DCT
3:19-cv-17522
Lighthouse Consulting Group LLC v. Investors Bank
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Lighthouse Consulting Group, LLC (Massachusetts)
- Defendant: Investors Bank (New Jersey)
- Plaintiff’s Counsel: Hansley Law Firm, PLLC
- Case Identification: 3:19-cv-17522, D.N.J., 08/30/2019
- Venue Allegations: Venue is alleged to be proper as Defendant is subject to personal jurisdiction, maintains regular and established places of business in the district, and has committed acts of patent infringement within the District of New Jersey.
- Core Dispute: Plaintiff alleges that Defendant’s Mobile Banking application, which provides remote check deposit functionality, infringes patents related to systems and methods for ubiquitous imaging device-based check image capture.
- Technical Context: The technology at issue is remote deposit capture (RDC), a widely adopted feature in the banking industry that allows customers to deposit checks by capturing images with personal devices like smartphones, rather than visiting a physical bank branch.
- Key Procedural History: U.S. Patent No. 7,950,698, one of the patents-in-suit, was reissued as U.S. Reissue Patent No. RE44,274. U.S. Patent No. 8,590,940 is a continuation of the application that led to the '698 patent. Subsequent to the filing of this complaint, in IPR proceedings IPR2020-00194 and IPR2020-00759, all claims of the '940 patent and the RE44,274 patent were cancelled, with certificates issued in May 2021.
Case Timeline
| Date | Event |
|---|---|
| 2004-10-28 | Check 21 Act becomes effective |
| 2005-10-17 | Earliest priority date for '940 and RE44,274 patents |
| 2006-10-16 | Application for original '698 patent filed |
| 2009-01-01 | Complaint alleges first RDC mobile app launched (approx.) |
| 2011-04-15 | Application for '940 patent filed |
| 2011-05-31 | Original U.S. Patent No. 7,950,698 issues |
| 2013-06-11 | U.S. Reissue Patent No. RE44,274 issues |
| 2013-11-26 | U.S. Patent No. 8,590,940 issues |
| 2019-08-30 | 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 capture was primarily available to businesses that could afford expensive, dedicated check scanners. These specialized scanners were necessary to ensure high-quality images and, critically, to keep the front and back images of a check correctly associated during the capture process ('940 Patent, col. 1:15-24). The high cost of this hardware limited the adoption of remote deposit technology by individuals and small businesses ('940 Patent, col. 1:60-64).
- The Patented Solution: The invention proposes a system that enables remote deposit using common or "ubiquitous" imaging devices like fax machines or flat-bed scanners ('940 Patent, col. 2:16-18). The solution centers on a physical "carrier" designed to hold one or more negotiable instruments. This carrier features a unique identifier that is captured along with the images of the checks. A remote receiving unit uses this identifier to reliably pair the front and back images, even if they are transmitted separately, and then uses software to "break down" the composite image into individual check images ('940 Patent, Abstract; col. 4:26-41).
- Technical Importance: This system was designed to lower the barrier to entry for remote deposit capture by leveraging widely available consumer electronics, thereby expanding the service's availability beyond large commercial clients (Compl. ¶25).
Key Claims at a Glance
- The complaint asserts independent claims 1 and 6 (Compl. ¶¶10, 11).
- Essential elements of Independent Claim 1 include:
- A "carrier" for receiving negotiable instruments, which has a "unique identifier" on its front and back sides that is independent of the check data.
- An "imaging device" for separately generating and transmitting a front image and a back image of the instruments on the carrier, along with the unique identifier.
- A "link" for network communication.
- A "receiving unit" with software to receive the separate images, "break down" the images of individual instruments from a composite image, and "pair" the front and back of each instrument using the identifier.
- Independent Claim 6 is similar to claim 1, but adds the limitation that the carrier includes "a surface area for providing deposit information" (Compl. ¶11).
- The complaint reserves the right to assert dependent claims, specifically mentioning claims 4, 5, 9, and 10 (Compl. ¶42).
U.S. Reissue Patent No. RE44,274 - Ubiquitous Imaging Device Based Check Image Capture
Issued June 11, 2013.
The Invention Explained
- Problem Addressed: As with its continuation ('940 Patent), this patent addresses the challenge of enabling remote check deposit using low-cost, non-specialized imaging devices, which historically lacked the ability to reliably process and pair check images ('274 Patent, col. 1:20-33).
- The Patented Solution: The '274 Patent claims the method of performing remote deposit capture using the system described in the '940 patent. The core steps of the method involve providing a physical "carrier," securing a check to it, creating a unique identifier on the carrier, generating electronic images of the check-on-carrier, transmitting the images and identifier, and pairing the front and back images at a remote location using the unique identifier ('274 Patent, Abstract; col. 15:36-col. 16:11).
- Technical Importance: The claimed method provides the operational steps for implementing a low-cost RDC solution, aiming to make the technology accessible to a broader market of individuals and small businesses (Compl. ¶25).
Key Claims at a Glance
- The complaint asserts independent claim 1 (Compl. ¶53).
- Essential elements of Independent Claim 1 include the steps of:
- "providing a carrier" designed for image generation.
- "securing the negotiable instrument to the carrier."
- "creating an identifier on a front side and back side of the carrier," which is unique to the carrier.
- "generating an electronic image" of the instrument and identifier.
- "transmitting the electronic image" and identifier to a remote location.
- "pairing, at the remote location," the front and back images using the identifier.
- The complaint also identifies infringement of dependent claims 5, 6, 9, 13, and 14 (Compl. ¶57).
III. The Accused Instrumentality
Product Identification
- The accused instrumentality is Defendant's "Mobile Banking" application, specifically the mobile check deposit feature (Compl. ¶38, ¶52).
Functionality and Market Context
- The application allows customers to use their smartphone cameras to deposit checks remotely. The complaint describes a process where the user is instructed to place a check on a contrasting background and capture separate images of the front and back within on-screen guides (Compl. p. 14). The captured images are then transmitted to the bank's servers for processing and deposit into the user's account (Compl. p. 16). The complaint alleges that mobile banking has become a "significant platform for Investors Bank's customer engagement" (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, the carrier having an identifier on a front and back side of the carrier, the identifier being independent of data on the negotiable instruments and unique to the carrier, and the carrier being designed to permit one front image of all the negotiable instruments, and one back image of all the negotiable instruments to be generated; | The complaint alleges this element is met under the doctrine of equivalents by instructing users to place the check on a "flat contrasting background surface," which it terms the "carrier equivalent." On-screen brackets for alignment are also identified as part of this feature (Compl. p. 14). | ¶39, p. 14 | col. 4:42-56 |
| an imaging device for separately generating and transmitting one electronic front image of all the negotiable instruments and one electronic back image of all the negotiable instruments and the unique identifier, while the negotiable instruments are secured to the carrier; | The user's mobile phone is identified as the "imaging device." Screenshots are provided to show that the front and back of the check are imaged and transmitted separately (Compl. p. 15). | p. 15 | col. 2:16-18 |
| a link configured to permit the image device to be in communication with a network for directing the front and back electronic images to a remote location for subsequent pairing... | The mobile device's connection to the internet or a cellular network serves as the link to transmit images to the Defendant's server (Compl. p. 17). A screenshot showing receipt of images by the bank is provided as evidence of transmission from a mobile device (Compl. p. 17). | p. 17 | col. 3:12-19 |
| a receiving unit at the remote location for receiving the separately transmitted front and back images... the receiving unit having... software designed to break down the individual front and back images... and subsequently pair the front image of each negotiable instrument... so as to provide a complete image of each negotiable instrument. | The Defendant's bank server acts as the receiving unit. The complaint alleges the server receives the images, pairs them using the user's account information as an identifier, and stores them (Compl. p. 15). A screenshot of a deposit receipt is offered as proof of this processing (Compl. p. 16). | p. 15-16 | col. 4:26-41 |
- Identified Points of Contention:
- Scope Questions: A central dispute will be whether a "flat contrasting background surface" and on-screen software guides can be construed as a "carrier" under the patent. The plaintiff asserts this only under the doctrine of equivalents, suggesting a recognition that the accused system lacks the physical "carrier" described and depicted in the patent's specification (e.g., '940 Patent, Fig. 3-8). This raises the question of whether an intangible background and software overlay can be equivalent to a physical object.
- Technical Questions: The claim requires the "identifier" to be "on a front and back side of the carrier." The complaint alleges that the user's account number, contained in a digital data packet sent with the images, meets this limitation (Compl. p. 14-15). A key question is whether a piece of data in a transmission packet can be considered "on" a physical background surface, as the claim language requires.
RE44,274 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 of the negotiable instrument, when the negotiable instrument is secured to the carrier, to be generated; | As with the '940 patent, this is alleged under the doctrine of equivalents. The complaint states that instructions to place the check on a "flat contrasting background surface" and use alignment software together constitute the "carrier equivalent" (Compl. p. 22). | p. 22 | col. 4:45-50 |
| securing the negotiable instrument to the carrier; | The act of placing the check on the background surface within the on-screen camera brackets is alleged to be the "securing" step (Compl. p. 23). | p. 23 | col. 15:43 |
| creating an identifier on a front side and back side of the carrier, the identifier being unique to the carrier and associated therewith. | The complaint alleges that the system creates unique identifiers (e.g., the user's account number) so the Defendant can identify the account and properly pair the front and back images once received (Compl. p. 23). | p. 23 | col. 15:44-46 |
| generating an electronic image of the front and back of the negotiable instrument along with the unique identifier... while the negotiable instrument is secured to the carrier. | The user's mobile phone camera is used to generate separate front and back images of the check while it is placed on the background surface (Compl. p. 24). | p. 24 | col. 15:47-50 |
| transmitting the electronic image... and the unique identifier to a remote location; and | The mobile app transmits the captured images and associated account information over a network to the Defendant's server. A screenshot showing the deposit history is provided as evidence of receipt (Compl. p. 24). | p. 24 | col. 15:51-53 |
| pairing, at the remote location, the front image... to a separately received corresponding back image... having the associated unique identifier... | The Defendant's server is alleged to receive the separate front and back images and pair them to confirm the deposit. A screenshot showing the confirmed deposit is presented as evidence of this pairing (Compl. p. 25). | p. 25 | col. 15:54-59 |
V. Key Claim Terms for Construction
The Term: "carrier"
- Context and Importance: This term is the foundation of the infringement case for both patents. The plaintiff's theory depends on convincing a court that a user-provided background surface, augmented by software guides, is equivalent to the patent's "carrier." The defendant will likely argue that a "carrier" is unambiguously a physical apparatus. Practitioners may focus on this term because its construction could be dispositive of the literal infringement question and will frame the dispute under the doctrine of equivalents.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification states a purpose of the carrier is to "ensure the proper positioning on the carrier of checks" and "facilitate matching fronts and backs" ('940 Patent, col. 4:45-48). Plaintiff may argue that any feature, physical or not, that performs this function falls within the scope of the term.
- Evidence for a Narrower Interpretation: The specification provides numerous physical embodiments, such as a "transparent sealing carrier," a "non-transparent cut-out carrier," and a "single sided carrier" ('940 Patent, col. 4:50-53). Figures 3 through 8 all depict a distinct, tangible object for holding checks. This evidence supports a narrower construction limited to a physical item.
The Term: "identifier on a front and back side of the carrier"
- Context and Importance: The asserted claims require the identifier to be physically located "on" the carrier. The complaint's allegation is that a user's account number, transmitted as part of a data packet separate from the image file, serves as this identifier. The construction of "on" will determine whether this non-physical, non-visual association satisfies the claim language.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: A party might argue that in the context of a digital transmission system, "on" should be interpreted functionally to mean "unambiguously associated with" the images of the front and back of the carrier, rather than requiring a physical marking.
- Evidence for a Narrower Interpretation: The patent specification describes and depicts pre-printed sequence numbers and bar codes on the physical carrier (e.g., '940 Patent, Fig. 4, elements 410, 415, 420; col. 5:61-65). This supports a construction requiring a tangible mark visible on the carrier itself.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement to infringe under 35 U.S.C. §271(b). The factual basis for this claim is the allegation that Defendant provides the accused mobile app and "actively instructs their customers to use the Accused Instrumentality in a way that infringes the... patent," citing Defendant's website and product manuals as evidence of these instructions and the specific intent to cause infringement (Compl. ¶40, ¶54).
- Willful Infringement: The complaint does not allege pre-suit knowledge of the patents. The prayer for relief seeks enhanced damages for willful infringement from "August 15, 2019 at the latest," a date two weeks before the complaint was filed, suggesting this allegation is based on notice provided to the Defendant shortly before litigation commenced (Compl. p. 31, ¶D).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope and equivalence: Can the term "carrier," which the patent specification consistently describes as a physical object for holding checks, be interpreted or found equivalent to the accused system's use of a customer-provided background surface and on-screen software guides? Resolution of this question through claim construction will be central to the dispute.
- A related key question is one of technical and spatial requirements: Does a digital account number transmitted in a data packet satisfy the claim limitation of a "unique identifier on a front and back side of the carrier"? The case may turn on whether this requires a physical marking on the "carrier" itself, or if a functional digital association is sufficient.
- The most significant question for the case, arising after the complaint was filed, is its fundamental viability. The subsequent cancellation of all asserted claims of both patents-in-suit in Inter Partes Review proceedings presents a critical, and likely insurmountable, challenge to the continuation of the lawsuit.