DCT
1:20-cv-00686
Blackbird Tech LLC v. TD Bank NA
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Blackbird Tech LLC d/b/a Blackbird Technologies (Delaware)
- Defendant: TD Bank US Holding Company (Delaware) and TD Bank, N.A. (National Banking Association)
- Plaintiff’s Counsel: Stamoulis & Weinblatt LLC
- Case Identification: 1:20-cv-00686, D. Del., 07/27/2020
- Venue Allegations: Plaintiff alleges venue is proper in the District of Delaware because Defendant resides in the district through incorporation and its main office, commits acts of infringement in the state, and maintains regular and established places of business there.
- Core Dispute: Plaintiff alleges that Defendant’s fraud alert service for credit card transactions infringes patents related to methods for securely authorizing transactions using a separate, out-of-band communication channel.
- Technical Context: The technology addresses security vulnerabilities in "card-not-present" online transactions by creating a secondary verification loop to confirm the cardholder's identity and intent.
- Key Procedural History: The patents-in-suit constitute a family, with the ’832 and ’848 patents being continuations of the application that resulted in the ’214 patent. The ’832 and ’848 patents are subject to terminal disclaimers. The complaint does not mention any prior litigation, licensing history, or administrative proceedings related to these patents.
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 |
| 2020-03-06 | Date of referenced marketing material for Accused Service |
| 2020-07-27 | Complaint Filing Date |
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 identifies the risk of fraudulent use of credit card information in "card not present" transactions, such as those conducted over the Internet, where a seller cannot physically verify the card or the person using it (ʼ214 Patent, col. 1:20-34).
- The Patented Solution: The invention proposes a method to add a layer of security. When a merchant receives a request for a card-not-present transaction, the system initiates a secondary verification process. It accesses a pre-established "verification site" (e.g., a specific email account) authorized by the cardholder and sends an "authorization communication" to the cardholder, who must then respond to approve the purchase, thereby completing a verification loop separate from the initial transaction request (ʼ214 Patent, Abstract; col. 2:20-45). This process is illustrated in the patent's Figure 1 flow chart.
- Technical Importance: The method provides an out-of-band authentication mechanism to confirm a user's identity and intent, addressing a critical security challenge that grew with the rise of e-commerce (ʼ214 Patent, col. 1:20-25).
Key Claims at a Glance
- The complaint asserts at least independent claim 1 (Compl. ¶15).
- Essential elements of claim 1 include:
- 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;
- accessing the verification site by the merchant to determine if the request is an authorized transaction;
- sending an electronic authorization communication from the verification site to the cardholder with information about the transaction; and
- transmitting an approval communication by the cardholder if the transaction is approved.
- The complaint reserves the right to assert other claims (Compl. ¶15).
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 ’214 Patent, the ’832 Patent addresses the same problem of securing "card not present" transactions against fraudulent use of credentials (ʼ832 Patent, col. 1:23-35).
- The Patented Solution: The method is structurally identical to that of the ’214 Patent, involving a "verification site" and an out-of-band authorization loop. The primary distinction is that the claims are directed more broadly to "a set of pre-existing identification credentials" rather than being limited to a "credit card," potentially extending the invention's applicability beyond traditional payment cards (ʼ832 Patent, Abstract; col. 4:36-39).
- Technical Importance: This patent broadens the terminology of the original invention to cover a wider array of potential online identification and payment methods, reflecting an evolving digital transaction landscape (ʼ832 Patent, col. 4:36-39).
Key Claims at a Glance
- The complaint asserts at least independent claim 1 (Compl. ¶28).
- Essential elements of claim 1 include:
- establishing a verification site authorized by the holder of "pre-existing identification credentials";
- receiving a request at a merchant location using the credentials, where they are not physically presented;
- accessing the verification site by the merchant to determine if the transaction is authorized;
- sending an authorization communication from the site to the holder of the credentials; and
- transmitting an approval communication by the holder if the transaction is approved.
- The complaint reserves the right to assert other claims (Compl. ¶28).
U.S. Patent No. 9,424,848 - "Method for Secure Transactions Utilizing Physically Separated Computers," Issued August 23, 2016
- Technology Synopsis: This continuation patent further details the secure transaction method by explicitly structuring the process into a sequence of four distinct electronic network communications. These communications correspond to the merchant receiving the initial request, the merchant accessing the verification site, the site sending the authorization request to the user, and the user transmitting approval (ʼ848 Patent, col. 4:42-67).
- Asserted Claims: Independent claim 1 is asserted (Compl. ¶35).
- Accused Features: The accused features are the same as for the other patents: TD Bank's suspicious card activity alerts service (Compl. ¶35).
III. The Accused Instrumentality
Product Identification
- The accused instrumentality is TD Bank’s "fraud alerts service," also referred to as its "suspicious card activity alerts service" (Compl. ¶¶15, 28, 35).
Functionality and Market Context
- The service is designed to protect TD Bank credit card customers from fraud. The system identifies potentially fraudulent transactions and sends an automated alert, such as a text message, to the cardholder (Compl. ¶¶18, 24). This alert contains details of the transaction, and the customer is instructed to reply to either verify or reject the purchase (Compl. ¶26). The complaint alleges that customers authorize this communication system as a condition of using TD Bank credit cards and related online services (Compl. ¶17). The service is marketed as a key security feature, as shown in a commercial describing "24/7 Fraud text alerts" (Compl. p. 7). A screenshot from a TD Bank commercial depicts a mobile phone receiving a fraud alert text message with transaction details and a prompt for a "YES or NO" response (Compl. p. 7).
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 | TD Bank operates fraud detection and communication systems, and customers authorize their use by providing a mobile number and accepting a cardholder agreement. | ¶16, ¶18 | col. 2:46-49 |
| 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 | TD Bank customers make online purchases where the card is not physically presented, and the merchant receives an electronic request for payment. | ¶19, ¶20 | col. 2:50-53 |
| accessing the verification site by the merchant to determine whether the request for goods or services is an authorized transaction | The merchant forwards the electronic request to TD Bank, which then accesses its internal fraud detection systems to determine if the transaction is potentially fraudulent. | ¶21, ¶22 | col. 2:49-53 |
| 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, TD Bank’s system sends a text message to the cardholder with transaction details (e.g., amount and merchant), asking for verification. | ¶24 | col. 2:36-42 |
| 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 (e.g., by replying "YES") to verify the transaction, which constitutes the approval communication. | ¶26 | col. 2:42-45 |
’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 | TD Bank establishes fraud alert systems authorized by customers, whose credit card and associated account information constitute "pre-existing identification credentials." | ¶29 | col. 4:36-39 |
| receiving at a merchant location, via an electronic communication link, a request...using the identification credentials...not physically presented | Merchants receive electronic requests for online transactions from customers using their TD Bank credit card credentials. | ¶30 | 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 forwards the transaction request to TD Bank, which accesses its fraud detection systems to determine if the transaction should be authorized. | ¶31 | col. 4:46-50 |
| sending an electronic authorization communication from the verification site to the holder of the identification credentials... | TD Bank's system sends a text message alert with transaction details to the cardholder. | ¶32 | col. 4:51-54 |
| transmitting, by the holder of the identification credentials, an electronic approval communication... | The cardholder replies to the text alert to approve the transaction. | ¶33 | col. 4:55-58 |
Identified Points of Contention
- Scope Questions: The infringement analysis may focus on whether TD Bank's integrated, internal fraud-detection system qualifies as a "verification site" as contemplated by the patents. A related question is whether a merchant forwarding a standard authorization request to the card-issuing bank constitutes "accessing the verification site by the merchant," or if the claims require a more distinct action by the merchant to a separate site.
- Technical Questions: A factual question may arise regarding the precise mechanism of the transaction flow. What evidence shows that the merchant is the entity "accessing" the site "to determine" authorization, as recited in the claims, versus simply passing the transaction to the banking network, which then triggers a purely internal process within TD Bank? The complaint’s allegation that TD Bank "directs or controls merchants" to perform this step may become a focal point.
V. Key Claim Terms for Construction
The Term: "verification site"
Context and Importance: This term defines the core architectural element of the claimed method. The outcome of the case may depend on whether this term can be construed to cover a bank's internal fraud-detection and communication system or if it requires a separate entity. Practitioners may focus on this term because the complaint maps it to TD Bank's own systems, which may not align with a patent specification that describes the site as potentially being an "external" service provider.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent states the verification site is "an electronic mail account which may be established by the merchant, card holder or other authorized person or entity," suggesting flexibility in its form and ownership ('214 Patent, col. 2:54-56).
- Evidence for a Narrower Interpretation: The specification discusses the "credit card clearinghouse" forwarding a request to an "e-mail account," which could be maintained by an "'external' service provider," implying a potential separation between the bank (clearinghouse) and the verification site ('214 Patent, col. 2:30-36). Figure 1 depicts a flow where the transaction is forwarded for verification (step 14 to 16), which could be interpreted as a hand-off to a distinct system.
The Term: "accessing the verification site by the merchant"
Context and Importance: This term is critical as it defines the action that links the merchant to the verification process. The dispute will likely involve whether a merchant's standard act of submitting a transaction for authorization through the payment network constitutes "accessing" the site as claimed.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent does not narrowly define "accessing." An argument could be made that any action by the merchant that foreseeably causes the verification site to be engaged for the purpose of authorization satisfies this limitation ('214 Patent, col. 4:39-42).
- Evidence for a Narrower Interpretation: The language "accessing... by the merchant" could be interpreted to require a direct and purposeful interaction initiated by the merchant with the verification site, rather than the indirect triggering of a bank's internal systems through a payment processing network ('214 Patent, col. 4:39-40).
VI. Other Allegations
- Indirect Infringement: The complaint alleges that TD Bank induces infringement by directing and controlling both merchants and cardholders to perform the claimed method steps. The allegations point to TD Bank’s cardholder agreements and its instructions to customers on how to receive and respond to fraud alerts as evidence of intent to cause the infringing acts (Compl. ¶¶17-19, 25).
- Willful Infringement: The complaint does not contain specific allegations of pre-suit knowledge of the patents-in-suit to support a claim for willful infringement. The prayer for relief, however, requests a finding that the case is "exceptional" under 35 U.S.C. § 285, which could entitle Plaintiff to attorneys' fees (Compl. p. 11).
VII. Analyst’s Conclusion: Key Questions for the Case
- A central issue will be one of architectural scope: can the term "verification site," which the patent suggests could be an external email account, be construed to read on a card-issuing bank’s own integrated, internal fraud-alert system? The resolution will likely depend on whether the court finds the accused system is functionally and structurally equivalent to the one described in the patents.
- A key question of agency and action will be whether a merchant’s act of submitting a transaction into the general payment authorization network satisfies the claim requirement of "accessing the verification site by the merchant." The case may turn on whether this claim language requires a direct, specific action by the merchant toward a designated site, or if the indirect triggering of the bank's internal fraud check is sufficient for a finding of infringement.