IP Law Daily, PATENT—Fed. Cir.: Identity theft and fraud protection patent declared invalid, (Feb 14, 2024)

By Brian Craig, J.D.

The district court correctly determined that the claim term “transaction partner” is indefinite.

A patent that claims to protect against identity theft, fraud, and other unauthorized uses of identifying information is invalid based on indefiniteness, the U.S. Court of Appeals for the Federal Circuit has held. In affirming the federal district court in Chicago, Illinois, the Federal Circuit concluded the district court correctly determined that the term “transaction partner” in the patent claims is indefinite. The Federal Circuit also declined to review the district court’s construction of a disputed claim term based on lack of jurisdiction. Circuit Judge Alvin Schall wrote a dissenting opinion and argued that the patent claims are not indefinite based on the specification (Mantissa Corp. v. First Financial Corp., February 14, 2024, Dyk, T.).

Mantissa Corporation owns U.S. Patent No. 9,361,658 (the ’658 patent) entitled “System and Method for Enhanced Protection and Control Over the Use of Identity.” The patent concerns an improved way to protect against identity theft, fraud, and other unauthorized uses of identifying information. Mantissa brought suit against First Financial Corporation and First Financial Bank, N.A., in the federal district court in Illinois alleging infringement of certain claims of the ’658 patent. During claim construction, the parties disputed two terms: (1) “transaction partner” and (2) “OFF.” The district court determined that “transaction partner” is indefinite and that the’658 patent is invalid based on indefiniteness. Mantissa appealed.

Claim construction. The Federal Circuit held that the district court correctly determined the clam term “transaction partner” is indefinite. A patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention. Here, the intrinsic evidence establishes that the claims are indefinite. The specification makes clear that the claims cover a broad array of scenarios involving financial accounts where construing “transaction partner” to mean “seller” would not make sense. To construe the term “transaction partner” to include each of the multiple parties to the multiple types of transactions simply makes no sense if the purpose of categorizing is to determine whether a potential party is authorized or unauthorized to engage in a transaction. For example, the identity owner and service provider—who are parties to a transaction—do not require authorization.

The federal appeals court found a person would not understand with reasonable certainty how to categorize different types of transaction partners for the purpose of protecting an identity owner’s financial account from unauthorized transactions. Because the specification and claims fail to provide adequate guidance as to the identity of the “transaction partner,” the term “transaction partner” is indefinite. In other cases, the Federal Circuit has found terms to be indefinite when a person could not identify with reasonable certainty the identity of what the term refers to. Therefore, the panel ruled the district court properly found that the term “transaction partner” is indefinite, and the asserted claims are invalid.

Lack of jurisdiction. The Federal Circuit also declined to review the district court’s construction of the claim term “OFF” based on lack of jurisdiction. While the parties asked the Federal Circuit to address the district court’s construction of “OFF” because the same term is at issue in related litigation, the Federal Circuit declined to address the district court’s claim constructions that would not affect the judgment of non-infringement. There was no final judgment relating to the district court’s construction of the term “OFF” in the clams for ’658 patent. The appeals court clarified that it may not provide an advisory opinion on the meaning of a claim term that does not affect the merits of this appeal.

Dissent. Circuit Judge Alvin Schall wrote a separate opinion, concurring in part, and dissenting in part. Judge Schall agreed that the court lacks jurisdiction to review the claim term “OFF” in the ’658 patent, but he argued that the district court erred in holding the patent claims are indefinite. Judge Schall recognized that the patent specification recites at length the various types of situations in connection with which the claimed invention may be employed. These include credit card use, making a request for a loan, and bank account withdrawals. The specification recites that an embodiment of the claimed invention comprises receiving, at a service provider, a request to determine whether the use of an entity’s identity by a party is authorized for a requested application. Each of these situations involves a “transaction” in which a party to a transaction who is separate and distinct from the “entity” seeks to use what the patent claims refer to as the entity’s “financial account.” Thus, in Judge Schall’s opinion, the patent claims are not indefinite.

The Case is No. 22-1963.

Attorneys: Anthony John Demarco (Young Basile Hanlon & MacFarlane, PC) for Mantissa Corp. Ryan Ronald Smith (Wilson, Sonsini, Goodrich & Rosati, PC) for First Financial Corp. and First Financial Bank, N.A.

Companies: Mantissa Corp.; First Financial Corp.; First Financial Bank, N.A.

Cases: Patent FedCirNews IllinoisNews