DCT
2:06-cv-00100
Emergis Tech v. PNM Resources
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Emergis Technologies, Inc. (Delaware)
- Defendant: PNM Resources (New Mexico)
- Plaintiff’s Counsel: Foster & Rieder, P.C.; Kirkland & Ellis LLP
- Case Identification: 2:06-cv-00100, D.N.M., 02/03/2006
- Venue Allegations: Plaintiff alleges venue is proper because Defendant is an investor-owned energy holding company incorporated and based in New Mexico.
- Core Dispute: Plaintiff alleges that Defendant’s electronic bill presentment and payment system infringes a patent related to systems for direct electronic invoicing and payment between a biller and a customer.
- Technical Context: The technology concerns electronic invoice presentment and payment (EIPP) systems, which allow companies to present bills and receive payments from customers over the internet, automating a traditionally paper-intensive process.
- Key Procedural History: The complaint alleges that Defendant had pre-suit "actual notice of the existence of the '362 patent," a fact that could be used to support the claim for willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 1997-09-08 | U.S. Patent No. 6,044,362 Priority Date |
| 2000-03-28 | U.S. Patent No. 6,044,362 Issued |
| 2006-02-03 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 6,044,362 - "Electronic Invoicing and Payment System," issued March 28, 2000
The Invention Explained
- Problem Addressed: The patent describes conventional invoicing and payment collection as a "very labor intensive and paper intensive process" ('362 Patent, col. 1:12-14). It also notes that prior electronic systems attempting to solve this problem often relied on third-party service providers, which could "add a great deal of complexity and no small amount of expense to the process" ('362 Patent, col. 1:31-33). The patent identifies a need for a "simple, straight forward system" that does not require a third-party service provider ('362 Patent, col. 1:52-58).
- The Patented Solution: The invention is a system that enables direct electronic interaction between an invoicer and a customer. The system comprises "invoice presentation electronics" (typically at the invoicer's location) and a "remote... customer authorization interface" (at the customer's location) ('362 Patent, col. 2:50-58). The invoicer’s electronics send billing data to the customer's interface; the customer reviews the data and uses the interface to transmit payment instructions "directly to said invoicer" ('362 Patent, col. 8:62-64). This creates a closed loop between the two parties for invoice presentment and payment authorization, as illustrated in the contrast between the prior art (Fig. 1) and the invention (Fig. 2).
- Technical Importance: This direct-to-biller model sought to reduce the complexity and cost associated with both traditional paper billing and early electronic systems that relied on third-party aggregators to manage the bill presentment and payment process ('362 Patent, col. 1:52-61).
Key Claims at a Glance
- The complaint does not identify specific asserted claims, alleging infringement of the patent generally (Compl. ¶13). Independent claim 1 is a representative system claim.
- Independent Claim 1 recites a system comprising:
- "invoice presentation electronics" adapted to present customer billing data and request payment instructions.
- "a remote electronic customer authorization interface" adapted to:
- receive the billing data and payment request from the invoice presentation electronics;
- provide this data and request to the customer;
- receive payment instructions from the customer in response; and
- transmit the customer payment instructions "from the customer directly to said invoicer".
III. The Accused Instrumentality
Product Identification
The accused instrumentality is Defendant PNM Resources' "electronic invoicing, payment, and presentment ('EIPP') facility" offered to its customers via its internet website (Compl. ¶10).
Functionality and Market Context
The complaint alleges that the EIPP facility allows customers to use a personal computer to "view invoices and initiate payment transactions to PNM Resources" (Compl. ¶10). The facility is used in support of PNM Resources' business of serving more than 400,000 electricity customers and 470,000 natural gas customers in New Mexico (Compl. ¶10).
IV. Analysis of Infringement Allegations
As the complaint was filed before the Twombly/Iqbal pleading standards were established, it does not contain a detailed mapping of accused functionality to claim elements. The following chart summarizes the infringement theory as inferred from the general allegations.
No probative visual evidence provided in complaint.
’362 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| An automated electronic invoicing and payment system... comprising: (a) invoice presentation electronics adapted to present customer billing data for customer review and to request payment instructions... | The complaint alleges PNM Resources operates an "EIPP facility" on its website, which is used to present electronic invoices to customers (Compl. ¶10). This website facility represents the "invoice presentation electronics." | ¶10 | col. 2:50-54 |
| and (b) a remote electronic customer authorization interface adapted to... (i) receive the customer billing data... (ii) provide the customer billing data... to the customer; (iii) receive customer payment instructions... and (iv) transmit the customer payment instructions from the customer directly to said invoicer... | The system allegedly allows customers to use a personal computer to "view invoices and initiate payment transactions to PNM Resources" (Compl. ¶10). The customer's computer and web browser function as the claimed interface. | ¶10 | col. 2:55-65 |
- Identified Points of Contention:
- Technical Question: A primary factual question will be the specific architecture of PNM Resources' EIPP facility. The complaint does not provide evidence on whether payment instructions are transmitted from the customer to a system controlled by PNM Resources itself, or if they are routed through an intermediary third-party payment processor. The latter architecture may not satisfy the "directly to said invoicer" limitation.
- Scope Questions: The interpretation of the phrase "directly to said invoicer" will be a central legal issue. The question for the court will be whether this phrase requires that the data transmission path excludes all intermediaries, such as a bank or payment gateway, or if it merely distinguishes the claimed system from the specific "third party service provider" model described as prior art in the patent's background section ('362 Patent, col. 1:46-51).
V. Key Claim Terms for Construction
- The Term: "directly to said invoicer"
- Context and Importance: This term appears in the dispositive final step of independent claim 1 and defines the communication path for the customer's payment instructions. Its construction is critical because the patent distinguishes itself from prior art based on the avoidance of third-party service providers ('362 Patent, col. 1:26-37). Whether PNM's system, which likely uses some form of financial intermediary, infringes will depend heavily on the scope assigned to "directly."
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: A party could argue that "directly" is used in contrast to the specific third-party bill presentment and remittance service providers described in the background ('362 Patent, col. 1:26-37, 46-51). Under this view, using standard financial intermediaries (e.g., the ACH network) for the payment transaction itself would not negate a "direct" authorization from the customer to the invoicer's system.
- Evidence for a Narrower Interpretation: The patent’s Figure 2, which illustrates an embodiment of the invention, depicts a communication line for "Electronic Authorization 52" running from the "Customer 20" entity straight to the "Invoicer 10" entity. This is explicitly contrasted with Figure 1 ("Prior Art"), where the authorization flows to a "3rd Party Service Provider 54." This stark visual distinction may support an interpretation that the authorization data itself must be transmitted to a system owned or controlled by the invoicer without an intervening third-party processor.
VI. Other Allegations
- Indirect Infringement: The complaint includes a conclusory allegation of active inducement and contributory infringement (Compl. ¶13). However, it does not allege specific supporting facts, such as identifying user manuals or other instructions provided by PNM Resources to its customers that would encourage infringing use.
- Willful Infringement: Plaintiff alleges that Defendant’s infringement has been "deliberate, willful, [and] intentional" (Compl. ¶15). This allegation is supported by the factual assertion that "PNM Resources has had actual notice of the existence of the '362 patent" prior to the lawsuit (Compl. ¶11).
VII. Analyst’s Conclusion: Key Questions for the Case
This dispute is likely to center on the architecture of the accused system and the interpretation of a single, critical claim phrase. The key questions for the court will be:
- A key evidentiary question will be one of system architecture: What is the actual data flow path for a payment authorization within PNM Resources' EIPP facility? Does the customer's instruction travel to a system controlled by PNM, or is it first processed by a distinct third-party payment vendor?
- A core issue will be one of definitional scope: Can the claim limitation "directly to said invoicer," which the patent uses to distinguish itself from prior art third-party aggregator models, be construed to read on a system that uses modern, conventional third-party payment gateways or financial networks to execute transactions?