. Patent
No. 6,422,462 to Cohen and of claims 11–14, 26, and 34
for obviousness over Cohen and U.S. Patent No. 5,826,243to Musmanno (IPR2014-543). Regarding the ’486 patent,
the Board instituted a review of claims 1–15 and 22–30
for anticipation by Cohen and of claims 16–21 for obvi-
ousness over Cohen and Musmanno (IPR2014-544). After
conducting the reviews, the Board cancelled all of the
D’AGOSTINO v. MASTERCARD INTERNATIONAL 3
reviewed claims as unpatentable on the grounds on which
it instituted review. MasterCard Int’l Inc. v. D’Agostino,
2015 WL 5159950 (P.T.A.B. Aug. 31, 2015) (’988 Deci-
sion); MasterCard Int’l Inc. v. D’Agostino, 2015 WL
5159951 (P.T.A.B. Aug. 31, 2015) (’486 Decision). The
Board’s two final written decisions are materially identi-
cal for present purposes, so we hereafter cite only the ’988
Decision.
As relevant here, the claims fall into two categories—
those which involve “limiting a number of transactions to
one or more merchants,” i.e., a “one or more merchants
limitation,” ’988 patent, col. 8, lines 66–67; and those
which involve “limit[ing] transactions to a single mer-
chant,” i.e., a “single merchant limitation,” id., col. 11,
lines 12–13. It being undisputed that the former are
unpatentable if the latter are unpatentable, the Board
relied only on the “single merchant” claims in its deci-
sions, holding them unpatentable and, solely on that
ground, also holding the “one or more merchants” claims
unpatentable. ’988 Decision at *8. We therefore address
only the “single merchant” claims.
Claim 21 is representative of the “single merchant”
claims:
21. A method for implementing a system for per-
forming secure credit card purchases, the method
comprising:
a) receiving account information from an
account holder identifying an account that
is used to make credit card purchases;
b) receiving a request from said account
holder for a transaction code to make a
purchase within a payment category that
at least limits transactions to a single
merchant, said single merchant limitation
being included in said payment category
4 D’AGOSTINO v. MASTERCARD INTERNATIONAL
prior to any particular merchant being
identified as said single merchant;
c) generating a transaction code utilizing a
processing computer of a custodial author-
izing entity, said transaction code associ-
ated with said account and reflecting at
least the limits of said payment category,
to make a purchase within said payment
category;
d) communicating said transaction code to
said account holder;
e) receiving a request to authorize pay-
ment for a purchase using said transac-
tion code;
f) authorizing payment for said purchase if
said purchase is within said payment cat-
egory.
’988 patent, col. 11, lines 5–27.
After construing the single-merchant limitation,
which is step (b) in representative claim 21, the Board
found that Cohen meets the single-merchant limitation
through an embodiment that limits credit-card transac-
tions to a particular chain of stores. ’988 Decision at *8.
The Board also found that Cohen discloses the step of
defining and designating the “payment category” before
the transaction code is generated. Id. at *9–10. The
Board’s unpatentability reasoning for both anticipation
and obviousness relies critically on those two rulings; the
Board did not rely on any independent alternative
grounds for its decisions.
Mr. D’Agostino appeals under 35 U.S.C. §§ 141(c) and
319. We have jurisdiction to review the Board’s decisions
under 28 U.S.C. § 1295(a)(4)(A).
D’AGOSTINO v. MASTERCARD INTERNATIONAL 5
II
The Board permissibly applied the broadest reasona-
ble interpretation standard in this inter partes review
proceeding. See Cuozzo Speed Techs., LLC v. Lee, 136 S.
Ct. 2131, 2142 (2016); 37 C.F.R. § 42.100(b). “There being
no dispute here about findings or evidence of facts extrin-
sic to the patent, . . . we conduct a de novo review of the
Board’s determination of the broadest reasonable inter-
pretation of the claim language.” Straight Path IP Grp.,
Inc. v. Sipnet EU S.R.O., 806 F.3d 1356, 1360 (Fed. Cir.
2015). “The protocol of giving claims their broadest
reasonable interpretation . . . does not include giving
claims a legally incorrect interpretation.” In re Skvorecz,
580 F.3d 1262, 1267 (Fed. Cir. 2009). Instead, “claims
should always be read in light of the specification and
teachings in the underlying patent,” In re Suitco Surface,
Inc., 603 F.3d 1255, 1260 (Fed. Cir. 2010); the Board
“should also consult the patent’s prosecution history in
proceedings in which the patent has been brought back to
the agency for a second review,” Microsoft Corp. v. Proxy-
conn, Inc., 789 F.3d 1292, 1298 (Fed. Cir. 2015).
We note two limits on our review and ruling here.
First, we separately address only the “single merchant”
claims because the Board relied entirely on those claims
for its decisions as to all claims. Second, as to Cohen, we
consider only the portion, concerning a chain of stores, on
which the Board relied. We reject the Board’s bases of
decision and remand. The Board on remand may consider
other issues, e.g., as to Cohen and as to the “one or more
merchants” claims, that the parties have preserved.
A
The single-merchant limitation clearly requires a sep-
aration in time between the communication of one piece of
information and the communication of another. The
authorizing entity, in being asked for a transaction code,
is told that the number of merchants to be covered by that
6 D’AGOSTINO v. MASTERCARD INTERNATIONAL
code is one (no more, no less): a “payment category that at
least limits transactions to a single merchant” is commu-
nicated to the authorizing entity. Critically, though, the
“single merchant” must not be identified to the authoriz-
ing entity at that time: “said single merchant limitation
being included in said payment category prior to any
particular merchant being identified as said single mer-
chant.” Only later is the “particular merchant” identified,
and the “particular merchant” is identified “as said single
merchant.” Identification of a particular merchant may
take place, for example, at the subsequent step (f), when
the transaction with that merchant is authorized; but it
does not take place at the earlier step, when the transac-
tion code for a defined payment category is requested. At
that earlier step, the account holder sets the number of
authorized merchants at one without identifying the one.
The specification refers to this process as one among
several embodiments. “The payment category may also
include a multi-transaction authorization wherein more
than one purchase may be made from one or a plurality of
different merchants, each of which may or may not be
identified by the customer and pre-coded in association
with the transaction code.” ’988 patent, col. 8, lines 18–22
(emphases added).
The prosecution history reinforces the evident mean-
ing of the single-merchant limitation as requiring limit-
ing, to one, the number of merchants that may use the
transaction code, without identifying the merchant. In
responding to a non-final rejection, Mr. D’Agostino distin-
guished the Langhans prior art as involving a list of
identified approved merchants, stating: “There is no
disclosure in Langhans et al. that limits a transaction to a
single merchant prior to any particular merchant being
identified as the single merchant.” J.A. 1427 (emphasis in
original); see also J.A. 1366 (“[C]omparing merchant
information transmitted in an authorization request
against vendor data stored in an approved vendor list and
D’AGOSTINO v. MASTERCARD INTERNATIONAL 7
determining if a particular vendor is on an approved
vendor list does not teach a single merchant limitation
being included in a payment category prior to any particu-
lar merchant being identified as said single merchant.”)
(emphases in original). And in a reexamination of the
’988 patent, Mr. D’Agostino said the following in distin-
guishing Cohen:
[L]imiting to a particular store or chain of stores
is not the same as limiting to a single merchant.
A particular store or chain of stores limitation is
an identity limitation whereas a single merchant
limitation is a numerical limitation. That is, the
only way a particular store or chain or stores limi-
tation can be made is by identifying that store or
chain of stores from other stores or chain of stores.
Conversely, a single merchant limitation is not re-
lated to the particular identity of any store or
chain of stores, rather it is a numerical limitation
that limits use to only one merchant. Stated dif-
ferently, a particular store or chain of stores limi-
tation is limited to only the identified store or
chain of stores, whereas a single merchant limita-
tion is not limited by way of identity.
J.A. 2333–34. In the present appeal, this material is
relevant as reinforcing the evident meaning of the claim
language at issue, whether or not it would meet standards
for disclaimer or disavowal. See Cordis Corp. v. Medtron-
ic AVE, Inc., 339 F.3d 1352, 1359 (Fed. Cir. 2003).
The single-merchant limitation thus requires, simply,
that, when the transaction code is requested, the request
limits the number of authorized merchants to one but
does not then identify the merchant, such identification
occurring only later. This is the claim-construction posi-
tion that Mr. D’Agostino urged before the Board. See, e.g.,
J.A. 5486, 5490, 8417. Contrary to MasterCard’s conten-
tion, the doctrine of waiver does not preclude Mr.
8 D’AGOSTINO v. MASTERCARD INTERNATIONAL
D’Agostino from making any of the arguments he has
made to us—e.g., offering a new analogy, changing the
emphasis on or ways of describing sources of support—in
“defending the original scope of [his] claim construction.”
Interactive Gift Express, Inc. v. Compuserve Inc., 256 F.3d
1323, 1346 (Fed. Cir. 2001).
The Board departed from or misapplied the above-
stated clear meaning when—whether as a matter of claim
construction or as a matter of application to Cohen, see
’988 Decision at *6, *8 (making point in both ways)—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. ’988 Decision at *8. The Board stated
its point by way of an example it deemed within the
claim: the customer could designate the “Target” chain of
stores when obtaining a transaction code and only later
choose a specific Target store at which to use such a code
to obtain authorization of a purchase. Id.; id. at *9 (“[A]
‘single merchant’ can be the chain of stores, whereas the
‘particular merchant’ is a single store of that chain of
stores.”). The Board read Cohen as disclosing such a
scenario and thus teaching the claim limitation at issue
(for anticipation and obviousness). Id. at *8–*9.
The decisive problem with the Board’s conclusion is
that this scenario necessarily falls outside the single-
merchant limitation. If Target is more than one mer-
chant, then telling the authorizing entity to limit transac-
tions to Target is not limiting the number of merchants
(whose transactions are to be authorized) to one—and the
Target scenario is for that reason outside the initial
clause of the claim limitation. If Target instead is one
merchant, then telling the authorizing entity to limit
transactions to Target is not withholding the identity of
the particular merchant—and the Target scenario is for
that reason outside the second clause of the claim limita-
D’AGOSTINO v. MASTERCARD INTERNATIONAL 9
tion. Either way, the chain store example fails to satisfy a
claim requirement.
The only way to avoid that straightforward logic
would be to separate “single merchant” (in the first
clause) from “particular merchant” (in the second clause).
But, as we have discussed, the claim language of the
single-merchant limitation does not allow that separation.
Indeed, the second clause speaks expressly of “any partic-
ular merchant being identified as said single merchant.”
For that reason, the Board’s chain-store construction
and/or finding for purposes of meeting the single-
merchant claim limitation, for both anticipation and
obviousness purposes, must be set aside. Because the
decisive aspect of the Board’s reasoning is contrary to the
claim as reasonably construed, we need not and do not
discuss other statements made by the Board en route to
its conclusion, some of which MasterCard declines to
defend. 1 In leaving those aspects of the Board’s decisions
unaddressed, we are not implicitly approving them. Nor,
as we have already noted, are we deciding whether as-
pects of Cohen other than the chain-store discussion
might satisfy the single-merchant claim limitation or
whether the “one or more merchants” limitation might
1 For example, although the Board seemed uncer-
tain “how transactions are limited to a single merchant,
without identifying any particular merchant,” ’988 Deci-
sion at *6, MasterCard has recognized at least one way:
the customer specifies, as the single merchant, the next
merchant seeking authorization with the transaction
code. See Oral Arg. at 27:30–29:00. MasterCard also has
correctly declined to defend the Board’s apparent under-
standing of Mr. D’Agostino’s remarks about scenarios
involving Target and McDonald’s made in the imprecise
back-and-forth discussion at oral argument before the
Board. Id. at *8.
10 D’AGOSTINO v. MASTERCARD INTERNATIONAL
call for a different analysis from that which governs the
single-merchant limitation. In noting that these ques-
tions are not being decided here, we do not suggest an-
swers one way or another.
B
Mr. D’Agostino also challenges the Board’s decisions
on a separate ground. The Board agreed that “the claims
require designating/selecting a payment category before
the generation of the transaction code,” and it found that
Cohen meets that requirement. ’988 Decision at *9. Mr.
D’Agostino argues that Cohen does not disclose defining
and designating the payment category before the transac-
tion code (in Cohen, the credit card number) is generated.
We reject that argument.
Substantial evidence supports the Board’s finding as
to Cohen in this respect. It is clear that, in at least one
embodiment, Cohen discloses the user providing “what
the single use or the customized credit card number is to
be used for” in the same telephone call in which the
customized card is requested. Cohen, col. 3, lines 50–53.
Cohen also discloses that “the limited use nature of the
card (either in a general sense or the specific limita-
tions) . . . may . . . be printed on the card.” Id., col. 3, lines
22–26; see also id., col. 3, lines 63–66 (“With respect to the
customized card, the cards can . . . be preset for certain
uses . . . .”). Those passages support the finding that
Cohen teaches, among other things, that the limitations
have been defined and designated before the card is
generated. Although Mr. D’Agostino argues that the
printing of the physical credit card does not necessarily
occur simultaneously with the generating of the credit
card number, he provides no citations to the record to
suggest that the card number is generated before the card
is printed. The evidence before the Board thus permitted
the Board’s finding on this issue. See In re Jolley, 308
F.3d 1317, 1320 (Fed. Cir. 2002) (“If the evidence in
D’AGOSTINO v. MASTERCARD INTERNATIONAL 11
record will support several reasonable but contradictory
conclusions, we will not find the Board’s decision unsup-
ported by substantial evidence simply because the Board
chose one conclusion over another plausible alternative.”).
III
For the foregoing reasons, we vacate the Board’s claim
construction and its findings of anticipation and determi-
nations of obviousness. We remand for further proceed-
ings not inconsistent with this opinion.
Costs awarded to Mr. D’Agostino.
VACATED AND REMANDED