Scott Daniels | July 7, 2011
Any judicial opinion that contains the word “chutzpah” is certain to contain some points of interest, at least for those not mentioned in the opinion. So it is in the case of Judge Kent Jordan’s grant of summary determination of invalidity in Stored Value Solutions v. Card Activation Technologies, 2011 U.S. Dist. LEXIS 71330 (D. Del., July 1, 2011). Stored Value (SVS) had sued Card Activation (CAT) for declaratory judgment that the latter’s U.S. Patent No. 6,032,859 was invalid over the prior art. The ‘859 patent claims a method for processing electronic transactions that involve an ATM card, prepaid debit card, or phone card.
Before the court was SVS’s motion for summary judgment that the ‘859 patent was invalid over certain prior art references. Both parties must have been surprised when the Judge granted summary that the ‘859 claims were invalid for failure of the specification to provide written description support.
Judge Jordan pointed to an earlier reexamination of the ‘859 patent where claims 20 and 29 – that recited an initial step of “entering an authorization code” and a later step of “entering confirmation of the sales transaction data by a customer” – were rejected over a prior art reference. CAT traversed the rejection by amending claims 20 and 29 to recite two sub-steps from dependent claims 21 and 32, specifically, the two sub-steps constituting the initial step of “entering an authorization code” already recited in claims 20 and 29. These were the sub-steps of “entering the clerk authorization code” and “entering the customer authorization code.” Judge Jordan complained that:
CAT did not, however, merely suggest replacing the “entering an authorization code” step in the independent claims with that of entering both the clerk and the customer authorization codes. [Rather,] it added both steps to the independent claims. Whatever may have been the motivation for that addition, it resulted in claims 20 and 29 as written today, which require three separate and distinct codes to be entered and a customer to confirm the sales transaction data entered by a clerk. (Emphasis added).
Judge Jordan thus found that claims 20 and 31, as amended in the reexamination, require four relevant steps: the initial step of “entering a customer authorization code,” the sub-step of “entering a clerk authorization code,” the sub-step of “entering a customer authorization code,” and the final step of “entering confirmation of the sales transaction data by a customer.”
Judge Jordan then noted that the ‘859 specification “does not disclose any one method that includes all three of the code entering steps or any one method that includes all three of the code entering steps [plus] the sales transaction data confirmation step” (emphasis added). In other words, the ‘859 specification does not disclose a method comprising both the initial step of “entering a customer authorization code,” the two sub-steps of “entering a clerk authorization code,” the sub-step of “entering a customer authorization code” that comprise that initial step.
Because no single method for processing debit purchase transactions in which those four steps are included is described, the written description in the ‘859 patent does not describe the methods claimed in independent claims 20 and 29 sufficiently to allow a reasonable jury to determine that those claims are supported by a written description that would “convey with reasonable clarity to those skilled in the art that, as of the filing date sought, [the patentee] was in possession of the invention.”
Accordingly, the Judge granted summary judgment that the claims in question were invalid under 35 U.S.C. § 112, ¶ 1, for lack of written description support in the specification.
CAT had objected to Judge Jordan’s sua sponte consideration of the written description support issue because that issue had not been raised by SVS. Judge Jordan was not sympathetic: “all of this additional labor has been a result of CAT’s decision to amend its claims during reexamination, it [therefore] takes some chutzpah to mount those objections….” In view “of the additional discovery and briefing I ordered, CAT has had a full opportunity to address the written description issue here.” Further, “it was CAT’s actions during the ex parte reexamination of the ‘859 patent, which concluded more than a year after the filing of the original complaint, that has created the written description problem now at issue. Thus, it would be unjust to say that SVS has waived its right to assert that claims 20 and 29 of the ‘859 patent are invalid under § 112, ¶ 1.”