Torus Ventures LLC v. Moody National Bank

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Torus Ventures LLC (Delaware)
  • Defendant: Moody National Bank (Texas)
  • Plaintiff’s Counsel: Rabicoff Law LLC
• Case Identification: 2:25-cv-00114, E.D. Tex., 02/02/2025
• Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant maintains an established place of business in the District and has committed the alleged acts of infringement there.
• Core Dispute: Plaintiff alleges that unspecified products and services offered by Defendant infringe a patent related to a recursive security protocol for controlling access to digital content.
• Technical Context: The technology addresses digital rights management (DRM) by using a layered or "recursive" encryption method, a significant area of development during the proliferation of digital media in the early 2000s.
• Key Procedural History: The complaint does not mention any prior litigation, licensing history, or other procedural events related to the patent-in-suit.

Case Timeline

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

U.S. Patent No. 7,203,844 - "Method and system for a recursive security protocol for digital copyright control," issued April 10, 2007

The Invention Explained

• Problem Addressed: The patent describes a problem arising from the ease of creating perfect, low-cost copies of digital works (e.g., media, software), which undermines traditional copyright protection based on the difficulty of physical reproduction. Prior art security protocols were often rigid and could be rendered obsolete by a single security breach. (’844 Patent, col. 1:25-48). The patent identifies a need for protocols that do not rely on "arbitrary distinction between digital data types" and are capable of securing themselves. (’844 Patent, col. 2:36-42, 2:50-54).
• The Patented Solution: The invention proposes a "recursive security protocol" where digital content is protected through layered encryption. A bitstream is encrypted using a first algorithm, and this encrypted result is associated with its corresponding decryption algorithm. This entire package—the encrypted bitstream and its decryption algorithm—is then treated as a new bitstream and encrypted with a second algorithm. (’844 Patent, Abstract; col. 2:61-68). This self-referencing capability allows the security protocol itself to be updated and protected by a newer, more secure version of the same protocol, without altering the underlying hardware. (’844 Patent, col. 4:31-44).
• Technical Importance: This architecture provided a flexible framework for Digital Rights Management (DRM) that could evolve to address new security threats and support a variety of business models, such as time-limited rentals, device-specific licenses, and permanent ownership transfers, by embedding the rules within the protected data structure. (’844 Patent, col. 4:45-65).

Key Claims at a Glance

• The complaint does not identify specific claims, referring only to the "Exemplary '844 Patent Claims" in an unprovided exhibit (Compl. ¶11). The first independent method claim, Claim 1, is representative of the core invention.
• Independent Claim 1 requires:
  • encrypting a bitstream with a first encryption algorithm;
  • associating a first decryption algorithm with the encrypted bit stream;
  • encrypting both the encrypted bit stream and the first decryption algorithm with a second encryption algorithm to yield a second bit stream;
  • associating a second decryption algorithm with the second bit stream.
• The complaint does not explicitly reserve the right to assert dependent claims, but the prayer for relief seeks judgment on "one or more claims." (Compl. p. 4, B).

III. The Accused Instrumentality

Product Identification

The complaint does not identify any specific accused products, methods, or services. It refers to "Exemplary Defendant Products" that are purportedly detailed in an external "Exhibit 2," which was not included with the complaint. (Compl. ¶11, ¶16).

Functionality and Market Context

The complaint does not provide sufficient detail for analysis of the accused instrumentality's functionality or market context.

IV. Analysis of Infringement Allegations

The complaint makes conclusory allegations of infringement and incorporates by reference claim charts from an unprovided exhibit. (Compl. ¶16, ¶17). It alleges that the "Exemplary Defendant Products practice the technology claimed by the '844 Patent" and "satisfy all elements of the Exemplary '844 Patent Claims." (Compl. ¶16). Without the referenced exhibit or any specific factual allegations in the body of the complaint, a substantive analysis of the infringement theory is not possible.

No probative visual evidence provided in complaint.

Identified Points of Contention

• Evidentiary Questions: The primary question is what specific products or services are accused of infringement and what evidence exists to show they perform the claimed method. The complaint, as filed, provides no factual basis for this determination.
• Technical Questions: Once an accused instrumentality is identified, a central issue will be whether its security architecture performs the specific "recursive" steps of the claims. For example, does the system encrypt a first decryption algorithm with a second encryption algorithm, or does it merely use multiple, non-recursive layers of encryption on the primary data?

V. Key Claim Terms for Construction

The Term: "bitstream"

Context and Importance

This term is fundamental to the scope of the claims. Its construction will determine what types of digital data are covered by the patent. Practitioners may focus on this term to argue whether the accused system's data (e.g., financial transaction data, user credentials) falls within the patent's scope, which provides examples centered on media and software.

Intrinsic Evidence for Interpretation

• Evidence for a Broader Interpretation: The specification states that "all binary digital data can be reduced to a stream of 1's and O's (a bitstream)" and that the protocol "makes no distinction between types of digital data." (’844 Patent, col. 2:31-33; col. 4:21-23). This language may support a broad definition covering any form of digital data.
• Evidence for a Narrower Interpretation: The specification repeatedly uses examples such as "media streams," "software application," and "audio/video stream" to describe the content being protected. (’844 Patent, col. 4:22, 4:50, 5:56-57). This may support an argument that the term should be construed in light of these exemplary embodiments.

The Term: "recursive security protocol"

Context and Importance

This phrase, from the patent’s title and background, defines the invention's core novelty. The infringement analysis will depend on whether an accused system's security architecture meets this definition. Practitioners may focus on this term because it appears to require a specific "self-referencing" functional relationship, not just any multi-layer security.

Intrinsic Evidence for Interpretation

• Evidence for a Broader Interpretation: The patent abstract describes the process of encrypting a bitstream, then encrypting that result with a second algorithm, which could be argued to be the essence of the "recursive" process. (’844 Patent, Abstract).
• Evidence for a Narrower Interpretation: The specification explicitly defines the "self-referencing behavior" as a protocol that is "equally capable of securing itself," which suggests the process for decryption is itself protected by the same type of protocol. (’844 Patent, col. 2:50-54). A defendant may argue that this requires a specific architectural design that is absent from its system.

VI. Other Allegations

Indirect Infringement

The complaint alleges inducement by asserting that Defendant sells the accused products and distributes "product literature and website materials inducing end users... to use its products in the customary and intended manner that infringes the '844 Patent." (Compl. ¶14).

Willful Infringement

The complaint alleges that service of the complaint itself provides Defendant with "actual knowledge of infringement." (Compl. ¶13). It further alleges that Defendant "continues to make, use, test, sell, offer for sale, market, and/or import" the accused products despite this knowledge, forming a basis for post-suit willful infringement. (Compl. ¶14).

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

• A threshold issue is one of evidentiary foundation: The complaint lacks specific factual allegations, instead relying on an unprovided exhibit. A primary question for the case will be what specific Moody National Bank products are accused and what evidence Plaintiff will offer to show they perform the patented recursive encryption method.
• A key technical question will be one of functional operation: Assuming a product is identified, does its security system merely use multiple layers of encryption, or does it specifically perform the recursive step required by the claims—namely, encrypting a first decryption algorithm with a second encryption algorithm?
• A central legal question will be one of definitional scope: The case may turn on whether the term "bitstream", as defined in the patent, can be construed to cover the type of data processed by the accused banking systems, and whether the accused security architecture exhibits the "self-referencing" property required by the term "recursive security protocol".