DCT
2:24-cv-06398
Lion Credit Card Inc v. Upgraving LLC
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Lion Credit Card, Inc. (California)
- Defendant: Upgraving, LLC (Florida); Rachel Zilbert; Maria Isabel Calderon Suarez; Matan Siordia
- Plaintiff’s Counsel: Rhema Law Group P.C.
- Case Identification: 2:24-cv-06398, C.D. Cal., 07/29/2024
- Venue Allegations: Venue is alleged to be proper because the Plaintiff resides and maintains its principal place of business in the district, and because the Defendants have allegedly committed acts of infringement and a substantial part of the events giving rise to the claims occurred in the district.
- Core Dispute: Plaintiff alleges that Defendant’s service for customizing metal credit cards by transferring an EMV chip from a plastic card infringes its patent on methods and products related to this process.
- Technical Context: The lawsuit concerns the niche market for creating high-end, customized metal payment cards that retain the functionality of the original EMV chip transplanted from a standard plastic card.
- Key Procedural History: The complaint alleges that Plaintiff provided Defendant Upgraving with actual notice of the patent-in-suit via a cease and desist letter on January 26, 2024, approximately six months before filing suit. This notice forms the primary basis for the willfulness allegations.
Case Timeline
| Date | Event |
|---|---|
| 2017-02-02 | ’194 Patent Earliest Priority Date |
| 2023-01-24 | ’194 Patent Issue Date |
| 2024-01-26 | Plaintiff sends cease and desist letter to Defendant |
| 2024-07-29 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 11,562,194 - Methods for Placing an EMV Chip Onto a Metal Card
- Patent Identification: U.S. Patent No. 11,562,194, Methods for Placing an EMV Chip Onto a Metal Card, issued January 24, 2023.
The Invention Explained
- Problem Addressed: The patent’s background section identifies a market need for payment cards that are more aesthetically appealing than the “boring and unimpressive” plastic cards typically issued by banks, noting that consumers may desire a card that reflects a more “affluent, sophisticated” status (’194 Patent, col. 2:56-68).
- The Patented Solution: The invention provides a method for transplanting a functional EMV chip from a standard plastic card to a new metal card body. The process generally involves heating the plastic card to loosen the chip, carefully removing the chip, and then adhering it into a pre-made "holding cavity" on the metal card, thereby preserving its payment functionality in a more premium form factor (’194 Patent, Abstract; col. 2:3-16).
- Technical Importance: The described method provides a way to create customized, high-end metal payment cards without requiring a new chip to be programmed, instead reusing the original, authenticated chip from a customer's existing card.
Key Claims at a Glance
- The complaint asserts independent method claim 1 and independent product claims 17 and 18.
- Independent Claim 1 (Method):
- loosening the one or more EMV chips of the one or more cards
- removing each of the loosened one or more EMV chips from the one or more cards
- applying an adhesive between the bottom face of each of the removed one or more EMV chips and one or more separate locations of the metal card
- placing the bottom face of each of the removed one or more EMV chips onto the one or more separate locations of the metal card
- Independent Claim 17 (Product):
- a metal card substrate having opposed top and bottom faces
- a cavity in the metal card substrate recessed to a depth below one of the top and bottom faces
- an EMV chip disposed in the cavity, wherein the EMV chip is a donor EMV chip loosened and removed from a donor electronic payment card
- Independent Claim 18 (Product):
- a metal card substrate with opposed faces and a recessed cavity
- an EMV chip in the cavity from a donor card
- the donor EMV chip having been loosened from, removed from, and then adhered to the metal card substrate
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are Defendant Upgraving's "metal credit card customization products & services" (Compl. ¶30).
Functionality and Market Context
- The complaint alleges that Defendants provide a service that "transfers an EMV chip from a traditional plastic credit card to a metal credit card, while still maintaining the same credit card functionality" (Compl. ¶11, ¶23). A screenshot from Defendant's website shows a product page titled "CUSTOMIZE YOUR OWN METAL CREDIT CARD" with options for customization, including "EMV Chip Size" (Compl. ¶22). This option suggests a process tailored to accommodate and transplant a customer's existing chip. The complaint alleges these services compete directly with Plaintiff's products (Compl. ¶33).
IV. Analysis of Infringement Allegations
’194 Patent Infringement Allegations (Method Claim 1)
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A method of removing one or more EMV chips from one or more cards and placing the removed one or more EMV chips onto a metal card, comprising: loosening the one EMV chips of the one or more cards... | Defendants provide a service that "transfers an EMV chip from a plastic credit card onto a metal credit card" (Compl. ¶23). This process necessarily involves loosening the chip from the original plastic card. | ¶23 | col. 6:44-48 |
| removing each of the loosened one or more EMV chips from the one or more cards; | The alleged transfer process inherently requires removing the chip from the plastic card after it has been loosened (Compl. ¶23). | ¶23 | col. 6:51-52 |
| applying an adhesive between the bottom face of each of the removed one or more EMV chips and one or more separate locations of the metal card; and | The complaint does not specify the method of attachment, but alleges the overall transfer process is performed. Adhering the removed chip to the new metal card is a necessary step for the final product to be functional. The patent describes using an adhesive for this purpose (’194 Patent, col. 3:36-42). | ¶21, ¶23 | col. 6:53-56 |
| placing the bottom face of each of the removed one or more EMV chips onto the one or more separate locations of the metal card. | The final step of the alleged infringing process is placing the chip onto the new metal card (Compl. ¶23). The website screenshot showing a completed metal card with a chip implies this step is performed (Compl. ¶22). | ¶22, ¶23 | col. 6:57-59 |
’194 Patent Infringement Allegations (Product Claim 17)
| Claim Element (from Independent Claim 17) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a metal card substrate having opposed top and bottom faces; | Defendants' product is described as a "metal credit card" (Compl. ¶11), which inherently has a substrate with top and bottom faces. | ¶11, ¶22 | col. 8:17-19 |
| a cavity in the metal card substrate recessed to a depth below one of the top and bottom faces; and | The complaint does not explicitly allege a "cavity," but for a chip to be transplanted and sit flush or be secured within a metal card, a recessed area is typically required. The patent specification refers to a "holding cavity" to receive the chip. | ¶22 | col. 8:20-22 |
| an EMV chip disposed in the cavity, wherein the EMV chip is a donor EMV chip loosened and removed from a donor electronic payment card on which the donor EMV chip was previously disposed. | The core of the infringement allegation is that Defendants' service is to take a chip from a customer's original card ("donor electronic payment card") and place it onto the new metal card (Compl. ¶11, ¶23). | ¶11, ¶23 | col. 8:23-27 |
- Identified Points of Contention:
- Technical Questions: The complaint alleges the overall process of chip transplantation but provides no detail on the specific techniques used by the Defendant. A central question will be whether discovery reveals that the accused process includes every limitation of the asserted claims. For instance, the patent specification describes "bending the four sides" of the chip as one embodiment (’194 Patent, col. 2:10-12), and it is an open question whether the accused process includes this or other specific steps disclosed.
- Scope Questions: For the product claims, a potential dispute may arise over the definition of "cavity." The infringement analysis will turn on whether the accused metal cards contain a structure that meets the claim's requirement for a "cavity... recessed to a depth," and what the precise scope of that term is in the context of the patent.
V. Key Claim Terms for Construction
The Term: "loosening" / "loosened"
Context and Importance: This term appears in all asserted independent claims and describes the initial step of freeing the EMV chip from its original plastic card. The definition is critical because it could determine whether the claims are limited to a specific method of removal (e.g., heating) or cover any form of detachment.
Intrinsic Evidence for Interpretation:
- Evidence for a Narrower Interpretation: The specification repeatedly and consistently describes heating as the method for loosening the chip. The detailed description states, "In order to loosen the EMV chip, the plastic credit or debit card containing the EMV chip is first heated" (’194 Patent, col. 2:61-64). A defendant may argue this context limits the term "loosening" to a thermal process.
- Evidence for a Broader Interpretation: The claims themselves do not specify how the loosening is achieved, only that it occurs. A plaintiff may argue that the term should be given its plain and ordinary meaning, covering any method of making the chip less firmly attached, and that the detailed description’s focus on heating is merely a preferred embodiment, not a limiting definition.
The Term: "cavity"
Context and Importance: This term in product claims 17 and 18 defines a key physical feature of the allegedly infringing metal card. Its construction will determine what type of receptacle for the EMV chip is required to infringe.
Intrinsic Evidence for Interpretation:
- Evidence for a Narrower Interpretation: The specification refers to a "holding cavity" and shows it in figures as a distinct, pre-formed space for the chip (’194 Patent, col. 3:45-47). A defendant could argue this implies a specifically milled or manufactured recess, rather than any depression that might be formed.
- Evidence for a Broader Interpretation: The term "cavity" itself is broad, and a plaintiff may argue it simply means a hollow or recessed area sufficient to hold the chip, without limitation as to how it is formed. The claim requires only that it be "recessed to a depth below one of the top and bottom faces" (’194 Patent, col. 8:20-22), a general description that could cover various physical forms.
VI. Other Allegations
- Indirect Infringement: The complaint alleges contributory and induced infringement, stating Defendants act "through the manufacture, use, and sale of its infringing products, method and processes" (Compl. ¶25). The factual basis for inducement may rest on allegations that Defendants encourage customers to provide their plastic cards for the specific purpose of performing the allegedly infringing transfer method.
- Willful Infringement: Willfulness is alleged based on Defendants having "actual or constructive knowledge" of the ’194 patent since at least January 26, 2024, the date of a cease and desist letter sent by Plaintiff (Compl. ¶15, ¶24). The complaint further alleges that the individual defendants "personally oversee the intentional infringement" with "wanton and reckless behavior" (Compl. ¶17).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of claim scope and interpretation: Can the term “loosening,” which is undefined in the claims, be limited to the thermal-based method that is consistently described in the patent’s specification, or will it be construed more broadly to cover any method of detaching a chip from a donor card?
- A key evidentiary question will be one of technical proof: As the complaint provides a high-level theory of infringement, the case will likely depend on whether the plaintiff can produce evidence showing the defendant’s confidential process actually performs each specific step and meets every limitation recited in the asserted method and product claims.
- The viability of the willfulness claim will likely turn on the defendant’s conduct following its receipt of the January 26, 2024 notice letter. The central question will be whether the defendant continued its accused activities without a good-faith belief in non-infringement or invalidity after being put on notice of the patent.