Prosecute to Protect, Litigate Without Regret: How Smart Patent Prosecution Decisions Prepare Fintech for Future Litigation

Patents, like statutes, are made of words. And the claims of a patent, like the words of a statute, define its scope—the invention/activities that others are legally excluded from practicing. It then comes as no surprise that, during an infringement suit or administrative proceeding (e.g., an inter partes review (IPR) before the Patent Trials and Appeals Board (PTAB)), claim words spark intense interpretive debates during a process known as “claim construction.” And for good reason: the construction of a term or phrase can sink or float a patent infringement action. Moreover, even simple terms like “automatically” can generate these debates. Here, we consider recent cases to provide tips for aspiring and current fintech patent owners seeking to cover infringing activities while avoiding the pitfalls of patent invalidity.

As one would expect, patent owners usually seek broad claim scope to allege infringement, while defendants typically argue for narrow constructions to avoid it. Defendants often also contend a term is indefinite—that vague or ambiguous words fail to put the public on notice of claim scope. A district court judge or PTAB panel decides the ultimate construction, which often drives downstream infringement and validity outcomes.

First, some good news—standard terms often need no construction. For example, district courts and the PTAB recently declined to construe common fintech terms like “personal identification number” (Stripe Inc., et al. v. BOOM! Payments, Inc., (P.TA.B. May 19, 2020)), “point of sale system” (Nuonosys, Inc., v. RTR Holdings, LLC, (P.T.A.B. Apr. 14, 2021)), “identifying information” (Global Eticket Exchange, LTD. v. Ticketmaster, LLC, (W.D. Tex. Jan. 18, 2022), and “trading system” (same). Patents can therefore use such terms to preserve broad claim scope with lower risk of indefiniteness.

But be careful. Many terms have no standard definition, so well-written specifications should broadly define each claim term while describing it in context using plenty of examples. Examples help breathe life into the claims and, when explicitly presented in the specification as only examples, they do not limit claim scope. For instance, in Blue Spike LLC et al. v. Grande Comms., Inc., the Eastern District of Texas recently found “agreed upon purchase value” is not limited to a bandwidth-focused definition because it was merely one of several examples. By maintaining broader claim scope driven through a well-written specification, patent owners can force more favorable settlements or increase their odds of proving infringement at trial.

Detailed explanations are even important for seemingly innocuous words, including terms of degree like “maximizing,” “substantially,” or “not fully.” Even when the specification describes these terms, courts may deem it impossible to tell whether an activity reaches the claimed degree. In CA Inc., v. Netflix, Inc, for example, the plaintiff argued “maximizing” meant “increasing,” but the court disagreed, finding the specification failed to provide an objective standard for measuring “maximizing.” Without an objective standard, the Eastern District of Texas has held a person of ordinary skill in the art would not be able to determine the scope of the invention “with reasonable certainty.” The court found “maximizing” was indefinite, rendering the claim invalid. On the other hand, in Proven Networks, LLC v. et al, the Western District of Texas found “minimal equal-cost paths” to have an objective meaning that is not indefinite because an ordinary artisan “could understand that ‘minimal’ means ‘the least possible.’” The court in Proven Networks noted, however, that “Defendants raise[d] some convincing points,” indicating that the high burden of clear and convincing evidence necessary to prove invalidity may have played a big role in saving the claim. Similarly, relying on the specification’s examples, the Western District of Washington in WSOU Investments, LLC v. F5 Networks, Inc. found the phrase “not fully connected” was not an indefinite term of degree because the specification indicated it was a binary term that covering unconnected and partially-connected things. Still, although the specification was helpful, the court relied on expert testimony which may have been unnecessary had it included more explicit definitions and examples.

A detailed description filled with illustrative examples—whether for complex or simple terminology—can help propel patent owners successfully through claim construction. As such, patent drafters should proactively draft claims and specifications following the above tips.

Finnegan logo