DCT

2:18-cv-07661

Kindred Studio Illustration Design LLC also Known As True Grit v. Electronic Communication Technology LLC

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:18-cv-07661, C.D. Cal., 12/24/2018
  • Venue Allegations: Plaintiff alleges venue is proper because Defendant conducts substantial business in the district, including filing numerous patent lawsuits and contacting the California-based Plaintiff to seek licensing revenue.
  • Core Dispute: Plaintiff alleges that Defendant's patent enforcement activities, specifically asserting a patent related to physical delivery notifications against Plaintiff's digital download products, constitute unlawful and unfair business practices under California law.
  • Technical Context: The technology at issue involves automated systems for notifying a recipient of the impending arrival of a mobile object, such as a delivery vehicle, at a physical location.
  • Key Procedural History: This First Amended Complaint follows an original declaratory judgment action. After the original filing, Defendant provided Plaintiff a covenant not to sue, which Plaintiff alleges was insufficient. The current complaint focuses on state law claims. The complaint also alleges a history of litigation involving the patent family, including a 2014 C.D. Cal. order finding claims in related patents invalid under 35 U.S.C. § 101 (McKinley), a 2017 letter from the Electronic Frontier Foundation (EFF) challenging the patent's validity, and another suit that was dismissed with prejudice after a § 101 challenge was filed (The Pep Boys).

Case Timeline

Date Event
2003-05-28 Earliest Priority Date for '261 Patent
2014-09-04 C.D. Cal. court finds claims in related patents invalid in McKinley case
2016-01-01 Plaintiff True Grit founded (approximate, based on "founded in 2016")
2016-06-21 '261 Patent Issued
2017-09-13 Electronic Frontier Foundation (EFF) sends letter to Defendant challenging validity of '261 Patent
2018-08-15 Plaintiff receives enforcement letter from Defendant
2018-12-24 Plaintiff's First Amended Complaint Filed

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

U.S. Patent No. 9,373,261 - Secure Notification Messaging With Delivery Or Pickup Representative

Issued June 21, 2016 (’261 Patent)

The Invention Explained

  • Problem Addressed: The patent describes the need for individuals and businesses to be better prepared for the arrival or departure of a "mobile thing" (MT), such as a delivery truck, bus, or airplane, at a specific "stop location" ('261 Patent, col. 2:1-12). Without automated notifications, parties may be unaware of delays or early arrivals, leading to inefficiency and inconvenience ('261 Patent, col. 2:12-23).
  • The Patented Solution: The invention is an automated system that monitors the location and travel information of an MT. Based on this data, it sends an advance notification to a party's personal communication device (PCD) before the MT arrives at its destination. The system also enables secure, authenticated communication to ensure the notification is from an authorized source ('261 Patent, Abstract; col. 3:51-col. 4:15). Figure 1 illustrates the overall system architecture, showing a "Mobile Thing (MT)" (15) tracked by a "Positioning System" (23), with a "Base Station Control Unit" (40) sending notifications to a "Personal Communications Device (PCD)" (75) ('261 Patent, Fig. 1).
  • Technical Importance: The technology aims to improve coordination and scheduling in logistics, public transit, and other fields where timely status updates on moving assets are critical ('261 Patent, col. 2:24-34).

Key Claims at a Glance

  • The complaint focuses on Claim 11, an independent system claim (Compl. ¶20).
  • The essential elements of Claim 11 are:
    • An automated notification system with transceivers, memories, and processors.
    • Code to enable a first party with a personal communication device (PCD) to input or select authentication information for a notification session.
    • The notification session involves "advance notice of a delivery or pickup of a good or service at a stop location by a mobile thing (MT)".
    • Code to store the authentication information.
    • Code to "monitor location or travel information in connection with the MT".
    • Code to initiate the notification session to the PCD "in advance of arrival of the MT at the stop location," based on the monitored MT information.
    • Code to provide the authentication information to the PCD during the session.
    • Code to enable the first party to select whether to engage in a communication session with a second party about the pickup or delivery.
  • The complaint does not mention any dependent claims.

III. The Accused Instrumentality

Product Identification

Plaintiff True Grit's online store, which sells "downloadable tools and assets for use by commercial graphic designers and illustrators including digital paintbrushes, stock images, software shortcuts and tutorials" (Compl. ¶9).

Functionality and Market Context

The complaint states that True Grit's products are exclusively digital and are "delivered via digital download" (Compl. ¶14). After a customer makes a purchase, the system provides a download link. The complaint strenuously asserts that True Grit "does not and has not ever sold any physical product, nor any product which requires shipping or delivery by any person or shipping service" (Compl. ¶22). A screenshot of a True Grit order summary page is provided as evidence, showing a button to "DOWNLOAD YOUR DIGITAL GOODS" and a shipping cost of "$0.00" (Compl. ¶29, p. 9). The complaint alleges that Defendant’s infringement accusations are baseless because the accused system does not involve physical delivery, a "mobile thing," or a "stop location" as required by the patent (Compl. ¶31).

IV. Analysis of Infringement Allegations

The complaint is a declaratory judgment action by the accused infringer (True Grit), so it lays out arguments for non-infringement. The following chart summarizes True Grit's rebuttal to the infringement allegations it received from Defendant ECT.

'261 Patent Infringement Allegations

Claim Element (from Independent Claim 11) Plaintiff's Rebuttal of Infringement Complaint Citation Patent Citation
...involving advance notice of a delivery or pickup of a good or service at a stop location... The complaint alleges that its products are digital files delivered via download, not physical goods delivered to a physical "stop location" (Compl. ¶21). A screenshot from Plaintiff's FAQ shows a download link, not a shipping confirmation (Compl. ¶28, p. 8). ¶¶21, 23 col. 93:26-28
...by a mobile thing (MT); The complaint alleges there is no "mobile thing" involved in the transaction, as delivery is electronic (Compl. ¶¶11, 31). ¶31 col. 93:29
code that monitors location or travel information in connection with the MT; The complaint alleges that because there is no "MT," its system does not and cannot monitor any location or travel information associated with one (Compl. ¶31). ¶31 col. 93:30-31
...in advance of arrival of the MT at the stop location, based at least in part upon the location or travel information associated with the MT; The complaint alleges that since there is no "MT" and no "stop location," its system does not initiate notifications based on the arrival of an MT (Compl. ¶¶11, 31). An order confirmation page explicitly directs the user to "CLICK HERE TO DOWNLOAD YOUR DIGITAL GOODS" (Compl. ¶29, p. 10). ¶¶31, 29 col. 93:34-38
  • Identified Points of Contention:
    • Scope Questions: The central dispute raises the question of whether the claim term "delivery... of a good... at a stop location by a mobile thing" can be construed to read on the electronic transmission of a digital file to a customer's computer. The complaint argues for a narrow, physical interpretation (Compl. ¶16), while Defendant's assertion implies a much broader one.
    • Technical Questions: A key question is whether any part of Plaintiff's digital delivery system performs the function of "monitor[ing] location or travel information in connection with the MT." The complaint provides no evidence of such monitoring and argues it is technically impossible since no physical "MT" exists in the accused process (Compl. ¶31).

V. Key Claim Terms for Construction

  • The Term: "mobile thing (MT)"

  • Context and Importance: This term's definition is critical. If a "mobile thing" requires a physical object in transit, as Plaintiff argues, then the infringement claim fails. Defendant's assertion suggests it may argue that a data packet or other electronic element constitutes an "MT."

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The specification defines an MT as "any movable object or thing," which could be argued to be technologically neutral ('261 Patent, col. 10:4-5).
    • Evidence for a Narrower Interpretation: The specification's examples of an MT are overwhelmingly physical, including an "air-plane, helicopter, balloon, or a rocket... a train... a ship... a human being, an animal, or other animate or inanimate object," as well as delivery vehicles and buses ('261 Patent, col. 10:5-10, col. 2:58-61).

  • The Term: "delivery... at a stop location"

  • Context and Importance: This term is similarly dispositive. Plaintiff's system delivers digital files to a computer, which it argues is not a "delivery at a stop location." The viability of the infringement claim depends on whether this phrase can encompass electronic file transfers.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The patent does not explicitly limit "delivery" or "stop location" to physical contexts in its formal definitions.
    • Evidence for a Narrower Interpretation: The specification consistently uses the term in the context of physical logistics, such as "pickup or delivery of an item at a stop location" and providing notifications to "bus, automobile, taxicab, train or ship" passengers or "airline travelers." ('261 Patent, col. 2:5-6, col. 2:24-34). Figure 22 depicts "stop locations" as physical places on a map, such as a restaurant or a store ('261 Patent, Fig. 22).

VI. Other Allegations

  • Allegations of Bad Faith and Unfair Competition: The complaint alleges that Defendant's assertion of the '261 Patent is part of a broader pattern of unlawful business practices (Compl. ¶¶ 88-99). The factual bases for this claim include:
    • Knowledge of Invalidity: The complaint alleges Defendant knew or should have known the asserted claim was invalid and/or not infringed. It cites a prior court order in the McKinley case invalidating claims from patents in the same family under § 101, USPTO rejections on similar grounds, and a detailed invalidity analysis sent by the EFF (Compl. ¶¶ 76, 80, 83-84).
    • Baseless Enforcement: The core allegation is that asserting a patent for physical delivery against a digital download service is objectively baseless (Compl. ¶16). The complaint further alleges Defendant doctored screenshots from Plaintiff's website to create a "fraudulent infringement chart" (Compl. ¶33).
    • Pattern of Nuisance Litigation: The complaint alleges Defendant and its related entities have a "long-standing, oft-repeated business model" of asserting weak patents against small companies to "extract nuisance value settlements" (Compl. ¶37). It cites prior judicial findings in Shipping & Transit v. Hall that an affiliated entity engaged in an "aggressive strategy that avoids testing its case on the merits" (Compl. ¶45).

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

  • A core issue will be one of definitional scope: Can terms such as "mobile thing" and "delivery... at a stop location," which are rooted in the patent's disclosure of physical logistics and transit, be plausibly construed to cover the purely electronic transfer of a digital product from a server to a customer's computer?
  • A key question for the unlawful competition claim will be one of intent and knowledge: Can Plaintiff demonstrate that Defendant's assertion of the '261 Patent was made in bad faith, particularly in light of the alleged mismatch with the accused digital product and the prior judicial and administrative proceedings questioning the validity of related patent claims?
  • An evidentiary question will be one of factual basis: What evidence will be presented regarding the complaint's allegations that Defendant knowingly pursued a baseless claim, including the charge that it manufactured evidence by altering screenshots from Plaintiff's website to obscure the digital nature of the product?