Cardsoft, LLC v. Verifone, Inc., 120215 FEDFED, 2014-1135

Docket Nº:2014-1135
Opinion Judge:Hughes, Circuit Judge.
Party Name:CARDSOFT (assignment for the Benefit of Creditors), LLC, Plaintiff-Appellee v. VERIFONE, INC., HYPERCOM CORP., VERIFONE SYSTEMS INC., Defendants-Appellants INGENICO S.A., INGENICO CORP., INGENICO INC., WAY SYSTEMS, INC., Defendants
Attorney:Donald R. McPhail, Cozen O'Connor, Washington, DC, for plaintiff-appellee. Also represented by Barry P. Golob, Kerry Brendan McTigue; William Ellsworth Davis III, The Davis Firm, PC, Longview, TX; Kristina Caggiano Kelly, Patrick D. McPherson, Duane Morris LLP, Washington, DC. E. Joshua Rosenkran...
Judge Panel:Before Prost, Chief Judge, Taranto and Hughes, Circuit Judges.
Case Date:December 02, 2015
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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CARDSOFT (assignment for the Benefit of Creditors), LLC, Plaintiff-Appellee

v.

VERIFONE, INC., HYPERCOM CORP., VERIFONE SYSTEMS INC., Defendants-Appellants

INGENICO S.A., INGENICO CORP., INGENICO INC., WAY SYSTEMS, INC., Defendants

No. 2014-1135

United States Court of Appeals, Federal Circuit

December 2, 2015

Appeal from the United States District Court for the Eastern District of Texas in No. 2:08-CV-00098-RSP, Magistrate Judge Roy S. Payne.

Donald R. McPhail, Cozen O'Connor, Washington, DC, for plaintiff-appellee. Also represented by Barry P. Golob, Kerry Brendan McTigue; William Ellsworth Davis III, The Davis Firm, PC, Longview, TX; Kristina Caggiano Kelly, Patrick D. McPherson, Duane Morris LLP, Washington, DC.

E. Joshua Rosenkranz, Orrick, Herrington & Sut-cliffe LLP, New York, NY, for defendants-appellants. Also represented by Richard A. Bierschbach, Brian David Ginsberg; Mark S. Davies, Susannah Weaver, Washington, DC; Cam Thi Phan, Menlo Park, CA; Robert W. Kantner, Jones Day, Dallas, TX.

Before Prost, Chief Judge, Taranto and Hughes, Circuit Judges.

Hughes, Circuit Judge.

The case returns to us on remand from the Supreme Court. In CardSoft v. VeriFone, Inc., 769 F.3d 1114 (Fed. Cir. 2014), we decided an appeal by defendant-appellants (collectively, VeriFone) from a decision of the United States District Court for the Eastern District of Texas. In construing the patent claims, the district court adopted plaintiff-appellees' (collectively, CardSoft's) proposed construction for the claim term "virtual machine." Applying the district court's construction, a jury returned a verdict for CardSoft. Because the district court erred in its construction of "virtual machine, " and because Card-Soft waived any argument that Appellants infringe under the correct construction, we reversed the district court's decision.

Following our first decision in this case, the Supreme Court held that we must review a district court's ultimate interpretation of a claim term, as well as its interpretations of "evidence intrinsic to the patent, " de novo and its subsidiary factual findings about extrinsic evidence for clear error. See Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831, 841–42 (2015). The Court also vacated and remanded our Cardsoft decision for further consideration in light of this new standard of review. CardSoft, LLC v. VeriFone, Inc., 135 S.Ct. 2891 (2015). Because this case does not involve the factual findings to which we owe deference under Teva, we again reverse the district court's construction of the term "virtual machine."

I

CardSoft filed suit in March 2008 against VeriFone, asserting infringement of U.S. Patent Nos. 6, 934, 945 (the '945 patent) and 7, 302, 683 (the '683 patent). The district court held a Markman hearing in July 2011 and conducted a jury trial in June 2012. The jury determined that certain VeriFone devices infringed claim 11 of the '945 patent and claim 1 of the '683 patent and that these claims were not invalid. VeriFone moved for a new trial and for judgment as a matter of law, but the district court denied both motions. VeriFone appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

The '683 patent is a continuation of the '945 patent and shares the same specification. Both patents describe software for controlling a payment terminal. See '945 patent col. 1 ll. 10–17. Payment terminals are small, specialized computers, and include a processor, peripheral units like a card reader, a display, a printer, or a communications interface, and a software operating system to control the hardware components. Id. at col. 2 l. 64–col. 3 l. 1.

According to the patents, prior art payment terminals used a variety of "different hardware/software architectures." Id. at col. 2 ll. 34–37. But this variety of different architectures meant that each application program for a payment terminal needed to be written specifically for that terminal. Id. at col. 3 ll. 5–11. "[P]rogramming alterations are not 'portable' between different types of devices." Id. at col. 3 ll. 13–14.

To solve this problem, the specification describes a "virtual machine, " acting as an "interpreter" between an application program (like a particular merchant's payment processing software) and a payment terminal's underlying hardware and operating system. Id. at col. 3 ll. 29–36. 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. Id. at col. 3 ll. 41–45. This application can...

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