BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY ENTERPRISE COURT (ChD)
New Fetter Lane
B e f o r e :
sitting as a Judge of the High Court
| COMMUNISIS PLC
- and -
|(1) THE TALL GROUP OF COMPANIES LIMITED
(2) CHECKPRINT LIMITED
(3) DLRT LIMITED
Mr Henry Ward (instructed by Brabners LLP) for the Defendants
Hearing dates: 14 and 15 July 2020
Crown Copyright ©
Covid-19 Protocol: This judgment was handed down remotely by circulation to the parties' representatives by email. The date and time for hand-down is deemed to be 10.00am on 17 November 2020.
Her Honour Judge Melissa Clarke:
B. THE PROCEEDINGS
Mr Charles Brewer
i) What was in the skilled person's common general knowledge. Mr Brewer stated in cross-examination that he believed the common general knowledge was what the skilled person needed to compare the Patent with the Confidential PPD. In fact, as is common ground, the common general knowledge is the entire stock of knowledge that the skilled addressee would have had at the priority date;
ii) Construction. There are two criticisms of Mr Brewer's approach: (a) he disclosed in cross-examination that his evidence on the meaning of Claim 1 and the claim integers was his understanding of what the terms meant in the context of both the Patent and the Defendants' Confidential PPD. In fact, it is common ground that it is impermissible to construe the claims by reference to the alleged infringement; (b) Mr Brewer's report discloses that he addressed construction issues in a manner which sought to distinguish between the Prior Art and the claims of the Patent. It is, again, common ground that this is an impermissible approach (per Beloit Technologies v Valmet  RPC 705).
iii) Who the skilled person is and what they do. I deal with in this in more detail in paragraphs 35-37 below.
Professor Peter Landrock
C. THE PATENT
"The personal details are first included on a cheque by a manufacturer using a laser printing technique. A fraudster may scrape away, remove or amend the personal details and add new fraudulent details relating to a different account. The altered cheque can then be presented as payment and the amount to which it relates is debited from a different account as fraudulently detailed on the cheque".
"The UCN 34 is created by means of an algorithm that links together the sort code, account number and serial number on a cheque/credit. The UCN 34 is personalised onto the document in order to provide a means to identify instances where the personalised details have been changed.
Within the cheque and credit clearing process the main clearing houses that provide cheque processing services… use software and systems… to identify cheque fraud as part of the clearing cycle. These systems are used to verify that the sort code, account number and serial number details have not been amended and to reject any items during the cheque clearing process that do not match the correct UCN 34. The UCN 34 is generated using the account number, sort code, and serial number on a cheque or credit. Therefore it will be unique to each individual cheque. The UCN 34 consists of 14 alphanumeric characters/symbols."
A cheque/credit manufacturer generates a UCN 34 to be laser printed in two positions on the cheque document when the cheque document is being personalised. This will link the sort code, serial number and account number that is printed within the MICR [Magnetic Ink Character Recognition] line 22 of the document".
"The effect of conversion to base 43 is to render a 7 digit number into 5 characters and a 6 digit number into 4 characters. Base 43 is a positional numeral system using 43 as the radix. The choice of 43 is convenient in that the digits can be represented using selected ASCII Characters. Base 43 is therefore the most compact case-insensitive alphanumeric numeral system using ASCII characters.
As the Account Number is 8 characters, the method moves the last character of this to be at the front of the serial number; giving three separate numbers of a maximum of 6, 7 and 7, instead of 6, 8 and 6.
For example, Sort Code 20-20-20, Account Number 12345678, Serial Number 100000 would become:
These three separate values can then be converted to base 43 using any of the well known conversions. The conversion provides three sets of alphanumeric values, one of which will be represented as 4 characters and the other two of 5 characters, giving a total of 14 characters.
Conversion of the above three sets of numeric values to base 43, using the character set defined in section above [selected ASCII characters] would be as follows:
The natural string of code would be personalised as such: 4QE92IPW#4I#Z7"
"The producer of the cheques described herein will provide a .dll file to the clearing company to decrypt the UCN 34. The sort code, account number, serial number and UCN 34 are scanned and recorded as part of the cheque scanning process by the processing system. These details are passed to the .dll, which will then decrypt the UCN 34, review the information and retUCN a value of True (a match) or False (a mis-match). Acceptance or rejection will be based on whether an exact match is found or not. If the two codes do not match this indicates the potential fraudulent alteration of some of the details on the cheque."
1.1. A method of generating a payment/credit instrument comprising:
1.2. Generating a code based on at least one string of information to be applied to the payment/credit instrument during generation thereof;
1.3. Applying at least one string of information to the payment/credit instrument; and
1.4. Applying the generated code to the payment/credit instrument in at least one location of the payment/credit instrument during generation thereof by a printing technique,
1.5. Wherein the or each string of information is converted to a code by conversion to a higher base; and
1.6. Wherein the payment/credit instrument is a cheque or credit slip, and
1.7. Wherein the at least one string of information is one or more of a bank sort code, a payment/credit instrument serial number and an account number for the payment/credit instrument.
THE SKILLED PERSON
(a) someone skilled in banking and particularly the generation, processing and use of payment and credit instruments including cheques, as well as the security issues that attach to such a field such as the various ways in which cheque fraud can be perpetrated; and
(b) a cryptographer or a digital security expert who will be familiar with common principles of cryptography...".
"In assessing a commercial IT system, it is virtually never the case that the analyst responsible for the selection of competing systems goes deeply into the design, architecture or detailed method of operation of those systems. The analyst no more needs to understand the manner in which an algorithm has been implemented than the purchaser of a car needs to understand the software which regulated the supply of fuel to the engine." (my emphasis).
i) the Patent does not require a new implementation of a cryptographic technique or algorithm which needs to be assessed by the skilled addressee, and if it did, that would be contrary to generally accepted principles of good security implementation that a well-known, well tested solution (and in the case of algorithms, one which is well-reviewed by professional cryptographers) is far better than a new one;
ii) the Patent also does not require a professional cryptographer to implement cryptographic processing of data, as the algorithm to be implemented should be sourced from those which have undergone such professional review so that they are suitable for consideration for implementation. One such source may be the UK National Institute of Standards and Technology (NIST).
D. THE COMMON GENERAL KNOWLEDGE
i) the use of various identifying data on cheques including the sort code, account number and cheque serial number;
ii) the concatenation of the above information into data strings, and the printing and display of the same on cheques;
iii) the requirement for and use of machine-readable data and symbols on cheques;
iv) that physical security measures are used on cheques;
v) the inadequacy of physical security measures for digitised systems and digitally transmitted cheque systems, and the requirement for "image-survivable" security features;
vi) some understanding of the forms of cheque fraud, specifically those relating to tampering with personalisation data;
vii) the use of cryptography in security applications;
viii) the existence, use and strength of cryptographic techniques;
ix) a basic knowledge of mathematics and implementation of mathematical methods of programming;
x) simple principles of digital security such as:
• The principles and use of digital signatures;
• Private and public key encryption including the use of commonly known protocols such as RSA;
• The use of reversible and irreversible cryptographic functions;
• The use of hashing functions including commonly known hashing functions such as SHA-1 and SHA-2 including SHA-256, message authentication codes and checksums;
• The use of different bases for the display of outputs of cryptographic functions such as encryption algorithms and hashing functions etc, including the use of hexadecimal display of the outputs of common hashing functions such as SHA-1;
xi) sufficient understanding of the application of algorithms to numeric strings to appreciate that this is a suitable method of encoding.
E. CONSTRUCTION OF THE PATENT
"Where a patentee has used general language in a claim, but has described the invention by reference to a specific embodiment, it is not normally legitimate to write limitations into the claim corresponding to details of the specific embodiment, if the patentee has chosen not to do so. The specific embodiments are merely examples of what is claimed as the invention, and are often expressly, although superfluously, stated not to be "limiting". There is no general principle which requires the court to assume that the patentee intended to claim the most sophisticated embodiment of the invention. The skilled person understands that, in the claim, the patentee is stating the limits of the monopoly which it claims, not seeking to describe every detail of the manifold ways in which the invention may be put into effect".
i) The meaning of "code/generating a code" in integer 1.2;
ii) The meaning of "by conversion to a higher base" in integer 1.5; and
iii) The meanings of "applying the generated code" and "during generation thereof" in integer 1.4.
Code/Generating a Code
By Conversion to a Higher Base
i) the Claimant's construction requires the skilled addressee to ignore words which are present in Claim 1 ("by conversion to") and read-in words ("that is in") which are not present in Claim 1, and in doing so fundamentally alter its meaning.
ii) I remind myself that the skilled person understands that, in the claim, the patentee is stating the limits of the monopoly which it claims. The Claimant has chosen the wording of the claims, including in integer 1.5 of Claim 1. I do not consider there is anything in the Patent to justify ignoring the wording that the Claimant has chosen in articulating the claims: there is no general teaching in the Patent, only a single embodiment, and Claims 1 and 6 use language which is apt to capture that single embodiment. The Patent teaches only how to generate a code by base conversion, and accordingly that should be the limit of the scope of monopoly.
iii) Putting to one side for the moment any consideration of the Defendants' counterclaim in invalidity for obviousness over the Prior Art and excluded subject matter, I accept the Defendants' submission that if the Court were to prefer the Claimant's construction, the Claimant would obtain a monopoly to the encryption of Personalisation Data by every single cryptographic function invented or yet to be invented, as long as the result of that cryptographic function was presented in a higher base and applied to a cheque or credit slip. Mr Ward submits that would be a monopoly which exceeds by a very great way the Claimant's contribution to the art. I accept that submission. I remind myself that a patent is a social contract between the inventor and the public. The inventor teaches a new product or process, and in doing so adds to the sum of the public's knowledge, receiving as a reward a monopoly of that product or process for a period. The extent of the monopoly conferred by the patent must correspond with the extent of the contribution which it makes to the art, as the Supreme Court reminded us very recently in its discussion of sufficiency at paragraphs 23 and 24 of the judgment of Lord Briggs (with whom Lord Reed, Lord Hodge and Lord Sales agreed) in Regeneron Pharmaceuticals Inc v Kymab Ltd  UKSC 27.
iv) I have no difficulty in finding that, cryptographically speaking, conversion of numerical input to a higher base is not at all sophisticated, and that the skilled addressee would understand that. Mr Brewer, the Claimant's own expert, described the security that it provided in oral evidence as "frankly pretty awful" which appears to accord with Professor Landrock's opinion that the invention disclosed by the Patent would not be considered as a practical method of fraud prevention by the person skilled in the art. Professor Landrock stated in his first report that it was "very basic indeed… the sort of thing I would anticipate my first-year students might try for fun before they became familiar with good principles of cryptography… amateurish". Given this contribution to the art (if it is a contribution to the art at all, which I will retUCN to), to construe the Patent as providing a monopoly of the width contended for by the Claimant would be, in my judgment, outwith the social contract and unjustifiable, even before looking at legitimate arguments which could be raised about the sufficiency of the Patent's teaching across that width.
Applying the Generated Code
Printing the whole of the code or only part of it?
i) that construction requires the Court to read-in words limiting the Claim ("the whole of") which the patentee has chosen not to insert;
ii) although the Patent teaches, in the worked algorithm, application of the whole code to the cheque, that is merely an example of what is claimed as the invention, per Nokia v Ipcom. The Defendants accept that the example contained in the Patent is merely an example, and the Claimant as patentee is not required to identify every possible way of implementing the invention;
iii) I accept the Claimant's submission that if, as I have found, the skilled addressee can understand that the invention can be worked using 'forwards' as well as 'backwards' decryption, the skilled addressee can also understand that the invention can be worked whether the whole code is printed or only a sufficient part of it to safely verify the match (say, for example, the 1st, 2nd, 4th and 5th characters);
iv) I do not consider that this requires the unimaginative skilled addressee to use his imagination in circumstances where the Patent discloses the possibility of a re-ordering algorithm. That discloses that although the code produced by conversion to a higher base may be varied before printing, as long as the validation process subjects the same input data string to the same variations, the match will be achieved and the invention will work; and
v) the skilled reader would also understand that printing part and not the whole code will further assist in fulfilling the practical purpose identified by the Defendants of reducing the code to a size which will fit legibly on the limited spaces available on the cheque.
The meaning of "generation of a cheque"
F. INVALIDITY – OBVIOUSNESS OVER THE PRIOR ART
i) (a) Identify the notional 'person skilled in the art';
(b) Identify the relevant common general knowledge of that person;
ii) Identify the inventive concept of the claim in question or, if that cannot readily be done, construe it;
iii) Identify what, if any, differences exist between the matter cited as forming part of the state of the art and the inventive concept of the claim, or the claim as construed;
iv) Ask whether, when viewed without any knowledge of the alleged invention as claimed: do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?
"This approach assists the fact-finding tribunal, but is not a substitute for the statutory question: "is it obvious?" In applying it, as elsewhere, hindsight is impermissible. It has to be remembered that the skilled person is not in a position to perform his own Pozzoli analysis. It is particularly important to remember that the first three stages are merely those which the court needs to go though in order to equip itself with the tools to answer the statutory question, which is the fourth one. The first three steps involve knowledge of the invention, which must then be forgotten for the purposes of step 4. What one is seeking to establish is whether the claim extends to methods or objects which are, without knowledge of the invention and without inventive capacity, obvious."
"The apparatus can be implemented at the payee's home or office with a Personal Computer (PC) which has a scanner attached to it and connected to… the Internet. The process of depositing paper checks begins by the payee endorsing a check having printed thereon encryptions in at least selected locations where information is written by a payer. The act of writing by the payee obscuring some of the encryptions. The payee then scans the endorsed check with a scanner to generate a digitized version of the check. The computer extracts from the digitized version of the check a concatenated branch number, account number and check number and a corresponding digital signature. The payee then transmits the extracted information together with the digitized version of the check for deposit. The checks are specially designed to prevent fraud such as alterations of the payee, amount and multiple deposits. In addition to the encryptions imprinted on the check, a secret key and a plurality of digital signatures are generated based on the concatenated branch number, account number and check number. Furthermore the new kind of checks described in this invention will also make fraud much harder when traditional methods of depositing are used".
i) In relation to integer 1.2, it discloses that the code is applied to the payment/credit instrument "during generation thereof"; and
ii) In relation to integer 1.5, that the information is converted to a code "by conversion to a higher base".
"A client wishing to prepare a document for paying in or paying out introduces an unprinted document form into the apparatus by sliding it in through a slot. The required amount is then typed onto the document by means of the keyboard 3. The amount is printed by the printing mechanism 4 in the panel 5 of the document and applied to the second input of the code pulse calculator 9. Serial number producer 2 produces a serial number which the mechanism 4 prints in panel 6 of the document and which is applied to the third input of calculator 9. Preset at the first input of the calculator 9 is the secret code information from the store 8, such information being logically associated in the calculator 9 with the data information items representing the amount and the serial number. This association leads to the crypto number being obtainable at the output of the calculator 9. The mechanism 4 prints the crypto number in the panel 7 to complete the preparation of the document." (my emphasis)
G. EXCLUDED SUBJECT MATTER
Doctrine of Equivalents
i) Claims 1 and 6 of the Patent are invalid for obviousness over the Prior Art: Martens, Ehrat and Martin.
ii) Claims 1 and 6 of the Patent are invalid for excluded subject matter pursuant to section 1(2) Patents Act 1977.
iii) The claim for infringement is dismissed.