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Although District Court Erred in Construing “Comprised of” as a Closed-End Term, SJ of Noninfringement Affirmed

06-1342
September 27, 2007

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Last Month at the Federal Circuit - October 2007

Judges: Newman (author), Schall, Moore

[Appealed from: S.D.N.Y., Judge Kaplan]

In CIAS, Inc. v. Alliance Gaming Corp., No. 06-1342 (Fed. Cir. Sept. 27, 2007), the Federal Circuit held that the district court erred in its construction of the claim term “comprised of” as a closed-end term that excludes the presence of elements beyond those listed in the “comprised of” clause. Nevertheless, the Federal Circuit affirmed the district court’s grant of SJ of noninfringement because it concluded that the district court’s error did not affect the construction of the substantive terms supporting the SJ of noninfringement.

CIAS, Inc. (“CIAS”) and Alliance Gaming Corporation and its subsidiary Bally Gaming, Inc. (collectively “Alliance”) make systems for detecting the use of counterfeit objects. The Alliance systems detect the use of counterfeit betting tickets in casino slot machines. CIAS filed a patent infringement suit against Alliance, charging that Alliance’s systems infringe U.S. Patent No. 5,283,422 (“the ’422 patent”) either literally or under the DOE. The ’422 patent describes and claims a system for detecting counterfeit objects, including gambling chips, labels, currency, and commercial paper, via a computer-directed process. This process works by assigning each authentic object with coded identification information that is both recorded on the object and stored in a machine-readable facility. When the object is presented for authentication, the computerized system compares the object’s coded information with the stored information to determine the object’s authenticity. The district court construed the relevant terms of the ’422 patent claims in light of the accused systems and granted Alliance’s motion for SJ of noninfringement. The district court further ruled that Alliance’s counterclaim of unenforceability was moot and entered final judgment.

The district court determined that the claim term “comprised of” does not have the same open-ended meaning as “comprising.” The district court construed “comprised of” as a closed-end term that excludes the presence of elements beyond those listed in the “comprised of” clause. The district court reasoned that there was a difference between “comprised of” and “comprising.”

The Federal Circuit concluded that the district court’s construction of “comprised of” was incorrect because “comprised of” has long been understood to be an open-ended term meaning “including but not limited to.” The Court explained that “comprised of,” when used as a transition phrase, typically means, like comprising, that the following elements or steps are not limiting. The Court highlighted that the important contrast, in patent lexicography, lies with “consisting of,” rather than with variations of “comprises.” “Consisting of” has long been understood to be closed-ended and to convey limitation to those elements or steps listed in the “consisting of” clause and the exclusion of others.

The Federal Circuit concluded that the district court used an incorrect construction of “comprised of” to determine that the claim language was limited to a detectable series. This limitation formed the basis for the district court’s ruling that Alliance’s systems did not infringe because the Alliance code systems include a “secret” series as well as a detectable series. The Federal Circuit recognized, however, that while this particular basis for noninfringement was not valid given the mistaken construction of “comprised of,” the construction of the claim language “unique authorized information” provided sufficient basis for the finding of noninfringement.

The Federal Circuit agreed with the district court that the claim term “unique authorized information” should be construed to exclude a combination of serial and randomly selected information, based on arguments made by CIAS during reexamination to distinguish the prior art. Moreover, the Federal Circuit agreed with the district court’s conclusion that the inventors, by limiting the ’422 patent claims to a counterfeit detection system relying on a “detectable series,” had disavowed use of a secret algorithm. Because the accused systems used a combination of serial and randomly selected information, as well as a secret algorithm, the Federal Circuit affirmed the district court’s grant of SJ of literal noninfringement. Furthermore, because the accused systems were excluded from the claims based on prior art that was distinguished during prosecution, the Federal Circuit affirmed the district court’s finding of noninfringement under the DOE.