United States District Court, D. Minnesota
J. Gilbertson, David J. Wallace-Jackson, and Sybil Dunlop,
Greene Espel PLLP for Plaintiff and Counter-defendant.
M. Lancaster, Ben D. Kappelman, and Kenneth E. Levitt, Dorsey
& Whitney LLP, and J. Thomas Vitt, Jones Day, for
Defendants and Counter-claimants.
AMENDED  MEMORANDUM OPINION AND
RICHARD NELSON, UNITED STATES DISTRICT JUDGE
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.
Plaintiff's Patent ‘945
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).) 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
(Id. at 2.)
Covered Business Method Review and Randle ‘283
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.
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).
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.
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 ...