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Court “Dials In” on Phone Patent

99-1562
April 25, 2001

Decision icon Decision

Last Month at the Federal Circuit - May 2001

Judges: Gajarsa (author), Newman, and Lourie

In Telemac Cellular Corp. v. Topp Telecom, Inc., No. 99-1562 (Fed. Cir. Apr. 25, 2001), the Federal Circuit affirmed a district court’s grant of SJ that the patent-in-suit was invalid and not infringed.

Telemac Cellular Corporation (“Telemac”) charged Topp Telecom, Inc. (“Topp”) with infringement of U.S. Patent No. 5,577,100 (“the ‘100 patent”). The ‘100 patent claims a phone system including a mobile phone that permits a user to prepay for air-time minutes that are then debited in real time from credit stored in the phone’s memory. The claimed phone is programmed by a host processor with “communication means for selectively establishing communication to the phone” to enable operation. Charges for calls are debited at specific rates by a complex billing algorithm stored in the phone.

The district court granted Topp’s motion for SJ that the ‘100 patent was invalid and not infringed.

On appeal, the Federal Circuit first reviewed the district court’s claim construction. With respect to “communication means for selectively establishing communication with each mobile phone,” the Federal Circuit affirmed the district court’s construction that the limitation requires communications initiated by a host processor. The Federal Circuit agreed with the district court that the only structure described in the specification that functioned to selectively establish communications with the cell phones was a host-processor structure that selectively and automatically established communications for performing the activation or programming of the phone by an electronic link. With respect to the “complex billing algorithm” limitation, the Federal Circuit agreed with the district court’s conclusion that the algorithm requires, at a minimum, storage of phone rates for local, long distance, international, and roaming calls.

Turning to infringement, the Federal Circuit affirmed the district court’s finding of noninfringement, either literally or under the DOE. First, the Federal Circuit agreed with the district court that the accused device lacked the claimed “communication means.” Specifically, instead of having a host processor that selectively initiates communication with the phone by an electronic link, the accused device was programmed by the user’s manual input of codes into the phone. Second, the accused device lacked a “complex billing algorithm” that stored phone rates for local, long distance, international, and roaming calls. Rather, no international rate is stored in the accused phone and no international charges are calculated by that phone because the accused device blocks the direct placement of international calls.

Finally, the Federal Circuit affirmed the district court’s conclusion that the ‘100 patent was invalid for anticipation in view of U.S. Patent No. 5,631,947 (“the Wittstein reference”). Telemac argued that the Wittstein reference fails to disclose the four rates used in the ‘100 patent’s complex billing algorithm. The Federal Circuit disagreed, holding that although those rates were not expressly disclosed in the Wittstein reference, they are inherently disclosed. Specifically, the Wittstein reference discloses a rental mobile phone that generates data normally included in a Call Detail Record. According to the Federal Circuit, the district court had correctly concluded that there was no genuine issue of material fact that Call Detail Records necessarily included charges categorized into the four claimed types and, thus, inherently anticipate the claimed four categories of rate charges.