DCT

1:18-cv-00943

AlmondNet Inc v. Oath Holdings Inc

Key Events

Complaint

I. Executive Summary and Procedural Information

Parties & Counsel:
- Plaintiff: AlmondNet, Inc. (Delaware)
- Defendant: Oath Holdings Inc. (Delaware)
- Plaintiff’s Counsel: Farnan LLP
Case Identification: 1:18-cv-00943, D. Del., 06/26/2018
Venue Allegations: Venue is alleged to be proper in the District of Delaware because Defendant Oath Holdings Inc. is a Delaware corporation.
Core Dispute: Plaintiff alleges that Defendant’s online advertising platforms, including its Demand Side Platform (DSP) inherited from Yahoo and BrightRoll, infringe a patent related to methods for directing targeted advertisements based on a user's prior website visits and a profitability analysis.
Technical Context: The technology concerns programmatic advertising, a multi-billion dollar market where automated systems buy and sell ad space in real-time to target specific user profiles based on collected behavioral data.
Key Procedural History: The complaint alleges a long history between the parties, including discussions between Plaintiff and Defendant’s predecessor (Yahoo) regarding Plaintiff's inventions in 2006, 2013, and 2015. Plaintiff previously sued Yahoo in 2016 in the Eastern District of New York over related parent patents. In 2017, Yahoo filed two Covered Business Method (CBM) review petitions against those parent patents, which the Patent Trial and Appeal Board declined to institute, finding they were not CBM patents. The complaint alleges that Defendant monitored the prosecution of the patent-in-suit and that it issued after the patent examiner considered arguments and prior art submitted by Defendant in the CBM proceedings.

Case Timeline

Date	Event
2006-06-16	'615 Patent Earliest Priority Date
2014-01-01	Yahoo announces Yahoo Ad Exchange (YAX) (approx. date)
2014-11-01	Yahoo acquires Brightroll (approx. date)
2015-03-01	Brightroll begins using Yahoo audience data (approx. date)
2015-09-01	Yahoo consolidates ad tech under BrightRoll brand (approx. date)
2016-01-01	AlmondNet sues Yahoo in E.D.N.Y. on parent patents (approx. date)
2016-07-20	Yahoo Holdings, Inc. is formed
2017-06-13	Yahoo operating business is transferred to Yahoo Holdings
2017-11-28	U.S. Patent 9,830,615 Issues
2018-02-01	Yahoo Holdings is renamed Oath Holdings Inc. (approx. date)
2018-06-26	Complaint Filed

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

U.S. Patent No. 9,830,615 - Electronic ad direction through a computer system controlling ad space on multiple media properties based on a viewer's previous website visit

The Invention Explained

Problem Addressed: The patent describes the process of "retargeting"—showing ads to a user based on their prior browsing history—as potentially inefficient. A key problem is that the cost of ad space on different websites varies widely, as does the value of a specific user profile to an advertiser. Simply trying to show an ad to every previously-seen user, without regard to the cost of the ad placement, could result in a financial loss for the advertising company. (’615 Patent, col. 5:56-6:24).
The Patented Solution: The invention proposes an automated system that introduces a profitability check before committing to a retargeting ad placement. When a user with a known profile is detected on a third-party website, the system calculates the expected profit by subtracting the cost of the ad space from the expected revenue the ad will generate. (’615 Patent, col. 6:25-34). Only if the calculated profit is positive does the system arrange for the user to be "tagged," enabling the targeted ad to be delivered. (’615 Patent, col. 6:39-44). This pre-calculation is designed to avoid unprofitable ad buys.
Technical Importance: The invention's introduction of an automated, profit-based selection filter into the ad-targeting workflow represents an effort to add a layer of economic efficiency to the high-speed, high-volume process of real-time behavioral advertising. (’615 Patent, col. 6:15-24).

Key Claims at a Glance

The complaint asserts all 17 claims of the ’615 Patent, with a focus on method claim 1 and system claim 9. (Compl. ¶¶ 27, 30).
Independent Claim 1 (Method): The core elements are:
- (a) At a first time, arranging for a third-party computer system to electronically tag a first computer of a visitor, without transferring profile information to that third party.
- (b) Recording profile information about the visitor collected during their visit to a first website.
- (c) Electronically transferring a "price cap" to the third-party system, representing what the behavioral targeting (BT) company is willing to pay.
- (d) At a later time, upon receiving a redirection from the third-party system, causing a selected ad to be served to the visitor based on their profile, in exchange for a price less than the price cap.
Independent Claim 9 (System): This claim recites a computer system structured and programmed to perform the method steps outlined in Claim 1. It may be noted that post-filing inter partes review proceedings resulted in the cancellation of claims 9-12. (IPR Certificate for 9,830,615, p. 2).
The complaint reserves the right to assert dependent claims. (Compl. ¶ 27).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are Defendant's demand-side platforms ("Oath's DSP"), which include technology from its BrightRoll and former Yahoo units, as well as the Yahoo Ad Exchange (YAX) and Yahoo Audience Ads products. (Compl. ¶¶ 10, 11, 29).

Functionality and Market Context

The complaint alleges that Oath's DSP is a comprehensive advertising system that allows advertisers to purchase targeted ads across the web. (Compl. ¶¶ 9, 11). The system is alleged to collect profile data on users, categorize this data into "segments," and use this information to purchase ad space on behalf of advertisers. (Compl. ¶ 31).
Functionally, the DSP is alleged to communicate with ad exchanges and supply-side platforms (SSPs) to place bids in "real time bidding" (RTB) auctions for ad inventory. (Compl. ¶ 37). It allegedly performs "cookie mapping or ID swapping" to identify and tag users across different web domains, a process central to the infringement allegations. (Compl. ¶ 35). This programmatic ad technology is described as a core part of Defendant's business. (Compl. ¶ 13).

No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

'615 Patent Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
(a) at a first time, arranging for a third party computer system controlling advertising space on a plurality of third party media properties to electronically tag a first computer of a first visitor visiting a first website, without transferring to the third party computer system any profile information related to the first visitor...	Oath's DSP arranges for entities like ad exchanges or SSPs to tag visitor computers, identifying the visitor as associated with Oath's DSP. This is allegedly done through "cookie mapping or ID swapping." The complaint states that in this process, the DSP "does not transfer to the entity any profile information."	¶¶35, 36	col. 13:10-26
(b) recording, in a profile of the first visitor maintained by the BT computer system, profile information collected during the first computer's visit to the first website;	Oath's DSP records profile data collected from a visitor's website visit, which may include user actions or demographics. This information is allegedly maintained by Oath in "visitor profiles" and categorized into "segments."	¶31	col. 13:27-30
(c) electronically transferring to the third party computer system a price cap that the BT company is willing to pay for allowing delivery of an advertisement within media property advertising space...	Oath's DSP automatically transmits a "real time bidding" bid to an ad exchange or SSP. This bid allegedly "contains a price cap identifying a maximum price that Oath is willing to pay for allowing delivery of a customer's advertisement."	¶37	col. 13:30-39
(d) at a second time, later than the first time, upon receiving a redirection of the first computer... causing a selected advertisement to be served to the first computer, which advertisement is based on the profile information... in exchange for a price less than the price cap.	When Oath's bid is accepted, its DSP receives a redirection of the visitor computer. The DSP then causes a targeted ad, based on the visitor's profile attributes, to be delivered. The use of an RTB bid with a price cap allegedly "causes the ad exchange or SSP to display the ad only if it can do so for a charge less than the price cap."	¶¶37, 38	col. 13:40-49

Identified Points of Contention:
- Scope Questions: Does participation in an industry-standard protocol like "cookie mapping or ID swapping" (Compl. ¶35) satisfy the claim requirement of "arranging for" a third party to tag a user? A court may need to determine if this element requires a specific, bespoke instruction from the DSP to the third party, or if engaging in a pre-existing, cooperative technical framework is sufficient.
- Technical Questions: What evidence demonstrates that Oath's RTB bid functions as the "price cap" contemplated by the patent? The complaint alleges the bid itself is the price cap (Compl. ¶37), but a court may question whether this bid is tied to the type of profitability calculation described in the patent's specification or is merely a standard auction bid. The defense may argue a mismatch if the bid is not derived from the Revenue - Costs formula.

V. Key Claim Terms for Construction

The Term: "arranging for"
- Context and Importance: This term in claim 1(a) is critical for infringement. The case may turn on whether Oath's alleged use of "cookie mapping" (Compl. ¶35) with third-party ad exchanges constitutes "arranging for" those exchanges to tag users. Practitioners may focus on this term because it addresses the degree of control and direct action required by the patentee's system over other independent entities in the advertising ecosystem.
- Intrinsic Evidence for Interpretation:
  - Evidence for a Broader Interpretation: The patent summary broadly states that "the BT company arranges for the visitor to be tagged with a tag readable by the selected media property." (’615 Patent, col. 6:39-41). This general language could support an interpretation where any action that predictably results in tagging by a third party, including engaging in a standard industry protocol, qualifies as "arranging for" it.
  - Evidence for a Narrower Interpretation: The detailed description gives an example where a server "redirect[s] the visitor's computer to the BT company #1 server, to have an ad served." (’615 Patent, col. 5:46-49). This suggests a more direct, command-like action, which could support a narrower construction requiring a specific instruction or redirection rather than passive participation in a cooperative system.
The Term: "price cap"
- Context and Importance: This term from claim 1(c) is the linchpin of the patent's purported novelty—the profitability analysis. The complaint equates an RTB "bid" with this "price cap" (Compl. ¶37). The definition will determine whether any maximum bid qualifies, or if it must be the result of a specific type of calculation.
- Intrinsic Evidence for Interpretation:
  - Evidence for a Broader Interpretation: The claims themselves do not explicitly define how the "price cap" must be calculated, only that it is a value the BT company "is willing to pay." (’615 Patent, col. 13:32-34). This may support a construction where any electronically transmitted maximum bid value meets the limitation.
  - Evidence for a Narrower Interpretation: The specification repeatedly links the selection of a media property to a profit calculation, such as P(mp) < Rev(profile) - C - Mar. (’615 Patent, col. 7:40-50). A party could argue that for a value to be a "price cap" in the context of the patent, it must be the output of such a formula, tying it directly to the invention's economic rationale and distinguishing it from an arbitrary bid.

VI. Other Allegations

Indirect Infringement: The complaint alternatively alleges induced infringement, asserting that to the extent Defendant's customers control the DSP's operation, Defendant encourages and facilitates that infringement. (Compl. ¶ 56). This is allegedly done through "customer instruction manuals and instruction sheets, and statements made by customer service and training representatives." (Compl. ¶ 55).
Willful Infringement: The complaint alleges willful infringement based on extensive pre-suit and post-suit knowledge. The pre-suit allegations are particularly detailed, citing (1) business discussions between Plaintiff and Defendant's predecessor (Yahoo) concerning the patented technology, (2) a prior lawsuit on parent patents, (3) Defendant's alleged monitoring of the '615 patent application during prosecution, and (4) Defendant's use of the application's file history in unsuccessful CBM petitions against related patents. (Compl. ¶¶ 42-51).

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

A central issue will be one of definitional scope and proof: can the abstract concept of a "price cap," described in the patent as the output of a profitability formula, be met by a standard "real time bidding" bid in a complex ad auction? The case may depend on whether AlmondNet can provide evidence that Oath's bids are functionally and intentionally the profit-based caps of the invention, not just ordinary auction prices.
A key legal question will be one of agency and action: does participating in a standardized, multi-party ad ecosystem, through protocols like "cookie mapping," satisfy the claim requirement that the accused system "arranges for" a third party to act? The court will need to decide if this requires a direct command or if engaging cooperative industry infrastructure is sufficient to establish infringement.
Given the extensive history alleged in the complaint, a critical question for a jury will be willfulness: do the allegations of prior litigation on parent patents and, most notably, Yahoo’s alleged monitoring of the '615 patent’s prosecution, demonstrate that any infringement was undertaken with the kind of deliberate or reckless disregard required for enhanced damages?