On September 12, 2019, after about six hours of deliberating, a jury in the United States District Court for the Eastern District of Texas determined that no infringement had been committed in a suit filed by PPS Data LLC against Jack Henry & Associates Inc. (Jack Henry), a leading provider of financial services technology.

In addition to finding no infringement, the jury also invalidated PPS Data’s patent claims, finding that the claimed invention was routine and conventional and already existing in the field when the patent application was filed on April 28, 2000. In 2018, the Federal Circuit Court of Appeals in Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018) held that whether an invention was patentable under 35 U.S.C. § 101 may involve questions of fact as to whether the claims were “routine and conventional” at the time of the invention. According to research, this appears to be the first case since Berkheimer where a jury has invalidated a patent under Section 101, which was historically a legal question for the Court.

Background

In January 2018, PPS Data LLC (a wholly owned subsidiary of Zion’s Bancorporation, a Utah based national banking holding company) filed the lawsuit against Jack Henry & Associates. PPS Data accused Jack Henry’s Remote Deposit Capture (RDC) products of infringing five U.S. patents which dated back to an application originally filed on April 28, 2000. Shortly before trial, PPS Data dropped its claims as to all patents except one and proceeded to trial solely on U.S. Patent No. 7,216,106 asserting infringement of a computer readable medium (CRM) claim as the only independent claim as well as six additional dependent claims. Jack Henry successfully argued that its products were incapable of infringing because its source code was not written in a manner where the RDC products were capable of infringing the asserted CRM claims. Jack Henry also presented evidence of its own internal systems it had previously developed and sold to show that PPS Data’s claimed invention was routine and conventional as of April, 28, 2000. The jury agreed and found that Jack Henry did not infringe and invalided all of the asserted claims of the ’106 patent under 35 U.S.C. § 101. It is believed this is the first case since the Federal Circuit’s decision in Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018) where a jury has invalidated patent claims under Section 101, which had previously been a question of law for the court.

“Jack Henry has always respected the intellectual property rights of others,” said Bill Phillips, Group President of Enterprise Payment Solutions, the group within Jack Henry that develops its RDC Products. “Because our payment processing systems have been developed internally by a talented and devoted team of developers over many generations of system capabilities, life cycles and regulatory changes, this case was very personal for us. This was a clear overstep by the patent holder in attempting to ‘move the fence’ in asserting rights that were not granted in the patent. In instances where Jack Henry is right, we will defend our products and developers’ reputation.”

Polsinelli is proud to have represented Jack Henry. “This case shows that juries are willing to listen and will invalidate patent claims if presented with the correct evidence in the correct manner,” said Polsinelli attorney Jay Heidrick. “We tried our total case in under six hours. That’s everything from opening statements to closing arguments in under six hours.” Heidrick continued. “If a company is faced with a patent infringement claim, it is critical for companies to develop its strategy and its story to present to the jury. Attempting to present every possible issue to the jury just won’t work. You need to stay focused and help the jury understand what you truly want them to know.” In addition to Jay Heidrick, Polsinelii attorneys, Jason Wietjes (Dallas), Adam Daniels (Los Angeles) and Randal Alexander (Chicago) were part of the trial team. Jason Mazingo of The Mazingo Firm in Tyler, Texas also served as part of the trial team in addition to serving as Jack Henry’s local counsel.