This post was first published on July 15, 2014.
How is the novelty of an invention established? Another question with a similar connotation is – How does one determine if an invention is anticipated? Simple. Let’s see if something exactly alike exists. Apparently, the district court of the District of Arizona didn’t think so.
We’ll look at a case that will put to rest a lot of doubts surrounding the anticipation of inventions. The case, Net MoneyIN, Inc. v. Verisign, Inc., 545 F.3d 1359 (Fed. Cir. 2008), decided in October 20, 2008, is where the Federal Circuit Court of Appeals clarified the test for anticipation under 35 U.S.C. §102(a).
The patents in contention mainly dealt with subject matter pertaining to systems and methods for online credit card transactions and for addressing security concerns related to these transactions. There were two main issues that were addressed by the inventor – 1. The requirement of prospective customers to send their confidential credit card information to an unknown merchant over the Internet; and
2. Banks that had issued customers’ credit cards imposed stringent requirements on merchants.
Usually, there are 4 parties involved in any credit card transaction: customer, issuing bank for the customer’s credit card, merchant and merchant’s bank. The invention involved a system that added a payment processing entity, which was the fifth entity. The entity interacted with the other four to avoid the problems of existing systems. The inventor acquired two patents and formed Net MoneyIN, Inc. (NMI), a company to process Internet credit card transactions.
First, NMI sued VeriSign, Inc. et al. (Defendant) for the infringement of: Claims 1, 13, and 14 of US Patent No. 5,822,737 (‘737 patent) and claim 1 of US Patent No. 5,963,917 (‘917 patent). As part of its claim construction terms, the district court invalidated claims 1, 13, and 14 of the ’737 patent and claim 1 of the ’917 patent, as being indefinite under 35 U.S.C. § 112.
Then, the Defendants moved the court for summary judgment of invalidity of claim 23 of one of NMI’s patents, under section 102(a) which states:
“A person shall be entitled to a patent unless –
(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for a patent.”
The Defendants introduced a prior art document published by the Internet Engineering Task Force and IBM, also known as the iKP reference, which discussed two different models for processing credit card transactions on the Internet. The district court granted the Defendants’ motion, stating:
“All of the limitations of claim 23 can be found within the iKP reference. A simple combination would produce the system described in claim 23 of the ‘737 patent. That no specific example within iKP contains all five links does not preclude a finding of anticipation.”
NMI appealed, arguing that the district court was not permitted to combine disparate models, although described in a single prior art reference, to find all the elements of the claim. The Defendants argued that there was sufficient anticipation if all the elements of the claim were present in a single document. The Federal Circuit reversed this decision and although it affirmed-in-part that a claim is anticipated if “the four corners of a single, prior art document describe every element of the claimed invention,” it reversed-in-part, providing further explanation that, “…but it does not tell the whole story. Because the hallmark of anticipation is prior invention, the prior art reference – in order to anticipate under 35 U.S.C. §102 – must not only disclose all elements of the claim within the four corners of the document, but must also disclose those elements ‘arranged as in the claim.’”
The FC Court further discussed the meaning of the phrase “arranged as in the claim.” as, a claim that required several ingredients to be mixed in a specific order would not be anticipated by a prior art reference that disclosed all of the ingredients but not the order. “[A]n anticipatory reference [must] show all of the limitations of the claims arranged or combined in the same way as recited in the claims, not merely in a particular order. The test is thus more accurately understood to mean ‘arranged or combined in the same way as in the claim.’”
Summarizing its position, the court stated: “…the prior art reference had to show the claimed invention arranged or combined in the same way as recited in the claim in order to anticipate. We thus hold that unless a reference discloses within the four corners of the document not only all of the limitations claimed but also all of the limitations arranged or combined in the same way as recited in the claim, it cannot be said to prove prior invention of the thing claimed, and, thus, cannot anticipate under 35 U.S.C. §102.”
The court, upon analyzing the prior art reference asserted by Verisign, found that neither of the two models disclosed contained all of the elements of NMI’s claim 23, arranged as in claim 23. The district court had, thus, improperly combined parts of the two different models of the prior art reference to find claim 23 anticipated. The court noted that in case the difference between claim 23 and the models disclosed in the prior art reference were slight, the claim might have been obvious under 35 U.S.C. §103(a), but not anticipated. According to the court: “The prior art reference must clearly and unequivocally disclose the claimed invention or direct those skilled in the art to the invention without any need for picking, choosing, and combining various disclosures not directly related to each other by the teachings of the cited reference.”, quoting In re Arkley, 455 F.2d 586 (CCPA 1972).
In conclusion, the district court had erroneously found claim 23 to be anticipated and the Federal Circuit court, thus reversed the grant of summary judgment.
Image credit: zetson (Creative Commons)
