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Aerotel, Ltd. v. Telco Group

May 13, 2010


The opinion of the court was delivered by: Richard J. Holwell, District Judge


In this patent-infringement action, plaintiff Aerotel, Ltd. alleges that a number of defendants (collectively, "Telco") infringed U.S. Patent No. 4,706,275 (the "'275 patent"). The patent describes a system for making prepaid telephone calls. Aerotel alleges that defendants infringed the patent by using, offering to sell, and selling products and services related to prepaid telephone calling cards, and by inducing others to do so. (See Second Amended Compl. ¶ 27.) At the Court's suggestion, the parties identified claim language that required construction, completed simultaneous briefing, and submitted opening and response briefs. Thereafter the Court held a hearing in which the parties presented their proposed constructions of the disputed claim terms. See generally Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996). This Opinion sets out the Court's construction of those terms.


A. The '275 Patent

The '275 patent describes a phone call prepayment system, whereby a user can pay in advance for a special code that can later be used to make phone calls, which are debited at that time against the earlier paid amount. The patent, which appears to have been translated into English from a foreign language, is poorly drafted. See generally Aerotel, Ltd. v. Radiant Telecom Inc., 569 F. Supp. 2d 387 (S.D.N.Y. 2008). This fact accounts for many of the parties' interpretative disputes.

The parties' current disputes focus on three of the patent's claims: claim 1, claim 9, and claim 23. Claim 1 recites "[a] unique method for making telephone calls from any available telephone." (Col.6 ll.45-46.)*fn1 The claim includes nine labeled elements. They begin with "obtaining a special code by depositing a prepayment amount" (step (a)), and end with "disconnecting said call when the prepayment amount has been spent" (step (i)).

Claim 9 is a means-plus-function claim that recites "[a] telephone system for facilitating telephone calls including toll calls from any available telephone station for prepaid customers." In includes four labeled means. They begin with "means for coupling a calling party station to a special exchange," (step (a)), and end with "means for completing a call from said calling party station to a called station.." (step (d).)

Claim 23, which is independent of claim 1, recites "[a] method for making telephone calls." (Id. col.8 l.31.) In contrast to claim 1, claim 23 describes the operation of the prepaid calling system from the perspective of the system operator. It includes eight labeled elements. They begin with "issuing a valid special code to a calling party when a prepayment amount is deposited to the credit of said calling party," (step (a)), and end with "deducting from the initial prepayment amount the running cost of the call" (step (h)).

The'275 patent's specification discloses two embodiments of the invention. In the first embodiment, the customer "acquires a special code, a credit amount[,] and the telephone number of the special central offices by either a cash or credit card payment." (Col.3 ll.3-5.) He then "uses the nearest available telephone" to call a "special central office." (Col.3 ll.20-21.) Once connected to the special central office, the user dials an identifying code number and the phone number he wishes to reach. A computer verifies the inputted information and connects the call if the information is successfully verified.

After the call is connected, a "time and distance computing circuit... is put into service to provide information for timing the call against the available credit." (Col.4 ll.3-6.) Information from the circuit is sent to a comparator, and the call is automatically terminated "[w]hen the credit equals the used time rate." (Col.4 ll.9-10.) The specification also describes a process by which, after terminating a call, the user can place another call without having to hang up and redial the central office. (Col.4 ll.28-43.) Figures 1 and 3, appended to this Opinion, illustrate the operation of this embodiment.

The second embodiment describes the use of the system from a "dedicated public telephone." (See col.4 l.44 -- col.5 l.28.) In this embodiment, the caller does not have to dial the "special central offices" before making a call. Instead, as soon as he picks up a receiver and "goes off hook" (col.4 l.47) at a dedicated public telephone, he hears a dial tone and dials an identifying code. Thereafter, the system functions similarly to the system described in the first embodiment. Figures 2 and 4 illustrate the operation of this embodiment. (See Appendix A.)

B. Prosecution Amendments

The '275 patent was filed on November 13, 1985. In an Office Action issued October 2, 1986, the examiner rejected all of the claims in the patent on the grounds that they were indefinite and failed to particularly point out and distinctly claim the subject matter of the invention. Specifically, the examiner objected that (1) "[l]ine 10 of claim 1 is grammatically incorrect;" (2) the "running cost of the call" referred to in claim 1, line 11 could not be calculated before the call was connected; (3) it was unclear whether the "subscriber codes" in line 6 of claim 10 included non-registered numbers; and (4) he did not understand what was meant by "the code in the memory" referred to at claim 10, line 9.

The examiner additionally rejected claims 1-9, 11-16, and 18-23 as being unpatentable in view of two U.S. patents: U.S. Patent No. 3,676,597 ("Peterson"), which discloses a "coin telephone non-coin service," and U.S. Patent No. 4,595,983 ("Gehalo"), which discloses a "central office powered credit only telephone paystation." In essence, the examiner found that when read together, these two patents contained all of the purportedly novel features described in the patent. The examiner noted:

Although Peterson mentions postpay telephone systems in his prior art discussion, his invention does not specifically mention prepayment and credit monitoring. It would therefore be obvious to supply the Peterson reference with the credit monitoring and prepayment features disclosed in Gehalo et al since Gehalo et al is also a credit telephone which has the feature of making calls without coins or credit cards. (Office Action, at 3 (Nov. 13, 1985), Burling Decl. Ex. 13.)

In response to the examiner's rejection, Aerotel filed amendments to its patent application on February 2, 1987, which made several changes to claim 1. Most significantly, Aerotel replaced references to "credit" throughout the claim with references to the "prepayment amount." (Amendment, at 2 (Nov. 13, 1985) ("Nov. 1985 Amdt."), Burling Decl. Ex. 6.) In addition, Aerotel amended claim 1 to include lettered steps; used the phrase "making a prepayment" in place of "depositing a prepayment amount" in step (a); and added step (h). (See Amendment, at 1-2 (Nov. 13, 1985) ("Nov. 1985 Amdt."), Burling Decl. Ex. 6.) Finally, Aerotel responded to the examiner's objection that the running cost of the call could not be known before the call began by calling for the "minimum cost of the inputted call" to be determined before connecting the call.

C. Reexaminations

The '275 patent issued on November 10, 1987. Since then, the Patent and Trademark Office has twice reexamined the patent's validity. In an Office Action issued December 20, 2000, the PTO announced that an examiner intended to reject claims 1 through 23 of the patent as being obvious or anticipated by various patents, including U.S. Patent No. 4,162,377 ("Mearns"). (See Office Action in Reexamination (Dec. 12, 2000), Morgan Decl. Ex. 5.) However, the PTO confirmed the validity of the patent after Aerotel submitted a twenty-seven page response. (Reply to Office Action in Reexamination (Mar. 20, 2002) ("Mar. 2002 Reply"), Morgan Decl. Ex. 3); Notice of Intent to Issue Reexamination Certificate (Dec. 16, 2002), Morgan Decl. Ex. 8; see also Reexamination Certificate, U.S. Patent No. 4,706,275, at cols. 1-2 (Apr. 8, 2003).)

On April 13, 2005, the PTO issued a second Office Action, in which the examiner proposed to hold claims 1-12, 15, 16, and 18-23 unpatentable or obvious. (Office Action in Ex Parte Reexamination (Apr. 13, 2005), Morgan Decl. Ex. 10.) Aerotel again filed a lengthy response, and the PTO again confirmed the patent's validity. (Reply to Office Action in Reexamination (June 9, 2005), Morgan Decl. Ex. 11; Notice of Intent to Issue Ex Parte Reexamination Certificate (Sept. 13, 2005), Morgan Decl. Ex. 13; see also Reexamination Certificate, U.S. Patent No. 4,706,275, at cols. 1-2 (June 27, 2006).)

D. Washington Action

In 2007, Aerotel brought a similar action against T-Mobile USA, Inc. before Judge Robart in the Western District of Washington. Case No. C07-1957JLR ("Washington Court"). That action alleged infringement of only Claim 23 of the '275 patent, but raised some of the same claim construction issues as are raised by the parties here. The contentions of the parties overlap in part, but are by no means identical: Telco, the defendant herein, seeks construction of different terms (e.g. "any available telephone"). And even when seeking construction of the same terms, the proposed constructions often differ. E.g. compare Washington Court at 16 ("T-Mobile seeks. a unique number, other than an identifier of a telephone subscriber or a telephone number, that the calling party inputs to the special exchange to make a prepaid call") with Joint Claim Chart, at 2 (Telco suggesting that a special code is "a unique number received by a user from the prepaid service provider in return for a prepayment amount." Where appropriate, reference appears below to that action's arguments and proposed constructions. After proceedings were delayed in this action, the Court deferred ruling pending the Washington Court's issuance of a Markman order regarding Claim 23. On December 23, 2009, that Court issued its claim construction order. Where appropriate, reference appears below to the Washington Court's claim construction order.


A. Legal Standard

The standards governing the construction of patent claims are familiar and well established. See generally Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (summarizing and restating doctrine). Because patents are addressed to practitioners in the field of the patented invention, a court should usually construe claim language consistent with its "ordinary and customary meaning" to a person of ordinary skill in the relevant art on the effective filing date of the patent application. Id. at 1312--13. "Such a person is deemed to read the words used in the patent documents with an understanding of their meaning in the field, and to have knowledge of any special meaning and usage in the field." Id. at 1313 (quoting Multiform Dessicants, Inc. v. Medzam, Ltd., 133 F.3d 1473, 1477 (Fed. Cir. 1998)).

To determine the "ordinary and customary meaning" of a claim term, a court should first consult the intrinsic evidence-the claims, the specification, and the prosecution history. See, e.g., Primos, Inc. v. Hunter's Specialties, Inc. 451 F.3d 841, 847--48 (Fed. Cir. 2006); Kinik Co. v. Int'l Trade Comm'n, 362 F.3d 1359, 1365 (Fed. Cir. 2004). Prior art cited to the examiner during prosecution is considered part of the prosecution history. See Phillips, 415 F.3d at 1317.

"A fundamental rule of claim construction is that terms... are construed with the meaning with which they are presented in the patent document. Thus claims must be construed so as to be consistent with the specification...." Merck & Co., Inc. v. Teva Pharms. USA, Inc., 347 F.3d 1367, 1370 (Fed. Cir. 2003) (citations omitted). Therefore, the patent specification has been called the most important guide to claim construction.

See, e.g., Vitrionics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 ("[The specification] is always highly relevant to the claim construction analysis. Usually, it is dispositive."); Phillips, 415 F.3d at 1315--16 ("The best source for understanding a technical term is the specification from which it arose, informed, as needed, by the prosecution history." (quoting Multiform Desiccants, 133 F.3d at 1478)).

The specification may show that a patentee has provided its own definitions for claim terms or has narrowed the scope of the claims through disclaimer. See Phillips, 415 F.3d at 1316. In such cases, the claim is construed according to the patentee's expressed intent even if the resulting construction departs from the ordinary meaning of the claim language. See, e.g., id.; Honeywell Int'l, Inc. v. Universal Avionics Sys. Corp., 493 F.3d 1358, 1361 (Fed. Cir. 2007) ("When a patentee defines a claim term, the patentee's definition governs, even if it is contrary to the conventional meaning of the term."). A patentee may redefine a term either explicitly or implicitly. See, e.g., Invitrogen Corp. v. Biocrest Mfg., L.P., 327 F.3d 1364, 1367 (Fed. Cir. 2003) ("The applicant may also act as his own lexicographer and use the specification to implicitly or explicitly supply new meanings for terms"); Bell Atl. Network Servs., Inc. v. Covad Commc'ns Group, Inc., 262 F.3d 1258, 1268 (Fed. Cir. 2001) ("[T]he specification may define claim terms 'by implication' such that the meaning may be 'found in or ascertained by a reading of the patent documents.'").

Though claims should be interpreted in light of the specification, it generally is inappropriate to import limitations from the specification into the claims. See, e.g., N. Am. Container, Inc. v. Plastipak Packaging, Inc., 415 F.3d 1335, 1348 (Fed. Cir. 2005); Prima Tek II, L.L.C. v. Polypap, S.A.R.L., 412 F.3d 1284, 1289 (Fed. Cir. 2005); see also SciMed Life Sys., Inc. v. Advanced Cardiovascular Sys., Inc., 242 F.3d 1337, 1340 (Fed. Cir. 2001) (describing the reading of a limitation from the written description into the claims as "one of the cardinal sins of patent law"). For example, the scope of a claim is usually not limited to the particular embodiment or embodiments described in the specification. See, e.g., Resonate Inc. v. Alteon Websystems, Inc., 338 F.3d 1360, 1364-- 65 (Fed. Cir. 2003) ("[A] particular embodiment appearing in the written description may not be read into a claim when the claim language is broader than the embodiment.") In order to determine whether the limitations of an embodiment should be applied to a claim, a court must determine whether a person of skill in the art would consider the embodiments to be merely exemplary, or whether they are intended to define the scope of the claim. See Phillips, 415 F.3d at 1323; Pfizer, Inc. v. Ranbaxy Labs. Ltd., 457 F.3d 1284, 1290 (Fed. Cir. 2006) ("[I]mport[ing] limitations from the specification into the claims... should be avoided unless the patentee clearly 'intends for the claims and the embodiments in the specification to be strictly coextensive.'" (quoting Phillips, 415 F.3d at 1323)).

The prosecution history, also part of the intrinsic evidence, may "inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it would otherwise be." Phillips, 415 F.3d at 1317. However, the prosecution history "often lacks the clarity of the specification and thus is less useful for claim construction purposes." Id..

"Extrinsic evidence is that evidence which is external to the patent and file history, such as expert testimony, inventor testimony, dictionaries, and technical treatises and articles." Vitrionics, 90 F.3d at 1584. While a district court may consult extrinsic evidence as part of the claim construction analysis, such evidence is considered less reliable than the intrinsic evidence. See, e.g., Phillips, 415 F.3d at 1317--19 ("[T]he court should keep in mind the flaws inherent in each type of [extrinsic] evidence and assess that evidence accordingly.").

These guidelines are not exhaustive. As the Federal Circuit has noted, "there is no magic formula or catechism for conducting claim construction," and a court is not "barred from considering any particular sources or required to analyze sources in any specific sequence, as long as those sources are not used to contradict claim meaning that is unambiguous in light of the intrinsic evidence." Phillips, 415 F.3d at 1324. "[W]hat matters is for the court to attach the appropriate weight... to those sources in light of the statutes and policies that inform patent law." Id.

B. Disputes Affecting Claims 1 and 23

Two of the parties' disputes relate to both claim 1 and claim 23. The Court begins by addressing these disputes.

1. Order of Steps

The parties first dispute whether the steps in claims 1 and 23 must be performed in the exact order recited in the claims. Under Federal Circuit precedent, the steps in a method claim need not be performed in a particular order unless the claim implicitly or explicitly requires this result. See Altiris, Inc. v. Symantec Corp., 318 F.3d 1363, 1369 (Fed. Cir. 2003); Interactive Gift Exp., Inc. v. Compuserve Inc., 256 F.3d 1323, 1342-43 (Fed. Cir. 2001). Two inquiries are relevant to the analysis. First, a court must "look to the claim language to determine if, as a matter of logic or grammar, [the steps] must be performed in the order written." Altiris, 318 F.3d at 1369. If the grammar and logic of the claims does not require a particular order, a court must "look to the rest of the specification to determine whether it'directly or implicitly requires such a narrow construction.'" Id. at 1370 (quoting Interactive Gift, 256 F.3d at 1343). Conversely, if the "sequential nature of the claim steps is apparent from the plain meaning of the claim language," a sequential construction is required so long as "nothing in the written description[, the specification,] suggests otherwise." Mantech Envtl. Corp. v. Hudson Envtl. Servs., Inc., 152 F.3d 1368, 1375-76 (Fed. Cir. 1998).

Here, Aerotel maintains that "[n]othing requires that all the steps of the paragraphs of Claims 1 and 23 need to be performed in the order they are recited" (Pl.'s Resp. Br. 22), while Telco contends that "Aerotel's claim amendments as well as grammar and logic dictate that the claimed methods must follow the order of the steps as set forth in claims 1 and 23...." (Def.'s Opp. Br. 8.) In view of Telco's position, the first question to resolve is whether anything in the claims' "grammar and logic" requires that the steps be performed in the order written.

Both logic and grammar support a sequential construction of the steps in claim 1. Logically, most but not all of the steps in claim 1 must be performed in the order in which they are recited. The significant degree to which the claims are logically sequential supports a construction requiring that all of the steps must be performed in order. Specifically, the Court finds as follows with respect to claim 1:*fn2

* Step (a) ("obtaining a special code by depositing a prepayment amount") must be performed before steps (d) ("inputting such special code for verification"), (f) ("verifying the special code.... "), (h) ("monitoring the prepayment amount..."), and (i) ("disconnecting... when the prepayment amount has been spent"). Logically, steps (d) and (f) assume that a special code has been issued, while steps (h) and (i) assume a particular prepayment amount.

* Step (b) must be performed before steps (f), (h), and (i). In step (b), a prepayment amount is stored in the special exchange's computer system. In step (f), it is compared to the minimum cost of the inputted call (less deductions for previous calls). In step (h), a variable calculated by subtracting "deductions for the running cost of the call" from the prepayment amount is monitored. In step (i), the call is disconnected if the prepayment amount is spent. Thus, steps (f), (h), and (i) assume step (b) has been performed.

* Step (c) must be performed before steps (d) through (i). Steps (d) through (i) assume that a call to the special exchange has been made.

* Step (e) must be performed before step (g). Step (g) connects the calling party to the number entered by the user in step (e).

* Step (f) must be performed before steps (g) through (i). Each of steps (g), (h), and (i) assume that the verification performed in step (f) was successful.

* Step (g) must be performed before steps (h) and (i). Steps (h) and (i) assume that the connection required by step (g) has occurred.*fn3

Thus, most of the steps appear in an order that they are also logically required to be performed in. This fact supports a sequential construction of the steps in the claim.

Moreover, the claim language also supports such a construction: claim 1 provides for "[a] unique method for making telephone calls from any available telephone, said method comprising the steps of.," and then lists the steps in lettered order. Generally speaking, steps are taken in order. In light of this grammatical indication and the significant degree to which the steps are logically required to follow in their given alphabetical orders, the Court concludes that the steps of claim 1 must be performed sequentially.

Turning to claim 23,*fn4 the Court finds as follows:

* Step (a) must be performed before steps (b), (e), (g), and (h). In step (a), the user deposits a "prepayment amount" with the system operator and receives a "valid special code." In step (b), the computer system at the special exchange records the prepayment amount. In step (e), a variable labeled "current initial prepayment amount," calculated in part based on the "prepayment amount" of step (a), is compared to "the minimum cost of a call to the inputted number." Steps (g) and (h) perform calculations based on this variable.

* Step (b) must be performed in quick succession with (a) and before steps (e), (g), and (h). The "prepayment amount" must be stored when it is known -- at the time it is deposited during step (a). Further, the "current initial prepayment amount" of step (e) is calculated based on the value stored of the "prepayment amount" stored in step (b), and used in steps (g) and (h).

* Step (c) must be performed before steps (d), (e), (f), and (g). Each of the latter steps assumes that a call has been placed to the special exchange.

* Step (d) must be performed before step (e). In step (d), a user inputs a "special code," which is validated in (e).

* Step (e) must be performed before steps (f) through (g). Each of the latter steps assumes the ...

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