IBM Corp v. Expedia Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: International Business Machines Corporation (New York)
  • Defendant: Expedia, Inc., et al. (Delaware, Washington, Texas, Nevada)
  • Plaintiff’s Counsel: Desmarais LLP
• Case Identification: 1:17-cv-01875, D. Del., 12/29/2017
• Venue Allegations: Plaintiff alleges venue is proper in Delaware because several defendant entities are incorporated there. For defendants not incorporated in Delaware, such as Expedia, Inc. (a Washington corporation), Plaintiff alleges venue is proper because they have committed acts of infringement in the district and maintain a "regular and established place of business" through a subsidiary-owned physical retail location, the "Expedia CruiseShipCenter" in Bear, Delaware. The complaint includes a photograph of the storefront to support this allegation.
• Core Dispute: Plaintiff alleges that Defendants’ online travel reservation websites and mobile applications infringe four patents related to foundational technologies for presenting interactive online services, managing stateful conversations over stateless protocols, and enabling federated single-sign-on.
• Technical Context: The asserted patents address core technical challenges from the pre-World Wide Web and early-Internet eras, including server resource limitations and the stateless nature of communication protocols, which were critical hurdles for developing large-scale commercial online services.
• Key Procedural History: The complaint alleges a long history of pre-suit contact, stating that Plaintiff sent letters to various Defendants informing them of infringement and attempted to negotiate a license agreement. These alleged notifications date back to October 2011 for Orbitz and July 2014 for Expedia, which may be relevant to the allegations of willful infringement.

Case Timeline

Date	Event
1988-07-15	Priority Date for ’967 and ’849 Patents
1996-06-07	Priority Date for ’601 Patent
1998-08-18	’967 Patent Issued
1999-10-05	’601 Patent Issued
2005-04-01	Priority Date for ’346 Patent
2006-07-04	’849 Patent Issued
2009-12-08	’346 Patent Issued
2011-10-01	IBM allegedly sent letter to Orbitz re: infringement of ’967 and ’849 Patents (approx. date)
2014-07-23	IBM allegedly sent letter to Expedia-DE, Expedia-WA, and Hotels.com re: infringement
2014-09-15	IBM allegedly informed Orbitz of infringement of ’346 and ’601 Patents
2016-01-19	IBM allegedly sent letter to Expedia and Homeaway re: infringement of ’849, ’601, and ’346 patents
2017-12-29	Complaint Filing Date

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

U.S. Patent No. 5,796,967 - “Method for Presenting Applications in an Interactive Service”

The Invention Explained

• Problem Addressed: In the late 1980s, interactive computer networks traditionally relied on a central host computer to handle all user processing requests. This created processing bottlenecks, slow response times, and required increasingly complex and expensive host computers as the user base grew. (Compl. ¶46; ’967 Patent, col. 1:40–56).
• The Patented Solution: The invention describes a method for presenting interactive applications developed for the PRODIGY online service that reduces reliance on the host server. (Compl. ¶¶46-47). The method structures applications as reusable "objects" of data and program code that can be processed by the user's local computer. (Compl. ¶47; ’967 Patent, col. 6:17–24). The system generates a screen display with a plurality of concurrent "partitions"—for example, a main partition for the application content and a second partition for a command bar—which are constructed from these objects. (’967 Patent, Abstract; Fig. 3a).
• Technical Importance: This object-oriented, client-side processing approach enabled the deployment of one of the first large-scale graphical user interfaces for online services by making the system more efficient and responsive. (Compl. ¶48).

Key Claims at a Glance

• The complaint asserts at least independent claim 1. (Compl. ¶66).
• Claim 1 of the ’967 Patent requires, in essential part:
  • A method for presenting interactive applications on a computer network with multiple user reception systems.
  • Generating a screen display at a reception system for a requested application.
  • The screen display is generated by the reception system from "data objects having a prescribed data structure," with some objects potentially stored at the reception system.
  • The screen display includes a plurality of partitions constructed from the objects, which are retrieved from local storage or the network.
  • Generating at least a first partition for presenting applications.
  • Generating concurrently at least a second partition for presenting a plurality of command functions, including a group selectable to permit movement between applications.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 7,072,849 - “Method for Presenting Advertising in an Interactive Service”

The Invention Explained

• Problem Addressed: The patent, which shares a specification with the ’967 Patent, addresses the same host-centric bottleneck problem in early online services. (’849 Patent, col. 1:41–57). The specific focus is on how to integrate advertising without further degrading system performance or interrupting the user experience. (’849 Patent, col. 2:20–42).
• The Patented Solution: The invention proposes a method to present advertising concurrently with an interactive application by structuring the advertising as "objects" that can be selectively stored, or cached, at the user's local system. (’849 Patent, Abstract). This allows advertising to be pre-fetched and displayed in a dedicated portion of the screen without interfering with the data stream for the primary application, thereby preserving response time. (’849 Patent, col. 10:4–10).
• Technical Importance: The technology provided a framework for delivering individualized and pre-fetched advertising in early graphical online services in a manner that was efficient and less disruptive to the user. (Compl. ¶¶47-48).

Key Claims at a Glance

• The complaint asserts at least independent claim 1. (Compl. ¶78).
• Claim 1 of the ’849 Patent requires, in essential part:
  • A method for presenting advertising obtained from a computer network.
  • Structuring applications for presentation at a first portion of a screen display.
  • Structuring advertising in a manner compatible with the applications for concurrent presentation at a second portion of the screen.
  • This structuring includes configuring the advertising as "objects" that include advertising data.
  • Selectively storing the advertising objects at a store (e.g., a cache) established at the reception system.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 5,961,601 - “Preserving State Information in a Continuing Conversation Between a Client and Server Networked via a Stateless Protocol”

Technology Synopsis

The complaint states that the patent addresses the problem that internet protocols like HTTP are "stateless," which makes it difficult to maintain user session information (e.g., items in a shopping cart) across multiple page requests. (Compl. ¶49). The patented solution involves recursively embedding state information into communications, such as by modifying hypertext links in web pages to carry the session data from one page to the next. (Compl. ¶50).

Asserted Claims

At least independent claim 51. (Compl. ¶91).

Accused Features

The accused websites and applications allegedly preserve state information by embedding identification variables into hyperlinks and other URL references generated in response to a user's service request. (Compl. ¶91).

U.S. Patent No. 7,631,346 - “Method and System for a Runtime User Account Creation Operation Within a Single-Sign-On Process in a Federated Computing Environment”

Technology Synopsis

The complaint explains that at the time of the invention, single-sign-on (SSO) technology required a user to already have an established account with a service provider to log in. (Compl. ¶51). The patented method allows a new user to create an account with a service provider at runtime as part of an SSO operation initiated through a federated partner (e.g., using a social media login to simultaneously create an account and sign in to a third-party website). (Compl. ¶52).

Asserted Claims

At least independent claim 5. (Compl. ¶103).

Accused Features

Defendants' services are accused of using this method by allowing users to "Sign in" via a third-party system like Facebook, which triggers the creation of a user account (e.g., an Expedia account) if one does not already exist, as part of the SSO process. (Compl. ¶¶103–104).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are the websites and mobile applications operated by Defendants, including Expedia.com, Homeaway.com, Hotels.com, Hotwire.com, Orbitz.com, and Travelocity.com. (Compl. ¶54).

Functionality and Market Context

The accused products provide online travel and reservation services to consumers. (Compl. ¶4). The complaint alleges that parent company Expedia-DE operates several "technology platforms" that support these various consumer-facing brands. (Compl. ¶22). The specific accused functionalities align with the asserted patents: the presentation of interactive applications and advertisements using partitioned displays constructed from locally stored objects (’967 and ’849 Patents); the preservation of user session data by embedding state information in hyperlinks (’601 Patent); and the use of federated single-sign-on systems that create user accounts at runtime (’346 Patent). (Compl. ¶¶66, 78, 91, 103).

IV. Analysis of Infringement Allegations

’967 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
generating a screen display at a respective reception system for a requested application...the screen display being generated by the respective reception system from data objects having a prescribed data structure...	The screen display (e.g., for Hotels, Cars, Flights) is generated by the user's computer or mobile device from data objects such as HTTP Responses containing image files.	¶66(b)	col. 11:40-45
at least some of which objects may be stored at the respective reception system...	At least some of the objects (e.g., image files) may be stored on the customer's computer or mobile device (e.g., in a browser cache).	¶66(b)	col. 6:26-32
the screen display including a plurality of partitions...the partitions being constructed from objects...	The webpage display includes partitions such as the main content area and a menu bar, which are constructed from the retrieved data objects.	¶66(b)	col. 3:5-13
generating at least a first partition for presenting applications...	A first partition, such as the main webpage content for Hotels, Cars, or Flights, is generated to present the applications.	¶66(c)	col. 12:40-42
generating concurrently with the first partition at least a second partition for presenting a plurality of command functions...including at least a first group which are selectable to permit movement between applications	A second partition, such as a menu bar, is generated concurrently to present command functions that allow users to move between applications like Hotels, Cars, and Flights.	¶66(d)	col. 12:43-51

Identified Points of Contention

• Scope Questions: A central question may be whether the term "partition," as described in the context of the PRODIGY service's fixed screen layout (see ’967 Patent, Fig. 3a), reads on the dynamic and fluid layout elements of a modern webpage, such as HTML <div> tags or frames. Another question is whether the "command functions" in a modern navigation menu perform the same function as the fixed "command bar" disclosed in the patent.
• Technical Questions: A key technical dispute will likely focus on whether the collection of files used to render a modern webpage (e.g., HTML documents, CSS stylesheets, JavaScript files, image files) constitutes "data objects having a prescribed data structure" as that term is used and defined in the patent's specification. The patent describes a specific object architecture with a uniform header and segment structure (’967 Patent, col. 11:60-67; Figs. 4a-4c), which may differ from the structure of standard web file formats.

’849 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
structuring applications...so that they may be presented...at a first portion of one or more screens of display...	Applications such as Hotels, Cars, and Flights are structured for presentation in a first portion of the webpage.	¶78(b)	col. 9:43-46
structuring advertising in a manner compatible to that of the applications so that it may be presented...at a second portion...concurrently with applications...	Advertising for hotels is structured for concurrent presentation in a second portion of the webpage.	¶78(c)	col. 10:4-10
wherein structuring the advertising includes configuring the advertising as objects that include advertising data and;	The advertising is configured as objects, such as HTTP Responses containing image files, that include advertising data.	¶78(c)	col. 13:62-65
selectively storing advertising objects at a store established at the reception system.	The advertising objects are selectively stored by setting a cache control parameter at a store, such as the browser cache, on the user's system.	¶78(d)	col. 6:55-63

Identified Points of Contention

• Scope Questions: The analysis may turn on whether a modern browser cache qualifies as "a store established at the reception system" for the purpose of "selectively storing" the claimed "advertising objects."
• Technical Questions: Does the accused method of "setting a cache control parameter," which typically refers to standard HTTP headers, constitute the "selectively storing" mechanism contemplated by the patent? The patent describes a specific "storage candidacy" system encoded within the object header to control local storage (’849 Patent, col. 28:45-51), which raises the question of whether browser caching controlled by HTTP headers is a fundamentally different and non-infringing technology.

V. Key Claim Terms for Construction

Patent: ’967 Patent

The Term: "data objects having a prescribed data structure"

Context and Importance

This term is fundamental to the infringement theory. The definition will determine whether modern web assets (e.g., JPEGs, CSS files, JavaScript files) fall within the scope of the claims, which were written to describe the specific, proprietary object architecture of the PRODIGY online service. Practitioners may focus on this term because the patent’s viability against modern technology hinges on its interpretation.

Intrinsic Evidence for Interpretation

• Evidence for a Broader Interpretation: The specification describes objects more generally as a "means of packaging and distributing partitioned applications" and as "uniform, self-defining" units. (’967 Patent, col. 5:51-53, col. 6:17-18). This language may support a functional definition that is not strictly limited to the specific embodiments.
• Evidence for a Narrower Interpretation: The specification provides a highly detailed definition of the "prescribed data structure," including a fixed 18-byte header with specific fields and a series of self-defining segments. (’967 Patent, col. 11:60-67; Fig. 4b). This suggests the term may be limited to the particular architecture disclosed, not any arbitrary file format used on the web.

Patent: ’849 Patent

The Term: "selectively storing"

Context and Importance

The infringement allegation hinges on mapping this term to the operation of a modern web browser's cache, which is controlled by HTTP headers. The patent, however, was developed in a pre-HTTP environment. The construction of this term will determine whether standard browser caching performs the claimed "selective storing."

Intrinsic Evidence for Interpretation

• Evidence for a Broader Interpretation: The specification states that the purpose of selective storage is to tailor the contents of the local system's memory to "applications favored by the user" and that it enables "frequently used objects to be stored locally." (’849 Patent, col. 6:55-58). This functional description aligns with the general purpose of a cache.
• Evidence for a Narrower Interpretation: The detailed description discloses a specific mechanism for implementing this function: a "storage control parameter" encoded as a "storage candidacy" value within the object's header determines whether an object is "stageable, cacheable or trashable." (’849 Patent, col. 27:40-44). This suggests "selectively storing" may require this specific encoding method, rather than the different mechanism of HTTP cache-control headers.

VI. Other Allegations

Indirect Infringement

The complaint makes conclusory allegations of induced and contributory infringement. (Compl. ¶¶64, 76, 89, 101). The primary factual basis alleged is that the parent entity, Expedia-DE, "directs and controls" the "technology platforms" used by its various subsidiary brands. (Compl. ¶¶65, 77, 90, 102). The complaint does not plead specific facts concerning the intent to induce infringement by third parties, such as end users.

Willful Infringement

The complaint alleges that Defendants' infringement was "deliberate and willful." (Compl. ¶¶73, 85, 98, 110). This allegation is supported by specific factual claims of pre-suit knowledge, including letters sent to Defendants informing them of the patents-in-suit and their alleged infringement, with the earliest alleged notice to an acquired entity (Orbitz) in October 2011 and to Expedia directly in July 2014. (Compl. ¶¶55-57).

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

• A core issue will be one of technological translation: can the claim terms of patents written for the specific, proprietary, object-oriented architecture of the 1980s-era PRODIGY online service be construed to read on the standardized, open-protocol technologies of the modern World Wide Web? The case may turn on whether concepts like "partitions" and "objects with a prescribed data structure" are broad enough to cover HTML elements and standard web file formats.
• A critical threshold question will be one of venue: can a parent corporation (Expedia-WA) be deemed to have a "regular and established place of business" in a district based on the physical retail storefront of a wholly-owned subsidiary (Expedia CSC), particularly when the core accused instrumentalities are websites and mobile applications? (Compl. ¶¶33-37).
• Should the case proceed past initial motions, a key evidentiary question will concern willfulness and damages: given the extensive history of alleged pre-suit notice and licensing negotiations detailed in the complaint, the dispute will likely involve significant focus on whether Defendants' conduct was objectively reckless, potentially leading to enhanced damages.