National Bank v. Plano Encryption Technologies, LLC

Delaware plaintiff Honeyman Cipher Solutions LLC has expanded the litigation campaign that it launched in June with a single suit against Groupon, targeting that company’s use of Apple’s iTunes Connect and Google’s Android Developer Console to register and distribute its respective iOS and Android apps. Now, as Groupon challenges the sufficiency of Honeyman Cipher’s infringement allegations in that Northern District of Illinois case, the NPE has filed a pair of new complaints in Delaware against LogMeIn (1:19-cv-01545) and Snap (1:19-cv-01547) over their use of the same systems—laying out virtually the same arguments currently under fire by Groupon. A related set of arguments were also raised by Groupon in an unresolved motion to dismiss a Texas case brought by the patent-in-campaign’s prior owner, Bradley D. Liddle’s Plano Encryption Technologies, LLC (PET), before that case was dismissed for improper venue (thereby mooting the defendant’s allegations of noninfringement).

PET filed that earlier case against Groupon in October 2016 amidst a second wave of lawsuits targeting general-purpose mobile apps, following an initial wave of litigation starting in June 2015 that more narrowly targeted banks and providers of online and mobile banking platforms. The case was subsequently consolidated with a suit filed one month earlier against Alkami Technology. Groupon then moved to dismiss PET’s complaint in January 2017 on multiple grounds, including a challenge to proper venue in anticipation of the not-yet-issued TC Heartland decision as well as its claim that PET’s infringement allegations as to the patent now asserted by Honeyman Cipher (5,991,399). (That case also included a second patent-in-suit, 5,974,550, with a third patent—6,587,858—later added to the PET campaign.) Groupon argued as to noninfringement that “[PET] ha[d] pleaded itself out of this lawsuit—its allegations establish that the ‘tamper resistant module’ does not include the ‘encrypted data’ required to infringe”). After the TC Heartland decision was handed down, the parties agreed to a dismissal, prompting District Judge Rodney Gilstrap to grant Groupon’s motion on the venue challenge, setting aside the remaining arguments as moot.

The motion to dismiss that Groupon filed in the Honeyman Cipher case in early August expands upon its prior noninfringement arguments in the PET lawsuit, again focusing on claim 1 of the ‘399 patent, which describes a method for “generating an asymmetric key pair having a public key and a private key” and “encrypting predetermined data with the generated public key”, the claim also reciting a limitation requiring an “executable tamper resistant key module including the generated private key and the encrypted predetermined data”. Whereas that claim allegedly requires that a product include a private key needed to decrypt data, Groupon asserts that neither it nor any other developer with apps on iTunes or Google Play distributes their private keys, “because doing so would be the functional equivalent of an individual publishing their own bank account PIN number or social security number for all the world to see (and potentially misuse)”. While Honeyman Cipher alleges that Groupon’s apps infringe because “certain private keys are used to build the mobile application”, this “fall[s] short of alleging that the distributed mobile application itself includes these private keys” (emphasis in original).

In support of this argument, Groupon cited to a Markman order issued by Judge Gilstrap in the Alkami case in August 2017, two months after Groupon’s dismissal, holding that “[a]s a threshold matter, the doctrine of the last antecedent supports finding that the language beginning with ‘including’ modifies ‘the executable tamper resistant key module’”. Considered alongside an earlier claim construction order in another PET case—in which the court, as summarized by Groupon, “specifically rejected an assertion that including a ‘private key’ in the building of the tamper resistant module would satisfy the claims”—this means that “the claimed method unambiguously requires that the tamper resistant module must itself include the private key”, Groupon asserted.

Despite Groupon’s challenge against Honeyman Cipher’s infringement case, the plaintiff has now made largely the same allegations in its newest lawsuits against LogMeIn and Snap. The NPE laid out its arguments in the Groupon case in two claim charts attached to the complaint, one for claims related to iOS and the other to Android—both spanning more than 100 pages. Attached to the complaints against LogMeIn and Snap are two pairs of claim charts, respectively, that appear to be nearly identical to the ones filed in the Groupon case. The text is virtually the same, aside from the inclusion of the new defendants’ respective names, the replacement of product-specific screenshots and related URLs with versions that correspond to the Snap and LogMeIn accused products, updated screenshots from the Apple and Google developer portals, and minor differences in formatting. (The Apple-related claim charts also replace uses of the name “iTunes Connect” with “App Store Connect” to reflect Apple’s rebranding of that service, which had occurred before the filing of the Groupon complaint.)

The patent-in-suit issued to Intel in November 1999 with an estimated priority date in December 1997. PET acquired the ‘399 patent, together with three other former Intel patents, from H2 Partners LLC, a Connecticut company controlled by financial manager Roger M. Harris, in March 2015. In January 2001, Intel had assigned the patents to Convera, a new entity spun off from its main business, which assigned them to H2 Partners in January 2011. PET assigned those four patents in early March 2019 to Honeyman Cipher, a Delaware entity formed in October 2018.

That assignment appears to be part of a larger pattern of patent transfers involving plaintiffs associated with Texas attorney Liddle (identified as PET’s CEO, as well as the CEO and general counsel for Personal Audio, LLC), some of which have passed the patents that they had been litigating back to Delaware entities from which they had acquired the patents in the first place. For example, in October 2018, Cumberland Systems, LLC handed its patents back to Universal Cipher LLC, while Spider Search Analytics LLC assigned its patents back to Recursive Web Technologies LLC. (While PET has identified Delaware entity Koba Holdings, LLC as its corporate parent, it received its patents directly from either H2 Partners or the individual inventor of the other two patents that it held at one time.)

That assignment pattern—litigating Texas NPEs associated with Liddle passing patents back to Delaware entities—may have been prompted both by TC Heartland and by a Federal Circuit opinion that held that PET’s letter-writing campaign into the Northern District of Texas was sufficient to ground jurisdiction for a declaratory judgment action there. For a fuller treatment of that opinion and the accompanying shift in Liddle’s litigation tactics, see “NPE’s Filing Pattern in Sudden Reverse as Federal Circuit Holds That Letter-Writing Campaign Is Sufficient to Establish Venue” (May 2019).

Honeyman Cipher has disclosed in Delaware that it has no parent corporation, and that no publicly held company owns ten percent or more of its stock. A one-page assessment of the entity’s campaign can be downloaded from RPX Insight here. 8/8, HPE, Western District of Texas. 8/19, District of Delaware.

Plano Encryption Technologies, LLC (PET) has continued the expansion of its sole litigation campaign beyond mobile banking to more general consumer apps with new cases against Groupon (2:16-cv-01093), JCPenney (2:16-cv-01073), IAC (Match.com) (2:16-cv-01094), and State Farm (2:16-cv-01072). These complaints assert the same two patents (5,991,399; 5,974,550) consistently at issue since the onset of this campaign in June 2015. A July 2016 claim construction order characterizes the ‘399 patent as generally related to “digital content protection in computer systems”, and the ‘550 patent as generally related to a “remote security protocol in computer systems in which two processes are operating”.

PET launched this campaign against a set of banks and providers of online and mobile banking platforms, last month expanding its scope to accuse of infringement more general mobile apps with cases against Best Buy, Etsy, and Shutterfly. PET was formed in Texas in March 2015 as a subsidiary of corporate parent Koba Holdings, LLC (formed in Delaware). USPTO records suggest that it owns at least six patents, four of which (including the ‘399 and ‘550 patents) originally issued to Intel. PET’s CEO and corporate counsel is Bradley D. Liddle, the entity’s only employee and officer. More information about this campaign, as well as Liddle’s connections to other NPEs, can be found here. RPX has also published a Litigation Campaign Assessment covering Plano Encryption. 10/3 (JCPenney, State Farm), 10/4 (Groupon, Match.com), Eastern District of Texas.