DCT
2:18-cv-05391
Blue Spike LLC v. Soundcloud Ltd
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Blue Spike LLC (Texas)
- Defendant: SoundCloud Limited (Germany)
- Plaintiff’s Counsel: Garteiser Honea PLLC
- Case Identification: 2:18-cv-05391, C.D. Cal., 06/15/2018
- Venue Allegations: Plaintiff alleges venue is proper because Defendant, a foreign corporation, is subject to suit in any U.S. judicial district and because Defendant has a regular and established place of business in the Central District of California.
- Core Dispute: Plaintiff alleges that Defendant’s online audio distribution platform infringes patents related to trusted transactions, data security using steganography, and methods for distributing secured digital content.
- Technical Context: The patents address technologies for digital rights management (DRM) and securing online transactions, which are central to the business models of digital media streaming and distribution services.
- Key Procedural History: The complaint alleges that Plaintiff has licensed the patents-in-suit to competitors of the Defendant and that news coverage exists regarding Plaintiff's enforcement of the patents against other infringers, which may be relevant to allegations of willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 1999-12-07 | Earliest Priority Date for ’116, ’011, and ’506 Patents |
| 2007-01-02 | Issue Date for U.S. Patent No. 7,159,116 |
| 2008-01-01 | Accused SoundCloud Platform Launch (approximate) |
| 2010-10-12 | Issue Date for U.S. Patent No. 7,813,506 |
| 2013-09-17 | Issue Date for U.S. Patent No. 8,538,011 |
| 2018-06-15 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 7,159,116
- Patent Identification: U.S. Patent No. 7,159,116, titled "Systems, methods and devices for trusted transactions," issued January 2, 2007.
- The Invention Explained:
- Problem Addressed: The patent’s background section describes the challenges of conducting electronic transactions over public networks like the internet, highlighting concerns about the authenticity of products, the identity of transaction parties, and the security of sensitive data exchange (e.g., credit card numbers) (’116 Patent, col. 2:54-67).
- The Patented Solution: The invention proposes a "Trusted Transactions Engine" to enhance confidence in online transactions by using secure steganographic and cryptographic methods for data identification, authentication, and transmission (’116 Patent, Abstract; Fig. 1). This integrated system aims to create verifiable and secure transactional relationships between parties who may not otherwise trust each other in a remote environment (’116 Patent, col. 3:38-49).
- Technical Importance: The technology sought to provide a framework for building trust in the then-nascent field of e-commerce by bridging mathematical security concepts with human-perceptible measures of authenticity (’116 Patent, col. 3:55-62).
- Key Claims at a Glance:
- Independent Claim Asserted: Claim 14.
- Essential Elements of Claim 14:
- A device for conducting a trusted transaction between at least two parties.
- "means for uniquely identifying information" selected from a group including unique IDs for a party, the transaction, or value-added information.
- A "steganographic cipher" for generating the unique identification information, governed by a predetermined key, message, and carrier signal.
- A "means for verifying an agreement to transact" between the parties.
- The complaint does not explicitly reserve the right to assert other claims but infringement is alleged for "one or more claims" (Compl. ¶23).
U.S. Patent No. 8,538,011
- Patent Identification: U.S. Patent No. 8,538,011, titled "Systems, methods and devices for trusted transactions," issued September 17, 2013.
- The Invention Explained:
- Problem Addressed: This patent, part of the same family as the ’116 Patent, addresses the same fundamental problems of establishing trust and security in online transactions over distributed public networks (’011 Patent, col. 2:54-67).
- The Patented Solution: The invention describes a device that facilitates trusted transactions by incorporating a steganographic cipher into both its hardware and software components. The device uses this cipher to secure software applications and to process and transmit output data with a key, thereby securing value-added information associated with the transaction (’011 Patent, col. 7:5-11; col. 17:1-15). This creates a secure environment for handling sensitive transactional data and components.
- Technical Importance: The approach integrates steganographic security directly into the operational software and hardware of a transaction device, aiming to provide a more robust and embedded form of data protection than purely network-level security (’011 Patent, col. 17:10-15).
- Key Claims at a Glance:
- Independent Claim Asserted: Claim 35.
- Essential Elements of Claim 35:
- A device for conducting trusted transactions.
- A "steganographic cipher".
- A controller for receiving/outputting data and at least one input/output connection.
- A device identification code stored in the device.
- An "analog to digital converter".
- A "steganographically ciphered software application" that has been serialized via a steganographic cipher.
- The steganographic cipher receives output data, ciphers it using a key, and transmits it.
- The device is configured to steganographically cipher both value-added information and an associated value-added component.
- The complaint alleges infringement of "one or more claims" of the patent (Compl. ¶49).
Multi-Patent Capsule: U.S. Patent No. 7,813,506
- Patent Identification: U.S. Patent No. 7,813,506, titled "System and methods for permitting open access to data objects and for securing data within the data objects," issued October 12, 2010.
- Technology Synopsis: The patent addresses the problem of distributing copyrighted digital works (like music) over open networks while ensuring creators are paid (Compl. ¶74; ’506 Patent, col. 2:21-27). The proposed solution is a method that "scrambles" the digital content to create a "perceptibly degraded" version that can be freely distributed; users can then purchase a key to descramble the content and access a higher-quality version (’506 Patent, Abstract; col. 4:18-24).
- Asserted Claims: Independent Claim 6 (Compl. ¶76).
- Accused Features: The complaint alleges that SoundCloud's systems and processes for distributing digital content incorporate the claimed scrambling techniques (Compl. ¶77).
III. The Accused Instrumentality
- Product Identification: SoundCloud Music Services ("Accused Products and Services") (Compl. ¶16).
- Functionality and Market Context:
- The complaint identifies the accused instrumentality as "the world's largest music and audio platform," which allows users to "discover and enjoy the greatest selection of music from the most diverse creator community on earth" (Compl. ¶16; Figure 2). The service provides features for creators to upload, share, and monetize content, and for users to listen to tracks, connect with artists, and discover new music (Compl. ¶16; Figure 1-2). Figure 1 in the complaint is a screenshot of the SoundCloud homepage, showing trending music and an option for artists to upload tracks (Compl. p. 7). The complaint alleges these services institute systems for trusted transactions and for distributing digital content (Compl. ¶25, ¶51, ¶77).
IV. Analysis of Infringement Allegations
The complaint does not provide a detailed claim chart or map specific product features to claim limitations. The following summary is based on the asserted claims and the general allegations of infringement.
7,159,116 Infringement Allegations
| Claim Element (from Independent Claim 14) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A device for conducting a trusted transaction between at least two parties who have agreed to transact, comprising: | The SoundCloud platform facilitates transactions between content creators and listeners. | ¶25 | col. 3:38-41 |
| means for uniquely identifying information selected from the group consisting of a unique identification of one of the parties, a unique identification of the transaction, a unique identification of value added information to be transacted, a unique identification of a value adding component; | The SoundCloud service utilizes unique identifiers for users (parties), tracks (value-added information), and transactions (e.g., plays, downloads, or subscriptions). | ¶24-25 | col. 6:55-62 |
| a steganographic cipher for generating said unique identification information, wherein the steganographic cipher is governed by at least the following elements: a predetermined key, a predetermined message, and a predetermined carrier signal; | The complaint does not specify what component of the SoundCloud service allegedly constitutes a "steganographic cipher" or how it is used to generate identification information. | ¶24-25 | col. 6:52-55 |
| and a means for verifying an agreement to transact between the parties. | The SoundCloud platform verifies user agreements to its terms of service and facilitates transactions such as content uploads and streaming, which constitute agreements to transact. | ¶25 | col. 6:59-61 |
- Identified Points of Contention:
- Scope Questions: Claim 14 is in means-plus-function format. The scope of the "means for uniquely identifying information" and "means for verifying an agreement" will be limited to the corresponding structures described in the patent's specification and their equivalents. A central question will be whether the architecture of the SoundCloud platform contains structures equivalent to those disclosed in the ’116 Patent.
- Technical Questions: The complaint provides no factual basis for its allegation that SoundCloud uses a "steganographic cipher". A key point of contention will be whether Plaintiff can produce evidence that any part of the SoundCloud service performs the function of a steganographic cipher as defined by the patent to generate identifying information.
8,538,011 Infringement Allegations
| Claim Element (from Independent Claim 35) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A device for conducting trusted transactions...comprising: a steganographic cipher; a controller for receiving input data or outputting output data;...at least one input/output connection, wherein the device has a device identification code stored in the device; an analog to digital converter; | The complaint alleges SoundCloud's service as a whole is a device that conducts trusted transactions, but does not identify specific components corresponding to the controller, A/D converter, or steganographic cipher. | ¶50-51 | col. 7:5-11 |
| and a steganographically ciphered software application; wherein said steganographically ciphered software application has been subject to a steganographic cipher for serialization; | The complaint does not specify which SoundCloud software application is allegedly "steganographically ciphered" or how it is serialized. | ¶50-51 | col. 17:7-10 |
| wherein said steganographic cipher receives said output data, steganographically ciphering said output data using a key, to define steganographically ciphered output data, and transmits said steganographically ciphered output data to said at least one input/output connection; | The complaint does not provide technical details on how SoundCloud's service allegedly uses a steganographic cipher to process and transmit output data. | ¶50-51 | col. 17:10-15 |
| wherein the device is configured to steganographically cipher both value-added information and at least one value-added component associated with the value-added information. | The complaint does not specify how the SoundCloud device is configured to perform this dual-ciphering function on both information (e.g., a music track) and its components (e.g., metadata). | ¶50-51 | col. 17:13-15 |
- Identified Points of Contention:
- Technical Questions: Similar to the ’116 Patent, the core of the dispute will likely involve the term "steganographic cipher". The complaint does not explain how any part of the SoundCloud platform, which primarily distributes standard audio files, constitutes or uses a "steganographically ciphered software application" or performs steganographic ciphering on output data.
- Scope Questions: The claim recites an "analog to digital converter". A question may arise as to whether a cloud-based service that receives already-digitized files from creators can be said to include this element.
V. Key Claim Terms for Construction
For the ’116 Patent:
- The Term: "steganographic cipher"
- Context and Importance: This term is central to the novelty of claim 14. As a means-plus-function claim, the scope of the "means for uniquely identifying information" is defined by the structure disclosed in the specification for performing the claimed function, which is a "steganographic cipher". The definition of this term will therefore be critical to determining both the scope of the claim and whether the accused service infringes.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification states that the cipher may be a "steganographic cipher or a cryptographic cipher," suggesting the terms may have some interchangeability or overlap in function within the context of the invention (’116 Patent, col. 4:8-10).
- Evidence for a Narrower Interpretation: The specification explicitly links the term to digital watermarking, describing it as a tool for "secure watermarking" and embedding data within a "carrier signal" (’116 Patent, col. 25:65-26:15; col. 29:35-44). This suggests the term requires the act of hiding data within other data, not merely encrypting or encoding it.
For the ’011 Patent:
- The Term: "steganographically ciphered software application"
- Context and Importance: This term is a key limitation of independent claim 35. The infringement analysis will depend on whether the software used by the SoundCloud service can be characterized as having been "ciphered" using steganography for the purpose of "serialization." Practitioners may focus on this term because it appears to require that the application code itself, not just the data it processes, has undergone a steganographic process.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent discusses steganographic ciphering in the general context of providing security and enabling trusted transactions, which could support an argument that any software protected by such techniques meets the definition, regardless of the specific mechanism (’011 Patent, Abstract).
- Evidence for a Narrower Interpretation: The claim requires the application to have been subject to a cipher "for serialization." The specification describes using steganographic ciphers to serialize individual transaction "events" and devices, tying the concept to creating unique, verifiable instances (’011 Patent, col. 25:40-50). This may support a narrower interpretation requiring a specific process for creating serialized copies of the software itself, rather than general security protection.
VI. Other Allegations
- Indirect Infringement: For all three patents, the complaint alleges induced infringement by providing instructions, technical support, and advertising that allegedly encourage customers and end users to use the SoundCloud service in an infringing manner (Compl. ¶31, ¶33, ¶57, ¶59, ¶83, ¶85). It also alleges contributory infringement, contending that the accused functionality has no substantial non-infringing uses (Compl. ¶39, ¶65, ¶91).
- Willful Infringement: For all three patents, willfulness is alleged based on Defendant’s knowledge of the patents "at least as early as the service of this complaint" (Compl. ¶34, ¶60, ¶86). The complaint also alleges Defendant had or should have had knowledge through "due diligence and freedom to operate analyses" and "News coverage of Blue Spike's enforcement of this patent against other infringers" (Compl. ¶41, ¶67, ¶93).
VII. Analyst’s Conclusion: Key Questions for the Case
This case appears to present several central questions for the court's determination:
- A core issue will be one of evidentiary proof: The allegations of infringement for the ’116 and ’011 patents hinge on the use of a "steganographic cipher." The central factual question will be whether Plaintiff can provide evidence that the accused SoundCloud platform actually uses steganography—the practice of hiding data within other data—to generate identifiers or serialize its software, as the complaint offers no specific technical allegations on this point.
- A second key question will be one of functional operation: For the ’506 patent, the dispute may turn on whether SoundCloud's methods for providing different audio quality tiers constitute "scrambling" that results in "perceptibly degraded digital content" as required by the claim, or if it is a standard multi-bitrate encoding and streaming process that operates on a different technical principle.
- A final question will be one of claim scope: The asserted claim of the ’116 Patent is in means-plus-function format. The court’s construction of the scope of the claimed "means," based on the structures disclosed in the 1999-priority-date specification, and their application to a modern, cloud-based software-as-a-service platform, will be a critical legal issue.