DCT
2:19-cv-00250
Lighthouse Consulting Group LLC v. Bank Of America NA
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Lighthouse Consulting Group, LLC (Massachusetts)
- Defendant: Bank of America, N.A. (Delaware)
- Plaintiff’s Counsel: Hansley Law Firm, PLLC
- Case Identification: 2:19-cv-00250, E.D. Tex., 07/12/2019
- Venue Allegations: Venue is alleged to be proper based on Defendant maintaining regular and established places of business within the Eastern District of Texas.
- Core Dispute: Plaintiff alleges that Defendant’s mobile check deposit application infringes patents related to systems and methods for remote check image capture using ubiquitous imaging devices and unique identifiers to associate front and back images.
- Technical Context: The technology enables remote deposit capture (RDC) using general-purpose consumer devices, such as smartphones, a practice that has become a cornerstone of modern mobile banking.
- Key Procedural History: The complaint alleges that the parties entered into a Non-Disclosure Agreement in 2007 to discuss a potential business relationship concerning the technology embodied in the patents-in-suit. Subsequent to the filing of this complaint, both patents-in-suit were the subject of Inter Partes Review (IPR) proceedings at the U.S. Patent and Trademark Office. In IPR2020-00194, all claims (1-10) of the ’940 patent were cancelled on May 14, 2021. In IPR2020-00759, all claims (1-15) of the RE44,274 patent were cancelled on May 18, 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 | LCG '698 patent application filed |
| 2007-06-01 | Plaintiff and Defendant sign Non-Disclosure Agreement |
| 2009-01-01 | First RDC mobile apps reportedly appear (approximate date) |
| 2011-04-15 | LCG '940 patent application filed |
| 2011-05-31 | Original U.S. Patent No. 7,950,698 issues |
| 2013-06-11 | U.S. Patent No. RE44,274 (reissue of '698) issues |
| 2013-11-26 | U.S. Patent No. 8,590,940 issues |
| 2019-07-12 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 8,590,940 - “Ubiquitous Imaging Device Based Check Image Capture,” issued Nov. 26, 2013
The Invention Explained
- Problem Addressed: The patent’s background section identifies the high cost of dedicated check scanners as a barrier preventing banks from offering remote deposit capture services to low-volume users like individuals and small businesses (’940 Patent, col. 1:59-64).
- The Patented Solution: The invention proposes a system that uses a physical "carrier" (e.g., a specially designed envelope or sheet) to hold one or more checks for imaging by a "ubiquitous imaging device" such as a standard flatbed scanner or fax machine (’940 Patent, col. 2:16-19). The carrier includes a unique identifier, independent of any data on the checks, which is captured along with the check images. This identifier allows a remote server to reliably pair the front and back images of each check, even if they are transmitted separately, solving a key logistical problem for non-specialized hardware (’940 Patent, Abstract; col. 4:27-41).
- Technical Importance: This approach aimed to democratize remote deposit capture by leveraging common office and home equipment, thereby expanding the market beyond large businesses that could justify the expense of dedicated hardware (’940 Patent, col. 2:25-30).
Key Claims at a Glance
- The complaint asserts independent claims 1 and 6 (Compl. ¶9-10).
- Independent Claim 1 recites a system comprising:
- A "carrier" for receiving negotiable instruments, the carrier having a "unique identifier" on its front and back sides that is independent of the instruments' data.
- An "imaging device" for separately generating and transmitting electronic front and back images of all instruments on the carrier, along with the unique identifier.
- A "link" to a network for directing the images to a remote location.
- A "receiving unit" at the remote location with software to "break down" the composite images into individual check images and "pair" the front and back of each instrument using the unique identifier.
- Independent Claim 6 is similar to claim 1 but adds the requirement that the carrier has "a surface area for providing deposit information."
U.S. Patent No. RE44,274 - “Ubiquitous Imaging Device Based Check Image Capture,” reissued Jun. 11, 2013
The Invention Explained
- Problem Addressed: Like its continuation (’940 Patent), the ’698 patent (reissued as RE44,274) addresses the need for a low-cost remote check deposit solution that avoids reliance on expensive, dedicated scanners (RE44,274 Patent, col. 1:63-col. 2:7).
- The Patented Solution: This patent claims the method corresponding to the system of the ’940 Patent. The method involves the steps of providing a carrier, securing a negotiable instrument to it, creating a unique identifier on the carrier, generating an electronic image of both the instrument and the identifier, transmitting the image and identifier to a remote location, and pairing the front and back images using that identifier (RE44,274 Patent, Abstract). This process is designed to be performed with ubiquitous imaging devices (RE44,274 Patent, col. 2:19-25).
- Technical Importance: The invention provided a methodological framework for using general-purpose devices to perform remote check deposits, a key step in the development of mobile banking.
Key Claims at a Glance
- The complaint asserts independent claims 1 and 9 (Compl. ¶13-14).
- Independent Claim 1 recites a method comprising the steps of:
- "Providing a carrier" designed to permit front and back imaging.
- "Securing" the negotiable instrument to the carrier.
- "Creating an identifier" on the front and back of the carrier, unique to the carrier.
- "Generating" an electronic image of the instrument along with the unique identifier.
- "Transmitting" the electronic image and identifier to a remote location.
- "Pairing" the front image to its corresponding back image at the remote location.
- Independent Claim 9 is similar to claim 1 but recites a carrier with a "surface... to provide deposit information" and transmitting the image of the carrier along with the negotiable instrument.
III. The Accused Instrumentality
Product Identification
- The Bank of America Mobile Checking Application (the "Accused Instrumentality") (Compl. ¶43, 60).
Functionality and Market Context
- The complaint alleges the Accused Instrumentality is a software application for mobile devices that allows users to deposit checks by taking pictures of the front and back of a check (Compl. p. 16, ¶46). The complaint further alleges that the app guides the user to align the check for imaging, assigns a unique identifier to the transaction, and transmits the front and back images to a remote bank server for processing and pairing (Compl. ¶17, 19, 26). The complaint highlights the product's market significance, noting that Bank of America has 25 million active mobile users who deposited 34 million checks via mobile in the second quarter of 2018 alone (Compl. ¶39).
IV. Analysis of Infringement Allegations
A central allegation for both patents is that the software-based mobile application functions as the "equivalent" of the physical "carrier" recited in the claims, an argument made under the Doctrine of Equivalents (Compl. ¶16, 25).
’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... having an identifier on a front and back side of the carrier... | The complaint alleges the mobile app is the "equivalent of the carrier" that receives checks for imaging, assigns an identifier, and provides an on-screen frame to align the check. | ¶17, p. 18 | col. 3:42-49 |
| an imaging device for separately generating and transmitting one electronic front image... and one electronic back image... and the unique identifier... | The user's mobile device (e.g., smartphone) is identified as the imaging device that captures and transmits separate front and back check images. | ¶18 | col. 2:16-19 |
| 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 app allegedly uses the mobile device's internet or data connection to transmit the images to Bank of America's servers. | ¶18, ¶43 | col. 4:12-16 |
| a receiving unit at the remote location for receiving the separately transmitted... images... and having software designed to break down the... images... and subsequently pair the front image... to a... corresponding back image... | Bank of America's remote servers are alleged to receive the transmitted images and use software to process and pair the front and back images using a unique identifier. A deposit receipt screen is provided as evidence of this process. | ¶19 | col. 4:27-41 |
’698 Patent (RE44,274) 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... to be generated; | The complaint alleges the mobile app is the "equivalent of the carrier." | ¶26 | col. 3:42-49 |
| Securing the negotiable instrument to the carrier; | The user placing the physical check on a surface and aligning it within the app's on-screen digital frame is alleged to meet this limitation. The complaint provides a screenshot showing an on-screen alignment guide. | ¶27, p. 27 | col. 5:1-5 |
| Creating an identifier on a front side and back side of the carrier, the identifier being unique to the carrier... | The app allegedly "assigns a unique identifier to the imaging to be done." | ¶26 | col. 6:25-43 |
| Generating an electronic image of the front and back of the negotiable instrument along with the unique identifier... | The mobile device's camera, under the control of the app, is alleged to generate the front and back images. | ¶28, p. 28 | col. 2:16-24 |
| Transmitting the electronic image... and the unique identifier to a remote location; | The app allegedly transmits the captured images and associated identifier over a network to the bank's remote servers. | ¶28, ¶29 | col. 11:6-14 |
| Pairing, at the remote location, the front image... to a separately received corresponding back image... | The bank's remote server allegedly receives and pairs the images. A deposit receipt showing "Photos of Check: Received" is offered as evidence. | ¶29 | col. 12:50-54 |
- Identified Points of Contention:
- Scope Questions: The infringement theory for both patents hinges on the interpretation of "carrier." The patent specifications describe the "carrier" as a physical item like a transparent envelope or a sheet of paper with cutouts (’940 Patent, Fig. 3-8). A primary question for the court is whether a software application can be considered a "carrier" under the claims, even through the doctrine of equivalents. A related question is whether placing a check on a surface and aligning it within a digital frame constitutes "securing the negotiable instrument to the carrier."
- Technical Questions: What evidence demonstrates that the accused app generates a "unique identifier" that is "independent of data on the negotiable instruments" as required by the ’940 patent claims? The complaint alleges the app assigns an identifier (Compl. ¶17), and a screenshot shows a "Confirmation #" (Compl. p. 19), but the technical basis for its independence from check data (e.g., MICR line, amount) is not detailed.
V. Key Claim Terms for Construction
- The Term: "carrier"
- Context and Importance: This term is the lynchpin of the infringement case. Plaintiff's theory requires the mobile app to be construed as the "equivalent of the carrier." If the court construes "carrier" to require a physical object used to hold and transport the negotiable instrument for imaging, the infringement claims may fail.
- Intrinsic Evidence for a Broader Interpretation: The claims themselves do not explicitly state the carrier must be a physical object made of paper or plastic. A party might argue for a functional definition, where anything that "carries" the check information through the process could qualify.
- Intrinsic Evidence for a Narrower Interpretation: The specification provides numerous examples and figures (e.g., Fig. 3-8) that consistently depict the carrier as a physical item, such as a "transparent sealing carrier," a "non-transparent cut-out carrier," or a "single sided carrier" (’940 Patent, col. 7:40-65; col. 8:57-61). The abstract itself describes "a carrier that secures a negotiable instrument," strongly suggesting a physical object.
VI. Other Allegations
- Indirect Infringement: The complaint alleges that Defendant induces infringement by providing the Accused Instrumentality to its customers and actively instructing them, through its website and other materials, to operate it in a manner that performs the patented methods (Compl. ¶47-48, 62-63). It also alleges contributory infringement, stating the app is designed specifically for this purpose and has no substantial non-infringing use (Compl. ¶55, 70).
- Willful Infringement: The complaint makes a specific allegation of willful infringement based on pre-suit knowledge. It provides a signed 2007 Non-Disclosure Agreement as evidence that Defendant engaged in discussions with Plaintiff about the patented technology years before the suit was filed (Compl. ¶44, 61, p. 15). Post-suit knowledge is also alleged based on the filing of the complaint itself (Compl. ¶49).
VII. Analyst’s Conclusion: Key Questions for the Case
The disposition of this case, as filed, appears to rest on two fundamental and distinct questions for the court:
A core issue will be one of definitional scope: Can the term "carrier," which is described in the patent specifications as a physical medium for holding and aligning checks, be construed to encompass a software application's digital alignment frame and processing logic, even under the doctrine of equivalents? The viability of the entire infringement theory depends on the answer.
A dispositive procedural question is one of remedy: Given that all asserted claims of both patents were cancelled in IPR proceedings after the complaint was filed, what, if any, legal basis remains for Plaintiff to recover damages? The central legal battle may not be over the technical merits of infringement but over whether damages can be awarded for acts that occurred before the USPTO determined the claims to be unpatentable.