DataTreasury Corporation v. Fidelity National Information Services, Inc.

Case Overview & Background

This litigation represents a key battle in a long-running, multi-front patent enforcement campaign by DataTreasury Corporation, a Plano, Texas-based entity that derives its revenue from licensing and enforcing a portfolio of patents related to digital check imaging and processing. Often characterized as a patent assertion entity (PAE) or "patent troll," DataTreasury has sued dozens of banks and financial services companies since the early 2000s, reportedly securing over $350 million in licensing fees and settlements. The defendant, Fidelity National Information Services, Inc. (FIS), is a major global financial technology company that provides core processing, payment, and other technology services to thousands of financial institutions. The lawsuit alleges that FIS's systems for electronic check conversion, digital payment processing, and related risk management services—used by both FIS and its numerous bank clients—infringe DataTreasury's patents. This specific action was part of a coordinated wave of suits filed on May 28, 2013, which also targeted other major financial technology providers like Fiserv and Jack Henry & Associates, along with their respective client banks.

The two patents asserted in this case are U.S. Patent Nos. 5,910,988 and 6,032,137, often called the "Ballard patents" after their inventor, Claudio Ballard. Both patents are titled "Remote image capture with centralized processing and storage" and generally describe systems and methods for capturing images of documents (like checks) at remote locations, transmitting the encrypted data to a central facility for processing and storage, and generating reports. The '137 patent is a continuation-in-part of the '988 patent and is specifically directed to check processing systems. The litigation was filed in the U.S. District Court for the Eastern District of Texas, a venue historically favored by patent plaintiffs for its fast trial dockets and jury pools perceived as friendly to patent owners. Cases involving these same patents had been litigated in the district for years, including a notable 2010 trial where a jury found U.S. Bancorp's infringement to be willful, resulting in a significant damages award.

The case against FIS is particularly notable for its intersection with post-grant proceedings at the U.S. Patent and Trademark Office (USPTO). After being sued, FIS challenged the validity of the DataTreasury patents by filing petitions for Covered Business Method (CBM) review at the Patent Trial and Appeal Board (PTAB), a proceeding created by the America Invents Act (AIA). The PTAB ultimately invalidated the challenged claims of both patents, finding them to be directed to an unpatentable abstract idea. This decision was subsequently affirmed by the U.S. Court of Appeals for the Federal Circuit in October 2016. The successful use of the CBM review process by FIS to invalidate what some have called the "most 'notorious' business method patents" is a significant outcome, illustrating the impact of the AIA on patent litigation and the power of PTAB proceedings to terminate long-running district court enforcement campaigns.

Legal Developments and Outcome

The patent infringement litigation between DataTreasury Corporation and Fidelity National Information Services, Inc. (FIS) was a multi-front battle, with the definitive outcome ultimately decided by parallel administrative proceedings at the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB) and a subsequent appeal to the Federal Circuit. The district court case was effectively sidelined and ultimately terminated as a result of the patent invalidations.

Filing and Initial Pleadings (2013)

• 2013-05-28: Complaint Filed. DataTreasury Corporation filed a patent infringement lawsuit in the U.S. District Court for the Eastern District of Texas against Fidelity National Information Services, Inc. and several of its client banks. The complaint alleged infringement of U.S. Patent Nos. 5,910,988 and 6,032,137, which relate to systems for remote image capture and centralized processing of documents, a technology central to modern check processing. This suit was one of a wave of cases DataTreasury filed against various financial services technology providers and banks.
• Initial Pleadings: Following the complaint, FIS would have filed an answer and likely asserted counterclaims for non-infringement and invalidity of the patents-in-suit. Specific dates and docket entries for these filings are not available in public search results, but this is a standard procedural step.

Parallel PTAB Proceedings (2013-2015)

Shortly after the litigation began, FIS strategically shifted the fight to the PTAB, which was created by the America Invents Act (AIA) and proved to be a more efficient venue for challenging the validity of business method patents.

• 2013-10-25: Covered Business Method (CBM) Petitions Filed. FIS filed petitions for Covered Business Method review against both the '988 patent (CBM2014-00021) and the '137 patent (CBM2014-00020), arguing the patents were invalid as directed to abstract ideas. These specific DataTreasury patents were notoriously known and were even cited by Congress during the drafting of the AIA as a key reason for creating the CBM review program.
• IPR Petition Denied. In a separate attempt, FIS also filed a petition for inter partes review (IPR) against the '988 patent (IPR2014-00489). However, on 2014-08-13, the PTAB denied institution. The Board found that FIS had improperly attempted to incorporate thousands of pages of arguments and evidence from an expert declaration and claim charts by reference, rather than including them in the petition itself, as a way to circumvent page limits.
• 2015-04-29: PTAB Final Written Decisions. The PTAB issued final written decisions in the CBM reviews, finding all challenged claims of both the '988 and '137 patents unpatentable under 35 U.S.C. § 101. The Board agreed with FIS that the patents were directed to the abstract idea of "transferring [encrypted] information from one location to another" and that implementing this idea on generic computer components did not provide a sufficient inventive concept to render them patent-eligible.

District Court Stay and Inactivity

While the exact date of a motion to stay is not available, federal courts commonly stay litigation pending the outcome of PTAB proceedings to avoid duplicative effort and conserve judicial resources. Given the timeline of the CBM petitions, the district court case was almost certainly stayed pending the PTAB's final decisions and any subsequent appeal. The case docket would have shown minimal activity during this period.

Federal Circuit Appeal and Final Disposition (2016-2017)

• Appeal to the Federal Circuit. DataTreasury appealed the PTAB's CBM decisions to the U.S. Court of Appeals for the Federal Circuit. Oral arguments were held on October 5, 2016.
• 2016-10-13: Federal Circuit Affirms Invalidation. The Federal Circuit issued a summary affirmance under its Rule 36, upholding the PTAB's invalidation of both patents. This judgment, styled DataTreasury Corp. v. Fidelity Nat'l Info. Svcs., Appeal No. 16-1046, conclusively ended the validity dispute over the asserted patent claims. The affirmance was seen as a major victory for the financial industry and a successful application of the AIA's CBM review process to eliminate what were described as "notorious" business method patents that had been used to extract over $350 million in settlements.
• Termination of District Court Case. With the patents definitively invalidated by the highest court for patent law, DataTreasury's infringement claims against FIS in the Eastern District of Texas were rendered moot. Although a specific dismissal order is not available in public search results, the standard procedure following such an appellate outcome is for the parties to file a joint stipulation of dismissal, officially terminating the district court case. The case is no longer active.

Counsel for Plaintiff DataTreasury Corporation

Based on court filings and reporting on DataTreasury's extensive litigation campaigns, the company was represented by a combination of national and local counsel. Attorneys from at least two firms have appeared on behalf of the plaintiff.

• Gregory S. Dovel (Lead Counsel)

  • Firm: Dovel & Luner, LLP (Santa Monica, CA)
  • Note: A Harvard Law graduate and former Supreme Court clerk, Dovel represents plaintiffs in high-stakes, contingency-fee litigation and has secured large trial verdicts and settlements in patent cases against major technology companies like Cisco and Google.

• T. John Ward, Jr. (Johnny Ward) (Local Counsel)

  • Firm: Ward, Smith & Hill, PLLC (Longview, TX)
  • Note: A prominent East Texas trial lawyer specializing in intellectual property litigation, he has been consistently recognized by Texas Super Lawyers for his work in this field.

• Wesley Hill (Local Counsel)

  • Firm: Ward, Smith & Hill, PLLC (Longview, TX)
  • Note: An experienced trial lawyer in the Eastern District of Texas, Hill has served as lead or co-lead counsel in over ten patent infringement trials and has represented both plaintiffs and defendants.

• T. John Ward (Of Counsel)

  • Firm: Ward, Smith & Hill, PLLC (Longview, TX)
  • Note: A former U.S. District Judge for the Eastern District of Texas, he presided over hundreds of patent cases before retiring from the bench in 2011 and joining the firm founded by his son, Johnny Ward.

• Cary Patterson

  • Firm: Nix Patterson, LLP (formerly Nix, Patterson & Roach LLP)
  • Note: For over a decade, Patterson's firm has been a primary representative for DataTreasury, recovering more than $350 million for the company across numerous patent infringement lawsuits against the banking industry.

The legal team combined the national reputation and contingency-fee model of Dovel & Luner with the deep local knowledge and patent trial experience of Ward, Smith & Hill, a common strategy for plaintiffs litigating in the Eastern District of Texas. Nix Patterson has a long and very successful history of representing DataTreasury in its broader enforcement campaign against the financial services sector.

Counsel for Defendant Fidelity National Information Services, Inc.

Fidelity National Information Services, Inc. (FIS) was primarily represented by attorneys from the intellectual property firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, particularly in the successful Covered Business Method (CBM) reviews that were central to the case's resolution. Additional counsel from Kilpatrick Townsend & Stockton LLP also appeared in the district court litigation.

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

• Erika H. Arner (Role: Lead Counsel).

  • Firm & Office: Finnegan; Washington, D.C.
  • Note: Arner was lead counsel for FIS in the pivotal PTAB proceedings that invalidated DataTreasury's patents and argued the subsequent appeal at the Federal Circuit. Her practice focuses on patent office litigation, including IPR and CBM reviews, and she has been recognized for her work before the PTAB.

• Darren M. Jiron (Role: Counsel).

  • Firm & Office: Finnegan; currently London, formerly Washington, D.C.
  • Note: Jiron's firm biography lists his representation of FIS in the CBM patent reviews against DataTreasury as a key experience, highlighting his role in having all challenged claims found unpatentable.

Kilpatrick Townsend & Stockton LLP

• Scott L. Pojunas (Role: Counsel).

  • Firm & Office: Kilpatrick Townsend & Stockton; Atlanta, GA. At the time of this litigation, he was a partner at the firm. He has since moved to an in-house role at Google.
  • Note: Pojunas has extensive experience in patent litigation and counseling, particularly in the software and financial technology sectors.

• Taylor Higgins Ludlam (Role: Counsel).

  • Firm & Office: Kilpatrick Townsend & Stockton; Raleigh, NC. She has since moved to an in-house role at Lenovo.
  • Note: Ludlam's practice at the firm focused on patent infringement and complex commercial litigation, with experience in cases involving wireless communications and software systems.

• J. Wesley Earnhardt (Role: Counsel).

  • Firm & Office: Kilpatrick Townsend & Stockton at the time. He is now a partner at Cravath, Swaine & Moore LLP.
  • Note: Earnhardt is a trial and appellate lawyer with significant experience in intellectual property, antitrust, and other complex commercial disputes.

• Michael T. Morlock (Role: Counsel).

  • Firm & Office: Kilpatrick Townsend & Stockton; Atlanta, GA.
  • Note: Morlock focuses on patent law, including litigation and PTAB trials, with an emphasis on the electronics and software industries.