Advanced Software Design Corp. v. Fiserv, Inc.
641 F.3d 1368
| Fed. Cir. | 2011Background
- Advanced Software owns three related check-security patents: the '340 (encryption, printing, validation), the '624 (validation by decrypting plaintext and comparing to entered data), and the '110 (claims about validating by encrypting selected information with key information).
- Fiserv markets the Secure Seal check-security product and was accused of infringing Advanced Software’s '110 patent; district court granted summary judgment of noninfringement and denied invalidity, with timing issues on other claims.
- The '110 claims recite a process and a system for validating checks where preamble language ties to encrypting, printing, and validating steps; district court construed that all steps must be performed by the accused, affecting direct infringement analysis.
- Advanced Software sought to amend to add a Lanham Act claim based on Fiserv’s advertisements; the district court denied as untimely under its scheduling order, and the appeal addressed that denial.
- On appeal, the court vacated the noninfringement decision on the first ground (environment vs. performed steps) and remanded to consider inducement evidence; it affirmed in part and declined to address certain invalidity issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether preamble steps limit the claims and whether Fiserv can infringe by using the system without encrypting/printing. | Advanced Software contends preambles limit the environment, not the steps; infringement can occur via use of the validated system. | Fiserv argues preambles describe the invention’s environment and must be performed by the accused or are not limiting. | Preambles limit environment, enabling use-based infringement without encrypting/printing by Fiserv. |
| Whether there is sufficient evidence of induced infringement given timeliness and knowledge requirements. | Advanced Software presented evidence of Fiserv’s knowledge and instructions to banks to use Secure Seal. | Inducement requires timely assertion and evidentiary showing of state of mind; no direct infringement proven. | Vacate summary judgment on inducement to permit consideration of direct infringement evidence. |
| Whether the '110 patent's encryption limitation is properly construed as two-step (combining with key information then encrypting) or broader. | Advanced Software supports a broader construction (encryption with key information via combination). | Fiserv urges a two-step construction consistent with the district court. | Adopt broader construction that “selected information … encrypted in combination with key information” means combining information with keys in the encryption process. |
| Whether the denial of the Lanham Act amendment was erroneous under Rule 16(b) good-cause standard. | Amendment late due to discovery of source code; timely given four-month window. | District court had scheduling deadline; need good cause. | District court did not abuse discretion; denial affirmed. |
Key Cases Cited
- Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011) (use of environment language to define infringing act; preambles limit environment, not the claim body)
- Centillion Data Systems, LLC v. Qwest Communications International, Inc., 631 F.3d 1279 (Fed. Cir. 2011) (a party can infringe by using the claimed system as a whole even if not all components are controlled by the infringer)
- DSU Med. Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) (evidence of intent can raise a genuine issue of material fact on inducement)
- NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005) (direct infringement / use-related analysis in claim scope)
- Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) (use and control of system can establish direct infringement)