Solutran, Inc. v. U.S. Bancorp, Case No. 13–cv–2637 (SRN/BRT)

• Decision Date: 27 November 2017
• Docket Number: Case No. 13–cv–2637 (SRN/BRT)
• Citation: 291 F.Supp.3d 877
• Parties: SOLUTRAN, INC. Plaintiff, v. U.S. BANCORP and Elavon, Inc., Defendants. U.S. Bancorp and Elavon, Inc. Counter-claimants, v. Solutran, Inc. Counter-defendant.
• Court: U.S. District Court — District of Minnesota

291 F.Supp.3d 877

SOLUTRAN, INC. Plaintiff,

v.U.S. BANCORP and Elavon, Inc., Defendants.

U.S. Bancorp and Elavon, Inc. Counter-claimants,

v.Solutran, Inc. Counter-defendant.

Case No. 13–cv–2637 (SRN/BRT)

United States District Court, D. Minnesota.

Signed November 27, 2017

David J. Wallace–Jackson, Robert J. Gilbertson, and Sybil L. Dunlop, Greene Espel PLLP, 222 South Ninth Street, Suite 2200, Minneapolis, Minnesota, for Plaintiff and Counter-defendant.

Ben D. Kappelman, Kenneth E. Levitt, Peter M. Lancaster, Dorsey & Whitney LLP, 50 South Sixth Street, Suite 1500, Minneapolis, Minnesota 55402, and J. Thomas Vitt, Jones Day, 90 South Seventh Street, Suite 4950, Minneapolis, Minnesota 55402, for Defendants and Counter-claimants.

MEMORANDUM OPINION AND ORDER

Susan Richard Nelson, United States District Judge

I. INTRODUCTION

This matter comes before the Court on the parties' cross-motions for summary judgment. (See Pl.'s Mot. for Summ. J. [Doc. No. 183]; Defs.' Mot. for Summ. J. [Doc. No. 170].) For the reasons that follow, Plaintiff's motion is granted, and Defendants' motion is denied.

II. BACKGROUND

Plaintiff Solutran, Inc. ("Solutran") is the owner by assignment of United States Patent No. 8,311,945 (the "'945 Patent"), which claims a system and method for processing check transactions. (See Compl. ¶ 10 [Doc. No. 1].) According to Solutran, its system improves on legacy check processing systems by eliminating the need for merchants to scan checks after they are received, and by speeding the rate at which the merchant's account would be credited with a payment. (See Pl.'s Opening Claim Construction Br. at 4–6 [Doc. No. 78].) Solutran's check processing system is marketed as "Solutran's POS [Point of Sale] Imaging Network," or "SPIN." (See Compl. ¶ 9.)

On September 25, 2013, Solutran filed suit against Defendants U.S. Bancorp and its subsidiary, Elavon, Inc. (collectively, "US Bank"), alleging infringement of the '945 Patent. (See generally id. ) In particular, Solutran contends that US Bank's competing "Electronic Check Service," or "ECS," system is practically identical to SPIN, and infringes at least one of the claims of the '945 Patent. (See generally id. ) US Bank has consistently denied any infringement and brings counterclaims in its own right against Solutran, seeking declaratory judgments of non-infringement and patent invalidity. (See generally Am. Answer [Doc. No. 17].)

In February 2014, US Bank petitioned for a Covered Business Model ("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 US Bancorp v. Solutran, Inc., No. CBM2014-00076, 2014 WL 3943913, at *1 (PTAB Aug. 7, 2014). The PTAB rejected US 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 this district court action. (See Sept. 18, 2014 Order to Stay [Doc. No. 50].) After the PTAB found that the challenged claims in the '945 Patent were not unpatentable as obvious, see US Bancorp v. Solutran , 2015 WL 4698463, at *10–16 (PTAB Aug. 5, 2015), aff'd , No. 2016-1302, 668 Fed.Appx. 363 (Fed. Cir. 2016), this Court lifted the stay. (See Jan. 12, 2016 Text–Only Order [Doc. No. 62].)

Following extensive motion practice and discovery, the Court heard the parties' claim construction arguments on August 30, 2016. (See Aug. 30, 2016 Minute Entry [Doc. No. 87].) In total, the parties asked the Court to construe eight different terms found variously in claims 1, 2, 4, and 5 of the '945 Patent. See Solutran, Inc. v. U.S. Bancorp , No. 13-cv-2637 (SRN/BRT), 2017 WL 2274959, at *2 (D. Minn. May 24, 2017). At this stage of the litigation, however, the application of only one of those terms is disputed: " comparing by a computer said digital images with said data in the data file to find matches."¹ This term appears in claims 1(d), 4(e), and 5(e) of the '945 patent —for illustrative purposes, and to provide needed context, the Court will reproduce claim 1 in full here:

1. A method for processing paper checks, comprising:

a) electronically receiving a data file containing data captured at a merchant's point of purchase, said data including an amount of a transaction associated with MICR² information for each paper check, and said data file not including images of said checks;

b) after step a) crediting an account for the merchant;

c) after step b), receiving said paper checks and scanning said checks with a digital image scanner thereby creating digital images of said checks and, for each said check, associating said digital image with said check's MICR information; and

d) comparing by a computer said digital images with said data in the data file to find matches .

(Compl., Ex A (" '945 Patent") at 10:54–67 (emphasis added).)

The Court issued its claim construction order on May 24, 2017. The parties responded by filing their cross-motions for summary judgment the following month. (See generally Pl.'s Mot. for Summ. J.; Defs.' Mot. for Summ. J.) Solutran contends that the undisputed record evidence shows that US Bank's ECS service practices "every single step" of claims 1, 2, 3, and 5 of the '945 Patent. (See Pl.'s Mem. in Supp. of Mot. for Summ. J. ("Pl.'s Mem. in Supp.") at 1 [Doc. No. 185].)³ It notes that US Bank now argues non-infringement solely on the basis of the comparing step. (See id. ) In its view, however, the Court's construction of this term resolves the issue in its favor, and thus a judgment of infringement is warranted here. (See id. ) US Bank, however, argues the opposite in its own motion—that the Court's construction makes clear that its service does not infringe the '945 Patent. (See Defs.' Mem. in Supp. of Mot. for Summ. J. ("Defs.' Mem. in Supp.") at 2 [Doc. No. 172].) In the alternative, US Bank also contends that all asserted claims are invalid because they are too abstract to qualify for patent protection under 35 U.S.C. § 101. (See id. )

The Court heard oral argument on the parties' motions on August 11, 2017, and the matter is now ripe for disposition.

III. DISCUSSION

A. Standard of Review

Summary judgment is appropriate 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). A fact is "material" only if it may affect the outcome of the lawsuit. TCF Nat'l Bank v. Mkt. Intelligence, Inc. , 812 F.3d 701, 707 (8th Cir. 2016). Likewise, an issue of material fact is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the burden of establishing a lack of genuine issue of fact, Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), and the Court must view the evidence and any reasonable inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In responding to a motion for summary judgment, however, the nonmoving party may not rest on mere allegations or denials, but must "demonstrate on the record the existence of specific facts which create a genuine issue for trial." Krenik v. Cty. of Le Sueur , 47 F.3d 953, 957 (8th Cir. 1995).

B. The Issue of Infringement

A determination of infringement requires a two-step analysis. See Transclean Corp. v. Bridgewood Servs., Inc. , 290 F.3d 1364, 1370 (Fed. Cir. 2002). First, the Court must determine the scope and meaning of the patent claims asserted. See Phil–Insul Corp. v. Airlite Plastics Co. , 854 F.3d 1344, 1358 (Fed. Cir. 2017). Second, the properly construed claims are compared to the allegedly infringing device or process. See id. Although the second inquiry is one of fact, Transclean Corp. , 290 F.3d at 1370, the Court may decide infringement on summary judgment if there are no genuine issues of material fact requiring determination at trial. See, e.g. , 3M Co. v. Mohan , No. 09-cv-1413 (ADM/FLN), 2010 WL 3200052, at *2 (D. Minn. Aug. 9, 2010) ("Courts routinely grant summary judgment and find infringement as a matter of law where there is no factual dispute on the infringement question."). Where, as here, "there is no dispute regarding the operation of the accused system[ ], [the] issue [of infringement] reduces to a question of claim interpretation and is amenable to summary judgment." MyMail, Ltd. v. Am. Online, Inc. , 476 F.3d 1372, 1378 (Fed. Cir. 2007).

A patent is infringed if every limitation set forth in a claim is present in an accused product or process, either literally or through the doctrine of equivalents. Deering Precision Instruments, L.L.C. v. Vector Distrib. Sys., Inc. , 347 F.3d 1314, 1324 (Fed. Cir. 2003). Because only literal infringement is alleged here, Solutran bears the burden of proving that the accused process contains each limitation of an asserted claim. See id. Although at this point in the proceedings, US Bank contends only that its process does not meet the requirements of the '945 Patent's comparing step, that step is a required element of all asserted claims. See Hutchins v. Zoll Med. Corp. , 492 F.3d 1377, 1382 (Fed. Cir. 2007) (citing 35 U.S.C. § 112, ¶ 4 (pre–AIA) ) (noting that limitations in each independent claim are incorporated into every dependent claim). Accordingly, Solutran's infringement argument rises or falls on the application of that step to the accused process. See Wolverine World Wide, Inc. v. Nike, Inc. , 38 F.3d 1192, 1199 (Fed. Cir. 1994).

1. The Court's Construction of the "Comparing Step"

The purpose of claim construction is "to arrive at the true and consistent scope" of the claims. Markman v. Westview...