The U.S. District Court for the Southern District of New York entered a judgment in favor of Jack Henry & Associates, Inc. and against plaintiff Joao Bock Transactions Systems, LLC in an online banking patent infringement jury trial. Visiting Senior Judge Warren W. Eginton found that Jack Henry did not infringe on any of the six patent claims pressed by the plaintiff, and also found all six claims to be invalid on multiple grounds. Jack Henry is a supplier of software and data processing services, including online banking products, to financial institutions. Jack Henry stepped in to defend its customer, Sleepy Hollow, a small bank in upstate New York sued by the plaintiff.
“Eli Whitney had passion when he invented the cotton gin and a desire to serve an untapped need in our society. The same holds true for Thomas Edison when he developed the first commercial light bulb and Thomas Savery when he invented the first crude steam engine,” said Polsinelli Shughart PC trial attorney Russell S. Jones, Jr. “But in this case, the plaintiff had no intention of ever taking this product to market. He had no knowledge of the software industry and knew nothing about this technology.”
The story began when Raymond Joao and Robert Bock, of Yonkers, New York obtained a patent in March 2003 for a “transaction security apparatus and method,” U.S. No. 6,529,725. Later that year, Joao and Bock sued Sleepy Hollow Bank alleging that its online banking product infringed claims in the ‘725 patent. In 2004 plaintiffs added Jack Henry to the action as a defendant. Plaintiff sought substantial damages in the form of a royalty based on Jack Henry’s software and support revenues.
“We stood by our product, we stood by what we knew was right,” said Jack Henry General Counsel Robert T. Schendel. “We fought, we fought hard and we won.”
The case reached trial on March 1, 2010. Bock claimed that Jack Henry’s online banking and core processing software infringed six claims in the ‘725 patent. Joao Bock asserted that those claims covered “limitations and restrictions” on the use of a checking account, such as stop payment requests, and sending “real time” messages to the account holder about activity on his or her account, including alerts as to account activity.
Jack Henry denied infringement, arguing among other things that online stop payment instructions were not “limitations or restrictions” on the use of an account and that messages to an account holder advising that a check had cleared or a bill payment instruction had been processed were not generated or transmitted to the user in "real time" as defined by the Court.
A seven-person jury sitting in White Plains, New York agreed with Jack Henry, finding both that Jack Henry’s products did not infringe and that the patent claims were invalid because prior art -- one of Jack Henry’s predecessor products and three other earlier patented inventions -- either anticipated the patent claims or rendered them obvious to a person of ordinary skill in the art.
The jury was asked seven interrogatories with multiple sub-parts, all of which they answered in favor of Jack Henry, including specific findings on infringement, anticipation, obviousness, and statutory bar.
The Court received and accepted the jury’s verdict on March 16, 2010. After post-trial briefing by the parties, the Court entered judgment in accordance with the jury’s verdict on July 16, 2010. The Court concluded that Jack Henry’s online banking and core processing products did not infringe any of the ‘725 patent claims submitted to the jury, and that those claims were all invalid based on anticipation, obviousness and statutory bars. The Court specifically found that the invalidating art consisted of Jack Henry’s Cash Management product, developed and licensed in 1993, a remote banking product developed by WestStar Bank in Bartlesville, Oklahoma in the late 1980s, the Fulton patent, U.S. No. 6,182,052; the Blonder patent, U.S. No. 5,708,422, and the Deming patent, U.S. No. 4,823,264.
For the defense:
Russell S. Jones, Jr., Richard P. Stitt and Joshua M. McCaig of Polsinelli Shughart, P.C., Kansas City, Missouri, represented Jack Henry.
For the plaintiff:
John W. Fried of Fried & Epstein, LLP, New York, New York, represented Joao Bock Transaction Systems LLP.
Jack Henry is headquartered in Monett, Missouri. Its stock is publicly traded on the NASDAQ.
A copy of the jury’s verdict form and the Court’s July 16 2010 Judgment is available.
Defense attorney Russell Jones is available to talk to reporters about:
• Defending Non-Practicing Entity (NPE) cases
• Intellectual Property and Technology Litigation
• Trade Secrets Litigation
About Polsinelli Shughart PC
With more than 500 attorneys, Polsinelli Shughart PC (www.polsinelli.com) is a national law firm that is a recognized leader in the areas of business litigation, financial services, real estate, business law, construction, life sciences, environmental and natural resources, health care, insurance coverage/bad faith, and labor and employment. Serving corporate, institutional and individual clients regionally, nationally and worldwide, Polsinelli Shughart is known for successfully applying forward-thinking strategies for both straightforward and complex legal matters. The firm has 16 offices located in Kansas City, St. Louis, Phoenix, Chicago, Denver, Washington, New York City, Wilmington, Overland Park, St. Joseph, Springfield, Jefferson City, Topeka and Edwardsville
About Jack Henry & Associates, Inc.
Jack Henry & Associates, Inc. (NASDAQ:JKHY - News) is a leading provider of computer systems and ATM/debit card/ACH transaction processing services primarily for financial services organizations. Its technology solutions serve more than 11,800 customers nationwide, and are marketed and supported through four primary brands. Jack Henry Banking™ supports banks ranging from de novo to mid-tier institutions with information processing solutions. Symitar™ is the leading provider of information processing solutions for credit unions of all sizes. ProfitStars® provides highly specialized products and services that enable financial institutions of every asset size and charter, and diverse corporate entities to mitigate and control risks, optimize revenue and growth opportunities, and contain costs. iPay Technologies operates as a leading electronic bill pay provider supporting more than 3,600 banks and credit unions with turnkey, highly configurable retail and small business electronic payment platforms. Additional information is available at www.jackhenry.com.