Paymentone Corporation v. Zong, Inc

Filing 135

CLAIM CONSTRUCTION ORDER: Case Management Statement due by 9/9/2013. Case Management Conference set for 9/16/2013 02:00 PM in Courtroom 5, 2nd Floor, Oakland. Signed by Judge Yvonne Gonzalez Rogers on 8/2/13. (kk, COURT STAFF) (Filed on 8/2/2013)

1
2
3

UNITED STATES DISTRICT COURT

4

NORTHERN DISTRICT OF CALIFORNIA

5
6
7

PAYMENTONE CORPORATION,

Case No.: 11-cv-02186-YGR

8

Plaintiff,

CLAIM CONSTRUCTION ORDER

9
10

Northern District of California

United States District Court

11
12
13
14
15
16
17
18
19

v.
PAYPAL, INC.,
Defendant.

PaymentOne Corporation (“PaymentOne”) alleges infringement of three patents: (1) U.S.
Patent No. 7,080,049 (“’049 Patent”); (2) U.S. Patent No. 7,848,500 (“’500 Patent”); and (3) U.S.
Patent No. 7,848,504 (“’504 Patent”) (collectively, “PaymentOne’s Patents”). PayPal, Inc.
(“PayPal”) filed a counterclaim seeking a declaration of non-infringement and invalidity for each of
PaymentOne’s Patents, and alleging infringement of its own patent, U.S. Patent No. 5,757,917 (“’917
Patent” or “PayPal’s Patent”). In response to PayPal’s infringement claim, PaymentOne
counterclaimed seeking a declaration of invalidity and non-infringement of PayPal’s Patent.

20

The parties request that the Court construe nine claim terms/phrases from the four patents-in21

suit. On October 5, 2012, the parties provided a technology tutorial. (Dkt. No. 119.) The Court held
22

a claim construction hearing on December 19, 2012. (Dkt. No. 128.)
23

Based upon the papers submitted, the arguments of counsel, and for the reasons set forth
24

below, the Court provides the following claim construction.
25
26
27
28

1

I.

TERMS/PHRASES REQUESTED FOR CONSTRUCTION
The parties seek construction of the following claim terms/phrases:

2
3

NO.

4

(1)

“communication line”

(2)

“subscriber line”

(3)

“wherein payment is routed to financial card gateway if a validation module
invalidates the transaction” / “selectively route processing of the transaction to a
financial instrument gateway in the event of a validation process not validating the
subscriber line”

(4)

“financial card gateway” / “financial instrument gateway”

(5)

“automatically detecting an event indicative of an option to charge the second
transaction to the user using an alternative payment method” / “to detect,
automatically, an event indicative of an option to charge the second transaction to
the user using an alternative payment method”

12

(6)

“billing telephone number (BTN)” / “BTN”

13

(7)

“determine [first/second] reference subscriber data”

(8)

“the first reference subscriber data corresponds to the second reference subscriber
data” / “the second subscriber data corresponding to the first reference subscriber
data”

(9)

“secure part of said computer system”

5
6
7
8
9
10

Northern District of California

United States District Court

11

14
15
16

DISPUTED CLAIM TERM/PHRASE

17

(Amended Joint Claim Construction Statement & Prehearing Statement [“Am. Joint CC Statement”

18

(Dkt. No. 123)] at 3–7.)
To date, the parties have agreed to the construction of certain terms/phrases.1 (Am. Joint CC

19
20

Statement at 2; Reporter’s Transcript of Proceedings dated Dec. 19, 2012 [“Transcript” (Dkt. No.

21

128)] at 93.) The parties have provided a list of additional terms not requiring construction at this

22

time. (Am. Joint CC Statement at 8–9.)2

23
1

24
25
26
27
28

Specifically, the parties stipulate that: (1) “automatically” means “without human intervention”;
(2) “wherein the second database is distinct from the first database” means “wherein the first and
second databases are separate databases”; (3) “first [/second] database” does not require construction;
and (4) “comparing the first reference subscriber data to the second reference subscriber data” and
“compare the first reference subscriber data to the second reference subscriber data” shall be given
their ordinary meaning.
2

The Court previously issued an order stating that it would construe no more than fourteen terms at
claim construction—six joint terms and an additional four terms per party. (Dkt. No. 95.) In their
2

1

II.

RELEVANT FRAMEWORK FOR CLAIM CONSTRUCTION
Claim construction is a matter of law to be decided by the Court. Markman v. Westview

2
3

Instruments, Inc., 517 U.S. 370, 387 (1996) (Determination of infringement is a two-step analysis:

4

first, the Court determines the scope and meaning of the claims; second, the properly construed claims

5

are compared to the accused device.). “[T]he role of a district court in construing claims is . . . to

6

give meaning to the limitations actually contained in the claims, informed by the written description,

7

the prosecution history if in evidence, and any relevant extrinsic evidence.” American Piledriving

8

Equipment, Inc. v. Geoquip, Inc., 637 F.3d 1324, 1331 (Fed. Cir. 2011). “Claim construction is a

9

matter of resolution of disputed meanings and technical scope, to clarify and when necessary to

Northern District of California

explain what the patentee covered by the claims, for use in the determination of infringement.” U.S.

11

United States District Court

10

Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1568 (Fed. Cir. 1997). Thus, claim terms need only

12

be construed “to the extent necessary to resolve the controversy.” Wellman, Inc. v. Eastman Chemical

13

Co., 642 F.3d 1355, 1361 (Fed. Cir. 2011) (citing Vivid Techs., Inc. v. American Science & Eng’g,

14

Inc., 200 F.3d 795, 803 (Fed. Cir. 1999).3
The starting point in a claim construction analysis is the language of the claims themselves.

15
16

These define the invention that the patentee may exclude others from practicing. Phillips v. AWH

17

Corp., 415 F.3d 1303, 1312–13 (Fed. Cir. 2005). The general rule is to construe a claim term in a

18

manner consistent with its “ordinary and customary meaning,” which is “the meaning that the term

19

would have to a person of ordinary skill in the art in question at the time of the invention.” Id. at

20

1312.

21
22

Am. Joint CC Statement, the parties stated that “[t]he remaining disputed terms are reserved for future
hearings.” The Court notes it has not authorized any additional claim constructions in this action.

23
3

24
25
26
27
28

Once the meaning of a term used in a claim has been determined, the same meaning applies to that
term for all claims in which the same term appears. Inverness Med. Switzerland GmbH v. Princeton
Biomeditech Corp., 309 F.3d 1365, 1371 (Fed. Cir. 2002). After a term is construed, the Court’s
construction becomes the legally operative meaning of the disputed terms that governs further
proceedings in the case. See Chimie v. PPG Indus., Inc., 402 F.3d 1371, 1377 (Fed. Cir. 2005).
However, “district courts may engage in a rolling claim construction, in which the court revisits and
alters its interpretation of the claim terms as its understanding of the technology evolves.” Pressure
Products Medical Supplies, Inc. v. Greatbatch Ltd., 599 F.3d 1308, 1316 (Fed. Cir. 2010).

3

1

“There are only two exceptions to this general rule [that a claim term has its ordinary and

2

customary meaning]: 1) when a patentee sets out a definition and acts as his own lexicographer, or 2)

3

when the patentee disavows the full scope of a claim term either in the specification or during

4

prosecution.” Thorner v. Sony Computer Entm’t Am. LLC, 669 F.3d 1362, 1365 (Fed. Cir. 2012)

5

(quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1580 (Fed. Cir. 1996)). “[A] claim term

6

also will not have its ordinary meaning if the term ‘chosen by the patentee so deprive[s] the claim of

7

clarity’ as to require resort to the other intrinsic evidence for a definite meaning.” CCS Fitness, Inc. v.

8

Brunswick Corp., 288 F.3d 1359, 1367 (Fed. Cir. 2002) (quoting Johnson Worldwide Assocs., Inc. v.

9

Zebco Corp., 175 F.3d 985, 990 (Fed. Cir. 1999)).

10

Claims must be read in view of the specification, of which they are a part and in a manner

Northern District of California

United States District Court

11

consistent with the patent’s specification. See Markman v. Westview Instruments, Inc., 52 F.3d 967,

12

979 (Fed. Cir. 1995), aff’d, 517 U.S. 370 (1996). The specification may act as a sort of dictionary,

13

which explains the invention and may define terms used in the claims. Id. The Court also should

14

consider the patent’s prosecution history, if it is in evidence. Id. at 980. The prosecution history

15

may “inform the meaning of the claim language by demonstrating how the inventor understood the

16

invention and whether the inventor limited the invention in the course of prosecution, making the

17

claim scope narrower than it would otherwise be.” Phillips, 415 F.3d at 1317 (citing Vitronics

18

Corp., 90 F.3d at 1582–83); see also Chimie, 402 F.3d at 1384 (“The purpose of consulting the

19

prosecution history in construing a claim is to exclude any interpretation that was disclaimed during

20

prosecution.”) (internal quotations omitted).

21

Various doctrines of claim construction are implicated by the parties’ arguments below.

22

“‘[C]laim differentiation’ refers to the presumption that an independent claim should not be

23

construed as requiring a limitation added by a dependent claim.” Curtiss-Wright Flow Control

24

Corp. v. Velan, Inc., 438 F.3d 1374, 1380 (Fed. Cir. 2006); Phillips, 415 F.3d at 1315 (“[T]he

25

presence of a dependent claim that adds a particular limitation gives rise to a presumption that the

26

limitation in question is not present in the independent claim.”); see Nazomi Commc’ns, Inc. v. Arm

27

Holdings, PLC., 403 F.3d 1364, 1370 (Fed. Cir. 2005) (claim differentiation means that limitations

28

stated in dependent claims are not to be read into the independent claim from which they depend).

4

1

“[R]eading an additional limitation from a dependent claim into an independent claim would not

2

only make that additional limitation superfluous, it might render the dependent claim invalid.”

3

Curtiss-Wright, 438 F.3d at 1380.
“Under the doctrine of prosecution disclaimer, a patentee may limit the meaning of a claim

4
5

term by making a clear and unmistakable disavowal of scope during prosecution.” Purdue Pharma

6

L.P. v. Endo Pharmaceuticals Inc., 438 F.3d 1123, 1136 (Fed. Cir. 2006) (citing Seachange Int’l,

7

Inc. v. C-COR Inc., 413 F.3d 1361, 1372–73 (Fed. Cir. 2005) and Omega Eng’g, Inc. v. Raytek

8

Corp., 334 F.3d 1314, 1323–26 (Fed. Cir. 2003)). A patentee may disavow the scope of the

9

meaning of a claim term by, for example, clearly characterizing the invention in a way to try to

Northern District of California

overcome rejections based on prior art. See, e.g., Microsoft Corp. v. Multi-Tech Sys., Inc., 357 F.3d

11

United States District Court

10

1340, 1349 (Fed. Cir. 2004) (limiting the term “transmitting” to require direct transmission over

12

telephone line because the patentee stated during prosecution that the invention transmits over a

13

standard telephone line, thus disclaiming transmission over a packet-switched network).4 Where the

14

patentee has unequivocally disavowed a certain meaning to obtain the patent, the doctrine of

15

prosecution disclaimer attaches and narrows the ordinary meaning of the claim congruent with the

16

scope of the surrender. Cordis Corp. v. Medtronic Ave, Inc., 511 F.3d 1157, 1177 supplemented sub

17

nom. Cordis Corp. v. Boston Scientific Corp., 275 F. App’x 966 (Fed. Cir. 2008) (“an applicant can

18

make a binding disavowal of claim scope in the course of prosecuting the patent, through arguments

19

made to distinguish prior art references”) (citing Conoco, Inc. v. Energy & Envtl. Int’l, L.C., 460

20

F.3d 1349, 1364 (Fed. Cir. 2006); Pharmacia & Upjohn Co. v. Mylan Pharms., Inc., 170 F.3d 1373,

21

1376 (Fed. Cir. 1999); and Litton Sys., Inc., v. Honeywell Inc., 140 F.3d 1449, 1458 (Fed. Cir.

22

1998)).

23
24
25
26
27
28

4

See Alloc v. Int’l Trade Comm’n, 342 F.3d 1361, 1372 (Fed. Cir. 2003) (finding the patentee
expressly disavowed floor paneling systems without “play” because the applicant cited the feature
during prosecution to overcome prior art); Bell Atl. Network Servs. v. Covad Commc’ns Group, Inc.,
262 F.3d 1258, 1273 (Fed. Cir. 2001) (limiting operation of the “transceiver” to the three stated
modes because of clearly limiting statements made by the patentee to try to overcome a prior art
rejection).

5

1
2

III.

PAYMENTONE’S PATENTS: CLAIM CONSTRUCTION ANALYSIS
A.

First and Second Claim Terms/Phrases – “communication line” (’049 Patent,
claims 8 & 9) and “subscriber line” (’049 Patent, claims 9 & 22)

3

The parties’ dispute on these terms focuses on whether it is appropriate to limit
4
5

“communication line” and “subscriber line” to a physical connection by wire or cable, or whether the
connection may be wireless. The parties’ proposed constructions are shown below with the key

6

differences emphasized:
7
8
9
10

Northern District of California

United States District Court

11
12
13
14
15
16
17
18
19

PAYMENTONE’S PROPOSED
CONSTRUCTION
communication line a communication channel that
facilitates wireless or physical
communication between a
vendor and an electronic
terminal over a wireless or
physical communication
network
subscriber line
a communication channel in the
form of a user’s wireless
communication line, digital
subscriber line, or cable line
that facilitates wireless or
physical communication
between a vendor and an
electronic terminal over a
wireless or physical
communication network
TERM/PHRASE

1.

PAYPAL’S PROPOSED
CONSTRUCTION
a wire or cable for which a
customer has an account with a
local telephone company that
physically connects the
customer’s electronic terminal to
the local telephone company
a telephone wire or cable for
which a customer has an account
with a local telephone company
that physically connects the
customer’s telephone or personal
computer to the local telephone
company

Parties’ Positions

20

PaymentOne argues that based on the plain meaning of the terms, the teachings of the
21
22
23

specification, and the doctrine of claim differentiation, neither term is limited to a “wire or cable”
that “physically connects” a customer’s electronic terminal to the local telephone company. The
Court outlines each of PaymentOne’s three principal arguments in turn:

24

First, the express language of independent claims 8 and 22 does not restrict the meaning to
25

landlines, telephone lines, cables, or any form of a wire connection. PaymentOne concedes that the
26
27

“communication line” or “subscriber line” can be a cable or wire connection, but it need not be. A
person of ordinary skill in the art (“POSITA”) in 2001 would have understood it can be either

28

6

1

wireless or wired, and the word “line” itself has a plain and ordinary meaning that includes both

2

groups.

3

Second, PaymentOne argues the express language in the specification teaches that the

4

electronic terminal (item 24 in Fig. 1, reproduced below) from which a consumer initiates a

5

transaction may be a cellular telephone. The specification at 64:28–33 provides: “In alternative

6

embodiments, the machine may comprise a network router, a network switch, a network bridge,

7

Personal Digital Assistant (PDA), a cellular telephone, a web appliance or any machine capable of

8

executing a sequence of instructions that specify actions to be taken by that machine.” (Emphasis

9

supplied.) Thus, communications may logically and technically occur over a wireless network.

Northern District of California

PaymentOne argues that a POSITA would recognize from this explicit teaching that

11

United States District Court

10

communications may be wireless.

12
13
14
15
16
17
18
19
20
21

Further support in the specification exists for a broad construction of an electronic terminal because

22

the specification describes a PC as an “exemplary form[]” of a computer system that could execute

23

the instructions therein. (See ’049 Patent, 66:24–28.) In other words, the patent specification

24
25
26
27
28

contemplates that many machines can be item 24 and the Court cannot impose one embodiment (that
which is connected to the local phone company) from the specification as a limitation to claims
across the board.
Third, the doctrine of claim differentiation precludes a limitation to a telephone connection in
independent claim 8 based on qualifying language in dependent claim 9. These claims provide:

7

Claim 8

Claim 9

A transaction processing system for processing a
transaction between a vendor and an electronic terminal
connected via a communication line to a communication
network, the system including:

A system as claimed in
claim 8, in which the
communication line is a
subscriber line and the
unique identifier is a
telephone number
associated with the
subscriber line.

1
2
3
4

an application interface for providing a user, via the
electronic terminal used to carry out the transaction,
with an option to select payment for the transaction
from an account associated with the communication
line to which the electronic terminal is connected,
and receiving a user request entered into the terminal
to process payment from the account; and

5
6
7
8
9

a modification module connected to the application
interface, the modification module generating a
record which includes a unique identifier associated
with the communication line and communicating
the record to a validation module which validates the
transaction based on data associated with the unique
identifier, wherein payment is routed to financial
card gateway if a validation module invalidates the
transaction.

10

Northern District of California

United States District Court

11
12
13
14
15

(Emphasis supplied.)

16

Reading claims 8 and 9 together, PaymentOne argues that an association with a telephone

17

number cannot be imported to the broader “communication line” of claim 8. Further, if the patentee

18

had wanted to “associate” a “telephone account” with a communication or subscriber line, it knew

19

how to use such language in the claims. (Compare ’049 Patent, claim 8 (“an account associated

20

with the communication line to which the electronic terminal is connected”) with claim 9

21

(“telephone number associated with the subscriber line”).)5

22

PayPal argues that PaymentOne’s proposed construction cannot be correct because the

23

underlying premise for the ’049 Patent and the teachings therein necessarily require a landline and

24

did not include wireless. PayPal raises three principal arguments in support: first, PayPal argues that

25
26
27
28

5

PaymentOne also argues that the inclusion of similar qualifications in other claims show that a
limitation to a “telephone” could very well have been added if the patentee had so intended. (See ’049
Patent, claims 17 (“telephone account associated with a subscriber line”), 21 (“an account associated
with the subscriber line”) & 27 (“a telephone account associated with the subscriber line”).)

8

1

the ’049 Patent was directed to “bill-to-landline”—that is, it purported to allow consumers making

2

transactions via the internet to charge their home telephone number rather than a credit card. (See

3

’049 Patent, 4:59–64 (“[M]any users are unwilling to submit financial card information to vendors,

4

inter alia, for security reasons. Further, many users who have access to the Internet do not in fact

5

possess financial cards (hereinafter referred to as credit cards) and are thus unable to transact via the

6

Internet.”).) In order to provide greater security, “various checks” would be performed to validate

7

the “subscriber line.” (’049 Patent, 7:34–36; see id., 18:40–54.) The “communication line” may be

8

the same or may be different from the “subscriber line,” but in essence, it is the line that

9

communicates with the internet. (See ’049 Patent, Abstract.)

10

Second, PayPal argues the ’049 Patent uses terms that are specific to landlines. (See ’049

Northern District of California

United States District Court

11

Patent, 21:46–58.) It also identifies examples in the specification of numbers being either

12

“[u]nbillable” or “[d]enied” in the validation process because they were from cellular telephones.

13

(See excerpts from ’049 Patent, Tables 2 & 3 (emphasis supplied).)

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

9

1
2
3
4
5
6

PayPal concludes that these codes show there was no infrastructure for billing cellular telephones in

7

2001.6 PayPal further contrasts “bill-to-landline” in 2001 with the state of cellular phones in the

8

2006–2007 timeframe, when the ’500 and ’504 Patents were filed, noting that these patents

9

explicitly state in the specification that a “cellular telephone . . . may be used to initiate the

10

communication.” (’500 Patent, 2:1–4; ’504 Patent, 4:13–16.)
Third, PayPal asserts that despite the specification’s alternative embodiment of a cellular

Northern District of California

United States District Court

11
12

telephone, this reference is too vague to support PaymentOne’s construction because (i) it is contrary

13

to the teachings of the patent that necessarily require a landline, and (ii) it does not provide an

14

explanation of how the cellular telephone embodiment would be implemented. In sum, a catch-all

15

cannot be used to teach away from the entire underlying premise of the patent.
Court’s Construction

16

2.

17

The Court is persuaded that PayPal’s construction accurately represents the teaching in

18

the ’049 Patent, which contemplated that the electronic terminal from which a consumer initiated a

19

transaction was a computer connected to a telephone landline. While a technical term in a patent

20

claim should be construed in accordance with its description in the specification (Phillips, 415 F.3d at

21

1315), each party here focuses on the most helpful portions of the specification to support its

22

respective position. The only support for PaymentOne’s construction is the referenced embodiment at

23

64:28–33, which provides that rather than a PC (item 24) “the machine may comprise . . . a cellular

24

telephone.” (Emphasis supplied.) In addition, there is the specification language at 66:24–28

25

confirming that the PC is an “exemplary form” of the computer system claimed. Other than the

26

6

27
28

PaymentOne responds that the examples of “[u]nbillable” or “[d]enied” codes associated with
cellular telephones in the tables cannot be used to limit claims themselves, particularly where there is
no indication from the tables that all cellular devices are categorically declined. PaymentOne posits
that the reason for rejection is not dispositive based on these tables; in other words, other reasons may
have contributed to the reason that the transaction was declined.
10

1

singular reference to a cellular telephone, the specification does not otherwise teach how wireless or

2

cellular embodiments were contemplated. On the other hand, PayPal emphasizes certain instances in

3

the tables where cellular telephones received unbillable or denied codes in the validation process.

4

While PaymentOne argues that there is no support that cellular telephones were categorically denied

5

or declined as unbillable, the Court does not find this argument to be persuasive in light of the

6

description and explanation contained in the tables. Rather, the express teachings of the patent are

7

directed to landline telephones and PaymentOne has failed to identify how a POSITA would

8

understand the claims to apply to cellular embodiments.7
Based on the foregoing analysis, the Court provides the following constructions8:

9

“communication line” means “a communication channel over a wire or cable between a

10

Northern District of California

United States District Court

11

vendor and an electronic terminal over a physical communication network”; and
“subscriber line” means “a communication channel over a wire or cable that facilitates

12
13

communication between a customer and a telephone company.”
B.

14
15
16

Third Claim Term/Phrase – “wherein payment is routed to financial card
gateway if a validation module invalidates the transaction” / “selectively route
processing of the transaction to a financial instrument gateway in the event of a
validation process not validating the subscriber line” (’049 Patent, claims 8 & 22)

The parties dispute whether the process described in these terms/phrases must occur

17
18

automatically. The parties’ proposed constructions are shown below with the key differences

19

emphasized:

20
21
22
23
24

7

25

While claim 9 expressly references “a telephone number associated with the subscriber line,” this
does not compel the conclusion that claim 8 necessarily embodies cellular telephones.

26

8

27
28

While the Court’s constructions become the legally operative meaning of the disputed terms in
future proceedings in this case, the Court reserves the right to modify its claim constructions prior to
trial, if necessary and appropriate. See Pressure Products Medical Supplies, 599 F.3d at 1316 (“[a]
district court[] may . . . revisit[] and alter[] its interpretation of the claim terms as its understanding of
the technology evolves”).
11

1
2
3
4
5
6
7
8
9
10

Northern District of California

United States District Court

11

PAYPAL’S PROPOSED
CONSTRUCTION
wherein payment is
wherein payment is routed to a
routed to financial
financial card gateway
card gateway if a
automatically when a validation
validation module
module determines that the
invalidates the
transaction cannot be charged
transaction
to the telephone bill
selectively directing
selectively route
when a validation process
processing of the
processing of the transaction determines that the
transaction to a
to a Financial Instrument
transaction cannot be charged
financial instrument Gateway in the event of a
to the telephone bill of the
gateway in the
validation process
subscriber, automatically route
event of a
nullifying the Subscriber
processing of the transaction to a
validation process
Line
financial instrument gateway
not validating the
subscriber line
TERM/PHRASE

PAYMENTONE’S PROPOSED
CONSTRUCTION
wherein payment is
directed to Financial Card
Gateway if the validation
module nullifies the
transaction

Parties’ Positions

12

1.

13

PaymentOne argues that based on plain and ordinary meaning, PayPal’s proposed use

14

of “automatic” cannot be reconciled with the claim language of “selectively routing.” (See Plaintiff’s

15

Opening Claim Construction Brief [“PaymentOne’s Opening Brief” (Dkt. No. 105)] at 9 (citing

16

Aventis Pharma S.A. v. Hospira, Inc., 675 F.3d 1324, 1330 (Fed. Cir. 2012) and Thorner v. Sony

17

Computer Entm’t America LLC, 669 F.3d 1362, 1365–66 (Fed. Cir. 2012) for the proposition that the

18

“stringent” and “exacting” standard for deviating from ordinary scope of claims is not met).) Thus,

19

no support exists for PayPal’s proposed limitation that the processes occur automatically.

20
21
22
23
24
25
26
27
28

Next, PaymentOne argues that the prosecution file history of the ’049 Patent supports its
construction for two reasons. (See Declaration of Katherine K. Lutton in Support of PayPal’s
Responsive Claim Construction Brief [“Lutton Decl.” (Dkt. No. 109-1)], Ex. G.) First, the January
18, 2005 Notice of Allowance of the ’049 Patent reflects that the PTO allowed the claims (thenpending claims 19 and 38, which became issued claims 8 and 22) as amended by the PTO examiner.
(Id. at ECF pp. 6–8.) The amendments included the phrases that the parties now ask the Court to
construe. The PTO examiner’s statement of reasons in the Notice of Allowance stated as follows:
As per independent claims 1, 15, 19, 29, 34, and 45 the closest prior art of record,
Grandcolas et al. U.S. Patent 6,332,131 B1, Chen U.S. Patent 5,978,775 A, and
Bouanaka et al. U.S. Patent 6,023,502 A taken either individually or in combination

12

1
2
3
4
5
6
7
8
9
10

Northern District of California

United States District Court

11
12
13
14
15
16
17

with other prior art of record fails to teach or suggest providing a user with an option,
via an electronic terminal used to carry out the transaction, to select payment for the
transaction from a telephone account associated with a subscriber line to which the
electronic terminal is connected, receiving a user request entered into the electronic
terminal to process payment from the telephone account, investigating data associated
with the subscriber line including retrieving information form [sic] a line identification
database (LIDB) and performing a validation process, selectively approving the
transaction dependent upon an outcome of the investigation and selectively routing
processing of the transaction to a financial instrument gateway in the event the
validation of the subscriber line is not validated.
The specific allowable feature, which distinguishes the present invention over the prior
art is that during the process of authorizing a payment utilizing the telephone account,
if the subscriber line can not [sic] be validated/verified, the system would selectively
route processing of the transaction to a financial instrument gateway. The prior art
stops the process and notifies the user of the failure to validate instead of automatically
going to another form of payment.
(Id. at ECF pp. 9–10.)
PaymentOne emphasizes the fact that the PTO examiner explained that prior art “stop[ped] the
process and notifie[d] the user of the failure to validate instead of automatically going to another form
of payment.” (Id. at ECF p. 10.) “[T]his is much different from saying that the systems of claims 8
and 22 require the automatic rerouting of a payment or transaction processing without user
intervention if an initial transaction is not validated.” (PaymentOne’s Opening Brief at 8 (emphasis
supplied).) PaymentOne asserts that the most reasonable interpretation of the allowed claims is that

18

they were approved because they offered some or any form of alternative payment, unlike prior art

19

which offered no such option and stopped the transaction entirely. (Id. at 8–9.)

20

Second, PaymentOne emphasizes that despite using the word “automatic” in the statement of

21

reasons, the PTO examiner elected not to include that language in the amended claims themselves. If

22

he intended to add such a limitation, he easily could have used such language in the claims.

23

(Plaintiff’s Reply Claim Construction Brief [“PaymentOne’s Reply Brief” (Dkt. No. 121)] at 6.) The

24

use of the word in other claims of the patent is further support that the decision not to use the word in

25

the claims was deliberate.

26

PayPal counters a prosecution disclaimer occurred and is reflected in the Notice of Allowance.

27

PayPal contends that the routing referenced in the claims necessarily involves a causal relationship—

28

if or in the event of an invalidation, then the software must take the action of routing processing to a

13

1

financial card gateway. (PayPal, Inc.’s Responsive Claim Construction Brief [“PayPal’s Responsive

2

Brief” (Dkt. No. 109)] at 13–14; Transcript at 65–66 (software and computer systems work by

3

automatic steps or decision trees).) PayPal’s primary intrinsic evidence is the “automatic” language

4

contained in the PTO examiner’s statement of reasons, which PaymentOne accepted as part of the

5

claim in order to get the patent. This explanation “informs the meaning of the disputed claim

6

language” and demonstrates that the patentee “understood the claims to require a causal relationship”

7

between the steps. (Id. at 15.) The “automatic” aspect is what distinguished the claims from prior art.

8

(Id.)

the claims. Specifically, claim 22 uses the word “selectively” twice to address two conditional steps9:

11

Northern District of California

PayPal next contends that “selectively” and “automatically” can be reconciled in the context of

10

United States District Court

9

(i) that transactions will be either validated or invalidated based on an investigation, and (ii) only

12

those that are not validated will proceed to the routing process to a financial instrument gateway.

13

(PayPal’s Responsive Brief at 15–16.) In other words, a selective sub-set of transactions (those where

14

the primary payment by telephone number are invalidated) are automatically routed. See American

15

Calcar, Inc. v. Am. Honda Motor Co., Inc., 651 F.3d 1318, 1339–40 (Fed. Cir. 2011) (agreeing with

16

district court’s claim construction that “‘[i]n response to’ connotes that the second event occur in

17

reaction to the first event”).10 No further action or information is needed once invalidated for this

18

routing to occur—i.e., it is not optional, it is automatic.

19

9

20
21
22
23
24
25
26
27
28

Claim 22 of the ’049 Patent recites:
A computer program product including a medium readable by a processor, the medium
carrying instructions which, when executed by the processor, cause the processor to:
provide a user, via an electronic terminal used to carry out a transaction, with an
option to select payment for the transaction from a telephone account associated
with a subscriber line to which the electronic terminal is connected;
receive a user request entered into the electronic terminal to process payment from
the telephone account;
investigate data associated with the subscriber line;
selectively approve the transaction dependent upon an outcome of the investigation;
and
selectively route processing of the transaction to a financial instrument gateway in the
event of a validation process not validating the subscriber line.

10

In American Calar, the Federal Circuit explained: “The language of the claim itself suggests that
when a vehicle condition is detected, the processing element identifies a provider automatically as
14

Court’s Construction

1

2.

2

The Court is not persuaded by PayPal’s argument that “automatic” is necessary to

3

clarify that there is a causal relationship between the event of the transaction being invalidated and

4

routing. The claim language itself explains that routing only occurs “if” or “in the event of”

5

invalidation. As such, the word “automatic” is not necessary for the purpose of “clarity,” as PayPal

6

argues.

7

Further, defining the term to include “automatic” is potentially confusing. The parties have

intervention.” (Am. Joint CC Statement at 2.) As a consequence and for consistency, a transaction

10

under PayPal’s construction would be “routed” without human intervention or the transaction would

11

Northern District of California

stipulated that the term “automatically” (as used in the ’500 Patent) means “without human

9

United States District Court

8

be processed without human intervention. Notably, the PTO examiner’s failure to include

12

“automatically” in the amended claim language is significant. The examiner’s use of “automatically”

13

in the statement of reasons is consistent with the above—automatic refers to the fact that routing

14

occurs “if” or “in the event of” invalidation, compared to prior art which would have stopped the

15

process and notified the user of the failure to validate. The fact that the ’049 Patent proceeds beyond

16

the invalidation step, whether automatic or otherwise, seems to have been the distinguishing point

17

from the prior art. There is no evidence that the patentee intended to limit the invention to routing

18

that occurred “without human intervention.” See Phillips, 415 F.3d at 1317 (prosecution history

19

“provides evidence of how the PTO and the inventor understood the patent” and “can often inform the

20

meaning of the claim language by demonstrating how the inventor understood the invention and

21

whether the inventor limited the invention in the course of prosecution, making the claim scope

22

narrower than it would otherwise be”) (citing Vitronics Corp, 90 F.3d at 1582–83).

23

Based on the foregoing, the Court provides the following construction:

24
25
26
27
28

opposed to requiring further user interaction. Further, the specification fails to disclose any
embodiment that requires any type of user interaction prior to identification of a service provider.
Thus, the court properly construed the claim terms ‘in response to’ and ‘when’ to require a cause-andeffect relationship.” 651 F.3d at 1340 (internal citation omitted).
15

1

“wherein payment is routed to financial card gateway if a validation module invalidates the

2

transaction” means “wherein payment is directed to a financial card gateway if a validation module

3

determines that the transaction cannot be charged to the telephone bill”; and

4

“selectively route processing of the transaction to a financial instrument gateway in the event

5

of a validation process not validating the subscriber line” means “selectively direct processing of the

6

transaction to a financial instrument gateway in the event that the transaction cannot be charged to the

7

telephone bill.”

8
9
10

Northern District of California

United States District Court

11
12
13
14
15

C.

Fourth Disputed Claim Term/Phrase – “financial card gateway” / “financial
instrument gateway” (’049 Patent, claims 8 & 22)

The substantive dispute over “financial card gateway” and “financial instrument gateway” is
whether the transaction must be directed to a user or purchaser’s specific credit or debit card. The
parties’ proposed constructions are shown below with the key differences emphasized:
TERM/PHRASE
financial card
gateway

PAYMENTONE’S PROPOSED
CONSTRUCTION
access point through which
payments can be made using
a financial card

16
17
18

financial
instrument
gateway

access point through which
payments can be made using
a financial instrument

19

PAYPAL’S PROPOSED CONSTRUCTION
an entry point to a financial card
provider system that processes
transactions involving a user or
purchaser’s credit or debit card
an entry point to a financial instrument
provider system that processes
transactions involving a user or
purchaser’s credit or debit card or
other financial instrument

20
21

The parties do not significantly dispute each other’s construction of an “access point” versus

22

“entry point.” Nor do the parties dispute that the transaction or payment is processed using the

23

financial card or financial instrument.
Parties’ Positions

24

1.

25

Both parties focus on dictionary definitions to support their respective positions.

26
27

PaymentOne relies on the Microsoft® Encarta College Dictionary and The American Heritage
Dictionary from 2001 and 2000, respectively, to show that a “gateway” is a generic access point.

28

16

1

(PaymentOne’s Opening Brief, Exs. 5 & 6.)11 It argues its construction is proper when these

2

definitions are read in conjunction with “financial card” and “financial gateway.”
Putting aside the dictionary definitions, PaymentOne argues no support exists to impose a

3
4

limitation to a specific financial card provider that processes transactions with a credit or debit card.

5

In fact, the patent itself describes how financial instruments beyond credit or debit cards can be used

6

for payment. (See ’049 Patent, 4:51–56 (“a user or purchaser using the electronic terminal 24 enters

7

financial card details, e.g., credit card, debit card, or any other financial instrument details . . .”); id.,

8

5:50–55 & 6:42–47 (stating option of paying by “bank account”).)
By contrast, PayPal contends that “financial card gateway” is a term of art, which requires

9

Northern District of California

that the gateway be related to a specific payment system. PayPal relies on the MasterCard merchant

11

United States District Court

10

glossary, which defines “MasterCard Payment Gateway (MPG)” as “[a] gateway hosted by

12

MasterCard and used for routing and settling commercial e-payments between buyers and suppliers.”

13

(Lutton Decl., Ex. H. at 3.) PayPal argues that this definition shows that the gateway must be

14

specific. It also argues that this definition trumps PaymentOne’s dictionary definitions, because the

15

MasterCard glossary reflects a definition from the relevant technological field, and PaymentOne

16

merely strings together generic dictionary definitions. (PayPal’s Responsive Brief at 16–17.)12
PayPal also refers to two portions of the specification to support its construction. First, the

17
18

’049 Patent at 4:57–58 states: “The credit card gateway 42 may then either accept or reject the

19

transaction.” Second, the ’049 Patent at 6:37–42 provides “[t]he module 32 checks to determine

20

whether or not a credit card number is present in the record and, if so, the record is communicated to

21

a credit card gateway for processing in a conventional fashion and the procedure terminates as

22
23
24
25

11

The Court notes that PaymentOne did not submit its exhibits by declaration as required by Civ. L.R.
7-5: “Factual contentions made in support of or in opposition to any motion must be supported by an
affidavit or declaration and by appropriate references to the record. Extracts from depositions,
interrogatory answers, requests for admission and other evidentiary matters must be appropriately
authenticated by an affidavit or declaration.”

26
12

27
28

PaymentOne counters that the MasterCard definition provided by PayPal does not contradict its
own construction. “A person of ordinary skill would recognize that a MasterCard Payment Gateway
is of course hosted by MasterCard, but would not expect that a generic gateway must also be hosted
by MasterCard.” (PaymentOne’s Opening Brief at 11 (emphasis in original).)
17

1

shown as step 102.” (Emphasis supplied.) PayPal concludes that these references support the

2

MasterCard definition.
Court’s Construction

3

2.

4

The Court finds that the language of the patent does not require reference to a specific

5

process. The term at issue is not particularly technical thereby requiring the narrow construction

6

offered by PayPal.

7

PayPal’s arguments are unavailing. The Court is not persuaded that a glossary, created by a

8

specific card company to refer to internal systems or processes, requires the Court to impose a

9

similarly narrow construction for the purposes of claim construction. Further, while Exhibit H

Northern District of California

appears to have been accessed in September 2012, there is no indication when this glossary or the

11

United States District Court

10

relevant definition was prepared, nor whether this glossary was publicly available in 2001.

12

The specification itself provides that options other than credit or debit cards exist for payment

13

of transactions. (’049 Patent, 4:53–56, 5:50–55 & 6:42–47.) Although these excerpts speak to the

14

providing an additional option of paying by “phone bill,” the possibility of other “financial

15

instruments” and “bank accounts” indicate that payment need not necessarily be as limited as PayPal

16

suggests. In sum, PayPal has not presented sufficient evidence to limit the claims to a specific credit

17

or debit card payment system where no such limitation exists in the claim or specification.

18

For the foregoing reasons, the Court provides the following constructions:

19

“financial card gateway” means an “access point through which payments can be made using

20
21
22
23
24
25

a financial card”; and
“financial instrument gateway” means “access point through which payments can be made
using a financial instrument.”
D.

Fifth Claim Term/Phrase – “automatically detecting an event indicative of an
option to charge the second transaction to the user using an alternative payment
method” / “to detect, automatically, an event indicative of an option to charge the
second transaction to the user using an alternative payment method” (’500
Patent, claims 1 & 17)

26

The parties initially disagree as to whether these phrases require construction. Next, the
27

parties dispute whether the phrase “indicative of an option” means the system must “prompt

28

18

1

presentation” of the option to charge the second transaction. The parties’ proposed constructions are

2

shown below with the key differences emphasized:

3

PAYMENTONE’S PROPOSED
CONSTRUCTION
No construction needed
automatically detecting an Automatically detecting an
event indicative of an
event relating to the option
option to charge the
to charge the second
second transaction to the
transaction to the user using
user using an alternative
an alternative payment
payment method
method
to detect, automatically, an To detect, automatically, an
event indicative of an
event relating to the option
option to charge the
to charge the second
second transaction to the
transaction to the user using
user using an alternative
an alternative payment
payment method
method
TERM/PHRASE

4
5
6
7
8
9
10

Northern District of California

United States District Court

11
12

PAYPAL’S PROPOSED
CONSTRUCTION
automatically detecting an event
that prompts presentation of
an option to the user to charge
the second transaction using an
alternative payment method
to detect, automatically, an event
that prompts presentation of
an option to the user to charge
the second transaction using an
alternative payment method

13

1.

14

PaymentOne contends that no construction is required because the plain meaning

15

speaks for itself—when a payment by telephone number is declined, the system detects an event

16

indicative of an option to charge the transaction to the user using an alternative payment method, such

17

as a credit card.

18

Parties’ Positions

PaymentOne agrees with PayPal that the specification does not explain the meaning of these

19

phrases, but notes there is language in the specification relevant to this construction. Namely, the

20

codes generated by the system in response to the optional use of a credit card are “an exemplary

21

description and explanation.” (’500 Patent, 11:28–30.) PaymentOne argues that PayPal’s proposal to

22

require an event that “prompts presentation” is unsupported because (i) the specification only referred

23

to “optional use” and (ii) that reference was intended as an example in the first place, not a mandate.

24

As to its own construction, PaymentOne argues that equating “an event indicative of an option to

25

charge” to “an event relating to the option to charge” stays true to the meaning of the claim term

26

without importing any additional limitations.

27
28

19

PayPal, on the other hand, argues there is no commonplace or self-evident meaning for “an

1
2

event indicative of an option to charge” and, as such, construction is necessary for a jury.13

3

PayPal bases its construction on language in the specification of the ’500 Patent, 11:33–12:30:

4

6

In the event of the subscriber line 17 failing the checks carried out on it, the system
10 provides optional use of a credit card and, accordingly, Table 2 sets out codes
which the system 10 generates in response to executing a standard credit card enquiry
for a particular transaction.

7

PayPal argues that, based on this language, the user has to be presented or provided with the option in

8

order for the user to choose the option. Thus, it is appropriate to construe the phrases such that the

9

system “prompts presentation of an option.” PayPal acknowledges there is no other language in the

5

10

specification that teaches what the claims mean with regard to these phrases.
Court’s Construction

Northern District of California

United States District Court

11

2.

12

The Court is not satisfied with either party’s construction. As to the proposed

13

constructions, the critical difference is how to construe what it means to “detect an event indicative of

14

an option . . . .” (Emphasis supplied.) In the limited context of the phrases proposed for construction,

15

“indicative of” is not readily understandable. The parties’ constructions, however, would do little to

16

aid a jury in understanding what it means for an event to be “indicative of” an option. Specifically,

17

the Court finds PaymentOne’s substitution of “relating to” for “indicative of” does not clarify the

18

intended meaning in any manner and that “relating to” is equally ambiguous. At the same time, the

19

Court is not persuaded that the specification supports a limitation that the system must “prompt

20

presentation of an option,” as PayPal proposes. The insertion of “prompt presentation” is likely to

21

confuse the jury to the extent that (i) the phrase itself lacks clarity, and (ii) a “prompt” has its own

22

meaning with respect to computers.
The Court believes that when read in the full context of the claims, a jury is more likely to

23
24

understand what it means for an event to be “indicative of” an option than when reading the proposed

25

phrase in a vacuum. Based on the entire claim language, it is clear that there are two transactions, the

26

first of which is received and charged to a subscriber account associated with the billing telephone

27
28

13

PayPal asserts PaymentOne’s construction is vague, provides no clarity regarding the event
“relating to” the option, and is not based on any evidence or reasoning.
20

1

number. The system detects a second transaction, but also detects that billing to the prior form of

2

payment—the account associated with the billing telephone number—has been declined. The system

3

detects that this is an event where the user can be provided with an option to charge the second

4

transaction to an alternative payment method, and the second transaction is charged to the alternative

5

payment method—not the subscriber account. The parties’ proposed constructions, however, do little

6

to clarify any step set forth in claims 1 and 17.

7

At this time, the Court has yet to conceive of alternative language that would remove any

8

potential ambiguity that exists from the phrase “indicative of” while remaining true to the intended

9

meaning of those claims. For these reasons, the Court declines to construe this term without prejudice

10

Northern District of California

United States District Court

11
12
13

to construe “indicative of” at an appropriate time prior to trial.
E.

Sixth Claim Term/Phrase – “billing telephone number (BTN)” / “BTN” (’500
Patent, claims 1, 10, 17 & 26 and ’504 Patent, claims 1, 43, 101, 102 & 107)

PayPal proposed an amended construction following the completion of claim construction

14

briefing. (Transcript at 80–82.) The parties submitted supplemental briefs on this term. Each party

15

presents a construction that it believes stays true to the claims in the patents. The parties’ proposed

16

constructions are shown below with the key differences emphasized:

17

TERM/PHRASE

18

“billing telephone
number (BTN)”
and “BTN”

19
20

1.
21

PAYMENTONE’S PROPOSED
PAYPAL’S PROPOSED
CONSTRUCTION
CONSTRUCTION
telephone number
telephone number billed for a
transaction
associated with a billing
account

Parties’ Positions

PaymentOne argues that PayPal’s amended construction attempts to narrow the

22

meaning of the term in contravention of the doctrine of claim differentiation. (Plaintiff PaymentOne
23
24
25
26
27
28

Corporation’s Response to PayPal, Inc.’s Revised Proposed Construction of the Terms “Billing
Telephone Number (BTN) / BTN” [“PaymentOne’s Supplemental BTN Briefing” (Dkt. No. 125)] at
2.) Specifically, PaymentOne asserts that PayPal imposes an overly-narrow requirement that “a
transaction recited in the claims in which the terms appear be billed to a ‘telephone number’ (i.e., a
telephone account).” (Id. at 2 (emphasis supplied).) Claim 1 of the ’500 Patent refers to “charging of
the first transaction to the subscriber account associated with the BTN.” Dependent claim 4 recites
21

1

“[t]he method of claim 1, wherein the subscriber account is a telephone account.” PaymentOne thus

2

argues that the subscriber account of claim 1 is not limited to a telephone account. In addition,

3

PaymentOne’s own construction that the telephone number is “associated with” a billing account is

4

supported because a comparison of claims 1 and 4 shows that the telephone number “can be

5

associated with types of accounts other than just telephone accounts (put otherwise, including but not

6

limited to telephone accounts).” (PaymentOne’s Supplemental BTN Briefing at 3.)
PayPal argues that plain meaning supports its construction: a billing telephone number is a

7
8

telephone number that is billed. It asserts PaymentOne’s proposed construction attempts to construe

9

the term too broadly as “any type of billing account having any telephone number associated with it.”

Northern District of California

(PayPal, Inc.’s Reply to PaymentOne Corporation’s Response to PayPal’s Revised Proposed

11

United States District Court

10

Construction of the Terms “Billing Telephone Number (BTN) / BTN” [“PayPal’s Supplemental BTN

12

Briefing” (Dkt. No. 130)] at 1); see Retractable Tech., Inc. v. Becton, Dickinson & Co., 653 F.3d

13

1296, 1305 (Fed. Cir. 2011) (court must “strive to capture the scope of the actual invention, rather

14

than strictly limit the scope of claims to disclosed embodiments or allow the claim language to

15

become divorced from what the specification conveys is the invention”).14 This is contrary to the

16

specifications of the ’500 and ’504 Patents, which require that the subscriber account associated with

17

the BTN be a telephone account. (PayPal’s Supplemental BTN Briefing at 2; see ’500 Patent, 3:40–

18

44 & 3:53–64.) For example, PaymentOne’s broad attempt to equate a BTN to a telephone number

19

that is “in some way tied to another billing account (e.g. credit card)” contravenes the specification

20

teaching that the system for “validating the billing account associated with the subscriber line” is

21

distinct from processes “using a conventional payment techniques [sic] such as a credit card, debit

22

card, bank account details or the like.” (PayPal’s Supplemental BTN Briefing at 3; ’500 Patent,

23
24
25
26
27
28

14

In Retractable Tech., an independent claim recited a “body” a dependent claim recited a “one piece
body.” 653 F.3d at 1305. The Federal Circuit held that the “district court erred when it construed
‘body’ as encompassing bodies composed of multiple pieces” because the specification expressly
recited the invention “ha[d] a body constructed as a single structure, expressly distinguish[ed] the
invention from the prior art based on this feature, and only disclose[d] embodiments that [we]re
expressly limited to having a body that is a single piece.” Id. (“construction of “body” that limits the
term to a one-piece body is required to tether the claims to what the specifications indicate the
inventor actually invented”).
22

1

39:41–46.) Lastly, PayPal argues that PaymentOne patents not at issue in this action support that the

2

billing telephone number must be associated with a telephone account.
Court’s Construction

3

2.

4

The Court agrees with PayPal. PaymentOne has provided no persuasive reason that a

5

billing telephone number is not, effectively, the telephone number billed for a transaction.

6

PaymentOne’s attempts to define the term being a telephone number associated with a billing

7

account are likewise unsupported based on plain meaning. Moreover, if the Court were to construe

8

the term as proposed by PaymentOne, it would create redundancies within the relevant claims and

9

potentially confuse the jury. (See, e.g., ’500 Patent 42:18–19 (portion of claim 1 would read:

Northern District of California

“charging the first transaction to a subscriber account associated with the telephone number

11

United States District Court

10

associated with a billing account”).)

12

Based on the foregoing, the Court will adopt PayPal’s proposed construction of the disputed

13

phrase, which the Court believes comports with its plain meaning. However, the Court notes that

14

PayPal’s construction does not take into account that at certain steps of the process, such as when a

15

BTN is being obtained, the telephone number will not yet have been “billed.” For this reason, the

16

Court believes it is appropriate to include both the future and past tense of “billed” in its construction.

17

As such, the Court construes a “billing telephone number (BTN)” and “BTN” to mean

18
19
20
21
22

“telephone number billed or to be billed for the transaction.”
F.

Seventh Claim Term/Phrase – “determine [first/second] reference subscriber
data” (’504 Patent, claims 1, 43, 101 & 102)

The parties have three disputes over the construction of this term/phrase. The primary dispute
relates to whether the data to be obtained must be “stored” in the database searched. The parties’
proposed constructions are shown below with only the key difference emphasized:

23
24
25
26

TERM/PHRASE
determine
[first/second]
reference subscriber
data

PAYMENTONE’S PROPOSED
PAYPAL’S PROPOSED
CONSTRUCTION
CONSTRUCTION
obtain [first/second] data
obtain [first/second] stored data
associated with a customer
about a subscriber

27
28

23

1

The remaining disputes are secondary: first, the parties agree that the difference between

2

“associated with” and “about” is not significant and each proffers its construction as being more

3

understandable to a jury.15 Second, they dispute whether “customer” or “subscriber” is more

4

appropriate. The parties agree that “determine” means “obtain.”

5

The claims implicated by this term/phrase recite steps of:
Claim 1

Claims 43, 101, and 102

“searching a first database using the
ANI data or the BTN data to
determine first reference subscriber
data” and “searching a second
database using the identification data
to determine second reference
subscriber data”

“[requesting/request] a search of a first
database using the ANI data or the BTN data
to determine first reference subscriber data”
and “[requesting/request] a search of a second
database using the identification data and the
first reference subscriber data to determine
second reference subscriber data”

6
7
8
9
10

Northern District of California

United States District Court

11

Parties’ Positions

12

1.

13

Stored Data: As to the primary dispute, PaymentOne argues that the explicit terms of

14

the ’504 Patent do not require the data to be stored. Had a storage requirement been intended, the

15

patentee would have used terms like “retrieve,” “return,” or “inquiry” in the claims, which are

16

“words that you might associate with data that is stored in a database.” (Transcript at 83–84.) To

17

the extent that the ’504 Patent specification refers to “return[ing]” LIDB (line identification

18

database) codes after interrogating a database, PaymentOne emphasizes that such embodiment was

19

exemplary and cannot be imported to limit claims in their entirety. (See ’504 Patent, 7:26–27 &

20

7:34–37 and claim 17.)
PayPal responds that data must reside in a database. (PayPal’s Responsive Brief at 21 (“If

21
22

the data was not stored in the database, then the data could not be obtained by searching the database

23

as required by the undisputed plain language of the claims.”).) PayPal further contends that the plain

24

and logical understanding of “data” supports the storage requirement. See Comcast Cable

25

Commc'ns Corp., LLC v. Finisar Corp., No. C 06-04206 WHA, 2007 WL 1052821, at *4 (N.D. Cal.

26
15

27
28

PaymentOne argues that “associated with” provides more clarity and consistency for the jury
because that phrase is used elsewhere in claim 1 and throughout the ’504 Patent. PayPal responds that
requiring that data be specifically “about” a customer is in line with other language of the claims—
“[first/second] reference subscriber data” (emphasis supplied).
24

1

Apr. 6, 2007) (“Both parties agree that th[e] term [‘information database’] indicates some grouping

2

of data. Lay jury members would understand the term ‘information,’ and also that a ‘database’ is

3

stored in some fashion.”). Moreover, the specification refers to a database and thus supports this

4

plain meaning construction. (’504 Patent, 7:34–37 (“[o]nce the LIDB database or host 52 has been

5

interrogated, it returns industry standard LIDB codes . . .”) (emphasis supplied).)
“Customer” versus “Subscriber”: PaymentOne argues that there is no difference and the

6
7

patent uses these terms interchangeably. (See, e.g., ’504 Patent, 1:15–17, 41:8–20 & 41:26–30.) It

8

prefers the term “customer” because it is easier for a jury to understand than “subscriber.”
PayPal argues that the customer and subscriber are frequently the same person, but there are

9

Northern District of California

circumstances where the customer is not the subscriber. This is specifically contemplated by the

11

United States District Court

10

’504 Patent at 8:45–59, and therefore must be distinguished in the relevant claims as well.

12

(Transcript at 86.)
Court’s Construction

13

2.

14

The Court agrees that by necessity the data must be stored under the teachings of the

15

patent. PaymentOne’s argument that the absence of terms that are indicative of “data stored in

16

databases” misses the point. The claims clearly state that the first and second databases are

17

“searched” with certain data in hand in order to obtain another piece of data. The Court cannot

18

conceive, in the context of these claims, how the data could not be stored in the database that it is

19

explicitly searching. The fact that the sought-after data could be obtained from sources other than

20

the first and second databases16 was not recited by the implicated claims, although it is theoretically

21

possible that the data also exists elsewhere.
As to use of the word “customer” or “subscriber,” the Court notes that the information to be

22
23

“determined” (obtained) is the “[first/second] reference subscriber data.” Construing the phrase to

24

refer to a “subscriber” will maintain consistency throughout the claims at hand, which otherwise do

25

not reference a “customer.” Moreover, the parties concede that this distinction is unlikely to bear

26
27
28

16

See, e.g., Transcript at 90 (“[T]here’s no indication necessarily that the first reference subscriber
data has to come from the database. There could be searching happening potentially. There could be
something else happening.”).
25

1

great significance, since customer/subscriber is either used interchangeably in the patent or typically

2

refers to the same person.

3
4
5
6
7
8

Based on the foregoing analysis, the Court adopts PayPal’s construction and provides the
following construction:
“determine [first/second] reference subscriber data” means “obtain [first/second] stored data
about a subscriber.”
G.

Eighth Claim Term/Phrase – “the first reference subscriber data corresponds to
the second reference subscriber data” / “the second subscriber data
corresponding to the first reference subscriber data” (’504 Patent, claims 1 & 43)

9

The parties agree that the two pieces of data must “match” each other, but dispute only

10

whether the data must be “separate.” The parties’ proposed constructions are shown below with only

Northern District of California

United States District Court

11

the key difference emphasized:

12
13

TERM/PHRASE

14

the first reference subscriber
data corresponds to the
second reference subscriber
data
the second subscriber data
corresponding to the first
reference subscriber data

15
16
17
18
19
20

PAYMENTONE’S PROPOSED
CONSTRUCTION
the First Reference
Subscriber Data matches the
Second Reference
Subscriber Data
the Second Reference
Subscriber Data matching
the First Reference
Subscriber Data

PAYPAL’S PROPOSED
CONSTRUCTION
the first reference subscriber
data matches the second,
separate reference
subscriber data
the second reference
subscriber data matching the
first, separate reference
subscriber data

Claims 1 and 43, which were both implicated in the construction of the last term/phrase, recite
the following (the relevant phrase is highlighted):

21
22
23
24
25
26
27
28

26

1
2
3
4

Claim 1
An identity verification method, the method
comprising:
obtaining automatic number identification
(ANI) data or billing telephone number
(BTN) data associated with a subscriber
line of a telecommunications network;

Claim 43
An identity verification method, the method
comprising:
obtaining automatic number identification
(ANI) data or billing telephone number
(BTN) data associated with a subscriber
line of a telecommunications network;

obtaining identification data associated
with a subscriber, said identification
data being different from the ANI data
or the BTN data;

obtaining identification data associated
with
a
subscriber,
where
said
identification data is different from the
ANI data or the BTN data;

searching a first database using the ANI
data or the BTN data to determine first
reference subscriber data;

requesting a search of a first database using
the ANI data or the BTN data to
determine first reference subscriber data;

searching a second database using the
identification data to determine second
reference subscriber data;

requesting a search of a second database
using the identification data and the first
reference subscriber data to determine
second reference subscriber data;

5
6
7
8
9
10

Northern District of California

United States District Court

11
12
13
14
15
16
17
18
19
20
21
22
23

comparing the first reference subscriber
data to the second reference subscriber
data; and

comparing the first reference subscriber
data to the second reference subscriber
data; and

verifying an identity of the subscriber if
the first reference subscriber data
corresponds to the second reference
subscriber data.
1.

verifying an identity of a subscriber based
on the second subscriber data
corresponding to the first reference
subscriber data.

Parties’ Positions

PaymentOne asserts that no support exists for a limitation requiring that the first and
second reference subscriber data be separate from each other. The claims recite steps of searching a
first database, then a second database, and after obtaining each piece of data, they are compared. The
claims do not, however, speak to the issue of the reference subscriber data being different.

24

PaymentOne concedes that the data “might be different, but . . . they do not have to be, nor do they

25

have to be separate.” (PaymentOne’s Reply Brief at 11.)

26
27
28

PaymentOne also draws on language in other claims and the specification to support its
proposed construction which provides that identity may be verified by checking whether data of the
same format corresponds. Specifically, claim 17 recites that the two pieces of data may be in the form
27

1

of “only one LIDB code.” (PaymentOne’s Opening Brief at 19; see ’504 Patent, claim 17 (“The

2

identity verification method of claim 1, wherein the first reference subscriber data and the second

3

reference subscriber data are in a form of one or more LIDB codes.”); ’504 Patent, 8:16–19

4

(“processor module 54 checks to see if the OCN returned from the LIDB host 52 corresponds with a

5

known CLEC or if the OCN corresponds with an OFFNET OCN”)17 & 8:48–59 (“The system 10 then

6

interrogates an address verification database 44 to compare the address or location data (e.g. a ZIP

7

code) supplied by the customer 11 with a reference address data as shown at operation 112. If,

8

however, the address supplied by the customer 11 does not match with the address in the verification

9

database 44 . . .”).) Based on this intrinsic language, PaymentOne concludes that the data to be

10

matched need not necessarily be separate.
PayPal’s construction is based on the fact that the claims recite four pieces of information:

Northern District of California

United States District Court

11
12

(i) telephone number data; (ii) identification data associated with the user; (iii) first reference

13

subscriber data; and (iv) second reference subscriber data—with the third and fourth pieces of

14

information being obtained by searching a first and second database. PayPal argues that there are two

15

separate steps to follow the method of the claims, wherein the first two pieces of information are used

16

to identify the third and fourth pieces of information. PayPal acknowledges that the data to be

17

compared may have the same “substance” or “value.” (PayPal’s Responsive Brief at 25; Transcript at

18

96 (“You might certainly compare two pieces of information with the same value, but not a piece of

19

information with itself.”).) However, it seeks to clarify for the jury that these are separate pieces of

20

information. See 3M Innovative Properties Co. v. Avery Dennison Corp., 350 F.3d 1365, 1371 (Fed.

21

Cir. 2003) (“The use of the terms ‘first’ and ‘second’ is a common patent-law convention to

22

distinguish between repeated instances of an element or limitation.”). (See Transcript at 96.)18

23
24
25

17

As defined in the patent specification, the CLEC, OCN, and OFFNET OCN each refer to specific
databases.

26
18

27
28

Both parties contend that the other’s construction renders the “comparison” of first and second
reference subscriber data useless. There would be no reason to compare data if they always have to
be separate or different, just as there would be no purpose in comparing the same pieces of
information.
28

Court’s Construction

1

2.

2

The Court finds the inclusion of the word “separate” to be unsupported and

3

unnecessary for PayPal’s stated purpose. The relevant claims recite that two pieces of data are

4

obtained through separate steps or processes—namely, that the first and second databases are searched

5

such that the system can obtain the first and second reference subscriber data that will be compared.

6

However, adding the word “separate” (as PayPal suggests) conveys that the data itself is separate, not

7

the step obtaining the data, and does not recognize, as PayPal acknowledges, that the data itself may

8

have the same value. As proposed, the Court finds that addition of “separate” imposes an unintended

9

meaning and is likely to confuse the jury. The Court does not believe that the claims need further

10

clarification than what the parties have agreed to—that “correspond” means “match.”
Based on the foregoing reasons, the Court adopts PaymentOne’s construction except for the

Northern District of California

United States District Court

11
12

capitalization of terms contained therein.19

13

The Court hereby provides the following constructions:

14

“the first reference subscriber data corresponds to the second reference subscriber data” means

15

“the first reference subscriber data matches the second reference subscriber data”; and
“the second subscriber data corresponding to the first reference subscriber data” means “the

16
17

second reference subscriber data matching the first reference subscriber data.”

18

IV.

A.

19
20
21

PAYPAL’S PATENT: CLAIM CONSTRUCTION ANALYSIS
Ninth Claim Term/Phrase – “secure part of said computer system” (’917 Patent,
claim 1)

The parties dispute the scope of the “secure part” of the computer system in the ’917 Patent.
The parties’ proposed constructions are shown below with the key differences emphasized:

22
23
24
25
26
27
28

19

PaymentOne fails to explain the reason for the capitalization of terms within its proposed
construction.
29

1

TERM/PHRASE

3

5
6
7

PAYMENTONE’S PROPOSED CONSTRUCTION

CONSTRUCTION
Ordinary meaning

2

4

PAYPAL’S
PROPOSED

secure part of
said computer
system

a portion of the
computer system
with restricted
accessibility via the
quasi-public
network

8

Original construction: a private network, such as an
Ethernet network
First alternative construction: computer hardware and
software running on a private network, such as an
Ethernet network
Second alternate construction: computer hardware and
software running on a private network which is part
of said computer system, such as an Ethernet network

9
10

Claim 1 recites the following:

Northern District of California

United States District Court

11
12
13
14
15

A method for enabling a seller and a buyer communicating over a quasi-public
network to initiate a commercial transaction involving a payment of funds by the
buyer to the seller, said method comprising the steps of:
on a computer system coupled to said quasi-public network, receiving a message
over the quasi-public network from the seller, the seller's message identifying the
buyer and a transaction;

16
17
18
19
20
21
22
23

from said computer system coupled to said network, sending a message over the
quasi-public network to the identified buyer, said message to the buyer
identifying the transaction;
on said computer system coupled to said quasi-public network, receiving a
message over the quasi-public network from the identified buyer, said buyer's
message indicating acceptance or refusal of the transaction;
if the buyer’s message indicates approval of the transaction, from a secure part of
said computer system, communicating to an agent of the seller via a secure
communication channel information for permitting the buyer to pay for
transaction;

24
25
26
27

on said secure part of said computer system, receiving an authorization code from
the seller’s agent via said secure communication channels; and
from said computer system coupled to said quasi-public network, sending a
cryptographically-signed message including the authorization code to the seller
via the quasi-public network.

28

30

Parties’ Positions

1

1.

2

PayPal argues that its construction—proposed only to the extent that the Court deems

3

construction necessary—is derived from the language in claim 1 above, which recites two parts of a

4

computer system: the user-accessible (non-secure) portion and the secure part of said computer

5

system. While the patent does not expressly define what is secure, PayPal contends that the

6

specification and drawings confirm what was meant by secure and the “secure part of said computer

7

system.”

8
9

PayPal explains that the ’917 Patent sought to address “security problems” arising from
“sending a credit card number over the Internet.” (’917 Patent, 1:29–36.) As shown in Figure 1

Northern District of California

(reproduced below), the payment system contains two parts: an above-the-line system and a below-

11

United States District Court

10

the-line system.

12
13
14
15
16
17
18
19
20
21
22

t
(Emphasis supplied.)
Figure 1 indicates that the above and below-the-line systems are separated by a line 44 called a

23

firewall. (’917 Patent, 3:51–67.) The firewall “isolates the above-the-line system 40 from the below-

24

the-line system 42” and “permits limited communication” between the two systems, “but prevents

25

unauthorized access to the below-the-line system 42 through the above-the-line system 40.” (Id.) The

26

firewall “provides security for the information contained on the below-the-line system 42 and

27
28

prevents hackers on the Internet from entering the below-the-line system 42 via the above-the-line
system.” (Id.) Put another way, “[t]he above-the-line system 40 relates to the computer hardware and
31

1

software on the non-secure side of the firewall 44 and the below-the-line system 42 relates to the

2

computer hardware and software on the secure side of the firewall 44.” (Id. (emphasis supplied).)

3

The specification further teaches that the above-the-line computer system runs an above-the-

4

line a software program that “provides for communication with users 14 of the Internet 12.” (See

5

’917 Patent, 4:46–52 and Fig. 3, reproduced below.) The below-the-line system runs its own

6

program, which is “physically separate and isolated” from the above-the-line program. (Id., 4:53–57.)

7

The communications between the above and below-the-line programs occur “via the private network

8

53.” (Id.)

9
10

Northern District of California

United States District Court

11
12
13
14
15
16
17

“The below-the-line program 92 receives information from and sends information to the

18

above-the-line program 90 by means of batch processing. This comprises, in part, the firewall or line

19

44 and results in an inherently safe method of communicating between the publicly accessible part of

20

the payment system, i.e. the above-the-line system 40, and the secure part of the payment system, i.e.

21

the below-the-line system 42.” (Id., 4:57–65 (emphasis supplied).)

22

Based on this intrinsic evidence, PayPal argues that “secure part” of the system cannot be the

23

part of the system accessible to internet users. It must be the portion that the patent figures and

24

specification refer to as the below-the-line system. (See PayPal, Inc.’s Opening Claim Construction

25

Brief [Dkt. No. 104] at 18–20; PayPal, Inc.’s Reply to PaymentOne Corporation’s Responsive Claim

26

Construction Brief [Dkt. No. 122] at 8.)

27
28

In contrast, PaymentOne argues that the specification, figures, and doctrine of prosecution
disclaimer support its constructions. PaymentOne’s initial construction defined the “secure part of

32

1

said computer system” as “a private network, such as an Ethernet network.”20 PaymentOne’s briefing

2

argued that PayPal sought a construction “under which both the quasi-public network and the secure

3

part of the computer system are the internet.” (PaymentOne’s Responsive Brief at 3 (emphasis

4

supplied).) According to PaymentOne, “[t]he point . . . is that the secure part of the computer system

5

is a private network connection – not the internet.” (Id. (emphasis in original).)
To support its initial construction, PaymentOne emphasized that the patent describes figures in

6
7

the patent such that “[t]he above-the-line computer 50 and below-the-line computer 52 are connected

8

together via a private network. In a preferred embodiment, the private network is an Ethernet

9

network.” (’917 Patent, 4:5–8.) Further, the specification teaches that “[t]he below-the-line

Northern District of California

computer 52 is connected to the above-the-line computer 50 by means of Ethernet cable. The below-

11

United States District Court

10

the-line computer 52 also has a Novell LAN 81 that provides a secure communication link apart from

12

the Internet.” (Id., 4:21–24.)
At the claim construction hearing, PaymentOne seemed to shift its argument to different

13
14

portions of the specification to show that certain steps of claim 1 must occur on a private network, as

15

opposed to the internet. Specifically, the specification states that “[t]he communication 250 to the

16

seller’s agent 115 is performed off the Internet on secure communication channels.” (’917 Patent,

17

10:56–58; Transcript at 105.) As such, PaymentOne argued that the secure part of the system was

18

“really limited to a transaction which the bank card processor, which is the seller’s agent, such as

19

Visa[,] is communicating on a private network. And that is what [its] proposed construction reflects.”

20

(Transcript at 105; id. at 106 (in “Figure 1 where the communication between the seller’s agent and

21
22
23
24
25
26
27
28

20

PayPal argues that PaymentOne’s initial construction of “a private network, such as an Ethernet
network” eliminates the requirement that the “secured part” be of a “computer system.” (PayPal’s
Reply Brief at 7.) It also argues that PaymentOne’s initial construction reads out the embodiments
that the computer system must run programs and store data files. (Transcript at 102–103.) In
response, PaymentOne proposes its first alternative construction—“computer hardware and software
running on a private network, such as an Ethernet network”—to clarify that a computer system is
running on the private network. (PaymentOne Corporation’s Response to PayPal, Inc.’s Opening
Claim Construction Brief [“PaymentOne’s Responsive Brief” (Dkt. No. 108)] at 5; Transcript at 107.)
To the extent that the Court may still have concerns over whether a jury would understand that the
hardware or software is part of the computer system, PaymentOne proposes its second alternative—
“computer hardware and software running on a private network which is part of said computer
system, such as an Ethernet network.” (Transcript at 108.)
33

1

the payment system is happening off of the internet[,] [t]hat’s the secure part in contradistinction to

2

the quasi-public network, which is the internet.”).)
PaymentOne also argues that the doctrine of prosecution disclaimer supports its construction.

3
4

PaymentOne asserts that “the patentee initially attempted to claim a system without the requirement

5

that ‘communicating to an agent of the seller’ and ‘receiving an authorization code’ occur on a private

6

network.” (PaymentOne’s Responsive Brief at 6.) PaymentOne attached to its Responsive Brief a

7

document purporting to show that “[o]n February 5, 1997, the Patent Office rejected [the patentee’s

8

initial claims] as being unpatentable in light of prior art, and, in response, the patentee amended the

9

claims to include a clear delineation between steps that occur on the quasi-public network and those

Northern District of California

that occur on a secure part of the computer system.” (Id. & Ex. A at 2.)21 PaymentOne then

11

United States District Court

10

concludes that by including the “secure part of the computer system,” the patentee disavowed any

12

system where the communication to the seller’s agent or receipt of the authorization code occur over

13

the internet. (PaymentOne’s Responsive Brief at 6.)

14

PayPal responds that PaymentOne’s reliance on the specification at 10:56–60 only proves that

15

PayPal’s construction is appropriate. Claim 1 recites certain steps that occur from the “secure part of

16

said computer system,” but it separately recites as a claim term that certain communications with the

17

seller’s agent occur “via a secure communication channel” or “via said secure communication

18

channels.” The pertinent language reads:

19

if the buyer’s message indicates approval of the transaction, from a secure part of said
computer system, communicating to an agent of the seller via a secure communication
channel information for permitting the buyer to pay for transaction;

20
21

on said secure part of said computer system, receiving an authorization code from the
seller’s agent via said secure communication channels . . .

22
23

(’917 Patent, 12:60–67 (emphasis supplied).) PayPal argues that the secure part of the computer

24

system and the secure communication channels are different. (Transcript at 109 (“This secure

25

communication channel . . . is not the secure part of the computer system.”).)

26
27
28

21

The Court notes that, again, PaymentOne failed to comply with the Local Rule requiring that
documents be authenticated and submitted by declaration. Civ. L.R. 7-5.
34

Court’s Construction

1

2.

2

The Court agrees with PayPal that no construction is necessary. At this time, neither

3

party proposes a satisfactory construction and the Court nonetheless finds that a jury will understand

4

what is meant by the “secure part of said computer system” in the context of the entire claim.

5

As to the meaning of the “secure part of said computer system,” the Court generally agrees

6

with PayPal’s arguments in support of ordinary meaning and its construction. However, PayPal’s

7

proposed construction—as drafted—also risks confusing the jury, and for that reason, the Court

8

declines to adopt it. Based on the teachings in the specification, a jury can understand what is the

9

“secure part of said computer system” without construction. The specification and corresponding

Northern District of California

figures teach that the below-the-line system, as shown in the figures, was considered the “secure side

11

United States District Court

10

of the firewall” and the “secure part of the payment system.” (’917 Patent, 3:51–67 & 4:53–65.) The

12

specification further teaches that the above-the-line system is the publicly accessible part of the

13

payment system. (Id., 4:46–52.) The existence of dual above and below-the-line systems is

14

consistent with the language in claim 1 that the “computer system [is] coupled to said quasi-public

15

network”—i.e., the internet. The steps wherein particular messages occur from a secure part of said

16

computer system does not negate that there is still an above-the-line part of the system that is coupled

17

to the internet. Even if the preferred embodiment for the connection between the above and below-

18

the-line systems is an Ethernet (private) network (’917 Patent, 4:5–8 & 4:21–25), as argued by

19

PaymentOne, this does not limit necessarily the rest of the below-the-line system from being secure.

20

Further, the Court agrees with PayPal that the “secure communication channel[s]” and “secure

21

part of said computer system” are not the same. Rather, they are separate claim terms in claim 1,

22

wherein claim 1 explicitly references the “secure part of said computer system” as distinct from the

23

“secure communication channel[s]” through which information is exchanged with the seller’s agent.

24

(’917 Patent, 12:60–68; see id., 10:50–62 (“below-the-line system 42 communicates with the seller’s

25

agent” which is “performed off the Internet on secure communication channels”).) Consistent with

26

the specification teaching that the below-the-line system—i.e., the secure part of the computer

27

system—has secure communications with the seller’s agent, the secure channel communication

28

cannot be the entire secure part of said computer system, as PaymentOne argues. (See Transcript at

35

1

105–106 (arguing that communication between seller’s agent and payment system is the “secure part”

2

of the computer system).)
As to PaymentOne’s proposed constructions, the Court finds that each construction fails to

3

unnecessarily focuses on the location of various steps of claim 1. Each construction refers to an

6

“Ethernet network,” which is itself neither defined nor explained and may be confused with the term

7

“internet.” Further, two of PaymentOne’s proposed constructions insert the phrase “computer

8

hardware and software running on a private network,” which is inherently confusing and

9

cumbersome. These constructions will not aid a jury in understanding that there are two portions of

10

the computer system: an above-the-line part coupled to the internet and a below-the-line part that is

11

Northern District of California

provide any clarity as to what was meant by the “secure part of said computer system” and

5

United States District Court

4

secure.

12

As to PaymentOne’s prosecution disclaimer argument, the Court is not persuaded that Exhibit

13

A supports the specific constructions proposed by PaymentOne. PaymentOne argues that “the

14

patentee disavowed any system in which the steps of ‘communicating to an agent of the seller’ and

15

‘receiving an authorization code’ occur over the internet.” (PaymentOne’s Responsive Brief at 6

16

(emphasis supplied).) The Court agrees that language in the specification supports the argument that

17

communications with the seller’s agent must occur off the internet on secure communication

18

channels. (See ’917 Patent, 10:56–61 & 11:26–32; see Exhibit A to PaymentOne’s Responsive Brief

19

at 9 and Remarks ¶ A.) However, Exhibit A does not support imposing an additional limitation of a

20

“private network” for the “secure part of said computer system.” There is no indication that the PTO

21

examiner found the specific location of a “private network” to be dispositive in allowing the claim 1.

22

The Court notes that PaymentOne’s arguments appear to be directed to defining “secure

23

communication channel information” or “secure communication channels,” but does not directly

24

address what is meant by the “secure part of said computer system.”

25

Based on the foregoing reasons, the Court declines to construe this term as proposed by either

26

party because there is a plain meaning of “secure part of said computer system” that is

27

understandable by a jury. The Court will consider further construction of this term, if necessary, at an

28

appropriate time prior to trial.

36

1

V.

For the reasons set forth above, the Court provides the following construction of the disputed

2
3

claim terms/phrases:

4
5

CONCLUSION

DISPUTED CLAIM TERM/PHRASE
(1)
communication line

a communication channel over a wire
or cable between a vendor and an
electronic terminal over a physical
communication network

subscriber line

a communication channel over a wire
or cable that facilitates
communication between a customer
and a telephone company

wherein payment is routed to financial card
gateway if a validation module invalidates
the transaction

wherein payment is directed to a
financial card gateway if a validation
module determines that the
transaction cannot be charged to the
telephone bill

selectively route processing of the
transaction to a financial instrument gateway
in the event of a validation process not
validating the subscriber line

selectively direct processing of the
transaction to a financial instrument
gateway in the event that the
transaction cannot be charged to the
telephone bill

financial card gateway

access point through which payments
can be made using a financial card

financial instrument gateway

6

access point through which payments
can be made using a financial
instrument

automatically detecting an event indicative
of an option to charge the second transaction
to the user using an alternative payment
method

No construction necessary

7
8

(2)

9
10

Northern District of California

United States District Court

11

CONSTRUCTION

(3)

12
13
14
15
16
17
18

(4)

19
20
21
22
23
24

(5)

25
26
27
28

37

1

DISPUTED CLAIM TERM/PHRASE

2

to detect, automatically, an event indicative
of an option to charge the second transaction
to the user using an alternative payment
method

No construction necessary

(6)

billing telephone number (BTN) and BTN

telephone number billed or to be
billed for the transaction

(7)

determine [first/second] reference subscriber
data

obtain [first/second] stored data about
a subscriber

(8)

the first reference subscriber data
corresponds to the second reference
subscriber data

the first reference subscriber data
matches the second reference
subscriber data

the second subscriber data corresponding to
the first reference subscriber data

the second reference subscriber data
matching the first reference
subscriber data

secure part of said computer system

No construction necessary

3
4
5

CONSTRUCTION

6
7
8
9
10

Northern District of California

United States District Court

11
12
13

(9)

14
15
16
17
18

The Court hereby schedules this matter for a Case Management Conference on Monday,
September 16, 2013, at 2:00 p.m. in Courtroom 5. The parties shall file an updated Joint Case
Management Statement pursuant to this Court’s Standing Order in Civil Cases and the Civil Local
Rules.
IT IS SO ORDERED.

19
20

Date: August 2, 2013
21
22

______________________________________
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

23
24
25
26
27
28

38