CIAS, Inc. v Alliance Gaming Corp.
2007 WL 2791695, 2007 U.S. App. LEXIS 22807, decided September 27, 2007
Lexis: 2007 U.S. App. LEXIS 22807
Facts: CIAS sued Alliance and its subsidiary, Bally Gaming, for infringement of Patent No. 5,283,422 (the ‘422 patent), entitled “Information Transfer and Use, Particularly with Respect to Counterfeit Detection.†The ‘422 patent claims a computer directed system that assigns authentic objects coded identification information, which is recorded on the object and in the system. The system then, upon presentation of the object for authentication, compares the object’s information with the stored information, to determine whether the object is authentic or counterfeit. Claim 1 is directed to “a counterfeit detection system for identifying a counterfeit object from a set of similar authentic objects, each object in said set having unique authorized information associated therewith comprised of machine-readable code elements coded according to a detectable series . . . .†(emphasis added). Claim 13 is similar to claim 1, but adds “each object in said set having unique randomly selected authorized information . . . .â€
Alliance produces a system for detecting counterfeit tickets in casino slot machines. It argued that its system does not infringe, because the system uses numbers generated by a “secret algorithmâ€, which was excluded from the ‘422 claims during prosecution of the patent, along with a detectable series of numbers.
Procedural History: The U.S. District Court for the Southern District of New York granted summary judgment for Alliance. In doing so, the court interpreted the phrase “comprised of†as a closed-end term, and found that Alliance’s system fell outside of the claim language following the term. Additionally, the court found that CIAS had limited the scope of the terms “unique authorized information†and “unique randomly selected authorized information" during prosecution of the ‘422 patent, and that Alliance’s system fell outside of this limited claim scope. CIAS appealed to the Federal Circuit Court of Appeals.
Holding: Judgment granting summary judgment to Alliance affirmed. The district court erred in its interpretation of the term “comprised of,†but this error did not affect the court’s construction of the terms “unique authorized information†and “unique randomly selected authorized information,†which correctly supported the grant of summary judgment.
Analysis:
• “Comprised ofâ€: The term “comprised of,†used as a transition phrase, has long been recognized as an open-ended term similar to “comprising†and distinct from the closed-end term “consisting ofâ€. “Comprised of†means “including but not limited toâ€, and does not exclude the possible presence of additional elements or steps. The district court erred in finding that “comprised of†is a closed-end term.
• “Unique authorized information†/ “unique randomly selected authorized information":
o CIAS argues that “unique authorized information†includes sets of numbers containing pseudo-random computer-generated numbers, and that Alliance’s system infringes because it uses sets of numbers that include numbers obtained from a secret algorithm. However, during reexamination of the ‘422 patent, CIAS argued that its claims did not include these sets of numbers, in order for the claims to be patentable over Patent No. 3,833,795 to Shoshani. Thus, the district court was correct in finding that “unique authorized information†must be construed to include only a detectable series of numbers or a randomly generated series of numbers, and not a set including both.
o During reexamination, CIAS also argued around Patent No. 4,463,250 to McNeight, which detected counterfeit articles according to a detectable series and through the use of a secret algorithm, by stating that the ‘422 patent’s authorized information is not generated by an algorithm. Thus, the district court was correct in finding that “randomly selected†means “truly random†numbers, with no predictability whatsoever, as opposed to numbers generated by an algorithm.
o Given the district court’s correct construction of the terms “unique authorized information†and “unique randomly selected authorized information," the court was correct in finding that Alliance’s system, which uses numbers generated by a “secret algorithm†along with a detectable series of numbers, does not infringe the ‘422 patent.
Notes: The court also addresses CIAS’s doctrine of equivalence argument. The district court found that Alliance’s system did not infringe the ‘422 patent under the doctrine of equivalence, but did not explain its ruling. The court of appeals found that the district court had not committed reversible error, because it may have recognized that CIAS, faced with the court’s prosecution history estoppel findings, could not meet its burden for showing equivalence under Festo Corp., 535 U.S. 722.
2007 WL 2791695, 2007 U.S. App. LEXIS 22807, decided September 27, 2007
Lexis: 2007 U.S. App. LEXIS 22807
Facts: CIAS sued Alliance and its subsidiary, Bally Gaming, for infringement of Patent No. 5,283,422 (the ‘422 patent), entitled “Information Transfer and Use, Particularly with Respect to Counterfeit Detection.†The ‘422 patent claims a computer directed system that assigns authentic objects coded identification information, which is recorded on the object and in the system. The system then, upon presentation of the object for authentication, compares the object’s information with the stored information, to determine whether the object is authentic or counterfeit. Claim 1 is directed to “a counterfeit detection system for identifying a counterfeit object from a set of similar authentic objects, each object in said set having unique authorized information associated therewith comprised of machine-readable code elements coded according to a detectable series . . . .†(emphasis added). Claim 13 is similar to claim 1, but adds “each object in said set having unique randomly selected authorized information . . . .â€
Alliance produces a system for detecting counterfeit tickets in casino slot machines. It argued that its system does not infringe, because the system uses numbers generated by a “secret algorithmâ€, which was excluded from the ‘422 claims during prosecution of the patent, along with a detectable series of numbers.
Procedural History: The U.S. District Court for the Southern District of New York granted summary judgment for Alliance. In doing so, the court interpreted the phrase “comprised of†as a closed-end term, and found that Alliance’s system fell outside of the claim language following the term. Additionally, the court found that CIAS had limited the scope of the terms “unique authorized information†and “unique randomly selected authorized information" during prosecution of the ‘422 patent, and that Alliance’s system fell outside of this limited claim scope. CIAS appealed to the Federal Circuit Court of Appeals.
Holding: Judgment granting summary judgment to Alliance affirmed. The district court erred in its interpretation of the term “comprised of,†but this error did not affect the court’s construction of the terms “unique authorized information†and “unique randomly selected authorized information,†which correctly supported the grant of summary judgment.
Analysis:
• “Comprised ofâ€: The term “comprised of,†used as a transition phrase, has long been recognized as an open-ended term similar to “comprising†and distinct from the closed-end term “consisting ofâ€. “Comprised of†means “including but not limited toâ€, and does not exclude the possible presence of additional elements or steps. The district court erred in finding that “comprised of†is a closed-end term.
• “Unique authorized information†/ “unique randomly selected authorized information":
o CIAS argues that “unique authorized information†includes sets of numbers containing pseudo-random computer-generated numbers, and that Alliance’s system infringes because it uses sets of numbers that include numbers obtained from a secret algorithm. However, during reexamination of the ‘422 patent, CIAS argued that its claims did not include these sets of numbers, in order for the claims to be patentable over Patent No. 3,833,795 to Shoshani. Thus, the district court was correct in finding that “unique authorized information†must be construed to include only a detectable series of numbers or a randomly generated series of numbers, and not a set including both.
o During reexamination, CIAS also argued around Patent No. 4,463,250 to McNeight, which detected counterfeit articles according to a detectable series and through the use of a secret algorithm, by stating that the ‘422 patent’s authorized information is not generated by an algorithm. Thus, the district court was correct in finding that “randomly selected†means “truly random†numbers, with no predictability whatsoever, as opposed to numbers generated by an algorithm.
o Given the district court’s correct construction of the terms “unique authorized information†and “unique randomly selected authorized information," the court was correct in finding that Alliance’s system, which uses numbers generated by a “secret algorithm†along with a detectable series of numbers, does not infringe the ‘422 patent.
Notes: The court also addresses CIAS’s doctrine of equivalence argument. The district court found that Alliance’s system did not infringe the ‘422 patent under the doctrine of equivalence, but did not explain its ruling. The court of appeals found that the district court had not committed reversible error, because it may have recognized that CIAS, faced with the court’s prosecution history estoppel findings, could not meet its burden for showing equivalence under Festo Corp., 535 U.S. 722.