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Higher One, Inc. v. Touchnet Information Systems, Inc.

United States District Court, W.D. New York

February 24, 2014

HIGHER ONE, INC., Plaintiff-Respondent,
v.
TOUCHNET INFORMATION SYSTEMS, INC., Defendant-Movant.

ORDER

CHARLES J. SIRAGUSA, District Judge.

INTRODUCTION

Defendant-Movant TouchNet Information Systems, Inc. ("TouchNet") seeks an order quashing a subpoena served by Plaintiff-Respondent Higher One, Inc. ("Higher One") in connection with patent litigation that is pending in the U.S. District Court for the District of Connecticut. The subpoena was served on TouchNet's non-testifying expert witness, Tom Bell ("Bell"), who resides in this Judicial District. The application is granted in part and denied in part.

BACKGROUND

The parties' respective businesses relate to the facilitation of payments involving colleges, universities and students. TouchNet states that it "is in the business of developing software and licensing it to numerous colleges and universities in the United States and elsewhere, " and that its software "facilitates electronic payments between Schools, their students, and others in the campus community." For example, TouchNet's software purportedly "allows Schools to present students' tuition and other bills online, " and to "electronically deposit disbursements to a student-designated bank account, such as a refund of an overpayment (if, for example, a student drops a class), or, as relevant to this matter, a disbursement of the student's residual financial aid - often referred to in higher education as a refund.'"[1] Higher One's business also pertains to such refunds. According to TouchNet,

Higher One derives most of its revenue from account revenue consisting principally of fees from debit cards which Plaintiff (through its banking partner) issues to students as a means of receiving their Refunds. Plaintiff issues its debit cards through a two-part strategy. First, under the "OneDisburse" program, the School agrees to outsource the disbursement of Refunds to Plaintiff, such that the School sends the full amount of each student's Refund to Plaintiff, and Plaintiff forwards the funds to the student in accordance with the student's instructions. Students, by making a designation through Plaintiff, may request their Refunds to be furnished by paper checks, ACH transfers, or deposits to their Plaintiff debit cards. The Schools provide Plaintiff with the students' contact information and Plaintiff markets to students in an effort to increase both the number of new "OneAccounts" and usage of existing "OneAccounts."[2]

On February 24, 2009, Higher One obtained a U.S. patent ("the 536' patent"), entitled "Systems and Methods to Facilitate a Transfer of a Refund Amount from an Educational Institution to a Student." Shortly thereafter, on February 27, 2009, Higher One commenced the aforementioned patent infringement litigation against TouchNet in the District of Connecticut.[3] Higher One maintains that one of TouchNet's "software modules, " entitled "TouchNet B Payment - eRefunds, " infringes the 536 Patent.[4]

TouchNet has asserted various defenses in that action, including that the 536 Patent is invalid because it was anticipated, and rendered obvious, by prior art. More specifically, TouchNet maintains that "the claims in the 536 Patent were anticipated, and rendered obvious, by multiple campus card programs introduced, at least, as early as the mid-1990s."[5] TouchNet asserts counterclaims, seeking a declaratory judgment that it is not infringing the 536 patent, and that the patent is unenforceable in any event. Additionally, TouchNet is asserting a counterclaim for unfair competition, in which it accuses Higher One of filing a baseless infringement law suit in order to negatively affect TouchNet's business relationships.[6]

In connection with its defense of the patent infringement action, TouchNet retained Bell as a non-testifying consulting expert, purportedly because Bell has know ledge regarding the "multiple campus card programs" that were allegedly in use prior to the issuance of the 536 Patent. TouchNet indicates that, "in order to better understand these campus card programs, [it] hired Tom Bell as a non-testifying expert, given that Mr. Bell has worked with campus card programs."[7] Specifically, for approximately ten years, between 2001 and 2011, Bell previously worked for Blackboard, Inc. ("Blackboard"), "a provider of campus card solutions."[8]

The problem with that, as Higher One sees it, is that Blackboard is one of Higher One's business partners, with whom it has shared confidential information:

Early on, Higher One partnered with [Blackboard], a provider of campus card solutions so that customers of both Blackboard and Higher One could integrate the two companies' product offerings. Towards that end, Higher One has exchanged sensitive and proprietary information regarding Higher One's business and products with Blackboard on a confidential basis. As per Higher One's contracts with Blackboard, Blackboard employees are required to keep Higher One's information confidential.[9]

Because of that business relationship, Higher One indicates that it wants to find out what, if anything, Bell learned about Higher One while he was working at Blackboard, and whether he shared any confidential information about Higher One with TouchNet. More specifically, Higher One states:

Higher One is now aware that Mr. Bell was a high level employee at its partner Blackboard until at least 2011, and since 2001, Mr. Bell was likely exposed to Higher One's confidential information. Mr. Bell worked for Blackboard from 2001 to July 2011 as a Vice President for Commerce Industry Relations and later as the Vice President for Strategic Consulting - Transact (the business unit of Blackboard with which Higher One's products integrate). Higher One is entitled to determine the extent of Mr. Bell's know ledge of Higher One and its business, and the extent

to which he may have communicated that information to TouchNet.[10] (emphasis added). Higher One, though, doesn't specify the nature of the confidential information that it shared with Blackboard, or explain how such information relates to the underlying patent litigation, if at all. Nor does Higher One indicate that it has checked with its partner, Blackboard, to see to what, if any, confidential information Bell may have had access. Overall, as evident from the quote above, Higher One doesn't offer any ...


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