Solutran, Inc. v. U.S. Bancorp

Solutran, Inc., Plaintiff, v. U.S. Bancorp and Elavon, Inc., Defendants.

U.S. Bancorp and Elavon, Inc., Counter-Claimants, v. Solutran, Inc., Counter-Defendant.

Case No. 13-cv-02637 (SRN/BRT)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Filed: January 18, 2019

December 11, 2018

MEMORANDUM OPINION AND ORDER

FILED UNDER SEAL

Robert J. Gilbertson, David J. Wallace-Jackson, and Sybil Dunlop, Greene Espel PLLP, 222 South Ninth Street, Suite 2200, Minneapolis, Minnesota, for Plaintiff and Counter-Defendant.

Peter M. Lancaster, Ben D. Kappelman, and Kenneth E. Levitt, Dorsey & Whitney LLP, 50 South Sixth Street, Suite 1500, Minneapolis, Minnesota 55402, and J. Thomas Vitt, Jones Day, 90 South Seventh Street, Suite 4950, Minneapolis, Minnesota 55402, for Defendants and Counter-Claimants.

SUSAN RICHARD NELSON, United States District Judge

I. INTRODUCTION

Plaintiff Solutran, Inc. ("Solutran") holds a U.S. patent, numbered 8,311,945 (the "'945 Patent"). The patent details an innovative method for electronically processing the paper checks that merchants receive from customers. In September of 2013, Solutran accused Defendants U.S. Bank and Elavon (collectively, "U.S. Bank") of infringing this patent. After years of litigation, including a trip to the U.S. Patent and Trademark Office's Patent Trial and Appeal Board ("PTAB"), the parties tried the issues of validity and damages before a jury in March. (This Court had already deemed U.S. Bank an infringer on summary judgment.) Following a nine-day trial, the jury determined that Solutran's patent was not obvious, and therefore valid, and that U.S. Bank owed Solutran a little over $3 million in lost profit and reasonable royalty damages.

The Court now considers both parties' post-trial motions. U.S. Bank moves for judgment as a matter of law ("JMOL") on damages. Specifically, U.S. Bank asks that the Court vacate both the reasonable royalty and lost profit components of the jury's verdict, and instead enter a damages award based solely on the (lower) reasonable royalty rate supported by its damages expert.

For its part, Solutran moves for (1) a permanent injunction barring U.S. Bank from offering its infringing check processing service; (2) a damages award that fully accounts for the harm Solutran has suffered over the course of 2018; (3) prejudgment interest at Minnesota's 10% statutory rate, starting on the date U.S. Bank began infringing (November 13, 2012), and post-judgment interest at the federal statutory rate; (4) its bill of costs, totaling $32,750.23; (5) its attorney fees under 35 U.S.C. § 285 (allowing courts to awardfees to prevailing parties in "exceptional" patent infringement cases); and (6) enhanced damages under 35 U.S.C. § 284.¹ With limited exceptions, both parties oppose every aspect of each other's motions.

After careful consideration, the Court rules as follows: (1) U.S. Bank's motion for JMOL on damages is denied, (2) Solutran's motions for a permanent injunction, post-2017 damages, and post-judgment interest are granted in full, as is its bill of costs, (3) Solutran's motion for prejudgment interest is granted in part, and (4) Solutran's motions for attorney's fees and enhanced damages are denied.

II. BACKGROUND

The background of this case and the '945 patent are well documented in this Court's claim construction and summary judgment decisions. See Solutran, Inc. v. U.S. Bancorp, 2017 WL 2274959 (D. Minn. May 24, 2017) (claim construction); Solutran Inc. v. U.S. Bancorp, 291 F. Supp. 3d 877 (D. Minn. 2017) (granting Solutran summary judgment on infringement, and denying U.S. Bank summary judgment on validity under 35 U.S.C. § 101 (abstractness)). This background section will accordingly focus on only the facts necessary to explain this decision.

In order to provide context for these motions, the Court will first briefly review the basic timeline of this litigation. The Court will then detail certain pre-trial decisions pertinent to both parties' motions - the Court's decisions to exclude U.S. Bank's evidence related to the BankServ prior art, as well as Solutran's evidence of willful infringement. Finally, the Court will discuss, in broad strokes, the dueling evidence the parties presented to the jury on the questions of validity, lost profits, and a reasonable royalty rate.

A. Abbreviated Factual and Procedural History

On November 13, 2012, Solutran secured the '945 patent, titled "System and Method for Processing Checks and Check Transactions." (See Compl. [Doc. No. 1] ¶¶ 9-10). The patent essentially details a three-step method for merchants to quickly and inexpensively credit paper checks received from customers. First, the merchant collects certain information from the check at the point of purchase, and electronically sends that information to a third party like Solutran. Then, the third party uses that information to expeditiously credit the customer's money to the merchant's bank account. Finally, the merchant sends the physical checks to the third party, where the third party scans the entire check and compares the scanned image to the data gathered from the point of purchase. Once the third party has ensured that all the information matches up, it records the check image in a database.

According to Solutran, this process "improve[d] on legacy check systems by eliminating the need for merchants to scan checks after they are received [e.g., with expensive scanning equipment in the back office or at every check-out register], and by speeding the rate at which the merchant's account would be credited with a payment." Solutran, 291 F.Supp. 3d at 880. Solutran markets this patent as "Solutran's POS [Point of Sale] Imaging Network," or "SPIN." Id. Ten months after securing its patent, on September 25, 2013, Solutran sued U.S. Bank and its subsidiary, Elavon, for infringement. Solutran claimed that U.S. Bank's competing check processing service, called "Electronic Check Service with Outsourced Imaging" ("ECS-OSI"), infringed the '945 patent, and by extension, unfairly directed business away from Solutran's SPIN service.

In the face of this litigation, U.S. Bank primarily responded that the '945 patent was invalid, on both abstractness grounds, see 35 U.S.C. § 101, and obviousness grounds, see 35 U.S.C. § 103. As such, not long after Solutran filed suit, in February 2014, U.S. Bank petitioned the PTAB for a Covered Business Method ("CBM") review of the '945 patent under §§ 101 and 103.² The PTAB declined to take up U.S. Bank's § 101 argument, as U.S. Bank had failed to demonstrate that the challenged claims were "more likely than not" unpatentable as abstract. See U.S. Bancorp v. Solutran, Inc., No. CBM-2014-00076, 2014 WL 3943913 (PTAB Aug. 7, 2014). Moreover, upon further review, the PTAB also found that the challenged claims in the '945 patent were not unpatentable as obvious. See U.S. Bancorp v. Solutran, Inc., 2015 WL 4698463 (PTAB Aug. 5, 2015), aff'd, 668 Fed. App'x 363 (Fed. Cir. Aug. 8, 2016) (per curiam). As Solutran notes in its post-trial briefing (and U.S. Bank has not disputed this assertion), "U.S. Bank's CBM challenge [was] the first onein history [out of a pool of 55 decisions] to result in a complete victory for the patent-holder on all challenged claims." (See Solutran's Post-Trial Br. at 26.)

On January 12, 2016, Magistrate Judge Thorson lifted the litigation stay. (See Jan. 12, 2016 Text-Only Order [Doc. No. 62].) Discovery and claim construction briefing ensued. Following a Markman hearing, the Court entered a claim construction order. See Solutran, Inc., 2017 WL 2274959. Later that year, on November 27, 2017, the Court decided the parties' dueling summary judgment motions. In so ruling, the Court clarified one aspect of its claim construction order: that the "data" compared between the scanned paper check and the electronic data at step three of the patented process need not include the transaction amount. See Solutran, 291 F. Supp. 3d at 883-84. This clarification effectively decided the infringement suit in favor of Solutran. Id.³

In its summary judgment decision, the Court also denied U.S. Bank's motion for summary judgment on § 101 abstractness. The Court ruled, in step with the PTAB, that the claims at issue were not "directed to a patent-ineligible concept," and, to the extent any of the claims were, the claims "contain[ed] an inventive concept that sufficiently transform[ed] the abstract idea into a patent-eligible application." See id. at 885-891 (citing Alice Corp Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2327 (2014)). After determining that U.S. Bank had receivednotice and the opportunity to respond to the possibility of the Court granting summary judgment to Solutran on this issue, the Court entered summary judgment for Solutran on U.S. Bank's § 101 abstractness defense. (See Feb. 23, 2018 Order Granting Summary Judgment for Plaintiff and Finding that the '945 Patent Is Patent Eligible Under 35 U.S.C. § 101 [Doc. No. 290].)

Following motions in limine, some of which are discussed below, the parties tried the issues of obviousness and damages before a jury from March 5, 2018 to March 16, 2018. Before closing arguments, U.S. Bank moved for judgment as a matter of law on essentially the same grounds raised in its current motion, i.e., that Solutran's damages case was contrary to law and unsupported by any substantial evidence. (See U.S. Bank's Br. in Support of its Oral Fed. R. Civ. P. 50(a) Motion [Doc. No. 337].) Solutran also moved for JMOL on obviousness. The Court denied both motions on the record. (See Minute Entry for Mar. 15, 2018 [Doc. No. 342].)

The jury, in turn, rejected U.S. Bank's invalidity defense and returned a verdict in favor of Solutran for $3,272,285.10, partly for lost profits and partly for a reasonable royalty at Solutran's proposed rate of $0.02 (two cents) per infringing transaction. (See Redacted Verdict Form [Doc. No. 364].)

A few months later, on May 9, 2018, the parties submitted the...