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Solutran, Inc. v. U.S. Bancorp

United States District Court, D. Minnesota

March 12, 2018

Solutran, Inc., Plaintiff,
v.
U.S. Bancorp and Elavon, Inc., Defendants. U.S. Bancorp and Elavon, Inc., Counter-claimants,
v.
Solutran, Inc., Counter-defendant.

          Robert J. Gilbertson, David J. Wallace-Jackson, and Sybil Dunlop, Greene Espel PLLP for Plaintiff and Counter-defendant.

          Peter M. Lancaster, Ben D. Kappelman, and Kenneth E. Levitt, Dorsey & Whitney LLP, and J. Thomas Vitt, Jones Day, for Defendants and Counter-claimants.

          AMENDED [1] MEMORANDUM OPINION AND ORDER

          SUSAN RICHARD NELSON, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         The Court now addresses Plaintiff's Motions in Limine No. 3, to exclude testimony, exhibits, and argument regarding the Randle prior-art reference, and No. 7, to exclude evidence and argument relating to 35 U.S.C. § 103 [Doc. No. 228], as well as Defendant U.S. Bank's Motion in Limine to Exclude Evidence of the Patent Office's Covered Business Method Review [Doc. No. 234]. For the reasons stated below, the Court denies Plaintiff's Motion No. 7 and defers ruling upon the remaining motions.

         II. BACKGROUND

         A. Plaintiff's Patent ‘945

         On September 25, 2013, Plaintiff filed a Complaint against Defendants, alleging infringement of its United States Patent No. 8, 311, 945 (“'945 patent”). (Compl. [Doc. No. 1].) The ‘945 patent claims a system and method for processing check transactions. (Id., Ex. A [Doc. No. 1-1] (Patent ‘945).) The ‘945 patent process, which Plaintiff has marketed as “Solutran's POS [Point of Sale] Imaging Network, ” or “SPIN, ” converts a paper check into two electronic files: a data file containing key transaction information and a digital image of the check. (Compl. ¶ 9; id., Ex. A.) When a check is presented to a business, the business creates the data file at the point of sale and sends it to a third-party payment processor (“TPPP”), which uses that data to credit the payee's account. (Id., Ex. A (Patent ‘945, at 12[2]).) The data file includes, inter alia, the amount of the transaction and the check's Magnetic Ink Character Recognition (“MICR”) information. (Id. at 15.) After the account is credited, the business sends the original check to the TPPP, which creates a digital image of the check and associates that image with the check's MICR information. (Id.) The TPPP then compares the initial data file with the digital image to confirm matches or identify and resolve discrepancies. (Id. at 12.) The digital image can then be indexed in the Automated Clearing House (“ACH”) network, if eligible, or otherwise presented for settlement and archived. (Id. at 9, 12, 16.) Essential to the patent ‘945 process is that

The data files and image files are separated both in time and space, with the data files being used to promptly initiate the transfer of funds to and from appropriate accounts, while the paper checks, at a remote location and typically lagging in time, are scanned to create digital image files and deposited as an image or substitute check if deemed ACH ineligible.

(Id. at 2.)

         B. Covered Business Method Review and Randle ‘283

         In February 2014, U.S. Bank petitioned for a Covered Business Method (“CBM”) review of the ‘945 patent before the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (“PTAB”), arguing that: (1) the patent was invalid under 35 U.S.C. § 101; and (2) the patent's claims were unpatentable under 35 U.S.C. § 103 as obvious. See U.S. Bancorp v. Solutran, Inc., No. CBM2014-00076, 2014 WL 3943913, at *1 (PTAB Aug. 7, 2014) (“Bancorp I”). The PTAB rejected U.S. Bank's § 101 argument, but instituted the CBM proceeding based on the § 103 argument. See id., at *6-13. While the CBM review was underway, this Court stayed proceedings in the district court action. (See generally Order dated Sept. 18, 2014 [Doc. No. 50].)

         U.S. Bank argued that the prior art represented in Figure 2 of the ‘945 patent, combined with Published Patent Application No. U.S. 2005/0071283 (“Randle ‘283”), fully discloses or renders obvious the ‘945 patent. U.S. Bancorp v. Solutran, Inc., No. CBM2014-00076, 2015 WL 4698463, at *8 (PTAB Aug. 5, 2015) (“Bancorp II”). The PTAB summarized the process contained in Randle ‘283: “According to Randle, the deposit bank captures a check and related information by scanning to create an image of the check, which is in addition to creating a data file containing MICR data of the check.” Id., at *9. Then, the data file and “image plus data file” are “separately manipulated and processed for settlement, payment and clearing.” Id. (internal citation omitted). By creating two different-sized packages of data for each check, Randle ‘283 allows clearing houses to “timely notify financial institution participants of debit and credit obligations that will accrue upon actual receipt and processing of the imaged instruments.” Id. (internal citation omitted).

         U.S. Bank held up Randle ‘283 as disclosing or making obvious several elements of the ‘945 patent. Specifically, it asserted in its petition that Randle ‘283 made obvious: (1) that the digital imaging of a check could be outsourced to a third party, as described in the ‘945 patent's Claims 1c, 4d, and 5d; (2) that a computer could compare the MICR information from a data file with the MICR information derived from a digital image, as described in the ‘945 patent's Claim 1d, 4e, and 5e; (3) that the digital-scan and account- crediting steps could be reversed, as described in the ‘945 patent's Claim 1c, 4d, and 5d; (4) that the creation and comparison of the data file and digital image could include exception processing procedures to resolve unmatched or mismatched data, as described in the ‘945 patent's Claim 2e; (5) that the files could be compared using the check's MICR information, as described in the ‘945 patent's Claim 3; and (6) that the digital image file could be used to settle checks that are not eligible for ACH processing, as described by the ‘945 patent's Claim 4f. See U.S. Bancorp v. Solutran, Inc., No. CMB2014-00076 (Petition).

         The PTAB found that the combination of Figure 2 and Randle ‘283 did not render the ‘945 patent obvious. Bancorp II, 2015 WL 4698463, at *16. The PTAB rejected U.S. Bank's argument that it was obvious to reverse the sequence of the check-scanning step and the account-crediting step. Id. Upon finding that U.S. Bank had failed to prove that Claim 1 was obvious, the PTAB also rejected U.S. Bank's challenge to Claims 2, 3, and 6, which were dependent upon Claim 1, and Claims 4 and 5, which were similar to Claim 1 and included additional limitations. Id. The Federal Circuit Court of Appeals affirmed the PTAB's decision that the ‘945 patent was not invalid for obviousness, see ...


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