Liberty Peak Ventures LLC v. Fifth Third Bancorp

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Liberty Peak Ventures, LLC (Texas)
  • Defendant: Fifth Third Bancorp and Fifth Third Bank, National Association (Ohio)
  • Plaintiff’s Counsel: Bragalone Olejko Saad PC
• Case Identification: 3:23-cv-00611, N.D. Tex., 03/20/2023
• Venue Allegations: Plaintiff alleges venue is proper in the Northern District of Texas because Defendants maintain a regular and established place of business in the district, specifically citing an office located in Dallas, Texas.
• Core Dispute: Plaintiff alleges that Defendant’s mobile and online banking platforms, including their credit/debit cards and digital wallet services, infringe six patents related to secure electronic transactions, payment processing, data privacy, and automated cash back rewards.
• Technical Context: The patents relate to foundational technologies for securing and streamlining digital financial transactions, a domain of critical importance in the modern consumer banking and e-commerce markets.
• Key Procedural History: The complaint alleges that Defendants had pre-suit knowledge of the patents-in-suit since at least April 2, 2020, when Plaintiff’s affiliate allegedly initiated licensing discussions and provided access to a data room containing claim charts for the asserted patents.

Case Timeline

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

U.S. Patent No. 7,953,671 - Methods and Apparatus for Conducting Electronic Transactions

The Invention Explained

• Problem Addressed: The patent addresses security concerns in electronic transactions where conventional identifiers like PINs could be easily discovered or duplicated, creating a need for more robust safeguards (Compl. ¶37; ’671 Patent, col. 2:1-10).
• The Patented Solution: The invention describes a challenge-response system to secure transactions. A computer system forwards a "challenge" to a user's "intelligent token" (e.g., a smartcard or mobile phone), which generates a "challenge response." Upon successful verification of this response, the system assembles transaction credentials, including a cryptographic key. The client then uses these credentials to request access to a service, and the system validates the request using the key before granting access (’671 Patent, Abstract; col. 18:9-24).
• Technical Importance: This challenge-response authentication model provides a method for securing transactions over open networks without relying solely on static identifiers, an important step in enabling secure e-commerce and mobile payments (Compl. ¶37).

Key Claims at a Glance

• The complaint asserts at least independent claim 1 (Compl. ¶80-81).
• Claim 1 of the ’671 Patent recites a method with the essential elements of:
  • Forwarding, by a computer-based system, a challenge to an intelligent token of a client, wherein the intelligent token generates a challenge response.
  • Receiving the challenge response by the computer-based system.
  • Assembling credentials for a transaction in response to verifying the challenge response, where the credentials include a key.
  • Receiving, by the computer-based system, a request from the client that includes at least a portion of the assembled credentials.
  • Validating the portion of assembled credentials with the key.
  • Providing access to a transaction service in response to the validation.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 8,794,509 - Systems and Methods for Processing a Payment Authorization Request over Disparate Payment Networks

The Invention Explained

• Problem Addressed: The patent addresses the difficulty of processing transactions, particularly RFID transactions, in environments with multiple, disparate payment systems where a merchant and customer may not mutually support the same system (Compl. ¶43; ’509 Patent, col. 2:1-11).
• The Patented Solution: The invention discloses a computer-based system that queries a "payment system directory" to identify an appropriate payment system from a plurality of candidates. The selection can be based on rules related to the transaction type, issuer, or other payment information, which may include a "proxy account number." Once a system is selected, an authorization request is sent to it for processing (’509 Patent, Abstract; col. 34:40-54).
• Technical Importance: This technology allows for greater interoperability in payment processing by enabling a system to dynamically select a mutually supported payment network for a given transaction (Compl. ¶43).

Key Claims at a Glance

• The complaint asserts at least independent claim 1 (Compl. ¶96-97).
• Claim 1 of the ’509 Patent recites a method with the essential elements of:
  • Querying, by a computer-based system, a payment system directory that contains information on multiple candidate payment systems and locates a candidate system for the transaction.
  • The candidate payment system receiving payment information for developing authorization, where the payment information includes a proxy account number.
  • Transmitting, by the computer-based system, a payment authorization request to the candidate payment system.
  • Receiving, by the computer-based system, the payment authorization from the candidate payment system.
• The complaint does not explicitly reserve the right to assert dependent claims.

Multi-Patent Capsules

• Patent Identification: U.S. Patent No. 8,851,369, titled Systems and Methods for Transaction Processing Using a Smartcard, issued October 7, 2014.

• Technology Synopsis: The patent describes a smartcard (such as in a contactless card or mobile wallet) that receives a payment request and determines an appropriate payment system by querying payment directory information stored on the smartcard itself. The smartcard then transmits an identification of the selected payment system to a point-of-sale (POS) device to initiate authorization (Compl. ¶49).

• Asserted Claims: At least claim 1 (Compl. ¶112).

• Accused Features: The complaint alleges infringement by Defendants' contactless credit/debit cards and mobile wallets, which contain smartcards that use an Application Identifier (AID) to select a payment network (e.g., VisaNet) in response to a command from a POS terminal (Compl. ¶¶50-51).

• Patent Identification: U.S. Patent No. 9,195,985, titled Method, System, and Computer Program Product for Customer-level Data Verification, issued November 24, 2015.

• Technology Synopsis: The patent discloses a method for improving fraud detection by authorizing a transaction initiated with a first transaction instrument (e.g., a token) by analyzing transaction data that corresponds to data associated with a second, related transaction instrument (e.g., the underlying physical card). This cross-verification of data across multiple instruments for the same customer is intended to improve the accuracy of risk calculations (Compl. ¶52).

• Asserted Claims: At least claim 1 (Compl. ¶128).

• Accused Features: The accused features are Defendants' systems for processing tokenized payments. The complaint alleges that when an authorization request is received using a token (the first instrument), the system de-tokenizes it to identify the underlying primary account number (the second instrument) and analyzes data associated with both to authenticate the transaction (Compl. ¶¶53-56).

• Patent Identification: U.S. Patent No. 6,886,101, titled Privacy Service, issued April 26, 2005.

• Technology Synopsis: The patent describes a system providing a privacy service where users can store personal information in a central database and are given the ability to self-audit their own data. Users can review and change their stored privacy data, which may aid in the early detection of identity fraud (Compl. ¶58).

• Asserted Claims: At least claim 1 (Compl. ¶143).

• Accused Features: Infringement is alleged based on Defendants' online and mobile banking platforms, which allow users to create accounts by providing privacy data (e.g., email, phone number) that is stored by Fifth Third. The platforms allegedly allow a user to log in, review their personal profile and communication preferences, and make changes to this data (Compl. ¶¶59-62).

• Patent Identification: U.S. Patent No. 7,904,386, titled System, Method, and Computer Program Product for Saving and Investing Through Use of Transaction Cards, issued March 8, 2011.

• Technology Synopsis: The invention is an account issuing system that associates a transaction account (like a credit card) with a deposit account (like a checking account). The system automatically deposits a cash back amount from the transaction account into the deposit account after verifying that certain criteria, such as the account having a predetermined bill payment status, are met (Compl. ¶63).

• Asserted Claims: At least claim 1 (Compl. ¶157).

• Accused Features: Defendants' cash back rewards credit cards are the accused features. The complaint alleges these transaction accounts can be associated with a customer's checking or savings account, and Defendants' system verifies criteria (e.g., the transaction is an eligible purchase, the account is in good standing) before automatically depositing the earned cash back into the associated deposit account (Compl. ¶¶65-69).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are Fifth Third Bancorp and Fifth Third Bank’s products, services, and methods for mobile and online banking. This includes Fifth Third-branded debit and credit cards, the associated online and mobile banking applications, and compatibility with third-party digital wallets like Google Pay and Samsung Pay (Compl. ¶¶6, 24).

Functionality and Market Context

The accused services enable customers to conduct financial transactions through various channels. A core technical aspect alleged is the use of Europay, Mastercard, and Visa (EMV) standards for processing payments securely (Compl. ¶26). This includes contactless "tap-to-pay" functionality on physical cards, indicated by a "Contactless Indicator" symbol, and mobile payments using Near Field Communication ("NFC") protocols (Compl. ¶¶27, 31). The complaint alleges these systems employ "tokenization," where a surrogate "virtual account number" replaces the customer's actual Primary Account Number (PAN) during transactions to enhance security (Compl. ¶¶33-34). The complaint alleges Fifth Third, as the card issuer, directs and controls the provisioning of its credentials and payment applications to these third-party mobile wallets (Compl. ¶35). The complaint also highlights the online banking portal for user self-auditing of privacy data and the administration of cash back rewards programs (Compl. ¶¶59, 65). The complaint positions Defendants as a large, diversified financial services company with substantial assets and thousands of banking centers and ATMs (Compl. ¶¶4, 7). A screenshot from Defendant's website shows logos for Apple Pay, Google Pay, and Samsung Pay, illustrating the digital wallets through which mobile payments are facilitated (Compl. p. 16).

IV. Analysis of Infringement Allegations

'671 Patent Infringement Allegations

• Identified Points of Contention:
  • Scope Questions: A primary question may be whether a general-purpose smartphone running third-party wallet software (e.g., Google Pay) constitutes an "intelligent token" as the term is used in the patent. The analysis will likely focus on whether the patent's specification supports a construction broad enough to cover such a device, as opposed to a more specialized piece of hardware like a dedicated smartcard (Compl. ¶38). The complaint provides a diagram from an EMV standards document illustrating the "Basic Mobile Payment System Overview" to support its theory of how the components interact (Compl. p. 24).
  • Technical Questions: The infringement theory combines actions taken during an initial "enrollment" phase (challenge/response, credential assembly) with actions taken during a later "transaction" phase (request, validation). A question may arise as to whether these distinct processes, performed at different times, collectively meet the limitations of a single, integrated method as claimed.

'509 Patent Infringement Allegations

• Identified Points of Contention:
  • Scope Questions: The case may turn on whether the EMV standard's "PPSE" constitutes a "payment system directory" as claimed. The dispute could focus on whether the patent requires a more complex, searchable database than the list of applications provided by the PPSE function on a smartcard or mobile device (Compl. ¶44).
  • Technical Questions: The complaint identifies a "payment token" used in modern EMV transactions as the claimed "proxy account number" (Compl. ¶47). A technical question will be what evidence demonstrates that this token functions as a "proxy" in the manner described and contemplated by the ’509 patent's specification.

V. Key Claim Terms for Construction

• The Term: "intelligent token" (from '671 Patent, claim 1)

• Context and Importance: This term's construction is critical, as the complaint's infringement theory for the ’671 patent rests on mapping this term to a consumer's general-purpose mobile device (e.g., a smartphone) running a mobile wallet application (Compl. ¶38). A narrow construction could preclude infringement, while a broad one may support the Plaintiff's theory.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The patent specification may support a broad functional definition. The specification states that an intelligent instrument may be a "personal digital assistant (PDA), a mobile phone... [or] a smartcard" (’671 Patent, col. 29:1-4), which suggests the term is not limited to a single type of hardware.
  • Evidence for a Narrower Interpretation: The patent's abstract and detailed description repeatedly use the term "intelligent instrument" and may describe specific hardware-based embodiments, such as a smartcard with an embedded chip (’671 Patent, col. 22:30-35). This could be used to argue that the term requires more than just software running on a general-purpose device.

• The Term: "proxy account number" (from '509 Patent, claim 1)

• Context and Importance: Infringement of the ’509 patent hinges on whether the "payment token" used in the accused EMV systems is a "proxy account number" (Compl. ¶47). The definition of this term will determine if modern tokenization technology falls within the patent's scope.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification may define the term functionally as any number that stands in for the real account number to facilitate processing across different networks. The '509 patent abstract notes that payment information "may include a proxy account number," suggesting it is one of several possibilities for transmitting account data.
  • Evidence for a Narrower Interpretation: The patent may describe the "proxy account number" in a specific context that differs from how EMV tokens operate today. For example, the specification's description of how the proxy number is generated, transmitted, or resolved by the payment system directory could be argued to be technically distinct from the tokenization framework utilized by Defendants.

VI. Other Allegations

• Indirect Infringement: The complaint alleges inducement of infringement for all asserted patents. The factual basis is that Defendants allegedly encourage and instruct their customers to use the accused products in an infringing manner through user manuals, websites, and mobile applications (Compl. ¶¶83-84). Further, by providing payment applications and credentials to third-party mobile wallet providers like Google and Samsung, Defendants are alleged to induce those entities to infringe (Compl. ¶84).
• Willful Infringement: Willfulness is alleged for all asserted patents. The claim is based on alleged pre-suit knowledge dating back to at least April 2, 2020, when Plaintiff’s affiliate allegedly contacted Defendants, identified the patent portfolio, and provided access to claim charts demonstrating infringement (Compl. ¶82, ¶85). The complaint alleges that Defendants continued their infringing conduct despite this notice.

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

• A core issue will be one of technological evolution and claim scope: can terms from patents with priority dates rooted in the early days of e-commerce (e.g., "intelligent token", "payment system directory", "proxy account number") be construed to encompass modern, standardized, and widely adopted technologies like EMV mobile payment applications running on general-purpose smartphones and the associated tokenization security standards?
• A key question will be one of system boundaries and control: do Defendants' systems, which operate in a complex ecosystem involving third-party wallet providers (Google, Samsung) and customer-owned devices, perform all steps of the claimed methods? The analysis will likely focus on the degree of direction and control Defendants exercise over the entire end-to-end process as required to establish direct infringement for the asserted method claims.
• An evidentiary question will be one of pre-suit knowledge and intent: given the specific allegations of notice, including the provision of claim charts dating back to 2020, the court will examine what evidence supports Defendants' alleged knowledge of the patents and whether their subsequent conduct rises to the level of willfulness.