Diebold Nixdorf, Inc. v. Int'l Trade Comm'n

• Citation: 899 F.3d 1291
• Decision Date: 15 August 2018
• Docket Number: 2017-2553
• Parties: DIEBOLD NIXDORF, INC., Diebold Self-Service Systems, Appellants v. INTERNATIONAL TRADE COMMISSION, Appellee Hyosung TNS Inc., Nautilus Hyosung America Inc., Intervenors
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

899 F.3d 1291

DIEBOLD NIXDORF, INC., Diebold Self-Service Systems, Appellants

v. INTERNATIONAL TRADE COMMISSION, AppelleeHyosung TNS Inc., Nautilus Hyosung America Inc., Intervenors

2017-2553

United States Court of Appeals, Federal Circuit.

Decided: August 15, 2018

Patrick Flinn, Alston & Bird LLP, Atlanta, GA, argued for appellants. Also represented by Keith E. Broyles, Pamela Councill, David Frist, Joshua Mark Weeks ; Adam Swain, Washington, DC.

Panyin Hughes, Office of the General Counsel, United States International Trade Commission, Washington, DC, argued for appellee. Also represented by Dominic L. Bianchi, Wayne W. Herrington.

Gregory G. Garre, Latham & Watkins LLP, Washington, DC, argued for intervenors. Also represented by Gabriel Bell, Elana Nightingale Dawson, Kevin Wheeler.

Before Prost, Chief Judge, Bryson and O'Malley, Circuit Judges.

O'malley, Circuit Judge.

Appellants Diebold Nixdorf, Inc. and Diebold Self-Service Systems (together, "Diebold") appeal the International Trade Commission's ("ITC" or "Commission") finding that they violated § 337 of the Tariff Act of 1930 by importing components of automated teller machines ("ATMs") that infringe claims 1–3, 6, 8, and 9 of U.S. Patent No. 8,523,235 ("the '235 patent"). Diebold challenges the Commission's determination that these claims, all of which recite the term "cheque standby unit," are not invalid for indefiniteness. See Certain Automated Teller Machines, ATM Modules, Components There of, and Prods. Containing the Same , Inv. No. 337-TA-989, 2017 ITC LEXIS 1603 (USITC Mar. 13, 2017). It also challenges the Commission's construction of certain claim limitations and its application of those constructions to Diebold's accused ATM components and the asserted domestic industry products. See id.

We conclude that the term "cheque standby unit" in the '235 patent is a means-plus-function term subject to 35 U.S.C. § 112, para. 6, which lacks corresponding structure disclosed in the specification. We therefore reverse the Commission's finding that Diebold violated § 337.

I. BACKGROUND

A. The '235 Patent

The '235 patent describes an ATM—i.e. , a "cash and cheque automatic depositing apparatus"—that is capable of performing banking transactions, and more particularly is "capable of automatically depositing a bundle of cashes and cheques inserted at once." '235 patent, col. 1, ll. 6–11. It accomplishes these goals by performing several steps: (1) separating deposited bundles into individual banknotes; (2) transferring those notes horizontally through the ATM; (3) verifying the authenticity or abnormality of each note; (4) sorting and processing the notes based on how each was verified; and (5) preparing the notes for depositing into storage safes. Id. col. 1, l. 40–col. 2, l. 3.

One component recited in each of the '235 patent's nine claims is a "cheque standby unit." The claims specify that the "cheque standby unit" is "placed in the main transfer path between the first gate and the second gate" and is "configured to hold the at least one authentic cheque to return the at least one authentic cheque to the user responsive to receiving user instructions cancelling depositing of the at least one authentic cheque." Id. col. 10, ll. 50–55.

The specification does not mention a "cheque standby unit," but instead references a "cheque temporary standby unit" in three portions of the detailed description. First, it explains that the ATM "includes a cheque temporary standby unit 120 formed on the main transfer path 106a provided at a rear side of the first gate 112 , for temporarily stopping a transfer of authentic cheques," as well as "an endorsement printing unit 122 followed by the cheque temporary standby unit 120 on the main transfer path 106a , for printing endorsement information on the authentic cheques according to printing instructions." Id. col. 2, l. 62–col. 3, l. 2. It later explains the function of the cheque temporary standby unit in more detail:

the cheque temporary standby unit 120 formed on a specific section of the main transfer path 106a between the first gate 112 and the main transfer path 106a temporarily stops a transfer of authentic cheques verified by the banknote verifying unit 110 . Before the cheques are subjected to an endorsement printing indicating that the rights relating to the cheques are transferred from customers to the bank, the cheques are held for the user as an owner to input an instruction. When a depositing instruction is inputted, the cheques are transferred to the endorsement printing unit 122 . On the contrary, when a depositing cancellation instruction is inputted, the cheques are transferred to the bundle insertion opening 102 or the abnormal banknote temporary storage 116 by a reverse driving of the main transfer unit 106 so that they can be returned to the user.

The endorsement printing unit 122 performs the endorsement printing only when the banknote verifying unit 110 verifies that the cheques are authentic and, also, when the cheque temporary standby unit 120 receives an owner's final depositing instruction.

Id. col. 5, ll. 40–59. Finally, the specification describes "a preferable entire operation" of the invention, in which checks that have been separated and transferred along the main transfer path "are temporarily held by the cheque temporary standby unit 120 formed on a specific section of the main transfer path 106a ," where they are held until a user selects either a depositing consent or cancellation. Id. col. 7, l. 65–col. 8, l. 6. "Cheque temporary standby unit 120 " is depicted on the right-hand side of Figure 2:

The "cheque standby unit" limitation was added during prosecution to overcome prior art that purportedly permitted cheques to be stored in a safe, but did not disclose returning stored cheques to the user after the user canceled a deposit. J.A. 559–61, 564–65.

B. The ITC Proceedings

In February 2016, Intervenors Hyosung TNS Inc. and Nautilus Hyosung America Inc. (together, "Hyosung"), which own the '235 patent by assignment, filed a complaint with the ITC against Diebold,¹ alleging violations of § 337 by reason of Diebold's infringement of four patents related to ATMs. The Commission instituted an investigation, and three of the four patents—all but the '235 patent —were subsequently terminated from the investigation pursuant to motions by Hyosung. The accused products are Diebold's ATMs that can receive and process both cash and checks in a single, mixed bundle that is inserted at once, and a module used in these ATMs. J.A. 76–77.

The administrative law judge ("ALJ"), after holding an evidentiary hearing, issued an Initial Decision, finding not only that the accused module directly infringed claims 1–3, 6, 8, and 9 of the '235 patent and that Diebold contributorily infringed the claims by importing the module, but also that the claims of the '235 patent are not invalid. In relevant part, the ALJ concluded that the term "cheque standby unit" is not indefinite. First, he agreed with Hyosung that the term should be given its plain and ordinary meaning, concluding that a person of ordinary skill in the art "would understand that a structure in an ATM that temporarily holds checks pending the customer confirming the deposit is the cheque standby unit," and that, "[i]n general, a cheque standby unit is the escrow that temporarily holds checks." J.A. 141. He expressly credited the testimony of Hyosung's expert, Dr. Howard, stating he "described how the phrase 'a cheque standby unit' would necessarily have a structural meaning to such a person, and would refer to the physical portion of a cash-and-check depositing module that is comprised of well-known components for holding cheques in a standby configuration pending user confirmation of the deposit." J.A. 141.

The ALJ also examined the claim limitation under the assumption that "cheque standby unit" is a means-plus-function term, and determined that the '235 patent discloses the required structure of "stacking and temporary storage of media." J.A. 142. The ALJ then stated that a person of ordinary skill in the art would find corresponding structure in Figure 2's teaching of "a cheque standby unit 120 that temporarily stores at least one authentic cheque by holding it in position on the belt." J.A. 142.

The Commission, after undertaking review of the ALJ's Initial Decision on issues not involving the "cheque standby unit," issued its Final Determination finding a violation of § 337, in addition to a Limited Exclusion Order and Cease and Desist Orders. Diebold appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(6).

II. DISCUSSION

Diebold argues on appeal that "cheque standby unit" is a purely functional term that connotes no specific structure and is therefore subject to § 112, para. 6.² Specifically, it contends that the word "unit" is a "generic nonce word" akin to " 'mechanism,' 'element,' 'device,' and other nonce words that reflect nothing more than verbal constructs," Appellant Br. 30 (quoting Williamson v. Citrix Online, LLC , 792 F.3d 1339, 1350 (Fed. Cir. 2015) (en banc)), and highlights that the '235 patent recites thirteen different "unit" elements in the claims, each of which has a unique function. Diebold explains that the specification includes no discussion of a specific structure of the "cheque standby unit," and instead defines the term exclusively by its function and location. It then points out that Hyosung's expert did not testify that the term "cheque standby unit" connotes sufficiently definite structure, but instead testified that the term encompasses all structures capable of fulfilling the function of temporarily holding checks pending the customer confirming the deposit, including a nonexhaustive list of structures as varied as a "suction cup," a "trap door," and a "drum."

The Commission and Hyosung first respond by arguing that Diebold failed to present evidence of its own to rebut the presumption that § 112, para. 6 does not apply to...