BMC Resources, Inc. v. Paymentech, Lp

• Decision Date: 20 September 2007
• Docket Number: No. 2006-1503.,2006-1503.
• Citation: 498 F.3d 1373
• Parties: BMC RESOURCES, INC., Plaintiff-Appellant, v. PAYMENTECH, L.P., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

498 F.3d 1373

BMC RESOURCES, INC., Plaintiff-Appellant, v. PAYMENTECH, L.P., Defendant-Appellee.

No. 2006-1503.

United States Court of Appeals, Federal Circuit.

September 20, 2007.

COPYRIGHT MATERIAL OMITTED

Christopher R. Benson, Fulbright & Jaworski L.L.P., of Austin, TX, argued for plaintiff-appellant. With him on the brief were Jeffrey D. Mills; J. Jeffery Richardson, of Dallas, TX. Of counsel was Michael R. Krawzsenek, of Austin, TX.

John M. Cone, Hitchcock Evert, LLP, of Dallas, TX, argued for defendant-appellee.

Daralyn J. Durie, Keker & Van Nest LLP, of San Francisco, CA, for amicus curiae, Comcast Cable Communications LLC. With him on the brief were Mark A. Lemley and Matthias A. Kamber.

John Kenneth Felter, Goodwin Procter LLP, of Boston, MA, for amicus curiae, Freedom Wireless, Inc. With him on the brief was Kevin P. Martin.

Before RADER, GAJARSA, and PROST, Circuit Judges.

RADER, Circuit Judge.

BMC Resources, Inc. (BMC) appeals the district court's decision on summary judgment that Paymentech, L.P. (Paymentech) does not infringe asserted claims from two patents owned by BMC. The court determined that Paymentech had not infringed the claims because it performed some but not all of the steps of the asserted method claims. Because the record contains no basis to hold Paymentech vicariously responsible for the actions of the unrelated parties who carried out the other steps, this court affirms the finding of non-infringement.

I

BMC is the assignee of two patents, U.S. Patent Nos. 5,718,298 (the '298 patent) and 5,870,456 (the '456 patent). These patents claim a method for processing debit transactions without a personal identification number (PIN). The patented invention provides an interface between a standard touch-tone telephone and a debit card network. On this interface, a customer may perform real-time bill payment transactions with only a telephone keypad. The invention includes an interactive voice response unit (IVR) that prompts the caller to enter an access code, account number, debit card number, and payment amount. This information, in turn, passes to a debit network and on to a banking or financial institution. Each of these entities participates in approving and carrying out the transaction. Using the invention, the caller may also obtain information regarding authorization for the transaction, and inquire about previously processed transactions. Thus, BMC's patents disclose a method for PIN-less debit bill payment (PDBP) featuring the combined action of several participants, including the payee's agent (for example, BMC), a remote payment network (for example, an ATM network), and the card-issuing financial institutions.

Paymentech processes financial transactions for clients as a third party. In 2002, Paymentech began marketing PDBP services. Paymentech processes a PDBP transaction according to the following sequence:

1. the customer calls the merchant to pay a bill using an IVR;

2. the merchant collects payment information from the customer and sends it to Paymentech 3. Paymentech routes the information to a participating debit network;

4. the debit network forwards the information to an affiliated financial institution;

5. the financial institution authorizes or declines the transaction, and if authorized, charges the customer's account according to the payment information collected by the merchant; and

6. information regarding the status of the transaction moves from the financial institution to the debit network and then, through Paymentech, to the merchant who informs the customer of the status of the transaction.

This action began when BMC learned of Paymentech's offer to provide PDBP services to its clients. BMC then demanded that Paymentech obtain a license to use the patented technology. Paymentech refused and, as a preemptive measure, filed suit in federal district court seeking a declaration of non-infringement with respect to the BMC patents. BMC counter-claimed for infringement of the '456 patent. After the parties were realigned, BMC, as plaintiff, amended its complaint to allege infringement, both direct and by inducement, of the '456 and the '298 patents. Paymentech, as defendant, filed a counterclaim seeking a declaration of non-infringement and invalidity of the '298 patent. Paymentech also sought a declaration of non-infringement and invalidity with respect to a third patent, U.S. Patent No. 5,652,786 (the '786 patent). The trial court dismissed that claim for lack of subject matter jurisdiction because Paymentech could not prove it had objectively reasonable apprehension of being sued for infringement of the '786 patent. BMC Resources, Inc. v. Paymentech, L.P., No. 3-03-CV-1 927-M (N.D.Tex. May 5, 2004).

The parties subsequently filed summary judgment motions relating to infringement. BMC alleged that Paymentech directly infringed claim 7 of the '456 patent and claim 2 of the '298 patent. Claim 7 depends from claim 6 of the '456 patent. Claims 6 and 7 claim:

6. A method of paying bills using a telecommunications network line connectable to at least one remote payment card network via a payee's agent's system wherein a caller begins session using a telecommunications network line to initiate a spontaneous payment transaction to payee, the method comprising the steps of:

prompting the caller to enter a payment number from one or more choices of credit or debit forms of payment;

prompting the caller to enter a payment amount for the payment transaction;

accessing a remote payment network associated with the entered payment number,

the accessed remote payment network determining, during the session, whether sufficient available credit or funds exist in an account associated with the payment number to complete the payment transaction,

and upon a determination that sufficient available credit or funds exist in the associated account,

charging the entered payment amount against the account with the entered payment number,

adding the entered payment amount to an account associated with the entered account number, and

storing the account number, payment number and payment amount in a transaction file of the system.

7. The method of claim 6 wherein said payment is a PIN-less credit or debit card number.

Claim 2 of the '298 patent is also a dependent claim, incorporating the PIN-less debit payment method described in claim 1.

Claims 1 and 2 of the '298 patent claim:

1. A method of paying bills using a telephone connectable to at least one remote payment card network via a payee's agent's system, wherein a caller places a call using said telephone to initiate a spontaneous payment transaction that does not require pre-registration, to a payee, the method comprising the steps of:

prompting the caller to enter an account number using the telephone, the account number identifying an account of a payor with the payee in connection with the payment transaction;

responsive to entry of an account number, determining whether the entered account number is valid;

prompting the caller to enter a payment number using the telephone, the payment number being selected at the discretion of the caller from any one of a number of credit or debit forms of payment;

responsive to entry of the payment, determining whether the entered payment number is valid;

prompting the caller to enter a payment amount for the payment transaction using the telephone;

responsive to a determination that a payment amount has been entered and further responsive to a determination that the entered account number and payment number are valid, and during the call;

accessing a remote payment network associated with the entered payment number, the accessed remote payment network determining, during the call, the account associated with the entered payment number to complete the payment transaction;

accessing a remote payment network associated with the entered payment number, the accessed remote payment network determining, during the call, whether sufficient available credit or funds exist in an account associated with the entered payment number to complete the payment transaction;

responsive to a determination that sufficient available credit or funds exist in the associated account, charging the entered payment amount against the account associated with the entered payment number, adding the entered payment amount to an account associated with the entered account number, informing the caller that the payment transaction has been authorized, and

storing the account number, payment number and payment amount in a transaction log file of the system during the call; and

responsive to determination that sufficient available credit or funds do not exist in the associated account, informing the caller during the call that the current payment transaction has been declined and terminating the current payment transaction.

2. The method of claim 1 wherein said payment number is a debit card number.

Paymentech denied infringement, arguing that it did not perform all of the steps of the patented method by itself or in coordination with its customers and financial institutions. The magistrate judge determined that Paymentech did not infringe the '298 patent or the '456 patent either by itself or in connection with other entities. Accordingly, the magistrate judge recommended that the district court grant Paymentech's motion for summary judgment of non-infringement.

BMC objected to that recommendation. Relying on this court's decision in On Demand Machine Corp. v. Ingram Industries, Inc., 442 F.3d 1331 (Fed.Cir.2006), BMC argued that Paymentech had infringed. BMC argued that On Demand changed the law governing joint infringement by multiple parties. The district court determined that the language BMC had relied upon in On Demand was dicta that had not altered the traditional standards governing infringement by multiple parties, and thus affirmed the findings of the magistrate judge. BMC Resources, Inc. v....