The Western Union Co. v. Moneygram Payment Systems, Inc. ( 2010 )

United States Court of Appeals
for the Federal Circuit
__________________________
THE WESTERN UNION COMPANY,
Plaintiff-Appellee,
v.
MONEYGRAM PAYMENT SYSTEMS, INC.,
Defendant-Appellant.
__________________________
2010-1080, -1210
__________________________
Appeal from the United States District Court for the
Western District of Texas in Case No. 07-CV-0372, Judge
Sam Sparks.
____________________________
Decided: December 7, 2010
____________________________
DAVID E. SIPIORA, Townsend and Townsend and Crew
LLP, of Denver, Colorado, argued for plaintiff-appellee.
With him on the brief were IAN L. SAFFER, AMANDA L.
SWAIM and KEVIN M. BELL.
WILLIAM F. LEE, Wilmer Cutler Pickering Hale and
Dorr LLP, of Boston, Massachusetts, argued for defen-
dant-appellant. With him on the brief were JOSEPH J.
MUELLER, MEGAN BARBERO and SYDENHAM B.
ALEXANDER, III ; and William G. McElwain, of Washing-
ton, DC. Of counsel on the brief were MARTIN R. LUECK
WESTERN UNION v. MONEYGRAM 2
and EMMETT J. MCMAHON, Robins, Kaplan, Miller &
Ciresi LLP, of Minneapolis, Minnesota.
__________________________
Before RADER, Chief Judge, and LOURIE and PROST,
Circuit Judges.
LOURIE, Circuit Judge.
MoneyGram Payment Systems, Inc. (“MoneyGram”)
appeals from the final judgment of the United States
District Court for the Western District of Texas in favor of
the Western Union Company (“Western Union”). A jury
found infringement of certain claims of U.S. Patents
6,488,203 (the “’203 patent”); 6,502,747 (the “’747 pat-
ent”); 6,761,309 (the “’309 patent”); and 7,070,094 (the
“’094 patent”), and found those patents not invalid for
obviousness. The district court denied MoneyGram’s
renewed motion for judgment as a matter of law (“JMOL”)
on infringement and invalidity of the asserted patents.
Western Union Co. v. MoneyGram Int’l, Inc., No. 1:07-cv-
00372, Dkt. No. 429 (W.D. Tex. Nov. 17, 2009) (“JMOL
Opinion”). Because we find that the asserted claims in
the patents in suit would have been obvious to a person of
ordinary skill in the art at the time of filing, we reverse.
BACKGROUND
Western Union owns the ’203, ’747, ’309, and ’094
patents directed to a system for performing money trans-
fers. The ’203, ’747, and ’309 patents (collectively, the
“send patents”) specifically relate to methods of sending
money through a financial services institution (“FSI”).
The ’094 patent claims methods for receiving transferred
money. The patented system relates to money transfer
services such as those offered by Western Union through
retail locations where a customer may identify a recipient
and tender an amount to be delivered to the recipient.
3 WESTERN UNION v. MONEYGRAM
The money transfer service collects the amount from the
retail location and completes the transaction for the
customer. Some of the traditional money transfer sys-
tems required money senders to fill out forms with trans-
action information such as recipient information and the
amount of money to be transferred. The ’203 patent
claims a method of performing a formless money transfer
using an electronic transaction fulfillment device
(“ETFD”). Figure 1 from the ’203 patent depicts an
embodiment of the patented system.
Figure 1 of the ’203 patent
In the patented system, a customer has telephone ac-
cess to the customer service representative (“CSR”) at the
WESTERN UNION v. MONEYGRAM 4
financial institution, who obtains details of the transfer
and “stages” the money transfer for the customer, storing
the transaction details on a host computer (18). The
customer is later able to complete the transaction at a
retail location where an agent is able to retrieve the
transaction from the computer (18) through an ETFD (22)
and accept the required amount of money from the cus-
tomer. Claim 1 is representative of the patented inven-
tion:
1. A method of performing a money transfer send
transaction, the method comprising:
providing a sender direct access to an em-
ployee of a financial services institution in
order to receive transaction details from
the sender;
storing, on a data base, the transaction
details provided by the sender, wherein
the transaction details include a desired
amount of money to be sent by the sender
to a recipient;
establishing a code that corresponds to the
transaction details stored on the data
base, wherein the code is established for
use by the sender during the send transac-
tion;
storing the code on the data base such that
the code is useable to identify the send
transaction on the data base;
5 WESTERN UNION v. MONEYGRAM
entering the code into an electronic trans-
action fulfillment device in communication
with the data base to retrieve the transac-
tion details from the data base after the
step of storing the code on the data base;
and
determining a collect amount, to be col-
lected from the sender, based on the
transaction details;
wherein the code is not provided by or to
the recipient for use by the recipient dur-
ing the send transaction.
’203 patent, claim 1 (emphases added).
Claim 12 is dependent on claim 1 and adds the limita-
tion that an employee of the money transfer business
provides the transaction identifying code. Claim 16,
which is also dependent on claim 1, adds the limitation of
collecting the money from the sender, notifying the data-
base of the collection, and recording the transaction as
complete. The ’203 patent was filed on October 26, 1999
and issued on December 3, 2002. The ’747 patent, also
filed in 1999, and the ’309 patent, filed in 2004, are both
continuations of the ’203 patent. The ’309 patent claims
are similar and substantially identical in scope to the ’203
patent claims. The ’747 patent primarily adds the use of
internet-based communications, using an internet com-
munications protocol (“the TCP/IP protocol”), to the
money transfer system and claims the use of a “first
computer” instead of “the data base” used in the ’203
patent. Claim 20 is illustrative:
WESTERN UNION v. MONEYGRAM 6
20. A method of performing a money transfer send
transaction through a financial services institu-
tion, the method comprising:
receiving transaction details on a first
computer of the financial services institu-
tion, wherein the transaction details are
provided by a sender and include a desired
amount of money to be sent by the sender
to a recipient;
storing the transaction details on the first
computer;
establishing a code that corresponds to the
transaction details, wherein the code is es-
tablished for use by the sender during the
send transaction;
storing the code on the first computer such
that the code is useable to identify the
send transaction;
receiving the code at the first computer
from an electronic transaction fulfillment
device in communication with the first
computer after the step of storing the code
on the first computer;
validating the code received from the
transaction fulfillment device by compar-
ing the code received from the transaction
7 WESTERN UNION v. MONEYGRAM
fulfillment device with the code stored on
the first computer; and
transmitting a collect amount, to be col-
lected from the sender, from the first com-
puter to the transaction fulfillment device
if the code received from the transaction
fulfillment device is valid;
wherein at least a portion of the method is
performed using TCP/IP, and wherein the
code is not provided by or to the recipient
for use by the recipient during the send
transaction.
’747 patent, claim 20 (emphases added). During prosecu-
tion of the ’747 and ’309 patents, the inventors filed a
terminal disclaimer limiting the terms of those patents to
that of the ’203 patent in response to double patenting
rejections by the USPTO.
Like the patented invention, a prior art system owned
by Orlandi Valuta, another money transfer service com-
pany, also employed technology that did not require
customers to fill out forms to transfer money. Below is a
figure from Orlandi Valuta’s literature on its “Red Phone”
system:
WESTERN UNION v. MONEYGRAM 8
Orlandi Valuta’s Red Phone technology, used as early
as 1997, required a customer to use a telephone to initiate
a transaction with an Orlandi Valuta CSR. The telephone
typically used by the customer was a red colored tele-
phone available at the retail location that automatically
connected to an Orlandi Valuta CSR in Los Angeles,
California. The CSR would enter information received
from the customer into the Orlandi Valuta computer
system, whereupon the system would fax an invoice to the
retail location of the customer or to the one that the
customer had requested. The Orlandi Valuta customer
would not receive a confirmation number for the transac-
tion, but was simply required to wait at the retail loca-
9 WESTERN UNION v. MONEYGRAM
tion. Upon receipt of the fax, an agent at the retail loca-
tion would call out the name of the customer, who could
then tender the required amount to that agent. Western
Union acquired Orlandi Valuta in 1997, shortly after it
had developed the formless transfer system.
The patents in suit claim to solve shortcomings of the
Orlandi Valuta system. The inventors, Earney Souten-
burg and Dean Seifert, both employees of Western Union,
were also responsible for Orlandi Valuta’s technology
group following Western Union’s acquisition of that
company. Prior to developing the patented system, later
commercialized as Western Union’s “Yellow Phone”
system, the inventors evaluated Orlandi Valuta’s formless
money transfer system to determine if Western Union
could utilize it on a larger scale to support its higher
volumes of money transfers. The inventors claim that the
Orlandi Valuta system was not a viable formless option
for Western Union.
MoneyGram, also a money transfer service company
and a direct competitor of Western Union, developed and
deployed its “FormFree” money transfer system in 2000.
Like the patented system, the MoneyGram system pro-
vided the customer with a confirmation number, which
when provided by the customer to a retail agent allowed
for completion of the previously staged transaction. This
confirmation number was also stored in a Confirmation
File database along with other information, such as the
transfer amount, of the staged transaction. In September
2003, when MoneyGram learned of the patents in suit, it
developed a work-around to avoid infringement of those
patent claims. The redesigned system no longer stored
the desired amount to be sent in the Confirmation File
database for pending transactions. Instead, the customer
was required to provide that information again to the
agent at the retail location where the customer funded
WESTERN UNION v. MONEYGRAM 10
and completed the transaction. MoneyGram obtained a
formal noninfringement opinion from outside counsel on
its redesigned system with regard to Western Union’s
patents.
In May 2007, Western Union filed this lawsuit in the
United States District Court for the Western District of
Texas, ultimately asserting infringement of claims 1, 12,
16, and 21 of the ’203 patent; claim 20 of the ’747 patent;
claims 12 and 22 of the ’309 patent; and claim 2 of the
’094 patent. In December 2008, the district court con-
strued claims of all four patents at issue. Western Union
Co. v. MoneyGram Int’l, Inc., No. 1:07-cv-00372, 2008 WL
5731946 (W.D. Tex. Nov. 6, 2008). In August 2009, the
district court granted summary judgment that Money-
Gram’s design-around system did not infringe the as-
serted claim of the ’094 patent. Western Union Co. v.
MoneyGram Int’l., Inc., No. 1:07-cv-00372, Dkt. No. 353
(W.D. Tex. Aug. 21, 2009).
The case was tried to a jury in September 2009. Dur-
ing trial, Western Union withdrew its claim of infringe-
ment of the ’309 patent and claim 21 of the ’203 patent as
to MoneyGram’s redesigned system. Following trial, the
jury found that MoneyGram’s redesigned system in-
fringed claims 1, 12, and 16 of the ’203 patent and claim
20 of the ’747 patent under the doctrine of equivalents. It
found that MoneyGram’s pre-design-around system,
however, literally infringed the same claims as well as
other claims that Western Union had asserted only
against the earlier MoneyGram system: claim 21 of the
’203 patent and claims 12 and 22 of the ’309 patent. On
claim 2 of the ’094 patent, also asserted only against the
earlier system, the jury found infringement under the
doctrine of equivalents. The jury rejected MoneyGram’s
argument that the asserted patent claims were obvious in
light of the Orlandi Valuta prior art system. The jury
11 WESTERN UNION v. MONEYGRAM
awarded Western Union reasonable royalty damages in
the amount of $16,529,501.81.
Following trial, MoneyGram renewed its JMOL mo-
tion on obviousness of the asserted patent claims based on
the Orlandi Valuta system, and on noninfringement of the
asserted patent claims. Western Union renewed its JMOL
motion on literal infringement of the ’747 patent. The
court denied all JMOL motions. In deciding Money-
Gram’s JMOL motion on obviousness, the court found
that MoneyGram had waived its argument on the issue.
JMOL Op., slip op. at 31. Nevertheless, the court pro-
ceeded to evaluate MoneyGram’s motion on its merits and
decided that the jury had a legally sufficient evidentiary
basis upon which it could conclude that the asserted
claims were not obvious. Id. at 32. Specifically, regarding
the Orlandi Valuta prior art system, the court found that
it did not employ an ETFD terminal at the retail location
and did not use a code. Id. at 31-32. The court concluded
that it would not have been obvious for a person of ordi-
nary skill in the art to combine these two elements with
the existing Orlandi Valuta system. Id. Moreover, it held
that secondary considerations such as commercial success
and investments made by both parties in designing sys-
tems better than the Orlandi Valuta system weighed
against a finding of obviousness. Id. Thus, the district
court denied MoneyGram’s JMOL motion. Lastly, the
court granted a permanent injunction against Money-
Gram. Id. at 60. MoneyGram now appeals the court’s
rulings on claim construction, infringement, and invalid-
ity of the ’203, ’747, and ’309 patents. 1 We have jurisdic-
tion pursuant to 28 U.S.C. § 1295(a)(1).
1 Western Union cross-appealed the court’s denial
of its JMOL motion on literal infringement of the ’747
patent, which we dismissed as an improper cross-appeal.
WESTERN UNION v. MONEYGRAM 12
DISCUSSION
Obviousness
We begin with the district court’s denial of Money-
Gram’s JMOL motion on obviousness. We review the
denial of a JMOL motion de novo, applying law from the
regional circuit, in this case, the Fifth Circuit. Harris
Corp. v. Ericsson lnc., 417 F.3d 1241, 1248 (Fed. Cir.
2005). Under Fifth Circuit law, a motion for judgment as
a matter of law “should be granted by the trial court if,
after considering all the evidence in the light [favorable
to] and with all reasonable inferences most favorable to
the party opposed to the motion, the facts and inferences
point so strongly and overwhelmingly in favor of one
party that the court concludes that reasonable jurors
could not arrive at a contrary verdict.” Bellows v. Amoco
Oil Co., 118 F.3d 268, 273 (5th Cir. 1997).
At the outset, Western Union argues that Money-
Gram has waived its right to appeal several issues includ-
ing obviousness of the asserted patent claims based on the
Orlandi Valuta system in combination with a keypad. It
argues that the district court properly found this argu-
ment waived below because MoneyGram failed to specifi-
cally raise obviousness based on a keypad device in its
Rule 50(a) motion and that omission ran afoul of the
purpose of Rule 50. Therefore, Western Union contends,
MoneyGram cannot attempt to incorporate new prior art
arguments on appeal.
We disagree and decide that the district court erred in
concluding that MoneyGram had waived its obviousness
argument specifically as it related to Orlandi Valuta.
Rule 50(a) requires that a motion for judgment as a
Western Union Co. v. MoneyGram Payment Sys., Inc., No.
2010-1080, Dkt. No. 54 (Fed. Cir. May 3, 2010).
13 WESTERN UNION v. MONEYGRAM
matter of law “must specify the judgment sought and the
law and facts that entitle the movant to the judgment.”
Fed. R. Civ. P. 50(a)(2). We have held that even a cursory
motion suffices to preserve an issue on JMOL so long as it
“serves the purposes of Rule 50(a), i.e., to alert the court
to the party’s legal position and to put the opposing party
on notice of the moving party’s position as to the insuffi-
ciency of the evidence.” Blackboard, Inc. v. Desire2Learn,
Inc., 574 F.3d 1371, 1379–80 (Fed. Cir. 2009). Fifth
Circuit law, applicable here, also construes the rule
liberally, excusing “technical noncompliance” when the
purposes of the rule are satisfied. Navigant Consulting,
Inc. v. Wilkinson, 508 F.3d 277, 288-89 (5th Cir. 2007)
(citation omitted). Applying that liberal standard, we find
no waiver here. MoneyGram argued in its Rule 50(a)
motion that it was entitled to JMOL on obviousness on all
asserted claims of all asserted patents, specifically listing
Orlandi Valuta as prior art that rendered the claims
obvious. We agree with MoneyGram that those state-
ments were sufficient to preserve MoneyGram’s obvious-
ness arguments as to Orlandi Valuta.
On the merits, MoneyGram argues that the claimed
invention simply takes a known prior art system and adds
obvious elements, such as the use of an off-the-shelf
keypad to access transaction information. It contends
that the patent specification itself concedes the fact that
the core concept of the claimed invention, namely, the
idea of providing a customer with direct access to a CSR
who can store the customer’s transaction details in the
FSI’s database, was well-known in the prior art. Accord-
ing to MoneyGram, the patented invention simply re-
placed the fax machine in the Orlandi Valuta system with
an off-the-shelf keypad—a well-known device in the art.
MoneyGram further argues that the district court incor-
rectly concluded that the Orlandi Valuta system did not
WESTERN UNION v. MONEYGRAM 14
use a code even though there was ample evidence that
such a code existed in that system by the name “clave,”
and users could use the clave to obtain information about
their money transfers. Regardless whether Orlandi
Valuta taught that limitation, MoneyGram argues, add-
ing a numerical code to a system that processes financial
transactions would have simply been common sense to a
person of skill in the art. As for the ’747 patent, which
primarily added the use of internet-based communica-
tions to the ’203 patent, MoneyGram argues that such an
improvement would have been obvious under this court’s
precedent. On secondary considerations relied upon by
the district court, MoneyGram contends that they have no
relation to the claimed invention. Thus, MoneyGram
contends that it established, by clear and convincing
evidence at trial, that the asserted claims were obvious.
It further notes that in response to its case on obvious-
ness, Western Union did not even offer a rebuttal before
the jury. Therefore, MoneyGram argues, there is no
evidence on the record to support the jury’s underlying
fact findings or its ultimate conclusion of nonobviousness.
Western Union argues in response that the Orlandi
Valuta system may share some similarities with the
patented invention, but it does not teach the core concepts
claimed by its patents. Western Union argues that the
Orlandi Valuta system lacks at least three critical ele-
ments: (1) the “code” that is established for use by the
sender during the send transaction; (2) an ETFD; and (3)
the use of the Internet. Regarding the code, Western
Union argues, the jury heard testimony that the clave in
the Orlandi Valuta system was not given to the customer
until after the transaction had been completed, and that
was sufficient evidence for the jury to find that limitation
missing from the prior art. Likewise, it argues, the ETFD
claimed is one used for completing the money transfer
15 WESTERN UNION v. MONEYGRAM
transaction, and no evidence presented at trial estab-
lished that the fax machine in the Orlandi Valuta system
could provide similar transaction fulfillment functionality.
According to Western Union, the keypads known in the
prior art were not the same as an ETFD, and MoneyGram
presented no evidence that such a keypad could be used to
retrieve transaction details from a database, as claimed in
the patents. Western Union further argues that to the
extent these elements were well-known in the prior art,
the jury’s verdict of nonobviousness is easily supported by
the lack of evidence of any motivation for one skilled in
the art to have combined these elements with the Orlandi
Valuta system. It contends, for example, that its own
witness testified that extensive coding work was required
to incorporate an ETFD into the commercial embodiment
of the asserted patents. Lastly, Western Union argues,
evidence of secondary considerations, such as the com-
mercial success of its Yellow Phone system, cannot be
ignored in evaluating the jury’s finding of nonobviousness.
We agree with MoneyGram that in light of the Or-
landi Valuta system, Western Union’s asserted claims
would have been obvious as a matter of law. Obviousness
is a question of law based on underlying findings of fact.
In re Kubin, 561 F.3d 1351, 1355 (Fed. Cir. 2009). We
review the jury’s determination of underlying fact for
substantial evidence, but we review the ultimate conclu-
sion of obviousness de novo. Boston Sci. Scimed, lnc. v.
Cordis Corp., 554 F.3d 982, 990 (Fed. Cir. 2009); Muni-
auction, Inc. v. Thomson Corp., 532 F.3d 1318, 1324 (Fed.
Cir. 2008). The underlying factual inquiries include (1)
the scope and content of the prior art; (2) the differences
between the prior art and the claims at issue; (3) the level
of ordinary skill in the art; and (4) any relevant secondary
considerations, such as commercial success, long felt but
unsolved needs, and the failure of others. Graham v.
WESTERN UNION v. MONEYGRAM 16
John Deere Co., 383 U.S. 1, 17-18 (1966). Here the level
of skill of one of ordinary skill in the art and the scope of
the claims of the patents in suit are not at issue. The
parties’ disputes revolve around whether the prior art
taught three specific elements of the claimed inventions,
whether there was a motivation to combine these ele-
ments with the prior art system, and whether secondary
considerations support a finding of nonobviousness. We
address each in turn.
A. Combining an ETFD and the Use of the Internet
with the Orlandi Valuta System
Western Union argues that the claimed ETFD is more
than a simple keypad and includes functionality that
cannot be achieved by simply exchanging the fax machine
in the Orlandi Valuta system for a keypad. It argues that
a keypad cannot communicate with a database to retrieve
the transaction details. It also argues that there is no
evidence in the record that a keypad equivalent to the
ETFD was “well-known” in the prior art. Moreover, it
argues, the combination would not have been obvious to a
person of ordinary skill in the art.
We find each of these arguments unpersuasive. The
patent specification itself describes the addition of “an
electronic transaction fulfillment device, such as an
electronic terminal having a keypad,” ’203 patent col.4
ll.8-10, and states that one embodiment is an FDX-400,
available from Western Union, id. col.4 ll.21-23. It ex-
plains that FDX-400 comprises a numeric keypad, one or
more function keys, and a display device. Id. col.4 ll.23-
25. MoneyGram presented that evidence at trial. It
presented evidence to show that the Orlandi Valuta
system used an FDX-400 device, although at the CSR
location, not at the retail location. It also presented
testimony that various electronic keypad devices, such as
17 WESTERN UNION v. MONEYGRAM
those used for credit card transaction processing, already
existed at retail locations. We conclude that no reason-
able jury should have found that MoneyGram failed to
present sufficient evidence to demonstrate that electronic
transaction devices, at least as sophisticated as the FDX-
400, were commonplace in the art at the time of the
invention.
We next address the question whether there was mo-
tivation to combine the prior art ETFD with the Orlandi
Valuta system. An obviousness determination is not the
result of a rigid formula disassociated from the considera-
tion of the facts of a case. Indeed, the common sense of
those skilled in the art demonstrates why some combina-
tions would have been obvious where others would not.
See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 416 (2007)
(“The combination of familiar elements according to
known methods is likely to be obvious when it does no
more than yield predictable results.”). Based on the
Supreme Court’s reasoning in KSR, we have subsequently
held that applying computer and internet technology to
replace older electronics has been commonplace in recent
years. See Muniauction Inc., 532 F.3d at 1327; Leapfrog
Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1161
(Fed. Cir. 2007). In Leapfrog, we held that
“[a]ccommodating a prior art mechanical device that
accomplishes [the goal of teaching a child to read phoneti-
cally] to modern electronics would have been reasonably
obvious to one of ordinary skill in designing children’s
learning devices.” 485 F.3d at 1161. Our conclusion of
obviousness was based in part on the reasoning that
“[a]pplying modern electronics to older mechanical devices
has been commonplace in recent years.” Id. Similarly, in
Muniauction, we concluded that conducting previously
known methods of bidding through an Internet web
browser was obvious because it amounted to no more than
WESTERN UNION v. MONEYGRAM 18
applying the use of the Internet to existing electronic
processes at a time when doing so was commonplace. 532
F.3d at 1327. We rejected the patentee’s arguments that
even where it was routinely done, such incorporation
would have been beyond the ability of a person of ordinary
skill in the art. Id.Here too, we find the use of an electronic transaction
device where the prior art employed a fax machine to be
an unpatentable improvement at a time when such a
transition was commonplace in the art. See In re Mettke,
570 F.3d 1356, 1360–61 (Fed. Cir. 2009) (finding it obvi-
ous to add Internet access to a prior art kiosk that in-
cluded a fax-machine). We fail to see how it would have
been difficult for a person of ordinary skill in the art to
integrate an electronic transaction device that was avail-
able from Western Union itself into a well-known money
transfer system that was also owned by Western Union at
the time of the invention. Specific limitations that West-
ern Union points to, such as using the ETFD to retrieve
information from a database, are simply routine modifica-
tions that are a part of adapting a new technology to an
existing system. Here, a person of ordinary skill in the
art replacing a fax machine with an ETFD that could
access a database would necessarily have known how to
retrieve transaction details from the database.
Western Union further argues that it spent signifi-
cant resources in developing its commercial embodiment
of the patented invention and that the integration of the
ETFD into a formless system was not a simple one that a
skilled person could accomplish without any experimenta-
tion. Although we have held that a finding of obviousness
may not be proper where the prior art merely provided a
promising field for experimentation, In re Kubin, 561 F.3d
at 1359-60, the testimony that Western Union relies upon
here relates only to the effort that its engineers invested
19 WESTERN UNION v. MONEYGRAM
in software implementation of its commercial system, not
toward any inventive aspect claimed in the patents.
Thus, we conclude that the combination of the ETFD with
the Orlandi Valuta system would have been obvious to a
person of ordinary skill in the art at the time of the inven-
tion.
For the same reasons, we are not persuaded by West-
ern Union’s arguments that the improvements recited in
claim 20 of the ’747 patent render the subject matter of
the claim nonobvious. The claim primarily adds the use
of internet-based communications, specifically the TCP/IP
protocol to the invention patented in the ’203 patent. We
conclude that it would have been obvious for a person of
ordinary skill in the art to use internet-based protocols in
networking the systems used in the ’203 patent. See
Papyrus Tech. Corp. v. N.Y. Stock Exch., LLC, 653 F.
Supp. 2d 402, 432 (S.D.N.Y. 2009) (finding that adding “a
connectionless protocol (TCP/IP) that has been used in
electronic communications, such as the Internet, since the
1980s” to other obvious elements of claim “adds nothing
new to the field of endeavor”), affirmed, Case No. 2010-
1166, 2010 WL 3934367 (Fed. Cir. Oct. 7, 2010).
B. Use of a Code
Western Union argues, and the district court found,
that the fact that the Orlandi Valuta system did not
provide a code to the customer meant that that system did
not disclose the use of a code for that specific functionality
to a person of ordinary skill in the art. MoneyGram
responds that the Orlandi Valuta system did in fact use a
clave to identify transactions. Moreover, it contends, the
basic idea of identifying transactions by codes is well-
known to anyone who has ever purchased or reserved an
item and received a confirmation number from a repre-
sentative.
WESTERN UNION v. MONEYGRAM 20
We agree with MoneyGram that the Orlandi Valuta
system taught the use of a code that corresponds to a
transaction in the system. At trial, MoneyGram estab-
lished that the code printed on the invoice given to the
Orlandi Valuta customer could be used to track the trans-
action. In light of this evidence, we conclude that it would
have been common sense for a person of ordinary skill in
the art to use a code generated at the staging phase and
provided to the customer to be used at the retail location
to look up transaction information in the manner claimed
by the asserted patents. See Perfect Web Techs., Inc. v.
InfoUSA, Inc., 587 F.3d 1324, 1329 (Fed. Cir. 2010) (In
KSR, “the Supreme Court instructed that factfinders may
use common sense in addition to record evidence.”). In
Perfect Web, the patented technology involved a method of
managing bulk e-mail that required repeating a series of
steps until the desired quantity of e-mail had been sent.
In affirming the district court’s holding of obviousness, we
reasoned that where there was a failure to reach the
targeted number, common sense dictated that one should
try again. Id. at 1330.
It is undisputed here that when a CSR entered a
transaction into the Orlandi Valuta system, it generated a
corresponding code and that that code was also printed on
the invoice that the customer received at the retail loca-
tion. Because, in that system, the transaction details
were faxed to the retail location, the customer’s name was
used to validate and complete the transaction. Where the
fax machine is replaced with an electronic transaction
device that is capable of retrieving information from the
host computer, it would be common sense for a person of
skill to use the transaction code throughout the life of the
transaction, including “use by the recipient during the
send transaction.” See KSR, 550 U.S. at 421 (“A person of
ordinary skill is also a person of ordinary creativity.”).
21 WESTERN UNION v. MONEYGRAM
Consequently, other code-related limitations in the as-
serted claims, such as entering the code into the ETFD
and validation of the code by the host computer, would
have also been a matter of common sense to a person of
ordinary skill in the art.
Western Union argues that MoneyGram did not sepa-
rately prove that additional limitations of each of the
asserted dependent claims were present in the prior art
rendering each of those claim obvious as well. Western
Union argues, for example, that dependent claim 12 of the
’203 patent adds the limitation that an employee of the
money transfer business provides the transaction identi-
fying code to the customer. Western Union, however,
does not explain why such an insignificant detail would
not have been obvious to a person of skill in the art. We
similarly decide that each of the other asserted claims of
the ’203 and ’309 patents adds only trivial improvements
that would have been a matter of common sense to one of
ordinary skill in the art, and that no reasonable jury could
find any of those claims to have been nonobvious. We
therefore conclude, after considering all the evidence
presented at trial in the light most favorable to Western
Union, that each of the disputed elements of the asserted
claims was present in the prior art, that the claimed
combination represents no more than “the predictable use
of prior art elements according to their established func-
tions,” KSR, 550 U.S. at 417, and as such, the claims
would have been obvious as a matter of law.
C. Secondary Considerations
MoneyGram argues that the district court’s analysis
of secondary considerations suffered from a fundamental
flaw in that it failed to identify the nexus between the
claimed inventions and the secondary considerations
identified by Western Union. In relying on commercial
WESTERN UNION v. MONEYGRAM 22
success, MoneyGram points out, the district court failed to
explain how the fact that Western Union had been trans-
ferring billions of dollars was in any way related to the
patented invention. It contends that the district court
failed to consider Western Union’s brand name recogni-
tion and marketing, or even the size of Western Union’s
business prior to adopting the patented system, when it
used systems such as Orlandi Valuta. It further argues
that in relying on the amounts that the parties had spent
on developing formless systems, the district court failed to
analyze whether those investments directly related to
conceiving the claimed inventions, such as an ETFD.
According to MoneyGram, absent those improper assump-
tions, there is no legally relevant evidence of secondary
considerations to support the nonobviousness of the
inventions of the asserted claims.
Western Union argues that to the extent the district
court’s finding of nonobviousness was based on secondary
considerations, it was well-supported in the record. It
contends that it presented evidence to the jury that the
Yellow Phone was commercially successful, transferring
billions of dollars and generating millions of dollars in
revenue each year. Throughout its arguments on nonob-
viousness, Western Union places significant emphasis on
the fact that both parties evaluated the Orlandi Valuta
system that existed at the time of the invention and
decided to develop their own new and improved systems.
We agree with MoneyGram that the district court
erred in its analysis of secondary considerations of obvi-
ousness and in its heavy reliance on them in denying
MoenyGram’s JMOL of obviousness. We find the evi-
dence of secondary considerations irrelevant in supporting
the jury verdict of nonobviousness. Our case law clearly
requires that the patentee must establish a nexus be-
tween the evidence of commercial success and the pat-
23 WESTERN UNION v. MONEYGRAM
ented invention. See In re Huang, 100 F.3d 135, 140 (Fed.
Cir. 1996) (holding that the proponent must offer proof
“that the sales were a direct result of the unique charac-
teristics of the claimed invention”) (emphasis added); In re
GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir. 1995) (“For
objective [evidence of secondary considerations] to be
accorded substantial weight, its proponent must establish
a nexus between the evidence and the merits of the
claimed invention.”) (emphasis added).
Here, Western Union failed to present any relevant
evidence proving a nexus between its commercial success
and its claimed invention. The only evidence that West-
ern Union points us to is testimony from one of its em-
ployees explaining how the “Money Transfer by Phone” or
Yellow Phone system that allowed customers simply to
pick up the phone and have a Western Union CSR stage a
transaction for them enabled dramatic growth of Western
Union’s business. However, Western Union does not
claim that it invented a formless money transfer system
or that systems such as Orlandi Valuta are not prior art
to the claimed invention. It cannot therefore claim any
commercial success that arose from features of the system
found in the prior art as a consideration for nonobvious-
ness of its claimed invention. Ormco Corp. v. Align Tech.,
Inc., 463 F.3d 1299, 1312 (Fed. Cir. 2006) (“[I]f the feature
that creates the commercial success was known in the
prior art, the success is not pertinent.”).
Similarly, Western Union failed to establish that in-
vestments made by itself and by MoneyGram in develop-
ing formless money transfer systems different from
Orlandi Valuta have any relation to the patentable fea-
tures of the claimed inventions. Western Union points to
payments in the amount of $240,000 that MoneyGram
made to Cambridge Technology Partners (“Cambridge”)
for consulting services as proof of such investments.
WESTERN UNION v. MONEYGRAM 24
However, MoneyGram presented evidence at trial that
MoneyGram’s payments to Cambridge were for consulting
services targeted toward reinventing the entire Money-
Gram system, only part of which was addressing chal-
lenges involved in adopting a formless system. Western
Union failed to rebut that testimony, or offer any other
evidence that demonstrated that Cambridge’s services
were dedicated to developing the inventions claimed in
the patents in suit. Mere attorney argument that both
parties refused to adopt the Orlandi Valuta system spe-
cifically because it was lacking the innovative aspects of
the claimed inventions is not evidence that can support a
finding of nonobviousness. See Perfect Web, 587 F.3d at
1332 (rejecting a nonobviousness position that was
“merely attorney argument lacking evidentiary support”).
Thus, we find that the district court’s reliance, in finding
nonobviousness, on the amount of time and money that
both parties had spent on developing formless systems
was misplaced.
Moreover, weak secondary considerations generally do
not overcome a strong prima facie case of obviousness.
See Media Techs. Licensing, LLC v. Upper Deck Co., 596
F.3d 1334, (Fed. Cir. 2010), cert. denied, 2010 WL
2897876 (Oct. 04, 2010) (“Even if [the patentee] could
establish the required nexus, a highly successful product
alone would not overcome the strong showing of obvious-
ness.”); Leapfrog Enters., 485 F.3d at 1162 (holding that
the objective considerations of nonobviousness presented,
including substantial evidence of commercial success,
praise, and long-felt need, were inadequate to overcome a
strong showing of primary considerations that rendered
the claims at issue invalid). Here, where the inventions
represented no more than “the predictable use of prior art
elements according to their established functions,” KSR,
550 U.S. at 417, the secondary considerations advanced
25 WESTERN UNION v. MONEYGRAM
by Western Union are inadequate to establish nonobvi-
ousness as a matter of law.
Thus, we conclude that the asserted claims of the
’203, ’747, and ’309 patents would have been obvious as a
matter of law and therefore reverse the district court’s
denial of JMOL of nonobviousness. In light of our disposi-
tion, we do not reach issues of claim construction and
infringement.
CONCLUSION
We have considered Western Union’s remaining ar-
guments and do not find them persuasive. Accordingly,
the judgment of the district court is
REVERSED.