DCT

1:17-cv-01857

Scvngr v. Dailygobble

Log In

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:17-cv-01857, D.R.I., 03/18/2016
  • Venue Allegations: Venue is asserted in the District of Rhode Island based on allegations that the accused infringing mobile application is marketed to and used by consumers at seven restaurant locations within the state, and that the restaurant chain, CilantroMex, is a Rhode Island LLC.
  • Core Dispute: Plaintiff alleges that Defendant’s mobile payment application and related point-of-sale software, developed for the CilantroMex restaurant chain, infringe a patent related to dynamically identifying and processing transactional data streams.
  • Technical Context: The technology addresses the need for point-of-sale (POS) systems to efficiently distinguish mobile payment data, such as that from a QR code, from other data inputs like product barcode scans.
  • Key Procedural History: The complaint alleges a significant history between the parties, including a prior judgment in the Eastern District of Texas where Defendant was found to have infringed a related Plaintiff patent (U.S. Patent No. 8,639,619). Plaintiff alleges that Defendant's conduct in this case constitutes continued infringement and copying of its technology, forming a basis for its willfulness allegations.

Case Timeline

Date Event
2013-10-17 LevelUp enters contractual agreement with CilantroMex.
2014-02-04 '260 Patent Priority Date (Application Filing).
2014-12-30 '260 Patent Issue Date.
2015-01-01 Approx. date Relevant allegedly begins copying LevelUp technology.
2016-01-14 Judgment entered against Relevant in prior Texas litigation.
2016-02-01 Approx. date Relevant launches accused CilantroMex mobile application.
2016-03-18 Complaint Filing Date.

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

U.S. Patent No. 8,924,260 - Dynamic Ingestion and Processing of Transactional Data at the Point of Sale

  • Patent Identification: U.S. Patent No. 8,924,260, "Dynamic Ingestion and Processing of Transactional Data at the Point of Sale," issued December 30, 2014. (Compl. ¶18; ’260 Patent, front page).

The Invention Explained

  • Problem Addressed: Point-of-sale (POS) terminals receive data from multiple sources, such as barcode scanners and credit card readers, sometimes through a single input device. This creates a "burden on the POS system to recognize and differentiate among data streams," which can slow down transaction processing or require manual intervention by a cashier. (’260 Patent, col. 1:56-64).
  • The Patented Solution: The invention proposes embedding unique data sequences, called "sentinels," to bracket the beginning and end of a specific type of data, such as a payment token from a mobile device. (’260 Patent, Abstract). When a POS terminal receives a data stream, its processor can recognize the first sentinel and, in response, handle the subsequent "transaction data" according to a specific, pre-defined protocol until it recognizes the second sentinel, which terminates the special handling. (’260 Patent, col. 2:60-col. 3:6). This automates the process of isolating and correctly processing different data types received through a common input port. (’260 Patent, Fig. 3).
  • Technical Importance: This method allows a single scanner to be used for heterogeneous tasks (e.g., scanning product barcodes and mobile payment QR codes) without confusion, improving the efficiency and automation of checkout processes. (’260 Patent, col. 1:59-64).

Key Claims at a Glance

  • The complaint asserts independent claims 1 (a method) and 11 (a terminal), along with dependent claims 2, and 12. (Compl. ¶19). It also reserves the right to assert claims 3-8 and/or 13-14. (Compl. ¶28).
  • Independent Claim 1 (Method) requires:
    • Receiving a stream of data from a credential reader at a POS terminal.
    • Recognizing a first data sequence.
    • Handling subsequent transaction data according to a stored data-processing protocol.
    • Recognizing a second data sequence.
    • Terminating the data handling in response to the second data sequence.
    • Completing a transaction based on the transaction data.
  • Independent Claim 11 (Terminal) requires:
    • A communications interface, computer memory, and an input port.
    • A processor configured to perform the core steps of the method: recognizing the first and second data sequences, executing a protocol to handle the bracketed data, and completing a transaction.

III. The Accused Instrumentality

Product Identification

  • The "accused Relevant system," which includes the "Relevant mobile application provided for CilantroMex" and associated "point-of-sale terminal software." (Compl. ¶¶19-20).

Functionality and Market Context

  • The accused system allows customers to make payments and manage rewards at CilantroMex restaurant locations. (Compl. ¶22). This is accomplished by the customer presenting a QR code on a mobile device, which is scanned at the POS. (Compl. ¶22). The complaint alleges this system directly competes with Plaintiff's offerings and was developed for a former customer of the Plaintiff. (Compl. ¶¶2, 14).

IV. Analysis of Infringement Allegations

No probative visual evidence provided in complaint.

  • Claim Chart Summary:

    ’260 Patent Infringement Allegations

    Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
    receiving, by the POS terminal, a stream of data from a credential reader The system initiates payment via "a single scan of a QR code displayed on the customer's mobile device screen" by a credential reader at the POS terminal. ¶22 col. 4:55-58
    recognizing, by the POS terminal, a first data sequence in the received data stream The data stream from the QR code begins with the data sequence "REL," which is recognized by the Relevant software on the POS terminal. ¶¶24, 27 col. 2:62-63
    in response to the recognized first data sequence, handling, by the POS terminal, transaction data...according to a data-processing protocol... Upon recognizing the "REL" sequence, the POS software "handles the transaction data according to a stored processing protocol and transmits the data to a Relevant server." ¶27 col. 2:63-66
    recognizing, by the POS terminal, a second data sequence in the received data stream The data stream from the QR code ends with the identical data sequence "REL." ¶24 col. 3:1-3
    in response to the recognized second data sequence, terminating, by the POS terminal, data handling according to the data-processing protocol The complaint alleges that the transaction data processed is the data between the first and second data sequences, implying that the protocol for special handling terminates upon recognition of the second sentinel. ¶26 col. 3:1-6
    completing, by the POS terminal, a transaction based on the transaction data The POS software transmits the data to a server "in order to complete payment for the point of sale transaction." ¶27 col. 3:4-6

  • Identified Points of Contention:

    • Scope Questions: The complaint alleges the accused POS software uses a "stored processing protocol." (Compl. ¶27). A potential point of dispute may be whether the accused software's alleged function—recognizing a sentinel and transmitting the bracketed data to a server—is sufficient to meet the "data-processing protocol" limitation as understood in the context of the patent.
    • Technical Questions: A key evidentiary question will be what the "Relevant software in the point of sale terminal" (Compl. ¶27) technically does upon recognizing the "REL" sequence. The analysis will depend on evidence demonstrating that the software's response constitutes "handling...transaction data according to a data-processing protocol" rather than a more generic data-forwarding function that does not rely on the sentinel for its logic.

V. Key Claim Terms for Construction

  • The Term: "data sequence"

    • Context and Importance: The infringement theory hinges on the accused system's use of "REL" as start and end markers, which Plaintiff alleges are infringing "data sequences." The construction of this term is fundamental to whether the "sentinel" concept of the patent reads on the accused system's implementation.
    • Intrinsic Evidence for a Broader Interpretation: The specification defines sentinels broadly as "any sequence of bits or characters that reliably differentiate from commonly processed data." (’260 Patent, col. 2:19-22). This supports an interpretation that covers any unique identifier, including "REL."
    • Intrinsic Evidence for a Narrower Interpretation: The patent provides specific examples such as the ASCII characters "LU or .:" (’260 Patent, col. 2:23-24). A party seeking a narrower construction might argue that the term implies certain characteristics of the examples provided, though the specification's broader definition may make such an argument challenging.

  • The Term: "data-processing protocol"

    • Context and Importance: Infringement requires that in response to the first data sequence, the POS terminal handles transaction data according to a "data-processing protocol." Practitioners may focus on this term because its definition will determine whether the accused software's alleged actions meet this claim limitation.
    • Intrinsic Evidence for a Broader Interpretation: The patent describes several different methods for handling the data—such as caching, interrupting a current task, or multithreading—as embodiments of a "data-processing protocol." (’260 Patent, col. 3:7-31). This suggests the term encompasses a variety of pre-defined procedures for managing the sentinel-identified data.
    • Intrinsic Evidence for a Narrower Interpretation: A party could argue that the term requires a more complex set of rules than what may be present in the accused system. For example, if the accused system simply forwards all data from the scanner but a back-end server parses it, the defense might argue the POS terminal itself is not executing a "protocol" as contemplated by the patent's more detailed examples of caching and task interruption.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges inducement and contributory infringement, stating that Defendant "distributes the CilantroMex application through the Apple iTunes and Google Play online stores." (Compl. ¶¶19, 21). This allegation suggests Defendant provides the means for infringement and encourages merchants and consumers to use the system in an infringing manner.
  • Willful Infringement: The complaint alleges that Defendant’s infringement has been "knowing and willful." (Compl. ¶16). This allegation is supported by extensive factual assertions of pre-suit knowledge, including a prior infringement judgment against Defendant on a related patent, allegations of direct copying of Plaintiff's technology, and Defendant's alleged solicitation of Plaintiff's former customer. (Compl. ¶¶2, 12, 14, 15).

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

  • A key evidentiary question will be one of technical operation: what factual evidence will demonstrate that the accused point-of-sale software executes a "data-processing protocol" in response to recognizing the "REL" sentinel, as opposed to performing a more generic data-forwarding function where the sentinel is interpreted only by a back-end server?
  • A central legal question will concern claim scope: can the term "data-processing protocol," as used in the patent, be construed to cover the alleged functionality of recognizing a data marker and transmitting the bracketed data to a server, or does the claim require more complex, local processing logic like the caching and task-interruption examples described in the specification?
  • Given the history alleged between the parties, a critical issue for damages will be willfulness: do the allegations of a prior infringement judgment, direct copying, and solicitation of a former customer provide a sufficient basis for a finding of willful infringement, potentially leading to enhanced damages?