Datatreasury Corporation v. Small Value Payments Company - Document No. 7

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RESPONSE to Motion re 2 MOTION to Dismiss for Improper Venue filed by Datatreasury Corporation. (Hohn, Edward) 2:2004cv00085 Texas Eastern District Court

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Datatreasury Corporation v. Small Value Payments Company

Doc. 7

Case 2:04-cv-00085-DF

Document 7

Filed 10/11/2004

Page 1 of 6

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION DATA TREASUR CORPORATION, Y Plaintiff
§ § § § § § § §

v.
SMALL VAL DE PAYMENTS COMPANY (SVPCo) Defendant

Civil Action No. 2:04-CY-85- DF/CC JURY DEMAND

DATA TREASURY'S SUPPLEMENTAL RESPONSETO SVPCo's MOTION TO DISMISS FOR IMPROPER VENUE Plaintiff, DataTreasury Corporation,("DataTreasury"),submitsthis Supplemental Response DefendantSmall Value Payments to Company("SVPCo")'s Motion to Dismiss for ImproperVenue. On June 16, 2004, Plaintiff filed its Response SVPCo'sMotion to to Dismiss for Improper Venue and incorporatesinto this supplementalresponse,all arguments authoritiesset out therein.Additionally, Plaintiff would respectfullyshow and the Court asfollows: DataTreasury filed this patentinfringementcasealleging that SVPCo is and has beeninfringing U.S. PatentNos. 5,910,988and 6,032,137,DataTreasury's patentson a systemof remote image capturewith centralizedprocessingand storage. SVPCo is a consortiumowned by over twenty of the largest financial institutions in the world. In addition to its Electronic Clearing Servicesand Electronic PaymentsNetworks, SVPCo offers a national check image exchange service,ImageExchangeNetwork, allowing all of its memberinstitutions to realizethe benefitsof imageexchange the checkclearing in process. SVPCo operatesthrough several subsidiaries,including Electronic Clearing Services(ECS) and Electronic Payments Network. ECS is a private sectorprovider of

PLAINTIFF'S SUPPLEMENTAL RESPONSE TO DEFENDANT'S MOTION TO DISMISS

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Dockets.Justia.com

Case 2:04-cv-00085-DF

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checkelectronificationservicesto U.S. financial institutions. Contrary to its assertions throughaffidavit, SVPCo engages its business a nationwidelevel, including in the in on EasternDistrict of Texas,by exchanging imagesand facilitating electronicpaymentsfor bankswithin the EasternDistrict. SVPCo's self-described mission is to electronify the checkas early as possibleonce it entersthe paymentsystem. Unfortunatelyfor SVPCo, as it seeksto accomplishthis mission, it also infringes upon the valid United States patentsheld by DataTreasury. SVPCo has filed the instant Motion under F.RC.P. 12(b)(3), alleging that all claims againstit shouldbe dismissed basedon allegedimpropervenue. In supportof its argument dismissthis entire case,SVPCorelieson one and only one document a two to page, self-serving, six-paragraphaffidavit signed by Susan Long, the Senior VicePresident of SVPCo. See Defendant's Motion to Dismiss and attached Affidavit previouslyfiled. For the additionalreasons forth below, venuein the EasternDistrict set of Texasis proper,and Defendant'sMotion shouldbe denied. DataTreasury pleadsin its Complaintthat "[p ]ersonal jurisdiction also exists specifically over SVPCo becauseof SVPCo's conduct in making, using, selling, offering to sell, and/or importing, directly, contributorily, and/or by inducement, infringing productsand serviceswithin the Stateof Texasand within this district, in particular for JP Morgan Chase,an infringing Defendantin the United States District Court for the Eastern District of Texas." SeeComplaintfor Patent Infringement,previouslyfiled. DefendantSVPCohas failed

to controvertthesespecific facts,which createpropervenueunder28 D.S.C. § 1391and 28 D.S.C. § 1400. The only pertinent response SVPCo could muster in its supporting affidavit was that "SVPCo hasno offices or employees the Stateof Texas." SeeSusan in Long affidavit,filed with Defendant'sMotion. Clearly, Plaintiff has allegednumerous

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specific facts which SVPCo does not controvert with this single sentencein its specific facts which SVPCo does not conc1usory, self-serving,two-pageaffidavit. Because SVPCohasnot controverted the all conc1usory, self-serving,two-pageaffidavit. specific facts plead by DataTreasurythat give rise to venue in the EasternDistrict of Texas,the Court shouldacceptDataTreasury's allegationsastrue. allegationsastrue. For further proof of SVPCo's involvement in businessin the State of Texas, involvement in businessin the State of Texas, DataTreasury refers to Exhibit "A", an article which appeared InformationWeek, in on September 2004, and attached 3, hereto. "Key Bank and J.P. Morgan Chase& Co. have inaugurateda checkimage-sharing program using Image Exchange Network, an imageexchangesystem owned and operatedby Small Value PaymentsCo., a consortiumof large banks. Key and Chasehave concludeda two-month pilot and expectto increase volume of imagesthey exchange year the this andnext." SeeExhibit <fA". This article clearly showsthat SVPCoperfonns infringing activities with J. P. Morgan ChaseBank, an institution that is subjectto jurisdiction and venuein the EasternDistrict of Texas, a Defendantin a similarly filed action before the same FederalJudge,David Folsom, and FederalMagistrateJudge,Caroline Craven. See file; DataTreasury Corp.. v. J. P. Morgan Chase.et al.. Civil Action No. 5:02-CV-OI24, JudgeDavid Folsompresiding. Defendant SVPCo devotes a majority of its Motion to the legal standards regardinga defendant'sresidence, exerciseof personal the jurisdiction over a defendant, and the constitutional due processrequirementsof minimum contacts,fair play, and substantial justice. As a generalrule, Plaintiff agrees with and adoptsthis discussion of the law. However,SVPCothen argues that its service"pennits banksto exchange check paymentinfonnation electronicallybut doesnot involve the exchangeof images- the subjectof the patentsin suit in this action." SeeDefendant'sMotion, p. 4. However,

PLAINTIFF'S SUPPLEMENTAL RESPONSE TO DEFENDANT'S MOTION TO DISMISS

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the article appearingin InformationWeekclearly statesthat "Image ExchangeNetwork enables banksof all sizesto clear and settlecheckimagesdirectly or throughthird parties suchas the FederalReserve." SeeExhibit itA", At the least,thesedocuments createa

fact question as to whether SVPCo is engaging in the specific business of image

exchange the Eastern in District of Texas a minimumcontact would give rise to that
specificjurisdiction, becausethis would be an infringing activity. At this stagein the proceeding,this fact question is to be resolvedin the Plaintiffs favor, and SVPCo's Motion shouldbe denied.
LUNLLUI3lUN

For the foregoing reasons,DataTreasuryn respectfully requeststhat SVPCO's Motion to Dismiss for ImproperVenuebe denied. P Plaintiff DataTreasury prays for such otherandfurther relief to which it may be~

A ITORNEY IN CHARGE SBN: 09813240
ANTHONY K. BRUSTER

SBN: 24036280
D. NEIL SMITH

SBN: 00797450
NIX PATTERSON & ROACH, L.L.P. 205 LINDA DRIVE DAINGERFIELD,TEXAS 75638 903.645.7333 (TELEPHONE) 903.645.4415 (FACSIMILE)

PLAINTIFF'S SUPPLEMENTAL REsPONSE TO DEFENDANT'S MOTION TO DISMISS

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Case 2:04-cv-00085-DF

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PROVOST* UMPHREY 3232 McKINNEY, STE.700 DALLAS, TEXAS S 75204 214.744.3000 (TELEPHONE) 214.744.3015 (FACSIMILE) JOEKENDALL

SBN: 11260700
THE COOPERLAW FIRM 545 E. JOHNCARPENTERFRWY. SUITE1460 IRVING,TEXAS 75062 972.831.1188 (TELEPHONE) 972.692.5445 (FACSIMILE)
ROD COOPER SBN: 90001628

ALBRITTON LAW FIRM 109 W. TYLER LONGVIEW, TEXAS 75601 903.757.8449 (TELEPHONE) 903.758.6397 (FACSIMILE)
ERIC ALBRITION SBN: 00790215

THE LAW OFFICE OF T. JOHN WARD JR. P.O. Box 1231 LONGVIEW, TEXAS 75601 903.757.6400 (TELEPHONE) 903.758.6397 (FACSIMILE) JOHNNY WARD

SBN: 00794818 ATTORNEYS FOR PLAINTIFF

CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the aboveand foregoing documenthas beendeliveredto the following counselon this ./.Il;!..day of September, 2004,via e-mail. Mr. Preston McGee FlowersDavis 1021ESELoop 323 Suite200
Tyler, TX 75701 [email protected]

PLAINTIFF'S SUPPLEMENTAL RESPONSE TO DEFENDANT'S MOTION TO DISMISS

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Key, Chase CaseCheck-Imaging Begin 2:04-cv-00085-DF Document 7 Program

Filed 10/11/2004

Page1 of2 Page 6 of 6

EnterpriseGrid Computing is Here Today:
The Key Benefits of Being on the Grid

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Key, Chase Begin Check-Imaging Program
They're using Image ExchangeNetwork, an image-exchange systemthat lets banks of all sizesclear and settle check images.
By Steven Marlin, InformationWeek Sept. 3, 2004 URL: http://www.informationweek.com/story/showArticle. ihtml?articlel 0=46800084

Key Bank andJ.PMorgan Chase& Co. haveinaugurated check-image-sharing a programusing Image Exchange Network, an image-exchange systemownedandoperated Small Value Payments by Co., a consortiumof largebanks.Key and Chase haveconcluded two-monthpilot and expectto increase a the volume of imagesthey exchange year andnext. this ImageExchange Network enables banksof all sizesto clear andsettlecheckimagesdirectly or through third partiessuchasthe FederalReserve. allowing banksto createdigitized imagesof paperchecks, By it eliminates expense physically transporting the of thembetweenbanks. A separate bank-owned enterprise, ViewpointeArchive Services, 4-year-oldimagerepositorythat a houses manyofthe 40 billion checkswritten annuallyin the United States, also gearingup to enable is imageexchange. On Oct. 28, the CheckClearingfor the 21st CenturyAct, known asCheck21, goesinto effect, enabling banksto transmitimagesof checksin lieu of the paperoriginals.Because manybanksagainst which checksaredrawnaren'tequippedto handlecheckimages, law requiresthat bankstransmitimagesto the servicebureaus locatednearthe bank on which the checksaredrawn;the servicebureaus convertthe imagesto paperfacsimilesand deliver the facsimilesto the bank. While cumbersome, still a lot less it's expensive thanhiring air couriersto haul bagsof checksacross country. the ViewpointeandImageExchange Network areownedby someofthe largestbanks,all of which have image-enabled their systems. Still, Viewpointe CEO JohnLettko says,the real benefitsof check-image exchange be realizedonly when the thousands "endpoints,"i.e., financial institutionsaroundthe will of countrythat maintaincheckingaccounts, ableto sendandreceiveimages. are

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