DCT

2:19-cv-00888

Parabit Systems Inc v. Synergistics Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:19-cv-00888, E.D.N.Y., 04/23/2019
  • Venue Allegations: Venue is alleged to be proper as Defendants have purportedly committed acts of patent infringement within the district, certain Defendants reside in the district, and other Defendants maintain a regular and established place of business in the district.
  • Core Dispute: Plaintiff alleges that Defendants’ card reader protection systems infringe a patent related to detecting fraudulent card-skimming devices.
  • Technical Context: The technology addresses the security risk of card-skimming, where criminals install fraudulent devices over legitimate card readers (e.g., at ATMs) to steal card data.
  • Key Procedural History: The complaint alleges that Defendants had pre-suit knowledge of the patent-in-suit based on a trade show interaction in September 2016 and a subsequent letter from Plaintiff’s counsel in February 2017, forming the basis for a willfulness allegation. Plaintiff also identifies its own "SkimGard" product as a commercial embodiment of the patent.

Case Timeline

Date Event
2011-12-13 ’072 Patent Priority Date
2013-09-03 ’072 Patent Issue Date
2016-09-01 Alleged notice to Defendants at trade show
2017-02-13 Alleged notice to Defendants via counsel letter
2019-04-23 Complaint Filing Date

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

U.S. Patent No. 8,523,072 - "Card Reader Protection System"

  • Patent Identification: U.S. Patent No. 8,523,072, "Card Reader Protection System," issued September 3, 2013.

The Invention Explained

  • Problem Addressed: The patent addresses the problem of third parties installing illicit external card readers, known as "skimming devices," over the authentic card slots of self-service terminals like ATMs to illegally acquire customer card data (’072 Patent, col. 1:26-40).
  • The Patented Solution: The invention is a card reader assembly featuring a face plate with an integrated array of light emitters and sensors, specifically infrared proximity detectors, positioned around the card slot (’072 Patent, Abstract). A key aspect of the design involves placing these detectors on "inclined surfaces" on opposite ends of the card slot, creating a detection field that is disrupted when a foreign object like a skimmer is placed over the slot (’072 Patent, col. 2:62-65; Fig. 4). A controller activates the detectors and analyzes the light measurements to determine if such an object is present (’072 Patent, col. 2:20-24).
  • Technical Importance: The technology provides an active, automated method for detecting the physical attachment of a skimming device, a threat that is often difficult to counter because such devices are designed to be visually unobtrusive (’072 Patent, col. 1:45-51).

Key Claims at a Glance

  • The complaint asserts independent claims 14, 16, and 17, and dependent claim 15 of the ’072 Patent (Compl. ¶34).
  • Independent Claim 14 recites the core elements of the invention:
    • A face plate with a card slot.
    • An array of infrared proximity detectors on the face plate.
    • A controller to activate the detectors to determine if an object is placed over the slot.
    • The face plate includes a front surface and "first and second inclined surfaces" disposed at an angle relative to the front surface.
    • These inclined surfaces are located on "opposite ends of the slot to face each other" and contain portions of the detector array.

III. The Accused Instrumentality

Product Identification

  • The complaint identifies "various models of card reader protection system devices," exemplified by Model No. 04-402, collectively termed the "Accused Product" (Compl. ¶33).

Functionality and Market Context

  • The Accused Product is alleged to incorporate a face plate, card slot, housing, inclined surfaces, and "light proximity detectors" (Compl. ¶36). Its function is to detect tampering by measuring light changes to generate an alarm, purportedly indicating the presence of a skimming device (Compl. ¶36).
  • A product cut sheet for the Accused Product, Model No. 04-402, is attached as Exhibit B to the complaint, which is referenced as showing the product's features (Compl. ¶33, Exhibit B).
  • The complaint alleges these products are used in ATMs at major financial institutions, including Citibank, Bank of America, and HSBC, suggesting they have a significant commercial footprint (Compl. ¶10).

IV. Analysis of Infringement Allegations

’072 Patent Infringement Allegations

Claim Element (from Independent Claim 14) Alleged Infringing Functionality Complaint Citation Patent Citation
a face plate including a slot for receiving a card in a direction of entry into the slot; The Accused Product has a "face plate" and "card slot." ¶36 col. 4:56-59
an array of infrared proximity detectors disposed on the face plate; The Accused Product has "light proximity detectors." ¶36 col. 5:7-15
a controller configured to selectively activate the array of infrared proximity detectors to determine if an object is placed over the slot of the face plate, The Accused Product "detects tampering and measures the presence, absence or change thereof of light to generate an alarm indicating the presence of a skimming device." ¶36 col. 2:20-24
wherein the face plate further comprises: a front surface including the slot; and first and second inclined surfaces disposed at a predetermined angle relative to the front surface... The Accused Product has "inclined surfaces." ¶36 col. 5:23-28
wherein the first and second inclined surfaces are disposed on opposite ends of the slot to face each other. The complaint alleges the Accused Product has "inclined surfaces," which purportedly meet this geometric limitation. ¶36 col. 2:65-3:2

Identified Points of Contention

  • Scope Questions: Does the term "light proximity detectors" as alleged in the complaint (Compl. ¶36) satisfy the more specific claim limitation of an "array of infrared proximity detectors" ('072 Patent, cl. 14)? The complaint does not specify the wavelength of light used by the accused detectors.
  • Technical Questions: A factual dispute may arise over whether the "inclined surfaces" of the Accused Product (Compl. ¶36) are configured "on opposite ends of the slot to face each other" as required by claim 14. The precise geometry and positioning of the accused device's features relative to the claim language will be a central point of analysis.

V. Key Claim Terms for Construction

The Term: "inclined surfaces"

  • Context and Importance: This geometric limitation is fundamental to the patent's described embodiment for creating a cross-face detection field. The infringement analysis for claim 14 will hinge on whether the accused device's physical structure falls within the scope of this term.
  • Evidence for a Broader Interpretation: The claims recite the surfaces are at a "predetermined angle," which is not defined with a specific numerical range in the claim itself, potentially allowing for some variability ('072 Patent, cl. 14).
  • Evidence for a Narrower Interpretation: The specification describes the angle as being "from about 30 degrees to about 60 degrees" ('072 Patent, col. 5:25-30). A party may argue that this range, disclosed in connection with the primary embodiment, limits the scope of the term.

The Term: "array of infrared proximity detectors"

  • Context and Importance: This term defines the specific sensing technology. The dispute may turn on whether the accused device's sensors use infrared light and whether their configuration constitutes an "array."
  • Evidence for a Broader Interpretation: The patent does not define "array" with a minimum number of detectors or a required layout. The specification also discloses alternative embodiments, such as one with a flat faceplate, suggesting the arrangement can vary from the primary illustrated embodiment ('072 Patent, Figs. 4B, 4C).
  • Evidence for a Narrower Interpretation: The word "infrared" is a specific technical limitation. Further, a party could argue that the term "array" should be construed in light of the preferred embodiment, which depicts a specific arrangement of two emitters and two sensors working in concert ('072 Patent, Fig. 4).

VI. Other Allegations

Indirect Infringement

  • The complaint pleads indirect infringement, alleging Defendants knowingly "induced others to infringe (such as its customers, its customers' clients...)" by selling and distributing the Accused Product (Compl. ¶¶43, 47). The factual basis rests on the allegation that Defendants supply the products to end-users who directly infringe by operating them.

Willful Infringement

  • Willfulness is alleged based on both pre-suit and post-suit knowledge (Compl. ¶44). The complaint provides specific factual allegations for pre-suit knowledge, including notice at a September 2016 trade show and a formal letter from counsel in February 2017 (Compl. ¶44). Continued alleged infringement after these events forms the basis of the claim for willful, wanton, and deliberate conduct (Compl. ¶45).

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

  • A core issue will be one of claim construction and scope: can the term "inclined surfaces... disposed on opposite ends of the slot to face each other" be construed to read on the specific physical geometry of the Accused Product? Resolution will depend on evidence regarding the accused device’s design and the court's interpretation of the claim language in light of the patent's specification.
  • A key evidentiary question will be one of technological identity: what evidence will be presented to establish that the Accused Product's "light proximity detectors" are, in fact, "infrared" detectors, as explicitly required by the asserted claims?
  • Finally, the willfulness claim raises a significant factual question: can Plaintiff prove that the alleged 2016 trade show discussion and 2017 cease-and-desist letter provided Defendants with knowledge of the patent and their alleged infringement sufficient to support a finding of subjective bad faith?