Net MoneyIN, Inc. v. VeriSign, Inc.
88 U.S.P.Q. 2d (BNA) 1751, 545 F.3d 1359, 2008 U.S. App. LEXIS 21827 (2008)
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Rule of Law:
To invalidate a patent claim for anticipation under 35 U.S.C. § 102, a single prior art reference must disclose every element of the claimed invention, and those elements must be arranged or combined in the same way as recited in the claim.
Facts:
- Inventor Mark Ogram sought to create a new online payment model to address security deficiencies he perceived in existing protocols.
- Ogram's idea was to add a fifth entity, a 'payment processing' entity, to the conventional four-party transaction model (customer, merchant, merchant's bank, issuing bank).
- This new entity would receive customer credit card information, seek authorization from the bank, and then notify both the customer and the merchant.
- On February 5, 1996, Ogram filed a patent application for his system, which later issued as the '737 and '917 patents, assigned to his company, Net MoneyIN, Inc. (NMI).
- A 1995 prior art document, the 'Internet Keyed Payments Protocol' (iKP reference), disclosed two separate protocols for processing Internet credit card transactions.
- Neither of the two protocols disclosed in the iKP reference individually contained all the elements of NMI's patented system as claimed, but collectively the elements could be found across the two different examples.
Procedural Posture:
- Net MoneyIN, Inc. (NMI) sued VeriSign, Inc. and others in the U.S. District Court for the District of Arizona for infringement of the '737 and '917 patents.
- Following a claim construction hearing, the district court invalidated several claims containing means-plus-function limitations as indefinite under 35 U.S.C. § 112 ¶ 2 for lacking a corresponding structure in the patent specification.
- VeriSign moved for summary judgment, arguing that claim 23 of the '737 patent was invalid as anticipated by a prior art document known as the 'iKP reference.'
- The district court granted VeriSign's motion, finding that claim 23 was anticipated because all its elements could be found within the four corners of the iKP reference, even though they were in two separate examples.
- The district court entered a final judgment in favor of VeriSign.
- NMI (appellant) appealed the district court's judgment of invalidity to the U.S. Court of Appeals for the Federal Circuit, with VeriSign as the appellee.
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Issue:
Does a prior art reference that contains all the elements of a claimed invention, but discloses them in separate and distinct examples, anticipate the claim under 35 U.S.C. § 102 if the reference does not show the elements arranged or combined in the same way as in the claim?
Opinions:
Majority - Linn, Circuit Judge.
No. To anticipate a patent claim, a single prior art reference must disclose not only all the limitations of the claim within its four corners, but also all of those limitations arranged or combined in the same way as recited in the claim. The district court erred by finding anticipation after combining elements from two separate protocols disclosed in the iKP reference. While the reference contained all the necessary elements, it did not disclose a single system with those elements 'arranged as in the claim.' Differences between a prior art reference and a claimed invention, however slight, raise the question of obviousness under § 103, not anticipation under § 102, which requires that the invention be 'identically disclosed.' The court also affirmed the invalidity of other patent claims under 35 U.S.C. § 112 ¶ 2 because they were written in means-plus-function format for a computer-implemented invention but the patent specification failed to disclose a specific algorithm for performing the claimed function, disclosing only a general-purpose computer.
Analysis:
This decision clarifies and strengthens the standard for patent anticipation under 35 U.S.C. § 102. It establishes that a defendant cannot prove anticipation by 'cobbling together' distinct teachings or separate embodiments contained within a single prior art reference. The ruling reinforces the high bar for anticipation, requiring the reference to be a complete blueprint of the invention as claimed, not merely a collection of its components. This strengthens the distinction between the novelty requirement of § 102 (identical disclosure) and the non-obviousness requirement of § 103 (combining or modifying prior art).
