DCT

1:23-cv-00346

Bright Capture LLC v. Expensify Inc

I. Executive Summary and Procedural Information

Parties & Counsel:
- Plaintiff: Bright Capture LLC (Delaware)
- Defendant: Expensify, Inc. (Delaware)
- Plaintiff’s Counsel: Napoli Shkolnik LLC
Case Identification: 1:23-cv-00346, D. Del., 03/28/2023
Venue Allegations: Venue is alleged to be proper in the District of Delaware because Defendant is a Delaware corporation and therefore resides in the District.
Core Dispute: Plaintiff alleges that Defendant’s expense management software and services infringe patents related to systems and methods for automatically scanning, extracting data from, and organizing information from documents like receipts that lack a predefined format.
Technical Context: The technology at issue involves optical character recognition (OCR) and data processing to automate the tedious task of entering financial data from unstructured paper or electronic documents into financial management systems.
Key Procedural History: The complaint notes that U.S. Patent No. 10,049,410 issued more than four years after the Supreme Court's decision in Alice v. CLS Bank, a fact often pleaded to preemptively argue for patent eligibility. The complaint also references the prosecution history of the related U.S. Patent No. 7,746,510, stating it was allowed after a decision by the Board of Patent Appeals and Interferences that the prior art did not disclose processing receipts with "no predefined format," which may be central to arguments regarding both novelty and patent eligibility. Plaintiff alleges providing pre-suit notice and a claim chart for the '510 patent to Defendant on March 17, 2023.

Case Timeline

Date	Event
2001-02-01	Earliest Priority Date for '070, '410, and '510 Patents
2010-06-29	U.S. Patent No. 7,746,510 Issued
2014-04-08	U.S. Patent No. 8,693,070 Issued
2018-08-14	U.S. Patent No. 10,049,410 Issued
2023-03-17	Pre-suit notice for '510 Patent allegedly sent to Defendant
2023-03-28	Complaint Filed

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

U.S. Patent No. 8,693,070 - "Receipts scanner and financial organizer"

The Invention Explained

Problem Addressed: The patent addresses the problem that manually entering data from receipts and other financial documents into budgeting or finance software is a "laborious and time consuming" process, causing users to abandon the practice. ('070 Patent, col. 1:35-40).
The Patented Solution: The invention proposes a system comprising a scanner and a computer with software to automate this process. A user feeds receipts into the scanner, and the software automatically extracts the expense information, organizes it into a database, and allows the user to view the organized data in various formats, such as tables or charts. ('070 Patent, col. 2:54-62). A key aspect is the system's ability to process various types of documents without a fixed structure, such as "grocery receipts, various purchase receipts, credit card receipts, bank statements, etc." ('070 Patent, col. 2:62-64).
Technical Importance: The invention aimed to provide a convenient, automated alternative to manual data entry for personal and business expense tracking from unstructured source documents.

Key Claims at a Glance

The complaint asserts "one or more claims," giving claim 1 as an example (Compl. ¶25).
Independent Claim 1 of the ’070 Patent recites a method with the following essential elements:
- obtaining, via a scanner, an electronic image of a document "having no predefined format" and containing numerical information;
- automatically capturing the electronic image and its numerical information in a computing device;
- organizing the captured numerical information;
- enabling the editing and viewing of the captured information; and
- combining the captured numerical information with previously captured information into a report.
The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 10,049,410 - "Receipts scanner and financial organizer"

The Invention Explained

Problem Addressed: Similar to its related patents, the ’410 Patent identifies the inefficiency and tediousness of manually saving and entering data from receipts, checks, and bills into financial software as the primary problem to be solved. ('410 Patent, col. 1:18-23).
The Patented Solution: The patent describes a method where a computer system processes an electronic image of a paper expense receipt. The system uses software to automatically "retrieve" and "parse" relevant data from the image to obtain expense data, which is then used to populate an electronic expense report for the user. ('410 Patent, col. 5:2-18). The method is explicitly defined as applying to an expense receipt that has "no predefined format for the computer system." ('410 Patent, col. 5:19-20).
Technical Importance: This patent, issued after the Supreme Court's Alice decision, purports to claim a specific technological improvement in computer scanning and data extraction technology. (Compl. ¶19-20).

Key Claims at a Glance

The complaint asserts "one or more claims," giving claim 1 as an example (Compl. ¶29).
Independent Claim 1 of the ’410 Patent recites a method with the following essential elements:
- receiving an electronic image of a paper expense receipt at a computer processor;
- processing the image to automatically obtain expense data by (1) using software to retrieve relevant data and (2) parsing that data;
- populating an electronic expense report with the expense data; and
- displaying the report to the individual.
- A final limitation requires that the expense receipt has "no predefined format for the computer system."
The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 7,746,510 - "Receipts scanner and financial organizer"

Technology Synopsis: The '510 patent describes an apparatus that manages and organizes expense information. The system includes a scanner to process various types of receipts of "no predefined format" and a computer that executes software to automatically extract numerical data, categorize the resulting expense information, and produce reports for display. ('510 Patent, Abstract; col. 5:3-29). The complaint notes the patent was allowed by the BPAI based on the capability of processing receipts having no predefined format. (Compl. ¶21).
Asserted Claims: The complaint asserts "one or more claims," giving claim 11 as an example. (Compl. ¶35).
Accused Features: The complaint alleges that Defendant's expense management products, as identified in Exhibit 6, infringe the '510 patent. (Compl. ¶34-35).

III. The Accused Instrumentality

Product Identification: The complaint refers generally to "Exemplary Defendant Products" and incorporates by reference exhibits that purportedly identify these products and compare them to the patent claims. (Compl. ¶25, ¶29, ¶34). These are understood to be Defendant Expensify's expense management software and services.
Functionality and Market Context: The complaint does not describe the specific functionality of the accused products in its narrative paragraphs. It alleges that the products perform the functions recited in the patent claims by incorporating claim charts (Exhibits 4, 5, and 6) by reference. (Compl. ¶26, ¶30, ¶36). The core accused functionality is therefore the automated scanning of receipts, extraction of expense data, and generation of expense reports. The complaint does not provide sufficient detail for analysis of the products' market context.

IV. Analysis of Infringement Allegations

No probative visual evidence provided in complaint.

The complaint’s infringement allegations are made by incorporating external claim chart exhibits (Exhibits 4, 5, and 6) by reference rather than by pleading specific facts in the body of the complaint itself. (Compl. ¶26, ¶30, ¶36). As these exhibits were not provided with the complaint document, a detailed element-by-element analysis is not possible.

The general theory of infringement is that Defendant's products directly infringe at least claim 1 of the '070 patent and claim 1 of the '410 patent by performing the claimed methods of receiving an image of an expense receipt with no predefined format, automatically extracting data, and organizing it into a report. (Compl. ¶25, ¶29). For the '510 patent, the complaint alleges induced infringement of at least claim 11, asserting that Defendant provides its products and instructs users, via product literature and website materials, to use them in a manner that infringes. (Compl. ¶34-35).

V. Key Claim Terms for Construction

The Term: "no predefined format"
Context and Importance: This term appears in independent claim 1 of both the '070 patent (col. 5:6-7) and the '410 patent (col. 5:19-20). Its construction is central to the dispute, as infringement will depend on whether the accused system operates on documents that truly lack a "predefined format" within the meaning of the patent. Furthermore, Plaintiff has framed this capability as a key technological improvement that confers patent eligibility and distinguishes the invention from prior art (Compl. ¶21, ¶23), making its definition critical to potential validity challenges under 35 U.S.C. § 101.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification suggests the term covers a wide array of document types, listing "grocery receipts, various purchase receipts, credit card receipts, bank statements, etc." ('410 Patent, col. 2:50-52). This language could support an interpretation that covers any document that is not a standardized, fixed-field form.
- Evidence for a Narrower Interpretation: The claims require steps like "parsing the relevant data to obtain the expense data" ('410 Patent, col. 5:14-15). A party could argue this implies the system is programmed to look for specific types or categories of information (e.g., date, total, vendor), which could be interpreted as a form of pre-definition, thereby narrowing the scope of what constitutes "no predefined format."

VI. Other Allegations

Indirect Infringement: The complaint alleges induced infringement of the '510 patent. The basis for knowledge is a pre-suit notice letter and claim chart allegedly sent to Defendant on March 17, 2023. (Compl. ¶33). The complaint alleges the inducing act is Defendant’s distribution of "product literature and website materials" that instruct customers on how to use the accused products in an infringing manner. (Compl. ¶34).
Willful Infringement: While the complaint does not use the word "willful," it alleges that Defendant had "actual knowledge" of the '510 patent and its infringement from the March 17, 2023 notice and "continues to" infringe despite this knowledge. (Compl. ¶33-34). The prayer for relief requests a judgment for "all appropriate damages under 35 U.S.C. § 284," which includes enhanced damages, and requests that the case be declared "exceptional" under 35 U.S.C. § 285, which provides a basis for attorneys' fees. (Compl. Prayer for Relief ¶D, E.i.).

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

A core issue will be one of definitional scope: how the court construes the claim term "no predefined format." The outcome of both infringement and validity analyses will likely depend on whether this term is interpreted broadly to mean any non-standardized document, or more narrowly to exclude systems that are pre-configured to search for expected categories of data, even if their location on the document varies.
The case will present a key question of patent eligibility: whether the asserted claims are directed to a specific technological improvement in computer functionality or to the abstract idea of organizing financial information using a generic computer. The prosecution history cited by the Plaintiff, particularly the BPAI's decision regarding the '510 patent, suggests this will be a central battleground.
A threshold procedural question will be one of pleading sufficiency: whether the complaint's conclusory infringement allegations, which rely entirely on incorporating unattached exhibits by reference, satisfy the plausibility standard set forth in federal pleading rules, or if they are vulnerable to a motion to dismiss for failure to state a claim.