CMG Fin. Servs., Inc. v. Pac. Trust Bank
| Decision Date | 29 August 2014 |
| Docket Number | Case No. CV 11–10344 PSG MRWx. |
| Citation | 50 F.Supp.3d 1306 |
| Court | U.S. District Court — Central District of California |
| Parties | CMG FINANCIAL SERVICES, INC. v. PACIFIC TRUST BANK, F.S.B. |
Allan Z. Litovsky, Salil Bali, Stradling Yocca Carlson and Rauth PC, Newport Beach, CA, for CMG Financial Services, Inc.
David Lawrence Aronoff, Gail Jeanne Standish, Stephen R. Smerek, Winston and Strawn LLP, Los Angeles, CA, for Pacific Trust Bank, F.S.B.
Order GRANTING Defendant's Motion for Summary Judgment
Before the Court is Defendant's Motion for Summary Judgment. (Dkt. No. 55.) The Court finds this matter appropriate for decision without oral argument. See Fed.R.Civ.P. 78(b) ; L.R. 7–15. After considering the papers filed in support of and in opposition to the Motion, the Court GRANTS the Motion.
On December 14, 2011, Plaintiff CMG Financial Services, Inc. (“Plaintiff”) filed a Complaint against Defendant Pacific Trust Bank, F.S.B. (“Defendant”), claiming infringement of its U.S. Patent No. 7,627,509 (“'509 Patent”).
On February 6, 2012, Defendant moved to dismiss the Complaint on the grounds that the '509 Patent is not patent-eligible. (See Dkt. No. 11.) On April 16, 2012, the Court denied the Motion, noting that courts “are better able to evaluate patent eligibility after considering evidence” and issues that would be better determined through the development and presentation of evidence included “whether the process of the '509 Patent is capable of being performed with pen and paper, whether the process integrates the operation of a machine, and whether the '509 Patent claims have been part of the banking industry for years.” (Apr. 16, 2012 Order, Dkt. No. 20 at 4.)
On May 4, 2012, Defendant filed its Answer and Counterclaim. (Dkt. No. 26.) Defendant denied the material allegations in the Complaint and counterclaimed that the '509 Patent is invalid, seeking a declaratory judgment to that effect. (Id. at 8.) Plaintiff filed its Answer to the Counterclaim on May 24, 2012. (Dkt. Nos. 29, 32.)
On October 29, 2012, Defendant filed the instant Motion for Summary Judgment, arguing that the '509 Patent is invalid as a matter of law, as well as a Statement of Uncontroverted Facts and Conclusions of Law, the Declaration of Dr. Michael Lea, with attached Exhibits A through C, and Request for Judicial Notice, with attached Exhibits A through C. (Dkt. Nos. 55–58.)
On November 5, 2012, Plaintiff filed its Amended Opening Claim Construction Brief, along with Exhibits A through L.1 (Dkt. Nos. 62, 63.) On November 16, 2012, Defendant filed its Responsive Claim Construction Brief, Declaration of Dr. Michael Lea, with attached Exhibit A, the Declaration of Amy C. Quartarolo, with attached Exhibits A through S, and Objections to Evidence Submitted by Plaintiff. (Dkt. Nos. 64–67.)
On November 19, 2012, Plaintiff filed an Ex Parte Application for Order Denying the Motion for Summary Judgment as Premature, or in the Alternative, for an Order Striking the Expert Witness Declaration of Dr. Michael Lea, with supporting documents. (Dkt. No. 68) The Court denied the Ex Parte Application on November 21, 2012. (Dkt. No. 74.)
Plaintiff filed Opposition to the Motion for Summary Judgment on November 26, 2012, in addition to the Declaration of David Zacharias, the Declaration of Michaele N. Turnage Young, the Declaration of Douglas Nesbit, Objections to Evidence submitted by Defendant, Statement of Genuine Issues, and Request for Judicial Notice with attached Exhibits. (Dkt. Nos. 76–83.)
The Court entered an Order on November 28, 2012, requiring the parties to submit supplemental briefing regarding the import of the Federal Circuit's decision in PerkinElmer, Inc. v. Intema Ltd., 496 Fed.Appx. 65 (Fed.Cir.2012), on the pending Motion for Summary Judgment. (Nov. 28, 2012 Order, Dkt. No. 84.)
On November 30, 2012, Plaintiff filed its Reply in support of its Claim Construction Brief, with the Declaration of David Zacharias and Exhibits 1 and 2. (Dkt. No. 86.)
In response to the Court's November 28, 2012 Order, the parties filed their supplemental briefs on December 19, 2012. (Dkt. Nos. 87–89.)
Defendant filed its Reply in support of the Motion for Summary Judgment on January 14, 2013, as well as evidentiary objections and its response to Plaintiff's Statement of Genuine Issues. (Dkt. Nos. 90–92.)
On May 17, 2013, the parties filed a joint stipulation for leave to submit supplemental briefing regarding the import of the Federal Circuit's decision in CLS Bank Int'l v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed.Cir.2013), on the pending Motion for Summary Judgment. (Dkt. No. 112.) The Court granted the stipulation. (Dkt. No. 113.) The parties filed their supplemental briefs on May 28, 2013. (Dkt. Nos. 116, 117.) The parties filed notices of supplemental authority on June 5, 6, and 21, 2013. (Dkt. Nos. 119, 120, 122, 124.)
On June 24, 2013, the Court ordered the parties to submit supplemental briefing on the Federal Circuit's decision Ultramercial, LLC v. Hulu, LLC, 722 F.3d 1335 (Fed.Cir.2013). (Dkt. Nos. 125–127.) The parties filed timely supplemental briefs. (Dkt. Nos. 129, 131, 133.)
On December 9, 2013, the Court entered an Order staying Defendant's Motion for Summary Judgment pending the Supreme Court's review of the Federal Circuit's en banc opinion in CLS Bank Int'l v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed.Cir.2013). (Dec. 9, 2013 Order, Dkt. No. 140; see also Dkt. No. 142.)
On January 30, 2014, Plaintiff moved the Court to lift the stay, but the Court denied the request on March 4, 2013. (Dkt. Nos. 143–145, 149–151.)
On June 19, 2014, the Court re-opened the action and ordered further briefing regarding the Supreme Court's decision in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. ––––, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014). (Dkt. No. 152.) Defendant filed its supplemental brief on July 10, 2014 (hereinafter “Def. Supp. Br.”). (Dkt. No. 155.) Plaintiff filed its supplemental brief on July 18, 2014 (hereinafter “Pl. Supp. Br.”). (Dkt. No. 156.) The Court took the Motion for Summary Judgment off calendar and under submission on August 15, 2014. (Dkt. No. 163.)
Federal Rule of Civil Procedure 56(c) establishes that summary judgment is proper only when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” The moving party has the burden of demonstrating the absence of a genuine issue of fact for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the moving party satisfies the burden, the party opposing the motion must set forth specific facts showing that there remains a genuine issue for trial, and “may not rest upon mere allegations or denials of his pleading.” See id. at 248, 257, 106 S.Ct. 2505 (citations omitted). A non-moving party who bears the burden of proving at trial an element essential to its case must sufficiently establish a genuine dispute of fact with respect to that element or face summary judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Such an issue of fact is a genuine and material issue if it cannot be reasonably resolved in favor of either party and may affect the outcome of the suit. See Anderson, 477 U.S. at 248, 250–51, 106 S.Ct. 2505.
If the moving party seeks summary judgment on a claim or defense for which it bears the burden of proof at trial, the moving party must use affirmative, admissible evidence. Admissible declarations or affidavits must be based on personal knowledge, must set forth facts that would be admissible evidence at trial, and must show that the declarant or affiant is competent to testify as to the facts at issue. See Fed.R.Civ.P. 56(e).
The following material facts are supported adequately by admissible evidence and uncontroverted. They are “admitted to exist without controversy” for the purposes of this Motion. See L.R. 56–3.
The '509 Patent, which was issued on December 1, 2009, is entitled “Home Ownership Payment System and Method.” (See '509 Patent.) According to the Abstract, the Patent is directed to:
A system and method for providing a line of credit to a mortgagee, while simultaneously paying off the mortgage loan of the mortgagee, by setting up an integrated account comprised of funds periodically deposited therein by the mortgagee with mortgage payment means associated with the account for paying down the mortgage. The account provides a line of credit to the mortgagee based on the equity the mortgagee has in the predetermined value of the property covered by the mortgage, and means are provided for withdrawal of funds from the account by the mortgagee.
(Id. at Abstract.) The background section of the Patent explains that before the '509 Patent, there were no payment plans that “[replace] one's home mortgage and the mortgagee's checking account and which maintains all of the various types of transactions offered by a checking account throughout such integration.” The '509 Patent also “allows for fully integrated and fully transactional checking account features (direct deposit, electronic transfers, unlimited checking, ATM access, point-of-sale access, online bill payment, online account access, etc[.] ) which are critical to maximizing the amount of unused cash that one can apply to reduce one's loan balance and save interest.”
The '509 Patent contains eleven claims.2 (Id. at col. 4 l. 6—col. 6 l. 32.) Of the eleven Claims, Claims 1, 3, and 11 are independent claims and the remaining eight claims are dependent claims. (Id. ) Independent Claims 1 and 11 describe systems while independent Claim 3 describes a method. (Id. )
Claim 1, an independent system claim, describes:
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