United States Court of Appeals for the Federal Circuit

2008-1263 

NETCRAFT CORPORATION, 

Plaintiff-Appellant, 

v. 

EBAY, INC. and PAYPAL, INC., 

Defendants-Appellees. 

 Frank E. Scherkenbach, Fish & Richardson P.C., of Boston, Massachusetts, argued 

for plaintiff-appellant. With him on the brief were Robert E. Hillman and Craig R. Smith; 

and Michael J. Kane and William R. Woodford, of Minneapolis, Minnesota. 

 Morgan Chu, Irell & Manella LLP, of Los Angeles, California, argued for defendantsappellees. With him on the brief were Samuel K. Lu and C. Maclain Wells. 

Appealed from: United States District Court for the Western District of Wisconsin 

Chief Judge Barbara B. Crabb 
United States Court of Appeals for the Federal Circuit 

2008-1263 

NETCRAFT CORPORATION, 

 Plaintiff-Appellant, 

v. 

EBAY, INC. and PAYPAL, INC., 

 Defendants-Appellees. 

Appeals from the United States District Court for the Western District of Wisconsin in 

case no. 3:07-CV-00254, Chief Judge Barbara B. Crabb. 

 __________________________ 

DECIDED: December 9, 2008 

 __________________________ 

Before BRYSON, LINN, and PROST, Circuit Judges. 

PROST, Circuit Judge. 

This is a patent infringement case involving internet billing methods. Plaintiff 

Netcraft Corporation sued eBay, Inc. and PayPal, Inc. (collectively “Defendants”) for 

infringement of two related patents: U.S. Patent Nos. 6,351,739 (“’739 Patent”) and 

6,976,008 (“’008 Patent”). The district court construed a phrase that appears in both 

patents, “providing a communications link through equipment of the third party,” to 

require “providing customers with internet access.” Netcraft Corp. v. Ebay, Inc., No. 

3:07-CV-00254, 2007 U.S. Dist. LEXIS 91806, at *2 (W.D. Wis. Dec. 10, 2007) (“Claim 

Construction Order”). The parties agreed that Defendants do not provide internet 

access to customers, and the district court therefore granted Defendants’ motion for 
summary judgment of non-infringement. Because we agree with the district court’s 

claim construction, we affirm. 

I. BACKGROUND 

The technology involved in this appeal generally relates to internet billing 

methods. PayPal offers online payment services. eBay is the parent of PayPal, and 

offers online auction services. Plaintiff Netcraft sued eBay and PayPal in the United 

States District Court for the Western District of Wisconsin, alleging infringement of the 

’739 and ’008 Patents (collectively “the asserted patents”). 

The asserted patents are both entitled “Internet Billing Method.” They also both 

claim priority to the same parent patent—U.S. Patent No. 5,794,221 (“’221 Patent”)—

and share a common specification. Both asserted patents are assigned to Netcraft. 

Andrew Egendorf—the president of Netcraft—is the named inventor on both patents. 

Representative Claim 1 of the ’739 Patent reads: 

1. An Internet billing method for a plurality of customers and a plurality of 

vendors of products or services for transactions over the Internet between 

a purchasing customer of the plurality of customers and a selling vendor of 

the plurality of vendors, wherein, for each purchase transaction, a 

transaction amount is charged to the purchasing customer, and an amount 

is remitted to the selling vendor, comprising the steps by a third party of: 

a) establishing a billing agreement with the purchasing customer, 

and a remitting agreement with the selling vendor, to bill the 

purchasing customer, and to remit to the selling vendor, for 

products and services purchased over the Internet by the 

purchasing customer from the selling vendor; 

b) providing a communications link through equipment of the third 

party between the purchasing customer and the selling vendor 

through which the purchasing customer obtains information from 

the selling vendor with respect to a purchase of a product or service 

by the purchasing customer from the selling vendor; 

c) obtaining at least one billing authorization for the purchase; 

2008-1263 2
d) charging the transaction amount to the purchasing customer in 

accordance with the billing agreement; and 

e) remitting an amount related to the purchase to the selling vendor 

in accordance with the remitting agreement. 

’739 Patent col.7 ll.21-48 (emphasis added). 

The phrase at issue in this appeal, “providing a communications link through 

equipment of the third party,” appears in all asserted claims of both asserted patents. 

Neither the term “communications link” nor the phrase “communications link through 

equipment of the third party” is found in the parent ’221 Patent or the common 

specification of the asserted patents. 

In construing this phrase, the district court first addressed the asserted claims 

themselves, noting that “the claim itself does not define ‘communications link’ the way 

defendants propose.” Claim Construction Order at *3. While the district court reasoned 

that the “lay understanding of ‘communications link’ is much broader than ‘internet 

access,’” it recognized that “courts cannot look at the claims in isolation or at just the lay 

understanding of them, but must consider the patent as a whole.” Id. The district court 

noted that “the specification makes it unmistakably clear that the invention requires that 

the third party provide internet access to the customer.” Id. at *4. It concluded that the 

phrase “communications link” is the only part of the claim that could incorporate this 

requirement, and construed the phrase “providing a communications link” as requiring 

“providing customer access to the internet.” Id. In support of its construction, the 

district court cited many portions of the common specification (including the Abstract 

and the Summary of the Invention), and stated that “[i]n countless instances, the 

specification refers to the third party as the ‘provider,’ which plaintiff conceded at the 

claim construction hearing means ‘internet access provider.’” Id. at *5. 

2008-1263 3
The district court was unconvinced by Netcraft’s attempts to show that the 

specification’s references to the provider connecting customers to the internet were just 

particular embodiments, as opposed to describing the invention as a whole. Id. at *5-6. 

It also rejected several claim differentiation arguments made by Netcraft. Id. at *6-9. 

Finally, even though both parties advanced prosecution history arguments in support of 

their respective claim construction positions, the district court determined that “it is 

unnecessary to consider those arguments when the patent itself is clear.” Id. at *9. 

Because the parties agreed that Defendants do not provide internet access to 

customers, the district court granted Defendants’ motion for summary judgment of noninfringement. Id. at 10. 

Netcraft appealed. We have jurisdiction over this appeal pursuant to 28 U.S.C. 

§ 1295. 

II. DISCUSSION 

This appeal involves a single question of claim construction. Precisely, we must 

decide whether the district court erred in construing “providing a communications link 

through equipment of the third party” to require that the third party provide customers 

with internet access. Claim Construction Order at *2. 

We review a district court’s claim construction de novo. Ortho-McNeil Pharm., 

Inc. v. Caraco Pharm. Labs., Ltd., 476 F.3d 1321, 1326 (Fed. Cir. 2007). As this court 

explained in Phillips v. AWH Corp., “[i]t is a bedrock principle of patent law that the 

claims of a patent define the invention to which the patentee is entitled the right to 

exclude.” 415 F.3d 1303, 1312 (Fed. Cir. 2005) (quotations omitted). Claim terms are 

generally construed in accordance with the ordinary and customary meaning they would 

2008-1263 4
have to one of ordinary skill in the art. Id. at 1312-13. “[T]he person of ordinary skill in 

the art is deemed to read the claim term not only in the context of the particular claim in 

which the disputed term appears, but in the context of the entire patent, including the 

specification.” Id. at 1313. In addition to considering the specification, courts should 

consider the prosecution history of an asserted patent if it is in evidence. Id. at 1317. 

“Although we have emphasized the importance of intrinsic evidence in claim 

construction, we have also authorized district courts to rely on extrinsic evidence . . . .” 

Id. That being said, “while extrinsic evidence can shed useful light on the relevant art, 

we have explained that it is less significant than the intrinsic record in determining the 

legally operative meaning of claim language.” Id. (quotations omitted). Mindful of these 

principles, we turn to the phrase at issue in the present case—“providing a 

communications link through equipment of the third party.” 

On appeal, Netcraft maintains that the claim language itself does not support the 

district court’s construction. It also argues that the specification does not support, and is 

in fact inconsistent with, the district court’s claim construction and that the district court 

erred by refusing to consider the prosecution history. We address these arguments in 

turn. 

With respect to the claim language, Netcraft argues that the ordinary meaning of 

“communications link” is much broader than the district court’s construction, and that 

neither the claim language nor ordinary meaning supports including a requirement that 

the third party must provide internet access. Defendants respond that the actual phrase 

construed by the district court was “providing a communications link through equipment 

of the third party,” not simply “communications link,” and that read in light of the 

2008-1263 5
specification this phrase must include a requirement that the third party provide internet 

access. 

The asserted claims themselves do not expressly indicate whether “providing a 

communications link through equipment of the third party” requires that the third party 

provide internet access. Indeed, the term “communications link” is never used in the 

parent ’221 Patent or the common specification of the asserted patents. While the lay 

meaning of “communications link” standing alone may be broader than “internet 

access,” we are not construing this term standing alone. See Phillips, 415 F.3d at 1321 

(“Properly viewed, the ‘ordinary meaning’ of a claim term is its meaning to the ordinary 

artisan after reading the entire patent.”). In order to properly determine the ordinary 

meaning of the entire phrase at issue in this case, we must consider the claim terms in 

light of the entire patent. As explained further below, based on a reading of the 

common specification in its entirety, along with the cited prosecution history, we 

conclude that the claim limitation “providing a communications link through equipment of 

the third party” requires providing customers with internet access. 

Construing the phrase in dispute to require providing customers with internet 

access is supported by the Summary of the Invention, which states: 

The main object of the present invention is to create a new business 

opportunity for telephone companies, cable television companies, existing 

Internet access providers, and companies offering financial services by 

creating a way for them to offer to their subscribers a method of securely 

buying and selling goods and services of any value over the Internet. 

Another object of the present invention is an Internet billing method which 

is cost effective for transactions having transaction amounts ranging from 

pennies to a few dollars. 

Still another object of the present invention is to provide a secure method 

of billing commercial transactions over the Internet. 

2008-1263 6
A further object of the present invention is an Internet billing method which 

is simple to use from both the customer’s point of view and that of vendors 

on the Internet. 

Yet another object of the present invention is a billing method which can 

be used by a large number of existing Internet users without requiring 

major changes in how the users customarily behave and conduct 

commercial transactions. 

These and other objects of the present invention are achieved by an 

Internet billing method in accordance with the present invention. A 

provider establishes an agreement with a customer, and a second 

agreement with a vendor, wherein the provider agrees with the customer 

and the vendor to bill for products and services purchased over the 

Internet by the customer from the vendor. Associated with the customer 

agreement are one or more billing accounts to which purchases may be 

charged. Associated with the vendor agreement are one or more methods 

of remitting funds to the vendor. The provider creates access to the 

Internet for the customer through the provider’s equipment. When the 

customer orders a product or service over the Internet from the vendor, 

the provider obtains transactional information transmitted between the 

customer and the vendor including a transaction amount relating to the 

ordered product or service and the provider then bills the transaction 

amount to a customer billing account and remits a portion of the 

transaction amount to the vendor. 

’739 Patent col.1 l.61–col.2 l.34 (emphases added). 

Netcraft argues that there is no “general rule that any use of ‘the present 

invention’ in the specification automatically limits the claims, as Defendants seem to 

believe.” Appellant’s Reply Br. 22; see also id. at 19 (“Defendants contend that the 

case law supports the draconian result that any use of the phrase ‘present invention’ 

limits the claims to the embodiment described.”). We agree with Netcraft that use of the 

phrase “the present invention” does not “automatically” limit the meaning of claim terms 

in all circumstances, and that such language must be read in the context of the entire 

specification and prosecution history. See Rambus Inc. v. Infineon Techs. AG, 318 

F.3d 1081, 1094 (Fed. Cir. 2003). For the reasons below, however, we agree with the 

district court that the common specification’s repeated use of the phrase “the present 

2008-1263 7
invention” describes the invention as a whole, see Claim Construction Order at *6, and, 

as will be discussed further below, that the prosecution history does not warrant a 

contrary result. 

The first two sentences of the Abstract also support the district court’s 

construction. These sentences read: “An Internet billing method comprises 

establishing an agreement between an Internet access provider and a customer . . . . 

The provider creates access to the Internet for the customer.” ’739 Patent, at [57]. 

Netcraft attempts to minimize the significance of this language by noting that the 

asserted patents’ Abstract is the same as the original Abstract in the parent ’221 Patent. 

It submits that “[b]ecause the ’221 patent claims are directed to a third party that 

provides Internet access to customers, the original Abstract naturally includes a 

discussion of this aspect.” Appellant’s Reply Br. 17. According to Netcraft, “[t]his does 

not mean . . . that every claim in the entire patent family should be limited to the 

features of the common Abstract as Defendants suggest.” Id. at 17-18. Netcraft’s 

arguments on this point, however, illustrate the following underlying problem with its 

claim construction position: the common specification, including the Abstract, 

consistently describes the invention in terms of a third party providing internet access to 

customers. 

While Netcraft concedes that “the third party in the [asserted] patents’ detailed 

examples is an Internet access provider,” it claims that other embodiments do not 

require that the third party provide customers with internet access. Id. at 16. 

Specifically, Netcraft points to Figs. 2 and 3 of the asserted patents, and argues that the 

use of the language “Connect Customer to Internet” in Fig. 2, step 12, should be 

2008-1263 8
differentiated from the use of the language “Customer Connects to Internet” in Fig. 3, 

step 22. Id. at 16-17. Thus, Netcraft claims that the difference in language between 

Fig. 2, step 12, and Fig. 3, step 22, “expressly demonstrates that the invention does not 

require providing Internet access to the customer.” Id. at 17. We disagree. 

There is no language in the specification, much less express language, indicating 

that the words “Customer Connects to Internet” used in Fig. 3, step 22, were meant to 

disclose an alternative embodiment not requiring that the third party provide internet 

access to customers. In fact, there are other differences between Figs. 2 and 3, 

including steps 11 and 21 respectively, which more clearly differentiate the two 

methods. Additionally, we note that the specification appears to describe the methods 

shown in Figs. 2 and 3 in context of the system illustrated in Fig. 1. See ’739 Patent 

col.5 ll.58-66. In that context, while the specification indicates that certain vendors may 

access the internet directly using their own equipment, the only way for customers to 

access the internet is through the equipment of the provider. Accordingly, we reject 

Netcraft’s arguments that the specification includes additional embodiments that do not 

involve the provision of internet access to customers by the third party. 

Moreover, as Defendants argue, the district court’s construction is further 

supported by the language of the phrase at issue, which requires that the 

“communications link” be provided “through equipment of the third party.” The common 

specification consistently uses the term “equipment” in reference to equipment that 

enables internet access. For example, the Summary of the Invention states that “[t]he 

provider creates access to the Internet for the customer through the provider’s 

equipment.” ’739 Patent col.2 ll.26-28; see also id. col.1 ll.23-26 (“These providers 

2008-1263 9
invest in the equipment needed to provide access to the Internet for subscribers who 

pay the providers a fee for the access.”); id. col.1 ll.30-35 (“[A] party desiring to connect 

to the Internet by means of a provider typically connects via a modem over a telephone 

network to the provider’s equipment which then connects the party, through the 

provider’s equipment, to the Internet.”); id. col.3 ll.6-10 (“Once the prearrangements 

have been completed, using the provider’s service to connect to the Internet typically 

involves calling a telephone number of the provider and being automatically connected 

through the provider’s equipment to the Internet.”). 

Turning to Claim 6 of the ’739 Patent, Netcraft makes several claim differentiation 

arguments. Claim 6 of the ’739 Patent reads: “The method according to claim 1, 2, 3, 

4, or 5, wherein the third party is an Internet access provider, a cable television 

company, a telephone company, or a company offering financial services.” Netcraft 

argues that “if claim 1 were truly limited to third parties that provide Internet access, 

claim 6 would be redundant in listing an ‘Internet access provider’ as a possible third 

party.” Appellant’s Br. 17. It also argues that within claim 6 the differentiation between 

internet access providers and the other possible third parties (i.e., a cable television 

company, a telephone company, or a company offering financial services) is 

inconsistent with requiring that all third parties provide internet access. 

As the district court observed, however, in several locations the specification 

contemplates the possibility that other companies, including cable television and 

telephone companies, will provide customers with internet access. Claim Construction 

Order at *7-8 (citing ’739 Patent col.1 ll.29-30, col.2 ll.64-65). Additionally, as the district 

court noted, the following portion of the Summary of the Invention distinguishes 

2008-1263 10
“existing” internet access providers from other entities who may also provide internet 

access: “The main object of the present invention is to create a new business 

opportunity for telephone companies, cable television companies, existing Internet 

access providers, and companies offering financial services . . . .” Id. at *8-9 (quoting 

’739 Patent col.1 ll.61-64). We agree with the district court that this passage suggests 

that the “new business opportunity” for companies, including financial services 

companies, involves the provision of internet access.1

 Id. at *9. Thus, we are not 

persuaded by Netcraft’s claim differentiation arguments. 

In addition, Netcraft attributes significance to the omission of financial services 

companies from the following portion of the specification: “Such providers can be, for 

example, companies whose only business is to offer connection to the Internet, 

companies which offer on-line computer services, one of which is connection to the 

Internet, cable television companies, or telephone companies.” ’739 Patent col.2 ll.61-

65. As the district court determined, however, “[a]lthough the patent does not include 

financial service companies in its lists of examples of internet access providers, e.g., 

’739 pat., col. 2, Ins. 61-65, that does not mean that such companies cannot be 

providers. An invention is not limited to its examples.” Claim Construction Order at *8. 

 1

 Furthermore, even if we agreed with Netcraft that the district court’s claim 

construction led to some redundancy, that alone would not necessarily warrant a 

different result in this case. While claim differentiation may be helpful in some cases, it 

is just one of many tools used by courts in the analysis of claim terms. See, e.g., 

Nystrom v. Trex Co., 424 F.3d 1136, 1142-43 (Fed. Cir. 2005) (construing the term 

“board” to mean a “piece of elongated construction material made from wood cut from a 

log,” even though principles of claim differentiation suggested that the term “board” 

should not be limited to wood cut from a log). 

2008-1263 11
Accordingly, we agree with the district court that the claims read in light of the 

entire specification indicate that “providing a communications link through equipment of 

the third party” requires providing customers with internet access. Our inquiry does not 

end here, however, as we still must consider the parties’ arguments based on the 

prosecution history. See Phillips, 415 F.3d at 1317 (stating that, in addition to 

considering the specification, courts should also consider the prosecution history of an 

asserted patent, if it is in evidence). 

 The parties offer conflicting explanations of the respective prosecution histories 

of both asserted patents and several related patents. Netcraft, for example, argues that 

the following portion of the ’739 Patent’s prosecution history supports its claim 

construction position: 

Claim 31 is the only independent claim and recites an Internet billing 

method wherein “a communications link through equipment of the third 

party” is provided “between the purchasing customer and the selling 

vendor” (claim 31(b)). This link can be made, for example, by the third 

party re-sending data it receives from the customer or from the vendor to 

the other party, or by the third party hosting on its equipment an Internet 

presence of the vendor (e.g., a World-Wide-Web site of the vendor or an 

e-mail address of the vendor). 

J.A. 119. Netcraft maintains that the parenthetical reference to examples of websites 

and email demonstrate ways to make a communications link that do not require that the 

third party provide internet access. 

Defendants respond that these “are not alternative embodiments, but optional 

additional functions. The method of providing a customer with access to the Internet 

and these additional functions (web page hosting and email) are not mutually exclusive.” 

Appellees’ Br. 54. They submit that the following portion of the prosecution history of 

the ’221 Patent confirms that these examples are optional additional functions, as 

2008-1263 12
opposed to alternatives: “[t]he present invention, by contrast, does not require the use 

of E-mail (because the Internet access provider is connected to the customer by a 

dedicated line), although E-mail may be used, if desired.” J.A. 1505. 

Defendants also argue that the prosecution history of the ’008 Patent supports 

the district court’s construction. Specifically, Defendants submit that, during prosecution 

of the ’008 Patent, Netcraft sought claims with the limitation “providing a 

communications link over the Internet,” J.A. 1247 (emphasis added), but the Examiner 

rejected these claims in light of the prior art, J.A. 1253. Then, the Examiner allowed the 

claims after Netcraft changed the limitation to “providing a communications link through 

equipment of the third party.” J.A. 1266 (emphasis added). Thus, Defendants argue 

that Netcraft’s claim construction position must be rejected because the construction of 

the phrases “through equipment of the third party” and “over the Internet” must differ. 

Appellees’ Br. 56. Additionally, Defendants point to the following statements, made in 

response to a rejection in light of U.S. Patent No. 5,826,241 (“Stein reference”) during 

prosecution of the ’739 Patent, in support of the district court’s construction: 

Applicant respectfully submits that Stein et al neither discloses nor 

suggests providing a system for allowing access to the Internet. 

Specifically, the Stein et al system . . . assumes that the users 14 (buyers 

and sellers) are already connected to the Internet . . . there is no 

disclosure . . . that suggests that Stein et al will provide access to the 

Internet. . . . There is never a connection of a user to the Internet through 

the payment system 10. 

J.A. 1235. 

We have considered the cited prosecution history and conclude that it lacks the 

clarity of the specification regarding the meaning of the claim terms at issue here, thus 

rendering it less useful for claim construction purposes. See Phillips, 415 F.3d at 1317 

2008-1263 13
(“[B]ecause the prosecution history represents an ongoing negotiation between the PTO 

and the applicant, rather than the final product of that negotiation, it often lacks the 

clarity of the specification and thus is less useful for claim construction purposes.”). For 

example, when the discussion of the Stein reference is read in context with the 

Examiner’s prior statements, it is not entirely clear whether that discussion was meant 

to characterize the present invention as requiring the provision of internet access, or 

whether it was meant to simply refute the Examiner’s prior assumption that the Stein 

reference involves the provision of internet access. Similarly, considered in context of 

all of the cited prosecution history, it is unclear whether the website and email 

parenthetical examples are optional functions provided in addition to internet access, or 

whether they are offered as alternatives to the provision of internet access.2 

In sum, we conclude that the portions of the prosecution history cited by the 

parties are not particularly helpful to either party’s claim construction position. Thus, 

while we agree with Netcraft that the district court should have considered the 

prosecution history, its failure to do so was harmless error here because we reach the 

same result having considered it.3

 See Claim Construction Order at *9 (concluding that 

 2

 Likewise, we have considered, but are not persuaded by either party’s 

arguments based on the prosecution histories of the related patents. 

3

 Finally, we reject Netcraft’s request that we rely on extrinsic evidence in 

the present case. Netcraft claims that prior to suit eBay “considered partnering with 

Netcraft, and clearly indicated to Mr. Egendorf that it was interested only in the ’739 and 

’008 patents, and not interested in the patents where the claims were limited to third 

parties providing Internet access.” Appellant’s Br. 24. Defendants respond, however, 

that they “never stated that the patents-in-suit cover entities not providing access to the 

Internet and, in fact, all of the documents to which Netcraft cites are communications 

from Netcraft to eBay.” Appellees’ Br. 43. Nevertheless, even if we assume that 

Netcraft’s factual description is correct, we would still conclude that it is insufficient to 

overcome the claim meaning discernable from the intrinsic record here. See Phillips, 

2008-1263 14
2008-1263 15

it was unnecessary to consider the prosecution history because the patent itself is 

clear). 

III. CONCLUSION 

Because we conclude that the phrase “providing a communications link through 

equipment of the third party” requires providing customers with internet access, we 

affirm the district court’s grant of Defendants’ motion for summary judgment of noninfringement. 

AFFIRMED

 

415 F.3d at 1319 (“In sum, extrinsic evidence may be useful to the court, but it is 

unlikely to result in a reliable interpretation of patent claim scope unless considered in 

the context of the intrinsic evidence.”).