IP Law Daily, PATENT—S.D.N.Y.: JP Morgan Chase unable to shake assertion entity’s remaining infringement claim, (Jul 22, 2016)

By Cheryl Beise, J.D.

The federal district court in New York City has declined to decide on summary judgment whether JP Morgan Chase’s use of IBM cryptographic chip processors in its cybersecurity systems infringe an arithmetic limitation claimed in an Intellectual Venture’s data encryption patent (Intellectual Ventures II, LLC v. JP Morgan Chase & Co., July 21, 2016, Hellerstein, A.).

The patent-in-suit—U.S. patent number 7,634,666 (the ’666 patent)—was the last of five patents Intellectual Ventures II, LLC ("IV"), asserted in 2013 against JP Morgan Chase & Co. and related entities (collectively, "JPMC"), as well as against several other financial services institutions in other suits. IV voluntarily withdrew one patent and the court ruled that the others were invalid under 35 U.S.C. §101 as claiming patent-ineligible abstract subject matter.

The ’666 patent claims a physical co-processor, referred to as a "crypto-engine," used to assist a host processor, such as a personal or network computer, with the encryption of data. The accused products were various versions of IBM cryptographic coprocessor cards ("crypto cards"), which the defendants employed in their cyber-security systems.

In May 2015, the court denied a prior motion for summary judgment of non-infringement filed by JPMC. The court found that IV raised triable issues of fact as to whether the IBM crypto cards had the capability of executing both ECC (Elliptic Curve Cryptography) and RSA (Rivest-Shamir-Adleman ) encryption algorithms, as required by Claim 4 of the ’666 patent. Before the court was JPMC’s second motion for summary judgment of non-infringement.

In its claim construction order, the court defined the term "sign inversion unit" as "a unit that changes positive numbers to negative numbers and changes negative numbers to positive numbers." JPMC argued that because technical discovery showed that accused sign inversion unit accepted only inputs that are greater than zero, IV was unable to show infringement as a matter of law, because the unit did not both change positive numbers to negative numbers and change negative numbers to positive numbers.

IV first argued that because the sign inversion unit was capable of converting negative to positive numbers, it was infringing, even though the product currently performed the function only with positive-number inputs. This argument was rejected. "Mere capability, however, is not sufficient to prove infringement where the claim and its construction make no reference to capability," the court said.

IV next argued that hat the definition of "sign inversion unit" in claim 4 of the ’666 patent should be changed to include sign changes in either or both directions: positive to negative, or negative to positive, or both. This argument was rejected by the court in a separate order. The court pointed out that IV never before objected to the Markman definition, either in this case or in other cases. "IV's sole reason to change the Markman order is its regret," the court said. "Regret is not a legal excuse."

Finally, IV argued that the distinction between positive and negative numbers was immaterial in the context of the modulo mathematics used by both the ’666 patent and the IBM crypto cards. According to IV, the numbers used in the accused products just as easily could be negative inputs, in whole or in part, because the numbers are modular and in a loop. JPMC contended that the sign inversion unit in the accused crypto cards processed only positive numbers, between 0 and 22048.

The court commented that JPMC’s contention appeared to be persuasive, and that IV’s position appeared to constitute "solely an expert's unsupported conclusion on the ultimate issue of infringement." However, the court ultimately concluded that it could not resolve the issue on the present record, without considering the context of the technology and in relation to the claim language of the ’666 patent. JPMC’s motion was accordingly denied.

The case is No. 13 Civ. 3777 (AKH).

Attorneys: Clayton W. Thompson, II (Feinberg Day Alberti & Thompson LLP), David Taylor Rudolph (Lieff Cabraser Heimann & Bernstein, LLP), and Laura Jean Scileppi (Dunnegan & Scileppi LLC) for Intellectual Ventures II LLC. Matthew Seldin Dontzin (Dontzin Nagy & Fleissig LLP), Benjamin Adam Lasky (Kirkland & Ellis LLP), and Clement S. Roberts (Durie Tangri LLP) for JP Morgan Chase & Co.; JP Morgan Chase Bank, National Association; and Chase Bank USA, National Association.

Companies: Intellectual Ventures II, LLC; JP Morgan Chase & Co.; JPMorgan Chase Bank, National Association; Chase Bank USA, National Association; Chase Paymentech Solutions, LLC; and Paymentech LLC

Cases: Patent NewYorkNews