Federal Circuit reverses PTAB decisions in MasterCard patent row

The US Court of Appeals for the Federal Circuit has reversed decisions by the Patent and Trial Appeal Board (PTAB) to invalidate two patents that cover security for credit card purchases.

Yesterday, December 22, the court  held that the PTAB decisions rested on an “unreasonable claim interpretation”, so they were vacated and remanded for further proceedings.

The case stemmed from two inter partes review (IPR) proceedings brought by MasterCard against US patent numbers 7,840,486 and 8,036,988.

Both proceedings held that the claims were unpatentable as they were obvious over patent numbers 6,422,462 and 5,826,243.

The patents disclose “processes for generating limited-use transaction codes to be given to a merchant by a customer for the purchase of goods and services”, which enhance security for the customer.

John D’Agostino, the owner of the patents, had  sued MasterCard back in April 2013, alleging patent infringement.

The claims of the patents fall into two categories: those which involve “limiting a number of transactions to one or more merchants” (a “one or more merchants limitation”) and those which involve “limiting transactions to a single merchant” (a “single merchant limitation”).

The “single merchant limitation” is illustrated in a representative claim of the ‘988 patent:

“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 prior to any particular merchant being identified as said single merchant.”

According to the court, the board relied only on the single merchant claims in its decisions, as it was “undisputed that the former [one or more merchants claims] are unpatentable if the latter are unpatentable”.

In the IPR proceedings, the board held that the prior art references anticipated the limitations, so the claims were unpatentable.

After reviewing the prosecution history and specification, the Federal Circuit disagreed with the board.

“The single-merchant limitation thus requires, simply, that, when the transaction code is requested, the request limits the number of authorised merchants to one but does not then identify the merchant, such identification occurring only later,” said the court.

It added that the board “departed from or misapplied the … clear meaning” when 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”.

On remand, the board may consider other issues, said the court, including the one or more merchants claims.