CardSoft: A Primer On Basic Claim Construction Principles

The U.S. Court of Appeals for the Federal Circuit recently reaffirmed basic claim construction principles in CardSoft, LLC v. VeriFone, Inc., No. 2014-1135 (Fed. Cir. Oct. 17, 2014). The court applied a broad range of tools from the seminal Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), to arrive at its interpretation, reversing the trial court.

The asserted patents (including U.S. Patent No. 6,934,945 ("the '945 patent")) describe software for controlling a payment terminal. The problem in the prior art was the variation in payment terminals, which used different hardware/software architectures. The variety of architectures required that each application program for a payment terminal be written expressly for the given terminal, meaning "[p]rogramming alterations are not 'portable' between different types of devices." CardSoft, No. 2014-1135, slip op. at 3 (quoting '945 patent, col. 3 II. 13-14). The patents-in-suit taught an improved "virtual machine" acting as an "interpreter" between an application program (like a merchant's payment-processing software) and the terminal's hardware systems. Id. "Instead of writing a payment processing application for a particular hardware configuration or operating system, a developer can write the application for the virtual machine," making it portable across systems. Id. (citing '945 patent, col. 3 ll. 41-45). The improved "virtual machine" of the patents-in-suit included a specialized "virtual message processor" designed to optimize network communications, and a "virtual function processor" designed to optimize control of the payment terminal itself. Id. at 4.

CardSoft sued VeriFone and others for patent infringement in March 2008. Id. at 2. Having held a Markman hearing, the district court construed "virtual machine"—a term found in all the asserted claims—as "a computer programmed to emulate a hypothetical computer for applications relating to transport of data." Id. at 6 (quoting CardSoft, Inc. v. VeriFone Holdings, Inc., No. 2:08-cv-98, 2011 WL 4454940, at *8 (E.D. Tex. Sept. 29, 2011)). The trial court thus found that the claimed "virtual machine" need not run applications or instructions that are hardware or operating system independent.

Subsequent to trial in June 2012, the jury determined under the court's construction that VeriFone infringed two valid claims of the patents-in-suit. VeriFone appealed the district court's construction of "virtual machine," arguing before the...