Kansas City, Mo. - The U.S. District Court for the Southern District of New York entered a judgment in favor of Jack Henry & Associates, Inc. and against plaintiff Joao Bock Transactions Systems, LLC in an online banking patent infringement jury trial. Visiting Senior Judge Warren W. Eginton found that Jack Henry did not infringe on any of the six patent claims pressed by the plaintiff, and also found all six claims to be invalid on multiple grounds. Jack Henry is a supplier of software and data processing services, including online banking products, to financial institutions. Jack Henry stepped in to defend its customer, Sleepy Hollow, a small bank in upstate New York sued by the plaintiff.

“Eli Whitney had passion when he invented the cotton gin and a desire to serve an untapped need in our society. The same holds true for Thomas Edison when he developed the first commercial light bulb and Thomas Savery when he invented the first crude steam engine,” said Polsinelli Shughart PC trial attorney Russell S. Jones, Jr. “But in this case, the plaintiff had no intention of ever taking this product to market. He had no knowledge of the software industry and knew nothing about this technology.”

The story began when Raymond Joao and Robert Bock, of Yonkers, New York obtained a patent in March 2003 for a “transaction security apparatus and method,” U.S. No. 6,529,725. Later that year, Joao and Bock sued Sleepy Hollow Bank alleging that its online banking product infringed claims in the ‘725 patent. In 2004 plaintiffs added Jack Henry to the action as a defendant. Plaintiff sought substantial damages in the form of a royalty based on Jack Henry’s software and support revenues.

“We stood by our product, we stood by what we knew was right,” said Jack Henry General Counsel Robert T. Schendel. “We fought, we fought hard and we won.”

The case reached trial on March 1, 2010. Bock claimed that Jack Henry’s online banking and core processing software infringed six claims in the ‘725 patent. Joao Bock asserted that those claims covered “limitations and restrictions” on the use of a checking account, such as stop payment requests, and sending “real time” messages to the account holder about activity on his or her account, including alerts as to account activity.

Jack Henry denied infringement, arguing among other things that online stop payment instructions were not “limitations or restrictions” on the use of an account and that messages to an account holder advising that a check had cleared or a bill payment instruction had been processed were not generated or transmitted to the user in "real time" as defined by the Court.

A seven-person jury sitting in White Plains, New York agreed with Jack Henry, finding both that Jack Henry’s products did not infringe and that the patent claims were invalid because prior art -- one of Jack Henry’s predecessor products and three other earlier patented inventions -- either anticipated the patent claims or rendered them obvious to a person of ordinary skill in the art.

The jury was asked seven interrogatories with multiple sub-parts, all of which they answered in favor of Jack Henry, including specific findings on infringement, anticipation, obviousness, and statutory bar.

The Court received and accepted the jury’s verdict on March 16, 2010. After post-trial briefing by the parties, the Court entered judgment in accordance with the jury’s verdict on July 16, 2010. The Court concluded that Jack Henry’s online banking and core processing products did not infringe any of the ‘725 patent claims submitted to the jury, and that those claims were all invalid based on anticipation, obviousness and statutory bars. The Court specifically found that the invalidating art consisted of Jack Henry’s Cash Management product, developed and licensed in 1993, a remote banking product developed by WestStar Bank in Bartlesville, Oklahoma in the late 1980s, the Fulton patent, U.S. No. 6,182,052; the Blonder patent, U.S. No. 5,708,422, and the Deming patent, U.S. No. 4,823,264.