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Grecia v. McDonald’s: District Court Grants Motion to Dismiss Where McDonald’s Could Not “Use” System for Patent Infringement Claim Because Credit Card Companies Controlled the Entire System

The plaintiff, Grecia, alleged that McDonald’s infringe certain claims of U.S. Patent No. 8,533,860 (“the ‘860 patent”) and of U.S. Patent No. 8,402,555 (“the ‘555 patent”) through its use of the “tokenization systems” of several credit card companies.

As explained by the district court, Grecia alleged that McDonald’s uses the claimed systems when a McDonald’s customer purchases a McDonald’s food item with a credit card, the credit card company’s server acts as a receipt module by receiving the primary account number (“PAN”) assigned to the credit card. The credit card company’s authentication module authenticates the PAN with the issuer of the credit card. Then the credit card company’s connection module establishes a connection between the credit card company’s payment processor and its token service provider. A token is data that serves as a surrogate for the PAN.) The payment processor then acts as a request module and requests from the token service provider the token associated with the PAN. The payment processor then acts as the second receipt module by receiving the token.) The credit card company then writes the token to the token vault, or branding module, so that when the same credit card is used for subsequent McDonald’s purchases, the token associated with the PAN is available to be cross-referenced.

McDonald’s asserted that the complaint did not plausibly allege direct infringement through “use” of the claimed systems because Grecia did not allege that McDonald’s controlled any of the systems’ components.

In response, Grecia argued that the only relevant inquiry for purposes of determining “use” is whether the defendant has put a system as a whole into service for its own benefit, which the complaint alleges McDonald’s did. Both parties cited Centillion Data Sys., LLC v. Qwest Commc’ns Int’l, Inc., 631 F.3d 1279 (Fed. Cir. 2011) to supports their respective positions.

As explained by the district court, in Centillion, the Federal Circuit addressed for the first time “the issue of infringement for ‘use’ of a system claim that includes elements in the possession of more than one actor.” 631 F.3d at 1283. The court in Centillion held that a party need not exercise “physical or direct control over each individual element of the system” in order to “use” it for the purposes of Section 271(a), but “a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.” Id. at 1284.

Based on Centillion, McDonald’s argued that the definition of “use” is only applicable to a “divided system” where two different entities operate different components of the system. According to McDonald’s the claimed systems are not divided because the credit card companies control all of the systems’ components. McDonald’s argued that where the entire system is controlled by one entity, a different entity cannot be deemed the infringing user of the system.

The district court concluded that Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011) supported McDonald’s argument that the test for “use” is different for divided systems than for inventions controlled by a single party: In Uniloc, the plaintiff contended that Microsoft’s product-activation feature infringed its patent through use of software algorithms to remotely verify that software being installed by a computer user had not been pirated. 632 F.3d at 1296-98. Microsoft argued that it did not “use” the system because it had no control over the computers of its customers who, when seeking to install Microsoft software, began the product activation process. Id. at 1301, 1308. The Federal Circuit rejected the argument because it found that no part of the customers’ computers was a component of the claimed invention. Id. at 1309. Rather the customers’ computers were merely a necessary part of the environment in which the claimed invention functioned. Id. The court noted that a patent can be infringed by a single party using a claimed invention even if two parties are required for the invention to function. Id.

Grecia argued that McDonald’s directly controls at least one component of the claimed systems because it controls the data processing device that sends the PAN to the first receipt module. The district court disagreed finding that this argument fails because data processing devices are not a component of the claimed systems. “Contrary to Grecia’s assertions, the court need not engage in premature claim construction to arrive at that conclusion. Rather the court can rely on Grecia’s own description of the claimed inventions in the complaint, which pleads that the system is comprised of a first receipt module, an authentication module, a connection module, a request module, a second receipt module, and a branding module. The complaint does not plausibly allege that data processing devices are a component of the claimed systems. The devices controlled by McDonald’s that send the PAN to the first receipt module are, like the Microsoft customers’ computers in Uniloc, merely part of the environment in which the claimed inventions function. The users of the claimed inventions are the credit companies themselves, not McDonald’s.”

Accordingly, the district court granted the motion to dismiss “[b]ecause the complaint does not plausibly allege that McDonald’s uses the claimed inventions.”

Grecia v. McDonald’s Corp., Case No. 16-cv-2560 (E.D. Ill. Aug. 23, 2016)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or