Some Claim Limitations Need Not Be Practiced for Direct Infringement
Advanced Software v. Fiserv (decided 6/2/11)By: Elisabeth H. Hunt
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What This Means to You
- When preparing a patent application, think carefully about different ways a competitor could implement your technology.
- File claims whose limitations can all be practiced by a single entity.
- If a limitation that could be practiced by a separate entity is needed to distinguish over the prior art, carefully choose claim language that limits the environment rather than the claimed method/system itself.
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Overview
In Advanced Software Design Corporation and Calin A. Sandru v. Fiserv, Inc., the US Court of Appeals for the Federal Circuit (Federal Circuit) decided that certain limitations in a claim’s preamble may limit the claim without having to be practiced by the entity that directly infringes the claim.
Case Background
Advanced Software’s patent claimed a method and system for validating a negotiable financial instrument (i.e., a check). When the check is issued by a payor, certain plaintext information on the check (e.g., the payee name or the dollar amount) is also printed in an encrypted barcode on the check. When redeemed, the check can then be validated by decoding the barcode and confirming that it matches the plaintext on the check, thereby preventing fraud.
Advanced Software’s independent claims contained preambles reciting, e.g., “A system for validating the authenticity of selected information found on a negotiable financial instrument,… wherein the selected information is encrypted… to generate a control code which is printed on the financial instrument.” The bodies of the claims recited only the validation steps, including reading the selected information from the financial instrument and decrypting the control code.
The district court found that Fiserv did not directly infringe the claims, because Fiserv itself performs only the validation steps, and not the encrypting and printing steps recited in the preamble. Both parties agreed that the recitations in the preamble were limiting.
Decision Analysis
The Federal Circuit reversed the district court’s finding of noninfringement, holding that the encrypting and printing recitations in the preamble did in fact limit the claims, but limited only the environment in which the claimed method or system was practiced, not the method or system itself. Thus, Fiserv could only infringe by validating checks that had been encrypted and printed, but Fiserv did not have to perform the encrypting and printing itself to directly infringe.
In its analysis, the Federal Circuit relied on the fact that the claims’ preambles recite, e.g., “A system for validating,” and not a system “for encrypting and printing.” Although such a statement of purpose in the preamble is generally not regarded as limiting, the Federal Circuit explained that it could still be used to distinguish whether other claim limitations simply limit the environment in which the claim operates or must actually be performed by an accused infringer.
Takeaways
In today’s technology, different parts of a patentable method or system are often practiced by different entities. A competitor’s potential noninfringement positions can sometimes be avoided by filing multiple separate claims, each of which is directed only to part of the overall system, such that the claim would be practiced entirely by a single entity.
However, when other limitations are needed to distinguish the claim over the prior art, this case suggests that such limitations can be added without requiring the infringer to be the one who performs them. The claim language should be crafted carefully to ensure that the added recitation does limit the claim with respect to the prior art, but only limits the environment and is not required to be performed for direct infringement.
