Amadora Systems LLC v. JPMorgan Chase Bank NA

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Amadora Systems LLC (Texas)
  • Defendant: JPMorgan Chase Bank, N.A. (Delaware)
  • Plaintiff’s Counsel: Garteiser Honea, PLLC
• Case Identification: 6:24-cv-00609, E.D. Tex., 07/31/2024
• Venue Allegations: Plaintiff alleges venue is proper because Defendant maintains a regular and established business presence in the Eastern District of Texas, including physical branch locations, branded Automated Teller Machines (ATMs), and retained employees, and specifically targets customers within the district.
• Core Dispute: Plaintiff alleges that Defendant’s ATM systems, and the associated back-end systems that provide transaction alerts and video surveillance, infringe patents related to enhancing transaction security.
• Technical Context: The technology involves integrating image capture of a user at an ATM with transaction data and providing near real-time electronic notifications to the account holder to facilitate rapid fraud detection.
• Key Procedural History: The complaint asserts that the patents-in-suit descend from a provisional application filed in 2005 and characterizes them as "pioneering patents" that have been cited as relevant prior art in hundreds of subsequent patent applications. No prior litigation, licensing history, or post-grant proceedings are mentioned in the complaint.

Case Timeline

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

U.S. Patent No. 9,245,270

• Patent Identification: U.S. Patent No. 9,245,270, titled “Transaction Security Apparatus and Method,” issued January 26, 2016.

The Invention Explained

• Problem Addressed: The patent’s background section describes shortcomings in conventional financial security practices, wherein an account owner is typically notified of fraudulent activity days after a transaction occurs via a monthly statement, by which time it is too late to stop or reverse the fraudulent transaction (Compl. ¶31; ’270 Patent, col. 4:4-12). Existing point-of-sale authorization systems primarily check only whether a card has been reported lost or stolen or if a credit limit has been exceeded, failing to prevent unauthorized use before such a report is made (Compl. ¶31; ’270 Patent, col. 3:31-43).
• The Patented Solution: The invention proposes an apparatus that provides security by capturing a photograph of the individual conducting a transaction and generating a notification message containing transaction information for the account holder (Compl. ¶32; ’270 Patent, Abstract). This notification, which can include the captured photograph, is transmitted to the account holder's communication device (e.g., a cellular phone) independently of the computer that authorizes the financial transaction itself, enabling near real-time review by the account holder (’270 Patent, Abstract; col. 5:4-16).
• Technical Importance: This approach aimed to link visual evidence directly to a specific transaction and deliver it promptly to the account holder, creating a security layer beyond traditional authorization checks (Compl. ¶29).

Key Claims at a Glance

• The complaint asserts infringement of at least independent Claim 61 (Compl. ¶44).
• Essential elements of Claim 61 include:
  • An apparatus comprising a camera for obtaining a photograph of an individual involved in a transaction.
  • An input device for receiving information regarding the transaction.
  • A processing device adapted for generating a notification message containing transaction information.
  • A transmitter for transmitting the notification message and the photograph to a communication device associated with an account holder.
  • The transmission occurs independently of any processing by a transaction authorization processing computer.
• The complaint does not explicitly reserve the right to assert dependent claims for this patent.

U.S. Patent No. 10,861,020

• Patent Identification: U.S. Patent No. 10,861,020, titled “Transaction Security Apparatus and Method,” issued December 8, 2020.

The Invention Explained

• Problem Addressed: The patent addresses the same deficiencies in the prior art as the ’270 Patent, namely the time lag between a fraudulent transaction and its discovery by the account holder, which limits the effectiveness of fraud prevention measures (Compl. ¶31; ’020 Patent, col. 4:4-30).
• The Patented Solution: The invention is an apparatus comprising a transaction terminal (e.g., an ATM) with an integrated camera and a separate back-end computer with a database (’020 Patent, Abstract). The system is designed to capture a photograph or video of the user at the terminal, process the transaction, and store the transaction information linked with the captured visual media in the database. This combined information is then transmitted to a communication device independently of the transaction authorization computer (’020 Patent, Abstract; col. 1:57-68).
• Technical Importance: This system architecture provides for the integrated storage of visual evidence with corresponding transaction data, creating a verifiable record that can be transmitted for review or retrieved later for investigation (Compl. ¶35).

Key Claims at a Glance

• The complaint asserts infringement of at least independent Claim 2 (Compl. ¶60).
• Essential elements of Claim 2 include:
  • An apparatus comprising a transaction terminal that includes an input device, a camera, and a processor.
  • A computer that includes a database for storing information regarding the transaction and the photograph or video clip of the individual.
  • The transaction information and the photograph/video clip are transmitted to a communication device independently of processing by a transaction authorization processing computer.
  • The camera is located on the transaction terminal.
• The complaint does not explicitly reserve the right to assert dependent claims for this patent.

Multi-Patent Capsule: U.S. Patent No. 11,922,429

• Patent Identification: U.S. Patent No. 11,922,429, titled “Transaction Security Apparatus and Method,” issued March 5, 2024.
• Technology Synopsis: This patent describes an apparatus centered on a "banking transaction terminal" electronically connected to a central processing computer of a financial institution. The system architecture enables a user or operator to retrieve and display both transaction data and the associated captured photograph or video clip. A key feature is the system's ability to receive a "transaction response message" from the account holder's communication device, which contains information for authorizing, allowing, or disallowing the transaction (Compl. ¶93, ¶97).
• Asserted Claims: The complaint asserts infringement of at least independent Claims 41 and 48 (Compl. ¶78).
• Accused Features: The accused features include JPM's ATM network, its interconnected central processing computers, the back-end interfaces that allow JPM agents to retrieve transaction and video data, and the system that generates electronic alerts and provides a means for the account holder to respond (Compl. ¶79, ¶85, ¶91, ¶93, ¶97).

III. The Accused Instrumentality

Product Identification

• The "Accused Instrumentalities" collectively comprise JPMorgan Chase’s branded Automated Teller Machines (ATMs) along with their associated hardware and software, and the integrated back-end computer systems that monitor, process, and store transaction data (Compl. ¶41). This includes the technologies that enable electronic notifications to account holders and provide for video surveillance at the ATMs (Compl. ¶41).

Functionality and Market Context

• The complaint alleges the Accused Instrumentalities function as a single, controlled system. JPM's ATMs are equipped with integral cameras to record transactions and capture facial features of customers (Compl. ¶8, ¶45). They also include data entry keypads and/or interactive touchscreens for user input (Compl. ¶47). These terminals are connected to JPM's back-end systems, which are configured to process transaction data and generate electronic alerts, such as text messages or emails, to account holders (Compl. ¶49). These alerts contain information such as the date, time, location, and dollar amount of the transaction (Compl. ¶49). The system also stores captured video footage in association with transaction data on a server, which can be accessed by JPM employees for purposes such as investigating disputes or criminal activity (Compl. ¶8, ¶67). The complaint references a screenshot from JPM's website describing the availability of account alerts via email, text message, and push notification for events such as charges or other transactions on an account (Compl. ¶49-50, Fig. Group C).

IV. Analysis of Infringement Allegations

’270 Patent Infringement Allegations

’020 Patent Infringement Allegations

• Identified Points of Contention:
  • Scope Questions: A central question for all asserted patents may be the scope of the term "independently of any processing of the transaction by a transaction authorization processing computer." The defense could argue that the accused notification systems are triggered by or receive data from the authorization process and are therefore not "independent." The complaint alleges independence but offers limited technical detail on the specific system architecture that would substantiate this claim element.
  • Technical Questions: For the ’270 Patent, a key point of contention may be whether the accused system transmits the photograph to the account holder’s device, as required by Claim 61. The complaint’s evidence shows alerts containing transaction data (Compl. Fig. Group C), and while it alleges the system is adapted to transmit images to the account holder (Compl. ¶53), it also alleges images are accessible to JPM agents (Compl. ¶69), raising the question of whether the claim's requirement of transmission to the account holder's device is met by the accused system's actual operation.

V. Key Claim Terms for Construction

• The Term: "independently of any processing of the transaction by a transaction authorization processing computer" (’270 Patent, Claim 61; ’020 Patent, Claim 2)

  • Context and Importance: This limitation appears in the independent claims of multiple asserted patents and is central to the plaintiff's theory of non-obviousness and infringement. Practitioners may focus on this term because its construction will determine whether JPM's alert system, which is likely triggered by a transaction event, is sufficiently separate from the core financial authorization system to infringe.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification contrasts the invention with the "current authorization practice," which it describes as failing to prevent fraud in real time (’270 Patent, col. 3:31-43). This framing may support an interpretation where "independently" means the notification system is a separate security layer, not part of the primary financial approval/denial decision loop, even if triggered by it.
    • Evidence for a Narrower Interpretation: The claim language recites independence from "any processing." The Abstract of the ’270 Patent makes the same assertion. A defendant may argue this requires complete architectural and data-flow separation, such that the notification system cannot be prompted by, or receive data directly from, the transaction authorization computer’s processing stream.

• The Term: "communication device associated with an individual account holder" (’270 Patent, Claim 61)

  • Context and Importance: The construction of this term is critical for determining whether infringement of the ’270 Patent can be established. The complaint alleges infringement via notifications sent to a customer's device but also discusses data access by JPM agents. The question is whether an internal bank terminal used by an agent qualifies under this term.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The term "associated with" is not explicitly defined and could be argued to encompass any device used in the management of the account, including a terminal used by a bank employee acting on the account holder's behalf.
    • Evidence for a Narrower Interpretation: The patent’s specification and figures consistently provide examples of the communication device as a personal, user-end device such as a cellular telephone, pager, personal computer, or personal digital assistant (’270 Patent, col. 6:46-54; Fig. 1). This intrinsic evidence may support a narrower construction limited to a device owned or controlled by the account holder.

VI. Other Allegations

• Willful Infringement: The complaint alleges that Defendant’s infringement will be willful and deliberate to the extent it continues its infringing activities "post-notice" of the asserted patents (Compl. ¶56, ¶74, ¶100). This allegation is based on knowledge of the patents gained from the filing of the lawsuit itself, not on alleged pre-suit knowledge.

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

• A core issue will be one of architectural functionality: does JPM’s transaction alert system operate “independently of any processing” by its transaction authorization computer as required by the claims? The resolution will likely depend on discovery into the specific data flows and triggering mechanisms between JPM’s authorization and customer notification platforms.
• A key evidentiary question will be one of operational correspondence: particularly for the ’270 patent, does JPM’s system actually transmit the captured photograph to the account holder’s personal communication device as part of a real-time alert? A discrepancy between the system’s alleged capability and its routine operation could be a central point of dispute.
• A secondary issue may be one of definitional scope: for claims in the ’020 patent, can an internal terminal used by a bank agent for fraud investigation be construed to be a “communication device” as contemplated by the patent, which primarily illustrates end-user devices?