DCT

3:23-cv-05917

BWB Co Ltd v. Alibaba Group Holdings Ltd

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Key Events
Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 5:23-cv-05917, N.D. Cal., 11/15/2023
  • Venue Allegations: Plaintiff alleges venue is proper because Defendants reside in the district, having registered as foreign businesses in California or being formed under its laws, and because they offer to sell and sell the accused products and services within the district.
  • Core Dispute: Plaintiff alleges that Defendants’ e-commerce platforms, including Alibaba.com and AliExpress.com, infringe four patents related to commercial transaction systems that facilitate pre-customs clearance for international logistics.
  • Technical Context: The technology addresses inefficiencies in cross-border e-commerce by enabling the pre-clearance of products through customs, including tariff calculation, before a consumer completes a purchase.
  • Key Procedural History: The four patents-in-suit are part of the same patent family and claim priority to a single Japanese patent application. The complaint does not mention any prior litigation, inter partes review proceedings, or licensing history related to these patents.

Case Timeline

Date Event
2016-05-23 Priority Date for '366, '644, '027, and '028 Patents
2019-10-29 U.S. Patent No. 10,460,366 Issues
2021-10-05 U.S. Patent No. 11,138,644 Issues
2023-10-03 U.S. Patent No. 11,776,027 Issues
2023-10-03 U.S. Patent No. 11,776,028 Issues
2023-11-15 Complaint Filed

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

U.S. Patent No. 10,460,366 - “Commercial Transaction System, Administrative Server, and Program,” issued October 29, 2019

The Invention Explained

  • Problem Addressed: In conventional international e-commerce, customs clearance procedures occur after a product is purchased. This can result in unforeseen delays, rejections by customs authorities, and uncertainty for the consumer regarding final costs and delivery times (’366 Patent, col. 2:34-44).
  • The Patented Solution: The patent describes a multi-server system designed to shift customs clearance to a pre-purchase step. An "administration server" receives product information, transmits it to a "customs clearance authentication server" for pre-clearance and tariff calculation, and then provides this "pre-customs clearance information" to an "EC server." The e-commerce site can then display the product's pre-cleared status and tariff-inclusive price to the user before a purchase is made, streamlining the transaction (’366 Patent, Abstract; col. 2:50-col. 3:6; Fig. 1).
  • Technical Importance: This system architecture aims to increase logistical efficiency and provide cost and delivery certainty in the growing market for cross-border e-commerce transactions (’366 Patent, col. 2:12-15).

Key Claims at a Glance

  • The complaint asserts independent claim 1 and dependent claims 2 and 8 (Compl. ¶21).
  • Independent Claim 1 recites a commerce system comprising:
    • A plurality of EC servers that connect to a user terminal in a first economic zone.
    • A customs clearance authentication server that connects to a customs terminal in a second economic zone and administers pre-customs clearance information.
    • An administration server connected to the other servers, which is configured to generate and transmit a registration request to the customs server, receive pre-customs clearance information (including tariff information) back, and notify the EC servers.
    • The EC servers are configured to transmit the pre-customs clearance information to the user terminal for display and accept a purchase instruction from the user.

U.S. Patent No. 11,138,644 - “Commercial Transaction System, Administrative Server, and Program,” issued October 5, 2021

The Invention Explained

  • Problem Addressed: As a continuation of the '366 Patent, the '644 Patent addresses the same technical problem of post-purchase delays and uncertainty in international e-commerce logistics due to customs processing (’644 Patent, col. 1:46-58).
  • The Patented Solution: The patent describes a similar system for pre-registering products for customs clearance before they are listed on an e-commerce site. The system architecture involves an EC server, an administration server, and a customs clearance authentication server working in concert to obtain and display pre-clearance status to a potential buyer, thereby making the customs process smoother (’644 Patent, col. 2:1-21; Fig. 1).
  • Technical Importance: The invention provides a method for front-loading the administrative burdens of customs, which can reduce friction and delays in global supply chains powered by e-commerce (’644 Patent, col. 1:29-31).

Key Claims at a Glance

  • The complaint asserts at least independent claim 1 (Compl. ¶28).
  • Independent Claim 1 recites a commerce system comprising:
    • An EC server, a customs clearance authentication server, and an administration server.
    • The administration server is configured to receive a registration request for a product, transmit a pre-customs clearance request, receive and store the resulting pre-customs information, and notify the EC server to post the product on its site.
    • The EC server is configured to transmit the product information to a user, accept a purchase instruction, and generate order information.
    • A customs terminal is configured to check for the existence of the pre-customs clearance information when the physical product arrives at customs.

Multi-Patent Capsule: U.S. Patent No. 11,776,027

  • Patent Identification: U.S. Patent No. 11,776,027, "Commercial Transaction System, Administration Server, and Program," issued October 3, 2023 (Compl. ¶18).
  • Technology Synopsis: This patent, also in the same family, discloses a product administration system for use in cross-border e-commerce. The system is designed to streamline logistics by obtaining pre-customs clearance information from a customs authority for a product before that product is offered for sale on an e-commerce platform, allowing tariff information to be presented to the buyer at the time of purchase (’027 Patent, Abstract; col. 2:38-51).
  • Asserted Claims: The complaint asserts at least independent claims 1 and 9 (Compl. ¶35).
  • Accused Features: The accused features are Defendants' computer systems, accessible via the Alibaba.com and AliExpress.com websites, that are used to facilitate cross-border e-commerce transactions (Compl. ¶¶6, 35).

Multi-Patent Capsule: U.S. Patent No. 11,776,028

  • Patent Identification: U.S. Patent No. 11,776,028, "Commercial Transaction System, Administration Server, and Program," issued October 3, 2023 (Compl. ¶19).
  • Technology Synopsis: This patent describes an administration server employed in a multi-server e-commerce system that manages cross-border transactions. The server facilitates a pre-registration process with customs authorities to determine a product's compliance and associated tariffs prior to the product being listed for sale, thereby mitigating post-purchase logistical complications (’028 Patent, Abstract; col. 2:38-51).
  • Asserted Claims: The complaint asserts at least independent claims 1 and 9 (Compl. ¶42).
  • Accused Features: The accused features are Defendants' computer systems that implement the functionality for facilitating international transactions via the Alibaba.com and AliExpress.com platforms (Compl. ¶¶6, 42).

III. The Accused Instrumentality

  • Product Identification: The accused instrumentalities are "Defendants' computer systems accessible through the Alibaba Website and/or the AliExpress Website for facilitating E-C transactions between at least two different economic zones" (Compl. ¶21), available at www.alibaba.com and www.aliexpress.com (Compl. ¶6).
  • Functionality and Market Context: The complaint alleges these platforms are computer systems and services that facilitate business-to-business and business-to-consumer commercial interactions, including systems for "pre-customers administration and clearance" (Compl. ¶2). The complaint asserts that the accused platforms infringe by making, using, and providing systems that practice the claimed inventions (Compl. ¶¶21, 28, 35, 42). Plaintiff alleges Defendants are companies with global reach and annual revenues in the billions of dollars (Compl. ¶15).

IV. Analysis of Infringement Allegations

The complaint repeatedly references claim chart exhibits (Exhibits B, D, F, and H) that allegedly compare the asserted claims to the functionality of the Accused Instrumentalities (Compl. ¶¶22, 29, 36, 43). However, these exhibits were not filed with the public version of the complaint.

In the absence of the claim charts, the infringement theory must be drawn from the complaint’s narrative allegations. The core theory is that Defendants' operation of the Alibaba.com and AliExpress.com platforms—which facilitate e-commerce between different countries—involves computer systems that necessarily practice the patented methods for pre-clearing goods through customs (Compl. ¶¶21, 28, 35, 42). The complaint does not provide specific technical details about how the accused platforms operate internally to support these allegations.

No probative visual evidence provided in complaint.

V. Key Claim Terms for Construction

  1. The Term: "pre-customs clearance information"

    • Context and Importance: This term is central to the invention, as it defines the data that is generated and exchanged between the system's servers. The scope of this term will be critical to determining infringement, as it defines what kind of information must be created and displayed to a user. Practitioners may focus on this term because the dispute could turn on whether the accused system generates and transmits data meeting this definition.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The specification suggests the term could be a simple status indicator, stating it "may include at least information indicating that pre-registration processing has been performed on customs clearance authentication server 400" (’366 Patent, col. 4:10-13).
      • Evidence for a Narrower Interpretation: The same passage also states the term may include a more detailed data set, such as "a result of customs clearance processing (compliant/non-compliant), tariff rates and a monetary amount to be applied to a product," and "information for calculating the tariff" (’366 Patent, col. 4:13-19). The patent’s exemplary user interface in Figure 6 also displays specific data fields like "PRICE INC. TARIFF" and a "PRE-CUSTOMS CLEARANCE" status of "OK," which may support an argument that more than a simple flag is required (’366 Patent, Fig. 6).

  2. The Term: "customs clearance authentication server"

    • Context and Importance: The identity and nature of this server are fundamental to the claimed system architecture. The infringement analysis may depend on whether this server must be an official government entity or if a privately-operated server performing an analogous function falls within the claim's scope.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The claims define this server by its function—it "administers pre-customs clearance information" and connects to the other servers in the system (’366 Patent, col. 2:52-54). This functional language does not explicitly limit the server to being a government-controlled entity.
      • Evidence for a Narrower Interpretation: The detailed description repeatedly associates this server with a "customs terminal 800," which is described as "a computer run by customs authorities" (’366 Patent, col. 5:46-47; Fig. 1). This linkage to official "customs authorities" could be used to argue that the claim requires interaction with, or direct control by, a government body, potentially narrowing its scope to exclude purely private systems.

VI. Other Allegations

  • Indirect Infringement: The complaint does not include counts for indirect infringement; it solely alleges direct infringement under 35 U.S.C. § 271(a) (Compl. ¶¶21, 28, 35, 42).
  • Willful Infringement: The complaint alleges for each asserted patent that Defendants' infringement was "knowing and intentional" (Compl. ¶¶24, 31, 38, 45). The prayer for relief seeks enhanced damages pursuant to 35 U.S.C. § 284 (Compl. p. 11). The complaint does not, however, plead specific facts supporting these allegations, such as pre-suit notice of the patents.

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

  • A key evidentiary question will be one of functional implementation: as the litigation proceeds, a central factual dispute will be whether the accused Alibaba and AliExpress platforms actually operate using the multi-server architecture claimed in the patents. The case may turn on evidence demonstrating that Defendants’ systems request, generate, and display specific "pre-customs clearance information" to users before a purchase is finalized, as opposed to using an alternative workflow for managing international shipping and duties.
  • A core issue will be one of definitional scope: the outcome of the case will likely hinge on claim construction, particularly whether the term "customs clearance authentication server," which the patent specification links to official "customs authorities," can be construed to cover a server operated by a private commercial entity like the Defendants.
  • A third critical question will relate to willfulness: given that the complaint makes conclusory allegations of knowing and intentional infringement, a key factual issue will be whether Plaintiff can produce evidence of pre-suit knowledge to support its claim for willful infringement and its corresponding request for enhanced damages.