3M Future Africa (Pty) Ltd v The Standard Bank of South Africa Ltd

• Jurisdiction: South Africa
• Judge: Makgoka J
• Judgment Date: 14 September 2012
• Citation: 2012 JDR 1716 (CP)
• Docket Number: 2002/2337
• Court: Commissioner of Patents

Makgoka J:

[1]

On 31 August 2012 I made the following order:

'1.

Claims 17, 18, and 19 of SA Patent No. 2002/2337 (the patent) are valid and were infringed by the 'MTN Money Banking' until the 'on/off' functionality was disabled on 13 January 2012;

2.

The defendants' counterclaim is granted and the patent is revoked, subject to paragraph 3 below;

3.

The revocation order granted in paragraph 2 above is provisional. It will become fully operative in respect of the patent if the patentee does not within one month file a notice of an application to amend the patent, or having filed such application, the patentee withdraws it. If an application for amendment is made and not withdrawn, it shall be decided at the hearing of such application whether or not the revocation order is to be put in operation.

4.

The defendants are ordered to pay the plaintiff's costs in respect of the infringed claims set out in paragraph 1 above, such costs to include those consequent upon employment of three counsel, to be paid by the first, second and third defendants, jointly and severally, the one paying the others to be absolved.

5.

The plaintiff is ordered to pay the defendants' costs in respect of the counterclaim, such costs to include those consequent upon employment of two counsel, respectively in the case of the first defendant on the one hand, and the second on the one hand, and the second and third defendants on the other.'

[2]

I undertook to furnish reasons at a later stage for the order. The following are the reasons.

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Makgoka J

[3]

This is a patent infringement action brought in terms of s 65 of the Patents Act, 57 of 1978 (the Act). It concerns the validity and alleged infringement of South African Patent Number 2002/2337 in respect of an invention titled 'Transaction Authorization System' (the patent). The plaintiff, a dormant company, is the proprietor of the patent by virtue of an assignment which was registered on 30 August 2006. The priority date of the patent is 26 March 2001.

[4]

The first defendant (Standard Bank) is a leading South African banking institution. The second defendant (MTN) is the holding company of one of Africa's leading cellular phone networks. The third defendant is a wholly-owned subsidiary of MTN Mobile Money Holdings (Pty) Ltd, which in turn is a joint venture between Standard Bank and Mobile Telephone Networks Holdings Ltd. The latter is a subsidiary of MTN.

Overview of the patent

[5]

The invention seeks to curb the unauthorized use of bank account details, where such details are used to conduct illegal transactions without the authorisation of an account holder. The object of the patent is said to be an added authorization to the conventional bank authorization, in terms of which the user of the bank card may 'enable' and 'disable' the bank account associated with the card, and only authorize the transaction if the account is designated as 'enabled',

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The patent specification

[6]

The invention relates to data processing, more particularly, to a transaction authorisation system, to a computer program on a carrier for causing a computer to execute transaction authorisations, and to a method of authorising, a transaction. The unauthorized transactions are said to be particularly prevalent in light of internet-based transactions or other transactions where a physical signature is not required or possible, such as those initiated by personal computers, mobile phones, handheld computers etc, where only the bank account details, such as a credit or debit card number, are required to authorize a transaction. Once such details are acquired in one way or the other, they can be used illegally for any transaction not requiring a physical signature.

The conventional authorization method

[7]

It is stated in the specification that conventionally, when a transaction is performed using a bank account in which the account holder purchases goods from a merchant, the merchant checks for authorization from an authorization institution or facility responsible for the account, before completing the transaction. The authorization institution is typically in the form of a bank (e.g the acquiring bank, the bank that manages the merchant's account, the card-issuing bank that manages the account holder's bank account or credit card account), credit card associations and clearing houses (such as Visa™, Master Card International™ or American Express™, or in addition, the merchant itself, or any other authorised institution or facility. The

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Makgoka J

authorization institution then authorizes the transaction based on the credit limit or available funds or other data or rules associated with the bank account.

The invention claimed

[8]

The invention is said to be an added authorization process in that over and above all of these processes mentioned above, the authorizing institution, using the invention, may access and/or interrogate the account status database to determine the status of the bank account, and only authorize the transaction if the account is designated as 'enabled'. Thus, even if there are sufficient funds in the account, the transaction or request from a merchant is only allowed or authorized if the account has been 'enabled'.

[9]

In terms of the invention, the status altering facility may be configured to allow an account holder to specify that the account is to change status once a pre-selected condition has been met. That pre-condition may either be:

(a)

a specified time interval during which the bank account will be designated as 'enabled' or 'disabled'. As an example, a card holder may enable his or her account for preselected time interval of, say 10 minutes, ½ hour etc to effect a transaction, whereafter the account may automatically revert to 'disabled' status;

(b)

a predetermined event, where for example, an account may be configured to allow for one transaction only, whereafter the account will revert to its disabled status, or

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(c)

an amount for which the account holder intends to designate the account as enabled.

[10]

The complete specification of the invention has 25 claims, and it is described by way of examples and with reference to accompanying diagrams.

[11]

The complaint by the plaintiff against the defendants is that the defendants have infringed claims 17, 18, 19, 20, 23 and 25 through the provision by 'MTN Banking' of the 'MTN Mobile Money System', in particular the 'on/off' and the 'authorised' function which attaches to the internet transactions. In support of its allegations of infringement the plaintiff relies on: (i) the 'Mobile Money Account Terms and Conditions as illustrated on the 'MTN Banking webpage'; (ii) a transaction performed by Mr. Christo Nel; (iii) screenshots from the MTN Banking website; and (iv) the MTN Banking training manual.

[12]

Initially the plaintiff sought an interdict restraining the defendants from infringing the claims of the patent alleged to be infringed, namely claims 17, 17, 19, 20, 23 and 25. It also sought an enquiry into damages and costs. The plaintiff alleges that the (allegedly) infringing conduct of the defendants has caused, and is still causing it damages, which it is unable to quantify, alternatively that the plaintiff is entitled to a reasonable royalty in terms of the provisions of s 65(6) of the Act. The defendants deny these allegations and assert that the 'functionality' on which the plaintiff had relied was disabled on 13 January 2012.

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Makgoka J

[13]

The defendants admit annexure 'B' to the plaintiff's particulars of claim to be a copy of the Mobile Money Account Terms and Conditions, and that annexures 'C1' to 'C17' are copies of the screenshots from the MTN Banking training Manual. However, they deny that they have infringed any of the claims of the patent, and seek the dismissal of the plaintiff's claims. In addition the defendants counterclaim for the revocation of the patent on the basis that it is invalid and liable to be revoked in terms of s 61(1) (c) of the Act, on the ground that the invention concerned was not patentable in terms of s 25 of the Act, in that: (i) it was not new; (ii) it did not involve an inventive step; (iii) it includes an 'invention' which consists of a scheme, rule or method for doing business; and (iv) it includes an 'invention' which consists of a program for a computer.

[14]

In support of their attack on the validity of the patent based on grounds of lack of novelty and obviousness the defendants rely on four prior art documents, namely:

(a)

US Patent No. 5,513,250 dated 30 April 1996 ('McAllister');

(b)

US Patent No. 5,649,117 dated 15 July 1997 ('Landry');

(c)

US Patent No. 5, 826,241 dated 20 October 1998 ('Stein'); and

(d)

US Patent No. 6, 052,675 dated 19 April 2000 ('Checchio')

The claims

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Makgoka J

[15]

In written submissions filed on behalf of the plaintiff, and confirmed orally from the bar during closing argument, I was informed that for the purposes of infringement the plaintiff would rely only on claims 17, 18 and 19. These are method claims. Claim 17 is a 'substantive' claim whilst claims 18 and 19 are 'dependent' claims, in the sense that they are dependent on claim 17 in that they incorporate all of the integers of claim 17 but are limited by further integers. Claim 17 is stated as follows:

(a)

A method of authorizing a transaction,

(b)

the method including selectively designating a bank account status as enabled or disabled, on the instruction of an account holder issued from a remote device;

(c)

thereby to selectively transactions performed using the bank account;

(d)

and recording the status of the bank account in an account status database.

[16]

Claim 18...