Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 1 of 77 PageID #: 1
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`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`LIBERTY PEAK VENTURES, LLC,
`
`
`Plaintiff,
`
`
`v.
`
`THE CHARLES SCHWAB
`CORPORATION, CHARLES SCHWAB &
`CO., INC., and CHARLES SCHWAB
`BANK, SSB,
`
`
`Defendants.
`
`
`JURY TRIAL DEMANDED
`
`
`CIVIL ACTION NO. ____________
`
`
`
`
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
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`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT
`
`Plaintiff Liberty Peak Ventures, LLC files this Complaint in this Eastern District of Texas
`
`(the “District”) against Defendants The Charles Schwab Corporation, Charles Schwab & Co., Inc.,
`
`and Charles Schwab Bank, SSB (collectively, “Defendants”) for infringement of U.S. Patent Nos.
`
`7,953,671 (the “’671 patent”), 8,794,509 (the “’509 patent”), 8,851,369 (the “’369 patent”),
`
`9,195,985 (the “’985 patent”), and 8,905,301 (the “’301 patent”), 8,572,712 (the “’712 patent”),
`
`and 6,886,101 (the “’101 patent”), which are collectively referred to as the “Asserted Patents.”
`
`THE PARTIES
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`1.
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`Plaintiff Liberty Peak Ventures, LLC (“LPV” or “Plaintiff”) is a Texas limited
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`liability company located at 812 W. McDermott Drive #1066, Allen, TX 75013.
`
`2.
`
`On information and belief, Defendant The Charles Schwab Corporation (“Schwab
`
`Corp.”) is a corporation organized under the laws of the state of Delaware, with its principal place
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`of business located at 3000 Schwab Way, Westlake, Texas 76262. Schwab Corp. may be served
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`with process via its registered agents and via its corporate officers. Schwab Corp. is a publicly
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`traded company on the New York Stock Exchange under the symbol “SCHW.”
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`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 1
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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 2 of 77 PageID #: 2
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`3.
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`On information and belief, Defendant Charles Schwab & Co., Inc. (“S&C, Inc.”) is
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`a corporation organized under the laws of California, having a principal office located at 211 Main
`
`Street, San Francisco, California 94105. S&C, Inc. is a subsidiary of Defendant Schwab Corp. S&C,
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`Inc. may be served with process via its registered agents and/or its corporate officers.
`
`4.
`
`On information and belief, Defendant Charles Schwab Bank, SSB (“Schwab Bank”)
`
`is a federally chartered savings association with its principal place of business located at 3000
`
`Schwab Way, Westlake, Texas 76262. Schwab Bank is a subsidiary of Defendant Schwab Corp.
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`Schwab Bank may be served with process via its registered agents. The term “Schwab” is used
`
`herein to refer to The Charles Schwab Corporation, Charles Schwab & Co., Inc., and Charles
`
`Schwab Bank, SSB.
`
`5.
`
`On information and belief, Schwab does business in three major business segments:
`
`the Commercial Bank, the Retail Bank, and Wealth Management segments, in addition to a Finance
`
`segment. Schwab “maintains a nationwide presence across a network of branches and operations
`
`centers, and [its] Westlake [Texas] location provides a centrally located hub for the Company.”
`
`Form 10-K of The Charles Schwab Corporation Annual Report 2021, at p. 1, CHARLES SCHWAB
`
`CORPORATION, available
`
`for download at https://www.aboutschwab.com/annual-report
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`(hereinafter “2021 Annual Report”). Schwab “engages, through its subsidiaries … in wealth
`
`management, securities brokerage, banking, asset management, custody, and financial advisory
`
`services.” Id. Moreover, “Schwab provides financial services to individuals and institutional clients
`
`through two segments – Investor Services and Advisor Services. The Investor Services segment
`
`provides retail brokerage, investment advisory, and banking and trust services to individual
`
`investors, and retirement plan services, as well as other corporate brokerage services, to businesses
`
`and their employees. The Advisor Services segment provides custodial, trading, banking and trust,
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 2
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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 3 of 77 PageID #: 3
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`and support services, as well as retirement business services, to independent registered investment
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`advisors (RIAs), independent retirement advisors, and recordkeepers.” Id.
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`6.
`
`On information and belief, Schwab contracts with and issues debit cards to its
`
`customers (“cardholders”) to provide card services. See Schwab Bank Debit Card, CHARLES
`
`SCHWAB BANK, https://www.schwab.com/checking/debit-card (identifying debit card products
`
`provided by Schwab) (last visited July 28, 2022). On information and belief, Schwab also provides
`
`mobile and online banking services associated with its banking products, such as debit card,
`
`checking,
`
`and
`
`savings
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`accounts.
`
`See Overview, CHARLES
`
`SCHWAB BANK,
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`https://www.schwab.com/checking (last visited July 28, 2022). The Asserted Patents cover
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`Schwab’s products, services, and methods related to the offering, issuing, providing, registering,
`
`facilitating, maintaining, transacting, authenticating, and processing commercial transactions via
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`banking products, including checking, savings, and debit card accounts, which are designed,
`
`developed, manufactured, distributed, sold, offered for sale, and used by Schwab and/or their
`
`customers, consumers, and clients. For example, Schwab infringes the Asserted Patents via at least
`
`Schwab Bank Debit Cards, mobile banking, and mobile wallets, which are services that allow
`
`Schwab’s clients and consumers to conduct financial and banking transactions via banking and
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`debit accounts. See id. Moreover, Schwab’s infringing banking product systems and processes are
`
`compatible with application-based (“app”) mobile payment methods, such as Google Pay and
`
`Samsung Pay, that are installed on a consumer’s device, such as a mobile phone, tablet, or
`
`smartwatch. See id.
`
`7.
`
`On information and belief, Defendants, on their own and/or via divisions,
`
`subsidiaries, partners, and affiliates maintain a corporate and commercial presence in the United
`
`States, including in Texas and this District, via at least 1) Schwab’s headquarters/regional campus,
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 3
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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 4 of 77 PageID #: 4
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`physical branch locations, operation centers, and ATM locations established throughout Texas,
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`including this District; 2) Schwab’s online presence (e.g., https://www.schwab.com/) that provides
`
`to consumers access to Defendants’ banking products and services, including those identified as
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`infringing herein; and 3) consumers and clients of Defendants who utilize Schwab Bank debit card
`
`account services, at the point of sale, including via contactless payment methods, in numerous
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`merchant physical and online sites, i.e., retail stores, restaurants, and other service providers
`
`accepting Schwab Bank debit cards. See, e.g., Schwab Bank Debit Card, CHARLES SCHWAB BANK,
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`https://www.schwab.com/checking/debit-card (“Pay securely and without making contact. All you
`
`have to do is tap and hold your Schwab Bank … Debit Card at a contactless-enabled terminal …
`
`It's easy, convenient, and safe.”) (last visited July 28, 2022). Defendants, on their own and/or via
`
`alter egos, agents, divisions, subsidiaries, partners, and affiliates maintain branch locations in this
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`District located, as one for example, at 3310 Dallas Parkway, Suite 111, Plano, Texas 75093, among
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`other properties found at https://client.schwab.com/public/branchlocator/accessschwab.aspx. Thus,
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`Defendants do business, including committing infringing acts, in the U.S., the state of Texas, and
`
`in this District.
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`JURISDICTION AND VENUE
`
`8.
`
`This action arises under the patent laws of the United States, namely 35 U.S.C. §§
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`271, 281, and 284-285, among others.
`
`9.
`
`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and
`
`1338(a).
`
`A.
`10.
`
`Defendant Schwab Corp.
`On information and belief, Defendant The Charles Schwab Corporation (“Schwab
`
`Corp.”) is subject to this Court’s specific and general personal jurisdiction pursuant to due process
`
`and/or the Texas Long Arm Statute, due at least to its substantial business in this State and this
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 4
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`District, including: (A) at least part of its infringing activities alleged herein which purposefully
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`avail the Defendant of the privilege of conducting those activities in this state and this District and,
`
`thus, submits itself to the jurisdiction of this Court; and (B) regularly doing or soliciting business,
`
`engaging in other persistent conduct targeting residents of Texas and this District, and/or deriving
`
`substantial revenue from infringing goods offered for sale, sold, and imported and services provided
`
`to and targeting Texas residents and residents of this District vicariously through and/or in concert
`
`with its alter egos, divisions, intermediaries, agents, suppliers, distributors, partners, subsidiaries,
`
`clients, customers, affiliates, and/or consumers, including, but not limited to, its subsidiaries Charles
`
`Schwab & Co., Inc. and Charles Schwab Bank, SSB.
`
`11.
`
`For example, Schwab “maintains a nationwide presence across a network of
`
`branches and operations centers, and [its] Westlake [Texas] location provides a centrally located
`
`hub for the Company.” Form 10-K of The Charles Schwab Corporation Annual Report 2021, at p.
`
`1,
`
`CHARLES
`
`SCHWAB
`
`CORPORATION,
`
`available
`
`for
`
`download
`
`at
`
`https://www.aboutschwab.com/annual-report (hereinafter “2021 Annual Report”). Indeed,
`
`Schwab “engages, through its subsidiaries [Charles Schwab & Co., Inc. and Charles Schwab Bank,
`
`SSB] … in wealth management, securities brokerage, banking, asset management, custody, and
`
`financial advisory services.” Id.
`
`12.
`
`Such a corporate and commercial presence in Texas, including its headquarters
`
`being located in this District, by Defendant Schwab Corp. furthers the development, design,
`
`manufacture, distribution, sale, and use of Schwab Corp.’s infringing products, services, and
`
`methods for offering, issuing, providing, registering, facilitating, maintaining, transacting,
`
`authenticating, and processing commercial transactions via debit cards, online banking accounts,
`
`and associated accounts. Through direction and control of its alter egos, divisions, suppliers,
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 5
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`intermediaries, agents, subsidiaries, and affiliates, including, but not limited to, direction and
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`control of Defendants Charles Schwab & Co., Inc. and Charles Schwab Bank, SSB, Schwab Corp.
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`has committed acts of direct and/or indirect patent infringement within Texas and this District, and
`
`elsewhere in the United States. Such acts give rise to this action and/or have established minimum
`
`contacts with Texas such that personal jurisdiction over Schwab Corp. would not offend traditional
`
`notions of fair play and substantial justice.
`
`13.
`
`Schwab Corp. has placed and continues to place infringing products, services, and
`
`methods for offering, issuing, providing, registering, facilitating, maintaining, transacting,
`
`authenticating, and processing commercial transactions via debit cards, online banking accounts,
`
`and associated bank accounts, including related mobile, contactless, and online payment and
`
`enrollment systems, into the U.S. stream of commerce. For example, Schwab Corp. has placed such
`
`infringing products, services, and methods into the stream of commerce through its branch offices
`
`located in this District and the State of Texas, including the branch office located at 3310 Dallas
`
`Parkway, Suite 111, Plano, Texas 75093. Indeed, Schwab Corp. has placed such infringing
`
`products, services, and methods into the stream of commerce with the knowledge and understanding
`
`that such products and services are, will be, and continue to be sold, offered for sale, and/or used in
`
`this District and the State of Texas. See Litecubes, LLC v. Northern Light Products, Inc., 523 F.3d
`
`1353, 1369-70 (Fed. Cir. 2008) (“[T]he sale [for purposes of § 271] occurred at the location of the
`
`buyer.”).
`
`14.
`
`Venue is proper in the United States District Court for the Eastern District of Texas
`
`pursuant to 28 U.S.C. §§ 1391(c) and 1400(b). As alleged herein, Defendant Schwab Corp. has
`
`committed acts of infringement in this District. As further alleged herein, Defendant Schwab Corp.,
`
`via its own operations and employees located there and via the presence of other subsidiaries as
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 6
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`agents and/or alter egos of Defendant Schwab Corp., has a regular and established place of business
`
`in this District at least at its headquarters/regional campus located at 3000 Schwab Way, Westlake,
`
`Texas
`
`76262,
`
`among
`
`other
`
`properties
`
`in
`
`this
`
`District,
`
`found
`
`at
`
`https://client.schwab.com/public/branchlocator/accessschwab.aspx. According to property search
`
`records for Denton County, Defendant S&C, Inc. is the listed owner of the property at this location,
`
`which serves as Defendants Schwab Corp. and Schwab Bank’s headquarters and Defendants’
`
`regional
`
`campus.
`
`See Property
`
`Search, Denton Central Appraisal District,
`
`https://www.dentoncad.com/ (use Property Search form to search for “Charles Schwab” as owner)
`
`(last visited September 26, 2022). Accordingly, Schwab Corp. may be sued in this district under 28
`
`U.S.C. § 1400(b).
`
`B.
`15.
`
`Defendant S&C, Inc.
`On information and belief, Defendant Charles Schwab & Co., Inc. (“S&C, Inc.”) is
`
`subject to this Court’s specific and general personal jurisdiction pursuant to due process and/or
`
`the Texas Long Arm Statute, due at least to its substantial business in this State and this District,
`
`including: (A) at least part of its infringing activities alleged herein which purposefully avail the
`
`Defendant of the privilege of conducting those activities in this state and this District and, thus,
`
`submits itself to the jurisdiction of this court; and (B) regularly doing or soliciting business,
`
`engaging in other persistent conduct targeting residents of Texas and this District, and/or deriving
`
`substantial revenue from infringing goods offered for sale, sold, and imported and services provided
`
`to and targeting Texas residents and residents of this District vicariously through and/or in concert
`
`with its alter egos, suppliers, intermediaries, partners, agents, divisions, distributors, importers,
`
`customers, subsidiaries, and/or consumers, including, but not limited to, Schwab Bank SSB and its
`
`parent Schwab Corp. S&C, Inc., including as an agent and alter ego of parent company Schwab
`
`Corp., owns and maintains a retail banking business that provides products, services, and methods
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 7
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`that include S&C, Inc. offering, providing, registering, facilitating, maintaining, transacting,
`
`authenticating, and processing banking and debit card account services, via debit cards and
`
`associated banking accounts, including related mobile, contactless, and online banking and payment
`
`systems, for Defendants’ customers, consumers, and clients in Texas and this District.
`
`16.
`
`S&C, Inc. currently has over twenty-two (22) branch locations throughout Texas,
`
`including, Austin, Houston, San Antonio, El Paso, and the Dallas-Fort Worth Metroplex which, in
`
`part, includes this District at least at a branch located at 3310 Dallas Parkway, Suite 111, Plano,
`
`Texas 75093. See https://client.schwab.com/public/branchlocator/accessschwab.aspx. Via S&C,
`
`Inc.’s own activities, S&C, Inc. has substantial business operations in Texas, which include clients,
`
`customers, and related financial products and services, such as retail banking services, investment
`
`services, and Schwab branded debit cards. S&C, Inc. has placed and continues to place infringing
`
`products, services, and methods for offering, issuing, providing, registering, facilitating,
`
`maintaining, transacting, authenticating, and processing commercial transactions via debit cards
`
`and associated bank accounts, including related mobile, contactless, and online payment systems,
`
`into the U.S. stream of commerce. S&C, Inc. has placed such products, services, and methods into
`
`the stream of commerce with the knowledge and understanding that such products are, will be, and
`
`continue to be sold, offered for sale, and/or used in this District and the State of Texas. See
`
`Litecubes, 523 F.3d at 1369-70 (“[T]he sale [for purposes of § 271] occurred at the location of the
`
`buyer.”).
`
`17.
`
`Such a corporate and commercial presence in Texas, including in this District, by
`
`Defendant S&C, Inc. furthers the development, design, manufacture, distribution, sale, and use of
`
`S&C, Inc.’s infringing products, services, and methods for offering, issuing, providing, registering,
`
`facilitating, maintaining, transacting, authenticating, and processing commercial transactions via
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 8
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`debit cards, online banking accounts, and associated accounts. Through direction and control of its
`
`alter egos, suppliers, intermediaries, agents, subsidiaries and affiliates, S&C, Inc. has committed
`
`acts of direct and/or indirect patent infringement within Texas and this District, and elsewhere in
`
`the United States. Such acts give rise to this action and/or have established minimum contacts with
`
`Texas such that personal jurisdiction over S&C, Inc. would not offend traditional notions of fair
`
`play and substantial justice.
`
`18.
`
`Venue is proper in the United States District Court for the Eastern District of Texas
`
`pursuant to 28 U.S.C. §§ 1391(c) and 1400(b). As alleged herein, Defendant S&C, Inc. has
`
`committed acts of infringement in this District. As further alleged herein, Defendant S&C, Inc., via
`
`its own operations and employees located there and via the presence of other subsidiaries as agents
`
`and/or alter egos of Defendant Schwab Corp., has a regular and established place of business in this
`
`District at least at a branch location located at 3310 Dallas Parkway, Suite 111, Plano, Texas 75093,
`
`among
`
`other
`
`properties
`
`in
`
`this
`
`District,
`
`found
`
`at
`
`https://client.schwab.com/public/branchlocator/accessschwab.aspx. According to property search
`
`records for Collin County, S&C, Inc. is the listed owner of the property at this branch location. See
`
`Property
`
`Search,
`
`COLLIN
`
`CENTRAL
`
`APPRAISAL
`
`DISTRICT,
`
`https://www.collincad.org/propertysearch (use Advanced Search form to search for “Charles
`
`Schwab” as owner) (last visited September 26, 2022). Accordingly, S&C, Inc. may be sued in this
`
`district under 28 U.S.C. § 1400(b).
`
`C.
`19.
`
`Defendant Charles Schwab Bank, SSB
`On information and belief, Defendant Charles Schwab Bank, SSB (“Schwab
`
`Bank”) is subject to this Court’s specific and general personal jurisdiction pursuant to due process
`
`and/or the Texas Long Arm Statute, due at least to its substantial business in this State and this
`
`District, including: (A) at least part of its infringing activities alleged herein which purposefully
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 9
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`avail the Defendant of the privilege of conducting those activities in this state and this District and,
`
`thus, submits itself to the jurisdiction of this court; and (B) regularly doing or soliciting business,
`
`engaging in other persistent conduct targeting residents of Texas and this District, and/or deriving
`
`substantial revenue from infringing goods offered for sale, sold, and imported and services provided
`
`to and targeting Texas residents and residents of this District vicariously through and/or in concert
`
`with its alter egos, suppliers, intermediaries, partners, agents, divisions, distributors, importers,
`
`customers, subsidiaries, and/or consumers, including, but not limited to, S&C, Inc. and its parent
`
`Schwab Corp. Schwab Bank, including as an agent and alter ego of parent company Schwab Corp.,
`
`owns and maintains a retail banking business that provides products, services, and methods that
`
`include Schwab Bank offering, providing, registering, facilitating, maintaining, transacting,
`
`authenticating, and processing banking and debit card account services, via debit cards and
`
`associated banking accounts, including related mobile, contactless, and online banking and payment
`
`systems, for Defendants’ customers, consumers, and clients in Texas and this District. Moreover,
`
`Schwab Bank provides “Schwab Bank” branded debit cards to Defendants’ clients, consumers, and
`
`customers.
`
`See,
`
`e.g.,
`
`Schwab Bank Debit Card, CHARLES SCHWAB BANK,
`
`https://www.schwab.com/checking/debit-card (identifying debit card products provided by Schwab
`
`Bank) (last visited July 28, 2022).
`
`20.
`
`Via Schwab Banks’s own activities, Schwab Bank has substantial business
`
`operations in Texas, which include clients, customers, and related financial products and services,
`
`such as retail banking services, investment services, and Schwab Bank-branded cards. Schwab
`
`Bank has placed and continues to place infringing products, services, and methods for offering,
`
`issuing, providing, registering, facilitating, maintaining, transacting, authenticating, and processing
`
`commercial transactions via debit cards and associated bank accounts, including related mobile,
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 10
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`contactless, and online payment systems, into the U.S. stream of commerce. Schwab Bank has
`
`placed such products, services, and methods into the stream of commerce with the knowledge and
`
`understanding that such products are, will be, and continue to be sold, offered for sale, and/or used
`
`in this District and the State of Texas. See Litecubes, 523 F.3d at 1369-70 (“[T]he sale [for purposes
`
`of § 271] occurred at the location of the buyer.”).
`
`21.
`
`Such a corporate and commercial presence in Texas, including in this District, by
`
`Defendant Schwab Bank furthers the development, design, manufacture, distribution, sale, and use
`
`of Schwab Bank’s infringing products, services, and methods for offering, issuing, providing,
`
`registering, facilitating, maintaining, transacting, authenticating, and processing commercial
`
`transactions via debit cards, online banking accounts, and associated accounts. Through direction
`
`and control of its alter egos, suppliers, intermediaries, agents, subsidiaries and affiliates, Schwab
`
`Bank has committed acts of direct and/or indirect patent infringement within Texas and this District,
`
`and elsewhere in the United States. Such acts give rise to this action and/or have established
`
`minimum contacts with Texas such that personal jurisdiction over Schwab Bank would not offend
`
`traditional notions of fair play and substantial justice.
`
`22.
`
`Venue is proper in the United States District Court for the Eastern District of Texas
`
`pursuant to 28 U.S.C. §§ 1391(c) and 1400(b). As alleged herein, Defendant Schwab Bank has
`
`committed acts of infringement in this District. As further alleged herein, Defendant Schwab Bank,
`
`via its own operations and employees located there and via the presence of other subsidiaries as
`
`agents and/or alter egos of Defendant Schwab Corp., has a regular and established place of business
`
`in this District at least at its headquarters/regional campus located at 3000 Schwab Way, Westlake,
`
`Texas 76262, which is located in Denton County. See Property Search, DENTON CENTRAL
`
`APPRAISAL DISTRICT, https://www.dentoncad.com/ (use Property Search form to search for
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 11
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`“Charles Schwab” as owner) (last visited September 26, 2022). Accordingly, Schwab Bank may
`
`be sued in this district under 28 U.S.C. § 1400(b).
`
`23.
`
`Upon information and belief, Defendants Schwab Corp., S&C, Inc., and Schwab
`
`Bank each have significant ties to, and presence in, the State of Texas and this District making
`
`venue in this District both proper and convenient for this action.
`
`THE ASSERTED PATENTS AND TECHNOLOGY
`
`24.
`
`The Asserted Patents cover various aspects of products, services, and methods that
`
`include Defendants’ offering, issuing, providing, registering, facilitating, maintaining, transacting,
`
`authenticating, and processing debit card accounts and related products and services for
`
`Defendants’ customers, consumers, and clients, including Defendants’ internal payment
`
`processing, authentication, authorization, overdraft, enrollment, and fraud detection systems and
`
`methods, referred to herein collectively as the “Accused Instrumentalities.” The apparatuses,
`
`systems, and methods described in each of the Asserted Patents apply, for example, to systems for
`
`securing, authorizing, and facilitating financial transactions, i.e., purchases related to banking and
`
`debit card accounts.
`
`25.
`
`The Asserted Patents cover Accused Instrumentalities of Defendants that secure,
`
`authorize, and facilitate mobile payments, contactless payments, and online payments using debit
`
`card accounts activated, offered, issued, provided, established, registered, facilitated, and
`
`maintained by Defendants and vicariously through their alter egos, suppliers, intermediaries, agents,
`
`divisions, distributors, partners, subsidiaries, and clients. Clients, customers, and consumers of the
`
`Accused Instrumentalities use such products at the point of sale, for example, via mobile wallets
`
`provided on a mobile device with the appropriate smartcard and/or app installed (and in some cases,
`
`the software is native to the device) or via an embedded chip or smartcard embedded within a
`
`physical debit card. In other instances, the Accused Instrumentalities may be utilized in online
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 12
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`

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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 13 of 77 PageID #: 13
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`purchases conducted over a network (e.g., the Internet) and/or when the user of the payment card
`
`account is registering, activating, or maintaining the account.
`
`26.
`
`On information and belief, Defendants’ debit card account services utilize the
`
`Europay, Mastercard, and Visa (EMV) standards in processing, securing, and authenticating
`
`financial transactions. For example, Defendants provide payment applications (often provisioned
`
`to a Secure Element) that use EMV standards to process payments. In some cases, Defendants’
`
`payment applications reside on a user’s mobile device (e.g., stored in a Secure Element or other
`
`secure memory), allowing the user to make payments via Defendants’ debit card without presenting
`
`the physical card at the time of payment (referred to herein as a “mobile payment”). Defendants’
`
`mobile payments can be facilitated by using mobile wallets such as Google Pay and Samsung Pay,
`
`such as shown below:
`
`See
`
`Mobile
`
`Wallet
`
`
`FAQs,
`
`CHARLES
`
`SCHWAB
`
`BANK,
`
`
`
`https://www.schwab.com/checking/faqs#accordion-title--acc1-component--acdefault91221 (last
`
`visited July 28, 2022).
`
`27. Mobile wallets may be implemented as an application (or “app”) on a mobile device,
`
`e.g., a mobile phone, tablet, or smartwatch. In some implementations, mobile wallets utilize Host
`
`Card Emulation, where, instead of storing Defendants’ payment application in a Secure Element on
`
`the host device, it is stored in the host CPU or remotely, e.g., in the cloud. In either case, mobile
`
`payments are made wirelessly, without contact needed between payment device and payment
`
`terminal, via, for example, Near Field Communication (“NFC”) protocols or Magnetic Secure
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 13
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`

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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 14 of 77 PageID #: 14
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`Transmission (MST), as explained below. A user holds the mobile device close to the payment
`
`terminal in order to establish communication between the payment application and the payment
`
`terminal. These wireless methods utilized with EMV deliver secure transactions between a payment
`
`terminal and the mobile device.
`
`
`
`
`
`
`On information and belief, as indicated below, Defendants encourage their clients,
`
`28.
`
`consumers, and customers to shop with Defendants’-branded debit cards using a digital wallet
`
`service that provides a distribution channel by which Defendants’ payment applications (e.g., via
`
`the Secure Element on the mobile device) can be accessed and used.
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 14
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`
`
`

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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 15 of 77 PageID #: 15
`
`See Schwab Bank Debit Card, CHARLES SCHWAB BANK, https://www.schwab.com/checking/debit-
`
`card (last visited July 28, 2022).
`
`29.
`
`The Accused Instrumentalities also include at least Defendants’ payment card (e.g.,
`
`debit card) related products, services, and methods for card payments using a physical debit card
`
`having an embedded chip or smartcard. See Schwab Bank Debit Card, CHARLES SCHWAB BANK,
`
`https://www.schwab.com/checking/debit-card (listing Schwab’s debit cards) (last visited July 28,
`
`2022). For example, as indicated below, Defendants’ payment applications reside on microchips
`
`embedded on Defendants’ debit cards, which allow the user to tap the payment card to a reader
`
`and complete a transaction wirelessly without contact between the card’s magnetic stripe and the
`
`reader.
`
`See id.
`
`
`
`30.
`
`On information and belief, the Accused Instrumentalities include at least
`
`Defendants’ payment card (e.g., debit card) related products, services, and methods for contactless
`
`payments using a physical debit card having an embedded chip or smartcard that utilize EMV
`
`standards for contactless payment. See, e.g., Schwab Bank Debit Card, CHARLES SCHWAB BANK,
`
`https://www.schwab.com/checking/debit-card (identifying debit card products provided by Schwab
`
`Bank) (last visited July 28, 2022); Schwab Bank Debit Card FAQs, CHARLES SCHWAB BANK,
`
`https://www.schwab.com/checking/faqs#accordion-title--acc1-component--acdefault91221
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 15
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`

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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 16 of 77 PageID #: 16
`
`(explaining benefits and features of EMV chip technology) (last visited July 28, 2022). Defendants’
`
`debit cards include EMV compliant contactless payment functionality indicated by the “Contactless
`
`Indicator”
`
` which appears prominently on the cards.
`
`
`
`
`See
`
`Schwab
`
`Bank
`
`Debit
`
`Card,
`
`CHARLES
`
`SCHWAB
`
`BANK,
`
`
`
`https://www.schwab.com/checking/debit-card (identifying debit card products provided by
`
`Schwab Bank) (last visited July 28, 2022).
`
`31.
`
`The Contactless Indicator “represents compatibility with a Point of Sale (POS)
`
`terminal or reader which is compliant with the EMV Contactless Communication Protocol” and in
`
`payment-related environments consumers may use their compliant card or device on a POS terminal
`
`or reader bearing the “Contactless Symbol”
`
` as explained below.
`
`PLAINTIFF’S ORIGINAL COMPLAINT FOR PATENT INFRINGEMENT – Page 16
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`Case 2:22-cv-00376-JRG Document 1 Filed 09/28/22 Page 17 of 77 PageID #: 17
`
`32.
`
`On information and belief, a process referred to as “tokenization,” which is also part
`
`of the EMV standards, is also utilized by Defendants in authorizing debit transactions, via online
`
`payments, in-app payments, and mobile payments. As explained below, a “payment token” is a
`
`“surrogate value for a PAN” (a primary account number). In tokenization, “Payment Tokens are
`
`requested, generated, issued, provisioned, and processed as a surrogate for PANs.”
`
`
`Via mobile wallet applic