Linda Shapiro | December 9, 2015
CardSoft, LLC v. VeriFone, Inc.
December 2, 2015
CAFC Panel and opinion author: Prost, Taranto, and Hughes, Opinion by Hughes
On remand from the Supreme Court, the Federal Circuit again reverses the district court’s construction of the term “virtual machine” and gives “virtual machine” its ordinary and customary meaning, resulting in a judgment of no infringement.
CardSoft filed suit against VeriFone for infringement of its patents Nos. 6,934,945 and 7,302,683, which are related as parent and continuation and have the same specification. Both patents describe software for controlling a payment terminal, which uses a “virtual machine” to act as an “interpreter” between an application program and a payment terminal’s underlying hardware and operating system. The virtual machine allows the application program to run on any payment terminal running the virtual machine. The specification acknowledges that virtual machines were known in the art, but that conventional virtual machines slow down the operation of the payment terminal. CardSoft’s patents purport to address this problem with a specialized “virtual message processor.”
Before the district court, VeriFone asserted that the ordinary and customary meaning of “virtual machine” requires that that the applications run by the virtual machine are not dependent on any specific underlying operating system or hardware. The district court disagreed, and construed a “virtual machine” as “a computer programmed to emulate a hypothetical computer for applications relating to transport of data.” Based on the district court’s construction, the jury returned a verdict of infringement in favor of CardSoft.
In its original decision, the Federal Circuit held that the district court’s claim construction was erroneous and reversed. On appeal, the Supreme Court held that the Federal Circuit must “review a district court’s ultimate interpretation of a claim term, as well as its interpretations of ‘evidence intrinsic to the patent,’ de novo and its subsidiary factual findings about extrinsic evidence for clear error,” in accordance with the Supreme Court’s decision in Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841-42 (2015).
The Federal Circuit began its analysis by noting that “it is not enough that the district court may have heard extrinsic evidence during a claim construction proceeding — rather, the district court must have actually made a factual finding in order to trigger Teva’s deferential review… [a]nd even then, we may nevertheless review the district court’s constructions de novo if the intrinsic record fully determines the proper scope of the disputed claim terms.
Giving claim terms their ordinary and customary meaning, as understood by a person of ordinary skill in the art, requires reading the claims in the context of the entire patent, and also if appropriate, in light of extrinsic evidence.
In reversing the district court, the Federal Circuit found that:
- The district court “improperly conflates the claimed virtual machine with applications written to run on the virtual machine.”
- The intrinsic evidence establishes that “that at the time the asserted patents were filed, the defining feature of a virtual machine was its ability to run applications that did not depend on any specific underlying operating system or hardware.”
- The specification teaches that the invention overcomes the problems of prior art because a virtual machine “creates a complete portable environment,” which “allows programs to operate independent of processor” and allows “[d]ifferent arrangements of hardware [to] be controlled by the same application software.”
- Statements made during prosecution are consistent with the ordinary and customary meaning of “virtual machine.”
- CardSoft’s arguments in support of the district court’s construction conflate the virtual machine with applications or instructions running on the virtual machine.
- Claim differentiation is “merely a presumption,” so dependent claims reciting “that instructions ‘do not require translation to the native software code of the microprocessor” do not “trump the clear import of the specification.”
VeriFone’s accused payment terminals run applications that depend on specific underlying software or hardware. CardSoft did not argue that VeriFone infringed under the correct construction. Consequently, the Federal Circuit granted VeriFone a judgment of no infringement as a matter of law.
Definitional language in the specification may be fully determinative of claim construction, and will take priority over the doctrine of claim differentiation. Therefore, care should be taken when drafting the specification to ensure that definitional language is accurate. Further, reliance should not be placed on the doctrine of claim differentiation and the presence of narrow dependent claims to support a claim construction broader than that mandated by definitional language in the specification.