BenedorTSE LLC v. Apple Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: BenedorTSE, LLC (Delaware)
  • Defendant: Apple Inc. (California)
  • Plaintiff's Counsel: Waddey Acheson LLC
• Case Identification: 3:25-cv-01473, M.D. Tenn., 04/28/2026
• Venue Allegations: Venue is alleged to be proper based on Apple committing acts of infringement in the district and maintaining a regular and established place of business, specifically citing an Apple Store in Nashville, Tennessee.
• Core Dispute: Plaintiff alleges that Defendant's Apple Pay mobile payment service, and its associated hardware and systems, infringe three patents related to technology for secure electronic transactions.
• Technical Context: The technology concerns methods for securing online and mobile payments by using a combination of user and device-specific identifiers to create a unique, encrypted, single-use token for each transaction, thereby avoiding the transmission of sensitive financial data like credit card numbers to merchants.
• Key Procedural History: The complaint alleges that Apple had pre-suit knowledge of the patents-in-suit. This allegation is based on Apple's own patent prosecution history, during which it repeatedly cited a publication of the asserted patent family as material prior art in Information Disclosure Statements filed with the USPTO. The complaint further notes that USPTO examiners, during the prosecution of Apple's patents, identified this prior art as "pertinent."

Case Timeline

Date	Event
2000-12-01	Priority Date for '713', '979', and '723' Patents
2012-09-04	'723 Patent Issued
2013-06-11	'713 Patent Issued
2014-01-01	Apple Pay Launched (approx.)
2016-07-26	'979 Patent Issued
2018-11-14	Apple files IDS citing the Benedor patent family
2020-11-13	USPTO Examiner finds Benedor art "pertinent" in Non-Final Rejection to Apple
2021-08-13	USPTO Examiner reaffirms Benedor art is "pertinent" in Final Rejection to Apple
2026-04-28	First Amended Complaint Filed

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 9,400,979 - "Transactional Security Over a Network"

• Patent Identification: U.S. Patent No. 9,400,979, "Transactional Security Over a Network," issued July 26, 2016 Compl. ¶19

The Invention Explained

• Problem Addressed: Prior to the invention, e-commerce transactions were insecure Compl. ¶8 Protocols like SSL secured data only in transit, leaving sensitive customer information such as credit card numbers exposed on merchant servers Compl. ¶9 More advanced protocols were too cumbersome for widespread adoption, and using a personal device as an authentication factor was not a conventional practice Compl. ¶¶10-12 The patent family background sections note the vulnerability of storing customer information in merchant databases '723 Patent, col. 1:19-22
• The Patented Solution: The invention describes a system where the customer's device generates a unique, encrypted credential for each transaction Compl. ¶14 This is accomplished by combining user-specific information (like a password) and device-specific information (like a hardware identifier) into an "encrypted user code" '723 Patent, abstract This code is sent to a merchant and then to a trusted verification entity (e.g., a financial institution) for authorization, which decrypts and validates the information without ever exposing the customer's underlying financial details to the merchant '723 Patent, col. 2:28-39
• Technical Importance: This method sought to enable secure and convenient online transactions by treating the user's own device as a security token, protecting customer data from merchants and strengthening authentication Compl. ¶14 Compl. ¶16

Key Claims at a Glance

• The complaint asserts at least Claim 1 of the '979 Patent Compl. ¶73
• The essential elements of independent method Claim 1, as alleged in the complaint, include:
  • Receiving a user-entered password via a graphical interface
  • Determining if the credential is valid
  • Reading a device-specific hardware identifier
  • Determining if the hardware identifier is valid
  • Retrieving a user identifier for the payment account
  • Creating an encrypted user code derived from the user identifier and the hardware identifier
  • Transmitting the encrypted user code to a provider to request authorization
• The complaint does not explicitly reserve the right to assert dependent claims for the '979 Patent.

U.S. Patent No. 8,463,713 - "Transactional Security Over a Network"

• Patent Identification: U.S. Patent No. 8,463,713, "Transactional Security Over a Network," issued June 11, 2013 Compl. ¶18

The Invention Explained

• Problem Addressed: As part of the same patent family, the '713 Patent addresses the same fundamental problem of providing a secure and convenient payment system for e-commerce that does not require the customer to provide private information to the merchant '713 Patent, col. 1:11-16
• The Patented Solution: The patented solution is a method for securing transactions where a user's device, after validating a password and hardware identifiers, retrieves a "user agreement identifier," creates an encrypted code using that identifier and the hardware identifier, and transmits it for authorization '713 Patent, claim 13 This process prevents the merchant from accessing the underlying financial account information '713 Patent, col. 2:40-45
• Technical Importance: The technology aimed to establish a "signature present" equivalent for online transactions, providing assurance to merchants while protecting customer privacy, thereby reducing the risk of fraud for all parties Compl. ¶16 '713 Patent, col. 5:30-34

Key Claims at a Glance

• The complaint asserts at least method Claim 13 and non-transitory computer-readable medium Claim 25 Compl. ¶¶82-83
• The essential elements of independent method Claim 13, as alleged in the complaint, include:
  • Receiving an entered password from a user via a graphical user interface
  • Determining if the password is valid
  • Based on a valid password, reading a hardware identifier from the user's device
  • Determining if the hardware identifier is valid
  • Based on a valid hardware identifier, retrieving a user agreement identifier
  • Creating an encrypted user code by encrypting the user agreement identifier and the hardware identifier
  • Transmitting the encrypted user code to a provider for an authorization decision
• The complaint does not explicitly reserve the right to assert dependent claims for the '713 Patent.

U.S. Patent No. 8,260,723 - "Transactional Security Over a Network"

• Patent Identification: U.S. Patent No. 8,260,723, "Transactional Security Over a Network," issued September 4, 2012 Compl. ¶20

Technology Synopsis

Belonging to the same family, this patent addresses the need for secure online transactions by disclosing a method where a customer's device authenticates a user via password, reads device hardware identifiers, and retrieves a customer identifier '723 Patent, abstract It then uses these inputs, along with a transaction-specific count value, to create an encrypted code that is transmitted to a merchant for authorization, protecting the user's actual credit card information (Compl. ¶¶16; Compl. ¶93).

Asserted Claims

At least method Claim 1 and non-transitory computer storage medium Claim 7 Compl. ¶¶93-94

Accused Features

The complaint alleges that Apple Pay infringes by receiving a passcode, validating it with the Secure Enclave, reading unique cryptographic keys from the Secure Element hardware, retrieving a Device Account Number, and generating a dynamic cryptogram using the DAN, a transaction counter, and the device key, which is then transmitted for payment instead of the user's actual credit card number Compl. ¶93

III. The Accused Instrumentality

Product Identification

The accused instrumentality is Apple's mobile payment service, Apple Pay, as integrated into Apple's hardware products, including the iPhone, iPad, Apple Watch, and Mac computers Compl. ¶24

Functionality and Market Context

The complaint, citing Apple's own security documentation, describes the core functionality of Apple Pay as generating a "payment cryptogram" and a "Device Account Number" (DAN) for transactions Compl. ¶26 This cryptogram is described as a one-time code computed from a transaction counter and a key, with the counter incrementing for each new transaction. Authorization is conditioned on user authentication, such as biometrics or a passcode, which is managed by the device's Secure Enclave Compl. ¶26 The complaint alleges that Apple Pay is a key driver of hardware sales and that Apple charges issuing banks a fee for its use, deriving substantial revenue from the service Compl. ¶27 No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

U.S. Patent No. 9,400,979 Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
receives a user-entered password ... via a graphical interface	A user enters a device passcode on the device's graphical interface.	¶73a	col. 30:57-61
determines if the entered credential is valid	The system checks the entered passcode against a credential stored on the device.	¶73b	col. 30:57-61
reads a device-specific hardware identifier from the device's secure hardware	After validation, the system reads a unique cryptographic key from the device's Secure Element.	¶73c	col. 8:13-17
creates an encrypted user code ... derived from both the user identifier and the hardware identifier	The system creates a dynamic cryptogram derived from the Device Account Number (user identifier) and the unique key (hardware identifier).	¶73f	col. 11:50-57
transmits the encrypted user code to a provider ... to request transaction authorization	The system transmits the cryptogram and DAN to the payment network and issuing bank to request authorization.	¶73g	col. 11:58-63

Identified Points of Contention

• Scope Questions: A central question may be whether terms rooted in the 2000-era internet context can be construed to cover modern mobile payment architecture. For instance, does a "device passcode" meet the claim definition of a "password"? Does a unique cryptographic key stored within a secure chip constitute a "hardware identifier" in the same way a device serial number does?
• Technical Questions: The claim requires creating an encrypted code "derived from" the user and hardware identifiers. The analysis may focus on whether the specific cryptographic operations in Apple Pay match the functions contemplated by the patent, or if there is a fundamental operational difference between the patented method and the accused process.

U.S. Patent No. 8,463,713 Infringement Allegations

Claim Element (from Independent Claim 13)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
Receiving an entered password from a user via a graphical user interface	Apple Pay requires authentication via the device's GUI by entering a passcode.	¶82a	col. 29:60-63
Based on a valid password, reading a hardware identifier from the user's device	Upon user authentication, Apple Pay accesses a unique, device-specific cryptographic key provisioned within the device's Secure Element.	¶82c	col. 30:5-8
Based on a valid hardware identifier, retrieving a user agreement identifier	After validation, the Secure Element retrieves the Device Account Number (DAN), which is alleged to be a tokenized representation of the payment card and comprise a user agreement identifier.	¶82e	col. 30:46-51
Creating an encrypted user code by encrypting the user agreement identifier and the hardware identifier	The Secure Element generates a dynamic cryptogram using data that includes the DAN (alleged user agreement identifier) and the device's unique key (hardware identifier).	¶82f	col. 31:4-9
Transmitting the encrypted user code to a provider in a request for an authorization decision	The encrypted code (DAN plus cryptogram) is transmitted via NFC to the merchant and routed through the payment network for an authorization decision.	¶82g	col. 31:40-47

Identified Points of Contention

• Scope Questions: The viability of the infringement claim for the '713 Patent may hinge on the construction of "user agreement identifier." The key dispute will be whether Apple's "Device Account Number" (a tokenized proxy for a payment card number) can be considered an identifier of the underlying cardholder agreement, as the patent requires, or if it is merely an identifier for the payment account.
• Technical Questions: The claim requires "creating an encrypted user code by encrypting the user agreement identifier and the hardware identifier." The court will need to determine whether Apple Pay's generation of a cryptogram constitutes "encrypting" these specific inputs, or if it is a different cryptographic function (e.g., generating a message authentication code) that falls outside the claim's scope.

V. Key Claim Terms for Construction

• The Term: "hardware identifier"

• Context and Importance: This term is foundational to the patents' concept of tying a transaction to a specific physical device. The complaint alleges that a unique cryptographic key stored in Apple's Secure Element satisfies this limitation Compl. ¶73c Practitioners may focus on this term because its construction will determine whether a piece of secret data stored on a hardware component can be considered an identifier of that hardware component itself.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification of the '723 Patent provides examples such as "serial numbers from the motherboard, the hard drives, the processor, etc." '723 Patent, col. 8:13-17 Plaintiff may argue that the use of "etc." indicates the list is not exhaustive and that any unique, device-specific data, including a provisioned key, falls within the scope.
  • Evidence for a Narrower Interpretation: Defendant may argue that the provided examples (motherboard serial number, etc.) all refer to identifiers physically and permanently affixed to hardware components, not programmable data like a cryptographic key that is written to memory, even if that memory is secure.

• The Term: "user agreement identifier"

• Context and Importance: This term, central to asserted Claim 13 of the '713 Patent, is critical for linking the transaction to a legal agreement. The complaint alleges Apple's "Device Account Number" (DAN) is a "user agreement identifier" Compl. ¶82e The case may turn on whether a tokenized payment account number can be legally and technically equated with an identifier for the user's contractual agreement with their bank.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The '713 Patent specification states the identifier "contains or identifies the contractual agreement between the customer and a verification entity" '713 Patent, col. 5:11-14 Plaintiff could argue that the DAN, while identifying an account, implicitly points to and thus "identifies" the specific cardholder agreement governing that account.
  • Evidence for a Narrower Interpretation: The specification also discusses a process where a customer and credit issuer "form the agreement of what identifiers are to be present" '713 Patent, col. 7:51-54, suggesting a purpose-built identifier for the agreement itself, distinct from a payment account number. Defendant may argue the DAN only identifies an account and does not identify the agreement itself.

VI. Other Allegations

Indirect Infringement

The complaint alleges both induced and contributory infringement.

• For inducement, it alleges Apple actively instructs and encourages users, merchants, and developers to perform the claimed methods through its public support documents, developer guides, and marketing materials Compl. ¶¶57-62
• For contributory infringement, it identifies specific, non-staple components supplied by Apple, such as the Apple Pay applet, the Device Account Number, and the PassKit APIs, which it alleges are specially made for the infringing system and have no substantial non-infringing use Compl. ¶¶63-64

Willful Infringement

The complaint alleges willful infringement based on detailed assertions of pre-suit knowledge Compl. ¶29 The basis for this knowledge is Apple's own patent prosecution activities, where Apple and its counsel repeatedly cited the asserted patent family as relevant prior art for its own Apple Pay-related patents Compl. ¶¶30-35 The complaint specifically names senior Apple Pay personnel, including a Vice President and a Senior Director, as inventors on these patents, suggesting knowledge at a high level within the company (Compl. ¶¶32; Compl. ¶37).

VII. Analyst's Conclusion: Key Questions for the Case

• A core issue will be one of definitional scope: can key claim terms from patents filed in the early 2000s, such as "hardware identifier" and "user agreement identifier," be construed to read on the technologically distinct components of a modern, tokenized mobile payment system like Apple Pay, specifically its use of provisioned cryptographic keys and tokenized account numbers (DANs)?
• A second central question will be one of technical operation: does the method of generating a "dynamic cryptogram" in Apple Pay, which likely aligns with established EMV payment standards, constitute the act of "creating an encrypted user code by encrypting" the specific inputs recited in the claims, or is there a fundamental mismatch in the cryptographic functions performed?
• Finally, a significant aspect of the case will be the question of willfulness: can the plaintiff leverage evidence from Apple's own patent prosecution history-specifically, its attorneys' and inventors' repeated citation of the Benedor patent family as "pertinent" prior art-to meet the high bar for proving that Apple acted with the subjective bad faith required for a finding of willful infringement?