Appeals Court Clarifies Legal Standard for Patent Claim Anticipation

In a precedential opinion decided Oct. 19, the Court of Appeals for the Federal Circuit clarified what a prior art reference must show in order to anticipate an invention claimed in a patent and thereby invalidate the claim. The case, Net MoneyIN, Inc. v. VeriSign, Inc. et al., 2007-1565, involves a patent owned by our client NetMoneyIN, Inc. on an Internet payment system that is arguably the dominant system in use today. The district court granted summary judgment of invalidity of claim 23 of the patent on the ground that the invention described in that claim was anticipated by a prior art reference entitled “Internet Keyed Payments Protocol” (“the iKP reference”), published by the Internet Engineering Task Force and IBM. The Federal Circuit reversed the lower court's holding, concluding that the iKP reference “cannot anticipate the system of claim 23.”

The Federal Circuit took the opportunity presented by this case to clarify its prior statements to the effect that, “in order to demonstrate anticipation, the proponent must show ‘that the four corners of a single, prior art document describe every element of the claimed invention.'” The Court made the following clarification: “Because the hallmark of anticipation is prior invention, the prior art reference—in order to anticipate under 35 U.S.C. § 102—must not only disclose all elements of the claim within the four corners of the document, but must also disclose those elements ‘arranged as in the claim.'”

Claim 23 of the`737 patent recites an Internet payment system comprising five “links.” Taking material from two separate disclosed examples in iKP, the district court stated: “All of the limitations of claim 23 can be found within in the iKP reference. A simple combination [of those limitations] would produce the system described in claim 23 of the `737 patent. That no specific example within iKP contains all five links does not preclude a finding of anticipation.”

The Federal Circuit disagreed. It held that “unless a reference discloses within the four corners of the document not only all of the limitations claimed but also all of the limitations arranged or combined in the same way as recited in the claim, it cannot be said to prove prior invention of the thing claimed and, thus, cannot anticipate under 35 U.S.C. § 102.” It went on to say:

“Here, the iKP reference discloses two separate protocols for processing an Internet credit card transaction. Neither of these protocols contains all five links arranged or combined in the same way as claimed in the `737 patent. Thus . . . the iKP reference cannot anticipate the system of claim 23. The district court was wrong to conclude otherwise”