Digital Verification Systems LLC v. Encyro Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Digital Verification Systems, LLC (Texas)
  • Defendant: Encyro, Inc. (California)
  • Plaintiff’s Counsel: SML AVVOCATI P.C.
• Case Identification: 5:22-cv-00686, C.D. Cal., 04/21/2022
• Venue Allegations: Plaintiff alleges venue is proper because Defendant is a California corporation deemed to reside in the district, commits acts of infringement in the district, and has a regular and established place of business in the district.
• Core Dispute: Plaintiff alleges that Defendant’s "Encyro E-Sign" digital signature service infringes a patent related to a system for creating and embedding a verifiable digital identification module within an electronic document.
• Technical Context: The technology concerns methods for enhancing the security and authenticity of electronic signatures by associating them with verifiable metadata embedded directly within a document file.
• Key Procedural History: The asserted patent, U.S. 9,054,860, was the subject of an Inter Partes Review (IPR) proceeding, IPR2018-00746. The IPR resulted in the cancellation of claims 23-39. The claims currently asserted in this litigation, including independent claim 1, survived the IPR proceeding.

Case Timeline

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 9,054,860 - Digital Verified Identification System and Method, issued June 9, 2015

The Invention Explained

• Problem Addressed: The patent asserts that common methods of electronically signing documents, such as typing a name between slashes, are "rather difficult to authenticate," making it an "arduous, if not impossible task to verify and/or authenticate the identity of the signatory to a respectable degree" (’860 Patent, col. 1:26-35).
• The Patented Solution: The invention proposes a system where a "module generating assembly" uses "verification data" (e.g., username, password) from a user to create a "digital identification module" (’860 Patent, Abstract). This module, which can be an object like an image file, is then embedded into an electronic document (’860 Patent, col. 3:30-40). The module includes a visible "primary component" (e.g., a graphical signature) and hidden "metadata components" (e.g., date, time, location, user data) that can be revealed through user interaction, such as hovering a mouse over the primary component, to aid in identity verification (’860 Patent, col. 7:11-24).
• Technical Importance: The technology aimed to create a more robust and verifiable electronic signature by binding authentication data directly to the signature object within a document, moving beyond simple textual or image-based representations (’860 Patent, col. 1:36-41).

Key Claims at a Glance

• The complaint asserts infringement of "one or more claims, including at least Claim 1" (Compl. ¶13).
• Independent Claim 1 requires:
  • A "digital identification module" associated with an entity.
  • A "module generating assembly" that receives "verification data element[s]" from the entity to create the module.
  • The module is "disposable within at least one electronic file."
  • The module has a "primary component" that associates the module with the entity.
  • The module is "cooperatively structured to be embedded within only a single electronic file."

III. The Accused Instrumentality

Product Identification

The complaint names Defendant's "Encyro E-Sign" service and any similar products (Compl. ¶13).

Functionality and Market Context

The accused product is a service for electronically signing digital documents (Compl. ¶14). Users can upload various document formats (e.g., PDF, Microsoft Word) for signing (Compl. ¶14; p.3). The system creates an "e-signature module for a user" that is associated with that entity (Compl. ¶15). The complaint alleges that a user's login ID and password serve as "verification data" for creating and applying the e-signature (Compl. ¶16). The resulting e-signature is then stored within the electronic document file (Compl. ¶17, ¶19). A screenshot from Defendant's website instructs users on how to select and upload various document file types for signing (Compl. p.3).

IV. Analysis of Infringement Allegations

’860 Patent Infringement Allegations

| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality - - - - - - - - - - - - - - ... | Complaint Citation | Patent Citation |
|:--------------------------------- |:-----------------------|:-------------------|
| at least one digital identification module structured to be associated with at least one entity, | The Encyro E-Sign product provides a module, such as the creation of an e-signature module for a user, to be associated with an entity. - - -.. | ¶15 | col. 9:4-6 |
| a module generating assembly structured to receive at least one verification data element corresponding to the at least one entity and create said at least one digital identification module, | The product includes a module generating assembly that receives verification data, such as a user's unique login ID and password, to create the digital identification module (e-signature). - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -.. | ¶16 | col. 9:7-11 |
| said at least one digital identification module being disposable within at least one electronic file, | A user can store the e-signature within a document such as a PDF, Word document, or image file. A screenshot of a sample signed document shows designated fields for a "Client Signature" and "Photographer Signature" embedded within the document (Compl. p.10). - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --.. | ¶17 | col. 9:12-13 |
| and said at least one digital identification module comprising at least one primary component structured to at least partially associate said digital identification module with said at least one entity, | The e-signature is associated with user information, such as username and date, thereby associating the module with the user. - - - - - - - -.. | ¶18 | col. 9:14-18 |
| wherein said at least one digital identification module is cooperatively structured to be embedded within only a single electronic file. | The e-signature module is stored within a single file, such as a PDF, Word document, or image file. A screenshot of the 'CONFIGURE E-SIGN REQUEST' interface shows fields for inputting the names and email addresses of signatories for a specific document (Compl. p.6). - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -.. | ¶19 | col. 9:19-22 |

Identified Points of Contention

• Scope Questions: A central dispute may arise over the meaning of "cooperatively structured to be embedded within only a single electronic file." The complaint alleges the accused module is "stored within a single file," but it does not allege that the module is technically restricted or limited to use in only that one file. The patent specification contemplates an embodiment where, after a pre-selected number of uses (which could be one), the module becomes "inoperable" or is "automatically deleted" (’860 Patent, col. 4:26-37). The case may turn on whether this claim limitation requires such a single-use technical enforcement mechanism, or if simply being placed in one file is sufficient to infringe.
• Technical Questions: The complaint alleges a "module generating assembly" receives "verification data" such as a login ID and password. A question for the court will be whether the accused system's standard user authentication process for accessing a service qualifies as the claimed "receiving at least one verification data element... [to] create said at least one digital identification module," or if the claim requires a more specific data-ingestion process for the direct purpose of module creation.

V. Key Claim Terms for Construction

• The Term: "cooperatively structured to be embedded within only a single electronic file"
• Context and Importance: This limitation appears to be the most restrictive and specific language in Claim 1. The viability of the infringement claim may depend entirely on its construction. Practitioners may focus on this term because it raises a question of whether a technical limitation (restriction to a single file) is required, or if the standard act of embedding a signature into one document meets the claim.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: A party might argue that the plain language does not explicitly recite a "self-destruction" or "inoperability" feature. The focus could be on the state of the module as embedded, where it exists within one file, rather than on any potential for future use.
  • Evidence for a Narrower Interpretation: A party could argue the term "cooperatively structured to be... within only a single..." implies a specific technical design for single-use enforcement. This is supported by the specification, which describes an embodiment where "the number of electronic documents in which the digital identification module... can be embedded... may be pre-selected" and after that number is reached, the module "may be automatically deleted, become inoperable, or otherwise be disposed in an inactive state" (’860 Patent, col. 4:26-37).

VI. Other Allegations

Indirect Infringement

The complaint includes a conclusory allegation of contributory and induced infringement (Compl. ¶13), but does not plead specific facts to support the knowledge and intent elements, such as referencing specific user manuals or instructions that direct users to perform the infringing acts.

VII. Analyst’s Conclusion: Key Questions for the Case

• A core issue will be one of definitional scope: can the claim phrase "cooperatively structured to be embedded within only a single electronic file" be met by the act of placing a signature in one document, or does it require evidence of a specific technical mechanism that restricts that signature module from any subsequent use, as described in the patent's specification?
• A key evidentiary question will be whether the accused product’s standard login and authentication process constitutes the "receiv[ing]" of "verification data element[s]" for the specific purpose of "creat[ing]" the claimed "digital identification module," or if there is a mismatch between the general security function of the accused product and the specific module-creation function required by the patent claim.