DCT

2:10-cv-00132

First American CoreLogic Inc v. Fiserv Inc

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Key Events
Amended Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:10-cv-00132, E.D. Tex., 07/26/2011
  • Venue Allegations: Venue is asserted based on the defendants' minimum contacts with the Eastern District of Texas, including conducting business and committing alleged acts of infringement within the judicial district.
  • Core Dispute: Plaintiff alleges that defendants’ Automated Valuation Model (AVM) products for real estate appraisal infringe a patent related to computer-implemented predictive modeling for property valuation. The complaint also includes trade secret misappropriation claims against Defendant Lender Processing Services, Inc.
  • Technical Context: The technology at issue involves AVMs, which use statistical models and large datasets to generate real estate appraisals automatically, providing a faster and potentially more objective alternative to traditional, in-person appraisals.
  • Key Procedural History: The complaint alleges that two former CoreLogic employees joined Defendant Lender Processing Services, Inc. (LPS) and used confidential information to develop competing AVM products. The complaint further alleges that one of these employees provided LPS with a copy of the patent-in-suit prior to the litigation, forming a basis for willfulness allegations. Subsequent to the filing of this complaint, the patent-in-suit underwent post-grant proceedings initiated in part by Defendant Interthinx, Inc., which resulted in the cancellation and disclaimer of numerous claims, including all independent claims.

Case Timeline

Date Event
1992-10-19 '201 Patent Priority Date (Filing Date)
1994-11-01 '201 Patent Issue Date
2010-02-02 LPS allegedly receives notice of '201 Patent from former CoreLogic employee
2010-02-16 Former employees Walker and Chen allegedly join Defendant LPS
2010-04-16 Original Complaint Filing Date
2011-07-26 Second Amended Complaint Filing Date
2012-12-26 Disclaimer of Claim 5 of the '201 Patent filed
2016-01-12 Post-Grant Review Certificate issued, cancelling or disclaiming claims

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

U.S. Patent No. 5,361,201 - "Real Estate Appraisal Using Predictive Modeling"

  • Patent Identification: U.S. Patent No. 5,361,201, “Real Estate Appraisal Using Predictive Modeling,” issued November 1, 1994 (the “’201 Patent”).

The Invention Explained

  • Problem Addressed: The patent identifies the traditional process of real estate appraisal as subjective, time-consuming, and potentially biased. It also notes that existing statistical methods, such as linear and logistic regression, are deficient in their ability to "capture complex behavior, nonlinearities and interactions among predictor variables." (’201 Patent, col. 1:40-61).
  • The Patented Solution: The invention proposes an automated system that uses one or more "predictive models," with a specific emphasis on neural networks, to generate an estimated value for a property. (’201 Patent, col. 2:30-35). The system is trained using historical property data and, when given data for a new property, applies the trained model to produce a valuation. The process is designed to also generate an error range for the estimate and "reason codes" that reveal the factors contributing to the final value, thereby providing transparency. (’201 Patent, col. 2:50-58; Fig. 9).
  • Technical Importance: The described technology aimed to replace or augment manual appraisals with a faster, data-driven, and repeatable computer-implemented process, which held significant implications for efficiency and consistency in the mortgage lending industry. (’201 Patent, col. 1:45-52).

Key Claims at a Glance

  • The complaint does not identify specific asserted claims but alleges infringement of "one or more of the claims of the '201 Patent" (Compl. ¶38). Independent Claim 1, a method claim, is representative of the invention's core process.
  • Independent Claim 1 (Cancelled post-filing):
    • A computer-implemented process for appraising a real estate property, comprising the steps of:
    • collecting training data comprising a plurality of items of data for a plurality of properties;
    • developing a predictive model from the training data;
    • storing the predictive model;
    • obtaining individual property data for the real estate property; and
    • generating a signal indicative of an appraised value for the real estate property responsive to application of the obtained individual property data to the stored predictive model.
  • The complaint does not explicitly reserve the right to assert dependent claims, but this is standard practice.

III. The Accused Instrumentality

Product Identification

  • The accused instrumentalities are the Automated Valuation Model (AVM) products and services offered by the various defendants. These include, but are not limited to, Fiserv’s CASA® AVM, Interthinx’s Clear VALUE® AVM, LPS’s ValueSure™, and Zillow’s Zillow.com website. (Compl. ¶¶ 38, 42, 46, 58).

Functionality and Market Context

  • The complaint describes the accused AVM technology as allowing "persons to easily, accurately and instantly obtain an appraisal of the value of real property without having an on-sight appraiser" (Compl. ¶18). The defendants are alleged to manufacture, use, and sell these AVM products to entities such as lending institutions and individuals. (Compl. ¶¶ 2, 17, 20). The complaint does not provide specific technical details about the operation of any single accused product beyond this general functional description. No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint does not provide an element-by-element claim chart or specific factual allegations mapping accused product features to claim limitations. The infringement theory is articulated at a high level: that the defendants' AVM systems, by their nature, perform a process that falls within the scope of the claims of the ’201 Patent (e.g., Compl. ¶¶ 38, 42, 46). The general narrative suggests that to provide an automated valuation, the defendants’ systems must necessarily perform the claimed steps of developing a model from training data, storing it, and applying it to new property data to generate a value.

  • Identified Points of Contention:
    • Evidentiary Question: A threshold issue is whether the plaintiff can produce evidence through discovery to demonstrate that the defendants' systems, in fact, perform each of the specific steps recited in any asserted claim. The complaint's allegations are conclusory and lack the technical detail to establish how any specific product operates.
    • Technical Question: The complaint does not describe the specific algorithms used by the accused AVMs. A potential point of dispute could be whether the models used by the defendants are the type of "predictive model" contemplated by the patent, which emphasizes neural networks as a solution to the deficiencies of simpler methods like regression (’201 Patent, col. 1:52-65). If an accused system uses a technique that the patentee distinguished as prior art, it may support a non-infringement argument.

V. Key Claim Terms for Construction

  • The Term: "predictive model"
  • Context and Importance: This term appears in all independent claims and is the central component of the invention. The construction of this term would be critical to determining the scope of the patent. A broad construction could cover a wide range of statistical valuation techniques, while a narrow construction could limit the patent's reach to the specific types of models detailed in the specification. Practitioners may focus on this term because its definition could either encompass or exclude the specific technologies used in the accused AVMs.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The claim language itself is facially broad, reciting "a predictive model" without express limitation to a particular type. The specification includes a statement that "any type of predictive modeling technique may be used, such as regression modeling, in place of or in combination with neural network models" (’201 Patent, col. 6:14-17), which may support a construction not limited to neural networks.
    • Evidence for a Narrower Interpretation: The specification repeatedly distinguishes the invention from prior art statistical techniques like regression, framing neural networks as the solution to their limitations (’201 Patent, col. 1:52-65). The abstract and the detailed description of the preferred embodiments focus almost exclusively on neural networks as the implementation of the "predictive model" (’201 Patent, Abstract; col. 6:8-21). A party could argue these distinctions and specific embodiments limit the term's scope.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges that defendants contribute to and induce infringement by "offering to sell and selling its systems...to customers, buyers, sellers, users and others that directly infringe the '201 Patent." (e.g., Compl. ¶38). This suggests a theory that defendants provide the tools and encourage end-users to perform the patented valuation methods.
  • Willful Infringement: Willfulness is alleged against all defendants based on their alleged awareness of the ’201 Patent (e.g., Compl. ¶39). The allegation is more specific against Defendant LPS, for which the complaint alleges pre-suit knowledge as of at least February 2, 2010, based on an email containing the patent sent from a former CoreLogic employee to the COO of LPS (Compl. ¶¶ 28, 47).

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

  1. Case Viability Post-Invalidation: A dispositive threshold question is whether the lawsuit can proceed following the post-filing cancellation and disclaimer of all independent claims of the '201 Patent. The court would need to address if any viable infringement theory remains based on surviving dependent claims, and whether the plaintiff would be permitted to amend its case to assert them at such a late stage.
  2. Intersection of Patent and Trade Secret Claims: For Defendant LPS, a central issue will be the demarcation between the patented subject matter and the alleged trade secrets. The court would need to analyze whether the "confidential and commercially valuable information" allegedly misappropriated by former employees is distinct from the teachings publicly disclosed in the ’201 Patent specification, a question complicated by the subsequent invalidation of the patent's primary claims.
  3. Pleading Sufficiency: A foundational legal question is whether the complaint's generalized infringement allegations meet federal pleading standards. The lack of specific, element-by-element mapping of any accused product to a claim could raise the question of whether the patent infringement counts state a plausible claim for relief or are merely conclusory.