DCT
1:20-cv-00342
Blackbird Tech LLC v. Barclays Bank Delaware
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Blackbird Tech LLC d/b/a Blackbird Technologies (Delaware)
- Defendant: Barclays Bank Delaware (Delaware)
- Plaintiff’s Counsel: Stamoulis & Weinblatt LLC
- Case Identification: 1:20-cv-00342, D. Del., 03/08/2020
- Venue Allegations: Venue is alleged to be proper in the District of Delaware because the defendant, Barclays, is a Delaware corporation and therefore resides in the district. The complaint also alleges Barclays commits acts of infringement and maintains a regular and established place of business in Delaware.
- Core Dispute: Plaintiff alleges that Defendant’s fraud alert service for credit card transactions infringes three patents related to methods for securely authorizing online transactions.
- Technical Context: The patents address security vulnerabilities in "card-not-present" e-commerce transactions by proposing a method that uses a secondary, out-of-band communication channel to verify the cardholder's identity and approve the purchase.
- Key Procedural History: The complaint does not mention any prior litigation, Inter Partes Review (IPR) proceedings, or licensing history related to the patents-in-suit. The '832 and '848 patents are continuations of the application that led to the '214 patent, and all three share the same specification and figures.
Case Timeline
| Date | Event |
|---|---|
| 2000-06-09 | Priority Date for '214, '832, and '848 Patents |
| 2011-06-07 | U.S. Patent No. 7,958,214 Issued |
| 2012-10-09 | U.S. Patent No. 8,285,832 Issued |
| 2016-08-23 | U.S. Patent No. 9,424,848 Issued |
| 2020-03-08 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 7,958,214 - "Method for Secure Transactions Utilizing Physically Separated Computers," Issued June 7, 2011
The Invention Explained
- Problem Addressed: The patent's background section identifies the risk of fraudulent use of credit card information in online or other "card not present" transactions, where credentials cannot be physically verified and other forms of verification can be impersonated or stolen (ʼ214 Patent, col. 1:20-43).
- The Patented Solution: The invention proposes a method to secure these transactions by using a separate, pre-established communication path for verification. When a merchant receives a card-not-present purchase request, the system contacts an "electronically accessible verification site" (such as a designated email account) authorized by the cardholder. An authorization message is sent to this site, and the cardholder must respond to approve the transaction, thus confirming their identity through an out-of-band channel (ʼ214 Patent, Abstract; col. 2:20-34). The process flow is illustrated in Figure 1.
- Technical Importance: This approach sought to enhance security by separating the transaction channel from the verification channel, making it more difficult for a fraudster with stolen card data to complete a transaction without also controlling the cardholder's separate verification account (Compl. ¶10).
Key Claims at a Glance
- The complaint asserts infringement of "one or more claims of the ’214 patent, including at least claim 1" (Compl. ¶12).
- Independent Claim 1 requires:
- establishing an electronically accessible verification site authorized by the holder of a credit card;
- receiving a request for goods or services by a merchant using the credit card, but wherein the card is not required to be physically presented to the merchant;
- accessing the verification site by the merchant to determine whether the request for goods or services is an authorized transaction;
- sending an electronic authorization communication by the verification site to the holder of the credit card, the message including information indicative of the transaction; and
- transmitting, by the holder of the credit card, an approval communication if the transaction is approved by the card holder.
U.S. Patent No. 8,285,832 - "Method for Secure Transactions Utilizing Physically Separated Computers," Issued October 9, 2012
The Invention Explained
- Problem Addressed: As a continuation of the application for the '214 Patent, the '832 Patent addresses the same problem of securing "card not present" transactions against fraudulent use of credentials (ʼ832 Patent, col. 1:21-35).
- The Patented Solution: The patented solution is functionally identical to that of the '214 Patent, employing a separate verification site and out-of-band communication to authorize a transaction. The core distinction lies in the claim terminology, which refers more broadly to "a set of pre-existing identification credentials" rather than being limited to a "credit card" ('832 Patent, Abstract; col. 4:36-39).
- Technical Importance: The method provides a security layer for a broader range of potential online transactions beyond just credit cards by using an out-of-band authentication step (Compl. ¶10).
Key Claims at a Glance
- The complaint asserts infringement of "one or more claims of the ’832 patent, including at least claim 1" (Compl. ¶25).
- Independent Claim 1 requires:
- establishing an electronically accessible verification site authorized by the holder of a set of pre-existing identification credentials;
- receiving at a merchant location, via an electronic communication link, a request for goods from, or services by, a merchant using the identification credentials, but wherein the identification credentials are not required to be physically presented to the merchant;
- accessing the verification site by the merchant, via an electronic communication link, to determine whether the request for goods or services is an authorized transaction;
- sending an electronic authorization communication from the verification site to the holder of the identification credentials, the communication including information indicative of the transaction; and
- transmitting, by the holder of the identification credentials, an electronic approval communication if the transaction is approved by the holder of the identification credentials.
Multi-Patent Capsule: U.S. Patent No. 9,424,848
- Patent Identification: U.S. Patent No. 9,424,848, "Method for Secure Transactions Utilizing Physically Separated Computers," Issued August 23, 2016 (Compl. ¶9).
- Technology Synopsis: As a further continuation, this patent also describes a method for securing "card not present" transactions against fraud. The invention outlines a multi-step communication process involving a merchant, a separate verification site, and the holder of "pre-existing identification (ID) information" to confirm a transaction's authenticity through a sequence of four distinct electronic network communications ('848 Patent, cl. 1; Compl. ¶10).
- Asserted Claims: The complaint asserts infringement of "at least claim 1" (Compl. ¶32).
- Accused Features: The complaint accuses Barclays' "suspicious card activity alerts service" of infringing the '848 patent (Compl. ¶32).
III. The Accused Instrumentality
Product Identification
- The accused instrumentality is Barclays' "fraud alerts service," also referred to as its "suspicious card activity alerts service" (Compl. ¶¶12, 15).
Functionality and Market Context
- The service is a security feature for Barclays credit card holders. It is designed to identify potentially fraudulent transactions and, upon detection, send an alert via email or text message to the cardholder (Compl. ¶15). The alert contains information about the suspicious transaction, and the cardholder can respond directly to the message to either verify or reject the purchase (Compl. ¶¶21, 23). A Barclays webpage titled "Free fraud text alerts at your fingertips!" describes the functionality of the alert service (Compl. ¶15, citing Exhibit G). The complaint alleges that this service helps customers "shop with confidence - in-store and online," positioning it as a key security feature of Barclays' credit card offerings (Compl. ¶14).
IV. Analysis of Infringement Allegations
'214 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| establishing an electronically accessible verification site authorized by the holder of a credit card | Barclays establishes a verification system by obtaining a customer's phone number and authorization to send text alerts for fraud detection. | ¶¶13-14 | col. 4:31-33 |
| receiving a request for goods or services by a merchant using the credit card, but wherein the card is not required to be physically presented to the merchant | An online merchant receives a purchase request from a customer using a Barclays credit card for a "card not present" transaction. | ¶¶16-17 | col. 4:34-38 |
| accessing the verification site by the merchant to determine whether the request for goods or services is an authorized transaction | The merchant forwards the transaction request to Barclays, which accesses its internal fraud detection systems to determine if the transaction is potentially fraudulent. | ¶¶18-19 | col. 4:39-42 |
| sending an electronic authorization communication by the verification site to the holder of the credit card, the message including information indicative of the transaction | If a transaction is flagged as suspicious, Barclays' system sends a text message to the cardholder's phone with details of the transaction, asking for verification. | ¶¶20-21 | col. 4:43-46 |
| transmitting, by the holder of the credit card, an approval communication if the transaction is approved by the card holder | The cardholder responds to the text message from Barclays to either approve or reject the suspicious transaction. | ¶¶22-23 | col. 4:1-3 |
'832 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| establishing an electronically accessible verification site authorized by the holder of a set of pre-existing identification credentials | Barclays establishes its fraud alert service based on the customer's phone number and credit card account, which constitute pre-existing identification credentials. | ¶26 | col. 4:36-39 |
| receiving at a merchant location, via an electronic communication link, a request for goods from, or services by, a merchant using the identification credentials... | An online merchant receives a request for a "card not present" transaction using a customer's Barclays credit card credentials. | ¶27 | col. 4:40-45 |
| accessing the verification site by the merchant, via an electronic communication link, to determine whether the request...is an authorized transaction | The merchant submits the transaction request to Barclays, which accesses its fraud detection systems to check the transaction's validity. | ¶28 | col. 4:46-50 |
| sending an electronic authorization communication from the verification site to the holder of the identification credentials... | Barclays' system sends a text alert to the cardholder with transaction details if the transaction is flagged as suspicious. | ¶29 | col. 4:51-54 |
| transmitting, by the holder of the identification credentials, an electronic approval communication if the transaction is approved... | The cardholder replies to the text alert to confirm or deny the transaction. | ¶30 | col. 4:55-59 |
- Identified Points of Contention:
- Scope Questions: A central dispute may arise over whether Barclays' internal fraud-detection platform constitutes the claimed "verification site." The patent specification repeatedly refers to an "e-mail account" as the preferred embodiment ('214 Patent, col. 2:53-54), raising the question of whether a proprietary banking system that triggers an SMS alert falls within the claim's scope.
- Technical Questions: The infringement theory for the element "accessing the verification site by the merchant" may be contested. The complaint alleges this is met when a merchant forwards a standard authorization request to Barclays (Compl. ¶¶18-19). This raises the question of whether this routine action constitutes "accessing" a "verification site," or if the claim requires a more direct and specific interaction by the merchant with the verification system itself.
V. Key Claim Terms for Construction
The Term: "verification site"
- Context and Importance: This term is the central component of the claimed invention. The outcome of the case may depend on whether Barclays' fraud alert platform and the customer's associated mobile phone are construed as meeting this definition.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claims use the general phrase "electronically accessible verification site" ('214 Patent, cl. 1). The specification adds that the site "may also be wirelessly accessible" ('214 Patent, col. 2:9-10), which may support an interpretation not strictly limited to email.
- Evidence for a Narrower Interpretation: The abstract states, "The verification site is an electronic mail account," and the detailed description repeatedly uses an email account as the primary example ('214 Patent, Abstract; col. 2:31-33). This may support a narrower construction limited to systems that function as a message repository directly accessible for verification.
The Term: "accessing the verification site by the merchant"
- Context and Importance: This term defines a key action in the claimed method. Plaintiff’s infringement case depends on this phrase covering a merchant's act of forwarding a transaction to the card issuer for authorization. Practitioners may focus on this term because the plaintiff's theory appears to rely on agency or direction by Barclays, rather than a direct action by the merchant as the plain language might suggest (Compl. ¶18).
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent does not explicitly define "accessing." An argument could be made that any action by the merchant that initiates the verification sequence, including a standard authorization request, constitutes "accessing" the system.
- Evidence for a Narrower Interpretation: The ordinary meaning of "accessing" may imply a more direct interaction than simply forwarding a request into a general banking network. The patent's description of the process as a "separate, pre-established communications path" may suggest a channel distinct from the standard payment authorization network ('832 Patent, col. 2:25-27).
VI. Other Allegations
- Indirect Infringement: The complaint alleges that Barclays "directs or controls" both merchants and customers to perform the claimed steps (Compl. ¶¶16, 18, 22). The basis for this allegation includes Barclays' terms of service, customer agreements, and website instructions that allegedly tell customers how to enroll in and use the fraud alert service (Compl. ¶¶14, 15, 19).
- Willful Infringement: The complaint does not explicitly allege willful infringement or plead facts showing Barclays had pre-suit knowledge of the patents. The prayer for relief requests an award under 35 U.S.C. § 285 for an "exceptional case" but does not contain a specific request for enhanced damages due to willfulness.
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: can the term "verification site," which is exemplified in the patent specification as an "e-mail account," be construed to cover a modern banking fraud-detection platform that initiates an SMS text alert to a cardholder's mobile device?
- A key infringement question will be one of actor and action: does a merchant's standard business practice of forwarding a transaction to the issuing bank (Barclays) for authorization satisfy the claim limitation of "accessing the verification site by the merchant," or does this step require a more specific and direct action by the merchant that is not present in the accused system? The resolution may depend on whether the plaintiff can successfully argue that Barclays directs or controls the merchant to perform this claimed step.