The U.S. Court of Appeals for the Federal Circuit recently upheld a International Trade Commission ruling that Suprema infringed upon a hardware patent owned by Cross Match Technologies and used in products like the L SCAN Guardian pictured here.
Photo credit: (Photo courtesy Cross Match Technologies)
The security industry is no stranger to patent litigation, especially when it comes to video surveillance. However, a ruling by a federal appeals court earlier this month could have an impact on the biometrics market and specifically on foreign manufacturers looking to import fingerprint scanners into the U.S.
In 2010, Cross Match Technologies, a Florida-based manufacturer of biometric solutions, filed a complaint with the International Trade Commission alleging that South Korea-based manufacturer Suprema, Inc. and its reseller Mentalix, Inc. of Plano, Texas, had infringed upon three of the company’s patents.
According to Kathryn Hutton, senior vice president and general counsel for Cross Match, these patents include: U.S. Patent No. 5,900,993 (“the ’993 patent”), which is a hardware patent that pertains to the optical configuration of their scanners, which use a series of lenses to generate the image on a fingerprint. The other two, U.S. Patent No. 7,203,344 (“the ’344 patent”) and U.S. Patent No. 7,277,562 (“the ’562 patent”) are software method patents that tell a user when a fingerprint image is good enough to be captured and processed.
Hutton said this case started near the end of 2009 when the U.S. General Services Administration was looking into purchasing several hundred fingerprint scanners for the Census Bureau in an effort to check the backgrounds of the incoming plethora of census workers. Mentalix was eventually awarded the bid, but to the surprise of Cross Match, they were not going to be using their hardware.
“We have had a long standing relationship with Mentalix and we heard that they won the bid to provide these scanners to the government, so we called up Mentalix and we said, ‘that’s wonderful, when we can expect your purchase order?’ And they said, ‘well, actually we’re going to provide Suprema fingerprint scanners to the government,’” explained Hutton.
In 2011, the ITC ruled that the ‘993 and ‘344 patents had been infringed upon and issued an exclusion order against Suprema barring them from importing any of its infringing products to the U.S. The ITC also issued a cease and desist order to Mentalix that prohibited them from selling any infringing Suprema products in their inventory.
The case was subsequently appealed to the U.S. Court of Appeals for the Federal Circuit, which last week upheld the ITC’s ruling that the ‘993 patent had been infringed upon, however, the court determined that the ITC did not have authority to ban the importation of certain Suprema products that the ITC found infringed the ‘344 patent because the direct infringement occurs after the products are imported. Hutton believes the court really didn’t address the “substance” of the infringement of the ‘344 patent.
“The ITC found infringement, but that combination doesn’t occur until after the scanner is in the United States and so if infringement happens when that combination occurs, the ITC shouldn’t’ have banned the importation,” said Hutton. “For me, that’s sort of form over substance, which is what the dissenting opinion says pretty much.
David Kim, manager of public relations and marketing for Suprema, said that the Federal Circuit’s decision regarding the ‘993 patent has no “practical effect” on the company since it moved to a different lens design long ago.
“The decision by the Federal Circuit confirms that Suprema may continue to sell its entire current line of products in the United States,” said Kim. “As noted above, the only product found to be in violation of a Cross Match patent was Suprema's legacy Realscan-10 scanner. Suprema had begun redesigning the
Realscan-10 scanner before Cross Match initiated the ITC investigation, and it officially released the new product, the Realscan-G10 scanner, while the ITC investigation was still pending.”
“Basically, they didn’t apologize for their infringement,” said Hutton. “They admitted it by saying they’ve stopped selling the one scanner that they were found to have infringed and they’re selling a different scanner.”
A spokeswoman for Mentalix said that the company has no comment about the case at this time.
Hutton said Cross Match is currently evaluating its option on how to proceed with the case. “The exclusion order stands. We go back to the ITC to clarify the exclusion order with respect to hardware,” she said.
Although the case that was brought before the ITC and appealed to the Federal Circuit only provided injunctive relief, Hutton said that Cross Match is also looking into whether or not it will seek monetary damages as the company still has a case pending in a U.S. District Court.
“What we wanted, initially, because we knew there were not a lot of prior sales of the Suprema device in the United States, was to keep their infringing products out of the country,” added Hutton. “The U.S. District Court in Texas; that would be a forum to claim damages. That case was filed and put on hold while we went through the ITC process.”
Kim is confident that Suprema will prevail in any further litigation.
“As to the Texas case, we are not going to try the case in the press, but will point out the absurdity of Cross Match's claims that Suprema induced only one customer out of many to somehow infringe its '344 patent, when the industry knows that biometric standards are set by law enforcement agencies and the government, not by Suprema,” said Kim. “Cross Match's technology is relevant only to products of the past, not the present.”
Kim doesn’t’ believe the case has harmed Suprema’s reputation in the market and accused of Cross Match of waging a media smear campaign. “In my opinion, the only damaging material arising out of this case is Cross Match's misleading statements to the media,” he said.
Despite the rulings by the ITC and the Federal Circuit, Hutton said that Cross Match hasn’t yet assessed the total damage of this infringement to the company.
“The impact for us, we’re still trying to figure that out really,” she said. “We’re evaluating it. I can’t put a number on it because we know that over the last several years, Suprema has not been able to import its scanners here.”