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Judge Hellerstein Denies Summary Judgment of Non-Infringement Based On Arguments that “Appear Not to Be Persuasive”

On July 21, 2016, District Judge Alvin K. Hellerstein (S.D.N.Y.) denied  Defendants JP Morgan Chase & Co., JPMorgan Chase Bank, National Association, Chase Bank USA, National Association, Chase PaymenTech Solutions LLC, and PaymenTech LLC's (“JPMC”) motion for summary judgment of non-infringement.

JPMC’s motion arose from a lawsuit brought in June 2013 by Plaintiff Intellectual Ventures II (“IV”), who alleged that JPMC’s use of IBM Crypto Cards (which are processors that assist with and protect the encryption of sensitive information), infringed several patents owned by IV.  The single claim at issue requires a "sign inversion unit" which JPMC argued was not found in the accused products.

The Court had construed the term "sign inversion unit" to mean "a unit that changes positive numbers into negative numbers and negative numbers into positive numbers."  In its motion, JPMC argued that since the accused product only accepts "inputs greater than zero," IV could not show infringement "as a matter of law, because the unit does not both change positive numbers to negative numbers and change negative numbers to positive numbers" (emphasis in original).  IV responded with three arguments: (1) that since the accused product is "capable" of converting negative to positive numbers, it infringes even though JPMC performs the function only with positive-number inputs; (2) that the Court “did not intend” to require both the conversion from positive to negative and from negative to positive, and thus, should revise its claim construction; and (3) that, according to IV’s expert testimony,  as a matter of fact, JPMC did not show that the IBM Crypto Cards use only positive inputs because it uses a so-called “modulo” number system.

The Court rejected the first two of IV’s arguments.  The court characterized the “capability” argument as “irrelevant,” noting that “[m]ere capability . . .  is not sufficient to prove infringement where the claim and its construction make no reference to capability.”  The court then rejected the argument to revise the claim construction, noting that the IV itself agreed to the construction and that “[r]egret is not a legal excuse.”

The Court characterized the third argument as “not . . . persuasive” and suggested that the expert testimony that allegedly supported it may have been “solely an expert's unsupported conclusion on the ultimate issue of infringement.”  Nevertheless, the Court stated that it could not, from the record in front of it, “determine as a matter of law that the product does not infringe.”  Accordingly, the Court denied JPMC’s motion for summary judgment of non-infringement.

-By Ryan Mott and Lewis Popovski

Case: Intellectual Ventures II LLC v. JPMorgan Chase & Co., et al., No. 13-cv-3777-AKH, 2016 BL 234506 (S.D.N.Y. July 21, 2016). The patent-in-suit is U.S. Patent No. 7,634,666.