Judges won’t readily dismiss a lawsuit. Usually, they will give the plaintiff several chances to correct flaws in a complaint before dismissing with prejudice. It’s especially rare to see a judge dismiss a patent suit with prejudice because the infringement allegation is so weak that the patentee has no chance of success. These rare cases deserve our attention. This post concerns a handful of related cases in multiple districts where the judges have dismissed the complaints.
William Grecia is named as an inventor on 18 US patents, of which 14 are design patents. Grecia purportedly invented an online payment system and seems to have alleged that the Zelle and other electronic payment systems infringe. Grecia owns some his patents himself. Others are owned variously by Grecia Innovations LLC, WePay Global Payments LLC, Qondando LLC, Dualscan LLC, Fintech Innovation Associates LLC, Etla LLC. Some, and maybe all, of the patent owners are owned or controlled by Grecia, directly or indirectly.
Altogether the Grecia patents have been asserted in about 100 patent lawsuits. Grecia has never won. There might be some settlements, though the court records make it hard to know. Grecia’s patents have been the target of 17 IPRs and PGRs. Of the 6 patents asserted, there are 6 invalidity decisions.
In late 2021 and early 2022, Grecia company WePay Global filed 11 suits for infringement USP D930702 entitled “Display screen portion with animated graphical user interface.” The ‘702 patent is a design patent, so it is supposed to protect ornamental aspects of a functional article.
The test for infringement of a design patent is commonly called the “ordinary observer” test. While infringement is a question of fact, courts may dismiss claims of design infringement on a Rule 12(b)(6) motion where, as a matter of law, no reasonable fact finder could find infringement. The standard for determining design patent infringement is whether in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other. Because infringement of a design patent is highly fact dependent, the issue usually must be taken to trial.
The scope of rights of a design patent are defined by the drawings. Thus, design patents are picture patents. The ‘702 patent has The 5 drawings, but they show very little. Most of the items in the ‘702 drawings are shown with dotted lines — meaning that they aren’t part of what is claimed.
The ordinary observer test is operationalized via two steps, with each step involving a side-by-side study of the designs. First, without review of the prior art, the claimed and accused designs are compared to one another to determine whether they are substantially similar. If so, the second step compares the claimed and accused designs with prior art to identify differences that are not noticeable in the abstract but would be significant to the hypothetical ordinary observer familiar with the prior art. If at either step it is determined that the designs are sufficiently distinct and plainly dissimilar, the patentee fails to meet its burden of proving infringement as a matter of law.
The first of Grecia’s suits for infringement of the ‘702 patent alleged that PNC Bank infringed because of screen displays in its banking app. Those screen displays were generated while the user was making a payment using the Zelle service. The complaint was filed 9-23-2021. On 6-1-2022 the judge dismissed the suit under Rule 12(b)(6) for failure to make a claim upon which relief can be granted.
The Order dismissing suit against PNC Bank WDPA-2-22-cv-00592-32 states:
[T]he Accused Design is incidental to the PNC customers utilization of the mobile application. The Complaint does not allege that a purchaser would have been or has been involved with the Accused Design. Further, the Complaint doesnot allege a purchase or transaction by a consumer with regard to the Accused Design over the Asserted Design. Thus, the ordinary observer test would seem not to fit squarely with the designs at issue, and WPG would not be able to assert a design patent infringement claim.
Even if the Court assumes that the Accused Design fits within the ordinary observer test, a side-by-side comparison of WPG’s Asserted Design and PNC’s Accused Design demonstrates that they are “sufficiently distinct” and “plainly dissimilar” such that no reasonable factfinder could find infringement. Any similarity between the two designs is limited to basic geometric shapes, but with notable differences in shape size and spacing such that no ordinary observer would mistake the Accused Design with the Asserted Design or vice versa. Even accounting for prior art, any similarity with the Accused Design and Asserted Design appears much like the prior art of a QR code, which was invented and adopted as an international standard before WPG filed the ‘702 patent. Thus, again, even accounting for prior art, PNC’s Accused Design is “sufficiently distinct” and “plainly dissimilar.” As the Court finds that the side-by-side comparison leaves no doubt that WPG cannot meet its burden, no claim construction, discovery, or amended complaint is appropriate.
In Grecia’s suit against McDonald’s, an Order dismissing suit against McD’s NDIL-1-22-cv-01064-20 resulted in a similar outcome 6 months later from a different judge in a different district:
After reviewing the Plaintiff’s exhibit, the Court does not see how any observer, ordinary or extraordinary for that matter, could ever find McDonald’s app confusingly similar to Plaintiff’s patented design. Comparing three boxes of indeterminate size with a list of McDonald’s specials or comparing a series of ten circles of indeterminate size with McDonald’s menu, or, comparing a plain box of indeterminate size with a list of condiments, could not possibly result in a confused observer. Plaintiff’s design appears to be the antithesis of what a design patent is supposed to protect, i.e., novel, and ornamental features.
Not every judge saw it this way. Judge Albright in the Western District of Texas (Waco) in an Order denying dismissal against PayPal WDTX-6-21-cv-01094-29 held that the issue was not properly presented in a motion to dismiss under Rule 12(b)(6), but gave the defendant, PayPal, permission to file an early motion for summary judgement or to file a motion to dismiss under Rule 12(c).
By the Spring of 2022, Grecia was also facing two PGRs (post grant reviews) of the ‘702 patent. Rather than fight the PGRs, Grecia filed statutory disclaimers, dedicating the ‘702 patent to the public.
It seems Grecia parted ways with his attorneys because those attorneys withdrew from the litigation and the PTAB cases in early 2022. Grecia apparently didn’t retain new counsel. As a result, most of the pending lawsuits were dismissed for failure to prosecute. The PTAB likewise issued an FWD (final written decision) invalidating the ‘702 patent, also as a result of a failure to defend the patent, and also acknowledged that the ‘702 patent was dead in light of the statutory disclaimer.
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