DCT
3:19-cv-19004
Lighthouse Consulting Group LLC v. PNC Financial Services Group Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Lighthouse Consulting Group, LLC (Wenham, MA)
- Defendant: The PNC Financial Services Group, Inc. (Incorporated in Pennsylvania, principal place of business in Troy, MI)
- Plaintiff’s Counsel: Hansley Law Firm, PLLC
- Case Identification: 3:19-cv-19004, D.N.J., 10/15/2019
- 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 check deposit functionality infringes patents related to systems and methods for remote check image capture using ubiquitous imaging devices.
- Technical Context: The technology at issue addresses remote deposit capture (RDC), a widely adopted banking feature that allows customers to deposit checks by capturing images with devices like smartphones, rather than using specialized scanners.
- Key Procedural History: The complaint asserts two related patents. U.S. Patent No. 7,950,698 is noted as having been reissued. Significantly, after the filing of this complaint, all asserted claims (1-10) of the '940 Patent were cancelled in an inter partes review proceeding (IPR2020-00194), a development that will likely be dispositive for the infringement allegations against that patent.
Case Timeline
| Date | Event |
|---|---|
| 2004-10-28 | Check 21 Act becomes effective |
| 2005-10-17 | Earliest Priority Date for ’940 and ’698 Patents |
| 2006-10-16 | '698 Patent application filed |
| 2009-01-01 | First RDC mobile app introduced (per complaint) |
| 2011-04-15 | '940 Patent application filed |
| 2011-05-31 | '698 Patent issues |
| 2011-06-05 | Accused PNC mobile deposit functionality introduced (alleged) |
| 2013-11-26 | '940 Patent issues |
| 2019-10-15 | Complaint Filed |
| 2019-12-13 | IPR proceeding (IPR2020-00194) filed against '940 Patent |
| 2021-05-14 | IPR Certificate issues, cancelling all claims of '940 Patent |
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 need following the passage of the "Check 21" Act. While the Act enabled remote deposit capture (RDC), the technology initially relied on dedicated, expensive check scanners, which were cost-prohibitive for individuals and small businesses ('940 Patent, col. 1:15-20, 56-62).
- The Patented Solution: The invention claims a system to overcome this cost barrier by using a physical "carrier" to hold a plurality of checks. A user can then use a "ubiquitous imaging device" (e.g., a standard flatbed scanner or fax machine) to capture a single composite image of all the check fronts and a single composite image of all the check backs. The carrier includes a unique identifier that is captured along with the checks. A remote server receives these two composite images and uses software to "break down" the images into individual check fronts and backs, pairing them correctly using the unique identifier ('940 Patent, Abstract; col. 4:42-53).
- Technical Importance: This system was designed to enable low-cost RDC by leveraging common office equipment, thereby expanding the potential market beyond large commercial customers ('940 Patent, col. 2:25-29).
Key Claims at a Glance
- The complaint asserts independent claims 1 and 6 (Compl. ¶¶ 10, 11, 41, 45).
- Essential Elements of Independent Claim 1:
- A "carrier" for receiving a "plurality" of negotiable instruments, the carrier having a unique "identifier" on its front and back and being designed to permit one front image and one back image of "all" the instruments.
- An "imaging device" for separately generating and transmitting one electronic front image and one back image of all the instruments and the identifier.
- A "link" for communication with a network.
- A "receiving unit" at a remote location with software to "break down" the individual front and back images from the composite images and "pair" them using the identifier.
- The complaint reserves the right to assert dependent claims 4, 5, 9, and 10 (Compl. ¶45).
U.S. Patent No. 7,950,698 - "Ubiquitous Imaging Device Based Check Image Capture", issued May 31, 2011
The Invention Explained
- Problem Addressed: Sharing a common specification with the ’940 Patent, the ’698 Patent addresses the same problem: the high cost and limited accessibility of RDC technology that relied on specialized hardware ('698 Patent, col. 1:15-20, 56-62).
- The Patented Solution: This patent focuses on the method for remote deposit. The claimed method comprises the steps of providing a carrier, securing a negotiable instrument to it, creating a unique identifier on the carrier, generating a composite electronic image of the instrument and the identifier, transmitting the image to a remote location, and pairing the front and back images using that identifier to create a complete image of the instrument ('698 Patent, Abstract; col. 6:15-30).
- Technical Importance: The method claims protect the core process of using a carrier and identifier with a non-specialized device, complementing the system claims of the related ’940 Patent ('698 Patent, col. 2:25-29).
Key Claims at a Glance
- The complaint asserts independent claims 1 and 9 (Compl. ¶¶ 14, 15, 57, 61).
- Essential Elements of Independent Claim 1:
- "Providing a carrier" designed to permit a front and back image.
- "Securing" the negotiable instrument to the carrier.
- "Creating an identifier" on the front and back side of the carrier.
- "Generating an electronic image" of the front and back of the instrument along with the identifier.
- "Transmitting" the electronic image and identifier to a remote location.
- "Pairing" the front and back images at the remote location using the identifier.
- The complaint reserves the right to assert dependent claims 5, 6, 13, and 14 (Compl. ¶61).
III. The Accused Instrumentality
Product Identification
- The accused instrumentality is Defendant's "Mobile Checking Application," which provides mobile RDC functionality (Compl. ¶39).
Functionality and Market Context
- The complaint alleges that the application enables customers to use their mobile device's camera to capture images of the front and back of a check for deposit (Compl. ¶39). The application provides an on-screen alignment guide to assist in positioning the check for image capture (Compl. ¶39). A screenshot in the complaint depicts this alignment feature as a rectangular overlay on the device's camera view (Compl. ¶14). The captured images are then transmitted to Defendant's bank server, which pairs them to complete the deposit process (Compl. ¶39). The complaint alleges this functionality was launched on or about June 5, 2011 (Compl. ¶35).
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... to be generated; | The complaint alleges under the Doctrine of Equivalents that Defendant's mobile app is the "equivalent of the carrier" because it receives checks for imaging, assigns a unique identifier, and permits alignment of the check for imaging (Compl. ¶41). | ¶41 | col. 4:42-53 |
| 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 camera functions as the imaging device, generating separate front and back images of the check (Compl. ¶14). The complaint provides a screenshot described as showing a mobile phone being used as an imaging device (Compl. ¶15). | ¶14, ¶15 | col. 4:54-59 |
| 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... | The mobile device's internet connectivity (e.g., Wi-Fi or cellular data) serves as the link to transmit the images to Defendant's servers (Compl. ¶15). | ¶15 | col. 4:60-64 |
| 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... to a separately received corresponding back image... using the unique identifier... | Upon information and belief, Defendant's remote servers act as the receiving unit, storing the images and using software to pair the front and back images with a unique identifier to complete the deposit (Compl. ¶15). | ¶15 | col. 4:65-col. 5:6 |
- Identified Points of Contention:
- Scope Questions: A central question is whether a software application (the "mobile app") can be considered a "carrier" as described in the patent. The patent specification consistently depicts the carrier as a physical item, such as a paper or transparent sleeve, for holding checks ('940 Patent, Figs. 3-8). The complaint's reliance on the Doctrine of Equivalents for this element (Compl. ¶41) suggests a recognized lack of literal infringement and frames the key dispute around equivalence.
- Technical Questions: Claim 1 requires a system for processing a "plurality of negotiable instruments" by capturing them in a single front and single back image, which is then "broken down." The complaint's visual evidence shows only a single check being deposited (Compl. ¶13). It is unclear what evidence supports the allegation that the accused system performs the claimed function of breaking down a composite image of multiple checks.
'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 of the negotiable instrument, when the negotiable instrument is secured to the carrier, to be generated; | The complaint again alleges under the Doctrine of Equivalents that the mobile app is the "equivalent of the carrier" (Compl. ¶57). | ¶57 | col. 15:30-34 |
| Securing the negotiable instrument to the carrier; | The complaint alleges the check is "supported on a surface" while being imaged (Compl. ¶23). This physical placement, guided by the app's on-screen alignment feature, is alleged to meet the "securing" step. | ¶23, ¶57 | col. 15:35 |
| Creating an identifier on a front side and back side of the carrier, the identifier being unique to the carrier and associated therewith; | Upon information and belief, the system creates a unique identifier for the transaction, such as by transmitting each image in a data packet containing the user's account number and a "front" or "back" designation (Compl. ¶23). | ¶23, ¶57 | col. 15:36-39 |
| Generating an electronic image of the front and back of the negotiable instrument along with the unique identifier on the carrier while the negotiable instrument is secured to the carrier; | The user's mobile phone camera is used to generate the front and back images of the check (Compl. ¶23). A screenshot is provided showing a phone capturing a check image (Compl. ¶23). | ¶23 | col. 15:40-44 |
| Transmitting the electronic image of the front and back of the negotiable instrument and the unique identifier to a remote location; and | The mobile device transmits the captured images and associated identifier data over a network to Defendant's remote server (Compl. ¶23). | ¶23 | col. 15:45-48 |
| Pairing, at the remote location, the front image... to a separately received corresponding back image... having the associated unique identifier, to provide a complete image... | Upon information and belief, Defendant's server receives the separately transmitted front and back images and pairs them using the unique identifier to create a complete, negotiable instrument for deposit (Compl. ¶24). The complaint includes a "How it Works" graphic from Defendant's website illustrating a multi-step deposit process (Compl. ¶24). | ¶24 | col. 15:49-55 |
- Identified Points of Contention:
- Scope Questions: As with the ’940 Patent, the interpretation of "carrier" is critical. Does placing a check on a desk and aligning it with an on-screen guide perform substantially the same function, in the same way, for the same result as physically inserting a check into the patented sleeve-like carrier?
- Technical Questions: The claim requires "securing the negotiable instrument to the carrier." The infringement theory appears to equate placing a check on a flat surface with securing it to the app itself. The connection between the physical check and the intangible software "carrier" raises a technical question about the nature of the alleged "securing" step.
V. Key Claim Terms for Construction
The Term: "carrier"
- Context and Importance: This term is the lynchpin of the infringement allegations for both patents. The plaintiff’s case for this element is explicitly based on the Doctrine of Equivalents, making the court's construction of "carrier" determinative of the scope of any equivalence analysis. Practitioners may focus on this term because the patent's viability against modern mobile deposit apps depends entirely on extending this term beyond its physical embodiments.
- Intrinsic Evidence for a Broader Interpretation: The patent does not provide an explicit definition of "carrier." A party could argue for a functional definition, suggesting that anything that "holds" or "orients" an instrument for imaging falls within the plain meaning of the term, consistent with the patent's title referencing "Ubiquitous Imaging."
- Intrinsic Evidence for a Narrower Interpretation: The specification, including the detailed description and all figures, consistently and exclusively describes the carrier as a physical object. The patent details a "transparent sealing carrier," a "non-transparent cut-out carrier," and materials like "self adhesive transparent, flexible, non-glare" sheets ('698 Patent, col. 4:42-53; col. 7:20-67; Figs. 3-8). This repeated emphasis on physical embodiments may be used to argue the term is limited to a physical apparatus.
The Term: "securing the negotiable instrument to the carrier"
- Context and Importance: This method step from the '698 Patent is critical because it defines the required physical relationship between the check and the alleged carrier. The infringement theory must demonstrate how placing a check on a table is equivalent to securing it to a software application.
- Intrinsic Evidence for a Broader Interpretation: A party might argue that "securing" does not require permanent or rigid attachment, but merely fixing the instrument's position relative to the carrier for the purpose of imaging.
- Intrinsic Evidence for a Narrower Interpretation: The patent specification describes securing the instrument by inserting it into "pockets," attaching it with "permanent adhesive," or "sealing" it within the carrier ('698 Patent, col. 5:8-14; col. 7:45-56). These examples all imply a direct physical connection or containment, which could support a narrower construction requiring more than simple placement on a surface.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement of infringement for both patents. It asserts that Defendant provides its customers with the Accused Instrumentality and actively instructs them, through its website and other materials, to use it in a manner that performs the claimed methods (Compl. ¶¶ 42-43, 58-59). The "How it Works" infographic from Defendant's website is presented as evidence of such instructions (Compl. ¶¶ 18, 45).
- Willful Infringement: The complaint alleges willfulness based on Defendant's knowledge of the patents "since at least the filing date of the Original Complaint" (Compl. ¶¶ 40, 56). This allegation appears to support only post-filing willfulness, as no specific facts are alleged to establish pre-suit knowledge.
VII. Analyst’s Conclusion: Key Questions for the Case
- A dispositive procedural issue for Count I is the effect of the IPR cancellation: With all asserted claims of the '940 Patent having been cancelled in a post-filing inter partes review, the viability of the infringement allegations in Count I is in serious question.
- The central substantive issue for both patents is one of definitional scope and equivalence: Can the term "carrier," which is described and depicted throughout the patents' shared specification exclusively as a physical object, be construed so broadly under the Doctrine of Equivalents that it reads on the software-based, on-screen alignment guides of a modern mobile banking application?
- A key evidentiary question will be one of functional operation: For the '940 Patent, does the accused system perform the claimed function of processing a "plurality" of checks from a single composite image, or is there a mismatch between the claim language and the system's actual operation of processing checks one at a time?