DCT
8:24-cv-00061
Phan v. Nayax Ltd
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Kenny Phan (California) and George Samaha (Lebanon)
- Defendant: Nayax, Ltd. (Israeli corporation, headquartered in Maryland) and Nayax, LLC (Maryland)
- Plaintiff’s Counsel: Law Offices of Mandana Jafarinejad, P.C.
- Case Identification: 8:24-cv-00061, C.D. Cal., 01/10/2024
- Venue Allegations: Venue is alleged to be proper because Defendants are deemed to "reside" in the district, or alternatively, because they have committed acts of infringement and maintain a regular and established place of business in the district.
- Core Dispute: Plaintiffs allege that Defendants’ cashless payment systems, self-checkout solutions, and electric vehicle charging stations infringe a patent related to facilitating secure access to a target device using a mobile device and time-limited, server-managed unique codes.
- Technical Context: The technology enables a user's smartphone to initiate a transaction with a networked device (e.g., a vending machine) by scanning a temporary code, which links the two through a central server for payment and account management.
- Key Procedural History: The complaint alleges that Plaintiffs provided notice of the patent-in-suit to Defendants through at least two means: patent markings on Plaintiffs' own products and website, and a cease-and-desist letter sent to Defendant Nayax, Ltd., which allegedly received no response. These allegations form the basis of the willfulness claim.
Case Timeline
| Date | Event |
|---|---|
| 2014-08-06 | U.S. Patent 9,911,273 Priority Date |
| 2018-03-06 | U.S. Patent 9,911,273 Issue Date |
| 2024-01-10 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 9,911,273, "Facilitating Access to a Target Device," issued March 6, 2018
The Invention Explained
- Problem Addressed: The patent describes the unwieldy nature of traditional transaction methods at establishments like family entertainment centers, particularly the use of physical tickets for redemption games or proprietary credit-card style cards that do not allow users to easily check their account balances when off-site (’273 Patent, col. 2:21-43).
- The Patented Solution: The invention proposes a system where a "target device" (e.g., an arcade game) displays a unique, machine-readable code, such as a QR code (’273 Patent, col. 5:29-35). A user captures this code with their personal computing device (e.g., a smartphone), which then communicates with a "management server" to authenticate and link the user's account to the target device (’273 Patent, Abstract). To enhance security and ensure the user is physically present, the unique code is periodically changed by the management server, making previous codes invalid (’273 Patent, col. 2:8-17). Once linked, the user can apply credits, and any rewards earned are credited directly to the user's central account (’273 Patent, col. 2:51-60).
- Technical Importance: This system digitizes the transaction process, replacing physical inputs like coins or dedicated cards with the user's own network-enabled device, thereby centralizing account management and enhancing user convenience (’273 Patent, col. 5:15-27).
Key Claims at a Glance
- The complaint outlines allegations for independent claims 1, 14, 15, and 16 (Compl. ¶¶ 13-16). Claims 1 and 15 describe a method and a non-transitory medium from the perspective of the target device. Claims 14 and 16 describe a method and a computing device from the perspective of the user device.
- Independent Claim 1 (Method at Target Device):
- Presenting from a target device a unique code to a user device in proximity.
- The user device presents this code to a management server, which links the two devices.
- The target device periodically receives new unique codes from the management server.
- The unique code is presented for a specified time, then discarded upon receiving an updated code.
- Receiving notification at the target device that it is linked to the user device.
- Displaying the user's account information on the target device's display.
- Receiving notification that the user has applied a credit.
- Initiating an operation associated with consuming the credit.
- Independent Claim 14 (Method at User Device):
- Receiving on a user device a unique code from a target device in proximity.
- Presenting the code and authentication information to a management server to link the devices.
- The server sends user identification and balance information to the user and target devices.
- Displaying account balance information on the user device's display.
- Receiving a request to apply a credit to the target device.
- Sending the request to the management server, which then subtracts the credit and notifies the target device to initiate an operation.
- The complaint reserves the right to assert additional claims (Compl. ¶25).
III. The Accused Instrumentality
Product Identification
The accused instrumentalities are a range of Defendants' products, including the Onyx Contactless Card Reader, VPOS Touch Credit Card Reader, Nova Market Self-checkout Solution, DOT Smart QR and Barcode Reader, and EV Meter-Electric Vehicle Charging Stations (Compl. ¶18).
Functionality and Market Context
The complaint alleges that these products, in conjunction with a management server and a user's device, implement a system for cashless payments and access control (Compl. ¶¶ 17-18). The alleged functionality involves the accused products presenting a unique code to a user's device, which is then used to communicate with a management server to link the devices and a user account (Compl. ¶¶ 18-20). This system is allegedly used in contexts such as retail self-checkout, unattended machine payments, and electric vehicle charging (Compl. ¶18). No probative visual evidence provided in complaint.
IV. Analysis of Infringement Allegations
The complaint references an Exhibit 2 containing claim charts, but this exhibit was not included with the filed complaint (Compl. ¶39). The analysis below is based on the narrative allegations.
’273 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| presenting from the target device a unique code to a user device that is located in proximity to the target device... | "Defendants’ products have a computer implemented method for facilitating access to a target device, comprising presenting from the target device a unique code to a user device that is located in proximity to the target device." | ¶18 | col. 19:56-59 |
| wherein the user device presents the unique code to a management server for the target device to gain access... wherein the management server links the user device and the target device... | "The user device presents the unique code to a management server for the target device to gain access to the target device." and "The management server links the user device and the target device..." | ¶¶19-20 | col. 19:59-20:2 |
| wherein the target device periodically receives unique codes from the management server, wherein the unique code is presented for only a specified time interval, wherein upon receiving an updated unique code... the target device discards the unique code and instead presents the updated unique code... | "The target device periodically receives unique codes from the management server, wherein the unique code is presented for only a specified time interval." and "Upon receiving an updated unique code from the management server, the target device discards the unique code and instead presents the updated unique code..." | ¶¶21-22 | col. 20:5-13 |
| receiving at the target device notification that the user device has been linked... and displaying the account information for the user account on a display of the target device; | "Receives at the target device notification that the user device has been linked to the target device and account information for the user account; displaying the account information for the user account on a display of the target device." | ¶23 | col. 17:3-7 |
| receiving at the target device notification from the management server that the user device has applied a credit to the target device; and initiating an operation on the target device that is associated with consuming the credit. | "Receiving at the target device notification from the management server that the user device has applied a credit to the target device; and initiates an operation on the target device that is associated with consuming the credit." | ¶24 | col. 17:8-11 |
Identified Points of Contention
- Scope Questions: The ’273 Patent’s background and many embodiments focus heavily on "redemption games" and "casino games" (’273 Patent, col. 2:21-28; col. 13:43-62). A potential point of dispute is whether the term "target device" can be construed to cover the accused instrumentalities, which include general-purpose payment terminals and EV charging stations, or if its meaning is limited by the specification to the amusement and gaming context.
- Technical Questions: The complaint's infringement allegations closely track the language of the claims without providing specific technical evidence of how the accused products operate. A key question for the court will be whether the accused system performs the specific function of having the target device "periodically receive unique codes from the management server" and "discard" old ones, as required by the claim, or if it uses a technically distinct method for generating and managing secure, temporary codes (’273 Patent, col. 20:5-13).
V. Key Claim Terms for Construction
The Term: "target device"
- Context and Importance: This term's construction is critical for determining the overall scope of the patent. Plaintiffs allege infringement by payment systems and EV chargers, while the patent's specification is heavily weighted with examples from the "redemption game" and casino industries.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The term itself is generic. The summary of the invention refers broadly to techniques for "facilitating access to a target device" (’273 Patent, col. 2:45-46). One embodiment notes the target device may be a "redemption game, casino game, or a range of other computing device types" (’273 Patent, col. 6:62-64).
- Evidence for a Narrower Interpretation: The "Background of the Invention" exclusively discusses the problems of "redemption games" (’273 Patent, col. 2:21-43). The detailed description provides extensive context under the heading "Redemption Games" (’273 Patent, col. 13:43), which a party could argue confines the invention to that field of use.
The Term: "periodically receives unique codes from the management server"
- Context and Importance: This phrase defines a specific architectural relationship for ensuring security. The infringement analysis will depend on whether the accused system uses this server-push model or an alternative, such as local code generation on the target device. Practitioners may focus on this term because it appears to define a specific technical implementation for the security feature.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: A party might argue this language does not require a specific frequency and should be read functionally to mean any system where the server controls the lifecycle of the codes presented by the target device.
- Evidence for a Narrower Interpretation: The claim language explicitly recites that the target device "receives" the codes "from" the server. This suggests a specific data flow where the server is the generator and sender of the codes, as opposed to merely validating codes generated elsewhere. The patent reinforces this by stating "a management server may be configured to send the target device a new barcode on a regular... time interval" (’273 Patent, col. 10:12-15).
VI. Other Allegations
- Indirect Infringement: The complaint makes a general allegation that Defendants induced and contributed to infringement by "supplying components and otherwise instructing, directing and/or requiring others" to use the accused products in an infringing manner (Compl. ¶46).
- Willful Infringement: The willfulness claim is based on allegations of both constructive and actual notice. Plaintiffs allege that Defendants had constructive notice via patent markings on Plaintiffs' products and website (Compl. ¶32). The complaint further alleges actual pre-suit knowledge based on a "cease-and-desist correspondence" sent to Defendant Nayax, Ltd., which allegedly went unanswered (Compl. ¶33). Continued alleged infringement after this notice is claimed to be willful, wanton, and deliberate (Compl. ¶¶ 44-45).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: Can the term "target device", which is described extensively in the context of redemption and casino games within the patent, be construed to cover the accused general-purpose payment terminals and electric vehicle charging stations?
- A key evidentiary question will be one of technical operation: Does the complaint's allegation that the accused system "periodically receives unique codes from the management server" accurately reflect its architecture, or does the accused system employ a different, non-infringing method for generating and rotating its security codes?
- A central question for willfulness will be one of intent: Assuming infringement is found, did Defendants' alleged failure to respond to a cease-and-desist letter and continued sales constitute the kind of "egregious" conduct necessary to justify enhanced damages under 35 U.S.C. § 284?