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ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

EON-NET, L.P.,

Plaintiff,

v.

FLAGSTAR BANCORP, INC.,

Defendant.

CASE NO. C05-2129MJP

ORDER ON SUMMARY

JUDGMENT RE:

INFRINGEMENT

I. INTRODUCTION

This matter comes before the Court on a motion for summary judgment by

Defendant Flagstar Bancorp (“Flagstar”) (Dkt. No. 39). The Court has reviewed

Flagstar’s motion, the opposition by Plaintiff Eon-Net, L.P. (“Eon-Net”), the reply, and

the supporting declarations and exhibits submitted by both parties. In addition, the Court

considered the patent at issue, U.S. Patent No. 6,683,697 (the “’697 Patent”). Plaintiff

Eon-Net, L.P., did not request oral argument, and the Court concludes this matter is

suitable for decision without oral argument.

The Court GRANTS Defendant Flagstar’s motion for summary judgment. 

Plaintiff Eon-Net failed to come forward with any facts demonstrating infringement,

failed to properly identify products that might infringe its ’697 Patent, failed to proffer a

reasonable construction for its ’697 Patent, and failed to apply its construction to the

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 The ’697 Patent does not provide a definition for a “hard copy” document. One current

dictionary defines “hard copy” as a “printed copy, especially of the output of a computer or word

processor,” which is consistent with the usage in the patent. See American Heritage Dictionary of

the English Language (4th Ed. 2000). 

ORDER – 2

allegedly infringing products. Because Plaintiff has come forward with no facts or legal

analysis that support a claim of infringement, summary judgment is appropriate.

II. BACKGROUND

Plaintiff Eon-Net alleges that Flagstar infringes the ’697 Patent. Am. Complaint ¶

10. A third corporation, Millennium, L.P. (“Millennium”), assigned the ’697 Patent to

Eon-Net. Id. ¶ 8. The ’697 Patent describes and claims an interface between “hard copy”

documents and computer applications.1

 See ’697 Patent at 4:13-15. The specification

describes the extraction of information from hard copy documents by scanning the

documents, parsing the extracted information, and formatting the information for use. 

’697 Patent at 4:25-28, 4:45-49, 4:53-5:56 (Description of Figure 1). The invention of

the ’697 Patent permits quick and automatic extraction of information from hard copy

documents, such as invoices or receipts.

Flagstar operates banking centers throughout the country. Declaration of Melissa

J. Baily in Support of Flagstar Bancorp’s Motion for Summary Judgment (“Baily Decl.”)

¶ 2. Flagstar also operates a website at www.flagstar.com. Id. Flagstar’s website

provides customers with online access and services related to its “e-mortgage” and

banking business. Affidavit of Jason B. Dufner in Support of Flagstar Bancorp’s Motion

for Summary Judgment (“Dufner Aff.”) ¶ 3. Potential borrowers may submit loan

applications and related information and obtain updates on loan approval. Id. Users may

also obtain information on established loan accounts through Flagstar’s website. Id.

Plaintiff alleges that Flagstar infringes the ’697 Patent by:

[C]ollecting information over the Internet pursuant to a claim of the ’697 patent,

and deploying for Defendant’s own use an application distributed over the Internet

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 Other parties sued by Eon-Net include Black Hound New York, Homecenter.com,

BabyAge, Inc., Beach Camera, Inc., ING Bank, Random House, Inc., RedEnvelope, Inc.,

Sawhorse Enterprises, Inc., SomethingSexyPlanet.com, A18 Corporation, Linens ‘N’ Things,

Inc., Brother International Corporation, Edmunds Optics, Inc., and Sommers Plastic Products,

Co. Inc. See Declaration of Melissa J. Baily in Support of Flagstar Bancorp’s Motion for Rule 11

Sanctions (“Second Baily Decl.”), Exs. C-Q.

ORDER – 3

in which information is collected and extracted from a customer of Defendant and

processed on Defendant’s server . . .

Am. Compl. ¶ 10. Plaintiff’s Complaint is virtually identical to two complaints in cases

previously before this Court, Eon-Net, L.P. v. CoolAnimalStuff.com, No. C05-1844MJP,

and Eon-Net, L.P. v. Drugstore.com inc., No. C05-2114MJP. The Complaint is also

virtually identical to at least thirteen other complaints filed against parties with greatly

disparate business operations.2

 The complaints all allege the defendants infringe by:

collecting information over the Internet pursuant to a claim of the ’697

patent, and deploying for Defendant’s own use an application distributed

over the Internet in which information is collected and extracted from a

customer of Defendant and processed on Defendant’s server . . .

See, e.g., Second Baily Decl., Ex. C at ¶ 10 (Black Hound Compl.). It appears that the

only difference between the complaints is the name of the defendant.

In this case, as in its other infringement actions, Eon-Net followed service of the

complaint with a cheap offer of settlement. See, e.g., Second Baily Decl., Ex. B. EonNet offers settlement for a fraction of the cost of litigation, with a settlement schedule

based on a defendant’s annual sales: $25,000 for sales less than $3,000,000, $50,000 for

sales between $3,000,000 and $20,000,000, and $75,000 for sales between $20,000,000

and $100,000,000. Id. Flagstar urges that the identical complaints and cheap settlement 

offers demonstrate bad faith. Flagstar’s counsel characterizes the litigation as a “bad faith

shakedown suit.” See Declaration of Jean-Marc Zimmerman in Support of Eon-Net’s

Opposition to Motion for Rule 11 Sanctions (“Zimmerman Decl.”), Ex. 40.

Flagstar reviewed its web operations in light of the infringement suit to identify

products, software, or technologies that might infringe the ’697 Patent. See Declaration

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ORDER – 4

of Jason B. Dufner in Support of Flagstar Bancorp’s Motion for Rule 11 Sanctions

(“Dufner Decl.”) ¶ 2. Flagstar determined that it used potentially related software for

document processing, which was sold by Kofax Image Products, Inc. (“Kofax”). Id. ¶¶

2-3. Flagstar had purchased Kofax software, including “Ascent Capture” and “Ascent

Payables” (the “Kofax software”), which Flagstar used in its e-mortgage business. See

Dufner Aff. ¶¶ 4, 7, Ex. 1 (Software License Agreement).

Flagstar contacted Kofax about the software products it had purchased, and told

Kofax of the infringement lawsuit. Baily Decl. ¶ 6. Kofax’s attorney informed Flagstar

that Kofax had a license to the ’697 Patent and that its customers were covered by the

license. Baily Decl., Ex. 5 (Settlement & License Agreement between Kofax and

Millennium). The license agreement grants Kofax and its customers a non-exclusive

irrevocable license for the ’697 Patent, and binds Millenium’s assigns and related

corporate entities. Id., Ex. 5 ¶¶ 2.1.1, 8.2. Flagstar then subpoenaed the license

agreement from Kofax. Eon-Net instructed Kofax not to comply with the subpoena,

claiming it would seek a protective order. Baily Decl., Ex. 7 (email from Eon-Net to

Kofax). Eon-Net later threatened Kofax with a lawsuit for complying with the subpoena

and producing the license agreement. Id., Ex. 9.

After Eon-Net filed suit, Flagstar informally assisted Eon-Net with a post-filing

investigation of its web operations in an attempt to convince Eon-Net that it was not

infringing and was licensed; it answered questions about software functionality for nearly

a year. E.g., Zimmerman Decl., Ex. 31. Over a year after filing the Complaint, Eon-Net

now agrees that the Kofax software does not infringe. See Zimmerman Decl., Ex. 39

(April 21, 2006 Zimmerman Letter). However, faced with a motion for summary

judgment and Rule 11 sanctions, Eon-Net changes course and presents the Court (for the

first time) with new infringement contentions. Eon-Net now identifies other allegedly

infringing software from Digital Insight, which is used by Flagstar. See Second

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ORDER – 5

Zimmerman Decl. ¶ 5. Counsel’s carefully worded declaration notes that Eon-Net’s

investigation “to date” has uncovered evidence of infringement through the use of Digital

Insight software. Id. Eon-Net does not claim that it identified the Digital Insight

software before bringing suit.

II. ANALYSIS

In examining a motion for summary judgment, the Court must draw all inferences

from the admissible evidence in the light most favorable to the non-moving party. Addisu

v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). Summary judgment is proper

where there is no genuine issue of material fact and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears the initial

burden to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v.

Catrett, 477 U.S. 317, 323 (1986).

Once the moving party has met its burden, the opposing party must show that there

is a genuine issue of fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.

574, 586-87 (1986). The opposing party must present significant and probative evidence

to support its claim or defense. Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d

1551, 1558 (9th Cir. 1991). For purely legal questions, summary judgment is appropriate

without deference to the non-moving party.

1. The Parties Agree that Flagstar Does Not Infringe the ’697 Patent by

Using Kofax Software.

Flagstar asks the Court to grant summary judgment that it is not liable for

infringing the ’697 Patent. Flagstar bases its motion on two undisputed facts. First,

Flagstar uses licensed Kofax software to collect, manage, and process electronic and hard

copy documents collected through its website. See Dufner Aff. ¶¶ 4, 7. Second, the

license agreement between Kofax and Millenium covers use of Kofax software products

by customers, including Flagstar, and is binding on Millenium’s assigns. Baily Decl.,

Ex. 5.

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ORDER – 6

Eon-Net claims that the license agreement should have remained secret, but

concedes that Kofax software is covered by the license agreement. Pl.’s Opp. to S.J. at 1

n.1 (“Kofax customers are also licensed under the ’697 Patent to the extent they use

Kofax products to perform activities covered by the claims of the ’697 Patent”). Eon-Net

recently offered to dismiss the Complaint if Flagstar could show it used only Kofax

software for online banking functions. See Zimmerman Decl. ¶ 31. It is undisputed that

Flagstar’s “hard copy” document image processing is performed by Kofax software

licensed under the ’697 Patent. Flagstar is therefore entitled to summary judgment that

its image and document processing operations do not infringe the ’697 Patent. 

The Defendant has met its burden, having shown that no disputed issues of

material fact exist for trial with regard to Kofax software. Plaintiff urges the Court to

find that Flagstar’s use of other software creates a genuine issue of fact for trial.

2. Eon-Net Fails to Demonstrate that Flagstar’s Use of Digital Insight

Software Creates a Genuine Issue of Material Fact for Trial.

The Complaint does not claim that any particular product infringes. See Am.

Compl. ¶ 10. Flagstar assumed that the claim of infringement related to “hard copy”

documents. Eon-Net sees a broader scope for the ’697 Patent:

Millenium L.P. is the owner of five predecessor patents to the ’697 Patent. 

The Millenium patent claims are primarily directed to information extracted

from scanned hard copy documents, while the ’697 Patent additionally

covers extracting information from electronic files and documents that do

not originate from a scanned hard copy document.

Pls. Opp. to S.J. at 1 n.1 (emphasis added). Eon-Net believes the ’697 Patent covers the

extraction of information from any web-based form; it contends that Flagstar infringes the

’697 Patent by operating online banking web pages.

Eon-Net alleges that Flagstar uses Digital Insight software, which extracts

information from a web-based form and infringes the ’697 Patent. See Second

Zimmerman Decl., Ex. 2. Eon-Net’s counsel reached this conclusion based on its

investigation of Flagstar’s website. See id. ¶ 5. Counsel concluded that Flagstar

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ORDER – 7

infringes the ’697 Patent because “at the desired web page, the customer enters the

requested information into a form element included in the web page.” Id. Counsel did

not obtain copies of the allegedly infringing software, was unable to determine how the

web page worked, and did not evaluate the code; nevertheless, he concluded that the

“website” infringed. Zimmerman Decl. ¶ 10.

Eon-Net has not met its burden of showing that a genuine issue of fact exists for

trial, and has failed to present any facts demonstrating infringement. The Court presumes

for purposes of this motion that Flagstar uses Digital Insight software; it also presumes

that the software uses web-based forms. These two facts, however, do not support EonNet’s infringement contentions. Conclusory allegations of infringement are insufficient

to move beyond summary judgment. Similarly, allegations that a person uses a product

does not mean the product infringes a patent. 

a. Eon-Net presents no facts to support its claim that the ’697

Patent covers online banking services on the Flagstar website.

Eon-Net claims that Flagstar uses software that infringes the ’697 Patent. 

However, the fact that Flagstar uses particular software to provide online banking

functions to its customers does not create a genuine issue of fact for trial. In order to

create a genuine issue of material fact, Eon-Net must identify some evidence that the

software infringes the ’697 Patent. In this case, Eon-Net offers only a bare, conclusory

allegation that the claims “cover[] the extraction of information from any type of form,

including form elements used by the Flagstar Website to receive information from

Flagstar customers in order to provide various online banking services.” See Pl.’s Opp. to

S.J. at 10. 

Plaintiff presents no substantive evidence or argument to support its position. It

does not explain how a patent that describes hard copy document processing could

reasonably be construed to apply to all web-based forms, and it presents no analysis of

the individual claims and their elements. Although it concludes that limiting the ’697

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ORDER – 8

Patent to “hard copy documents” is improper, it never attempts to explain or justify this

position. Flagstar has successfully pointed out the lack of admissible evidence

supporting a claim of infringement; as the party opposing such a claim, Eon-Net has the

burden to come forward with some evidence in support of its claims. See Intel, 952 F.2d

at 1558. Eon-Net has done nothing more than identify products it believes might

infringe; however, it is insufficient to merely identify a product and claim that it

infringes. It is also insufficient to identify a patent and apparently unrelated software

products, and allege infringement with conclusory allegations. Plaintiff failed to perform

claim construction for the relevant claims of the ’697 Patent, and failed to apply properly

construed claims to the allegedly infringing software products used by the Defendant. 

Plaintiff has not shown that any genuine issues of fact remain for trial, and has not sought

a continuance pursuant to Rule 56(f) to conduct additional discovery. Accordingly, the

court must conclude that summary judgment is appropriate.

III. CONCLUSION

The Court GRANTS Flagstar’s motion for summary judgment (Dkt. No. 39). 

Plaintiff Eon-Net has failed to demonstrate any facts showing that Defendant Flagstar

operates software which infringes the ’697 Patent. The Plaintiff has also failed to present

any substantive analysis of the ’697 Patent’s claims, and has failed to apply those claims

to the accused products and functionality. The Court can find no facts or law supporting

the conclusion that Defendant’s software infringes the ’697 Patent. Accordingly,

summary judgment of non-infringement is appropriate.

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ORDER – 9

The Court STRIKES as moot Defendant’s motion to stay discovery pending

resolution of dispositive motions (Dkt. No. 66), and directs the Clerk to schedule oral

argument on Defendant’s motion for sanctions pursuant to Fed. R. Civ. P. 11 (Dkt. No.

42).

Dated this 11th day of August, 2006.

AMarsha J. Pechman

United States District Judge

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