DCT
8:13-cv-01080
Essociate Inc v. Ndemand Affiliates Inc
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Essociate, Inc. (Delaware)
- Defendant: Ndemand Affiliates Incorporated (Oklahoma)
- Plaintiff’s Counsel: Newman Du Wors LLP
- Case Identification: 8:13-cv-01080, C.D. Cal., 07/18/2013
- Venue Allegations: Venue is alleged to be proper because Defendant transacts business and provides products or services to customers in the judicial district.
- Core Dispute: Plaintiff alleges that Defendant’s affiliate marketing network infringes a patent related to methods for pooling and tracking referrals between different affiliate marketing systems.
- Technical Context: The lawsuit concerns the field of online affiliate marketing, a system where third-party publishers (affiliates) are compensated by merchants for driving traffic or sales to the merchants' websites.
- Key Procedural History: The complaint does not mention any prior litigation, licensing history, or other significant procedural events related to the patent-in-suit.
Case Timeline
| Date | Event |
|---|---|
| 2000-05-01 | U.S. Patent No. 6,804,660 Priority Date |
| 2004-10-12 | U.S. Patent No. 6,804,660 Issued |
| 2013-07-18 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 6,804,660 - "System Method and Article of Manufacture for Internet Based Affiliate Pooling"
- Patent Identification: U.S. Patent No. 6,804,660, "System Method and Article of Manufacture for Internet Based Affiliate Pooling", issued October 12, 2004.
The Invention Explained
- Problem Addressed: The patent describes inefficiencies in prior art affiliate marketing systems. "Stand-alone" systems (one merchant, one affiliate network) were costly for merchants to establish and offered limited product variety for affiliates (’660 Patent, col. 1:55-65). "Hub" systems (multiple merchants in one master network) forced merchants to compete for the same pool of affiliate traffic and risk losing business to others in the hub (’660 Patent, col. 2:58-65).
- The Patented Solution: The invention proposes a system for "affiliate pooling" that acts as an intermediary, allowing an affiliate registered with one system (the "source" system) to refer traffic to a merchant using a different, incompatible system (the "target" system). The pooling system receives a referral link containing the affiliate's original ID, "correlates" it to a corresponding ID recognized by the target merchant's system, and generates a new link to properly track the referral for compensation (’660 Patent, Abstract; col. 7:5-14). This allows affiliates to promote merchants across different networks without needing to join each one individually.
- Technical Importance: This approach aimed to increase the liquidity and reach of the affiliate marketing ecosystem by creating interoperability between otherwise siloed merchant programs and affiliate networks (’660 Patent, col. 4:53-56).
Key Claims at a Glance
- The complaint asserts infringement of the ’660 Patent, citing Claim 1 as an example (Compl. ¶18).
- Independent Claim 1 of the ’660 Patent includes the following essential elements:
- Configuring a target affiliate system to receive referrals from a "first plurality of Webmasters in an affiliate pool."
- Assigning a "source Webmaster unique identifier" to each of the webmasters.
- Receiving a user request for a target merchant's URL that includes the source webmaster's unique identifier.
- "Correlating" the received source identifier to a "target Webmaster unique identifier" corresponding to the target merchant's system.
- Generating a new URL for the target merchant's system that includes the "correlated target Webmaster" identifier for tracking.
- The complaint does not explicitly reserve the right to assert dependent claims but references "one or more claims" generally (Compl. ¶9).
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are Defendant's "affiliate marketing network available at http://www.ndemandaffiliates.com/" and associated "affiliate software and/or other products and/or services" (Compl. ¶9, ¶13).
Functionality and Market Context
- The complaint alleges that Defendant makes, uses, sells, and provides support for its affiliate marketing software and network (Compl. ¶9-10). The complaint does not provide specific details on the technical operation of the accused network, its architecture, or how it processes affiliate referrals. It is broadly characterized as an "affiliate marketing network" (Compl. ¶9).
IV. Analysis of Infringement Allegations
No probative visual evidence provided in complaint.
The complaint’s allegations are conclusory and do not map specific features of the accused product to the claim limitations. The following chart summarizes the infringement theory as can be inferred from the general allegations against the accused affiliate network.
'660 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A method for providing Virtual Affiliates to an existing target affiliate system...comprising the operations of: configuring an existing target affiliate system to receive referrals from a first plurality of Webmasters in an affiliate pool of source Webmasters... | Defendant allegedly operates an "affiliate marketing network" which, by its nature, is configured to receive referrals from webmasters. | ¶9, ¶11 | col. 21:47-52 |
| assigning a source Webmaster unique identifier for each of said first plurality of Webmasters... | The complaint does not provide sufficient detail for analysis of this element. | N/A | col. 21:53-56 |
| receiving a user request for a target Merchant affiliate system URL from a web site operated by a particular referring Webmaster...wherein the user request includes the source Webmaster unique identifier for the particular referring Webmaster... | Defendant’s affiliate network allegedly receives and processes user requests (e.g., clicks on affiliate links) that originate from affiliate web sites. | ¶9, ¶11 | col. 21:57-64 |
| correlating the received source Webmaster unique identifier to a target Webmaster unique identifier corresponding to the unique identification system of the requested Merchant affiliate system; | The complaint does not provide sufficient detail for analysis of this element, which is a central step of the claimed invention. | N/A | col. 22:1-5 |
| and generating a URL for the requested Merchant affiliate system, wherein the URL includes the correlated target Webmaster Merchant unique identifier, whereby the URL can be utilized to access the requested Merchant affiliate system, and further provide identification of the source Webmaster... | Defendant’s affiliate network allegedly generates referral URLs that enable the tracking of affiliate-driven traffic and transactions. | ¶9, ¶12 | col. 22:6-12 |
- Identified Points of Contention:
- Technical Questions: A primary question will be whether the accused Ndemand Affiliates network performs the specific "correlating" step recited in the claim. The complaint provides no evidence or specific allegation that Defendant's system translates an identifier from one affiliate system into a different, corresponding identifier for a separate target system, which is the core of the patented invention. The infringement theory may depend on whether Defendant's network is a single, unified system or if it functions as an intermediary between otherwise distinct systems.
- Scope Questions: The dispute may turn on the definition of an "affiliate pool." The patent describes this as a "loose aggregation of Webmasters" that may not be formally part of a single system (col. 7:31-33). The parties may dispute whether the affiliates participating in the Defendant's network meet this definition or if they are simply members of a conventional, single-entity affiliate program.
V. Key Claim Terms for Construction
The Term: "correlating"
Context and Importance: This term describes the central function of the invention: linking an affiliate's identity in a source system to an identity in a target system. The outcome of the infringement analysis will depend heavily on whether the function performed by the accused system falls within the scope of this term. Practitioners may focus on this term because it appears to be the primary point of novelty.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claim language itself is broad, simply requiring the "correlating" of one identifier to another. Plaintiff may argue this covers any form of mapping or association.
- Evidence for a Narrower Interpretation: The specification provides specific examples of how correlation can occur, such as through "a lookup table that cross-references the two codes" (col. 11:11-13) or by using a "hybrid string of characters" (col. 11:14-16). A defendant may argue that the term should be limited to these disclosed mechanisms or, more generally, to a process that bridges two separate and distinct affiliate systems.
The Term: "affiliate pool"
Context and Importance: The definition of this term determines the universe of webmasters to which the method applies. Infringement requires that the accused system receive referrals from such a "pool."
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent defines an affiliate pool as a "loose aggregation of Webmasters with a quantity of traffic, who may or may not already be utilizing a Merchant affiliate system or some master affiliate hub system" (’660 Patent, col. 7:31-35). This language suggests a broad, informal grouping that is not necessarily part of a single, managed program.
- Evidence for a Narrower Interpretation: Defendant may argue that the context of the invention, which solves problems arising from interactions between different affiliate systems, implies that an "affiliate pool" cannot simply be the group of webmasters formally registered within a single, conventional affiliate network like the one Defendant allegedly operates.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement by asserting that Defendant provides customers with "instructions and directions" that lead to infringing use of the claimed methods (Compl. ¶12). It also alleges contributory infringement, stating the accused software is a "material part of the invention," is "not a staple article," and has "no substantial non-infringing use" (Compl. ¶13).
- Willful Infringement: Willfulness is alleged based on the assertion that Defendant "knew, or should have known" that its activities infringed and that the infringement was "deliberate" (Compl. ¶12-15). The complaint does not plead specific facts showing pre-suit knowledge of the patent.
VII. Analyst’s Conclusion: Key Questions for the Case
- A central issue will be one of technical operation: does the accused Ndemand Affiliates network function as a conventional, self-contained affiliate program, or does it perform the specific, multi-system "correlating" function that translates an identifier from a source system into a distinct identifier for a target system, as required by the patent's claims? The complaint lacks the factual detail to resolve this.
- The case will also likely involve a significant claim construction dispute: can the term "correlating", as used in the patent, be interpreted broadly to cover tracking within a single affiliate network, or is its meaning limited by the specification's context to a function that creates interoperability between different, otherwise incompatible, affiliate systems?