Dynamics Inc. v. Samsung Electronics Co., Ltd.

Background

Dynamics Inc. sued Samsung Electronics Co., Ltd. and various affiliates, collectively called Samsung in the opinion, for allegedly infringing U.S. Patent No. 8,827,153. The patent concerns magnetic secure transmission, a technology that wirelessly mimicked swiping a magnetic-stripe payment card through a payment terminal. The court had previously dismissed Dynamics’s breach-of-contract claims, leaving only the patent-infringement claim.

The parties filed cross-motions for summary judgment, which asks the court to decide a claim without a trial when there is no genuine dispute about a material fact and one side is entitled to judgment under the law. The remaining dispute centered on whether Samsung devices “retrieved” payment-track data “from a memory,” as required by claim 5 of the patent.

Before a transaction, Samsung devices stored proxy payment information, but not a complete payment track. When a user initiated a transaction, the devices generated transaction-specific data and assembled payment tracks. The devices then temporarily held the tracks in runtime variables and transmitted multiple representations to payment readers. Dynamics argued that this temporary storage in random-access memory satisfied the patent’s memory requirement.

Court’s Analysis

The court concluded that, in the context of the patent, “retrieved from a memory” requires obtaining data that was already created and stored before retrieval. It held that the ordinary meaning referred to persistent storage, such as a hard drive or flash memory, rather than temporary working memory used while data is being processed. Treating ordinary runtime processing as retrieval from memory would, in the court’s view, eliminate the limiting function of the patent term.

The court also held that statements Dynamics made during proceedings before the Patent Trial and Appeal Board and the Federal Circuit narrowed the meaning of the patent. Dynamics had distinguished an earlier patent by arguing that the earlier system constructed tracks when a transaction began rather than storing complete tracks beforehand. The court applied prosecution-history disclaimer, a rule that prevents a patent owner from later relying on a claim meaning that it clearly disavowed to obtain or defend the patent.

The court found that Dynamics identified only temporary variables in Samsung’s source code and supplied no evidence that Samsung devices persistently stored complete payment tracks, much less multiple complete tracks, outside a particular transaction. Because Dynamics failed to raise a triable issue—an issue a reasonable jury could decide in its favor—on infringement, the court did not reach the parties’ arguments about patent validity or damages.

Disposition

Judge J. Paul Oetken granted Samsung’s motion for summary judgment of non-infringement and denied Dynamics’s motion for summary judgment of infringement. The court denied the motions as moot in all other respects, directed the clerk to enter judgment for the defendants, and ordered the case closed. The court had also denied Samsung’s motion to strike Dynamics’s reply filing, concluding that Dynamics properly addressed Samsung’s non-infringement arguments.