2:23-cv-00518
Liberty Peak Ventures LLC v. Fiserv Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Liberty Peak Ventures, LLC (Texas)
- Defendant: Fiserv, Inc. and Fiserv Solutions, LLC (Wisconsin)
- Plaintiff’s Counsel: BRAGALONE OLEJKO SAAD PC
- Case Identification: 2:23-cv-00518, E.D. Tex., 11/09/2023
- Venue Allegations: Plaintiff alleges venue is proper based on Defendant's commission of infringing acts in the district and its maintenance of a regular and established place of business in Frisco, Texas.
- Core Dispute: Plaintiff alleges that Defendant’s comprehensive suite of payment processing products, card issuance solutions, and financial technology services infringe ten patents related to secure electronic transactions, tokenization, and mobile payments.
- Technical Context: The patents address foundational technologies in the secure digital payments sector, covering EMV standards for chip cards, tokenization to replace primary account numbers, and secure protocols for mobile and contactless transactions.
- Key Procedural History: The complaint states that the asserted patents are part of a larger portfolio acquired from American Express. Plaintiff alleges providing pre-suit notice to Defendant of the portfolio and specific patents on multiple occasions beginning September 15, 2023, including access to a data room with infringement examples, which forms the basis for its willfulness allegations.
Case Timeline
| Date | Event |
|---|---|
| 1999-08-31 | U.S. Patent No. 7,953,671 Priority Date |
| 2000-03-07 | U.S. Patent No. 7,835,960 Priority Date |
| 2001-07-10 | U.S. Patent Nos. 8,851,369, 8,814,039, 8,794,509, 7,587,756, 7,668,750, and 7,312,707 Priority Date |
| 2005-01-05 | U.S. Patent No. 7,431,207 Priority Date |
| 2006-06-07 | U.S. Patent No. 9,195,985 Priority Date |
| 2007-12-25 | U.S. Patent No. 7,312,707 Issued |
| 2008-10-07 | U.S. Patent No. 7,431,207 Issued |
| 2009-09-08 | U.S. Patent No. 7,587,756 Issued |
| 2010-02-23 | U.S. Patent No. 7,668,750 Issued |
| 2010-11-16 | U.S. Patent No. 7,835,960 Issued |
| 2011-05-31 | U.S. Patent No. 7,953,671 Issued |
| 2014-08-05 | U.S. Patent No. 8,794,509 Issued |
| 2014-08-26 | U.S. Patent No. 8,814,039 Issued |
| 2014-10-07 | U.S. Patent No. 8,851,369 Issued |
| 2015-11-24 | U.S. Patent No. 9,195,985 Issued |
| 2023-09-15 | Plaintiff allegedly provided first pre-suit notice to Defendant |
| 2023-11-09 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 8,851,369 - “Systems and Methods for Transaction Processing Using a Smartcard”
The Invention Explained
- Problem Addressed: The complaint alleges that conventional methods for Radio Frequency Identification (RFID) transactions had problems supporting multiple payment systems on a single device (Compl. ¶99).
- The Patented Solution: The invention provides for a smartcard that, upon receiving a payment request from a Point of Sale (POS) device, determines an appropriate payment system by querying a payment directory stored on the smartcard itself. It then transmits an identifier for the selected payment system to the POS device, which can then use that identifier to route an authorization request to the correct network (e.g., Mastercard, Visa) (Compl. ¶99, ¶150).
- Technical Importance: This technology allows a single contactless card or device to intelligently select from multiple payment applications, enhancing interoperability and user convenience at the point of sale (Compl. ¶99).
Key Claims at a Glance
- The complaint asserts infringement of at least claim 1 of the ’369 Patent (Compl. ¶149).
- Essential elements of independent claim 1 include:
- receiving, at a smartcard, a payment request for a transaction;
- determining, by the smartcard, a first payment system for processing at least a portion of the transaction, wherein said determining includes the smartcard querying payment directory information stored on the smartcard; and
- transmitting, by the smartcard, an identification of the first payment system to a point of service (POS) device, wherein the identification is usable by the POS device to transmit a first authorization request related to at least a portion of the transaction to the first payment system.
- Plaintiff reserves the right to assert additional claims (Compl. ¶143).
U.S. Patent No. 8,814,039 - “Methods for Processing a Payment Authorization Request Utilizing a Network of Point-of-Sale Devices”
The Invention Explained
- Problem Addressed: The complaint asserts that at the time of the invention, merchants in remote locations (e.g., taxis, farmers markets) lacked the means to obtain immediate payment authorizations, forcing them into riskier and more expensive "card not present" transactions (Compl. ¶87).
- The Patented Solution: The invention describes a computer-based system that acts as a central router. Upon receiving payment information from a point-of-sale device, the system sends a query to a payment system directory to identify a candidate payment system (e.g., a specific card network). It then facilitates the transmission of an authorization request from the POS device to that candidate system and returns the resulting authorization to the POS device (Compl. ¶88, ¶167).
- Technical Importance: This approach enabled merchants in non-traditional or mobile settings to securely receive immediate payment authorization, reducing both fraud risk and transaction costs (Compl. ¶88).
Key Claims at a Glance
- The complaint asserts infringement of at least claim 1 of the ’039 Patent (Compl. ¶166).
- Essential elements of independent claim 1 include:
- sending a query from a computer based system to a payment system directory... to locate a candidate payment system;
- causing... a payment authorization request... to be transmitted from said first POS device to said candidate payment system;
- receiving, by said computer based system, payment authorization from said candidate payment system; and
- sending, by said computer based system, said payment authorization to said first POS device.
- Plaintiff reserves the right to assert additional claims (Compl. ¶160).
U.S. Patent No. 8,794,509 - "Systems and Methods for Processing a Payment Authorization Request Over Disparate Payment Networks"
Technology Synopsis
The patent describes a computer-based system that queries a payment system directory to select an appropriate payment system for a transaction, potentially based on factors like transaction type or issuer (Compl. ¶89). The system then sends an authorization request containing payment information, which may include a proxy account number, to the selected system and receives the authorization in return (Compl. ¶89, ¶184).
Asserted Claims
At least claim 1 (Compl. ¶183).
Accused Features
Fiserv's computer-based systems, including contactless EMV cards and payment networks, used for transaction processing (Compl. ¶90).
U.S. Patent No. 7,953,671 - "Methods and Apparatus for Conducting Electronic Transactions"
Technology Synopsis
The patent addresses securing transactions by using a challenge-response protocol between a computer-based system and an "intelligent token" (e.g., a digital wallet) (Compl. ¶46). The system sends a challenge to the token, receives a challenge response, assembles credentials including a key, and later validates a transaction request from the client by using the key (Compl. ¶46, ¶201).
Asserted Claims
At least claim 1 (Compl. ¶200).
Accused Features
Fiserv's computer-based systems that conduct user enrollment and transaction processing for mobile wallets, such as Google Pay and Samsung Pay (Compl. ¶47-48).
U.S. Patent No. 9,195,985 - "Method, System, and Computer Program Product for Customer-Level Data Verification"
Technology Synopsis
This patent describes a method for authorizing a payment transaction by analyzing data associated with multiple transaction instruments linked to a single user (Compl. ¶53). A computer system receives an authorization request involving a first instrument (e.g., a tokenized card number) and determines a second, corresponding instrument (e.g., the underlying physical card number) to analyze and verify transaction data across both records, improving fraud detection (Compl. ¶53, ¶218).
Asserted Claims
At least claim 1 (Compl. ¶217).
Accused Features
Fiserv's card issuance solutions, mobile wallet support (Google Pay, Samsung Pay), and tokenization services that create and process virtual account numbers which are later de-tokenized and analyzed against the underlying account data for authorization (Compl. ¶54-58, ¶66).
U.S. Patent No. 7,587,756 - "Methods and Apparatus for a Secure Proximity Integrated Circuit Card Transactions"
Technology Synopsis
The patent discloses a method for securing contactless transactions where a merchant system and a proximity integrated circuit (PIC) device (e.g., a smartcard or mobile wallet) each determine a respective "action analysis result" (e.g., approve offline, approve online, or deny) (Compl. ¶69, ¶235). Based on these results, the merchant system requests an appropriate application cryptogram from the device and then requests an authorization response from the card issuer (Compl. ¶69, ¶73-77).
Asserted Claims
At least claim 1 (Compl. ¶234).
Accused Features
Fiserv's EMV-compliant POS systems and devices, such as its Clover-branded terminals, that perform EMV mode transactions which include Offline Data Authentication and Terminal Risk Management to determine how to process a transaction (Compl. ¶70-73).
U.S. Patent No. 7,668,750 - "Securing RF Transactions Using a Transactions Counter"
Technology Synopsis
The patent describes securing RFID transactions by using a transaction counter on the transaction device (Compl. ¶79). A financial transaction request from the device includes a "transactions counted value." This value is sent to a transaction processor, which will deny the transaction if the counted value exceeds a predefined maximum, thereby preventing overuse or replay attacks (Compl. ¶79, ¶252).
Asserted Claims
At least claim 1 (Compl. ¶251).
Accused Features
Fiserv's Clover EMV readers that process transactions from mobile wallets using limited-use keys (LUKs). These LUKs include an Application Transaction Counter (ATC) that indicates the number of transactions performed and is used by the issuer to validate the transaction (Compl. ¶82-85).
U.S. Patent No. 7,312,707 - "System and Method for Authenticating a RF Transaction Using a Transaction Account Routing Number"
Technology Synopsis
The patent discloses a method for securing RFID transactions where an RFID reader transmits a random number to an RFID transaction device (Compl. ¶108-109). The device creates an authentication tag using the random number, a routing number, and a stored counter value, then transmits the tag back to the reader and increments its counter. A transaction request is then formed using the tag and counter value for verification (Compl. ¶109, ¶269).
Asserted Claims
At least claim 1 (Compl. ¶268).
Accused Features
Fiserv's Clover EMV readers that engage in contactless transactions involving the transmission of an unpredictable (random) number and the creation of an Application Cryptogram (ARQC) using a Limited Use Key (LUK) and an Application Transaction Counter (ATC) for authorization (Compl. ¶112-116).
U.S. Patent No. 7,431,207 - "System and Method for Two-Step Payment Transaction Authorizations"
Technology Synopsis
The patent addresses fraud in online or "card not present" transactions by authenticating the cardholder's identity (Compl. ¶119). The system initiates communication between the cardholder and an issuer's authorization computer, which authenticates the user by matching information against stored values to generate an authentication score. If approved, a private payment number is generated and issued to the merchant for the transaction (Compl. ¶119, ¶286).
Asserted Claims
At least claim 1 (Compl. ¶285).
Accused Features
Fiserv's 3-D Secure provider services, which are alleged to implement the EMV 3-D Secure specification for authenticating consumers during eCommerce purchases (Compl. ¶120, ¶122-125).
U.S. Patent No. 7,835,960 - "System for Facilitating a Transaction"
Technology Synopsis
The patent describes a system to reduce the risk of exposing a customer's actual account number by using a secondary transaction number (STN), or token (Compl. ¶129-130). A merchant receives an account number, requests authorization, and in response receives an STN. Subsequent settlement requests use the STN instead of the actual account number, which is replaced with the STN in the merchant's transaction records (Compl. ¶130, ¶303).
Asserted Claims
At least claim 1 (Compl. ¶302).
Accused Features
Fiserv's Multi-pay Token service, which allows merchants to store and use a token in place of a customer's credit card information for subsequent or recurring transactions (Compl. ¶131, ¶135-137).
III. The Accused Instrumentality
Product Identification
The complaint collectively refers to the accused products, methods, and services as the "Accused Instrumentalities" (Compl. ¶28). These include Fiserv’s payment processing platforms (VisionPLUS, FirstVision, Carat, Clover), card issuance solutions, EMV 3-D Secure services, tokenization services (e.g., Multi-pay Token service), and services for provisioning mobile wallets like Google Pay and Samsung Pay with digital payment credentials (Compl. ¶28, ¶30, ¶41, ¶70, ¶120, ¶131).
Functionality and Market Context
The complaint alleges these instrumentalities form a comprehensive ecosystem for modern electronic payments. Their core functions include processing EMV-compliant transactions for physical cards, enabling contactless payments via mobile wallets using technologies like NFC, generating and processing tokens as surrogates for primary account numbers (PANs) to enhance security, and providing multi-factor authentication for online "card-not-present" transactions (Compl. ¶28-32, ¶40, ¶120). A screenshot from Fiserv's website shows its "Push Provisioning" service, which it states "drives tokens from the issuer to destination wallets and merchants" (Compl. p. 18, ¶30). Fiserv is positioned as a "leading global provider of payments and financial services technology solutions" serving merchants, banks, and credit unions worldwide (Compl. ¶7).
IV. Analysis of Infringement Allegations
U.S. Patent No. 8,851,369 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| receiving, at a smartcard, a payment request for a transaction | A smartcard, such as in a contactless Mastercard or a mobile wallet, receives a payment request from a POS terminal. | ¶104, ¶150 | col. 8:36-40 |
| determining, by the smartcard, a first payment system for processing at least a portion of the transaction, wherein said determining includes the smartcard querying payment directory information stored on the smartcard | The smartcard or mobile wallet queries an onboard payment system directory to select a payment application (e.g., Mastercard). This is exemplified by the application selection and kernel activation functions of the POS system. | ¶105, ¶150 | col. 9:11-17 |
| transmitting, by the smartcard, an identification of the first payment system to a point of service (POS) device, wherein the identification is usable by the POS device to transmit a first authorization request...to the first payment system | The smartcard transmits an Application Identifier (AID) for the selected payment system (e.g., Mastercard) to the POS terminal, which uses it to initiate an authorization request with the correct payment network. | ¶106-107, ¶150 | col. 9:18-26 |
- Identified Points of Contention:
- Scope Questions: A central question may be whether the term "smartcard", as used in the patent, can be construed to cover modern mobile devices that utilize Host Card Emulation (HCE), where the payment application and directory logic may reside in the phone's main processor or the cloud, rather than on a physical embedded chip as contemplated in traditional smartcards (Compl. ¶31). The complaint's visual evidence shows a diagram of a contactless EMV card with a physical chip and antenna, which may be used to argue for a narrower construction (Compl. p. 24, ¶36).
- Technical Questions: Does the "application selection and kernel activation" process alleged to be performed by the Accused Instrumentalities (Compl. ¶105) constitute "querying payment directory information stored on the smartcard" as required by the claim, or is it a fundamentally different technical process for initiating a transaction?
U.S. Patent No. 8,814,039 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| sending a query from a computer based system to a payment system directory, wherein the query includes a request to locate a candidate payment system that is configured to process at least a portion of said transaction | Fiserv's computer-based systems, such as its payment networks and processing platforms, query a payment system directory in response to a command from a POS terminal to identify a supported payment system (e.g., Mastercard) for the transaction. | ¶90, ¶93, ¶167 | col. 8:1-12 |
| causing, by said computer based system, a payment authorization request related to said transaction to be transmitted from said first POS device to said candidate payment system | Fiserv's system causes the POS terminal to transmit a payment authorization request to the selected candidate payment system (e.g., the Mastercard network). | ¶96, ¶167 | col. 8:13-17 |
| receiving, by said computer based system, payment authorization from said candidate payment system | Fiserv's system receives the payment authorization back from the selected payment system. | ¶97, ¶167 | col. 8:18-20 |
| and sending, by said computer based system, said payment authorization to said first POS device | Fiserv's system sends the received payment authorization (e.g., a Transaction Certificate) back to the POS terminal to complete the transaction. | ¶98, ¶167 | col. 8:21-23 |
- Identified Points of Contention:
- Scope Questions: What is the scope of a "computer based system" and a "payment system directory" as claimed? The infringement theory appears to cast Fiserv's entire processing network as the "computer based system," raising the question of whether this distributed architecture maps to the system described in the patent.
- Technical Questions: The claim requires the computer-based system to perform specific sending, causing, receiving, and sending steps. The actual flow of data in the accused EMV transaction process involves multiple parties (merchant, acquirer, Fiserv, network, issuer). A key question will be whether Fiserv's system performs all the claimed steps or if the steps are divided among different legal entities, raising a potential divided infringement issue.
V. Key Claim Terms for Construction
For the ’369 Patent:
- The Term: "smartcard"
- Context and Importance: The definition of this term is critical because the infringement allegation extends beyond physical chip cards to include mobile wallets (Compl. ¶100, ¶103). The case may turn on whether a mobile device using Host Card Emulation (HCE), where processing logic resides on the phone's CPU or in the cloud, falls within the scope of a "smartcard" as understood at the time of the invention.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The complaint alleges that the '369 patent provides systems and methods that can be used by "mobile wallets" (Compl. ¶99), suggesting Plaintiff will argue for a functional rather than strictly structural definition.
- Evidence for a Narrower Interpretation: The patent specification and the complaint's own exhibits frequently depict a physical card with an embedded chip and antenna, which could support a narrower construction limited to devices with integrated secure processing hardware (Compl. p. 24, ¶36).
For the ’039 Patent:
- The Term: "payment system directory"
- Context and Importance: This term defines the core component that the claimed "computer based system" queries. Its construction will determine what type of database, lookup table, or routing logic meets this limitation. Practitioners may focus on this term because Fiserv's accused systems are complex and distributed, and the nature of the "directory" they allegedly use will be a central point of contention.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent specification may describe the directory in functional terms as a system that "locates a candidate payment system," potentially allowing it to cover a wide range of routing tables or databases (Compl. ¶88, ¶167).
- Evidence for a Narrower Interpretation: The specification may describe the directory in the context of specific embodiments that imply a more structured or centralized architecture, which Defendant could argue does not read on its distributed network of systems.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement of infringement across all asserted patents. The basis is that Fiserv allegedly provides its partners, merchants, and customers with the technology (e.g., Clover POS systems, Carat platform), documentation, and developer tools (Fiserv’s Developer Studio) that instruct them on how to perform the claimed methods (Compl. ¶153, ¶154, ¶170, ¶171). It further alleges Fiserv conditions participation in its network on conforming to standards like EMV, which allegedly practice the patented methods (Compl. ¶45, ¶147).
- Willful Infringement: The complaint alleges willful infringement based on pre-suit knowledge. It states that Plaintiff, through an affiliate, contacted Defendant on at least three separate dates starting September 15, 2023, providing notice of the patent portfolio and offering access to a data room containing detailed infringement allegations against Fiserv's products for numerous patents, including the patents-in-suit (Compl. ¶151, ¶168, ¶185, ¶202, ¶219).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope and technological evolution: can terms rooted in the context of early-2000s technology, such as "smartcard," be construed to cover modern, software-defined, and cloud-based payment systems that use techniques like Host Card Emulation? The resolution will depend on whether the court adopts a narrow, structural definition or a broader, functional one.
- A key legal and factual question will be one of divided infringement: many of the asserted methods involve steps performed across a chain of actors (consumer, merchant, Fiserv, issuer). The case will likely test the extent to which Fiserv's role as a central processor and standards-setter constitutes sufficient "direction or control" to hold it liable as a single actor for the actions of its partners, clients, and their end-users.
- A central evidentiary question will be one of technical mapping: given the assertion of ten distinct patents against a wide array of Fiserv's services, the case will require a granular analysis of whether the specific operational steps of accused products like the Clover POS system or the Multi-pay Token service align with the precise sequence and substance of the elements recited in each asserted claim.