The scope of patent rights has become increasingly controversial, with noteworthy cases exploring the degree to which enforcing patent rights stifles, instead of promotes, progress and innovation. After the Supreme Court’s Alice v. CLS Bank
decision in June 2014 lower federal courts and the Patent Office have invalidated a number of business method and software patents as being unpatentable because they cover only abstract ideas. Research indicates that patent trolls are now bringing the majority of U.S. Patent lawsuits, at 61% of all lawsuits filed in 2012, up from 23% five years ago.
Jack Henry & Associates, Inc., a nationwide provider of software solutions for financial institutions, had been involved in a 2003 patent claim with patent troll, Joao Bock Transactions Systems LLC. When one of Jack Henry & Associate’s bank customers was accused of infringing one of Joao Bock’s patents, Jack Henry, with Polsinelli as legal counsel, fought and won the case at trial.
Over the years, Joao Bock continued to accuse banks and financial institutions of infringing its patents. In 2012 it again accused Jack Henry of infringement. Jack Henry, again turned to its long-time counsel, Polsinelli, to help defend its software products against Joao Bock.
The Plaintiff claimed that several of Jack Henry’s online and mobile banking products infringed U.S. Patent No. 7,096,003, which covered an apparatus comprising a memory device, a processing device, transmitters, and receivers programmed to allow bank customers to place limitations or restrictions on transactions and receive a notification from the bank when a transaction had occurred. The Polsinelli Intellectual Property Litigation Practice Group worked with Jack Henry’s General Counsel, Robert Schendel and Assistant General Counsel Andrew Wimmer, to structure a defense that would invalidate the patent and prevent Joao Bock from making future patent accusations. Since most patent cases are not tried in court, the stakes were considerable, as were the risks.
While Jack Henry creates core and complementary information solutions that enable community and regional banks to process financial transactions and automate business processes, Joao Bock does not make or sell real products. It is a “non-practicing entity,’ sometimes called a “patent troll.” “Most patent cases traditionally involved one that had invented and patented an actual product suing a competitor who made a similar product, but more recently, these types of plaintiffs are using their patents to leverage against businesses that actually make things,” said lead counsel and Polsinelli Litigation Department Chair, Russell Jones.
Polsinelli asserted that the claims were invalid because they involved abstract ideas which were un-patentable subject matter and because they simply used generic computer components and the Internet to implement conventional business practices. The U.S. District Court for the District of Delaware agreed, and held that the claims being asserted against Jack Henry were all invalid under 35 U.S.C. section 101 for claiming non-patentable subject matter as described in CLS Bank Int’l v. Alice Corp. Pty Ltd.
, 134 S. Ct 2347 (2014)
Jack Henry & Associates, Inc. was awarded summary judgment of invalidity and non-infringement. The matter is now on appeal to the Federal Circuit Court of Appeals.
Key Success Factors
More on the Polsinelli-Jack Henry Client Relationship
- Polsinelli’s intimate understanding of the business objectives, appetite for risk, and parameters for success of the firm’s 30-year client, Jack Henry, led to development of an effective and efficient defense strategy
- Polsinelli conducted highly efficient e-Discovery in review of millions of pages of documents, almost 600,000 email files, and an extraordinary volume of data
- Deep experience of the firm’s litigation team in handling of such patent claims, coupled with access to thought leadership in the firm’s IP and Patent Prosecution practices creates collaborative benefits to firm clients.
Jack Henry was represented by Russell Jones, Jay Heidrick, Joshua McCaig and Travis Salmon of the firm’s Intellectual Property Litigation and Commercial Litigation practices. The IP Litigation group takes a creative, strategic, and cost-effective approach to resolving intellectual property disputes for local, regional, national and global companies. Since 2003, Polsinelli has successfully represented Jack Henry & Associates, Inc., national provider of products and services that automate business processes and mission critical information for more than 11,000 financial institutions and corporate entities, in several “Non-Performing Entity”, or patent troll cases.
Polsinelli is very proud of the results we obtain for our clients, but you should know that past results do not guarantee future results; that every case is different and must be judged on its own merits; and that the choice of a lawyer is an important decision and should not be based solely upon advertisements. Polsinelli PC. Polsinelli LLP in California.