DCT
2:22-cv-00080
Liberty Peak Ventures LLC v. Comerica
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Liberty Peak Ventures, LLC (Texas)
- Defendant: Comerica Incorporated (Delaware); Comerica Bank (Texas)
- Plaintiff’s Counsel: BRAGALONE OLEJKO SAAD PC
- Case Identification: 2:22-cv-00080, E.D. Tex., 03/15/2022
- Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas based on Defendants maintaining a corporate and commercial presence, including physical bank branches, and conducting infringing activities within the district.
- Core Dispute: Plaintiff alleges that Defendants’ credit card, debit card, mobile payment, and online banking products and services infringe six patents related to secure electronic transactions, payment processing, device authentication, and data privacy.
- Technical Context: The patents relate to foundational technologies for securing and authenticating digital financial transactions, which have become central to modern banking, e-commerce, and mobile payment ecosystems.
- Key Procedural History: The complaint alleges that Defendants had pre-suit knowledge of the asserted patents since at least February 16, 2019, based on communications from Plaintiff's affiliate, which included access to a data room with claim charts in June 2019 and a subsequent letter in April 2020 inviting licensing discussions. These allegations form the basis for claims of willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 1999-08-31 | Priority Date for U.S. Patent No. 7,953,671 |
| 1999-11-05 | Priority Date for U.S. Patent Nos. 8,794,509 & 8,851,369 |
| 2002-10-18 | Priority Date for U.S. Patent No. 8,572,712 |
| 2002-10-30 | Priority Date for U.S. Patent No. 6,886,101 |
| 2005-04-26 | U.S. Patent No. 6,886,101 Issues |
| 2006-06-08 | Priority Date for U.S. Patent No. 9,195,985 |
| 2011-05-31 | U.S. Patent No. 7,953,671 Issues |
| 2013-10-29 | U.S. Patent No. 8,572,712 Issues |
| 2014-08-05 | U.S. Patent No. 8,794,509 Issues |
| 2014-10-07 | U.S. Patent No. 8,851,369 Issues |
| 2015-11-24 | U.S. Patent No. 9,195,985 Issues |
| 2019-02-16 | Plaintiff alleges Defendants received pre-suit notice of patents |
| 2019-06-11 | Plaintiff alleges Defendants were provided access to claim charts |
| 2020-04-01 | Plaintiff alleges sending a letter inviting licensing discussions |
| 2022-03-15 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 7,953,671 - "Methods and Apparatus for Conducting Electronic Transactions," Issued May 31, 2011
The Invention Explained
- Problem Addressed: The patent addresses the high incidence of fraud in "Card Not Present" Internet transactions, noting that then-current security protocols like SSL did not provide a means for ensuring the person providing the card number was legally authorized to do so (’671 Patent, col. 2:5-9).
- The Patented Solution: The invention describes a challenge-response authentication system to secure electronic transactions. A computer-based system (e.g., an authorization server) sends a "challenge" to an "intelligent token" on a client's device (e.g., a smart card or mobile phone). The token generates a "challenge response," and upon verification, the server assembles transaction credentials, including a cryptographic key, for the client's use in subsequent secure transactions (’671 Patent, Abstract; col. 3:12-37).
- Technical Importance: This approach provided a method for transaction systems to verify possession of a unique, intelligent hardware or software token, adding a layer of security beyond just knowledge of a card number and moving toward the two-factor authentication models common today (Compl. ¶36).
Key Claims at a Glance
- The complaint asserts infringement of claim 1 (Compl. ¶¶76-77).
- Essential elements of independent claim 1 include:
- Forwarding a challenge from a computer-based system to an intelligent token of a client.
- The intelligent token generating a challenge response.
- Receiving the challenge response at the computer-based system.
- Assembling credentials for a transaction, including a key, in response to verifying the challenge response.
- Receiving a request from the client that includes at least a portion of the assembled credentials.
- Validating that portion of the credentials with the key.
- Providing access to a transaction service in response to the validation.
U.S. Patent No. 8,794,509 - "Systems and Methods for Processing a Payment Authorization Request over Disparate Payment Networks," Issued August 5, 2014
The Invention Explained
- Problem Addressed: Merchants conducting business at remote locations (e.g., taxis, expos) often lack the means to easily and rapidly request payment authorization from the correct financial institution for a given transaction instrument (’509 Patent, col. 1:26-44).
- The Patented Solution: The patent discloses a computer-based system that queries a "payment system directory" containing information about multiple candidate payment systems. Based on transaction information (which may include a "proxy account number"), the directory helps locate the appropriate payment system, to which an authorization request is then transmitted (’509 Patent, Abstract). Figure 24 illustrates a merchant POS device (2410) communicating with a payment system directory (2420) that, in turn, interfaces with multiple payment systems (2431, 2432).
- Technical Importance: This technology provided a centralized or distributed logic for routing transactions in environments where multiple payment networks (e.g., Visa, American Express) could be accepted but direct connections to each were not feasible (Compl. ¶42).
Key Claims at a Glance
- The complaint asserts infringement of claim 1 (Compl. ¶¶92-93).
- Essential elements of independent claim 1 (a method claim) include:
- Querying a payment system directory that has information regarding a plurality of candidate payment systems.
- The payment system directory locating a candidate payment system for the transaction.
- The candidate payment system receiving payment information, including a proxy account number, for developing a payment authorization.
- Transmitting a payment authorization request to the candidate payment system.
- Receiving the payment authorization from the candidate payment system.
U.S. Patent No. 8,851,369 - "Systems and Methods for Transaction Processing Using a Smartcard," Issued October 7, 2014
- Patent Identification: U.S. Patent No. 8851369, "Systems and Methods for Transaction Processing Using a Smartcard," Issued October 7, 2014.
- Technology Synopsis: The patent addresses challenges in supporting transactions involving multiple payment systems using smartcards (’369 Patent, col. 1:46-52). The invention describes a method where the smartcard itself receives a payment request, queries payment directory information stored on the smartcard, and transmits an identification of the determined payment system to a point-of-sale (POS) device (’369 Patent, Abstract).
- Asserted Claims: Claim 1 (Compl. ¶108).
- Accused Features: The complaint alleges that Comerica's EMV-compliant contactless credit/debit cards and mobile wallet applications function as the claimed smartcard, receiving payment requests from POS terminals and determining which payment system (e.g., Visa, MasterCard) to use for the transaction (Compl. ¶¶49-50).
U.S. Patent No. 9,195,985 - "Method, System, and Computer Program Product for Customer-level Data Verification," Issued November 24, 2015
- Patent Identification: U.S. Patent No. 9195985, "Method, System, and Computer Program Product for Customer-level Data Verification," Issued November 24, 2015.
- Technology Synopsis: The patent describes a method for improving fraud detection and reducing incorrectly declined transactions (’985 Patent, col. 1:57-63). The system receives an authorization request initiated with a first transaction instrument (e.g., a payment token), determines a second transaction instrument linked to the same user (e.g., the underlying primary account number), and analyzes transaction data for correspondence between the two to authorize the payment (’985 Patent, Abstract).
- Asserted Claims: Claim 1 (Compl. ¶124).
- Accused Features: The complaint accuses Comerica's systems for processing tokenized payments. It alleges that when a token (first instrument) is used, Comerica's system de-tokenizes it to the underlying PAN (second instrument) and analyzes transaction data to authenticate the transaction, directly mapping to the claimed method (Compl. ¶¶52-54).
U.S. Patent No. 8,572,712 - "Device Independent Authentication System and Method," Issued October 29, 2013
- Patent Identification: U.S. Patent No. 8572712, "Device Independent Authentication System and Method," Issued October 29, 2013.
- Technology Synopsis: The patent addresses secure session initiation for web-browsing devices, particularly those that do not support cookies (’712 Patent, col. 1:21-26). The invention involves a web server receiving an HTTP request that includes browser and device identification data (e.g., client agent, device model) and analyzing this data to selectively grant access, potentially by comparing it against a database of authorized devices (’712 Patent, Abstract).
- Asserted Claims: Claim 1 (Compl. ¶138).
- Accused Features: Comerica's online banking login system is accused of infringement. The complaint alleges that when a user logs in, their device sends an HTTP request with device and agent data, which Comerica's servers analyze to determine if the device is recognized; if not, secondary authentication is required (Compl. ¶¶58-61). The complaint includes a screenshot of the Comerica Web Banking login screen (Compl. p. 34).
U.S. Patent No. 6,886,101 - "Privacy Service," Issued April 26, 2005
- Patent Identification: U.S. Patent No. 6886101, "Privacy Service," Issued April 26, 2005.
- Technology Synopsis: The patent addresses a user's inability to control and audit their personal data collected by online entities (’101 Patent, col. 1:16-21). The claimed solution is a privacy service system that allows a first user to perform a "self audit" of their own privacy data stored in a central database—including retrieving, reviewing, and changing it—while being restricted from auditing the privacy data of a second user (’101 Patent, Abstract; col. 13:14-14:4).
- Asserted Claims: Claim 1 (Compl. ¶152).
- Accused Features: The complaint accuses Comerica's online banking platform, which allows users to log into their own accounts to review and modify personal information (e.g., email, mobile number) but restricts them from accessing any other user's data (Compl. ¶¶63-65). A screenshot in the complaint shows the user profile screen where a user can review and change their email address (Compl. p. 37).
III. The Accused Instrumentality
Product Identification
- The "Accused Instrumentalities" are Comerica's systems, products, and methods for providing and processing financial transactions via credit cards, debit cards, mobile banking, and online banking (Compl. ¶¶20, 35). This includes the "Comerica Credit Cards," "Debit Card & ATM Card," "Mobile Banking," and "Mobile Wallet" services (Compl. ¶3).
Functionality and Market Context
- The complaint alleges that the accused functionalities are central to modern banking services offered by Defendants (Compl. ¶21). Key technical features identified include:
- Contactless and Mobile Payments: Issuing EMV-compliant physical cards with contactless capability and facilitating mobile payments through third-party wallets like Google Pay and Samsung Pay (Compl. ¶¶26, 30). This is supported by a screenshot from Comerica's website showing the Google Pay and Samsung Pay logos (Compl. p. 14).
- Tokenization: Utilizing EMV standards for tokenization, where a "virtual account number" or token is used in place of the primary account number (PAN) to secure transactions (Compl. ¶¶32, 33).
- Transaction Processing and Authentication: Operating computer-based systems that perform user enrollment for mobile wallets, provision credentials, receive and validate transaction requests (including de-tokenization), and authorize payments (Compl. ¶¶37, 53-55).
- Secure Online Banking: Providing a web-based portal (comerica.com) where users can log in to manage their accounts, which involves device authentication and allows users to self-audit their personal data (Compl. ¶¶58, 63).
IV. Analysis of Infringement Allegations
U.S. Patent No. 7,953,671 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| forwarding, by a computer-based system for conducting a transaction, a challenge to an intelligent token of a client | Comerica's systems, during the mobile wallet enrollment process for a credit or debit card, forward a challenge to the consumer's mobile device for identification, verification, and device attestation. | ¶¶37-38 | col. 3:12-20 |
| wherein said intelligent token generates a challenge response | The consumer's mobile device (the "intelligent token") generates a challenge response as part of the enrollment and verification process. | ¶38 | col. 3:20-22 |
| receiving, by said computer-based system, said challenge response | Comerica's computer-based systems receive the challenge response from the consumer's device to verify the user and the device's trusted state. | ¶38 | col. 3:22-24 |
| assembling, by said computer-based system, credentials for a transaction in response to verifying said challenge response, wherein said assembled credentials include a key | Upon successful verification, Comerica's systems assemble credentials, including cryptographic keys, and provision them to the mobile device for use in transactions. This process is referred to as "provisioning." | ¶39 | col. 3:24-26 |
| receiving, by said computer-based system, a request from said client, wherein said request includes at least a portion of said assembled credentials | In a transaction, Comerica's systems receive a request from the consumer's mobile wallet that includes assembled credentials, such as a token (PAN) and an encrypted Application Cryptogram. | ¶40 | col. 3:29-32 |
| validating, by said computer-based system, said portion of said assembled credentials with said key of said assembled credentials | Comerica's systems validate the received credentials, such as by using the provisioned key to authenticate the Application Cryptogram (ARQC). | ¶¶40-41 | col. 3:32-35 |
| providing, by said computer-based system, access to a transaction service in response to said validating | Once the mobile wallet and its credentials are validated, the transaction is allowed to proceed, providing access to the payment transaction service. | ¶41 | col. 3:35-37 |
Identified Points of Contention
- Scope Questions: A central question may be whether the EMV standard's user enrollment and device attestation process (Compl. ¶38) constitutes a "challenge" and "challenge response" as contemplated by the ’671 Patent. The defense may argue that "challenge-response" in the patent implies a specific, dynamic, one-time cryptographic handshake, whereas EMV enrollment is a standardized verification and provisioning protocol.
- Technical Questions: The complaint relies on a system overview diagram from an EMVCo document to illustrate the alleged infringement (Compl. p. 21, Fig 2.2). A key question will be what technical evidence demonstrates that Comerica's specific implementation of this EMV standard performs each step of claim 1, particularly the "assembling credentials in response to verifying said challenge response."
U.S. Patent No. 8,794,509 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| querying, by a computer-based system configured to facilitate a transaction, a payment system directory... wherein said payment system directory comprises information regarding a plurality of candidate payment systems | In response to a command from a POS terminal, the computer-based system operating the payment application queries an onboard "payment system directory" known as the Proximity Payment System Environment (PPSE). | ¶¶43, 44 | col. 2:48-52 |
| said payment system directory locates a candidate payment system for processing at least a portion of said transaction | The PPSE response contains a list of supported payment applications (e.g., Visa, MasterCard), allowing the POS terminal's Entry Point to compare and select a candidate payment system based on priority and availability. | ¶44 | col. 2:52-54 |
| wherein said candidate payment system receives payment information related to said transaction... and wherein said payment information includes a proxy account number | Once a payment system is selected, it receives transaction information. The complaint alleges that the system uses tokens, which function as proxy account numbers. | ¶46 | col. 2:58-60 |
| transmitting, by said computer-based system, a payment authorization request... to said candidate payment system | The card application transmits an authorization request (ARQC) through the selected payment system to the issuer (Comerica) for authorization. | ¶47 | col. 2:54-57 |
| receiving, by said computer-based system, said payment authorization from said candidate payment system | The card application receives the issuer's authorization (or decline) through the payment system, which completes the transaction. | ¶47 | col. 2:57-58 |
Identified Points of Contention
- Scope Questions: The infringement theory hinges on construing the EMV standard's Proximity Payment System Environment (PPSE) as the claimed "payment system directory" (Compl. ¶44). The defense may argue that the PPSE is merely a file structure on a card that lists available applications, not a "directory" that actively "locates" a payment system in the manner described by the patent specification.
- Technical Questions: The complaint alleges the use of a "proxy account number" by pointing to tokenization (Compl. ¶46). A factual question will be whether the specific accused transactions that allegedly practice the "directory" query also systematically use tokens that meet the patent's definition of a "proxy account number."
V. Key Claim Terms for Construction
For the ’671 Patent:
- The Term: "intelligent token"
- Context and Importance: This term's scope is critical, as it defines the client-side component of the security system. The infringement allegation rests on a consumer's mobile device running a wallet application qualifying as an "intelligent token" (Compl. ¶37). Practitioners may focus on this term because its construction will determine whether the patent reads on modern software-based mobile payment systems or is limited to earlier hardware-based concepts.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification states that an "intelligent instrument" (which contains the token) may include a "personal computer, portable computer, handheld computer (e.g., a personal digital assistant (PDA)), cellular telephone, or the like" (’671 Patent, col. 3:12-14). This language may support construing the term broadly to cover software running on general-purpose devices like smartphones.
- Evidence for a Narrower Interpretation: The patent frequently uses a "smart card" as its primary example, which could suggest an interpretation limited to dedicated, secure hardware elements rather than a software application that could be installed on any compatible device (’671 Patent, col. 2:15).
For the ’509 Patent:
- The Term: "payment system directory"
- Context and Importance: The definition of this term is central to infringement. The complaint's theory equates the EMV standard's PPSE—a list of applications on a card—with the claimed "payment system directory" (Compl. ¶44). The viability of the infringement case against EMV-based systems depends on this construction.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The abstract states the directory "may contain algorithms or rules" for selection, which could describe the priority and selection logic applied to the PPSE list by a POS terminal (’509 Patent, Abstract). The complaint points to EMV documents describing how the "Entry Point" uses the PPSE list to make a choice (Compl. p. 25).
- Evidence for a Narrower Interpretation: The patent's detailed description suggests the directory is a system component that itself "locates" the payment system, potentially implying a more active or centralized lookup service rather than a passive data structure on a card that is merely read by a terminal (’509 Patent, col. 2:52-54; Fig. 24).
VI. Other Allegations
Indirect Infringement
- The complaint alleges that Defendants induce infringement by, among other things, encouraging consumers to add their cards to mobile wallets, providing instructions on their website for doing so, adopting the EMV standards that allegedly implement the patented methods, and providing the underlying payment applications and credentials used by third-party wallets (Compl. ¶¶80, 96, 112, 128, 142, 156).
Willful Infringement
- Willfulness is alleged for all asserted patents based on pre-suit knowledge. The complaint claims Defendants were notified of the patents via a letter on February 16, 2019, provided access to claim charts on June 11, 2019, and received a letter inviting licensing discussions on April 1, 2020 (Compl. ¶¶78, 81, 94, 97, 110, 113, 126, 129, 140, 143, 154, 157).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope and temporal translation: can the key claim terms of patents with priority dates around 1999-2002—such as "intelligent token," "challenge," and "payment system directory"—be construed to cover the standardized, industry-wide protocols for EMV, tokenization, and mobile payments that were widely adopted more than a decade later? The case may turn on whether these modern protocols are merely new names for the old inventions or represent a fundamental mismatch in technical operation.
- A key evidentiary question will be one of divided infringement and control: many of the accused processes involve a complex interaction between Comerica's systems, third-party mobile wallet providers (Google, Samsung), payment processors (Elan Financial), and the end consumer. A central issue will be whether the facts demonstrate that Defendants direct or control the performance of all steps of the asserted method claims to be liable as a single actor, particularly for the inducement allegations.