MasterCard Sent Back to PTO in Credit Card Patent Challenge

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By Tony Dutra

MasterCard International Inc. will have to return to the Patent and Trademark Office to try and knock out patents on limited-use “virtual” credit cards ( D’Agostino v MasterCard Int’l Inc. , Fed. Cir., No. 2016-1592, 12/22/16 ).

The U.S. Court of Appeals for the Federal Circuit, overturning the Patent Trial and Appeal Board, ruled Dec. 22 that Sarasota, Fla.-based inventor John D’Agostino’s patent claims are narrow enough to be valid. The downside for D’Agostino, though, is that narrowed claims covering fewer types of transactions will potentially offer reduced opportunities to sue for infringement in the future.

The Federal Circuit sent the case back to the PTAB to be reconsidered, but D’Agostino is not guaranteed a win. MasterCard will have a chance to present other invalidity arguments. The court, too, specified that the PTAB can consider other issues on remand. A court case in the matter is stayed pending the outcome of the invalidity challenge at the PTAB.

No Credit Card Info Disclosure

D’Agostino initiated the case with a complaint in the U.S. District Court for the District of Delaware, asserting U.S. Patent Nos. 7,840,486 and 8,036,988 against MasterCard and its subsidiary, Orbiscom Inc., Citigroup Inc. and Discover Financial Services. No. 1:13-cv-00738 (D. Del. Apr 26, 2013). The ’988 patent is a continuation of the ’486 patent.

The technology addresses a credit-card fraud problem. It allows a credit authority to issue a virtual or “disposable” code to a customer that can be used for a limited time and amount. The customer uses the code to purchase goods, usually online, without disclosing actual credit card information.

D’Agostino alleged that MasterCard’s Controlled Payment Numbers technology, which Orbiscom registered as a trademark, infringes. Citi’s Virtual Account Number services use the technology. Discover announced that it has discontinued the Secure Online Account Numbers service that allegedly used the technology as well.

What Does ‘Single Merchant’ Mean?

MasterCard petitioned the PTAB for inter partes review of the patents, offering evidence of a prior invention that would invalidate D’Agostino’s patents and wasn’t found by the original examiner or in a prior reexamination. The PTAB found the patents invalid based on an earlier “Cohen” patent that disclosed the invention.

The dispute centers on where customers can use the disposable code. Some D’Agostino patent claims let a customer pick from “one or more merchants,” but other claims allow use at a “single merchant.” In every claim, the purchase is made from “any particular merchant.”

Cohen’s patent disclosed a code that could be used at a chain of stores such as Target, where Target is the single merchant and an individual Target store is the particular merchant. Based on that interpretation of “single merchant,” the PTAB invalidated D’Agostino’s claims.

D’Agostino, requesting a rehearing, insisted that “single merchant” only meant that purchases had to be made from one merchant, who need not be identified when the code is issued.

The PTAB denied rehearing, but the Federal Circuit agreed with D’Agostino that the claims only require that a customer select a “payment category.” The category defines transaction parameters, such as maximum limit amount, but not the merchant or merchants. The purchase is made from a single store “if said purchase is within said payment category,” it said.

Judge Richard G. Taranto wrote the court’s opinion, which was joined by Judges Richard Linn and Kara F. Stoll.

Flachsbart & Greenspoon, LLC, Chicago, represented D’Agostino. Baker Botts LLP, Palo Alto, Calif., represented MasterCard.

To contact the reporter on this story: Tony Dutra in Washington at

To contact the editor responsible for this story: Mike Wilczek at

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