First Novo LLC v. Tabletop Media LLC

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: First Novo, LLC (Georgia)
  • Defendant: Tabletop Media LLC DBA Ziosk (Delaware)
  • Plaintiff’s Counsel: Fallon Law PC; JCORBITT Advisory Services Co.
• Case Identification: 1:24-cv-04452, N.D. Ga., 10/01/2024
• Venue Allegations: Plaintiff alleges venue is proper because Defendant conducts business in the Northern District of Georgia, is registered as a foreign corporation in the state, maintains a registered agent there, and has committed the alleged acts of infringement within the district.
• Core Dispute: Plaintiff alleges that Defendant’s Ziosk tabletop ordering and payment system infringes six U.S. patents related to secure, portable devices for wireless order entry and payment authorization.
• Technical Context: The patents relate to point-of-sale (POS) technology, specifically handheld devices designed to prevent credit card "skimming" fraud in environments such as restaurants by encrypting and transmitting payment data without storing it locally.
• Key Procedural History: The complaint does not allege any prior litigation, licensing history, or inter partes review proceedings involving the patents-in-suit.

Case Timeline

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

U.S. Patent No. 8,490,878 - "Portable Handheld Device for Wireless Order Entry and Real-Time Payment Authorization and Related Methods"

The Invention Explained

• Problem Addressed: The patent’s background describes how the adoption of wireless point-of-sale (POS) networks, particularly in restaurants, has led to a significant increase in credit card "skimming" and counterfeit fraud, which occurs when a criminal gains temporary possession of a customer's card to copy its magnetic stripe data (ʼ878 Patent, col. 1:40-55).
• The Patented Solution: The invention is a portable handheld device with a processor configured to accept order and payment information, but which enhances security by "encrypting and wirelessly sending the user sensitive information from the transaction card without storing and without displaying" it (’878 Patent, Abstract). By immediately encrypting and transmitting the data without retaining it on the device, the invention aims to eliminate the opportunity for the data to be skimmed or stolen from the device itself (’878 Patent, col. 4:60-65).
• Technical Importance: This approach sought to enhance data security in POS transactions by ensuring sensitive cardholder data is never held in a vulnerable state on the handheld terminal, directly addressing the growing problem of electronic skimming in consumer-facing environments.

Key Claims at a Glance

• The complaint does not specify which claims of the ’878 Patent are asserted. The following analysis is based on independent claim 1 as representative of the patent's core teachings.
• Independent Claim 1: A portable handheld device comprising:
  • a portable housing, display, order entry input device, transaction card input device, and wireless transceiver; and
  • a processor configured to perform the functions of:
    • wirelessly sending input order information;
    • encrypting and wirelessly sending user sensitive information from the transaction card "without storing and without displaying"; and
    • wirelessly receiving and displaying payment authorization information.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 8,356,754 - "Portable Handheld Device for Wireless Order Entry and Real-Time Payment Authorization and Related Methods"

The Invention Explained

• Problem Addressed: The ’754 Patent, part of the same patent family as the ’878 Patent, addresses the identical technical problem of increased credit card skimming fraud resulting from the use of wireless POS systems in environments where a customer must relinquish possession of their card (’754 Patent, col. 1:40-55).
• The Patented Solution: The patented solution is a portable handheld device that securely processes payment by encrypting and transmitting sensitive card data immediately after it is read, specifically "without storing and without displaying" that information on the device itself, thereby preventing it from being illicitly captured (’754 Patent, Abstract; col. 2:21-26).
• Technical Importance: As with the ’878 Patent, this technology aimed to secure "card-present" transactions by removing the handheld terminal as a point of data vulnerability, a significant concern for consumers and merchants in restaurant and retail settings.

Key Claims at a Glance

• The complaint does not specify which claims of the ’754 Patent are asserted. The following analysis is based on independent claim 1.
• Independent Claim 1: A portable handheld device comprising:
  • a portable housing, display, order entry input device, transaction card input device, and wireless transceiver; and
  • a processor configured to perform the functions of:
    • wirelessly sending input order information;
    • encrypting and wirelessly sending user sensitive information from the transaction card "without storing and without displaying"; and
    • wirelessly receiving and displaying payment authorization information.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 8,011,587 - "Portable Handheld Device for Wireless Order Entry and Real-Time Payment Authorization and Related Methods"

• Technology Synopsis: Belonging to the same family as the lead patents, the ’587 Patent describes a portable, wireless POS device designed to combat payment card fraud. The invention focuses on a method and system where sensitive user data from a credit or debit card is encrypted and transmitted for authorization without being stored or displayed on the handheld device, thus preventing skimming.
• Asserted Claims: The complaint does not specify claims; analysis presumes at least independent claim 1.
• Accused Features: The complaint alleges infringement by Defendant's Ziosk system used for wireless order entry and real-time payment authorization (Compl. ¶27).

U.S. Patent No. 7,721,969 - "Portable Handheld Device for Wireless Order Entry and Real-Time Payment Authorization and Related Methods"

• Technology Synopsis: As the earliest issued patent in the asserted family, the ’969 Patent discloses the foundational system for secure wireless payment processing. The technology addresses the risk of data skimming by proposing a handheld device that reads transaction card information, encrypts it, and immediately transmits it for authorization, crucially without storing or displaying the sensitive data locally.
• Asserted Claims: The complaint does not specify claims; analysis presumes at least independent claim 1.
• Accused Features: The complaint alleges infringement by Defendant's Ziosk system, which provides functionality for wireless order entry and real-time payment authorization (Compl. ¶35).

U.S. Patent No. 10,579,978 - "Portable Handheld Device for Wireless Order Entry and Real-Time Payment Authorization and Related Methods"

• Technology Synopsis: A more recent patent in the family, the ’978 Patent claims a restaurant-specific device for secure ordering and payment. The invention describes a portable device with a touch screen that receives order information, reads a credit or debit card, stores the transaction information in memory, generates an encrypted version, sends it for real-time authorization, and then erases the sensitive transaction information from memory between successive orders.
• Asserted Claims: The complaint does not specify claims; analysis presumes at least independent claim 1.
• Accused Features: The complaint alleges infringement by Defendant's Ziosk system when used for wireless ordering and payment authorization (Compl. ¶43).

U.S. Patent No. 10,592,881 - "Portable Handheld Device for Wireless Order Entry and Real-Time Payment Authorization and Related Methods"

• Technology Synopsis: This patent claims a point-of-sale (POS) device with enhanced security features. The invention is a portable, wireless-enabled device that stores user sensitive information in memory upon entry, generates an encrypted version for transmission, and critically, erases the sensitive information from memory "so that no user sensitive information is stored in said memory between successive POS sale transactions."
• Asserted Claims: The complaint does not specify claims; analysis presumes at least independent claim 1.
• Accused Features: The complaint alleges infringement by Defendant's Ziosk system, which facilitates wireless order entry and payment processing (Compl. ¶51).

III. The Accused Instrumentality

Product Identification

• The accused instrumentality is "Defendant's Ziosk system" or "Ziosk solution" (Compl. ¶11).

Functionality and Market Context

• The complaint alleges that the Ziosk system is used for "purposes of wireless order entry and real-time payment authorization" (Compl. ¶11). The complaint does not provide specific technical details about the Ziosk system's hardware, software architecture, or data handling protocols, nor does it contain allegations regarding the product's commercial importance or market position.

No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

U.S. Patent No. 8,490,878 Infringement Allegations

U.S. Patent No. 8,356,754 Infringement Allegations

Identified Points of Contention

• Scope Questions: A central dispute may arise over the meaning of the negative limitation "without storing." The question for the court will be whether this term prohibits any form of data retention, including temporary caching in volatile memory (RAM) during processing, or if it has a narrower scope, such as prohibiting storage in non-volatile memory or persistent storage after the transaction is complete.
• Technical Questions: Given the conclusory nature of the complaint, a key question is what evidence Plaintiff will offer to show that the Ziosk system’s internal software architecture performs the specific function of "encrypting and wirelessly sending... without storing." Proving the absence of storage, a negative limitation, often presents a significant evidentiary challenge that may require access to and analysis of Defendant's source code.

V. Key Claim Terms for Construction

• The Term: "without storing"

• Context and Importance: This term is the central inventive concept of the ’878 and ’754 patents, as it defines the core security feature. Its construction will be dispositive for infringement. Defendant may argue that all digital processing requires some form of temporary "storage" in memory, rendering the claim indefinite or not infringed, while Plaintiff will likely argue the term should be understood in the context of preventing subsequent illicit access to the data.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The patent specification repeatedly emphasizes the goal of preventing skimming and fraud, stating the invention "helps reduce the chance of a criminal or even an employee with access to a portable handheld device 21 from obtaining the user sensitive information" (’878 Patent, col. 4:62-65). This purpose could support a construction that prohibits any form of storage that would make the data accessible after being read.
  • Evidence for a Narrower Interpretation: The specification discloses using a "volatile memory 32 for storing encryption data, such as a private encryption key" (’878 Patent, col. 4:31-33). A defendant could argue that because the patent explicitly contemplates storing some sensitive data (the key) in volatile memory, the prohibition on "storing" user sensitive information should be construed to mean storage in non-volatile memory or storage that persists after the immediate transaction concludes.

• The Term: "user sensitive information"

• Context and Importance: The definition of this term dictates what specific data is subject to the "without storing and without displaying" limitation. The scope of this term will determine whether the accused system's handling of various data types (e.g., account number, expiration date, cardholder name, CVV) falls within the claims.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification provides examples, including "credit card and debit PIN information" (’878 Patent, col. 3:48-50) and information read by a "magnetic card reader" (col. 4:1-6). This suggests the term is intended to cover the full set of data typically read from a payment card's magnetic stripe.
  • Evidence for a Narrower Interpretation: A party could argue the term is limited to the specific examples disclosed in the specification. Independent claim 1 itself limits the term to information "read from the transaction card," providing a boundary for its scope.

VI. Other Allegations

• Indirect Infringement: For each asserted patent, the complaint alleges both induced and contributory infringement. The inducement claim is based on allegations that Defendant provides the Ziosk system to its customers and instructs them on its use (e.g., Compl. ¶14). The contributory infringement claim is based on the allegation that the Ziosk system has "no substantial non-infringing uses" (e.g., Compl. ¶13).
• Willful Infringement: The complaint does not contain an explicit allegation of willful infringement. However, for each patent, it alleges that Defendant had "actual notice" of the patent "at least as early as the date of the filing of this complaint" (e.g., Compl. ¶10, ¶18). This allegation may form the basis for a claim of post-filing willfulness if infringement is found to continue after the complaint was served.

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

• A core issue will be one of definitional scope: can the negative limitation "without storing," which is central to the asserted patents, be construed to read on a commercial POS device that necessarily uses volatile memory to process data? The viability of the infringement claim will likely depend on whether this term is interpreted to mean a complete absence of temporary data caching or a more limited prohibition on persistent storage.
• A key evidentiary question will be one of technical proof: what evidence can Plaintiff produce from discovery to demonstrate the internal data-handling protocols of the accused Ziosk system? The case may turn on expert analysis of Defendant's source code to determine whether, and for how long, "user sensitive information" resides in any form of memory after being read from a card.