DCT
1:12-cv-01482
Codepro Innovations LLC v. Giant Food LLC
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: CodePro Innovations LLC (Texas)
- Defendant: Shell Oil Company (Delaware/Texas); The Kroger Company (Ohio); The Stop & Shop Supermarket Company LLC (Delaware); Giant Food LLC (Maryland); Save Mart Supermarkets (California); Winn-Dixie Stores Inc. (Florida)
- Plaintiff’s Counsel: Murr Yanochik, P.L.L.C.
- Case Identification: 1:12-cv-01482, S.D. Tex., 08/06/2012
- Venue Allegations: Venue is alleged to be proper in the Southern District of Texas because Defendant Shell Oil Company is a resident of the district and maintains its U.S. headquarters there. The other "Grocery Defendants" are alleged to have entered into agreements with Shell to participate in its rewards program, thereby conducting systematic business and infringing activities within the district.
- Core Dispute: Plaintiff alleges that Defendants' customer loyalty and fuel rewards programs infringe two patents related to point-of-sale (POS) discounting systems and methods for analyzing consumer response to promotions.
- Technical Context: The patents address systems and methods for applying discounts at the point of sale using consumer-provided codes and for using data from those transactions to analyze the effectiveness of different advertising campaigns.
- Key Procedural History: The complaint alleges that Plaintiff provided each Defendant with actual notice of infringement of both patents-in-suit via a letter sent by certified mail on May 21, 2012. This pre-suit notice is asserted as a basis for willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 1996-06-28 | Earliest Priority Date ('078 and '866 Patents) |
| 1998-02-10 | '866 Patent Issued |
| 1999-07-13 | '078 Patent Issued |
| 2012-05-21 | Plaintiff allegedly sent notice of infringement to Defendants |
| 2012-08-06 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 5,924,078 - "Consumer-Provided Promotional Code Actuatable Point-of-Sale Discounting System," Issued July 13, 1999
The Invention Explained
- Problem Addressed: The patent’s background section describes the drawbacks of traditional retail discounting, such as paper coupons, which can lengthen transaction times and fail to effectively target "price-conscious consumers" who are motivated by a specific promotion ('078 Patent, col. 1:44-55). Existing electronic systems were seen as awarding discounts indiscriminately to all shoppers, regardless of their awareness of a promotion ('078 Patent, col. 2:5-11).
- The Patented Solution: The invention proposes a computer-implemented system integrated with a point-of-sale (POS) device to manage discounts. The system stores promotional data, including a promotional code, an associated product code, a discount amount, and a valid promotion period ('078 Patent, col. 3:1-8). When a consumer enters a promotional code, a software module validates the code against the stored data and, if valid, transmits the discount information to the POS device to be applied to the transaction ('078 Patent, col. 3:1-20; Fig. 1).
- Technical Importance: This technology sought to automate and control the application of discounts, tying them directly to a consumer's active response to a specific promotion by requiring the input of a code ('078 Patent, col. 2:48-56).
Key Claims at a Glance
- The complaint does not specify which claims are asserted, reserving the right to identify them later. Independent claim 1 is a representative system claim.
- Independent Claim 1 requires, in essence:
- A device for accepting promotional codes entered as a series of characters.
- A memory subsystem for storing promotion information (promotional code, product code, discount amount).
- A software module that receives an entered code, compares it to the stored codes, and if a match is found, transfers the corresponding product code and discount amount to a POS transactional device.
U.S. Patent No. 5,717,866 - "Method for Comparative Analysis of Consumer Response to Product Promotions," Issued February 10, 1998
The Invention Explained
- Problem Addressed: The patent identifies a need for a reliable method to analyze the effectiveness of different advertising campaigns, noting that traditional consumer surveys are often expensive and speculative ('866 Patent, col. 3:5-15).
- The Patented Solution: The invention describes a method for comparing consumer responses to different promotions for the same product. This is achieved by distributing different promotional codes through different advertising media (e.g., one code in a newspaper, a different code in a magazine) ('866 Patent, col. 15:47-62). The system counts the number of times each code is redeemed. By comparing these counts, a retailer can quantitatively determine which advertising channel was more successful in motivating consumers to purchase the product ('866 Patent, Abstract; col. 4:4-36).
- Technical Importance: The method provides a data-driven tool for A/B testing of marketing campaigns, allowing retailers to measure the return on investment for different advertising strategies based on actual consumer behavior ('866 Patent, col. 16:11-25).
Key Claims at a Glance
- The complaint does not specify which claims are asserted. Independent claim 1 is a representative method claim.
- Independent Claim 1 requires, in essence:
- Storing at least two promotional codes related to separate promotions for a product.
- Determining the total number of times a first promotional code is used by consumers responding to a first promotion.
- Determining the total number of times a second promotional code is used by consumers responding to a second promotion.
- Comparing the total usage counts of the first and second promotional codes.
III. The Accused Instrumentality
- Product Identification: The accused instrumentalities are the customer loyalty and rewards programs offered by the Defendants, individually and in combination, including "Shell's Grocery Rewards program" and the various "loyalty card discount and fuel discount programs" of the Grocery Defendants (Compl. ¶¶18, 32). The complaint also accuses the underlying "hardware and software for implementing" these programs (Compl. ¶¶18, 32).
- Functionality and Market Context: The complaint alleges these programs operate in conjunction with retail POS systems to provide discounts on transactions, such as gasoline purchases, in response to a consumer providing "grocery store loyalty card account information or other discount codes" (Compl. ¶19). The programs are presented as a collaborative effort, with the Grocery Defendants having "combined through Shell's Grocery Rewards program to carry out infringing acts" (Compl. ¶14).
IV. Analysis of Infringement Allegations
No probative visual evidence provided in complaint.
'078 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a device which accepts promotional codes entered as a series of characters | The hardware and software used in conjunction with retail POS systems for "accepting loyalty card account information entered by consumers" (Compl. ¶18). This presumably includes keypads at checkout counters or fuel pumps. | ¶18 | col. 9:48-52 |
| a memory subsystem... storing information related to at least one promotion, said information comprised of a promotional code, a product code and a discount amount... | The computer systems and databases used by Defendants to store loyalty account information and associated discount rules for their fuel and grocery rewards programs (Compl. ¶18). | ¶18 | col. 5:25-41 |
| a software module... receiving said promotional codes... and... transmitting discount information for said promotions... to said point-of-sale transaction device... | The software that implements the rewards programs, which allegedly receives loyalty card information and provides corresponding discounts on POS transactions (Compl. ¶18, 19). | ¶¶18, 19 | col. 6:25-48 |
'866 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| storing, in a memory subsystem... a series of at least two promotional codes... related to separate promotions for a product | The complaint alleges that Defendants use systems for "comparative analysis of consumer response to product promotions," which would necessitate storing data for at least two different promotions (Compl. ¶33). | ¶33 | col. 15:47-62 |
| determining a total number of times a first one of said series of promotional codes is transmitted... [and] a total number of times a second one... is transmitted | The accused systems allegedly track consumer responses to promotions, which would involve counting the usage of different loyalty cards or promotional identifiers (Compl. ¶33). | ¶33 | col. 4:24-31 |
| comparing said total number of times said first one... is transmitted... to said total number of times said second one... is transmitted... | The complaint directly alleges that the accused instrumentalities are used for "comparative analysis of consumer response to product promotions," which is the function of comparing usage counts (Compl. ¶33). | ¶33 | col. 4:31-36 |
- Identified Points of Contention:
- Scope Questions: A central dispute may arise over whether a "loyalty card account" number or identifier constitutes a "promotional code" as taught by the patents. The patents appear to describe codes distributed publicly in advertisements to attract customers, which raises the question of whether a persistent customer identifier used in a loyalty program falls within the same scope.
- Technical Questions: For the ’866 Patent, a key question is what evidence the complaint provides that Defendants' systems are actually used to perform a "comparative analysis" by tracking and comparing different promotions for the same product to assess advertising effectiveness. The complaint alleges this function but does not detail how the accused systems perform this specific type of comparison, as opposed to general sales and discount tracking.
V. Key Claim Terms for Construction
- The Term: "promotional code"
- Context and Importance: The construction of this term, which appears in the asserted claims of both patents, will be critical. The infringement case may depend on whether a "loyalty card account information" (Compl. ¶19) is found to be a "promotional code." Practitioners may focus on this term because the patents' context suggests a specific meaning tied to advertising, which may not align with the function of a modern loyalty card identifier.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent specifications describe the code broadly as a "series of characters" ('078 Patent, col.19:13-14) and provide an example of a long, alphanumeric phrase ("XYZ IS A1 WITH ME"), suggesting flexibility beyond simple numerical codes ('078 Patent, col. 10:5-8). This could support an argument that any unique identifier that triggers a discount is a "promotional code."
- Evidence for a Narrower Interpretation: The background and embodiments of both patents heavily frame "promotional codes" in the context of specific advertising campaigns. The '866 patent explicitly discusses using different codes in a "daily newspaper" versus a "weekly entertainment magazine" to test advertising media ('866 Patent, col. 15:47-62). This context suggests a "promotional code" is a disposable identifier linked to a specific marketing effort to motivate a purchase, rather than a persistent identifier for an existing loyalty program member.
VI. Other Allegations
- Indirect Infringement: The complaint alleges that Shell and the Grocery Defendants infringe "in combination" (Compl. ¶¶19-24). It asserts that Shell causes the Grocery Defendants to use the infringing systems, and that the Grocery Defendants cause Shell to use them, as part of the "Grocery Rewards program" (Compl. ¶19). These allegations suggest theories of joint and induced infringement based on the collaborative nature of the accused rewards programs.
- Willful Infringement: Willfulness is alleged for both patents based on Defendants' alleged continued infringement after receiving actual notice via a certified letter dated May 21, 2012 (Compl. ¶¶25-28, 39-42).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: can the term "promotional code", which the patents describe in the context of codes distributed through mass-media advertising to attract customers, be construed to cover the persistent "loyalty card account information" used in Defendants' rewards programs? The resolution of this question may determine whether the accused systems fall within the claims.
- A key evidentiary question for the '866 patent will be one of functional operation: what proof exists that the accused programs perform the claimed "comparative analysis" of consumer response to separate promotions for the same product? The case may turn on whether Plaintiff can demonstrate that Defendants' systems are used for this specific marketing-analysis function, as opposed to merely applying discounts and tracking overall sales within their loyalty programs.