Stoneeagle Servs., Inc. v. Pay-Plus Solutions, Inc.

• Decision Date: 04 June 2015
• Docket Number: Case No.: 8:13-cv-2240-T-33MAP
• Court: U.S. District Court — Middle District of Florida
• Parties: STONEEAGLE SERVICES, INC., Plaintiff, v. PAY-PLUS SOLUTIONS, INC., and PREMIER HEALTHCARE EXCHANGE, INC., Defendants.

STONEEAGLE SERVICES, INC., Plaintiff, v. PAY-PLUS SOLUTIONS, INC.,and PREMIER HEALTHCARE EXCHANGE, INC., Defendants.

Case No.: 8:13-cv-2240-T-33MAP

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

June 4, 2015

ORDER

This cause comes before the Court pursuant to Plaintiff StoneEagle Services, Inc.'s Opening Claim Construction Brief (Doc. # 122), Defendants Pay-Plus Solutions, Inc. and Premier Healthcare Exchange, Inc.'s Markman Motion to Construe Claims (Doc. # 127), and the claims construction hearing held on May 11, 2015 (Doc. # 183). The claim language in dispute in this case shall be construed as set forth in this Order.

I. Background

In this patent infringement action, Plaintiff alleges that Defendants willfully infringed Plaintiff's rights under two patents: Reissue Patent No. US RE43,904 E ("the 904 Patent") and Reissue Patent No. US RE44,748 E ("the 748 Patent"). (Doc. # 66 at ¶¶ 1, 8-10 & Ex. A, B). Both patents cover a health care provider reimbursement system, by whicha payor, such as an insurance company, makes "a virtual payment to a medical provider by transmitting a stored-value card account payment of the authorized benefit amount, together with an explanation of benefits." (Id. at ¶¶ 14-16 & Ex. A, B). Plaintiff alleges that Defendants' health care benefits payment processing system, "Pay-Plus™ Select," directly competes with Plaintiff's patented system. (Id. at ¶¶ 17-18). Specifically, Plaintiff "asserts different infringement positions against the Pay-Plus™ Select service: (1) the 'one-fax system' allegedly infringes all of the asserted claims; and (2) the 'two-fax system' and 'hardcopy mailing system' each allegedly infringe claims 7, 13, 19, and 25 of the 748 Patent." (See Doc. # 143 at 8).

To determine whether Defendants infringed the 904 and 748 Patents, it is first necessary to determine the scope of protection the Patents afford. The parties disagree about the proper construction of language contained in several claims of the 904 and 748 Patents; specifically, claims 2, 7, 12, 17, and 22 of the 904 Patent and claims 7, 13, 19, and 25 of the 748 Patent.

The function of patent claims is "(a) to point out what the invention is in such a way as to distinguish it from what was previously known, i.e., from the prior art; and (b) todefine the scope of protection afforded by the patent. In both of those aspects, claims are not technical descriptions of the disclosed inventions but are legal documents like the descriptions of lands by metes and bounds in a deed which define the area conveyed but do not describe the land." In re Vamco Mach. & Tool, 752 F.2d 1564, 1577 n.5 (Fed. Cir. 1985)(emphases in original). A patent's claims thus describe the outer bounds of the exclusive rights conveyed by the patent. Ice House Am., LLC v. Innovative Packaging Techs., Inc., No. 3:05-cv-1294-J-33TEM, 2008 WL 2856674, at *3 (M.D. Fla. July 22, 2008) clarified on denial of reconsideration, No. 3:05-CV-1294-J-33TEM, 2008 WL 3305232 (M.D. Fla. Aug. 7, 2008).

In Markman v. Westview Instruments, Inc., the Supreme Court held that the language of a patent claim must be construed by the court, and not the jury. 517 U.S. 370, 391 (1996). This holds true even where conflicting evidence is presented in support of alternative proposed constructions. Id. at 389-90. To that end, the parties have presented evidence on the meaning of disputed language in the patents in suit. (See Doc. ## 122, 127, 183). The Court now determines the meaning of this disputed language.

II. Legal Standard

"Patent infringement actions are composed of two phases." Alps S., LLC v. Ohio Willow Wood Co., No. 8:08-cv-1893-T-33MAP, 2010 WL 2347046, at *1 (M.D. Fla. May 19, 2010) report and recommendation adopted, No. 8:08-cv-1893-T-33MAP, 2010 WL 2293274 (M.D. Fla. June 7, 2010). "First, in the claim construction phase, the court determines the scope and meaning of the patent claims as a matter of law, and second, the claims are compared to the allegedly infringing device." Id. (citing Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir. 1998)).

The construction of claims is based primarily on intrinsic evidence: the claim language, the specification, and the prosecution history. Id. The claim language itself is first in importance when construing the meaning and scope of the patent. Id. Generally, the rule for claim interpretation is that:

[T]erms in the claim are to be given their ordinary and accustomed meaning. General descriptive terms will ordinarily be given their full meaning: modifiers will not be added to broad terms standing alone. In short, a court must presume that the terms in the claim mean what they say, and, unless otherwise compelled, give full effect to the ordinary and accustomed meaning of the claim terms. Thus, if the claim is unambiguous and clear on its face, the court need not consider the other intrinsic evidence in construing the claim.

Id. (quoting Johnson Worldwide Assocs., Inc. v. Zebco Corp., 175 F.3d 985, 989 (Fed. Cir. 1999)). The court must determine what the claim language would have meant to "a person of ordinary skill in the art in question at the time of the invention." Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005).

"When the meaning of words in a claim is in dispute, the specification and prosecution history can provide relevant information about the scope and meaning of the claim." Electro Med. Sys., S.A. v. Cooper Life Scis., Inc., 34 F.3d 1048, 1054 (Fed. Cir. 1994). "The specification contains a written description of the invention which must be clear and complete enough to enable those of ordinary skill in the art to make and use it." Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996). The prosecution history "contains the complete record of all the proceedings before the Patent and Trademark Office, including any express representations made by the applicant regarding the scope of the claims." Id.

"The [c]ourt must be careful, however, to avoid reading limitations from the specification into the claim." Ice House Am., LLC, 2008 WL 2856674, at *3. "The claim is what limits the scope of the patent, not the specification." Id. The[c]ourt [should] be equally careful to avoid reading the claims too broadly, as would be done if the [c]ourt read claim language according to its dictionary definition rather than in the context of the specification." Id.

The court may also consider extrinsic evidence. Alps S., LLC, 2010 WL 2347046, at *3. Extrinsic evidence is evidence that is external to the patent, such as expert testimony and dictionaries. Id. The purpose of this evidence is to:

provide background on the technology at issue, to explain how an invention works, to ensure that the court's understanding of the technical aspects of the patent is consistent with that of a person of skill in the art, or to establish that a particular term in the patent or the prior art has a particular meaning in the pertinent field.

Phillips, 415 F.3d at 1318.

III. Discussion

A. Stipulated Phrase

The parties agree that the phrase "stored-value card" should be construed as "credit card, debit card, or EFT card." (See Doc. # 122 at 6).

B. Disputed Terms/Phrases

Plaintiff provided the Court with a list of terms to construe, whereas Defendants request that this Court construe the entirety of various phrases. (See Doc. ## 122, 127). Atthis stage of the proceeding, the Court is called upon to determine what the claim language would have meant to a person of ordinary skill in the relevant art at the time of the invention. Phillips, 415 F.3d at 1313. "[T]he person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification." Id. Thus, the Court finds it appropriate to construe the various phrases provided by Defendants, which encompass several of the terms proffered by Plaintiff. See Medrad, Inc. v. MRI Devices, Corp., 401 F.3d 1313, 1319 (Fed. Cir. 2005)("We cannot look at the ordinary meaning of the term . . . in a vacuum. Rather, we must look at the ordinary meaning in the context of the written description and the prosecution history."). To the extent Defendants have not provided a phrase for this Court to construe, this Court will construe the isolated terms provided by Plaintiff.

1. 904 Patent

i. Explanation of Benefits

Plaintiff requests the following construction for this term: "information describing medical services provided to a patient by a health care provider, an amount billed by thehealth care provider, and an amount paid by the patient's insurance company." (Doc. # 122 at 7). According to Plaintiff, this construction "comports with the contextual use of the phrase" in the claims, the specification of the 904 Patent, and "with the meaning understood in the medical payments industry." (Id.).

Defendants contend, however, that Plaintiff's construction is flawed as it "(1) conflicts with the use of the term in the claims and specification and (2) excludes embodiments of the invention." (Doc. # 127 at 29). To that end, Defendants argue that the claims refer to "explanation of benefits" as a "tangible item," rather than just "abstract information." (Id.). Furthermore, Defendants suggest that the 904 Patent's specification describes that "explanation of benefits" can include more than the three informational categories proposed by Plaintiff. (Id.). Therefore, Defendants posit that the term "explanation of benefits" should be given its "plain and ordinary meaning." (Id.).

According to the background section of the 904 Patent, "the [explanation of benefits] lists the amount the health care provider billed the Payer's company and the amount the Payer's company paid on the claim. It may also list the contractual discount amount and the patient responsibility."(Doc. # 66-1). At the Markman hearing, Plaintiff admitted that...