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In a significant ruling Monday, a Federal Circuit panel upheld two Patent Trial and Appeal Board (PTAB) decisions that invalidated claims in two patents held by USAA, one of which underpinned a $218.45 million jury verdict against PNC Bank in a patent infringement case in the Eastern District of Texas.

The nonprecedential decision, authored by U.S. Circuit Judge Sharon Prost, leaves intact the PTAB's findings from two years ago, which nullified claims in U.S. Patent Nos. 8,977,571 and 8,699,779. The patents cover mobile check deposit technology, a development at the heart of USAA's legal battles against multiple financial institutions.

Federal Circuit Rejects USAA’s Inconsistency Argument

USAA had argued that the PTAB’s rulings were inconsistent with earlier decisions in petitions brought by Wells Fargo, which previously faced similar allegations but settled with USAA. However, the panel dismissed this claim, siding with the PTAB.

"We agree with the board and thus reject USAA's argument that the board erred in issuing inconsistent [inter partes review] decisions without rational explanation," Judge Prost wrote.

During oral arguments last month, USAA attorney William Jay of Goodwin Procter LLP contended that the Wells Fargo petitions had involved "materially indistinguishable facts." However, Judge Prost pushed back, emphasizing that the Wells Fargo decision relied on a different evidentiary record and distinct prior art references.

Impact on USAA’s $218M Verdict Against PNC

One of the patents at issue had been central to USAA’s 2022 jury victory against PNC, which resulted in the $218.45 million damages award—a verdict later upheld by U.S. District Judge Rodney Gilstrap. The second patent was dropped before trial.

Monday’s ruling treats both patents identically, with Judge Prost stating that “the relevant sections of the IPRs are almost identical” and that the same legal analysis applies to both.

In response to the 2023 PTAB rulings, a PNC spokesperson told Law360 that the jury’s $218.5 million verdict cannot stand since some of the invalidated claims were part of the original infringement allegations.

PNC has also directly appealed the verdict, leading to a November Federal Circuit hearing in which Judge Timothy Dyk criticized both parties for a lack of clarity on the final judgment issues. That case has since been remanded to Judge Gilstrap, whose latest ruling PNC has signaled it will appeal again.

Additional USAA Patent Dispute Also Impacted

Beyond the $218.45 million verdict, USAA had secured a separate $4.3 million jury award against PNC in the same East Texas court over different patents. However, Federal Circuit judges last month upheld PTAB rulings that invalidated claims in those patents as well, further complicating USAA's litigation strategy.

Judicial Panel and Legal Representation

The Federal Circuit panel presiding over the case included Judges Timothy Dyk, Sharon Prost, and Tiffany Cunningham.

Attorneys Representing the Parties

• USAA: Represented by William Jay, David Zimmer, and Rohiniyurie Tashima of Goodwin Procter LLP, along with Lisa Glasser, Tony Rowles, Stephen Payne, and Jason Sheasby of Irell & Manella LLP.
• PNC: Represented by Mark Fleming, Monica Grewal, Sarah Petty, Alexander Nemtzow, Amy Mahan, Gregory Lantier, Andrew Danford, R. Gregory Israelsen, and David Cavanaugh of WilmerHale.

Conclusion

The Federal Circuit’s ruling deals a significant setback to USAA's ongoing patent enforcement efforts, particularly in its dispute with PNC. With appeals still pending, the fate of the $218.45 million jury verdict remains uncertain. However, the PTAB’s findings—now backed by the appellate court—will likely have a lasting impact on the future of USAA’s patent litigation strategy.