IP Law Daily, PATENT—Fed. Cir.: Invalidity of one of USAA’s mobile check deposit patents affirmed; scope of unpatentability expanded for another, (Jan 30, 2025)

By Saurabh Kashyap, B.A., LL.B., LL.M.

PTAB correctly invalidated one patent and specific claims of another for obviousness but erred in its motivation-to-combine analysis for the second leading to the reversal of non-unpatentability findings.

In separate appeals concerning the Patent Trial and Appeal Board’s (PTAB) decisions in two Inter Partes Review (IPR) proceedings, the U.S. Court of Appeals for the Federal Circuit upheld PNC Bank, N.A.’s challenges to two of United Services Automobile Association’s (USAA) check deposit patents. The appellate court fully affirmed the PTAB’s determination that all challenged claims of U.S. Patent No. 10,621,559 (the ’559 patent) were unpatentable as obvious. In a related appeal, the court affirmed in part and reversed in part the PTAB's decision on U.S. Patent No. 10,769,598 (the '598 patent). It upheld the PTAB's determination that specific claims were unpatentable as obvious over prior art while reversing the board's decision to uphold other claims after finding that the PTAB applied an overly rigid standard in its motivation-to-combine analysis. As a result, the ’559 patent remains entirely invalid, while additional claims in the ’598 patent were also found unpatentable, beyond what the PTAB had initially determined (United Services Automobile Association v. PNC Bank, N.A., No. 23-1920 and No. 23-2171 (Fed. Cir. Jan. 30, 2025)).

Background. The appellant, United Services Automobile Association (USAA), is a financial services company offering banking, insurance, and investment products to military personnel and their families. The cross-appellant/ appellee, PNC Bank, N.A. (PNC), is a major commercial bank that offers digital banking services, including remote check deposit functionality.

The ’558 and ’559 patents were directed to systems and methods for remote check deposit. These patents describe functionalities allowing customers to capture and transmit check images using mobile devices, with backend processing systems verifying deposit eligibility.

In 2022, PNC filed two petitions for inter partes review (IPR) of USAA's patents, asserting that their claims were obvious in view of the prior art and, therefore, invalid under 35 U.S.C. § 103. The PTAB instituted IPRs and ultimately determined that all challenged claims in the ’559 patent and the majority of claims in the ’598 patent were unpatentable. USAA appealed these decisions, and PNC cross-appealed the PTAB’s decision upholding certain claims in the ’598 patent.

Prior art. PNC challenged the validity of both patents claiming they were obvious over multiple prior art references, including Garcia (WO 2005/043857), Byrne (U.S. Patent Application Publication No. 2006/0249567), Singfield (U.S. Patent Application Publication No. 2005/0097046), and Randle (U.S. Patent Application Publication No. 2006/0106717), which disclosed similar check deposit processing systems.

The ’559 patent. USAA appealed the PTAB’s final written decision, which held that all challenged claims of the ’559 patent were unpatentable as obvious over prior art references Garcia and Randle.

The Federal Circuit applied the substantial evidence standard to review the PTAB’s factual findings and conducted a de novo review of its legal conclusions, citing Kennametal, Inc. v. Ingersoll Cutting Tool Co., 780 F.3d 1376 (Fed. Cir. 2015). USAA contended that a skilled artisan would not have been motivated to combine Garcia’s mobile check deposit method with Randle’s optical character recognition (OCR) and bank processing system. USAA further asserted that Randle did not disclose the necessary check acceptance and validation process described in the ’559 patent.

The Federal Circuit rejected these arguments, finding that substantial evidence supported the PTAB’s conclusion that Garcia and Randle disclosed all key elements of the challenged claims. The appellate court determined that integrating Randle’s OCR verification into Garcia’s check deposit system was an obvious step, particularly given industry trends favoring automated verification to reduce errors and fraudulent transactions.

Additionally, the Federal Circuit dismissed USAA’s assertion that the PTAB misinterpreted the “accepting” limitation in claims 1 and 10 of the ’559 patent. USAA argued that the PTAB construed this term too broadly, allowing prior art references to satisfy it without a proper basis. However, the court found that the PTAB’s interpretation was consistent with intrinsic evidence, including the patent’s specification and prosecution history. The Federal Circuit emphasized that claim construction is a legal determination reviewed de novo, and it upheld the PTAB’s construction, aligning with established principles of patent interpretation.

The ’598 patent. In a separate appeal, USAA challenged the PTAB’s findings that claims 1 and 8–20 of the ’598 patent were unpatentable over Garcia, Byrne, and Singfield. The Federal Circuit affirmed the PTAB’s ruling, holding that these references disclosed a mobile-based remote check deposit system, including capturing check images, verifying deposit eligibility, and processing deposits.

Additionally, PNC cross-appealed the PTAB's decision, declining to find claims 2–7 unpatentable. These claims required error processing on the user's mobile device rather than the bank's servers. The PTAB ruled that a skilled artisan would not have been motivated to shift error processing from Garcia's bank server to the mobile device as taught in Byrne. The Federal Circuit disagreed, finding that the PTAB applied an overly rigid standard in rejecting PNC's motivation-to-combine arguments.

Citing KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 420 (2007), the court emphasized that obviousness does not require explicit motivation in the prior art but can be established through predictable improvements that align with market needs. Because mobile-based error processing reduced network delays and prevented failed transactions, it represented an expected improvement that a skilled artisan would have been motivated to implement. Accordingly, the Federal Circuit reversed the PTAB's decision on claims 2–7 and held that they were also unpatentable.

With these rulings, the Federal Circuit invalidated the ’559 patent and expanded the scope of unpatentability in the ’598 patent.

The Case is No. 23-1920 and Nos. 23-2171 and 23-2172.

Judges: Prost, S. and Dyk, T.

Attorneys: Lisa Glasser (Irell & Manella LLP) for United Services Automobile Association. Gregory H. Lantier (Wilmer Cutler Pickering Hale and Dorr LLP) for PNC Bank N.A.

Companies: United Services Automobile Association; PNC Bank N.A.

Cases: Patent FedCirNews USPTO