Jack Henry & Associates Inc., a leading provider in banking software, proved to be the victor in a patent infringement suit filed against the company by PPS Data LLC, relating to electronic check processing, particularly check imaging and remote deposit capture.
After about six hours of deliberating Thursday, an East Texas jury in Marshall’s federal court determined that no infringement had been committed.
“PPS Data told you Jack Henry infringed and Jack Henry did not infringe,” said attorney Jay Heidrick, representing Jack Henry.
In addition to finding no infringement, the jury also determined that Jack Henry proved its case of invalidity, accusing PPS Data’s patented invention of not being novel due to prior technology already existing in the field, as of April 28, 2000.
“I trust you’ll come to the correct result that Jack Henry does not infringe and the patent is invalid,” Heidrick told the eight-person jury after ending his closing arguments Thursday.
The case began here Monday in Marshall’s federal court with U.S. District Court Judge Rodney Gilstrap presiding.
In the case, PPS Data LLC (formerly NetDeposit), a Utah-based leader in innovative check payment technology, filed the lawsuit against Jack Henry & Associates in January 2018, accusing the Missouri-based company of making, using, selling and/or offering for sale a method and system for processing financial instrument deposits physically remote from a financial institution, incorporating the patented inventions that are described.
“They’ve used this infringing system many times over,” Steven A. Maddox, of Maddox and Edwards law firm out of Washington, D.C., argued, representing the plaintiff.
He contended that all of Jack Henry’s remote deposit captured (RDC) systems infringed. The patent-in-suit was issued by the U.S. Patent and Trademark Office on May 8, 2007.
During closing arguments Thursday, Maddox argued that the inventor of the patented technology, Danne Buchanan, was the one that came up with the electronic banking technology.
“He was the pioneer,” Maddox said, contending that Buchanan came up with ways to process checks with electronic data and images and do it all faster, cheaper and safer.
“He was the first one to pull it all together and make it work in banks,” said Maddox, adding he made everything meet regulations.
According to the lawsuit, NetDeposit (now PPS) was a software provider for banks, third party processors and commercial businesses to enable check imaging, truncation, optimized clearing and full settlement reporting, including the design and sale of remote deposit capture products and services. The company obtained numerous patents for its check imaging, processing, clearing and other remote deposit capture technology.
According to the synopsis of the patent-in-suit, titled “Method and System for Processing Financial Instrument Deposits Physically Remote from a Financial Institution,” the invention is a system that includes computer hardware, computer software, apparatus and methodology that enables individuals, businesses and all types of organizations to capture and securely transmit check images (including, but not limited to, personal checks, business checks, travelers checks, money orders, merchant coupons, food coupons, line of credit checks, etc.), deposit information, and other information from capture sites that preprocess financial instruments and generate data from the original instruments, for the purpose of having those checks credited to the depositing individual’s or organization’s bank account(s) and having the check images (and/or physical checks) entered into the bank check clearing channels for ultimate delivery to the maker bank for payment out of the maker’s account.
“That was a big deal,” Maddox said of the invention, arguing that even some internal documents of Jack Henry’s that was presented in court as evidence deemed it a big deal.
“It was regarded as revolutionary in 2005,” said Maddox. “Mr. Buchanan was way ahead of his time.”
Representing the defendant, Heidrick with Polsinelli law firm out of Kansas City, Missouri, not only argued that his client was not guilty of infringement, but also contended that the patent in the case was invalid.
“We do it differently,” Heidrick contended. “I also told you the patent office gave it a very narrow delineated scope of invention and it’s trying to expand that.”
Heidrick further argued that contrary to what the plaintiff’s counsel claims, the case is all about code.
“Net Deposit (now PPS) may have come up with a great business deal, but that business deal is not what’s legally protected in the patent,” said Heidrick. “They’re breaking their deal with the government to try to cover what’s simply not there.
“PPS has no code. Jack Henry has the code. The code always wins,” said Heidrick.
Regarding invalidity of the patent, Heidrick contended that everything described in the patented invention existed as of April 2000. Testimony in court revealed that accessing remote information was not new neither was sending check images, he said.
“This case is very personal for Jack Henry and to me,” said Heidrick. “For two years we litigated this case.”