DCT
2:19-cv-17318
Lighthouse Consulting Group LLC v. Kearny Bank
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Lighthouse Consulting Group, LLC (Massachusetts)
- Defendant: Kearny Bank (New Jersey)
- Plaintiff’s Counsel: Hansley Law Firm, PLLC
- Case Identification: 2:19-cv-17318, D.N.J., Filed 08/28/2019
- Venue Allegations: Plaintiff alleges venue is proper in the District of New Jersey because Defendant maintains regular and established places of business in the district and has committed acts of patent infringement there.
- Core Dispute: Plaintiff alleges that Defendant’s mobile banking application, which offers remote check deposit, infringes patents related to systems and methods for capturing check images using ubiquitous imaging devices.
- Technical Context: The technology enables remote deposit capture (RDC) using general-purpose imaging devices like smartphone cameras, a functionality that has become a standard and critical feature in the modern consumer and business banking sectors.
- Key Procedural History: The complaint alleges Defendant had pre-suit knowledge of the patents-in-suit via a certified letter sent in July 2019. Notably, post-filing, U.S. Patent No. 8,590,940 was the subject of an Inter Partes Review (IPR), which resulted in the cancellation of all its claims (1-10) as of May 14, 2021. This development significantly affects the viability of infringement allegations against the ’940 patent.
Case Timeline
| Date | Event |
|---|---|
| 2004-10-28 | Check 21 Act becomes effective |
| 2005-10-17 | Earliest priority date for ’940 & ’698 Patents |
| 2006-10-16 | ’698 Patent application filed |
| 2009-01-01 | First RDC mobile app launched (approximate date) |
| 2011-04-15 | ’940 Patent application filed |
| 2011-05-31 | ’698 Patent issues |
| 2013-11-26 | ’940 Patent issues |
| 2019-08-28 | Complaint filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 8,590,940, "Ubiquitous Imaging Device Based Check Image Capture," issued November 26, 2013
- The Invention Explained:
- Problem Addressed: The patent describes a market where remote check image capture was available but required the use of expensive, dedicated check scanners, making the technology inaccessible for individuals and small businesses with low deposit volumes (U.S. Patent No. 8,590,940, col. 1:15-21, col. 2:56-62).
- The Patented Solution: The invention proposes a system that uses a physical "carrier" to hold one or more negotiable instruments (e.g., checks). This carrier has a unique identifier on its front and back. A user employs a ubiquitous imaging device (like a fax machine or, by extension, a smartphone) to capture a single front image and a single back image of the carrier with the checks secured to it. These two images, along with the identifier, are sent to a remote server. The server's software uses the identifier to associate the front and back images, and then digitally "breaks down" the composite images to extract the individual front and back images of each check, thereby creating a complete digital record for each instrument (’940 Patent, Abstract; col. 4:42-col. 5:4).
- Technical Importance: This system was designed to decouple remote deposit capture from specialized hardware, enabling the use of common devices and thereby expanding the accessibility and lowering the cost of the technology (Compl. ¶25, ¶28-29).
- Key Claims at a Glance:
- The complaint asserts independent claims 1 and 6 (Compl. ¶10-11). The right to assert other claims, including dependent claims, is reserved.
- Independent Claim 1 recites a system comprising:
- A "carrier" for receiving multiple negotiable instruments, which has a unique "identifier" and is designed to permit the generation of one front image and one back image of all the instruments.
- An "imaging device" for separately generating and transmitting the front image, the back image, and the unique identifier.
- A "link" to a network for directing the images to a remote location.
- A "receiving unit" at the remote location with software to "break down" the composite images into individual check images and "pair" the front and back of each instrument using the identifier.
U.S. Patent No. 7,950,698, "Ubiquitous Imaging Device Based Check Image Capture," issued May 31, 2011
- The Invention Explained:
- Problem Addressed: The ’698 Patent shares its specification with the ’940 Patent and addresses the same problem: the high cost and limited availability of remote deposit capture technology due to its reliance on dedicated scanners (U.S. Patent No. 7,950,698, col. 1:15-21, col. 2:56-62).
- The Patented Solution: This patent claims the method of performing remote deposit. The method involves providing a carrier, securing checks to it, creating a unique identifier on the carrier, generating electronic front and back images of the checks along with the identifier, transmitting the images and identifier to a remote location, and then pairing the corresponding front and back images at the remote location to create a complete image of each instrument (’698 Patent, Abstract; col. 15:26-col. 16:1).
- Technical Importance: The method claims protect the novel process of using a carrier and identifier system with general-purpose imagers, which was central to enabling the widespread adoption of mobile remote deposit capture (Compl. ¶25, ¶28).
- Key Claims at a Glance:
- The complaint asserts independent claim 1 (Compl. ¶56). The right to assert other claims is reserved.
- Independent Claim 1 recites a method comprising the steps of:
- "Providing a carrier" designed to permit front and back images to be generated.
- "Securing" the negotiable instrument to the carrier.
- "Creating an identifier" on the front and back of the carrier.
- "Generating an electronic image" of the front and back of the instrument along with the identifier.
- "Transmitting" the image and identifier to a remote location.
- "Pairing" the front and back images at the remote location using the identifier.
III. The Accused Instrumentality
- Product Identification: The accused instrumentality is Kearny Bank’s "Mobile Banking" application, which includes functionality for mobile check deposit (Compl. ¶16, ¶38).
- Functionality and Market Context: The application allows a customer to use their smartphone camera to capture separate images of the front and back of a check for deposit. The complaint alleges that the app instructs the user on how to align the check for imaging, and then transmits the images to the bank’s server. At the server, the front and back images are paired and processed to deposit the funds into the user’s account (Compl. ¶38, ¶54). A screenshot provided in the complaint shows on-screen brackets intended to guide the user in aligning the check for capture (Compl. p. 28). The complaint positions mobile RDC as a key service for customer engagement in the modern banking industry (Compl. ¶15).
IV. Analysis of Infringement Allegations
’940 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a carrier for receiving the plurality of negotiable instruments... having an identifier... | The complaint alleges this element is met under the Doctrine of Equivalents by the use of a "flat contrasting background surface" which functions as a "carrier equivalent." The user's account number is alleged to be the identifier. | ¶40 | col. 4:42-54 |
| an imaging device for separately generating and transmitting one electronic front image... and one electronic back image... and the unique identifier... | The user's mobile phone camera serves as the imaging device, capturing separate front and back images of the check. The user's account number, as the identifier, is transmitted in the data packet with the images. | ¶40 | col. 4:56-65 |
| a link configured to permit the image device to be in communication with a network... | The mobile phone's internet connection (Wi-Fi or cellular) serves as the link to the bank's network. | ¶40 | col. 4:11-13 |
| a receiving unit at the remote location... having software designed to break down the individual front and back images... and subsequently pair the front image of each negotiable instrument... to a separately received corresponding back image... | The bank's server acts as the receiving unit. It receives the separate front and back images, which the complaint alleges are "broken down from the captured images," and pairs them using the account number as the identifier. A screenshot shows the process from capture to a "Deposit Pending" confirmation (Compl. p. 17). | ¶40 | col. 5:1-16 |
- Identified Points of Contention:
- Scope Questions: The central issue is the interpretation of "carrier". The patent specification and figures describe a physical, tangible object for holding checks. The complaint’s theory relies on the Doctrine of Equivalents, asserting that a background surface performs the same function in a substantially similar way to achieve the same result. The viability of this argument raises the question of whether the term "carrier" is limited to the physical embodiments disclosed.
- Technical Questions: A second question relates to the "unique identifier". The patent describes the identifier as being on the carrier itself. The complaint alleges a user's account number, transmitted as metadata, meets this limitation. This raises the question of whether the identifier must be physically present on the "carrier" and captured in the image, or if externally associated data suffices.
’698 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| Providing a carrier designed to permit a front image and a back image... | This element is alleged under the Doctrine of Equivalents, where the "flat contrasting background surface, and the camera and software allowing for proper marking and alignment" are the "carrier equivalent." | ¶56 | col. 15:28-32 |
| Securing the negotiable instrument to the carrier. | The user places the check on the flat surface, thereby "securing" it for imaging. | ¶56 | col. 15:33-33 |
| Creating an identifier on a front side and back side of the carrier... | The complaint alleges that unique identifiers are created and associated with the images, allowing the server to identify the account and pair the images. A screenshot shows the app's alignment guides (Compl. p. 24). | ¶56 | col. 15:34-37 |
| Generating an electronic image of the front and back of the negotiable instrument... | The user's mobile phone camera is used to separately generate images of the check's front and back. | ¶56 | col. 15:38-42 |
| Transmitting the electronic image... and the unique identifier to a remote location... | The mobile application transmits the image files and associated data (including the alleged identifier) over a network to the bank's server. | ¶56 | col. 15:43-46 |
| Pairing, at the remote location, the front image... to a separately received corresponding back image... | The bank's server receives the separate images and pairs them to create a complete digital record of the check for deposit. A screenshot shows a deposit receipt confirming receipt and pairing (Compl. p. 17). | ¶56 | col. 15:47-54 |
- Identified Points of Contention: The points of contention for the ’698 patent mirror those for the ’940 patent, focusing on whether a "carrier" can be an intangible set of instructions and a background surface, and whether an "identifier" can be metadata instead of a physical mark.
V. Key Claim Terms for Construction
The Term: "carrier"
- Context and Importance: This term's construction is dispositive. The patent's claims require a "carrier", but the accused system uses a smartphone camera aimed at a check on a generic surface. Plaintiff’s infringement theory depends on convincing a court that this arrangement is equivalent to the patent's "carrier". Practitioners may focus on this term because the outcome of the case likely hinges on whether its scope can extend beyond a physical, manufactured object.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claims do not specify the material or form of the "carrier", which may support an argument that the term should be defined by its function: to receive and hold negotiable instruments for imaging.
- Evidence for a Narrower Interpretation: The specification consistently describes the "carrier" as a physical object, such as a "transparent sealing carrier" or a "non-transparent cut-out carrier," and includes multiple figures (Figs. 3-8) depicting these physical embodiments (’940 Patent, col. 4:49-51). An argument for a narrower construction would posit that the patentee defined the term by these specific examples.
The Term: "unique identifier"
- Context and Importance: The claims require an identifier on the "carrier" that is used to pair front and back images. The complaint alleges the user's account number, sent as data, fulfills this role. The dispute will center on whether the identifier must be physically part of the carrier and captured in the image, or if associated metadata is sufficient.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claim requires the system to use the identifier for "subsequent pairing" (’940 Patent, Claim 1), a function that can be performed by metadata. The claim requires the imaging device to transmit the images and the identifier, which does not explicitly require them to be a single data object.
- Evidence for a Narrower Interpretation: Claim 1 of the ’940 patent states the ""carrier" having an identifier on a front and back side." The figures consistently show a number (e.g., "12345") printed directly on the physical carrier object to be imaged (’940 Patent, Fig. 3-4). This may support a construction requiring a physically present and imaged identifier.
VI. Other Allegations
- Indirect Infringement: The complaint alleges induced infringement, stating that Defendant instructs its customers on how to use the Mobile Banking application in an infringing manner through its website and other materials. It is alleged that when customers follow these instructions, they directly infringe the patents-in-suit (Compl. ¶41-42, ¶57-58).
- Willful Infringement: Willfulness is alleged based on Defendant’s purported knowledge of the patents since at least July 29, 2019, the date it allegedly received a certified letter from Plaintiff identifying the patents and the infringement (Compl. ¶39, ¶55).
VII. Analyst’s Conclusion: Key Questions for the Case
Validity and Mootness: Given that all asserted claims of the ’940 patent have been cancelled in an IPR proceeding, a threshold question is whether the infringement count against that patent is moot. The case may proceed only on the asserted claims of the ’698 patent.
Definitional Scope and Equivalence: A core issue will be one of definitional scope: can the term "carrier", which is described in the patent as a discrete physical object for holding checks, be construed under the doctrine of equivalents to cover the accused system’s use of a generic background surface combined with software-based alignment guides?
Functional Scope: A key evidentiary question will be one of functional interpretation: does the term "unique identifier" require a physical mark on the "carrier" that is captured by the imaging device, as depicted in the patent’s embodiments, or can it be satisfied by metadata, such as a user's account number, transmitted alongside the image files?