An ITC ruling for Hyosung brings the patent bout with Diebold right back to a draw

July 20, 2017 | by Suzanne Cluckey

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Last Friday, the International Trade Commission issued its final order in The Matter of Certain Automated Teller Machines, ATM Modules, Components Thereof, and Products Containing Same, investigation number 337-TA-989.

This plain brown label refers to the complaint filed with the ITC by Nautilus Hyosung America claiming that Diebold Nixdorf ATMs illegally used Hyosung patented technology and requesting that the ITC ban the import of infringing Diebold Nixdorf products.

The patent in question, No. 8,523,235, Cash and cheque automatic depositing apparatus, covers a Nautilus Hyosung invention that allows an ATM user to deposit a bundle of cash and checks simultaneously, letting the machine sort them out.

A ruling in Hyosung's favor was handed down after more than a year-and-a-half of consideration by the ITC, and exactly eight weeks after the commission's decision in The Matter of Certain Automated Teller Machines, ATM Modules, Components Thereof, and Products Containing Same, investigation number 337-TA-972, in which Diebold accused Hyosung of infringing its patents.

And just as in that matter, the ITC decision found both sides claiming a win. 

In reality, the latest ITC decision leaves the contenders tightly clinched in a contest whose prize is the U.S. banking and branch transformation market.

And this decision accomplishes … well, nothing, really, in terms of bringing the conflict between the two ATM industry heavyweights to a proximate end.

A refresher

On May 19, the International Trade Commission confirmed the findings of an administrative law judge that Nautilus Hyosung had infringed two Diebold Nixdorf patents — U.S. Patent No. 7,832,631 — Method of reading coded records including magnetic indicia on checks deposited in an automated banking machine; and U.S. Patent No. 6,082,616 — Automated banking machine enclosure.

Hyosung's response to the ruling, boiled down to one word was, "So … ?"

The company said that the decision in effect meant nothing; Hyosung had months before disabled the machine feature supported by the MICR patent and had retooled its enclosure design to eliminate the detail claimed to infringe Diebold's patent.

Since March, no machines imported to the United States have included the infringing technologies, Hyosung said.

Most importantly to its business in the U.S., the company received confirmation from the ITC that machines installed prior to the final ruling would in no way be affected by that decision.

As Hyosung legal counsel Kevin Wheeler, a principal in the Washington, D.C. office of Fish & Richardson PC, told ATM Marketplace after the ruling, "From a commercial standpoint it didn't matter."

A fresh spin

With last Friday's ITC decision, the shoe is on the other foot.

In ruling for Hyosung, the International Trade Commission said that Diebold had, indeed, infringed one of four patents listed in the original complaint, a decision that confirmed the administrative law judge's finding.

In response, Diebold said, in effect, "So … ?"

By the next business day, both manufacturers had published press releases claiming a win.

In an uncommonly artful piece of spin, Diebold headlined its release, "Diebold Nixdorf's Prior Success Against Hyosung Claims Upheld."

Translated into layman's English, this means, "Those three out of four patent claims the administrative law judge said should be tossed out? The commission agreed! The fourth? … Oh, look — shiny object!"

In the main body of the release, the company does confirm that its prior loss also was upheld:

On the fourth claim, the ITC found a technical violation of a Hyosung U.S. patent involving legacy Wincor technology. …

However, this ruling has no bearing on existing products in the market, and Diebold Nixdorf has developed a new and improved version of the product that is not affected by this patent which will be used in future sales.

Meanwhile, Hyosung touted its win with a headline that read: "Nautilus Hyosung America Wins With ITC Final Determination Confirming Diebold Nixdorf's Infringement of Key Patented Technology," a claim that requires no further explanation.

Nautilus Hyosung America Executive Vice President and Chief Operating Officer Sungmahn Kim remarked in the release that:

Today is yet another great day for Hyosung as the ITC has affirmed the [administrative law judge's] ruling that Diebold is wrongfully infringing Hyosung's patented technology. Although we did not start this patent dispute with Diebold Nixdorf, we have every intention of ensuring this ruling is properly enforced and their ATMs and components are kept out of the U.S.

That last assertion about keeping Diebold ATMs out of the U.S. has a hollow ring to it, though, since the ATMs in question — Diebold 7700, 7780, 7790 and 9900 ATMs — no longer use the patent-infringing technology, according to Diebold.

In short, nobody's infringing on anybody's patents anymore. Still, both companies have said they will appeal the ITC rulings against them, even if the issue is now essentially moot.

An appeal is not just about saving face, however. The companies have countersuits pending in U.S. district courts seeking damages. And while those courts are not bound by the ITC rulings, they could be influenced by them. And it could be a big purse at stake for each party.

So ... now that the bell has rung in the latest round of this industry slugfest, the punch count is still looking pretty even. Grab a water bottle and a spit bucket, because nobody's throwing in the towel just yet.

Diebold complaints

  • Diebold Inc. et al v. Nautilus Hyosung Inc. et al, 1:15-cv-0215, Northern District of Ohio
  • In the Matter of Certain Automated Teller Machines, ATM Modules, Components Thereof, and Products Containing Same, investigation number 337-TA-972, before the U.S. International Trade Commission

Nautilus Hyosung complaints 

  • Nautilus Hyosung Inc. v. Diebold Inc. et al, 3:16-cv-00364, Northern District of Texas
  • In the Matter of Certain Automated Teller Machines, ATM Modules, Components Thereof, and Products Containing Same, investigation number 337-TA-989, before the U.S. International Trade Commission


Topics: Manufacturers, Regulatory Issues

Companies: DIEBOLD NIXDORF, Nautilus Hyosung America, Inc.

Suzanne Cluckey
Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally. She is now the editor of and wwwView Suzanne Cluckey's profile on LinkedIn

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