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Federal Circuit affirms infringement finding against United StatesMay 4, 2006

In Paymaster Technologies, Inc. v. United States, the Federal Circuit affirmed a finding of infringement of a patent directed toward money order forms against the United States, and the United States Postal Service (USPS) in particular. Money order forms are generally either five-ply or single-ply. Five-ply forms have three ‘form layers’ with interlayered ink-infused transfer sheets between them. The top form is the negotiable money order, the middle form is the voucher sheet for the issuer, and the bottom form is the customer’s receipt. The ink transfer sheets between these forms make the dollar amount of the money order visible on all three forms. The single-ply forms have the same three forms, but do not use the ink transfer sheets, but rather are processed electronically. Between 1994 and 2004, the USPS purchased over 1.5 billion five-ply money order forms and over 785 million single-ply forms. Both types of forms were held to infringe at least one claim of patent number 5,292,283, held by PaymasterThe government took issue with the claim construction issued by the Court of Federal Claims, the court that hears claims for money damages against the government. Specifically, the government argued that the claims required a ‘form set’, which could not be satisfied by a single-ply form, and that the requirement that the ink permeate through the top form from the ‘front surface to [the] back surface’ required the ink to penetrate through the back surface of the top sheet. The court rejected both these arguments, referencing the claim language and the written description. With regard to the ink permeation limitation, the court stated: ‘(that it was) difficult to understand how the government can expect us to accept its argument which lacks support in the claims, the written description, dictionaries, and practicality.’ Judge Dyk dissented from the majority’s conclusion that a ‘form set’ may be met by a single-ply form, finding that the specification only supported a multiple-ply form set.In some of the five-ply forms purchased by the USPS, however, the ink did not permeate to the back surface of the top form. Testing a sample of 10 and 50 these forms, it was determined that this was the case in 10-12% of the forms. Because these were not deducted from the lower court’s determination of the ‘royalty base,’ or the number of infringing products which the patent holder is entitled to a royalty, the damage award was remanded for a consideration of the proper reduction. With regard to the royalty percentage per form, the Federal Circuit commended the Court of Claims on its careful analysis, and affirmed that 3.5% was a reasonable royalty based on the typical fifteen factors from the Georgia-Pacific case.For the complete decision, log on to

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