Factor2 Multimedia Systems v. Presidential Bank: Six-Patent Auth Dispute Dismissed
Factor2 Multimedia Systems, LLC asserted six US patents covering multi-factor authentication systems and methods against Presidential Bank, FSB, Inc. in Maryland. The plaintiff voluntarily dismissed the action without prejudice after 170 days — leaving the door open for refiling.
Multi-factor authentication IP challenge against a community bank ends before merits
On 6 May 2025, Factor2 Multimedia Systems, LLC filed suit against Presidential Bank, FSB, Inc. in the United States District Court for the District of Maryland (Case No. 8:25-cv-01469), before Judge Brendan Abell Hurson. The complaint alleged infringement of six US patents — US9727864B2, US9703938B2, US10769297B2, US10083285B2, US8281129B1, and US9870453B2 — all directed at systems and methods for user authentication. The accused product was described as Presidential Bank’s apparatus employing an authentication system and method.
On 23 October 2025, Factor2 filed a notice of voluntary dismissal without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). Because this rule permits a plaintiff to dismiss as of right before the defendant serves an answer or a motion for summary judgment, no court order was required and no merits determination was made. Presidential Bank was represented by Gibson Dunn & Crutcher, LLP, suggesting the bank was prepared to mount a substantive defence, which may have influenced the timing of Factor2’s withdrawal.
A 170-day lifespan is consistent with a pre-answer dismissal pattern often seen in patent assertion entity litigation, where early defendant signalling — such as retaining prominent defence counsel — can accelerate resolution. The public record does not disclose whether a settlement, licence, or other commercial arrangement accompanied the dismissal. Because the dismissal is without prejudice, Factor2 retains the right to refile the same claims against Presidential Bank, subject to applicable statutes of limitation and any intervening developments such as IPR petitions against the asserted patents.
Filing to Voluntary dismissal in 170 days
170 days from filing to voluntary dismissal — relatively swift resolution before any substantive ruling
Voluntarily dismissed: what Rule 41 without prejudice means for both parties
Rule 41(a)(1)(A)(i) dismissal: plaintiff’s right to exit before answer
Under FRCP 41(a)(1)(A)(i), a plaintiff may voluntarily dismiss an action as of right — without a court order — before the defendant serves an answer or a motion for summary judgment. This procedural right requires no judicial approval and, unless the notice specifies otherwise, operates without prejudice. No merits determination, claim construction, or invalidity ruling was issued in this case.
No merits rulingWithout prejudice: the public record is silent on final terms
A dismissal without prejudice preserves the plaintiff’s right to refile the same claims. A dismissal with prejudice would extinguish those claims permanently. Factor2’s notice explicitly states ‘without prejudice,’ so no claim preclusion attaches. However, the public record does not disclose whether the parties reached a private licence or settlement agreement alongside the dismissal — a common but unverifiable scenario in patent assertion cases.
Refiling right preservedPresidential Bank exits without a ruling — but litigation risk persists
Presidential Bank, FSB, Inc. avoids a merits determination and any injunction or damages award at this stage. However, the without-prejudice nature of the dismissal means the bank remains exposed to potential refiling on the same six authentication patents. The retention of Gibson Dunn & Crutcher suggests the bank was prepared to challenge validity and infringement, but that defence was never tested in court.
Exposure not extinguishedAuthentication patent assertions against financial institutions: a pattern to watch
Cases involving broad authentication patents targeting banking institutions are common in the current enforcement landscape. A without-prejudice dismissal after prominent defence counsel is retained is consistent with licensing negotiation or a deterrence effect. Financial institutions operating multi-factor or adaptive authentication systems should treat this outcome as a signal to review their IP exposure across all six Factor2 patent families — none of which received judicial scrutiny here.
Six patent families still activeFull party and counsel information
| Role | Name | Type | Detail |
|---|---|---|---|
| Plaintiff | Factor2 Multimedia Systems, LLC | Company | Authentication patent assertion entity — holder of US9727864B2 and five related auth patentsSearch in Eureka ↗ |
| Defendant | Presidential Bank, FSB, Inc. | Company | Presidential Bank, FSB, Inc. — federally chartered savings bank accused of infringing auth system patentsSearch in Eureka ↗ |
| Plaintiff counsel | Joseph J. Zito | Attorney | Counsel for Factor2 Multimedia Systems, LLCSearch in Eureka ↗ |
| Plaintiff law firm | Dnl Zito | Law Firm | Representing Factor2 Multimedia Systems, LLCSearch in Eureka ↗ |
| Defendant counsel | George Jarrod Hazel | Attorney | Counsel for Presidential Bank, FSB, Inc.Search in Eureka ↗ |
| Defendant law firm | Gibson Dunn & Crutcher, LLP | Law Firm | Representing Presidential Bank, FSB, Inc.Search in Eureka ↗ |
| Presiding judge | Judge Brendan Abell Hurson | Judge | Maryland District CourtSearch in Eureka ↗ |
Official order — verbatim text
The dismissal notice invokes FRCP 41(a)(1)(A)(i) explicitly and specifies ‘without prejudice,’ confirming this is a unilateral plaintiff exit requiring no judicial order. The phrasing carries significant procedural weight: no claim construction, no invalidity finding, and no infringement determination was reached. For Presidential Bank, the dismissal provides immediate relief but not finality — the six asserted authentication patents remain valid and enforceable, and Factor2 retains the right to refile. The absence of any costs or fees motion in the record suggests no exceptional-case arguments were pursued by either party at this stage.
US9727864B2 and five further Factor2 authentication patents
The six asserted patents — US9727864B2, US9703938B2, US10769297B2, US10083285B2, US8281129B1, and US9870453B2 — cover systems and methods for user authentication, with application dates ranging from approximately 2006 (US8281129B1, App. No. 11/333400) through 2017 (US10083285B2, App. No. 15/833909). This breadth of filing dates suggests a portfolio built through continuation and continuation-in-part strategy, designed to capture evolving implementations of multi-factor and adaptive authentication technology across a long technological lifecycle.
Authentication patents of this type present significant risk for financial institutions, which are among the heaviest deployers of multi-factor authentication systems under regulatory mandates including FFIEC guidance and PCI-DSS requirements. The broad claim scope typical of portfolios spanning a decade of continuations means that modern implementations — including mobile banking authentication, step-up verification, and behavioural biometrics — may fall within the claim language. Competitor financial institutions and fintech providers should treat this portfolio as a live enforcement risk, particularly given that no court has yet narrowed or invalidated any claim.
Should your authentication platform be cleared against Factor2’s portfolio?
Any financial institution, fintech, or enterprise software provider deploying multi-factor authentication, adaptive authentication, or single sign-on apparatus should treat the Factor2 portfolio as a material FTO concern. The six patents span a 2006–2017 application window and have never been subjected to claim construction or IPR invalidation, meaning their full scope remains legally intact. Banks subject to FFIEC authentication mandates are particularly exposed given their obligatory deployment of the very technology these patents describe.
PatSnap Eureka’s FTO Search Agent allows IP and R&D teams to map all six Factor2 patent numbers against their specific authentication architecture, identify claim elements that may read on current product implementations, and surface prior art that could support IPR petitions or design-around strategies. Running a structured FTO across the full Factor2 portfolio — rather than only the lead patent — is the commercially prudent response to a without-prejudice dismissal that preserves all enforcement options for the patentee.
Run a freedom-to-operate analysis on US9727864B2 to assess your product’s exposure
Run FTO in Eureka →Similar authentication patent cases in US District Courts
Explore related multi-factor authentication patent infringement actions filed in Maryland and other US District Courts against financial institutions and fintech defendants.
What this case signals for the financial authentication IP landscape
Factor2’s six-patent assertion against a federally chartered bank highlights ongoing enforcement pressure on authentication technology in the financial sector.
Pre-answer dismissals often mask licensing activity — monitor Factor2’s docket
A Rule 41(a)(1)(A)(i) dismissal without prejudice, arriving after prominent defence counsel appears, frequently signals parallel licensing negotiations. IP teams at financial institutions using authentication systems should monitor Factor2’s broader litigation docket for refiling patterns and any licence announcements.
Six active patent families create a wide assertion footprint for banks
Factor2 asserted patents spanning application numbers filed between 2006 and 2017, suggesting a maturing but still-enforceable portfolio. Financial institutions deploying multi-factor authentication apparatus should conduct FTO analysis across all six patent numbers — not just the lead patent — before this case is refiled or extended to new defendants.
Factor2 v Presidential — key questions answered
Factor2 Multimedia Systems asserted six US patents: US9727864B2, US9703938B2, US10769297B2, US10083285B2, US8281129B1, and US9870453B2. All six are directed at systems and methods for user authentication. The accused product was described as Presidential Bank’s apparatus using a system and method for authentication.
Factor2 voluntarily dismissed the action under FRCP 41(a)(1)(A)(i), which permits a plaintiff to exit as of right before the defendant files an answer or summary judgment motion. ‘Without prejudice’ means no claim preclusion attaches — Factor2 retains the right to refile the same infringement claims against Presidential Bank in the future. No merits determination was made.
Yes. Because the dismissal was expressly entered without prejudice, Factor2 is not barred from refiling the same claims, subject to applicable statutes of limitation. A second voluntary dismissal of the same claims against the same defendant would, however, operate as a dismissal with prejudice under FRCP 41(a)(1)(B).
Gibson Dunn & Crutcher is a prominent patent litigation firm with a strong track record defending against patent assertion entities. Their early retention — before an answer was filed — suggests Presidential Bank was prepared to challenge both infringement and validity of the six Factor2 patents. This level of defence resourcing may have influenced Factor2’s decision to dismiss before any substantive motions were litigated.
The Factor2 portfolio spans multi-factor authentication systems and methods with application dates from 2006 to 2017, suggesting broad claim coverage across legacy and modern MFA implementations. Financial institutions deploying password-plus-token, mobile push authentication, adaptive authentication, or step-up verification systems may face exposure. No claim has been judicially narrowed or invalidated, and no IPR petitions against this portfolio appear in the public record from this case.
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