Diebold vs. Hyosung: Sorting out the first-round decision in the ATM-makers' patent battle

Dec. 2, 2016 | by Suzanne Cluckey
Diebold vs. Hyosung: Sorting out the first-round decision in the ATM-makers' patent battle

For members of the ATM industry, the "post-truth" era might be feeling a little "post-truthier" based on battling press releases published Thusday by Diebold Nixdorf and Hyosung America.

Each release claims victory in the ruling by an administrative law judge for the International Trade Commission. And even attempting to read between the lines of both, you'll mostly see gray.

The lead paragraph in a release from Diebold Nixdorf said that:

Diebold Nixdorf today announced the initial determination of the International Trade Commission, in which the Administrative Law Judge recommends an exclusion order barring the importation of Nautilus Hyosung deposit automation-enabled automated teller machines (ATMs) and modules.

In short, a judge for the ITC is telling the commission that it should prohibit Hyosung from bringing certain of its ATMs and components into the U.S. for sale because they use technology that rightfully belongs to Diebold Nixdorf.

On the other hand, a release from Hyosung America makes no mention at all of an administrative judge, said judge's recommendation or anyone's importation of anything.

Instead, the lead graph of the release relates that:

Hyosung America (Hyosung), the largest and fastest growing ATM provider in the United States, is proud to announce that the U.S. International Trade Commission in a preliminary ruling has mostly [emphasis ours] sided with Hyosung with respect to the patent infringement claims initiated by Diebold Nixdorf.

The Hyosung release references each of six patents owned by Diebold that Hyosung products have been alleged to infringe and outlines the judge's findings in the case of each patent.

Most curiously, the Hyosung release states something that would seem to be a fairly important point in the proceedings, but this item receives no mention at all in the Diebold release:

Prior to trial, the administrative law judge granted a request by Diebold to drop its infringement allegations against Hyosung with respect to two patents — U.S. Patent Nos. 7,121,461 & 7,249,761 — and found all asserted claims of another patent invalid — U.S. Patent No. 7,314,163. In yesterday's post-trial ruling, the judge found another patent — 7,229,010 – not infringed, and Hyosung's newest, most innovative line of products as not infringing the other two patents — U.S. Patent Nos. 6,082,616 & 7,832,631. 

So, if we surmise correctly:

  • Diebold withdrew claims related to two of six patents — this leaves four disputed patents;
  • the judge ruled that all claims related to a third Diebold patent were invalid — this leaves three disputed patents;
  • the judge further ruled that a fourth Diebold patent was not infringed — this leaves two disputed patents; and finally,
  • according to Hyosung, the judge ruled, "… Hyosung's newest, most innovative line of products as not infringing the other two patents."

Which, apparently, is how that "mostly" thing from the first paragraph of the Hyosung press release figures in.

I take this to mean that of the starting total of six Diebold patents, the judge found two to be valid and infringed by Hyosung.

In its press release, Hyosung seems to imply that the two patents that remain in question apply only to its older products and that its newer products use technology that works around these Diebold patents.

Therefore, at least in Hyosung's estimation, its newest products would not be covered by any ITC order barring import of the company's hardware and components to the United States. The ITC is scheduled to announce its final, non-appealable decision in March.

At that time. Hyosung customers who need replacement parts for older machines or who are not interested in the company's "newest, most innovative line of products," could be out of luck. Or not, if Hyosung reengineers those products using its newer technology.

However, in the Diebold release, the company's senior vice president and chief legal officer Jonathan Leiken apparently throws some shade at Hyosung's newest technology saying, "The only way Nautilus Hyosung can avoid infringing the patent [covering magnetic ink-reading technology — one of the two patents still standing in the dispute] is to rely on optical reading functionality that decreases check reading accuracy and substantially increases the risk of fraud."

Hyosung America executive vice president and COO Nancy G. Daniels threw some shade right back in her press release statement:

When you look at the industry's ongoing attempts to block Diebold's merger with Wincor Nixdorf as well as the mounting loss in revenue the two companies are facing, our competitors are in a very vulnerable spot. They became aggressive and acted out of desperation, but in the end we're extremely gratified with the preliminary decision and remain focused on delivering the future in human technology. And we of course are looking forward to another positive preliminary ruling in our case against Diebold Nixdorf at the ITC.

ATM Marketplace has reached out to both companies for further clarification of the ruling and will share further details as they become available.

It's important to note that both companies are still in the midst of corresponding patent suits, both of which are pending in federal court. Hyosung's release did not mention the company's counter suit, which involves four patents allegedly infringed by Diebold. In its release, Diebold said that the company "expects to seek significant damages" in a trial against Hyosung.

At this point, it appears that the six patents named in the Diebold suit that started it all last October are now effectively reduced to two, based on the findings of the ITC judge. But this also is assumption.

We'll keep you posted.


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 ATMmarketplace.com and BlockChainTechNews.com wwwView Suzanne Cluckey's profile on LinkedIn

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