Factor2 Multimedia Systems LLC v. Presidential Bank FSB Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Factor 2 Multimedia Systems, LLC (Virginia)
  • Defendant: Presidential Bank, FSB, Inc. (Maryland)
  • Plaintiff’s Counsel: DNL Zito
• Case Identification: 8:25-cv-01469, D. Md., 05/06/2025
• Venue Allegations: Venue is alleged to be proper because Defendant maintains a regular and established place of business in the district and has committed acts of infringement within the district.
• Core Dispute: Plaintiff alleges that Defendant’s online banking authentication system infringes six patents related to systems and methods for user authentication via dynamic, single-use, or time-sensitive codes.
• Technical Context: The technology at issue falls within the domain of multi-factor authentication, a widely used security measure for protecting access to sensitive online accounts, particularly in the financial services industry.
• Key Procedural History: The complaint does not mention any prior litigation involving the patents-in-suit, any post-grant proceedings before the U.S. Patent and Trademark Office, or any prior licensing history.

Case Timeline

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

U.S. Patent No. 10,769,297 - "Centralized Identification and Authentication System and Method"

• Patent Identification: U.S. Patent No. 10,769,297, "Centralized Identification and Authentication System and Method," issued September 8, 2020.
• The Invention Explained:
  • Problem Addressed: The patent describes the problem of users needing to release confidential personal and financial information to an increasing number of online businesses, which creates security and privacy risks. The patent notes that this type of identification is "not only unsafe but also it is not fool proof that the user is really the person he says he is." (’297 Patent, col. 1:40-51).
  • The Patented Solution: The invention proposes a system with a "Central-Entity" that securely stores user information and generates a dynamic, non-predictable, and time-dependent "SecureCode" upon the user's request. The user can then provide this SecureCode along with their username (collectively, a "digital identity") to a third-party "External-Entity" (e.g., an e-commerce site) for authentication, which in turn verifies the digital identity with the Central-Entity. This architecture is intended to prevent the user from having to share more sensitive, static credentials directly with the External-Entity. (’297 Patent, Abstract; Fig. 2).
  • Technical Importance: This centralized approach aims to enhance e-commerce security by replacing the repeated use of static credentials with single-use dynamic codes managed by a trusted intermediary. (’297 Patent, col. 2:6-15).
• Key Claims at a Glance:
  • The complaint provides a detailed infringement analysis for independent claim 1 (Compl. ¶¶19, 25). The asserted claims are 1-29 (Compl. ¶50).
  • The essential elements of independent claim 1 include:
    • An authentication system configured to perform operations comprising:
    • Electronically receiving a request for a SecureCode from a user's computing device;
    • Generating the SecureCode;
    • Electronically providing the SecureCode to the user;
    • Wherein the SecureCode becomes invalid after a predetermined time, after one use, and is valid only for authenticating that specific user;
    • Electronically receiving a digital authentication request from an online computer system, where the request comprises a "digital identity" that includes the SecureCode; and
    • Authenticating the user by evaluating the validity of the SecureCode included in the request.
  • The complaint reserves the right to assert additional claims, including dependent claims (Compl. ¶50).

U.S. Patent No. 8,281,129 - "Direct Authentication System And Method Via Trusted Authenticators"

• Patent Identification: U.S. Patent No. 8,281,129, "Direct Authentication System And Method Via Trusted Authenticators," issued October 2, 2012.
• The Invention Explained:
  • Problem Addressed: The patent addresses the problem that fraud and identity theft are enabled by the flawed assumptions that knowledge of a person's private information is sufficient to verify their identity and that such information can be kept secret. (’129 Patent, Abstract).
  • The Patented Solution: The patent describes a "two-factor" authentication method that leverages an existing "trusted authenticator," such as a customer's bank. To complete a transaction with a separate entity (e.g., a merchant), an individual obtains a "dynamic code" from their trusted authenticator. The individual then provides both this dynamic code and other "user information" (a static factor) to the entity, which forwards an authentication request to the trusted authenticator for verification. This system uses a pre-existing trust relationship to secure transactions with third parties. (’129 Patent, col. 6:10-21; Fig. 2a).
  • Technical Importance: This method provides a framework for stronger, two-factor authentication by decentralizing the authentication process, allowing various entities to rely on trusted financial institutions to verify user identities in real time. (’129 Patent, Abstract).
• Key Claims at a Glance:
  • The complaint recites independent claim 1 as an example of the asserted method claims (Compl. ¶20). The asserted claims are 1-52 (Compl. ¶30).
  • The essential elements of independent claim 1 include:
    • A computer implemented method comprising:
    • Receiving, at a trusted-authenticator's computer, a request for a dynamic code for an individual;
    • Calculating the dynamic code, which is valid for a predefined time and becomes invalid after use;
    • Sending the dynamic code to the individual;
    • Receiving, at the trusted-authenticator's computer, an authentication request from an entity based on user information and the dynamic code; and
    • Authenticating the individual's identity based on the user information and dynamic code, and providing the result to the entity.
  • The complaint reserves the right to assert additional claims, including dependent claims (Compl. ¶30).

Multi-Patent Capsule: U.S. Patent No. 9,703,938

• Patent Identification: 9,703,938, "Direct Authentication System and Method Via Trusted Authenticators," issued July 11, 2017.
• Technology Synopsis: This patent, related to the ’129 Patent, discloses methods for enhancing network security where a trusted authenticator generates and validates a dynamic code for a user. The user provides this dynamic code during an electronic transaction with a computer system to verify their identity. (’938 Patent, Abstract).
• Asserted Claims: Claims 1-26 (Compl. ¶34).
• Accused Features: The complaint alleges that Defendant's overall authentication process, software, and hardware infringe the patent (Compl. ¶3).

Multi-Patent Capsule: U.S. Patent No. 9,727,864

• Patent Identification: 9,727,864, "Centralized Identification and Authentication System and Method," issued July 19, 2017.
• Technology Synopsis: This patent, related to the ’297 Patent, describes a centralized system for user authentication. A central entity generates a dynamic, time-dependent "SecureCode," which a user provides to an external entity for verification, thereby authenticating the user for e-commerce transactions without exposing underlying personal data. (’864 Patent, Abstract).
• Asserted Claims: Claims 1-15 (Compl. ¶38).
• Accused Features: The complaint alleges that Defendant's overall authentication process, software, and hardware infringe the patent (Compl. ¶3).

Multi-Patent Capsule: U.S. Patent No. 9,870,453

• Patent Identification: 9,870,453, "Direct Authentication System and Method Via Trusted Authenticators," issued December 27, 2017.
• Technology Synopsis: This patent, related to the ’129 and ’938 patents, discloses a two-factor authentication method. A user's identity is verified by a trusted authenticator (e.g., a bank) that provides a dynamic code for use in a transaction with a third-party business, leveraging an existing trust relationship. (’453 Patent, Abstract).
• Asserted Claims: Claims 1-26 (Compl. ¶42).
• Accused Features: The complaint alleges that Defendant's overall authentication process, software, and hardware infringe the patent (Compl. ¶3).

Multi-Patent Capsule: U.S. Patent No. 10,083,285

• Patent Identification: 10,083,285, "Direct Authentication System and Method Via Trusted Authenticators," issued September 25, 2018.
• Technology Synopsis: This patent, also in the same family, discloses systems where a business authenticates a customer by requiring the customer to obtain a dynamic key from a separate trusted authenticator. The customer then provides both the dynamic key and a static key to the business, which communicates with the trusted authenticator to verify the customer's identity. (’285 Patent, Abstract).
• Asserted Claims: Claims 1-30 (Compl. ¶46).
• Accused Features: The complaint alleges that Defendant's overall authentication process, software, and hardware infringe the patent (Compl. ¶3).

III. The Accused Instrumentality

Product Identification

• The accused instrumentality is the "Presidential Bank System and Apparatus," which includes the bank's internet website and the associated back-end systems that provide access and authenticate users (Compl. ¶21).

Functionality and Market Context

• The accused system provides online banking services to customers. The complaint focuses on the system's two-factor (or multi-factor) authentication functionality, which is triggered when a user attempts to log in (Compl. ¶25, p. 8). A screenshot shows the system's initial login page requesting a User Name and Password (Compl. p. 8). Upon initiation of a login, particularly from an unrecognized device, the system offers to send a "one-time code," which the complaint equates to the claimed "SecureCode," to the user via methods like SMS text or email (Compl. ¶25, pp. 8-9). A screenshot illustrates the user interface for selecting the delivery method for this code (Compl. p. 9). After receiving the code, the user is prompted to enter it to complete the authentication process and gain access to their account (Compl. ¶25, p. 8). A screenshot shows the interface where the user enters the received verification code (Compl. p. 11).

IV. Analysis of Infringement Allegations

The complaint provides a detailed narrative infringement theory only for Claim 1 of the ’297 Patent. For the ’129 Patent and other patents-in-suit, the complaint makes general allegations of infringement but does not provide a comparable element-by-element analysis (Compl. ¶¶11, 24, 30).

U.S. Patent No. 10,769,297 Infringement Allegations

Identified Points of Contention

• Scope Questions: A central question may be whether Presidential Bank’s integrated login system, which appears to perform all the recited functions, meets the claim limitations of an "authentication system" that interacts with an "online computer system." The language of Claim 1 of the ’297 Patent could be interpreted to suggest that these are architecturally distinct components, whereas the accused product may be a single, unified system.
• Technical Questions: The complaint alleges that the accused "one-time code" is invalid after one use and after a predetermined time. A key factual question will be what evidence demonstrates that the accused system technically implements both of these invalidation conditions, as required by distinct wherein clauses in Claim 1 of the ’297 Patent.

V. Key Claim Terms for Construction

The Term: "SecureCode"

• Context and Importance: This term is central to the claimed invention. The outcome of the case may depend on whether Defendant's "one-time code" falls within the scope of this term. Practitioners may focus on this term because its construction will determine whether a standard one-time password used for login constitutes the claimed invention.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification of the ’297 Patent defines the term broadly as a "dynamic, non-predictable and time dependent alphanumeric code, secret code, PIN or other code, which may be broadcast to the user." (’297 Patent, col. 2:48-52). This language may support an interpretation that covers the type of "one-time code" allegedly used by Defendant.
  • Evidence for a Narrower Interpretation: The term is consistently used in the context of a "Central-Entity" generating the code for a user to interact with a separate "External-Entity." (’297 Patent, col. 3:1-16). A defendant might argue that the term should be limited to codes generated by a distinct, centralized third-party authenticator, not a code generated by the same entity that the user is logging into for its own internal authentication.

The Term: "digital identity"

• Context and Importance: Claim 1 of the ’297 Patent requires the authentication request to comprise a "digital identity" that includes the SecureCode. The construction of this term is critical for determining what information must be submitted with the code to meet the claim limitation.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification defines "digital identity" as "a combination of user's 'SecureCode' and user's information such as 'UserName'." (’297 Patent, col. 2:53-56). This definition appears to map directly onto the complaint's allegation that the user submits their username along with the "one-time code." (Compl. p. 12).
  • Evidence for a Narrower Interpretation: The context of the invention involves creating a new form of identity to replace the sharing of personal information. A defendant could argue that "digital identity" implies a specific, tokenized data structure created by the "Central-Entity" that is more than just the simple combination of a username and a code in a standard web form submission.

VI. Other Allegations

• Indirect Infringement: The complaint does not contain counts for induced or contributory infringement. It alleges only direct infringement under 35 U.S.C. § 271(a) (Compl. ¶22, 26).
• Willful Infringement: The complaint does not use the word "willful" but does pray for enhanced damages under 35 U.S.C. § 284 and alleges that Defendant has "no good faith defense" to the infringement allegations (Compl. ¶27; p. 19, ¶E). This forms the basis for a willfulness claim. The complaint does not allege any facts suggesting pre-suit knowledge of the patents; the basis for willfulness appears to be predicated on notice from the filing of the complaint itself.

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

• A core issue will be one of architectural scope: can the patent claims, which often describe a three-party system involving a user, an "External-Entity," and a separate "Central-Entity" or "trusted authenticator," be construed to read on an integrated, two-party scenario where a single entity (the bank) generates an authentication code for its own login system?
• A second key issue will be one of claim construction: the case will likely turn on whether a standard "one-time code" used in a conventional two-factor authentication login process meets the specific definitions and characteristics of the claimed "SecureCode," which is described as being part of a "digital identity" and possessing specific invalidation properties.
• A central evidentiary question will be one of technical proof: Plaintiff will need to provide evidence that Defendant’s system technically implements all the claimed features, including the specific allegations that its "one-time code" becomes invalid both after a single use and after a predetermined period of time, as separately required by the claims.