Caselas, LLC v. VeriFone, Inc., Civil Action No. 1:21-cv-03834 (N.D. Ga., Aug. 30, 2022)

Judge Victoria Calvert, in a series of orders on pending motions to dismiss, found five patents directed to electronic payment processing invalid under 35 U.S.C. § 101 as directed to ineligible subject matter.  The decisions are Judge Calvert’s first dealing with substantive patent issues since joining the bench.

Caselas, LLC, one of many entities owned by inventor Raymond Antony Joao, has actively pursued litigation in a number of districts dating back to the end of 2020 against financial institutions over alleged infringement of five electronic payment processing-related patents  – U.S. Patent Numbers 7,529,698 (“the ’698 Patent”); 7,661,585 (“the ’585 Patent”); 9,117,206 (“the ’206 Patent”); 9,117,230 (“the ’230 Patent”); and 9,715,691 (“the ’691 Patent”). The suits generally deal with the integration of charge-back data in electronic payment processing, used by many banks throughout the country. 

Caselas filed eight suits in the Northern District of Georgia in August and September 2021, four of which were still active when Judge Calvert took the bench and had them assigned to her. VeriFone, Inc. and two other defendants filed early motions to dismiss for failure to state a claim based on Section 101, which the Court granted on August 30, 2022.

The dismissal found that Caselas’ asserted claims on electronic payment processing patents encompassed unpatentable subject matter directed toward an abstract idea. Relying on Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014), Judge Calvert reduced the plaintiff’s patents to nominal advancements in computerized underwriting:

“The Representative Claim, which comprises using a computer to receive information about a credit account prior to the consummation of a transaction, process the information, generate a report about prior transactions where the account was involved with a charge-back, and transmit the report, essentially describes underwriting. … It should go without saying that underwriting is a foundational concept in commerce. … [while c]onducting underwriting via the point-of-sale device is no doubt convenient, ‘[t]he introduction of a computer into the claims does not alter the analysis.’ Alice, 573 U.S. at 221. The bottom line here is that the Asserted Patents claim methods and apparatuses which check whether a credit card user has previously charged-back a prior transaction and provide this information to the end user. This is no more than stating the abstract concept of underwriting and stating ‘apply it.’”

In the same order, the Judge found the representative claim “remarkably similar to other claims which Courts have found to be directed to abstract ideas.”

Notably, Judge Calvert opted against appointing a Special Master, which is relatively common practice in patent cases in this district. She then entered orders in the related pending cases involving other Georgia businesses, and even sua sponte entered summary judgment of invalidity in Caselas’ case against Synovus Bank, incorporating the reasoning set forth in the VeriFone decision.

Caselas, LLC v. Defyne Holdings, LLC, No. 1:21-cv03480-VMC (N.D. Ga.); Caselas, LLC v. Synovus Financial Corp., No. 1:21-cv-03828- VMC (N.D. Ga.); Caselas, LLC v. Georgia’s Own Credit Union, No. 1:21-cv-03829- VMC (N.D. Ga.).

In the weeks since, Caselas filed a notice of appeal of this decision to the Federal Circuit, but then subsequently sought reconsideration by Judge Calvert based on the U.S. Court of Appeals for the Federal Circuit’s recent decision interpreting Alice in Cooperative Entertainment, Inc. v. Kollective Technology, Inc., 50 F.4th 127, 130 (Fed. Cir. 2022).  Judge Calvert quickly swatted away the motion for reconsideration, finding that:

“Even taking into account Kollective, the Court concludes it applied the proper legal standard, Caselas just disagrees with the Court’s conclusion under that standard. But a motion for reconsideration may not be used ‘to present the court with arguments already heard and dismissed or to repackage familiar arguments to test whether the court will change its mind.’ Bryan, 246 F. Supp. 2d at 1259.”

Caselas’ appeal to the Federal Circuit is now pending. In the meantime, one of the asserted patents, the ‘691 patent, has been found unpatentable by the Patent Trial and Appeal Board as obvious in view of the prior art.  (Unified Patents, LLC v. Caselas, LLC, CaseIPR2021-00799, P.T.A.B.)