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United Services Automobile Association v. Wells Fargo Bank, N.A.

United States District Court, E.D. Texas, Marshall Division

October 28, 2019

UNITED SERVICES AUTOMOBILE ASSOCIATION, Plaintiff,
v.
WELLS FARGO BANK, N.A., Defendant.

          MEMORANDUM OPINION AND ORDER

          RODNEY GILSTRAP UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant Wells Fargo Bank N.A.'s (“Wells Fargo”) Motion for Summary Judgment Under 35 U.S.C. § 101 (the “Motion”). (Dkt. No. 131.) The Court heard argument on this Motion at the pretrial conference held in the above-captioned case on October 17, 2019. (Dkt. No. 263.) As announced at that hearing and for the reasons set forth herein, the Court is of the opinion that the Motion should be and hereby is DENIED.[1] (Id. at 228:3-229:5.)

         I. Factual Background

         A. Procedural History

         United Services Automobile Association (“USAA”) brought suit against Wells Fargo alleging infringement of U.S. Patent Nos. 8, 977, 571 (the “'571 Patent”) and 9, 818, 090 (the “'090 Patent”) (collectively, the “Asserted Patents” or “Patents-in-Suit”).[2] Shortly thereafter, Wells Fargo filed a Motion for Judgment on the Pleadings that the Asserted Patents are ineligible under 35 U.S.C. § 101. (Dkt. No. 28.) The Court denied Well Fargo's motion as moot in light of USAA's subsequently filed First Amended Complaint and granted leave to refile a similar motion directed at the First Amended Complaint. (Dkt. No. 61.) Wells Fargo declined to refile under Federal Rule of Civil Procedure 12.

         However, Wells Fargo did file Petitions for Covered Business Method (“CBM”) Review with the United States Patent Trial and Appeal Board (“PTAB”) challenging each of the Asserted Patents, inter alia, as claiming patent-ineligible subject matter under § 101. Petition, Wells Fargo Bank, N.A. v. United Servs. Auto. Ass'n, CBM2019-00004, Paper No. 2 (P.T.A.B. Nov. 8, 2018) (hereinafter, “'571 CBM Petition”); Petition, Wells Fargo Bank, N.A. v. United Servs. Auto. Ass'n, CBM2019-00002, Paper No. 2 (P.T.A.B. Nov. 8, 2018). The PTAB declined to institute CBM review as to the '571 Patent because it found that the patent claimed a “technological invention”; that is, it claimed a technological feature that is novel and nonobvious and “solves a technical problem using a technical solution.” Decision, Wells Fargo Bank, N.A. v. United Servs. Auto. Assoc'n, CBM2019-00004, Paper No. 22 at 22-32 (P.T.A.B. May 15, 2019) (hereinafter, “'571 CBM Decision”); see also 37 C.F.R. § 42.301 (defining the scope of CBM review). Wells Fargo sought, and the PTAB granted, dismissal of its CBM petition as to the '090 Patent. Decision, Wells Fargo Bank, N.A. v. United Services Automobile Association, CBM2019-00002, Paper No. 16 (P.T.A.B. Aug. 26, 2019). The PTAB also denied initiation as to Wells Fargo's related Petition for Inter Partes Review of the '090 Patent. Decision, Wells Fargo Bank, N.A. v. United Services Automobile Association, IPR2019-00815, Paper No. 17 (P.T.A.B. Aug. 26, 2019).

         Wells Fargo now brings the instant Motion under Federal Rule of Civil Procedure 56 that the claims of the Patents-in-Suit are directed at patent-ineligible subject matter.

         B. The Asserted Patents and Claims

         USAA asserts that Wells Fargo infringes Claims 1-10 and 12-13 of the '571 Patent and Claims 1-10 of the '090 Patent (collectively, the “Asserted Claims”). (Dkt. No. 268.) By this Motion, Wells Fargo seeks summary judgment that each of these Asserted Claims is directed at patent-ineligible subject matter. The '571 Patent and the '090 Patent share the same priority date and specification.

         The Asserted Claims generally relate to the automated capture of a digital image of a check for deposit using a mobile device. The '571 Patent and '090 Patent generally claim systems and methods for capturing check images by monitoring images for conformance with certain monitoring criteria. Claim 1 of the '571 Patent is illustrative:

1. A non-transitory computer-readable medium comprising computer-readable instructions for depositing a check that, when executed by a processor, cause the processor to:
monitor an image of the check in a field of view of a camera of a mobile device with respect to a monitoring criterion using an image monitoring and capture module of the mobile device;
capture the image of the check with the camera when the image of the check passes the monitoring criterion; and provide the image of the check from the camera to a depository via a communication pathway between the mobile device and the depository.

'571 Patent, Claim 1.

         Wells Fargo asserts that Claim 1 of the '090 Patent is representative for purposes of the Court's analysis. The Court is not convinced that Wells Fargo has met its initial burden of showing representativeness. See PPS Data, LLC v. Jack Henry & Assocs., Inc., __F.Supp.3d__, No. 2:18-cv-00007-JRG, 2019 WL 4745122, at *3-6 (E.D. Tex. Sept. 6, 2019) (“[W]hen a defendant seeks to invalidate multiple claims based only on allegations relating to a subset of those claims, the defendant must justify treating that subset as representative of the other claims.”) (citing Aqua Prod., Inc. v. Matal, 872 F.3d 1290, 1305 (Fed. Cir. 2017); 35 U.S.C. § 282(a)); id. at 5 (“Since different patents must generally contain patentably distinct inventions, it follows that the claims in one patent will not usually represent all of the inventive concepts embodied in the claims of another patent.”) (citing Novartis Pharm. Corp. v. Breckenridge Pharm. Inc., 909 F.3d 1355, 1362 (Fed. Cir. 2018)). Accordingly, the Court looks to each independent Asserted Claim in each Asserted Patent. '571 Patent, Claims 1, 9; '090 Patent, Claim 1. The Court also looks to the individual limitations of particular dependent Asserted Claims to the extent relevant to its analysis.

         II. Legal Standard

         A. Summary Judgment

         Summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Any evidence must be viewed in the light most favorable to the nonmovant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)). Summary judgment is proper when there is no genuine dispute of material fact. Celotex v. Catrett, 477 U.S. 317, 322 (1986). “By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine [dispute] of material fact.” Anderson, 477 U.S. at 247-48. The substantive law identifies the material facts, and disputes over facts that are irrelevant or unnecessary will not defeat a motion for summary judgment. Id. at 248. A dispute about a material fact is “genuine” when the evidence is “such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The moving party must identify the basis for granting summary judgment and evidence demonstrating the absence of a genuine dispute of material fact. Celotex, 477 U.S. at 323. If the movant bears the burden of proof on an issue at trial, then the movant “must establish beyond peradventure all of the essential elements of the claim or defense to warrant [summary] judgment in [its] favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). “If the moving party does not have the ultimate burden of persuasion at trial, the party ‘must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.'” Intellectual Ventures I LLC v. T Mobile USA, Inc., No. 2:17-CV-00577-JRG, 2018 WL 5809267, at *1 (E.D. Tex. Nov. 6, 2018) (quoting Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000)).

         B. Patent-Eligible Subject Matter

         “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of [the Patent Act].” 35 U.S.C. § 101. Since patent protection does not extend to claims that monopolize the “building blocks of human ingenuity, ” claims directed to laws of nature, natural phenomena, and abstract ideas are not patent eligible. Alice Corp. v. CLS Bank Int'l, 573 U.S. 208, 216 (2014). The Supreme Court instructs courts to distinguish between claims that set forth patent-ineligible subject matter and those that “integrate the building blocks into something more.” Id. at 217. In doing so, courts apply a two-step test.

         First, the court “determine[s] whether the claims at issue are directed to a patent-ineligible concept.” Id. at 218. This “step of the inquiry calls upon us to look at the ‘focus of the claimed advance over the prior art' to determine if the claim's ‘character as a whole' is directed to excluded subject matter.” Affinity Labs of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016). The court must “tread carefully in construing this exclusionary principle” because “[a]t some level, ‘all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.'” Alice, 573 U.S. at 217 (omission in original) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 556 U.S. 66, 71 (2012)). The court must distinguish “ineligible abstract-idea-based solutions implemented with generic technical components in a conventional way from the eligible technology-based solution and software-based invention that improves the performance of the computer system itself.” Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1299 (Fed. Cir. 2016) (internal quotations omitted) . In doing so, the Court's analysis must be “directly tethered to the claim language” and should avoid recasting specific limitations “at a high level of abstraction.” Solutran, Inc. v. Elavon, Inc., 931 F.3d 1161, 1168 (Fed. Cir. 2019).

         Second, if the challenged claims are directed towards a patent-ineligible concept, the court then “consider[s] the elements of each claim both individually and ‘as an ordered combination' to determine whether the additional elements ‘transform the nature of the claim' into a patent eligible application.” Alice, 573 U.S. at 217 (quoting Mayo, 566 U.S. 66, 78-79 (2012)). This step is satisfied when the claim limitations contain an inventive concept that “involve[s] more than performance of ‘well-understood, routine, [and] conventional activities previously known to the industry.'” Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1347-48 (Fed. Cir. 2014) (quoting Alice, 573 U.S. at 225). The Federal Circuit has explained that “[w]hile the ultimate determination of eligibility under § 101 is a question of law, like many legal questions, there can be subsidiary fact questions which must be resolved en route to the ultimate legal determination.” Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1128 (Fed. Cir. 2018). As such, “[t]he question of whether a claim element or combination of elements is well-understood, routine, and conventional to a skilled artisan in the relevant field is a question of fact” that must be “proven by clear and convincing evidence.” Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).

         Something is not necessarily well-understood, routine, and conventional simply because it is disclosed in a prior art reference. Exergen Corp. v. KAZ USA, Inc., 725 Fed.Appx. 959, 965-66 (Fed. Cir. 2018). There are many obscure references that may qualify as prior art but are insufficient to establish something is a “well-understood, routine, and conventional activity previously engaged in by scientists who work in the field.” Mayo, 566 U.S. at 79. Accordingly, determining “[w]hether a particular technology is well-understood, ...


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