Default Proof Credit Card System v. Home Depot, No. 03-CV-20094.

CourtUnited States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
Writing for the CourtAltonaga
Citation389 F.Supp.2d 1325
PartiesDEFAULT PROOF CREDIT CARD SYSTEM, INC., Plaintiff, v. HOME DEPOT U.S.A., INC. d/b/a The Home Depot, et al., Defendants.
Docket NumberNo. 03-CV-20094.
Decision Date30 September 2004
389 F.Supp.2d 1325
HOME DEPOT U.S.A., INC. d/b/a The Home Depot, et al., Defendants.
No. 03-CV-20094.
United States District Court, S.D. Florida, Miami Division.
September 30, 2004.

Page 1326


Page 1327


Page 1328

Douglas M. Hall, Niro Scavone Haller & Niro, Chicago, IL, Sally Wiggins, David J. Sheikh, Raymond P. Niro, David Kenneth Friedland, Leslie Jean Lott, Lott & Friedland, Coral Gables, FL, for Plaintiff.

Annette Cristina Escobar, Astigarraga Davis Mullins Grossman, Miami, FL, Edward Maurice Mullins, Mark H. Izraelewicz, Marshall Gerstein & Borun, Chicago, IL, William H. Baker, Kevin M. Flowers, Robert Scott Newman, Marlow Connell Valerius Abrams Adler & Newman, Coral Gables, FL, Ian L. Saffer, Townsend Townsend & Crew, Denver, CO, Kenneth S. Chang, David E. Sipiora, Charles Howard Lichtman, Berger Singerman, Fort Lauderdale, FL, for Defendants.


ALTONAGA, District Judge.

THIS CAUSE came before the Court upon Defendants, Starbucks1 and Wal-Mart's2 Motion for Summary Judgment of Noninfringement (D.E.85), filed under seal; Defendant, Home Depot U.S.A., Inc.'s ("Home Depot") Motion for an Order Construing Claim 1 of U.S. Patent No. 6,405,182 (D.E.89); Home Depot's Motion for Summary Judgment that the Claims of U.S. Patent No. 6,405,182 are Invalid (D.E. 90); and Home Depot's Motion for Summary Judgment that its Gift-Card Program does not Infringe any Claim of U.S. Patent No. 6,405,182 (D.E.94), filed under seal. The Court has carefully considered the written submissions of the parties, pertinent portions of the record, argument of counsel, and applicable law.


Plaintiff, Default Proof Credit Card System, Inc. ("Default Proof") brought this action against Defendants, Starbucks, Wal-Mart and Home Depot (collectively "Defendants") based on the alleged infringement of U.S. Patent No. 6,405,182 (the" '182 Patent"). Vincent Cuervo ("Cuervo" or "Mr. Cuervo"), the inventor of the '182 Patent, was born in Cuba and practiced law there until 1960 when he emigrated to the United States. Cuervo took a job as a door-to-door life insurance salesman in Miami. Cuervo was able succeed in the life insurance business due, in

Page 1329

part, to his development of a system for providing lines of credit to the owners of life insurance policies based upon the cash surrender values of such policies. Cuervo was awarded United States Patent Nos. 4,718,009 and 5,025,138 on this novel system.

In 1986, Cuervo founded Default Proof to develop and promote his patented system. Default Proof alleges that Cuervo next developed a system for dispensing prepaid debit cards through automated teller machines and point of sale terminals. In August 2000, Cuervo was granted U.S. Patent No. 6,105,009 (the " '009 Patent") for a system of dispensing prepaid debit cards through automated teller machines. In June 2002, he was granted the '182 Patent for a "System for Dispensing Prepaid Debit Cards Through Point-Of-Sale Terminals." It is the '182 Patent that is the subject of this lawsuit. Default Proof alleges that Defendants have knowingly infringed at least Claim 1 of the '182 Patent through their manufacture, use, importation, sale and offer for sale of their respective store credit cards, electronic gift cards or other prepaid cards.

The First Amended Complaint, which is the operative pleading, was filed on April 24, 2003. It is a one-count Complaint for patent infringement arising under the patent laws of the United States, Title 35 of the United States Code. Default Proof seeks, inter alia, an injunction prohibiting further infringement and, specifically, enjoining further importation, manufacture, use, offer for sale and/or sale of gift cards within the scope of the '182 Patent, and enjoining Defendants from contributing to and/or inducing infringement of the '182 Patent.

Defendants answered the First Amended Complaint by asserting several affirmative defenses, including the defenses that Default Proof failed to state a claim upon which relief may be granted, that the claims of the '182 Patent are invalid for failure to comply with 35 U.S.C. §§ 102, 102, 103 and 112, and that Defendants have not infringed the claims of the '182 Patent either literally or under the doctrine of equivalents. All of the Defendants have also filed counterclaims against Default Proof, in which they request: (1) a declaratory judgment of non-infringement and non-liability pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201; and (2) a declaratory judgment of invalidity pursuant to 28 U.S.C. § 2201. Defendants maintain that one or more claims of the '182 Patent are invalid under one or more of the following statutory provisions: 35 U.S.C. §§ 101, 102, 103 and 112. Home Depot has also sought a judgment declaring that the '182 Patent is unenforceable and/or invalid due to Default Proof's misuse thereof.


A. The '182 Patent Specification

The '182 Patent is a continuation-in-part4

Page 1330

of the application that matured into the '009 Patent on August 15, 2000. The ' 009 Patent is incorporated by reference in the '182 Patent. The '182 Patent issued on June 11, 2002 to Vincent Cuervo. The title of the '182 Patent is "System for Dispensing Prepaid Debit Cards Through Point-of-Sale Terminals." The application number associated with the '182 Patent is 09/524,496 (the " '496 Application").

The "Abstract" of the invention describes:

Point-of-Sale machines that allow individuals to obtain from participating merchants, "over-the-counter", [sic] prepaid debit cards. The amount of the line of credit is determined from the amount prepaid and credited to the debit card issuer, as payment for a simple purchasing transaction of merchandise or services. In this case the transaction is the purchasing of a prepaid PIN (personal identification number) required debit card.

The prepaid debit cards will be instantly available and dispensed in different dollar amounts, after payment of the prepaid amount (line of credit) selected, and the purchaser has input required particular information and those of the transaction which are merged with one of the unique identification numbers and transmitted to a remote computer facility that acts as clearing house for the users' transactions. The remote facility, the debit card issuer, includes input and output means to communicate with the point-of-sale terminal (debit card dispenser location) and the associated circuitry to obtain the identification numbers of the debit cards being dispensed and the particulars of the users and the transactions. Adequate software is provided in the remote facility to permit users to access the same line of credit opened for one or more debit cards so that different users can remotely access and affect one or more lines of credit.

(emphasis added).

The specification describes in the "Background of the Invention" that "[t]he present invention relates to a system for dispensing prepaid debit cards through computerized point-of-sale (POS) terminals." ('182 Patent, col. 1, lines 13-15) (emphasis added). In the next section of the specification, entitled "Description of the Related Art," the '182 Patent notes that the closest reference of prior art:

corresponds to U.S. Pat. No. 5,696,908 issued to Muehlberger in 1997 for a telephone debit card dispenser and method. However, it differs from the present invention because it does not disclose the use of point-of-sale terminals (POS) to provide an injection on stacked "virgin" debit cards of any selected prepaid amount of funds (line of credit), security information (PINs, passwords, mother's maiden name, etc). And to include conditions for the validation and availability of those funds or line of credit [sic].

('182 Patent, col. 1, lines 23-32) (emphasis added).

The next section of the patent, entitled "Summary of the Invention," discusses the purported "objects of the invention." These are said to be, inter alia,: (1) "to provide a system for selling, dispensing and administering credit or debit cards" that "permits a user to acquire such debit or credit cards from widely available Point-of-Sale terminals using cash, debit and/or credit cards, check cards or ATM's

Page 1331

sic] cards;" and (2) to "provide a system for selling, dispensing and administering credit or debit cards that require a minimum of paperwork, maintenance and financial disclosure from the card purchaser." (Id. at col. 1, lines 40-49)

There are two Figures described in the "Brief Description of the Drawings" that follow. In this section, the invention is described as consisting of "the details of combinations of electronic transactions." (Id. at col. 2, lines 7-8).

The '182 Patent then includes two figures. Figure 1 is said to "represent[ ] the hardware used in the present invention," and Figure 2 "is a flow chart summarizing the process steps followed in typical transactions." (Id. at col. 2, lines 11-14) (emphasis added). Figures 1 and 2 are included below in the Appendix to this Order.

In Figure 1 of the '182 Patent, a box labeled "DISPENSER" is numbered "40" and a separate box labeled "P.O.S." is numbered 54. The two boxes are connected by a line. An arrow from the "DISPENSER" extends to another box labeled "D.C.," which indisputably stands for "debit card." The user of the device, numbered 30, is represented by a stick figure in Figure 1. In Figure 2 of the '182 Patent, the last step, after "D.C.C.H. VALIDATION," is "VALIDATING DATA RECEIVED AND D.C. DISPENSED."

The final section of the specification contains a single preferred embodiment and seven claims. The parties have limited their arguments in the pending motions to a discussion of Claim 1 of the Patent. Claim 1 of the '182 Patent reads as follows:

1. A system for dispensing and validating prepaid debit and credit cards, comprising:


To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT