Serverside Group Limited et al v. Tactical 8 Technologies LLC et al
Filing
144
MEMORANDUM OPINION and ORDER: Granting in Part and Denying in Part 133 Motion for Summary Judgment: Denying 137 Motion to Strike Affidavit of Plaintiffs' Expert: See text of Order for further information. Signed by Judge Mark W Bennett on 12/09/13. (kfs)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
EASTERN DIVISION
SERVERSIDE GROUP LIMITED and
SERVERSIDE GRAPHICS, INC.,
No. C 12-2016-MWB
Plaintiffs,
vs.
TACTICAL 8 TECHNOLOGIES,
L.L.C., and BANK IOWA
CORPORATION,
Defendants.
MEMORANDUM OPINION AND
ORDER REGARDING DEFENDANTS’
MOTION FOR SUMMARY
JUDGMENT AND MOTION TO
STRIKE AFFIDAVIT OF
PLAINTIFFS’ EXPERT
___________________________
TABLE OF CONTENTS
I.
INTRODUCTION........................................................................... 3
II.
THE MOTION TO STRIKE .............................................................. 6
A.
Procedural History ................................................................. 6
B.
Arguments Of The Parties ........................................................ 8
1.
The Iowa Defendants’ opening argument ............................. 8
2.
Serverside’s response .................................................... 10
3.
The Iowa Defendants’ reply ............................................ 11
C.
Legal Analysis ..................................................................... 11
1.
Rule 26 and Rule 37 standards ........................................ 11
2.
Rule 56 standards ........................................................ 19
3.
Summary ................................................................... 21
III.
THE MOTION FOR SUMMARY JUDGMENT .................................... 21
A.
Context Of The Motion .......................................................... 22
1.
The patents-in-suit ....................................................... 22
2.
The key patent claims at issue ......................................... 23
3.
The patent claim terms at issue ........................................ 25
B.
Factual Background ............................................................. 26
The parties’ factual allegations and denials......................... 26
The accused system ...................................................... 27
a.
Parts and users of the Cre8MyCard system ................. 28
b.
Customization by a remote customer ......................... 28
c.
Processing of the customized card by the
financial institution .............................................. 33
d.
Card manufacturing ............................................. 35
e.
“Instant” production methods ................................. 36
f.
Use of hash codes and encryption in the
accused system .................................................... 36
Standards For Summary Judgment ........................................... 38
Standards For Patent Infringement ........................................... 39
Grounds For Summary Judgment ............................................. 45
1.
Infringement under the doctrine of equivalents .................... 46
2.
Implications of non-infringement of the first claims .............. 46
3.
Absence of “a customer identifier that corresponds
to the remote customer that personalized said
image,” as claimed in the ‘199 and the ‘490 patents .............. 50
a.
Arguments of the parties ....................................... 51
b.
Analysis ............................................................ 52
4.
Absence of a “customer identifier [that] comprises
an identifier selected from a secure unique identifier
and a one-way code,” as claimed in the ‘199 patent .............. 57
a.
Arguments of the parties ....................................... 58
b.
Analysis ............................................................ 60
i.
Secure unique identifier ................................ 60
ii.
One-way code ............................................. 67
5.
Absence of a “customer identifier [that]
encompasses encrypted customer information,” as
claimed in the ‘490 patent .............................................. 70
a.
Arguments of the parties ....................................... 71
b.
Analysis ............................................................ 73
6.
Summary ................................................................... 77
1.
2.
C.
D.
E.
IV.
CONCLUSION ............................................................................ 78
2
T
his patent-infringement action, alleging infringement of two of the
plaintiffs’
patents,
both
entitled
“Computerized
Card
Production
Equipment,” is before me on the defendants’ motion for summary judgment and the
defendants’ motion to strike the affidavit of the plaintiffs’ expert offered in resistance to
the defendants’ motion for summary judgment. I previously construed disputed terms
of the patents in a Markman ruling. Thus, the question on the defendants’ motion for
summary judgment is whether their accused “system for the customization of financial
transaction cards” infringes the patents as I have construed them. The preliminary
question, however, is whether or not I can consider the affidavit of the plaintiffs’ expert
in deciding the summary judgment motion, where the defendants contend that the
affidavit presents new and previously undisclosed expert opinions.
I.
INTRODUCTION
On June 22, 2011, plaintiffs Serverside Group Limited and Serverside Graphics,
Inc., collectively “Serverside,” filed the original Complaint in this patent infringement
action, against fifteen defendants, in the United States District Court for the District of
Delaware (the Delaware action).
Serverside’s Complaint alleges infringement of
certain claims of its U.S. Patent No. 7,931,199 (the ‘199 patent), entitled
“Computerized Card Production Equipment,” in Count I, and infringement of certain
claims of its related U.S. Patent No. 7,946,490 (the ‘490 patent), also entitled
“Computerized Card Production Equipment,” in Count II.
3
Somewhat more
specifically, Serverside alleges that the Iowa Defendants, defendants Tactical 8
Technologies, L.L.C., now known as Banno, L.L.C. (Banno),1 and Bank of Iowa
Corporation (BIC), are infringing the patents-in-suit by using the “Cre8MyCard
system,” which the parties agree is an Internet-based system that allows for the
customization of financial transaction cards from financial institutions, such as BIC,
that are Banno’s customers.
On February 17, 2012, United States District Court Judge Richard Andrews
entered a Memorandum Opinion in the Delaware action, in response to motions by
several of the defendants, in which he concluded, inter alia, that the claims against the
Iowa Defendants should be transferred to this court, pursuant to 28 U.S.C. § 1406(a).
That same day, Judge Andrews entered a separate Order transferring the claims against
the Iowa Defendants to this court pursuant to 28 U.S.C. § 1406(a). After this action
was transferred to this district, it was initially assigned to Chief United States District
Court Judge Linda R. Reade, but it was eventually reassigned to me on August 29,
2012.
After a Markman hearing on February 20, 2013, I entered my ruling on
construction of disputed patent claim terms on March 4, 2013. See Serverside Group
Ltd. v. Tactical 8 Techs., L.L.C., 927 F. Supp. 2d 623 (N.D. Iowa 2013).
On August 12, 2013, the Iowa Defendants filed the first of the motions now
before me, the Iowa Defendants’ Motion For Summary Judgment (docket no. 133), in
which the Iowa Defendants assert that there are no genuine issues of material fact, and
1
I will refer to Tactical 8 Technologies as “Banno” and I have replaced
references to “Tactical 8” or “T8” with “Banno” in quotations from documents
throughout this decision.
4
that they are entitled to judgment as a matter of law, that their Cre8MyCard system
does not infringe the independent claims in claim 1 of the ‘199 patent and claim 1 of the
‘490 patent, so that they also are not infringing any dependent claims of those patents.
Serverside filed a Resistance (docket no. 134) to that Motion on September 5, 2013,
and the Iowa Defendants filed a Reply (docket no. 136) in further support of that
Motion on September 16, 2013.
On September 16, 2013, the Iowa Defendants filed the second motion now
before me, their Motion To Strike (docket no. 137), in which they argue that the
affidavit of Serverside’s expert, Alex Cheng, offered by Serverside in support of its
Resistance to the Motion For Summary Judgment, must be stricken, because it contains
new opinions not properly disclosed previously pursuant to Rule 26(a)(2)(B)(i), and that
portions of Serverside’s Statement Of Additional Material Facts that rely, in whole or
in part, on Mr. Cheng’s affidavit must also be stricken. Serverside filed its Resistance
(docket no. 139) to that Motion on October 3, 2013, and the Iowa Defendants filed a
Reply (docket no. 142), in further support of that Motion, on October 15, 2013.
Trial in this matter is set to begin on January 21, 2014, so I had hoped to address
the pending motions as soon as they were ripe. However, other matters interfered with
that plan, including a Verified Complaint And Petition For Return Of Children, seeking
return to Mexico of children allegedly wrongfully retained in the United States, filed
November 7, 2013, which required expedited proceedings under international and
federal law. For much the same reason, my crowded schedule has not allowed me to
accommodate the Iowa Defendants’ request for oral arguments on their Motions
sufficiently in advance of the scheduled trial. I find the parties’ written submissions
fully address the issues raised, however, so that I have resolved the pending motions on
the parties’ written submissions.
5
II.
THE MOTION TO STRIKE
I must first resolve the Iowa Defendants’ Motion To Strike, as it pertains to the
record that I may consider on the Iowa Defendants’ Motion For Summary Judgment. I
will begin my analysis of that Motion by briefly summarizing the procedural history
concerning disclosure of experts.
A.
Procedural History
In accordance with the Scheduling Order (docket no. 112), Serverside served its
Claim Chart setting forth its infringement contentions on October 5, 2012, and the Iowa
Defendants served and filed their Claim Chart (docket no. 119), asserting their noninfringement contentions, on November 2, 2012.
Serverside produced the Expert
Report Of Alex Cheng Regarding Infringement By Tactical 8 Technologies, L.L.C.,
And Bank Of Iowa Corporation (Cheng Report), on or about May 10, 2013. See
Plaintiffs’ Appendix (docket no. 134-4), 38-188. The Iowa Defendants produced their
Responsive Expert Report Of Peter Alexander, Ph.D., Regarding Non-Infringement Of
U.S. Patents No[s]. 7,908,199 And 7,599,490 (Alexander Report) (docket no. 131), on
June 7, 2013. Serverside never produced a supplemental or rebuttal expert report from
Mr. Cheng or anyone else related to the issues raised in Mr. Cheng’s Expert Report or
Dr. Alexander’s Expert Report. Fact and expert discovery closed on July 12, 2013,
without any expert depositions being taken by either side.
The Iowa Defendants filed their Motion For Summary Judgment (docket no.
133) on August 12, 2013, relying primarily on the deposition of David Wade Arnold,
Banno’s chief executive officer, rather than the Alexander Report, as the basis for its
arguments on non-infringement. On September 5, 2013, Serverside submitted as part
6
of and as the basis for much of its Resistance to the Iowa Defendants’ Motion For
Summary Judgment an Expert Declaration Of Alex Cheng In Support Of Plaintiff’s
Opposition To Defendants’ Motion For Summary Judgment (Cheng Declaration). See
Plaintiffs’ Appendix (docket no. 134-4), 1-37.
In his Declaration, Mr. Cheng declares, inter alia,
3.
Some of my expert opinions and nonconfidential bases therefore are set forth in the Expert
Report of Alex Cheng Regarding Infringement by Tactical 8
Technologies, L.L.C., and Bank of Iowa Corp. (“Cheng
Report”). The Cheng Report is filed as an attachment to the
Appendix in Support of Plaintiff’s Opposition to Defendants’
Motion for Summary Judgment. I have reviewed that
attachment, and confirm that it is a true and accurate copy of
the Cheng Report.
4.
To the best of my knowledge, all statements of
fact set forth in the Cheng Report are true and correct or, if
so indicated, are believed by me to be true and correct.
***
9.
The Cheng Report provides technical
background information in the area of financial cards,
financial card production, and documentation practices for
financial card production and documents my opinion on the
infringement of the patents-in-suit by Defendants and the
methodology used to arrive at my opinion.
10. This declaration contains my analysis of the
Defendants’ Brief in Support of Defendants’ Motion for
Summary Judgment, dated August 12, 2013 (“Defs’ SJ
Brief”).
Plaintiffs’ Appendix at 1-3 (Cheng Declaration, ¶¶ 3-4, 9-10).
Serverside relied extensively on the Cheng Declaration in resisting the Iowa
Defendants’ Motion For Summary Judgment, in both its Statement Of Additional
7
Material Facts and its brief.
The Iowa Defendants deny various allegations in
Serverside’s Statement Of Additional Material Facts “to the extent [that they are]
supported by stricken paragraphs from the Cheng Declaration, currently subject to
Defendants’ Motion to Strike,” but then “otherwise admit” those paragraphs, in whole
or in part, or deny them on the basis that they are incomplete or inaccurate summaries
of the underlying evidence on which Serverside relies. See Defendants’ Response To
Plaintiffs’ Statement Of Additional Material Facts (docket no. 136), ¶¶ 12, 13, 14, 15,
16, 22, 23.
B.
Arguments Of The Parties
In essence, the Iowa Defendants assert that the Cheng Declaration was developed
and submitted solely for the purpose of resisting the Iowa Defendants’ Motion for
Summary Judgment, and, as a result, contains numerous additional purported “expert
opinions” not previously disclosed in the Cheng Report.
Serverside contends that,
although discovery is closed, the Iowa Defendants’ Motion For Summary Judgment
relies on new arguments and unsupported assertions never previously articulated in
discovery, in deposition testimony, or in the Alexander Report, so that the Cheng
Declaration is justified to address those new arguments. These arguments require a
somewhat more detailed summary.
1.
The Iowa Defendants’ opening argument
The Iowa Defendants argue, first, that the Cheng Declaration contains newly
developed opinions not previously disclosed as required by Rule 26(a)(2)(B)(i) of the
Federal Rules of Civil Procedure and that, pursuant to Rule 37(c)(1) of the Federal
Rules of Civil Procedure, it should be stricken. More specifically, the Iowa Defendants
argue that this court and the Eighth Circuit Court of Appeals have construed those
8
rules, in conjunction, to mean that a party resisting a summary judgment motion cannot
cite to or rely upon expert opinions not otherwise previously disclosed and that such
previously undisclosed expert opinions must be stricken from the record, citing
Popoalii v. Correctional Medical Services, 512 F.3d 488, 496, 498-99 (8th Cir. 2008);
Chapman v. Labone, 460 F. Supp. 2d 989, 998 (S.D. Iowa 2006); and Schuller v.
Great-West Life & Annuity Ins. Co., 2005 WL 2257634, *6-8 (N.D. Iowa, Sept. 15,
2005).
Here, the Iowa Defendants argue, the Cheng Declaration should be stricken, and
should not be considered on summary judgment, because Serverside never produced a
supplemental or rebuttal expert report from Mr. Cheng and because the Cheng
Declaration contains new opinions that were formulated solely for the purpose of
resisting the summary judgment motion. Indeed, they contend that Mr. Cheng has
admitted as much by stating in his Declaration that his Report contains only “some” of
his opinions and that his Declaration is for the purpose of responding to their noninfringement arguments in their summary judgment motion.
The Iowa Defendants
concede that a few of the allegations in Serverside’s Statement Of Additional Material
Facts do not rely on the Cheng Declaration, but cite to and directly rely on opinions
properly disclosed in the Cheng Report, so that they need not be stricken.
They
contend that all other allegations that rely on the Cheng Declaration, in whole or in
part, must be stricken, however, because they lack any support in the record, and that
such allegations cannot preclude summary judgment pursuant to Rule 56(b). Finally,
they argue, in passing, that the conclusory statements and opinions in the Cheng
Declaration are not appropriate to resist or sufficient to defeat their summary judgment
motion, apparently because they contend that such statements are merely meant to
substitute for the judgment of the court.
9
2.
Serverside’s response
In its Resistance, Serverside argues that the Cheng Declaration is not an expert
report and, therefore, does not need to comply with Rule 26 requirements for
supplementation of Mr. Cheng’s prior Report on infringement. Specifically, Serverside
argues that the Cheng Declaration does not change Mr. Cheng’s infringement theories,
but only responds to new non-infringement arguments.
Second, while Serverside
admits that select paragraphs of the Cheng Declaration may contain new information,
Serverside argues that the Iowa Defendants acknowledge that “large” portions of it are
not new.
Third, Serverside argues that the limited new information in the Cheng
Declaration directly resulted from new non-infringement positions that the Iowa
Defendants have asserted and, therefore, are necessary to respond properly and fully to
those newly-stated positions.
Indeed, Serverside argues that some of the Iowa
Defendants’ new positions are in direct opposition to previously provided discovery
responses and testimony from their witnesses and expert to which Serverside has a right
to respond.
As a fallback position, Serverside argues that, even if I find that the Cheng
Declaration violates Rule 26, I should not strike the Declaration, because it is
substantially justified and does not harm the Iowa Defendants, where the Iowa
Defendants may disagree with the legal implications of certain facts, but those facts are
not “new.” Serverside argues that the Cheng Declaration also merely restates and
elaborates information and opinions previously disclosed, so that it may be considered
on summary judgment. Finally, Serverside argues that striking the Cheng Declaration
and portions of its Statement Of Additional Material Facts relying, in whole or in part,
on that Declaration is a harsh and extreme sanction that is not called for here, where
10
other equitable remedies, such as allowing the Iowa Defendants to respond to the
Cheng Declaration, are sufficient and more appropriate.
3.
The Iowa Defendants’ reply
In reply, the Iowa Defendants argue that Serverside is simply wrong in its
assertion that they have relied on “new” theories of non-infringement in their summary
judgment motion.
To the contrary, they contend, all of the purportedly “new”
arguments were set forth in the Alexander Report. They contend that Dr. Alexander
merely used different names in certain hypotheticals demonstrating non-infringement,
which are reasserted in their arguments for summary judgment, and that he also
addressed Serverside’s arguments that use of SSL and TLS constitutes an infringing
form of “encryption.” They contend that the vast majority of the Cheng Declaration,
not just some small part of it, states new opinions, and should be stricken. Moreover,
they dispute that any new arguments are substantially justified or harmless, where they
did not rely on “new” non-infringement arguments not previously disclosed, and they
are prejudiced by both the substance and timing of the Cheng Declaration, where there
is insufficient time to depose Mr. Cheng and seek rebuttal opinions.
C.
1.
Legal Analysis
Rule 26 and Rule 37 standards
“Decisions concerning the admission of expert testimony lie within the broad
discretion of the trial court, and these decisions will not be disturbed on appeal absent
an abuse of that discretion.” Bradshaw v. FFE Transp. Servs., Inc., 715 F.3d 1104,
1107 (8th Cir. 2013) (internal quotation marks and citations omitted). Similarly, the
Eighth Circuit Court of Appeals “review[s] for abuse of discretion a district court’s
11
election regarding how to treat evidence that was not disclosed in accordance with Rule
26(a)(2)(B).” Shuck v. CNH America, L.L.C., 498 F.3d 868, 873 (8th Cir. 2007).
Rule 26 of the Federal Rules of Civil Procedure provides, in pertinent part, as
follows:
(a) Required Disclosures.
***
(2) Disclosure of Expert Testimony.
***
(B) Witnesses Who Must Provide a Written
Report. Unless otherwise stipulated or ordered by the
court, this disclosure must be accompanied by a
written report--prepared and signed by the witness--if
the witness is one retained or specially employed to
provide expert testimony in the case or one whose
duties as the party’s employee regularly involve
giving expert testimony. The report must contain:
(i) a complete statement of all opinions
the witness will express and the basis and
reasons for them;
***
(e) Supplementing Disclosures and Responses.
***
(2) Expert Witness. For an expert whose report
must be disclosed under Rule 26(a)(2)(B), the party’s duty to
supplement extends both to information included in the
report and to information given during the expert’s
deposition. Any additions or changes to this information
must be disclosed by the time the party’s pretrial disclosures
under Rule 26(a)(3) are due.
12
FED. R. CIV. P. 26(a)(2)(B)(i), (e).
Thus, Rule 26(a)(2) “dictates the form and framework of disclosed experts
reports.”
Rodrick v. Wal-Mart Stores East, L.P., 666 F.3d 1093, 1096 (8th Cir.
2012). Rule 26(a)(2)(B)(i) requires an expert report to provide “a complete statement
of all opinions the witness will express and the basis and reasons for them,” FED. R.
EVID. 26(a)(2)(B)(i) (emphasis added); Mems v. City of St. Paul, Dep’t of Fire and
Safety Servs., 327 F.3d 771, 779 (8th Cir. 2003), and “[u]nder [Rule] 26(e), a party is
required to supplement and seasonably amend disclosures.” Mems, 327 F.3d at 779.
Such supplementation is required if the expert makes “any changes or alterations” to
his or her expert opinions and “any changes or additions to the information provided.”
Tenbarge v. Ames Taping Tool Sys., Inc., 190 F.3d 862, 965 (8th Cir. 1999); see also
FED. R. CIV. P. 26(e) (referring to “[a]ny additions or changes” as requiring
supplemental disclosure).
Although “Rule 26 does not require the disclosure of evidence used solely for
impeachment purposes,” the Eighth Circuit Court of Appeals has explained that
supplemental testimony of an expert is not “impeachment,” that is, evidence attacking
the credibility of a witness, where it is offered “to show that an expert’s opinion about
the meaning of facts merely differs from that of other experts.” Wegner v. Johnson,
527 F.3d 687, 691 (8th Cir. 2008).
The Eighth Circuit Court of Appeals has
recognized,
It is often difficult to distinguish between foundational facts
and expert opinion, and so to distinguish between
impeachment and substantive evidence, see [Kennemur v.
California, 184 Cal. Rptr. 393,] 403 [(1982)], but Rule
26(a)(2)(C)(ii) resolves the dilemma in favor of disclosure
by requiring parties to disclose expert testimony offered to
contradict the expert testimony of the opposing party.
13
Wegner, 527 F.3d at 691.
“‘Failure to disclose an expert witness required by rule 26(a)(2)(B) can justify
exclusion of testimony at trial.’” McCoy v. Augusta Fiberglass Coatings, Inc., 593
F.3d 737, 746 (8th Cir. 2010) (quoting Crump v. Versa Prod., Inc., 400 F.3d 1104,
1110 (8th Cir. 2005)). Similarly, “[i]f a party fails to supplement expert testimony [as
required by Rule 26(e)], the district court may order appropriate sanctions as provided
for in Rule 37(c).” Tenbarge, 190 F.3d at 865. “Sanctions [for a Rule 26 violation]
may include exclusion of the testimony, a continuance to allow depositions to be taken,
or the grant of a new trial.” Id. Although it may be permissible to reopen discovery to
address belatedly disclosed expert opinions, “‘[o]nce discovery has closed in a case, it
is the district court’s discretion whether or not to allow it to be reopened.’” Bradshaw,
715 F.3d at 1108 (quoting Harris v. Steelweld Equip. Co., 869 F.2d 396, 400 (8th Cir.
1989)). Also, if an expert’s testimony (or affidavit) exceeds the scope of opinions
properly disclosed, the district court may adequately address the discrepancy “by
advising the jurors of the discrepancy and instructing them to take this discrepancy into
consideration when weighing the expert’s testimony and credibility.” Shuck, 498 F.3d
at 876.
Although the district court has discretion to determine the appropriate sanction
for a Rule 26 violation, “the district court’s discretion narrows as the severity of the
sanction or remedy it elects increases.” Wegner, 527 F.3d at 692.
For example, the
court should consider “a lesser sanction, if any, before imposing one that [would]
result[ ] in the dismissal of a claim.” Dunning v. Bush, 536 F.3d 879, 890 (8th Cir.
2008). Similarly, “‘the exclusion of evidence is a harsh penalty and should be used
sparingly.’” Wegner, 527 F.3d at 692 (quoting ELCA Enters. v. Sisco Equip. Rental &
14
Sales, 53 F.3d 186, 190 (8th Cir. 1995)). Thus, the district court should “fashion a
remedy or sanction as appropriate for the particular circumstances of the case.” Id.
On the other hand, “under Federal Rule of Civil Procedure 37(c)(1), evidence
not disclosed under Rule 26(a) is admissible if harmless.” Shuck, 498 F.3d at 874.
Also, a district court may allow evidence violating Rule 26 disclosure requirements, if
the violation was “justified.” Rodrick, 666 F.3d at 1096 (acknowledging that expert
evidence violating Rule 26 may be allowed if it is “justified or harmless”); Wegner,
527 F.3d at 692 (same). As the Eighth Circuit Court of Appeals has explained,
A district court considers several factors in
determining whether a Rule 26 violation is justified or
harmless, including: “(1) the prejudice or surprise to the
party against whom the testimony is offered; (2) the ability
of the party to cure the prejudice; (3) the extent to which
introducing such testimony would disrupt the trial; and
(4) the moving party’s bad faith or willfulness.” [Jacobsen
v. Deseret Book Co., 287 F.3d 936, 953 (10th Cir. 2002)]
(quotation omitted). And, even then, the court need not
make explicit findings concerning the existence of a
substantial justification or the harmlessness. Id.
Rodrick, 666 F.3d at 1096-97; Wegner, 527 F.3d at 692.
Here, I find it unnecessary to engage in the paragraph-by-paragraph analysis of
the Cheng Declaration that the Iowa Defendants invite me to make to determine which
parts, if any, are “new” opinions that should have been presented by supplementation
of the Cheng Report.
I will assume, without deciding, that parts of the Cheng
Declaration introduced “changes or alterations” to his expert opinions or “changes or
additions to the information provided” in the Cheng Report. See Tenbarge, 190 F.3d at
965; see also FED. R. CIV. P. 26(e) (referring to “[a]ny additions or changes” as
requiring supplemental disclosure). I cannot conclude that the Cheng Declaration is
15
simply for “impeachment,” because it does not attack the credibility of any witness, but
is offered “to show that an expert’s [or witness’s] opinion about the meaning of
facts . . . differs from that of other experts.” Wegner, 527 F.3d at 691. Rather than
invite a challenge to the Cheng Declaration based on a Rule 26 violation, the wiser
course for Serverside would have been to make a supplemental disclosure, even if
doing so required a request to make the supplemental disclosure out of time. Cf. id.
(suggesting that the “dilemma” over what to disclose pursuant to Rule 26 can be
resolved by making a disclosure when an expert’s testimony is offered to contradict the
expert testimony of the opposing party).
Nevertheless, even if there was a violation, I find that it was “justified or
harmless.” Rodrick, 666 F.3d at 1096-97; Wegner, 527 F.3d at 692; Shuck, 498 F.3d
at 874. This is so, because the prejudice or surprise to the Iowa Defendants, if any, is
minimal.
See id. (first factor in the “justified or harmless” analysis).
The Iowa
Defendants surely anticipated responses specifically tailored to their non-infringement
arguments in their summary judgment motion. Moreover, their allegations of prejudice
ring hollow, where, notwithstanding their initial denials of various allegations in
Serverside’s Statement Of Additional Material Facts on the ground that those
allegations rely on the Cheng Declaration, the Iowa Defendants nevertheless “otherwise
admit” many of those allegations or offer specific explanations of continued denials
based on inaccurate summaries or statements of underlying evidence, with citations to
or quotations from the underlying evidence. Thus, it appears to me that the Iowa
Defendants have already seized the opportunity to “cure” any prejudice that they may
have suffered from unanticipated opinions in the Cheng Declaration. See id. (second
factor is the party’s ability to cure the prejudice).
For this same reason, allowing the
purportedly “new” expert opinions, offered in response to the Iowa Defendants’ own
16
non-infringement arguments will not disrupt the trial or, here, disrupt the timely
disposition of the summary judgment motion. See id. (third factor is the extent to
which introducing such testimony would disrupt the trial). Finally, I do not believe that
Serverside acted in “bad faith” or “willfully” in offering the Cheng Declaration,
although I believe that both parties have engaged in some gamesmanship to hide their
infringement and non-infringement arguments from each other.2 See id. (fourth factor
is the bad faith or willfulness of the party offering previously undisclosed expert
opinions).
The Iowa Defendants’ reliance on Schuller v. Great-West Life & Annuity Ins.
Co., 2005 WL 2257634, *6-*8 (N.D. Iowa, Sept. 15, 2005), is unavailing, because the
proponent of the expert’s evidence in that case had previously failed to make any Rule
26 disclosure prior to summary judgment, as required by applicable orders. See 2005
WL 2257634 at *7. Also, the proponent in Schuller failed to demonstrate that the
failure to make required disclosures was harmless or substantially justified, where the
opposing party had premised its summary judgment motion on the failure of the
proponent to make any expert disclosures, so that the proponent lacked the required
expert testimony to support a claim. Id. at *8. Here, the Iowa Defendants have not
premised their summary judgment motion on the failure of Serverside to make any
2
For example, much of the Iowa Defendants’ argument for summary judgment
relies on their assertion that the “remote customer” who uses the Cre8MyCard system
does not have to be the “account holder” or “card holder” for the account for which a
card is customized, but there was no hint of such an argument in the parties’ arguments
about the proper construction of disputed claim terms relating to the “customer” in the
patents-in-suit in the Markman proceedings.
17
expert disclosures, as the defendants had in Schuller, so that the Iowa Defendants
simply do not suffer the same kind of harm from the failure to disclose the opinions in
the Cheng Declaration earlier, and Serverside has shown an arguable justification for
any tardy disclosure.
The Iowa Defendants’ reliance on Chapman v. Labone, 460 F. Supp. 2d 989,
998 (S.D. Iowa 2006), is also unavailing.
In Chapman, the expert offered some
opinions in an affidavit that referred to the “required degree of scientific certainty,”
which had been absent from his report, without including the basis or reasoning for
such amended opinions, and one new opinion relied on underlying evidence that plainly
did not support that opinion. See 460 F. Supp. 2d at 998. The purportedly “new”
opinions here do not change any infringement opinions previously offered in the Cheng
Report, but respond to the Iowa Defendants’ non-infringement arguments, and, as I
have found, any prejudice from such new opinions has been cured by the Iowa
Defendants’ Response to Serverside’s Statement Of Additional Material Facts.
Furthermore, I conclude that, even if there was a violation of Rule 26 that was
not wholly justified or harmless, exclusion of the Cheng Declaration and all allegations
in Serverside’s Statement Of Additional Material Facts that rely, in whole or in part, on
purportedly “new” opinions in the Cheng Declaration is simply too harsh a sanction in
this case. See Wegner, 527 F.3d at 692 (noting that exclusion is a “harsh” remedy and
that the district court should “fashion a remedy or sanction as appropriate for the
particular circumstances of the case”).
A more appropriate sanction, even in the
relatively short time remaining before trial, might be to reopen discovery to address
belatedly disclosed expert opinions. Bradshaw, 715 F.3d at 1108. I find it unnecessary
to impose such a sanction in this case, however, because, again, notwithstanding the
Iowa Defendants’ initial denials of various allegations in Serverside’s Statement Of
18
Additional Material Facts on the ground that those allegations rely on the Cheng
Declaration, the Iowa Defendants nevertheless “otherwise admit” many of those
allegations or offer specific explanations of continued denials based on inaccurate
summaries or statements of underlying evidence, with citations to or quotations from
the underlying evidence. Thus, as I explained, above, it appears to me that the Iowa
Defendants have already seized the opportunity to “cure” any prejudice that they may
have suffered from unanticipated opinions in the Cheng Declaration, making further
discovery unnecessary.
Also, an appropriate sanction for an expert’s testimony (or affidavit) that exceeds
the scope of opinions properly disclosed is to “advis[e] the jurors of the discrepancy
and instruct[ ] them to take this discrepancy into consideration when weighing the
expert’s testimony and credibility.” Shuck, 498 F.3d at 876. Consequently, I can
leave the question of the impact of any discrepancies between the Cheng Declaration
and the Cheng Report to the jury at trial, if I find that the Cheng Declaration generates
genuine issues of material fact on infringement at the summary judgment stage.
Indeed, I turn, next, to the specific question of whether the Cheng Declaration
and allegations of disputed fact that rely upon it should be excluded in my consideration
of the Iowa Defendants’ summary judgment motion, under Rule 56 standards, but I will
not strike the Cheng Declaration on Rule 26 and Rule 37 grounds.
2.
Rule 56 standards
In addition to Rule 26 disclosure concerns, the presentation of an affidavit in
resistance to a Rule 56 summary judgment motion that includes expert opinions that
purportedly differ from those in a previously disclosed expert report raises additional
concerns:
19
Generally, a court is required to consider an
otherwise admissible affidavit, unless that affidavit
contradicts previous deposition testimony. Webb v. Garelick
Mfg. Co., 94 F.3d 484, 488 (8th Cir.1996). If an additional
affidavit simply restates information already contained in
deposition testimony or elaborates on information already
conveyed, then the district court should consider the
affidavit. Id. Contradictory supplemental affidavits are a
different matter. We have held that “[i]f testimony under
oath ... can be abandoned many months later by the filing of
an affidavit, probably no cases would be appropriate for
summary judgment. A party should not be allowed to create
issues of credibility by contradicting his own earlier
testimony.” Camfield Tires, Inc. v. Michelin Tire Corp.,
719 F.2d 1361, 1365 (8th Cir.1983). Post-deposition
contradictory affidavits are admitted only when the prior
deposition testimony shows confusion, and the subsequent
affidavit helps explain the contradiction. Cuffley v. Mickes,
208 F.3d 702, 707 (8th Cir.2000).
Popoalii v. Correctional Med. Servs., 512 F.3d 488, 498 (8th Cir. 2008).
Contrary to the Iowa Defendants’ arguments, I do not believe that Popoalii
requires exclusion of the Cheng Declaration or allegations of fact that rely upon it. In
Popoalii, the proponent of the expert’s affidavit asserted that it was a non-contradictory
supplemental affidavit, but the court found that the affidavit plainly contradicted the
expert’s prior refusal to opine that the defendants had done anything wrong in their
medical treatment of the plaintiff, where the expert’s affidavit included his opinion that,
if the defendants had tested and monitored the plaintiff’s intracranial pressure, they
could have likely prevented her blindness. 512 F.3d at 499. Thus, there was an actual
“inconsistency” between the expert’s earlier report and his affidavit offered to resist
summary judgment. Id. Notwithstanding that the Iowa Defendants have argued against
admission of the Cheng Declaration on various grounds, they have failed to
20
demonstrate that the “new” opinions in the Cheng Declaration, which respond to their
own arguments for non-infringement, actually “contradict” or are “inconsistent” with
any opinions about infringement by the accused system in the prior Cheng Report. To
put it the other way around, Serverside has asserted that the purportedly “new”
opinions about non-infringement in the Cheng Declaration are entirely consistent with
Mr. Cheng’s opinions about infringement in the Cheng Report, and the Iowa
Defendants have failed to rebut that assertion. Thus, the “trigger” of inconsistency for
exclusion of the affidavit on summary judgment is missing here. Id.
Therefore, I will not strike the Cheng Declaration from consideration on the
Iowa Defendants’ Motion For Summary Judgment on Rule 56 grounds, either.
3.
Summary
The Iowa Defendants’ September 16, 2013, Motion To Strike (docket no. 137) is
denied. Notwithstanding denial of that motion, to the extent that the Iowa Defendants
can demonstrate to a jury, if this case proceeds to a jury trial, that Mr. Cheng’s
opinions in his Declaration exceed the scope of opinions properly disclosed in his
Report, the Iowa Defendants may request that I “advis[e] the jurors of the discrepancy
and instruct[ ] them to take this discrepancy into consideration when weighing
[Mr. Cheng’s] testimony and credibility.” Shuck, 498 F.3d at 876.
III.
THE MOTION FOR SUMMARY JUDGMENT
The other motion now before me is the Iowa Defendants’ August 12, 2013,
Motion For Summary Judgment (docket no. 133).
Before reviewing the factual
background provided by the parties’ Statements Of Material Facts and responses to
them, I find that some context for the motion, particularly in light of prior Markman
proceedings, is appropriate.
21
A.
Context Of The Motion
The Motion For Summary Judgment on Serverside’s infringement claims must
be viewed in the context of the claims and claim terms of the patents-in-suit, as I have
construed them. See ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d
1312, 1319 (Fed. Cir. 2012) (explaining that determining literal infringement requires
“‘proper construction of the asserted claim and a determination whether the claim as
properly construed reads on the accused product or method’” (quoting Georgia–Pacific
Corp. v. U.S. Gypsum Co., 195 F.3d 1322, 1330 (Fed. Cir. 1999)). Thus, I will begin
my analysis of the Iowa Defendants’ Motion For Summary Judgment with a summary
of the patent claims at issue and my construction of various claim terms in those patent
claims.
1.
The patents-in-suit
The patents-in-suit are U.S. Patent No. 7,931,199 (the ‘199 patent), entitled
“Computerized Card Production Equipment,” in Count I, and U.S. Patent No.
7,946,490 (the ‘490 patent), also entitled “Computerized Card Production Equipment.”
As I explained in my Markman ruling, both of the patents-in-suit arise from the same
provisional application, and the Abstracts, Figures, Cross-Reference To Related
Applications, Technical Fields, Backgrounds, Summaries, Brief Descriptions Of The
Drawings, and Detailed Descriptions of the two patents are nearly identical. Id. at 63132. Unless otherwise indicated, citations to and quotations from the ‘199 patent appear
in the identical location, in identical form, in the ‘490 patent. I will refer to titled
sections of the patents in the singular and quote portions of the patents using the ‘199
patent as the source, unless otherwise required. Identically numbered claims of the two
patents are sometimes stated in identical language and sometimes stated somewhat
22
differently, albeit with much overlap of claim terms, so I will always differentiate
between the claims of the two patents.
In my Markman ruling, I set forth, in considerable detail, the description of the
invention claimed in the two patents-in-suit. Id. at 631-38. As I also explained, and
the parties did not dispute, putting the description of the invention in plain English, the
invention allows customers to use a secure process on the internet to select personalized
images, which are printed on their bank credit or debit cards, even if the customer, the
images, the image manipulation software, the customer’s account information, and the
card printer are all in different locations. Id. at 633. As I also explained, the claimed
invention discloses both “‘[a]n apparatus and method for manipulating images.’” Id. at
632 (quoting ‘199 Patent, Abstract).
2.
The key patent claims at issue
Serverside accuses the Iowa Defendants of directly and indirectly infringing
claims 1, 2, 9, 14-16, 18, 22, 25, 29, and 30 of the ‘199 patent and claims 1, 2, 9, 1416, 18, 22, 25, and 29-31 of the ‘490 patent. The focus of the defendants’ Motion For
Summary Judgment, however, is claim 1 of each patent. I think that the most effective
way to present these patent claims, when they are so similar, is side-by-side in a way
that indicates similarities and differences.
I have done so, below, using bold for
“undisputed” claim terms—that is, claim terms that the parties agreed required
construction, but for which they agreed upon the appropriate construction—using italics
for “disputed” claim terms—that is, claim terms for which the parties disputed the
appropriate construction, so that I was required to construe them—and underlining for
claim language that differs between the two patents.
23
PATENT CLAIMS ALLEGEDLY INFRINGED
‘199 Patent Claims
‘490 Patent Claims
What is claimed is:
What is claimed is:
1. Computerized financial transaction card
1. Computerized financial transaction card
production equipment operable to apply one or production equipment operable to apply one or
more personalized images to a financial more personalized images to a financial
transaction card, the production equipment transaction card, the production equipment
comprising:
comprising:
a module configured to receive a personalized
a module configured to receive a personalized
image of a customer, the image being
image of a customer, the image being
received from an image processor computer
received from an image processor computer
arranged to facilitate image personalization
arranged to facilitate image personalization
by remote customers;
by remote customers;
a module configured to receive a customer
a module configured to receive a customer
identifier that corresponds to the remote
identifier that corresponds to the remote
customer that personalized said image;
customer that personalized said image;
a module configured to receive a financial
a module configured to receive a financial
record of the remote customer that
record of the remote customer that
personalized the image;
personalized the image;
a card printer arranged to print images on card
a card printer arranged to print images on card
material and equipment configured to apply
material and equipment configured to apply
financial information from the financial
financial information from the financial
record to the card material; and
record to the card material; and
a controller operable, based on said customer
a controller operable, based on said customer
identifier, to cause printing of said
identifier, to cause printing of said
personalized customer image onto the card
personalized customer image onto the card
material and to cause application of relevant
material and to cause application of relevant
financial information from the financial
financial information from the financial
record onto the card material,
record onto the card material;
wherein the customer identifier comprises an
wherein the customer identifier encompasses
identifier selected from a secure unique
encrypted customer information.
identifier and a one-way code.
24
3.
The patent claim terms at issue
In my Markman ruling, Serverside, 927 F. Supp. 2d at 690, I construed the
“undisputed” claim terms that appear in either claim 1 of the ‘199 patent, claim 1 of the
‘490 patent, or both, as shown in the following chart:3
No.
1
2
3
8
UNDISPUTED CLAIM TERMS
Relevant
Claim Term/Phrase
Agreed Construction
Claim(s)
“financial transaction card”
‘199: 1, 2, 9, 14- “a transaction card (e.g., credit card,
16, 18, 22, 25, 29 debit card, ATM card, or similar card),
‘490: 1, 2, 9, 14- but not a prepaid bearer card”
16, 18, 22, 25,
29-31
“financial record of the remote ‘199: 1
“record of financial information of the
customer that personalized the ‘490: 1
customer that personalized the image”
image”
“one-way code”
‘199: 1
“a hash value created from customer
information”
“an identifier selected from a ‘199: 1
“a customer identifier that is chosen
secure unique identifier and a
from one of two available options: a
one-way code”
secure unique identifier or a one-way
code”
In my Markman ruling, see Serverside, 927 F. Supp. 2d at 691-92, I also
construed the “disputed” claim terms at issue in this patent-infringement action, all of
which appear in either claim 1 of the ‘199 patent, claim 1 of the ‘490 patent, or both,
as shown in the following chart:
3
Nine claim terms were originally identified by the parties as “undisputed,” but
those claim terms are not all found in the first claims of the two patents. I have
retained the original numbering of the “undisputed” claim terms from the Markman
proceedings in the Undisputed Claim Terms chart shown in the body of this ruling.
25
No.
1
2
3
DISPUTED CLAIM TERMS
Relevant
Claim Term/Phrase
Court’s Final Construction
Claim(s)
“customer identifier that
‘199: 1-4, 6-8,
“a signal, character, or group of
corresponds to the remote
10-13, 15, 17-18, characters that matches with the
customer that personalized said
20-21, 24-28
customer that personalized the image”
image”
‘490: 1-4, 6-8,
“customer identifier
10-13, 15, 17-18,
corresponding to the remote
20-21, 24-28, 30customer”/ “customer identifier
31
that corresponds to the remote
customer”
“unique identifier corresponding
to the remote user”
“secure unique identifier”
“encrypted customer
information”/
“encrypted remote user
information”
‘199: 1
‘490: 1, 29-31
“a secure, unique signal, character, or
group of characters that can be used to
identify the customer”
“customer information coded from
original text into language unintelligible
to unauthorized persons, but not into a
randomly generated alphanumeric code”
With this context in mind, I turn to the factual background specifically relating to
the pending Motion For Summary Judgment.
B.
1.
Factual Background
The parties’ factual allegations and denials
The factual background pertinent to the Motion For Summary Judgment relates
primarily to the Iowa Defendants’ allegedly infringing “Cre8MyCard system.” The
Iowa Defendants dispute many of Serverside’s allegations in Serverside’s Statement Of
Additional Material Facts on the ground that Serverside’s statements are inaccurate or
incomplete summaries or statements of the evidence cited in support. Where it appears
26
that the dispute over summaries or characterizations of other evidence can be resolved
by relying directly on the underlying evidence—such as what a particular document
says or what a particular witness said—I will quote from the underlying document. On
the other hand, where the dispute is about the characterization of a witness’s
explanation of the accused system, I cannot simply quote the underlying testimony as if
it were an undisputed explanation of the accused system. Rather, I can only frame the
dispute and later resolve whether the dispute is material and whether the cited record
evidence supports a particular characterization.
The Iowa Defendants also dispute
many more of Serverside’s allegations on the ground that those allegations rely, in
whole or in part, on the Cheng Declaration, which the Iowa Defendants had moved to
strike.
Because I have declined to strike the Cheng Declaration, I will not reject
allegations that rely on it as unsupported; rather, I will treat as “admitted” those
allegations relying on the Cheng Declaration that the Iowa Defendants “otherwise
admit” and explain the basis for denials of those allegations that the Iowa Defendants
deny on additional grounds.
Unless indicated otherwise, the facts stated below are undisputed.
2.
The accused system
Serverside alleges that the Iowa Defendants are infringing the patents-in-suit by
using the Cre8MyCard system, which the parties agree is an Internet-based system that
allows for the customization of financial transaction cards from financial institutions,
such as BIC, that are Banno’s customers. I will summarize the parties’ allegations
concerning the Cre8MyCard system as they relate to the parts and users of the
Cre8MyCard system; the process for customization of a card by a remote customer; the
processing of the customized card by a financial institution; the manufacturing or
printing of the card; the workings of “instant” production methods (as opposed to the
27
remote access method); and, finally, the extent to which the Cre8MyCard system does
or does not use “hashing” or “encryption.”
a.
Parts and users of the Cre8MyCard system
As part of the Cre8MyCard system, Banno owns and maintains the following:
(1) a database for storing images and configuration settings for each financial institution
participating in Cre8MyCard; (2) Personal Home Page (PHP) code that interacts with
the database; (3) a file system that stores Flash files; and (4) an Apache webserver.
Three classes of users interact with the Cre8MyCard system: card holders, financial
institutions, and card manufacturers.
b.
Customization by a remote customer
One way for a customer to customize a financial transaction card using the
Cre8MyCard system is for a customer to access the website serving the Cre8MyCard
system for the remote customer’s financial institution, then download the Cre8MyCard
software to the remote customer’s browser.4 Serverside points out that there are other
4
One example of the Iowa Defendants’ denial of Serverside’s allegations on the
basis that the allegation misstates or inaccurately summarizes the evidence cited in
support relates to Serverside’s allegation, in its Statement of Additional Material Facts
(docket no. 134-3), ¶ 3, that “[t]he webserver can be accessed as a subdomain of a
financial institution (e.g. bankiowa.cre8mycard.com) that points to the [Banno]
webserver.” Another example is the Iowa Defendants’ denial, on the same basis, of
Serverside’s allegation in its Statement of Additional Material Facts, ¶ 7, that “[t]he
user interface contains a link from a financial institution webpage which connects the
card holder’s browser to the [Banno] Cre8MyCard server (e.g. bankiowa.
cre8mycard.com for BIC).” In their Response To Plaintiffs’ Statement Of Additional
Material Facts (docket no. 136), ¶¶ 3, 7, the Iowa Defendants assert that these
allegations are inaccurate summaries of the following portion of Mr. Arnold’s
deposition, which Serverside cited in support of them:
(Footnote continued . . .
28
ways to access the Cre8MyCard system, including at an instant issuance kiosk and
through Banno’s iPad application.
Cre8MyCard does not use remote customer
passwords or usernames, but the parties dispute whether or not it requires remote
customers to submit any information about themselves. More specifically, the Iowa
MR. ARNOLD: The three integration points are the
client browser, which is the end user. If they come to the
website with a subdomain of a financial institution, such as
bankiowa.cre8mycard.com, this could also be used as a
vanity domain.
So they could have personalcard.
bankiowa.com point to us, and we would also resolve to
give them the content that the consumer would interact with.
Plaintiffs’ Appendix at 200 (Arnold Deposition at 46:2-10).
Where Mr. Arnold testified that a customer could “come to the website with a
subdomain of a financial institution,” it is not clear to me how Serverside’s statement in
¶ 3 that “[t]he webserver can be accessed as a subdomain of a financial institution” is
an inaccurate summary of that testimony. Similarly, it is not clear to me how
Serverside’s statement in ¶ 7 that “[t]he user interface contains a link from a financial
institution webpage which connects the card holder’s browser to the [Banno]
Cre8MyCard server” is an inaccurate summary of that testimony. It may be that the
parties’ dispute is over what website “points” to the Banno webserver, an issue that
Mr. Arnold’s testimony seems to me to muddy rather than clarify.
I have avoided simply quoting Mr. Arnold’s explanation of the Cre8MyCard
system, Plaintiffs’ Appendix at 44:14—46:15, as if it were undisputed, which appears
to be the Iowa Defendants’ position. Instead, I have stated that “one way to customize
a financial transaction card using the Cre8MyCard system is for a customer to access
the website serving the Cre8MyCard system for the remote customer’s financial
institution, then download the Cre8MyCard software to the remote customer’s
browser,” which is a clearly material fact that is alleged by the Iowa Defendants and
admitted by Serverside.
29
Defendants allege that any remote customer can access and utilize the Cre8MyCard
system to configure a financial transaction card for himself or herself or for a third
party, and that the remote customer’s identity is not verified by the Cre8MyCard
system, nor determinable from the information recorded by the Cre8MyCard system
during the card configuration process. Serverside counters that a remote customer can
access and utilize the Cre8MyCard system to configure a financial transaction card only
if that customer has the first name, last name, and personal account number (PAN) of a
card holder. Serverside admits that the Cre8MyCard system does not require, nor does
it take any steps to verify, that the remote customer and the card owner are the same
person, but Serverside alleges that the intended use of the Cre8MyCard system is for
card holders to customize their own cards.
Once connected, the remote customer (Serverside alleges “card holder,” but the
Iowa Defendants deny that the remote customer must actually be the “card holder”) is
“authenticated” (according to Serverside) or “credentialed” (according to the Iowa
Defendants) in one of three ways: (1) through the last four digits of their card number
and their unique personal identification number (PIN), although the Iowa Defendants
assert that this option applies only if the card is a debit card; (2) the remote customer’s
image is assigned an image ID and the financial institution manually reconciles the card
image with the account when the customer comes into the institution, although the Iowa
Defendants allege that this option applies only to new customers; and (3) the card
holder bank account number, primary account number (PAN), or user-supplied
information is associated with the session ID of the webserver (as Serverside alleges) or
a manual lookup can be performed to match the name and bank account number with
the image (as the Iowa Defendants allege).
30
Once a remote customer has accessed the Cre8MyCard system via the website
serving the Cre8MyCard system and downloads the software, the remote customer is
allowed to select a card product type (i.e., a photo ID card, full image card, debit card,
credit card, prepaid card, or photocard) that the remote customer wishes to configure.
The remote customer then selects an image provided from a third-party gallery, a social
media site, or the computer that the remote customer is using. The remote customer
(again, Serverside alleges “card holder,” but the Iowa Defendants deny that the remote
customer must be the “card holder”) can select images for customization in several
different ways: (1) the image data can be sent from the remote customer’s computer to
the remote customer’s web browser without sending the image to the server before
manipulation; (2) a thumbnail image can be selected from the gallery and the full
resolution image is downloaded to the client; or (3) a third-party web service (e.g.,
Facebook, Flickr) is accessed to download the image to the remote customer’s browser.
Next, the Cre8MyCard software downloaded to the remote customer’s web
browser allows the remote customer to manipulate the chosen image, for example, by
shrinking, enlarging, or rotating the image. The Iowa Defendants allege that the entire
image manipulation process takes place on the remote customer’s web browser, not on
the Cre8MyCard web server. Serverside admits that the Iowa Defendants have not
produced any evidence that the manipulation process occurs anywhere else, but
Serverside argues that the only evidence produced by the Iowa Defendants about where
the image is manipulated is “uncorroborated.” The Iowa Defendants allege that no
information about the initial image or the manner in which the image is manipulated is
sent to the Cre8MyCard server; rather, the Cre8MyCard server only receives the image
in its final form once the image manipulation process is complete. Serverside denies
this allegation, because it alleges that information about the card holder whose card will
31
display the manipulated image is sent to the Cre8MyCard server. I do not believe that
information about whose card will display the image is, by any sensible reading,
information about the initial image or the manner in which the image was manipulated,
so that Serverside has alleged an additional fact, but has not actually disputed (let alone
refuted) the Iowa Defendants’ allegation that no information about the initial image or
the manner in which the image was manipulated is sent to the Cre8MyCard server.
After the image has been manipulated, the remote customer continues the card
configuration process by filling in two alphanumeric fields, which hold text strings
consisting of the first and last name of the card owner, respectively, as well as a
separate numeric field generally representative of the last four digits of the card
owner’s card number. Like the parties, I will call the information entered in the two
alphanumeric fields and the numeric field “the Data.” Serverside alleges that the Data
is used to identify the card holder as the remote customer who personalized the image
in the Cre8MyCard system, but the Iowa Defendants deny this as unsupported by the
record, again based on their contention that the remote customer does not have to be the
card holder. The parties agree that, generally speaking, the financial institutions that
utilize the Cre8MyCard system desire the numeric field to represent somewhere from
four to six characters of the card owner’s card number or account number. As a
specific example, they agree that BIC uses the Cre8MyCard system’s numeric field to
gather the last four digits of the card owner’s card number. The parties agree that,
pursuant to ISO 7812, the first six digits of the PAN are reserved as the issuer identifier
number (IIN), which is unique to each financial institution issuing financial transaction
cards. The Cre8MyCard system does not store the card owner’s entire card number or
account number, because storage of that information in its entirety requires registration
with, and strict regulation by, the federal government.
32
The Cre8MyCard system does not verify the accuracy of the Data, only that the
remote customer has put letters (as opposed to other characters) into the alphanumeric
fields and numbers (as opposed to other characters) into the numeric field.
The
Cre8MyCard system does not verify that the Data provided by the remote customer
actually corresponds with an existing BIC account, but Serverside denies the Iowa
Defendants’ allegation that the Cre8MyCard system is not linked in any way to BIC’s
accounting system.
Next, the remote customer hits the “submit” button, and the Data, along with the
image, are uploaded to Cre8MyCard’s web server.
c.
Processing of the customized card by the financial
institution
The parties agree that the Data and the image are recorded by the Cre8MyCard
system during the card configuration process and passed on to BIC, but Serverside
alleges that the Cre8MyCard system also records a session ID. More specifically, after
a remote customer hits the “submit” button for the image he or she wants on the subject
card, the Cre8MyCard system uses a table called “Orders” to store the incoming
domain name of the financial institution from which the card is being personalized,
which is how Banno knows which financial institution to bill, and separate columns
within the table for first name, last name, personal account number (PAN), and a
foreign key that directs the user to another database table that holds all of the images,
33
but the Iowa Defendants deny that there is a column for an Order identification of any
kind.5
Through Banno’s back-end system, BIC is then notified that a new order was
placed using the Cre8MyCard system.
Someone at BIC logs into Banno’s
administrative software to verify that the Data provided by the remote customer
corresponds with an existing BIC account, and, if so, BIC orders the card for its
customer (i.e., the card owner) through a separate system operated by a third party (at
least in the case of non-instant issuance). Specifically, financial institutions log on to
Banno’s system to review and approve images submitted by a remote customer
(although the Iowa Defendants reiterate their contention that the “remote customer” is
not necessarily the actual card holder) prior to undertaking the different steps utilized
by each financial institution to print or manufacture its cards.6
5
It appears to me that this description, offered by the Iowa Defendants as the
basis for a denial of Serverside’s allegation in its Statement Of Additional Material
Facts, ¶ 15, is not plainly different from, although perhaps clearer and more complete
than, Serverside’s version, which is that “Cre8MyCard uses an order table to store the
incoming domain name, known as an institution key, which is unique to each financial
institution, as well as the last name, first name, and last four digits of the card holder
and a pointer to an image database.”
6
I have used this statement of the portion of Serverside’s Statement of
Additional Material Facts, ¶ 14, that the Iowa Defendants admit, see Iowa Defendants’
Response To Plaintiffs’ Statement Of Additional Material Facts (docket no. 136), ¶ 14,
to address the parties’ dispute regarding Serverside’s allegations in two paragraphs of
its Statement of Additional Material Facts, ¶ 4 (“Financial institution personnel use a
browser to connect to the [Banno] webserver over the Internet with the URL,
admin.cre8mycard.com”) and ¶ 14 (“The Cre8MyCard system provides a user
(Footnote continued . . .
34
d.
Card manufacturing
Serverside denies that the system that BIC uses to order the card from a card
manufacturer7 is “unrelated” to the Cre8MyCard system. While the Iowa Defendants
allege that the Cre8MyCard system does not control any card manufacturing operations,
Serverside disputes that allegation, because Serverside alleges, and the Iowa Defendants
admit, that the Cre8MyCard system provides the financial transaction card
manufacturer for a financial institution (e.g., BIC) with an interface to retrieve images
and associated data from the financial record of the remote customer that personalized
the image to manufacture financial transaction cards customized by the remote
customer.
Serverside also alleges, and the Iowa Defendants admit, that the card
manufacturer connects to the Banno webserver via the Banno API (i.e.,
api.cre8mycard.com) using a connection secured by firewall trust security.
Specifically, Mr. Arnold explained in his deposition that “api.cre8mycard.com . . . is
how the iPad version and the third-party card printers interact . . . to get the images.”
Plaintiffs’ Appendix at 200 (Arnold Deposition at 46:13-15).8 Financial institutions
interface to financial institutions, such as Bank of Iowa Corp. (‘BIC’), to review and
approve images submitted by card holders prior to printing the card”).
7
I have used “card manufacturing” and “card manufacturer” as interchangeable
with “card printing” and “card printer,” which I believe is consistent with the parties’
use of these terms.
8
I have quoted the pertinent part of Mr. Arnold’s deposition to address the
parties’ dispute regarding Serverside’s allegation in its Statement of Additional Material
Facts, ¶ 5, that “[c]ard printers and those using the Cre8MyCard iPad client connect to
the [Banno] webserver over the internet with the URL: api.cre8mycard.com.”
35
(but not Banno) have contracts in place with electronic fund transfer (EFT) companies
to have cards manufactured.
e.
“Instant” production methods
As mentioned above, in addition to a remote customer accessing the
Cre8MyCard system from his or her own computer, the Cre8MyCard system may also
be accessed at an instant issuance kiosk and through Banno’s iPad application.9 The
Cre8MyCard iPad application, which is used in instant issue machines, is controlled by
an employee of the financial institution and allows card holders to select an image from
a gallery or download images from social media (Facebook, Flickr, Picasso), customize
the downloaded image, and have the financial transaction card manufactured at the
financial institution’s location from an instant issuance machine.10
f.
Use of hash codes and encryption in the accused system
The Iowa Defendants allege that the Cre8MyCard system does not use, nor has it
ever used, hash codes or hashing techniques in its software. Serverside disputes this
allegation, because Serverside alleges, and the Iowa Defendants admit, that the last
numeric field, which is filled in with the last four or six digits of the card holder’s
PAN, is partly established by the remote customer’s financial institution and that,
9
It is not clear from the parties’ Statements Of Material Facts whether or not the
instant issuance kiosks can be used other than through the iPad application, nor is it
clear whether the iPad application is used other than for the instant issuance kiosks.
10
The parties dispute whether “have” in this statement means “cause,” as
Serverside alleges. See Serverside’s Statement Of Additional Material Facts, ¶ 22;
Iowa Defendants’ Response To Plaintiffs’ Statement Of Additional Material Facts,
¶ 22.
36
pursuant to the ISO 7812 standard, the last digit of the PAN is calculated using the
Luhn hash algorithm which uses the preceding digits of the PAN to compute the last
digit.
The Iowa Defendants also allege that the Cre8MyCard system’s software has no
encryption or decryption algorithms, and that the only encryption involved in the
Cre8MyCard process is the standard, everyday Security Sockets Layer (SSL)
transmission over the internet, which is performed by a third party. Serverside asserts,
based on deposition testimony by Mr. Arnold, that SSL transmission over the internet is
encryption used in the Cre8MyCard process—both between remote customers and the
Cre8MyCard server and between the Cre8MyCard server and card manufacturers11—
and alleges, further, that Transport Layer Security (TLS), the successor to SSL, is also
used. The Iowa Defendants allege that the Cre8MyCard system does not provide BIC
or any other customer with any encrypted information and that all information received
by Banno’s customers is unencrypted. Serverside denies this allegation, because it
alleges that an exhibit used in the deposition of Mr. Arnold shows that data transmitted
between the Cre8MyCard webserver and Banno’s customer’s browsers, such as BIC, is
SSL/TLS encrypted.
11
The parties’ dispute about the accuracy of Serverside’s characterization of
when SSL is used and whether or not it is encryption by or used in the Cre8MyCard
System, based on Mr. Arnold’s deposition testimony, is stated in more detail in
Severside’s Statement of Additional Material Facts, ¶ 8, and the Iowa Defendants’
response to that allegation. I believe that I have correctly characterized Mr. Arnold’s
testimony in the portions of his deposition cited by the parties to be that SSL is used
both between remote customers and the Cre8MyCard server and between the
Cre8MyCard server and card manufacturers.
37
C.
Standards For Summary Judgment
I must determine whether or not the Iowa Defendants are entitled to summary
judgment that the Cre8MyCard system described above does not infringe the patents-insuit.
As the Federal Circuit Court of Appeals recently reiterated, in patent-
infringement actions, that court “review[s] the grant of summary judgment under the
law of the regional circuit in which the district court sits,” here, the Eighth Circuit.
Keurig, Inc. v. Sturm Foods, Inc., 732 F.3d 1370, 1372 (Fed. Cir. 2013).
Under Supreme Court and Eighth Circuit precedent, summary judgment is only
appropriate when “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with affidavits, if any, show that there is no genuine issue
of material fact and that the moving party is entitled to a judgment as a matter of law.”
FED. R. CIV. P. 56(c) (emphasis added); see Woods v. DaimlerChrysler Corp., 409
F.3d 984, 990 (8th Cir. 2005) (“Summary judgment is appropriate if viewing the
record in the light most favorable to the nonmoving party, there are no genuine issues
of material fact and the moving party is entitled to judgment as a matter of law.”); see
generally Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Thus, “[t]he movant
‘bears the initial responsibility of informing the district court of the basis for its
motion,’ and must identify ‘those portions of [the record] . . . which it believes
demonstrate the absence of a genuine issue of material fact.’” Torgerson v. City of
Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc) (quoting Celotex, 477 U.S.
at 323). In response, “[t]he nonmovant ‘must do more than simply show that there is
some metaphysical doubt as to the material facts,’ and must come forward with
‘specific facts showing that there is a genuine issue for trial.’” Id. (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87 (1986)).
38
“Only
disputes over facts that might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986); Ryan v. Capital Contractors, Inc., 679 F.3d 772, 776
(8th Cir. 2012).
When the parties have met their burden, the district judge’s task is as follows:
“On a motion for summary judgment, ‘facts must be viewed
in the light most favorable to the nonmoving party only if
there is a genuine dispute as to those facts.’” Ricci v.
DeStefano, –––U.S. ––––, 129 S. Ct. 2658, 2677, 174 L.
Ed. 2d 490 (2009) quoting Scott v. Harris, 550 U.S. 372,
380, 127 S. Ct. 1769, 167 L. Ed. 2d 686 (2007) (internal
quotations omitted). “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences
from the facts are jury functions, not those of a judge.”
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133,
150, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000), quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.
Ct. 2505, 91 L. Ed. 2d 202 (1986). . . . . “‘Where the
record taken as a whole could not lead a rational trier of fact
to find for the nonmoving party, there is no genuine issue
for trial.’” Ricci, 129 S. Ct. at 2677, quoting Matsushita,
475 U.S. at 587, 106 S. Ct. 1348.
Torgerson, 643 F.3d at 1042-43. Summary judgment is particularly appropriate when
only questions of law are involved, rather than factual issues that may or may not be
subject to genuine dispute. See, e.g., Cremona v. R.S. Bacon Veneer Co., 433 F.3d
617, 620 (8th Cir. 2006).
D.
Standards For Patent Infringement
Here, the “governing law” against which the parties’ factual contentions must be
measured on summary judgment, see Anderson, 477 U.S. at 248, is the law of patent
39
infringement. Of course, “Federal Circuit law applies to ‘issues of substantive patent
law and certain procedural issues pertaining to patent law.’” Pregis Corp. v. Kappos,
700 F.3d 1348, 1353 (Fed. Cir. 2012) (quoting Research Corp. Techs., Inc. v.
Microsoft Corp., 536 F.3d 1247, 1255 (Fed. Cir. 2008)).
Under Federal Circuit
precedent, “‘[a] determination of infringement is a question of fact,’” id. (quoting
ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1311 (Fed. Cir. 2007)),
but “like other issues in which there are no disputed factual questions, [it] may properly
be decided by summary judgment.” Keurig, 732 F.3d at 1373.
In its Complaint, Serverside alleges both “direct” and “indirect” infringement of
its patents.
“Direct infringement requires proof by preponderant evidence that the
defendant performs (if a method claim) or uses (if a product claim) each element of a
claim, either literally or under the doctrine of equivalents.” Cheese Systems, Inc. v.
Tetra Pak Cheese and Powder Systems, Inc., 725 F.3d 1341, 1348 (Fed. Cir. 2013).
In contrast, “indirect infringement” occurs when a party actively induces others to
directly infringe a patent. Moba, B.V. v. Diamond Automation, Inc., 325 F.3d 1306,
1318 (Fed. Cir. 2003) (citing 35 U.S.C. § 271(b)).12 Here, the parties have not put at
12
Thus,
To establish liability for direct infringement of a
claimed method or process under 35 U.S.C. § 271(a), a
patentee must prove that each and every step of the method
or process was performed. See Akamai Techs., Inc. v.
Limelight Networks, Inc., 692 F.3d 1301, 1307
(Fed.Cir.2012) (en banc). In cases in which more than one
entity performs the steps of a claimed method or process, a
party is liable for direct infringement only if that party
(Footnote continued . . .
40
issue in their summary judgment briefing whether or not the Iowa Defendants indirectly
infringe the patents-in-suit. Therefore, I will focus on “direct” infringement. Also, as
explained, below, in Section III.E.1, beginning on page 46, infringement under the
“doctrine of equivalents” is not at issue on the Iowa Defendants’ Motion For Summary
Judgment. Therefore, I will focus on “literal” infringement.
As the Federal Circuit Court of Appeals has explained,
exercises “control or direction” over the performance of
each step of the claim, including those that the party does
not itself perform. Golden Hour Data Sys., Inc. v.
emsCharts, Inc., 614 F.3d 1367, 1381 (Fed.Cir.2010)
(“Where the combined actions of multiple parties are alleged
to infringe process claims, the patent holder must prove that
one party exercised control or direction over the entire
process such that all steps of the process can be attributed to
the controlling party, i.e., the mastermind.” (internal
quotation marks omitted)); see also Muniauction, Inc. v.
Thomson Corp., 532 F.3d 1318, 1329 (Fed.Cir.2008); BMC
Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1380
(Fed.Cir.2007) (“Courts faced with a divided infringement
theory have also generally refused to find liability where one
party did not control or direct each step of the patented
process.”) overruled on other grounds by Akamai, 692 F.3d
at 1306. The determination is a fact-specific inquiry;
relevant considerations include whether the accused direct
infringer “provides instructions or directions” to another
entity for performing steps of the patented process or, on the
other hand, “contract[s] out steps of a patented process to
another entity.” BMC, 498 F.3d at 1381.
Move, Inc. v. Real Estate Alliance Ltd., 709 F.3d 1117, 1123 (Fed. Cir. 2013).
41
Determining literal infringement is a two step
process: [(1)] the “proper construction of the asserted claim
and [(2)] a determination whether the claim as properly
construed reads on the accused product or method.”
Georgia–Pacific Corp. v. U.S. Gypsum Co., 195 F.3d 1322,
1330 (Fed.Cir.1999). The first step is a question of law,
which we review de novo. Id. The second step is a question
of fact, which we review for substantial evidence. i4i Ltd.
P'Ship v. Microsoft Corp., 598 F.3d 831, 849
(Fed.Cir.2010), aff'd, ––– U.S. ––––, 131 S.Ct. 2238, 180
L.Ed.2d 131 (2011).
ActiveVideo Networks, Inc., 694 F.3d at 1319. “‘To establish literal infringement,
every limitation set forth in a claim must be found in an accused product, exactly.’”
Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d
1340, 1356 (Fed. Cir. 2012) (quoting Southwall Techs., Inc. v. Cardinal IG Co., 54
F.3d 1570, 1575 (Fed. Cir. 1995)). More specifically, for present purposes, “[t]o
infringe a method claim, all steps of the claimed method must be performed.” Mirror
Worlds, L.L.C. v. Apple, Inc., 692 F.3d 1351, 1358 (Fed. Cir. 2012) (citing Lucent
Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1317 (Fed. Cir. 2009), and 35 U.S.C.
§ 271). The Federal Circuit Court of Appeals has explained that “‘[u]nless the steps of
a method actually recite an order, the steps are not ordinarily construed to require
one,” but the order of steps must be the same “when the method steps implicitly require
that they be performed in the order written.” Altiris, Inc. v. Symantec Corp., 318 F.3d
1363, 1369 (8th Cir. 2003) (noting, further, that claim language may indicate, “as a
matter of logic or grammar,” that the steps be performed in the order written (citing
Interactive Gift Express, Inc. v. Compuserve Inc., 256 F.3d 1323, 1342-43 (Fed. Cir.
2001))).
42
“A patentee need not always have direct evidence of infringement, as
infringement may be established by circumstantial evidence.” Mirror Worlds, L.L.C.,
692 F.3d at 1358. “Circumstantial evidence must show that at least one person directly
infringed an asserted claim during the relevant time period.” Toshiba Corp. v. Imation
Corp., 681 F.3d 1358, 1364 (Fed. Cir. 2012).
Such circumstantial evidence may
include installing, maintaining, demonstrating, and managing infringing systems for
customers, or live testing. See ePlus, Inc. v. Lawson Software, Inc., 700 F.3d 509,
521 (Fed. Cir. 2012). It may also include evidence that an alleged infringer designed a
product for use in an infringing way and instructed users to use the product in an
infringing way.
Toshiba Corp., 681 F.3d at 1365.13
Circumstantial evidence of
13
In Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir.
2009), the court provided this discussion of circumstantial evidence:
[I]n the present case, the jury reviewed evidence relating to
the extensive sales of Microsoft products and the
dissemination of instruction manuals for the Microsoft
products. The jury also heard corresponding testimony from
Lucent’s
infringement
expert.
The
circumstantial
documentary evidence, supplementing the experts’
testimony, was just barely sufficient to permit the jury to
find direct infringement by a preponderance of the evidence.
As in Moleculon [Research Corp. v. CBS, Inc., 793 F.2d
1261 (Fed. Cir. 1986)], the jury in the present case could
have reasonably concluded that, sometime during the
relevant period from 2003 to 2006, more likely than not one
person somewhere in the United States had performed the
claimed method using the Microsoft products. See
Moleculon, 793 F.2d at 1272 (“It is hornbook law that direct
evidence of a fact is not necessary. ‘Circumstantial evidence
(Footnote continued . . .
43
performing the method does not include demonstrating the accused method to a jury
during a trial. Mirror Worlds, L.L.C., 692 F.3d at 1359.
As to frequency of infringement, “[d]irect infringement of a method claim can
be based on even one instance of the claimed method being performed.”
Mirror
Worlds, L.L.C., 692 F.3d at 1358 (citing Lucent, 580 F.3d at 1317); Toshiba Corp.,
681 F.3d at 1364 (citing Lucent, 580 F.3d at 1317). Furthermore, an accused method
or system “‘that sometimes, but not always, embodies a claimed method nonetheless
infringes.’” Cross Medical Prods., Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d
1293, 1311 (Fed. Cir. 2005) (quoting Bell Commc’ns Research, Inc. v. Vitalink
Commc’ns Corp., 55 F.3d 615, 622-23 (Fed. Cir. 1995), and citing Hilgraeve Corp. v.
Symantec Corp., 265 F.3d 1336, 1343 (Fed. Cir. 2001), but noting that this rule does
not apply to apparatus claims).
Circumstantial evidence that an accused method
infringes “at least a small percentage of the time” is sufficient for a factfinder to
conclude that direct infringement has occurred. Vita-Mix Corp. v. Basic Holding, Inc.,
581 F.3d 1317, 1326 (Fed. Cir. 2009).
is not only sufficient, but may also be more certain,
satisfying and persuasive than direct evidence.’ ” (quoting
Michalic v. Cleveland Tankers, Inc., 364 U.S. 325, 330, 81
S.Ct. 6, 5 L.Ed.2d 20 (1960))); see also Alco Standard
Corp. v. Tenn. Valley Auth., 808 F.2d 1490, 1503
(Fed.Cir.1986) (“Although the evidence of infringement is
circumstantial, that does not make it any less credible or
persuasive.”).
Lucent, 580 F.3d at 1318.
44
Just as importantly, here, where the patents-in-suit claim both “[a]n apparatus
and method for manipulating images,” ‘199 Patent, Abstract, the Federal Circuit Court
of Appeals has explained, “[T]o infringe a claim that recites capability and not actual
operation, an accused device ‘need only be capable of operating’ in the described
mode.” Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1204 (Fed. Cir.
2010) (quoting Intel Corp. v. U.S. Int’l Trade Comm’n, 946 F.2d 821, 832 (Fed. Cir.
1991)). In Finjan, the court noted that the “apparatus” claims “do not require that the
proactive scanning software be configured in a particular way to infringe—only that it
be programmed for performing the claimed steps.”
Id.
Here, while the steps of
claim 1 of the patents-in-suit refer to various “modules” that are “configured” to
perform certain tasks or to receive certain information, they do not require that the
“modules” be configured in a particular way to perform those tasks or to receive that
information. Cf. id. (comparing software that was programed to perform claimed steps
to a claim requiring a locking device’s pin to extend through a slot in a specific
configuration). Thus, the question for infringement is whether an accused system is
“capable of operating in the described mode,” not whether it is actually operated in the
described mode. Id.
Where an accused method or system does not infringe independent claims, it also
cannot infringe associated dependent claims as a matter of law. See Voter Verified, Inc.
v. Premier Election Solutions, Inc., 698 F.3d 1374, 1383 (Fed. Cir. 2012) (citing
Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d 1546, 1552 n.9 (Fed. Cir. 1989)).
E.
Grounds For Summary Judgment
In their Motion For Summary Judgment, the Iowa Defendants assert that two
elements (or limitations) of claim 1 of the ‘199 patent and three elements (or
45
limitations) of claim 1 of the ‘490 patent are not infringed, which Serverside disputes.
I will consider those grounds for summary judgment in turn, below. First, however, I
will address two grounds for summary judgment that are no longer in dispute and some
further implications of the Iowa Defendants’ Motion For Summary Judgment that the
parties did not expressly address.
1.
Infringement under the doctrine of equivalents
The Iowa Defendants argue that the limitations “secure unique identifier” and
“one-way code,” as recited in the ‘199 patent, and “encrypted customer information,”
as recited in the ‘490 patent, are not entitled to equivalents. In response, Serverside
states that it has not argued that the Cre8MyCard system infringes the “secure unique
identifier,” “one-way code,” or “encrypted customer information” limitations under the
doctrine of equivalents, because there is no need to do so, where those limitations are
literally infringed. I conclude that Serverside has restricted its infringement claims
concerning these limitations of the patents-in-suit to “literal” infringement, by failing to
come forward with “specific facts showing that there is a genuine issue for trial” on
infringement of those limitations under the doctrine of equivalents. Torgerson, 643
F.3d at 1042 (internal quotation marks and citations omitted). Consequently, the Iowa
Defendants are entitled to summary judgment on any claim of infringement of these
limitations under the doctrine of equivalents.
2.
Implications of non-infringement of the first claims
The Iowa Defendants also assert that it is axiomatic that dependent claims of a
patent cannot be infringed, unless the independent claim from which they depend is also
infringed, citing Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d 1546, 1553 (Fed.
Cir. 1989). Thus, they contend that, if independent claim 1 of a patent at issue is not
infringed, then, as a matter of law, neither are dependent claims 2, 9, 14, 15, 16, 18
46
and 22 of that patent.
Serverside responds that the Iowa Defendants do infringe
independent claim 1 of each patent.
Because Serverside has not attempted to generate genuine issues of material fact
on infringement of the dependent claims, if the independent claims from which they
depend are not infringed—and, indeed, they could not do so, as a matter of law, see
Wahpeton Canvas, 870 F.2d at 1552-53 & n.9; accord Voter Verified, Inc., 698 F.3d at
1383—I will not separately consider infringement of the dependent claims specifically
identified by the Iowa Defendants. Torgerson, 643 F.3d at 1042 (the non-moving party
must generate genuine issues of material fact to avoid summary judgment); Cremona,
433 F.3d at 620 (explaining that summary judgment is particularly appropriate when
only questions of law are involved, rather than factual issues that may or may not be
subject to genuine dispute).
Rather, I conclude that whether or not assertions of
infringement of these dependent claims survive the Iowa Defendants’ Motion For
Summary Judgment depends upon my disposition of infringement claims as to
independent claim 1 of the respective patent.
This conclusion still leaves at issue claims 25, 29, and 30 of the ‘199 patent and
claims 25, and 29-31 of the ‘490 patent, which Serverside alleges are also infringed by
the Iowa Defendants’ Cre8MyCard system, see Complaint, Counts I and II, but which
the parties do not address in their summary judgment briefing. In my Markman ruling,
I noted that there was some dispute as to whether or not at least some of these patent
claims were “independent” or “dependent,” as follows:
This issue [of how “dependent” and “independent” claims
are defined] may be of more than academic interest here—
eventually, if not immediately—because Serverside asserts
that “claims 1 and 29 of the ‘199 patent, and claims 1 and
29–31 of the ‘490 patent, are independent,” Plaintiffs'
Opening Brief at 3, notwithstanding that claim 29 of the
47
‘199 patent expressly incorporates “the computerized
financial transaction card production equipment of claim 1
operable to apply the resulting image to a financial
transaction card.” In contrast, the Iowa Defendants assert
that only claim 1 of the ‘199 patent is “independent,”
although they agree that claims 1 and 29–31 of the ‘490
patent are “independent.” Defendants’ Opening Brief at 1.
Serverside, 927 F. Supp. 2d at 645 n.3. The issue of whether claims 25, 29, and 30 of
the ‘199 patent and claims 25, and 29-31 of the ‘490 patent are “dependent” or
“independent” is of more than academic interest now, because whether or not these
patent claims are infringed might depend on their relationship to independent claim 1 of
their respective patents. See Wahpeton Canvas, 870 F.2d at 1552-53 & n.9; accord
Voter Verified, Inc., 698 F.3d at 1383. Unfortunately, the parties not only failed to
address whether these patent claims are “dependent” or “independent” in their
summary judgment briefing, but they have failed to present any other arguments
concerning infringement of these patent claims.
Nevertheless, I can still determine whether allegations of infringement of these
overlooked patent claims can be decided as a matter of law, based on my disposition of
the arguments that the parties have made about infringement of claim 1 of each patent,
at least where the parties have had a full and fair opportunity to contest the
determinative issue. Cremona, 433 F.3d at 620 (explaining that summary judgment is
particularly appropriate when only questions of law are involved, rather than factual
issues that may or may not be subject to genuine dispute); Heisler v. Metropolitan
Council, 339 F.3d 622, 631-32 (8th Cir. 2003) (explaining that summary judgment may
be granted sua sponte if the court’s ruling on issues properly raised forecloses as a
matter of law the claim on which the court wishes to grant summary judgment sua
sponte); Madewell v. Downs, 68 F.3d 1030, 1048 (8th Cir. 1995) (explaining that a
48
district court may enter summary judgment sua sponte where the parties had an
adequate opportunity to address the determinative issues and were on notice that the
right to judgment as a matter of law was at stake on those issues).
Specifically, I note that the language of claim 25 is identical in the two patentsin-suit, and that claim 25 in each patent expressly incorporates “the computerized
financial transaction card production equipment of claim 1 operable to apply the
resulting image to a financial transaction card.” See Serverside, 927 F. Supp. 2d at
641-43 (chart of patent claims allegedly infringed quoting claim language); id. at 645
n.3 (noting this language in claim 25). Similarly, claims 29 and 30 of the ‘199 patent
incorporate claim 1 and claim 29 of that patent, respectively. See id. at 641-43. Thus,
whether or not claim 25 of each patent and claims 28 and 29 of the ‘199 patent are
“independent” or “dependent,” under the definitions identified in my Markman ruling,
id. at 645-46 & n.3,14 they plainly cannot survive if claim 1 of the respective patent
cannot survive—a matter clearly in dispute on the Iowa Defendants’ Motion For
Summary Judgment—where they specifically incorporate claim 1 of the respective
patent or a claim that, in turn, incorporates claim 1. To put it another way, if the
14
In my Markman ruling, I observed, “The Federal Circuit Court of Appeals
apparently knows an ‘independent’ claim when it sees one, because finding a clear
definition of an ‘independent’ claim in Federal Circuit case law has proved far more
difficult than I would have imagined, and the relevant statute and federal regulation also
are not particularly helpful.” Serverside, 927 F. Supp. 2d at 645 n.3. I also set out
various, admittedly conflicting definitions of “independent” claim from regulations,
case law, and commentators. See id. (citing 35 C.F.R. § 1.75(e); Monsanto Co. v.
Syngenta Seeds, Inc., 503 F.3d 1352, 1357 (Fed. Cir. 2007); and Jason M. Nolan,
Formalism And Patent Claim Drafting: The Status Of De Facto Independent Claims
Under The Fourth Paragraph Of 35 U.S.C. § 112, 19 TEX. INTELL. PROP. L.J. 263,
275, 294 (Winter 2011)).
49
limitations of an incorporated claim are not infringed as a matter of law, then neither is
a claim incorporating it, as a matter of law.
The analysis of claims 29-31 of the ‘490 patent is a little different, because those
patent claims do not incorporate any other patent claims. Nevertheless, whether or not
claims 29-31 of the ‘490 patent are “dependent” or “independent” claims, all of them
include the “encrypted customer information”/“encrypted remote user information”
limitation of claim 1 of the ‘490 patent—a limitation plainly at issue in the Iowa
Defendants’ Motion For Summary Judgment of non-infringement of claim 1 of the ‘490
patent.
Thus, if claim 1 of the ‘490 patent is not infringed on the basis of this
limitation, then neither are these claims, and the Iowa Defendants will be entitled to
summary judgment on allegations of infringement of these patent claims, as a matter of
law, as well.
I turn now to the Iowa Defendants’ hotly contested grounds for summary
judgment.
3.
Absence of “a customer identifier that corresponds to the remote
customer that personalized said image,” as claimed in the ‘199
and the ‘490 patents
Claim 1 of the ‘199 patent and claim 1 of the ‘490 patent include the following
element or limitation:
“a module configured to receive a customer identifier that
corresponds to the remote customer that personalized said image.”
‘199 Patent,
Claim 1 (italics indicating “disputed” claim term); ‘490 Patent, Claim 1 (same). As
noted in the chart of “Disputed Claim Terms,” supra, page 26, in my Markman ruling,
I construed the “disputed” claim term in this limitation to mean “a signal, character, or
group of characters that matches with the customer that personalized the image.” The
50
Iowa Defendants contend that this limitation is not literally infringed, as a matter of
law, but Serverside disputes that contention.
a.
Arguments of the parties
The Iowa Defendants argue that this limitation is not infringed, because the
Cre8MyCard system allows the “remote customer” and the “card owner” to be
different people, and it only records the Data in relation to the “card owner” (that is,
first name, last name, and last four digits of the card number), rather than any data
associated with the “remote customer.” Somewhat more specifically, they argue that
the “remote customer” must submit the Data about the “card owner,” but no
information about themselves, the Cre8MyCard system does not use “remote customer”
passwords or usernames, and a third party could customize a card for the “card owner”
using the Cre8MyCard system. In short, they argue, the Cre8MyCard system “knows
nothing about the identity of the ‘remote customer that personalized said image,’ and is
agnostic with regard to the Data provided by the remote customer.” They argue that,
in contrast, claim 1 of both the ‘199 patent and the ‘490 patent requires the use of a
“customer identifier that corresponds to the remote customer that personalized said
image.”
Serverside argues that the Cre8MyCard system provides exactly what the court
has construed “customer identifier” to be.
Serverside argues that Mr. Arnold has
admitted that the Cre8MyCard system receives the combination of the card owner’s
first name, last name, and last four digits of the PAN as a customer identifier that
corresponds to the remote customer that personalized the image. Serverside argues that
the combination of information in the Data comprises “a signal, character, or group of
characters that matches with the customer that personalized the image.” Serverside
points out that the court’s construction does not require that the Cre8MyCard system
51
use remote customer passwords or usernames, that the intended use of the Cre8MyCard
system is for the card holders to customize their own financial transaction cards, and
that any third party who customizes a card (if that scenario has ever occurred, and
Serverside contends that the Iowa Defendants have offered no evidence that it ever has)
must be acting as an agent of the card owner.
In reply, the Iowa Defendants reiterate that the Cre8MyCard system does not
require that the remote customer who is personalizing the image be the actual card
holder, meaning that Banno’s customer identifier of first name, last name, and last four
digits of the personal account number matches only the card holder, not necessarily the
remote customer. They also argue that nothing in the claims, specifications, or claim
construction supports Serverside’s argument that a third party who customizes a card
for a card owner must be acting as an agent of the card owner. They argue that,
because the Cre8MyCard system has no way of knowing who actually personalized an
image ordered through the system, only that an image has been personalized and a card
has been ordered, the Cre8MyCard system clearly does not require a customer
identifier that corresponds to or matches with the remote customer who personalized the
image.
b.
Analysis
As the movants for summary judgment, the Iowa Defendants must “inform[ ] the
district court of the basis for [their] motion, and must identify those portions of [the
record] . . . which [they] believe[ ] demonstrate the absence of a genuine issue of
material fact.” Torgerson, 643 F.3d at 1042 (internal quotation marks and citations
omitted). Here, this standard requires the Iowa Defendants to point to some basis in
the patents or in the court’s construction of the pertinent claim terms for their
contention that, in claim 1 of the patents-in-suit, the “remote customer” must be the
52
“card holder.” See ActiveVideo Networks, Inc., 694 F.3d at 1319 (explaining that the
first step in the two-step process for determining literal infringement is “the proper
construction of the asserted claim”). This they have failed to do.
Specifically, the Iowa Defendants have not identified where, in the claim
language, my construction of the claim terms, or the specification, the patents-in-suit
require passwords or usernames, or any language that demonstrates that the claimed
system knows the identity of the “remote customer that personalized said image,” or
any language that prevents a third party from customizing a card for a card holder.
Indeed, my reading of the claimed invention is that, like the Cre8MyCard system, it
“knows nothing about the identity of the ‘remote customer that personalized said
image,’ and is agnostic with regard to the [information] provided by the remote
customer.” Thus, in the first instance, the Iowa Defendants are attempting to impose
limitations for which they have identified no basis in the patents-in-suit. Doing so is at
least as egregious an error as importing limitations from the specification into the
claims. See, e.g., Deere & Co. v. Bush Hog, L.L.C., 703 F.3d 1349, 1353-54 (Fed.
Cir. 2012) (citing Phillips v. AWH Corp., 415 F.3d 1303, 1323 (Fed. Cir. 2005) (en
banc)).
What the claimed invention requires, as I have construed pertinent claim terms in
my Markman ruling, is “a signal, character, or group of characters that matches with
the customer that personalized the image.” Neither a requirement that the customer
identifier “matches with,” nor the actual claim term, “corresponds to,” the customer
that personalized the image requires that the remote customer that personalized the
image be the card holder or account holder—although that might well be the case in the
vast majority of instances in which the claimed invention is practiced.
While I
construed “customer identifier” as “some ‘signal or character’ or group of characters
53
that can be used to ‘identify’ the customer,” see Serverside, 927 F. Supp. 2d at 656, I
never construed “customer identifier” to require that the remote customer who
personalized the card be the card holder or account holder, or even that the “customer
identifier” reveal the “identity” of the remote customer.
Nor can a purported
requirement that the remote customer be the card holder or account holder be drawn
from my construction of “corresponds to” as “matches with.” See id. at 656.; see also
id. at 690 (reiterating this construction as the court’s final construction).
The
“customer identifier” was construed to “match with” the remote customer, not to
“match” the remote customer “with” the card holder or account holder, i.e., to identify
the remote customer as the card holder, nor was it construed to “match” the remote
customer “with” a specific person’s identity. Id. Rather, the “customer identifier”
was simply construed to “match with” the “remote customer,” for purposes of
practicing the claimed method, whoever the “remote customer” might actually be
outside of the practice of the claimed method.
The element of claim 1 of the patents-in-suit that I find comes closest to
suggesting that the remote customer must be the card holder or account holder in the
claimed invention is one not identified or relied on by the Iowa Defendants in their
summary judgment arguments. That element is the one after the element at issue here,
which requires “a module configured to receive a financial record of the remote
customer that personalized the image,” where bold indicates an “undisputed” claim
term. See Claim 1 side-by-side chart, supra, page 24. As I noted in my Markman
ruling, the “undisputed” claim term in this element had been construed by the Delaware
court “only by dropping ‘remote,’ so that its construction is ‘record of financial
information of the customer that personalized the image,’” a construction that I then
adopted. Serverside, 927 F. Supp. 2d at 656-57. There are further references in the
54
Abstract and the Detailed Description of the patents-in-suit to “financial account of the
customer” or “the customer’s financial information.” See, e.g., ‘199 Patent, Abstract;
Detailed Description, 4:60-63, 10:65-11:8. These references suggest that the patentsin-suit assumed—if they did not, in fact, require—that the “remote customer” who
personalized the image for a transaction card would be the card holder or account
holder.
Yet, even if the claimed invention requires that the “remote customer” be the
card holder or account holder, not a third party, the Iowa Defendants have failed to
demonstrate that their Cre8MyCard system does not infringe this element as a matter of
law.
The second step in the determination of literal infringement requires “a
determination [of] whether the claim as properly construed reads on the accused
product or method.” ActiveVideo Networks, Inc., 694 F.3d at 1319 (internal quotation
marks and citations omitted). While the Iowa Defendants have pointed to evidence that
the Cre8MyCard system can be used by a third party to customize a transaction card
for a card holder or account holder, see Torgerson, 643 F.3d at 1042, that is not the
end of the matter. Serverside has demonstrated—or has, at least, generated genuine
issues of material fact—that the Cre8MyCard system can also be used by the card
holder to personalize his or her own card, which would be an infringing performance of
the method. Id. at 1042 (stating the non-movant’s burden to resist summary judgment).
As explained in somewhat more detail, above, “[d]irect infringement of a method claim
can be based on even one instance of the claimed method being performed,” Mirror
Worlds, L.L.C., 692 F.3d at 1358 (citing Lucent, 580 F.3d at 1317); evidence that an
accused method or system “sometimes, but not always, embodies a claimed method,”
Cross Medical Prods., Inc., 424 F.3d at 1311 (internal quotation marks and citations
omitted); or by circumstantial evidence that an accused method infringes “at least a
55
small percentage of the time,” Vita-Mix Corp., 581 F.3d at 1326. Similarly, as to
“apparatus” claims, Severside has generated genuine issues of material fact that the
claim in question recites only capability, and not actual operation, and that the accused
system is “capable of operating in the described mode,” that is, for a card holder to
personalize his or her own card. Finjan, Inc., 626 F.3d at 1204. Serverside has also
marshaled evidence that Banno designed a product for use in an infringing way—
allowing card holders or account holders to personalize their own transaction cards—
and instructed users to use the product in an infringing way. Toshiba Corp., 681 F.3d
at 1365.
Thus, Serverside has pointed to evidence that the Cre8MyCard system uses “a
customer identifier that corresponds to the remote customer that personalized said
image,” where the Cre8MyCard system does use “a signal, character, or group of
characters that matches with the customer that personalized the image.” Specifically,
the Cre8MyCard system requires the remote customer to enter the card holder’s first
and last name and last four digits of the card holder’s PAN in the two alphanumeric and
one numeric field (the Data). Thus, the Data constitute the “signal, character, or group
of characters that matches with the customer that personalized the image,” even if that
“signal, character, or group of characters” does not reveal the identity of the remote
customer. When the remote customer hits the “submit” button, the Data, along with
the image, are uploaded to Cre8MyCard’s web server for further processing of the
remote customer’s personalized card order, and the Cre8MyCard system uses a table
called “Orders” to store the incoming domain name of the financial institution from
which the card is being personalized, and separate columns within the table for first
name, last name, personal account number (PAN), and a foreign key that directs the
user to another database table that holds all of the images. Thus, the “signal, character,
56
or group of characters” is “matche[d] with the remote customer that personalized the
image,” because the Data is “matche[d] with” or “correspond[s] to” the remote
customer and his or her order throughout the processing of the personalized card.
Therefore, the Iowa Defendants are not entitled to summary judgment that they
do not infringe, as a matter of law, the element of claim 1 of each of the patents-in-suit
that requires “a module configured to receive a customer identifier that corresponds to
the remote customer that personalized said image.”
‘199 Patent, Claim 1 (italics
indicating “disputed” claim term); ‘490 Patent, Claim 1 (same).
4.
Absence of a “customer identifier [that] comprises an identifier
selected from a secure unique identifier and a one-way code,” as
claimed in the ‘199 patent
Claim 1 of the ‘199 patent includes the following element or limitation:
a
module configured to receive a customer identifier that corresponds to the remote
customer that personalized said image . . . wherein the customer identifier comprises
an identifier selected from a secure unique identifier and a one-way code.” ‘199
Patent, Claim 1 (bold indicating “undisputed” claim terms, italics indicating “disputed”
claim terms, and underlining indicating claim language that differs between the two
patents). As noted in the chart of “Disputed Claim Terms,” supra, page 26, in my
Markman ruling, I construed “secure unique identifier,” a “disputed” claim term, to
mean “a secure, unique signal, character, or group of characters that can be used to
identify the customer.” As noted in the chart of “Undisputed Claim Terms,” supra,
page 25, in my Markman ruling, I construed “one-way code,” an “undisputed” claim
term, to mean “a hash value created from customer information.”
The Iowa
Defendants contend that they do not infringe this element of claim 1 of the ‘199 patent,
even if a factfinder interprets the Data—in their view, erroneously—to constitute “a
57
customer identifier that corresponds to a remote customer.” Serverside also disputes
this contention.
a.
Arguments of the parties
The Iowa Defendants argue that, to infringe claim 1 of the ‘199 patent, the
alleged “customer identifier” in the Cre8MyCard system (the Data) must include either
a “hash code” or a “secure unique identifier,” but the Cre8MyCard system does not.
They contend that it is undisputed that the Cre8MyCard system does not use, and has
never used, hashing or a hash code, so that it does not use a “one-way code.” They
also contend that the Data clearly are not “unique” or “secure,” so that this alternative
also is not present in the Cre8MyCard system. More specifically, they argue that the
Cre8MyCard system does not “provide” a “unique” customer identifier, because of the
possibility—however small—that two card owners may exist who have the same first
names, last names, and last four digits of their card numbers. They also argue that the
Cre8MyCard system does not “provide” a “secure” customer identifier, because The
Cre8MyCard system does not verify the accuracy of the Data provided by the remote
customer in relation to the card owner, only that the proper characters are filled into
each field. They contend that any verification is performed by BIC, through separate
administrative software after the remote customer has submitted the Data through the
Cre8MyCard system.
Serverside argues that the customer identifier used in the Cre8MyCard system is
both “a secure unique identifier” and “a one-way code.” Serverside points out that
claim 1 does not require, either by its plain language or as construed, that the claimed
invention (or an accused device) “provide” a customer identifier, only that the system
contain a module configured to “receive” a customer identifier. Serverside also argues
that the “customer identifier” in the Cre8MyCard system is “unique,” because even
58
two card owners with the same first names, last names, and last four digits of their card
numbers would have “unique” customer identifiers, where the first six digits of their
PANs (the issuing institutions’ IINs) would be unique to the different financial
institutions that issued their cards. Serverside points out that Mr. Arnold admitted in
his deposition that incoming orders are stored in a table by institution key, which
separates orders from each of Banno’s customers (various financial institutions). This
process, Serverside argues, ensures that no two customers have the same name and
account number at the same financial institution. Serverside argues that, if a customer
identifier comprising first name, last name, and last 4 digits of a PAN were not unique
within a financial institution, then there would be a violation of the Gramm-LeachBliley Act Standards For Safeguarding Customer Information, citing 15 U.S.C. § 6801
and 16 C.F.R. § 314).
Serverside also argues that the customer identifier in the
Cre8MyCard system is “secure,” because Mr. Arnold admitted that the administrative
software used by financial institutions, such as BIC, to verify card orders is accessed
through a web address (admin.cre8mycard.com) that is part of the Cre8MyCard
software. They contend that Mr. Arnold also admitted that the customer identifier is
secured using SSL and/or firewall trust security during the card customization process.
Serverside also argues that, contrary to the Iowa Defendants’ contention, the
Cre8MyCard system does use a “one-way code” for a customer identifier. This is so,
Serverside argues, because the Cre8MyCard system uses a hash code, where the last 4
digits of the PAN are part of the customer identifier, and the last digit of the PAN is a
hash value created from customer information, pursuant to ISO 7812.
In reply, the Iowa Defendants argue that two defendants, father and son, both
named John Doe, with accounts at U.S. Bank, could be issued cards with the same last
four digits, including the last digit created with the Luhn algorithm, so that they do not
59
have “unique” customer identifiers.
The Iowa Defendants argue that even an
infinitesimally small chance of that happening is sufficient to preclude infringement.
They also argue that nothing in the Gramm-Leach-Bliley Act or related regulations
requires a bank to control the last four digits of a customer’s PAN based on the
customer’s name or would prevent a bank from having two customers with the same
first name, last name, and last four digits of a card number. As to the “one-way code”
alternative, while the Iowa Defendants agree that the last digit of the PAN is a hash
value created from customer information, they contend that the presence of that digit in
no way brings the Cre8MyCard system within the scope of the “one-way code” recited
in claim 1 of the ‘199 patent. This is so, they argue, because the ‘199 patent never
teaches or describes a pre-calculated hash value as the “one-way code” limitation for
the “customer identifier.” They contend that reading the ‘199 patent to encompass such
a pre-calculated hash value would enlarge the scope of the patent to cover systems that
Serverside did not invent, describe, or fairly suggest. The Iowa Defendants contend
that what the ‘199 patent discloses is using customer information, including the
customer’s account number, and creating a new “hash value” for security purposes.
This, they contend, the Cre8MyCard system does not do.
b.
Analysis
i.
Secure unique identifier
Again, the Iowa Defendants must point to some basis in the claim language or
the court’s construction of the pertinent claim terms to support their contentions about
the meaning of “secure unique identifier.” See ActiveVideo Networks, Inc., 694 F.3d
at 1319 (explaining that the first step in the two-step process for determining literal
infringement is “the proper construction of the asserted claim”).
In their opening
summary judgment brief, the Iowa Defendants erroneously identify the following
60
portion of my Markman ruling as providing the analysis of the nature of the “secure”
limitation:
[T]he reference to “security” here is not to the “generation”
of the “customer identifier,” or even to the “customer
identifier” itself being “secure,” but to “a financial account
association table maintained securely from a user interface.”
′199 Patent, 4:60–63. Thus, because “uniqueness” is not a
limitation of the “customer identifier,” and only some of the
embodiments described in the specification describe
“security” as an element or limitation, nothing makes
“secure” superfluous if “secure unique identifier” means
“unique customer identifier.”
Serverside, 927 F. Supp. 2d at 660. The quoted statement was part of my basis for
rejecting the Iowa Defendants’ proposed construction of “secure unique identifier” as
“encrypted customer information,” and, more particularly, my rejection of the Iowa
Defendants’ argument that “secure” is somehow superfluous if the term “secure unique
identifier” means “unique customer identifier.” Id. at 660.
More instructive on the “secure” requirement are my conclusions that the
description of a single embodiment describing “encrypted customer information” as
“generated within a secure environment” “does not mean that all ‘secure unique
identifiers’ must be ‘encrypted customer information generated within a secure
environment.’” Id. at 659 (citing Deere & Co., 703 F.3d at 1353-54). In fact, I
specifically rejected the Iowa Defendants’ contention that “secure” meant either
“securely generated” or “maintained securely from the user interface,” as improper
importations of embodiments into the construction of the claim term. Id. at 659-60. I
also concluded that specifically claimed “secure unique identifiers” in dependent claims
(a machine readable code or a bar code) did not define the entire universe of “secure
unique identifiers.” Id. at 660-61. Ultimately, I concluded,
61
I do not believe that any doubt about the meaning and
scope of this claim term actually relates to either the
“secure” or the “unique” component. See O2 Micro Int’l [v.
Beyond Innovation Tech. Co., Ltd.], 521 F.3d [1351,] 1362
[(Fed. Cir. 2008)] (explaining the purpose of construction is
to “‘resol[ve] disputed meanings and technical scope, to
clarify and ... explain what the patentee covered by the
claims, for use in the determination of infringement.’”
(quoting U.S. Surgical [Corp. v. Ethicon, Inc.], 103 F.3d
[1554,] 1568 [(Fed. Cir. 1997)])). I think that these words
were intended to have their ordinary meaning; indeed, the
parties have pointed to nothing in the description or the
claims of the patents-in-suit that convincingly demonstrates
otherwise. I also believe that leaving these words undefined
in any construction of the claim terms will not prevent their
meaning from being clear to a jury's full understanding of
what the patentee covered with the claims. Power–One, Inc.
[v. Artesyn Techs., Inc.], 599 F.3d [1343,] 1348 [(Fed. Cir.
2010)] (“The terms, as construed by the court, must ‘ensure
that the jury fully understands the court's claim construction
rulings and what the patentee covered by the claims.’”
(quoting Sulzer Textil A.G. [v. Picanol N.V.], 358 F.3d
[1356,] 1366 [(Fed. Cir. 2004)])). The point of confusion,
in my view, is the meaning of “identifier.”
Serverside, 927 F. Supp. 2d at 661.
For that “confusing” point, I reiterated my
construction of “customer identifier” as “a signal, character, or group of characters that
can be used to identify the customer,” and I adopted the following construction for the
entire claim term: “a secure, unique signal, character, or group of characters that can
be used to identify the customer.”
Id.; see also id. at 691-92 (reiterating this
construction as the court’s final construction).
The Iowa Defendants have pointed to nothing in claim 1 or my construction of
the pertinent claim term that requires that an accused system “provide” a “secure”
62
customer identifier or even that the accused system “verify” the accuracy of the Data
provided by the remote customer in relation to the card owner to meet the “secure”
limitation. Thus, the Iowa Defendants are, once again, attempting to impose limitations
for which they have identified no basis in the patents-in-suit, and doing so is at least as
egregious an error as importing limitations from the specification into the claims. See,
e.g., Deere & Co., 703 F.3d at 1353-54. Indeed, my rejection of the Iowa Defendants’
construction of “secure” customer identifier as meaning “securely generated,” see
Serverside, 927 F. Supp. 2d at 659-60, demonstrates the fallacy of asserting that an
accused system must “provide” a “secure” customer identifier.
Most conclusive, however, is the fact that a requirement that the system
“provide” a “secure unique identifier” is clearly contrary to the express requirement of
the patent claim that the module “receive” a “secure unique identifier” not “create” it.
There is more, however.
Such a requirement is also contrary to descriptions of
embodiments that require the card issuer to “create” the “customer identifier.” See
Serverside, 927 F. Supp. 2d at 674 (citing ‘199 Patent, 16:5–8, and 16:20-21); see also
‘199 Patent, Detailed Description, 16:38-39 (explaining that the “hash value” relieved
the “card issuer” of the need to create a unique identifier). Furthermore, claim 18 of
the ‘199 patent specifically claims the following:
18. Computerized financial transaction card
production equipment as in claim 1, configured to connect to
a computer system of a card issuer comprising a module to
generate the customer identifier.
‘199 Patent, Claim 18. “It is axiomatic that a dependent claim cannot be broader than
the claim from which it depends.” Alcon Research, Ltd. v. Apotex, inc., 687 F.3d
1362, 1367 (Fed. Cir. 2012). Thus, “[t]he presence of a dependent claim that adds a
particular limitation gives rise to a presumption that the limitation in question is not in
63
the independent claim.” Phillips, 415 F.3d at 1315. Here, it is axiomatic that claim 1
of the ‘199 patent, from which claim 18 depends, does not include a limitation that
involves a connection of the claimed invention (or an accused system) to the card
issuer’s computer system comprising a module to generate the customer identifier. The
Iowa Defendants have pointed to nothing in the Detailed Description that makes
“creating,” “generating,” or “providing” a “customer identifier” that is a “secure
unique identifier” in claim 1 part of the claimed invention (or an accused system) itself.
Because I concluded that “secure” was intended to have its “ordinary meaning,”
Serverside, 927 F. Supp. 2d at 661, it means simply “free from risk of loss” or
“affording safety.” MERRIAM WEBSTER’S COLLEGIATE DICTIONARY (10th ed. 1995),
1056 (definitions (2)(b) and (c) of “secure” as an adjective). Here, I conclude that
Serverside has generated genuine issues of fact as to whether the accused Cre8MyCard
system is, in some sense, “secure,” because the Data are protected from loss and
afforded safety where the system is protected by SSL and TSL internet security, and
because the Data, once submitted, are stored in a table called “Orders” that can only be
accessed through an administrative website (i.e., api.cre8mycard.com) using a
connection secured by firewall trust security. I do not find those issues of fact to be
“material,” however.
It appears to me that, in their attempt to introduce new constructions of the
“secure” limitation, both parties have lost sight of the fact that it is not the system that
must be “secure,” but the “unique identifier” itself that must be “secure” in the “secure
unique identifier” limitation in claim 1 of the ‘199 patent. Because it is the “unique
identifier” that must be “secure,” what is really dispositive is the second step of the
infringement analysis, which requires “a determination [of] whether the claim as
properly construed reads on the accused product or method.” ActiveVideo Networks,
64
Inc., 694 F.3d at 1319 (internal quotation marks and citations omitted). To the extent
that the Iowa Defendants have pointed out that the Cre8MyCard system, including the
Data, is not protected by anything other than standard internet SSL encryption, the
Iowa Defendants have met their burden, as the movants for summary judgment, to
show that the “unique identifier” itself is not “secure.” Torgerson, 643 F.3d at 1042
(explaining the summary judgment movant’s initial burden). In response, Serverside
has failed to generate a genuine issue of material fact that the Data, identified by
Serverside as the allegedly infringing “secure unique identifier,” is, itself, “secure,”
even if that “identifier” is transferred by the Cre8MyCard system to the card issuer or
from the card issuer to the card manufacturer using SSL/TLS encryption.
Id.
(explaining the non-movant’s burden). More specifically, Serverside has not identified
any way in which the Data itself is a “secure” unique identifier in the accused
Cre8MyCard system.
The ‘199 patent does identify certain “secure unique identifiers.” As I observed
in my Markman ruling,
It is . . . clear that a “secure unique identifier” may be “a
machine readable code,” as claimed in dependent claim 2,
or “a barcode,” as claimed in dependent claim 3 . . . , but
these dependent claims are necessarily narrower than
claim 1 from which they depend, see, e.g., Alcon Research,
687 F.3d at 1367; Intamin, 483 F.3d at 1335, so that they
do not define the entire universe of “secure unique
identifiers.”
Serverside, 927 F. Supp. 2d at 660-61. In each of these instances, the “secure” aspect
of the “unique identifier” is a characteristic of the “unique identifier” itself, not simply
a characteristic of the claimed invention generally. Serverside has not pointed to any
characteristic of the purported “unique identifier” in the Cre8MyCard system that
65
makes the “unique identifier” itself “secure,” such as use of a machine readable code
or barcode.
Thus, the Iowa Defendants are entitled to summary judgment of noninfringement of the “secure unique identifier” limitation, because Serverside has not
generated any genuine issues of material fact that there is any “secure unique identifier”
in the Cre8MyCard system.
The Iowa Defendants’ argument that the identifier, even if “secure,” is not
“unique” also stands on firm ground.
As the Iowa Defendants point out, in my
Markman ruling, I concluded that “computational infeasibility” that the same “hash”
value would be produced by different input strings and a possibility, however
“infinitesimally small,” that different input strings might generate the same “hash”
value meant that the “hash” value was not “unique.” See Severside, 927 F. Supp. 2d at
673. The Iowa Defendants have now pointed to evidence that there is a possibility,
however small or remote, that two customers of the same financial institution could
have the same first and last names and the same last four digits of their PANs and that
this coincidence would not violate the GBL Act or regulations, where that Act and
those regulations do not relate to combinations of names and the last four digits of a
PAN, but to an entire PAN. See Torgerson, 643 F.3d at 1042 (explaining the summary
judgment movant’s initial burden). In response, Serverside has failed to generate a
genuine issue of material fact that the GBL Act or regulations would preclude such an
occurrence or that such an occurrence is computationally impossible. Id. (explaining
the non-movant’s burden).
Therefore, the Iowa Defendants are also entitled to summary judgment that the
accused Cre8MyCard system does not receive a “secure unique identifier,” as a matter
of law.
66
ii.
One-way code
The Iowa Defendants have pointed to nothing in claim 1 or the court’s
construction of the pertinent claim term that requires that an accused system “provide”
a “one-way code,” that is, “a hash value created from customer information.” Rather,
as explained above, the express requirement of the patent claim is that the module
“receive” a “one-way code.”
It is less immediately apparent whether the Iowa Defendants are correct that the
claimed invention teaches only using customer information, including the customer’s
account number, to create a new “hash value” for security purposes.
Serverside
responds that incorporating into the customer identifier the last digit of the PAN, which
is, itself, a “hash value” derived from the entire account number using the Luhn
algorithm, is sufficient to infringe the “one-way code” limitation of claim 1 of the ‘199
patent.
I note that the construction of this “undisputed” claim term is “a hash value
created from customer information.” Serverside, 927 F. Supp. 2d at 639. It does not
require that the “customer information” include the card holder’s entire account
number, as the Iowa Defendants appear to argue, nor does it require that the “hash
value” necessarily be derived from some part of the customer’s account number rather
than some other “customer information.”
This construction is confirmed by the
following description of Figure 12, which I also quoted in my Markman ruling. See id.
at 672-73:
By contrast with the process of FIG. 11, the
embodiment of FIG. 12 allows a card issuer to avoid the
need to create for each customer a unique identifier that
must be passed through the card issuer's system. Instead,
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the card issuer creates a “hash value,” such as a message
digest, or other one-way code, based on some account
details for each individual, so that the card issuer can pass
customers’ account information to the back end server in a
way that is completely safe. Referring to FIG. 12, the
process is similar to that of FIG. 11, with a card issuer
1204, a back end server 1203, and bureau 1205 performing
analogous steps (1201 and following) to those of FIG. 11
(1101 and following). However, a principal difference is
found in steps 1202, 1207, 1210, 1213, 1226, and 1227 of
FIG. 12, in which a “hash value” (or other one-way code) is
passed between the card issuer 1204 and the back end server
1203, instead of requiring the card issuer to create a unique
identifier for each customer, as in FIG. 11. First, in step
1202, a hash of a unique part of the customer record (such
as the customer’s name) is created. A one-way hash, such
as the MD5 hash, is a process that takes arbitrary-sized
input data (such as a customer’s name and account number),
and generates a fixed-size output, called a hash (or hash
value). A hash has the following properties: (i) it should be
computationally infeasible to find another input string that
will generate the same hash value; and (ii) the hash does not
reveal anything about the input that was used to generate it.
This means that the hash function used in the embodiment of
FIG. 12 allows the card issuer 1204 to pass at least some of
a customer's account information to the back end server
1203 in a way that is completely secure. As seen in steps
1202, 1207, 1210, 1213, 1226, and 1227, a hash value may
be passed back and forth between the card issuer 1204 and
the back end server 1203, without the need for the card
issuer 1204 to create a unique identifier and pass it through
its system.
‘199 Patent, 16:5-39 (emphasis added). Recognizing that the italicized preface makes
clear that this description is limited to a single embodiment, this description
nevertheless demonstrates that the “hash value” can be derived from “some account
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details,” such as “a unique part of the customer record,” which may include the
customer’s name, rather than any part of the customer’s account number, and may
allow for passing back and forth only “some of a customer’s account information.”
Also, because the card issuer “creates” a “hash value” in this embodiment, it is clear
that the “one-way code” can be a “pre-calculated” hash value, that is, one not
calculated or created by the Cre8MyCard system, and that it does not necessarily have
to be a “new” hash value for use in the Cre8MyCard system.
The more important question here is whether a customer identifier that is a “oneway code” must be only a hash value or whether the “one-way code” limitation is met
if the customer identifier includes a hash value, such as the last digit of the PAN, which
is derived by a “hashing” algorithm, or some other “pre-calculated” hash value.
Relying on the Cheng Declaration, Serverside argues that ISO 7812 is the standard for
identifying users of financial transaction cards, and must be used by financial
institutions; that ISO 7812 explains that the last digit of the PAN is calculated using the
Luhn hash algorithm, which computes the last digit of the PAN using all of the other
digits of the PAN; that because The Cre8MyCard system uses the customer’s first
name, last name, and last 4 digits of the PAN as a customer identifier, and the last digit
of the PAN is a hash created from customer information (the other digits in the PAN),
the customer identifier is, therefore, a hash value created from customer information,
thus meeting the limitation that the “customer identifier” comprises a “one-way code,”
construed as a “hash value.” The Iowa Defendants counter that this reasoning results
in an improper expansion of the patent over what was actually claimed.
I conclude that Serverside has met its burden, as the non-movant, to come
forward with specific facts showing that there is a genuine and material issue for trial.
Torgerson, 643 F.3d at 1042 (explaining the non-movant’s burden in responding to a
69
motion for summary judgment). Although the Iowa Defendants have moved to strike
the Cheng Declaration on which Serverside relies, I concluded, above, that I would not
strike the Cheng Declaration and that I could consider it to determine whether or not
there are genuine issues of material fact, leaving to the jury to determine the weight and
credibility of any testimony consistent with the Declaration, if that testimony exceeds
the scope of opinions disclosed in the Cheng Report.
Therefore, the Iowa Defendants are not entitled to summary judgment that the
accused Cre8MyCard system does not receive a “one-way code,” as a matter of law.
5.
Absence of a “customer identifier [that] encompasses encrypted
customer information,” as claimed in the ‘490 patent
Claim 1 of the ‘490 patent includes the following element or limitation: “a
module configured to receive a customer identifier that corresponds to the remote
customer that personalized said image . . . wherein the customer identifier encompasses
encrypted customer information. ‘490 Patent, Claim 1 (italics indicating “disputed”
claim terms, and underlining indicating claim language that differs between the two
patents). Claim 1 of the ‘490 claim also includes the following element or limitation:
“a controller operable, based on said customer identifier, to cause printing of said
personalized customer image onto the card material and to cause application of relevant
financial information from the financial record onto the card material . . . wherein the
customer identifier encompasses encrypted customer information. ‘490 Patent, Claim 1
(italics indicating “disputed” claim terms and underlining indicating claim language that
differs between the two patents). As noted in the chart of “Disputed Claim Terms,”
supra, page 26, in my Markman ruling, I construed “encrypted customer information”
(and “encrypted remote user information,” a claim term in claim 31 of the ‘490 patent)
to mean “customer information coded from original text into language unintelligible to
70
unauthorized persons, but not into a randomly generated alphanumeric code.” In their
Motion For Summary Judgment, the Iowa Defendants contend that they do not infringe
this limitation, which Serverside disputes.
a.
Arguments of the parties
As to the first element of claim 1 of the ‘490 patent now at issue, the Iowa
Defendants argues that the Cre8MyCard system does not encrypt or decrypt customer
information, so it does not infringe this limitation. They argue that the specification of
the ‘490 patent makes clear that the claimed “encrypted customer information” is
encrypted by protocols beyond those normally associated with everyday internet
activities, such as SSL. They argue, further, that The Cre8MyCard system has no
algorithms for encrypting or decrypting data. Thus, they argue, where any encryption
is by SSL, and is entirely unrelated to the encryption process disclosed in the ‘490
patent, then The Cre8MyCard system does not create a customer identifier that
“encompasses encrypted customer information,” and does not infringe claim 1 of the
‘490 patent as a matter of law. As to the second element of claim 1 of the ‘490 patent
now at issue, the Iowa Defendants argue that, because the Cre8MyCard system does
not provide any encrypted information to BIC, it necessarily does not provide any
encrypted information that may be used by a server operated by BIC to print cards, and
The Cre8MyCard system does not, itself, control any printing operations.
In response, Serverside argues that, because the customer identifier in the
Cre8MyCard system is the Data, which is encrypted using SSL/TLS when transmitted
from the client’s browser to the Banno server, the Cre8MyCard system does infringe
the “encrypted customer information” limitation of claim 1 of the ‘490 patent.
Serverside argues that the Iowa Defendants attempt to escape this conclusion by
misreading the plain language of the claim to impose a limitation that the Cre8MyCard
71
system “create” the customer identifier that encompasses encrypted customer
information, but that there is no limitation in claim 1 of the ‘490 patent requiring that
the Cre8MyCard system “create” a customer identifier, only that it “receive” a
customer identifier. Serverside also argues that the Iowa Defendants’ contention that
The Cre8MyCard system does not encrypt or decrypt customer information contradicts
the plain meaning of claim 1 and Mr. Arnold’s deposition testimony, where Mr. Arnold
admitted that the customer’s name, e-mail, and the last digits of the customer’s PAN
are encrypted via SSL/TLS. Serverside also disputes any reading of the ‘490 patent as
excluding encryption by protocols normally associated with everyday activities, because
there is no disavowal of such means in the patent and no such restriction in the court’s
construction of the claim term. Where the Iowa Defendants have relied on references
to public key/private key encryption in the specification, Serverside points out that SSL
and TLS both make use of public key/private key based encryption. As to the second
limitation of claim 1 of the ‘490 patent at issue, Serverside argues that a controller must
only “cause” printing. Serverside argues that a module of the Cre8MyCard system
provides an interface that is used by financial institution personnel to review the
customized image and verify that the customer identifier consisting of the last name,
first name, and last 4 digits of the PAN corresponds to the correct customized image,
and that financial institutional personnel then use Cre8MyCard Manager to “cause”
printing of the customized image and financial information onto the card material by a
card manufacturer.
In reply, the Iowa Defendants change their ground by arguing that the
specification to the ‘490 patent demonstrates that the financial institution takes steps to
perform the encryption, not that an internet provider encrypts any transmissions as it
would for any other internet users—in short, the Iowa Defendants argue that the use of
72
SSL in the Cre8MyCard system is incidental and done by a third party. The Iowa
Defendants also argue that construing the claims as broadly as Serverside would like
increases the scope of the patent well beyond what the patents fairly teach, suggest, or
claim.
b.
Analysis
The parties’ dispute about whether or not this limitation is infringed does not
appear to me to turn on the court’s construction of the pertinent claim terms. See
ActiveVideo Networks, Inc., 694 F.3d at 1319 (explaining that the first step in the twostep process for determining literal infringement is “the proper construction of the
asserted claim”). In fact, they almost completely ignore the court’s construction in
their arguments, instead focusing on who or what performs any encryption in the
Cre8MyCard system, which appears to me to involve an attempt at further construction
of the claim term. That being so, I will consider these attempts at further construction
in relation to the first step in the infringement analysis.
I observe that the specification or Detailed Description of the ‘490 patent (which
is identical to the Detailed Description of the ‘199 patent) does not require that, in all
embodiments, the claimed invention (or the accused system) “generate” or “create” the
“customer identifier” that encompasses “encrypted customer information.” Indeed, as
I noted in my Markman ruling, the specification discloses an embodiment that expressly
“allows a card issuer to avoid the need to create for each customer a unique identifier
that must be passed through the card issuer’s system.” See Serverside, 927 F. Supp. 2d
at 652 (quoting ‘199 Patent, Detailed Description, 16:5–8, which explains the
embodiment of Figure 12); ‘490 Patent, Detailed Description, 16:5-8. I also noted
that, in another embodiment described in the Detailed Description,
73
[I]t is also possible for the user information to be encrypted
at the card issuer at the beginning of the process, and
decrypted at the card bureau using a Private/Public Key or a
Private/Private Key encryption technology. This alternative
works in a manner similar to the process described in FIG.
12, but with modified security measures; for example, the
key must be held by the card bureau.
Serverside, 927 F. Supp. 2d at 664 (quoting ‘199 Patent, Detailed Description, 17:1322); ‘490 Patent, Detailed Description, 17:13-22.
Thus, the Detailed Description
contemplates that, in at least some embodiments, the card issuer, not the claimed
invention (or an accused system), will “create” or “generate” the “customer identifier.”
Furthermore, claim 18 of the ‘490 patent specifically claims the following:
18. Computerized financial transaction card
production equipment as in claim 1, configured to connect to
a computer system of a card issuer comprising a module to
generate the customer identifier.
‘490 Patent, Claim 18. “It is axiomatic that a dependent claim cannot be broader than
the claim from which it depends.” Alcon Research, 687 F.3d at 1367. Thus, “[t]he
presence of a dependent claim that adds a particular limitation gives rise to a
presumption that the limitation in question is not in the independent claim.” Phillips,
415 F.3d at 1315. Here, it is axiomatic that claim 1 of the ‘490 patent, from which
claim 18 depends, does not include a limitation that involves a connection of the
claimed invention (or an accused system) to the card issuer’s computer system
comprising a module to generate the customer identifier, as expressly claimed in claim
18. The Iowa Defendants have pointed to nothing in the Detailed Description that
requires the claimed invention (or an accused system) to “create” or “generate” a
“customer identifier” that encompasses “encrypted customer information” in order to
practice claim 1 of the ‘490 patent.
74
I also noted, in my Markman ruling, that one of the truly “new” arguments
offered by the Iowa Defendants at the Markman hearing was about who or what created
“customer identifiers.” See Serverside, 927 F. Supp. 2d at 672. I pointed out that the
Detailed Description of the embodiment of Figure 12 “actually indicates, twice, that it
is the ‘card issuer,’ not the ‘customer,’ who is relieved of the necessity of creating the
‘unique identifier.’” Id. at 674 (emphasis in the original) (citing ‘199 Patent, 16:5–8,
and 16:20-21). I should have said “thrice,” because the Detailed Description of that
embodiment actually indicates, yet again, at 16:38-39, that the “hash value” relieved
the “card issuer” of the need to create a unique identifier. Furthermore, I noted that
there were descriptions of numerous embodiments that were silent as to who or what
part of the process creates a “customer identifier.” Serverside, 927 F. Supp. 2d at 674.
The Iowa Defendants have still not pointed me to any part of the Detailed Description
that requires that, in claim 1, the claimed invention (or the accused device) “create” the
“customer identifier” that encompasses “encrypted customer information.”
Thus, the Iowa Defendants have, again, attempted to insert into the limitations at
issue “creation” of the “customer identifier” from “encrypted customer information”
by the system, which simply is not claimed in claim 1 of the ‘490 patent, and that
attempt is at least as egregious an error as importing limitations from the specification
into the claims. See, e.g., Deere & Co., 703 F.3d at 1353-54.
That is not the end of the matter, however, because it appears to me that, in their
attempt to introduce new constructions of the “encrypted customer information”
limitation, both parties have, again, lost sight of the fact that it is not the system, but
the “customer identifier” itself that must “encompass[ ] encrypted customer
information” in claim 1 of the ‘490 patent. The Iowa Defendants’ arguments focusing
on the lack of “encryption” within the Cre8MyCard system, other than standard
75
encryption of the transfer of information over the internet, and Serverside’s arguments
about the use in the Cre8MyCard system of SSL/TLS to “encrypt” the transfer of
information, or even the transfer of the Data, as the purported “customer identifier,”
from the Cre8MyCard system to the card issuer or from the card issuer to the card
manufacturer, miss the point.
Because it is the “customer identifier” that must “encompass[ ] encrypted
customer information” in claim 1 of the ‘490 patent, what is really dispositive is the
second step of the infringement analysis, which requires “a determination [of] whether
the claim as properly construed reads on the accused product or method.” ActiveVideo
Networks, Inc., 694 F.3d at 1319 (internal quotation marks and citations omitted). To
the extent that the Iowa Defendants have pointed out that the Data, as the purported
“customer identifier,” simply does not “encompass encrypted customer information,”
whoever might be responsible for the “encryption,” the Iowa Defendants have met their
burden as the movants for summary judgment.
Torgerson, 643 F.3d at 1042
(explaining the summary judgment movant’s initial burden). In response, Serverside
has failed to generate a genuine issue of material fact that the Data, identified by
Serverside as the allegedly infringing “customer identifier,” ever “encompasses
encrypted customer information,” even if the “customer identifier” is transferred by the
Cre8MyCard system to the card issuer or from the card issuer to the card manufacturer
using SSL/TLS encryption.
Id. (explaining the non-movant’s burden).
More
specifically, Serverside has not identified any part of the Data, as the alleged “customer
identifier” in the accused Cre8MyCard system, that is “encrypted customer
information,” because Serverside has pointed to no evidence that any part of the Data is
“customer information coded from original text into language unintelligible to
unauthorized persons, but not into a randomly generated alphanumeric code,” my
76
construction of “encrypted customer information.” Similarly, Serverside has pointed to
no evidence that there is a module of the Cre8MyCard system that uses a “customer
identifier” that “encompasses encrypted customer information” to “cause printing of
said personalized customer image onto the card material and to cause application of
relevant financial information from the financial record onto the card material.”
Consequently, the Iowa Defendants are entitled to summary judgment that they
do not infringe claim 1 of the ‘490, and all other patent claims of the ‘490 patent at
issue, as a matter of law, because Serverside has failed to generate a genuine issue of
material fact that the alleged “customer identifier” in the Cre8MyCard system
“encompasses encrypted customer information.”
6.
Summary
It follows from the analysis of the Iowa Defendants’ arguments for summary
judgment that the Iowa Defendants are entitled to summary judgment on claim 1,
dependent claims 2, 9, 14, 15, 16, 18 and 22 of the ‘199 patent, and claims 25, 29,
and 30 of the ‘199 patent, whether they are dependent or independent, to the extent that
infringement of those patent claims is premised on a requirement that the claimed
invention (or the accused Cre8MyCard system) receives a “customer identifier” that is
a “secure unique identifier.” On the other hand, the Iowa Defendants are not entitled
to summary judgment on infringement of those patent claims to the extent that
infringement is premised on a requirement that the claimed invention (or the accused
Cre8MyCard system) receives a “customer identifier” that is a “one-way code.” The
Iowa Defendants are entitled to summary judgment on all claims of infringement of all
of the patent claims of the ‘490 patent that are at issue here.
77
IV.
CONCLUSION
Upon the foregoing,
1.
The Iowa Defendants’ September 16, 2013, Motion To Strike (docket no.
137) is denied;
2.
The Iowa Defendants’ August 12, 2013, Motion For Summary Judgment
(docket no. 133) is granted in part, and denied in part, as follows:
a.
The Motion is granted as to claims of infringement of independent
claim 1, dependent claims 2, 9, 14, 15, 16, 18 and 22 of the ‘199 patent, and
claims 25, 29, and 30 of the ‘199 patent, whether they are dependent or
independent, to the extent that infringement of those patent claims is premised on
a requirement that the claimed invention (or the accused Cre8MyCard system)
receives a “customer identifier” that is a “secure unique identifier”;
b.
The Motion is denied as to claims of infringement of independent
claim 1, dependent claims 2, 9, 14, 15, 16, 18 and 22 of the ‘199 patent, and
claims 25, 29, and 30 of the ‘199 patent, whether they are dependent or
independent, to the extent that infringement is premised on a requirement that the
claimed invention (or the accused Cre8MyCard system) receives a “customer
identifier” that is a “one-way code”; and
c.
The Motion is granted on all claims of infringement of all of the patent
claims of the ‘490 patent that are at issue here.
IT IS SO ORDERED.
DATED this 9th day of December, 2013.
______________________________________
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA
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