Federal Circuit Affirms Narrow Construction of “Internet Billing Method”

Netcraft Corp v. eBay and PayPal (Fed. Cir. 2008)

Netcraft sued eBay and PayPal for infringement of its patents that cover an “internet billing method.” During claim construction, the Western District of Wisconsin found that the limitation of “providing a communications link through equipment of the third party” requires that an infringer “provid[e] customers with internet access.” Of course, eBay and PayPal do not provide internet access.

On appeal, the Federal Circuit affirmed the claim construction and summary judgment of non-infringement.

Three reasons why the claim was narrowly construed:

  1. In many cases, claim construction issues are won or lost in the process of defining which “term” is going to be construed. The patentee argued that the term “communications link” was broadly written and amenable to broad construction. The defendants argued that the element in question was actually the entire process of “providing a communications link through the equipment of the third party.” That entire process is more amenable to a narrow interpretation.”
  2. The patentee did not help its cause by adding the “communications link” to the claims during prosecution. The term is not used anywhere in the specification – consequently, the patentee had little ammunition for arguing for a broad interpretation.
  3. The specification declares several “objects of the present invention,” including providing internet access. Also, the abstract includes a statement regarding an “agreement between an Internet access provider and a customer.” And, there is no specific language indicating that these statements are directed at “alternative embodiments.” [Note here, a distinction between alternative embodiments and optional functions.]