For Infringement Purposes, Preamble Can Define a Limiting Environment Rather than a Claim Limitation

The U. S. Court of Appeals for the Federal Circuit has explained that terms of a patent claim preamble can define a limiting “environment.” Such terms of the limiting environment may be performed or met by third parties, setting the stage for infringement by parties accused of practicing the limitations of the claim body. Advanced Software Design Corp. v. Fiserv, Inc., Case Nos. 09-1585, 10-1011 (Fed. Cir., June 2, 2011) (Bryson, J.).

Advanced Software Design and Fiserv offer competing products that generally work by encrypting selected information on a check, e.g., the name of the payee or the amount to be paid, and printing the encrypted information on the check. The information is later used to validate whether the check is legitimate rather than fraudulent or forged. A key feature of Fiserv’s products was that its products performed only the validation feature and not the related encrypting or printing features.

Advanced Software Design sued Fiserv for patent infringement of its patents directed to guarding against check fraud and forgery. Following discovery and claim construction, one asserted patent remained. Fiserv filed a summary judgment motion for non-infringement based, in part, on its position that it did not practice all of the steps of the asserted claims requiring each of “encrypting,” “printing” and “validating” of checks. The district court granted Fiserv’s motion, in part, based on its finding that Fiserv did not direct or control “encrypting” or “printing” steps and, therefore, could Fiserv could not directly infringe the patent.

However, the “validating” step was the only step of the three steps at issue discussed in the body of the asserted claims. The “encrypting” and “printing” steps were found in the preamble. Nonetheless, the district court construed the “encrypting and “printing” steps as limiting, adopting Fiserv’s position that each of these steps must be performed by the accused infringer. Advanced Software Design appealed.

The Federal Circuit reversed, concluding that while the preamble’s encrypting and printing steps were limiting, the limitation only defines the “environment in which the accused infringer must practice the [invention].” The Court found its earlier decision in Uniloc USA instructive: “[l]ike the claim in Uniloc, the claims at issue in this case contain preambles that define the environment in which an accused infringer must act or describe capabilities that an accused device must have.”

There remained an issue of material fact as to whether Fiserv, or its products, practiced the “validating” step found in the body of the asserted claim. On this issue, the Court stated that “[f]or infringement purposes, the preamble steps need not be performed by the system or the party that uses the system.” Focusing on an exemplary claimed, the Court noted that the claim covers a “‘process for validating a negotiable financial instrument’ comprising reading information from the check and decrypting or re-encrypting to validate the check. Fiserv therefore could ‘use’ the [claimed] method … by validating checks even though it does not encrypt and print them. It would infringe the [claimed] method …, however, only by validating checks that have been encrypted and printed in accordance with steps described in the preamble.”