DCT

1:19-cv-00161

Blue Spike LLC v. Soundcloud Ltd

Log In

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:19-cv-00161, D. Del., 01/28/2019
  • Venue Allegations: Plaintiff alleges venue is proper because Defendant SoundCloud Ltd. is not a resident of the United States and may therefore be sued in any judicial district.
  • Core Dispute: Plaintiff alleges that Defendant’s music streaming service and application server infringe three patents related to securing digital content and conducting trusted online transactions.
  • Technical Context: The patents-in-suit concern technologies for digital rights management, including scrambling digital media to control access and using steganographic ciphers to authenticate and secure online application delivery.
  • Key Procedural History: The complaint alleges that SoundCloud had actual knowledge of the patents-in-suit since at least June 15, 2018, the filing date of a prior, related complaint (1:18-cv-01402, D. Del.). This prior notice forms the basis for Plaintiff's allegations of induced and willful infringement.

Case Timeline

Date Event
1999-12-07 Priority Date for ’506, ’116, and ’011 Patents
2007-01-02 Issue Date for U.S. Patent No. 7,159,116
2010-10-12 Issue Date for U.S. Patent No. 7,813,506
2013-09-17 Issue Date for U.S. Patent No. 8,538,011
2018-06-15 Filing of prior complaint, establishing alleged knowledge
2019-01-28 Complaint Filing Date

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

U.S. Patent No. 7,813,506 - "System and Methods for Permitting Open Access to Data Objects and for Securing Data Within the Data Objects"

The Invention Explained

  • Problem Addressed: The patent describes the challenge for copyright holders who wish to distribute digital works over open networks like the internet but need to ensure they are compensated and that the works are protected from unauthorized copying and distribution (Compl. ¶18; ’506 Patent, col. 2:23-31).
  • The Patented Solution: The invention proposes a method of securing digital content by "scrambling" it to degrade its quality to a predetermined level. This allows for open access to a lower-quality version (e.g., for promotional streaming), while access to the higher-quality, original version can be controlled and monetized by providing a means to "descramble" the content (’506 Patent, Abstract; col. 2:38-52).
  • Technical Importance: This approach provided a framework for tiered-access business models for digital media, balancing the need for promotional exposure with security for premium content (Compl. ¶21).

Key Claims at a Glance

  • The complaint asserts independent claim 6 (Compl. ¶43).
  • The essential elements of independent claim 6 are:
    • Providing a digital content comprising digital data and file format information.
    • Selecting a scrambling technique to apply to the digital content.
    • Scrambling the digital content using a predetermined key, resulting in perceptibly degraded content.
    • The scrambling technique is based on criteria including reaching a desired signal quality level.
    • Distributing the scrambled digital content.
  • The complaint also alleges infringement of "one or more claims" of the patent, which may suggest an intent to assert other claims later in the proceedings (Compl. ¶42).

U.S. Patent No. 7,159,116 - "Systems, Methods and Devices for Trusted Transactions"

The Invention Explained

  • Problem Addressed: The patent addresses the lack of trust in online transactions, which stems from the difficulty of verifying the authenticity and value of goods and services, and the security risks associated with exchanging information over public networks (’116 Patent, col. 2:36-54; Compl. ¶19).
  • The Patented Solution: The invention proposes systems and devices that use a combination of cryptographic and steganographic protocols to enhance trust. It describes using a "steganographic cipher" to securely embed identification and authentication data, thereby creating a bridge between mathematically determinable security and the "analog or human measure of trust" needed for transactions (’116 Patent, Abstract; col. 3:55-61).
  • Technical Importance: This technology aimed to increase confidence in e-commerce by providing a technical means for trusted, secure, and verifiable exchanges of digital information between parties (Compl. ¶23-24).

Key Claims at a Glance

  • The complaint asserts independent claim 14 (Compl. ¶55).
  • The essential elements of independent claim 14 are:
    • A device for conducting a trusted transaction.
    • A "means for uniquely identifying information" related to the parties, transaction, or value-added components.
    • A "steganographic cipher" for generating that unique identification information, governed by a predetermined key, message, and carrier signal.
    • A "means for verifying an agreement to transact" between the parties.
  • The complaint also alleges infringement of "one or more claims," potentially reserving the right to assert others (Compl. ¶54).

U.S. Patent No. 8,538,011 - "Systems, Methods and Devices for Trusted Transactions"

  • Technology Synopsis: As a member of the "Trusted Transaction" patent family, this patent also describes technology for enhancing trust in online dealings. The invention is a device for conducting trusted transactions that comprises a steganographic cipher, a controller, input/output connections, and other hardware elements, and is directed at securing software applications through techniques like code obfuscation (Compl. ¶34; ’011 Patent, Abstract).
  • Asserted Claims: Independent claim 35 is asserted (Compl. ¶67).
  • Accused Features: The complaint accuses SoundCloud's App Server, alleging it is a device that employs steganographic ciphers (by way of code obfuscation tools) to secure and authenticate its software applications distributed through platforms like the Google Play store (Compl. ¶¶68, 72).

III. The Accused Instrumentality

Product Identification

  • The complaint identifies two categories of accused instrumentalities:
    1. SoundCloud's streaming services and applications, available at soundcloud.com, are accused of infringing the ’506 Patent (Compl. ¶42).
    2. SoundCloud's "App Server" is accused of infringing the ’116 and ’011 Patents (Compl. ¶54, ¶66).

Functionality and Market Context

  • The complaint alleges that SoundCloud's streaming service distributes digital audio content, including music from major labels like Universal Music Group (UMG), in various formats and quality levels (e.g., MP3, Opus) (Compl. ¶44-45, ¶47). It further alleges that at least some of this content, such as that from UMG, contains a digital watermark (Compl. ¶45).
  • The SoundCloud App Server is alleged to be the backend infrastructure that hosts, distributes, and authenticates SoundCloud's applications, including those available on the Google Play store (Compl. ¶55, ¶67). The complaint alleges, based on information and belief and by citing Google's developer guidelines, that this server uses security and obfuscation tools like Google's License Verification Library ("LVL") and AESObfuscator to protect its applications (Compl. ¶57, ¶68). A screenshot of the SoundCloud website is provided as evidence of the app's availability and, by extension, the existence of the server that provides it (Compl. ¶55, Ex. 14).

IV. Analysis of Infringement Allegations

’506 Patent Infringement Allegations

Claim Element (from Independent Claim 6) Alleged Infringing Functionality Complaint Citation Patent Citation
a method for distributing accessible digital content, comprising: providing a digital content comprising digital data and file format information; SoundCloud offers a streaming service that provides digital audio files containing audio data and header information indicating the file format (e.g., Opus, MP3). ¶44 col. 17:5-8
selecting a scrambling technique to apply to the digital content; SoundCloud provides content from UMG that allegedly contains a digital watermark; the complaint asserts that a digital watermarking process (a "scrambling technique") must have been selected. ¶45 col. 17:9-10
scrambling the digital content using a predetermined key resulting in perceptibly degraded digital content; The complaint alleges that audio watermarking involves combining audio content with a key signal, creating a modified file that is perceptibly degraded. ¶46 col. 17:11-13
wherein the scrambling technique is based on a plurality of predetermined criteria including at least the criteria of reaching a desired signal quality level for the digital content; and SoundCloud allegedly delivers streaming audio at a "target quality level," and the complaint alleges the watermarking process is based on reaching this desired quality level. ¶47 col. 17:14-17
distributing the scrambled digital content. SoundCloud streams the allegedly watermarked and degraded digital audio to its users. ¶43, ¶47 col. 17:18
  • Identified Points of Contention:
    • Scope Questions: The complaint's theory appears to equate "scrambling" with "digital watermarking" (Compl. ¶45). A central point of contention may be whether the term "scrambling", as defined and used in the patent to mean overt degradation of the entire signal for tiered access, can be construed to cover digital watermarking, which is a form of data hiding that is often intended to be imperceptible.
    • Technical Questions: The complaint alleges that SoundCloud distributes content that was watermarked by a third party (UMG) (Compl. ¶45). This raises the question of whether SoundCloud itself performs the claimed method step of "scrambling the digital content", or if it merely distributes content that was previously modified by others.

’116 Patent Infringement Allegations

Claim Element (from Independent Claim 14) Alleged Infringing Functionality Complaint Citation Patent Citation
A device for conducting a trusted transaction... comprising: means for uniquely identifying information selected from the group consisting of... a unique identification of a value adding component; SoundCloud's App Server allegedly includes components that identify "the most recent successful license response in local persistent storage," which the complaint characterizes as a "unique identification of a value adding component." ¶56 col. 6:55-62
a steganographic cipher for generating said unique identification information, wherein the steganographic cipher is governed by... a predetermined key, a predetermined message, and a predetermined carrier signal; and The complaint alleges the App Server uses an obfuscation program similar to Google's "AESObfuscator," which it labels a "steganographic cipher." This tool allegedly uses a "salt" (key), a "device identifier string" (message), and an "application identifier string" (carrier signal). ¶57-58 col. 6:63-7:2
a means for verifying an agreement to transact between the parties. The complaint alleges the SoundCloud App Server includes components to verify license information ("an agreement to transact") to authorize the download and installation of its apps. ¶59 col. 7:3-4
  • Identified Points of Contention:
    • Scope Questions: The infringement theory hinges on characterizing a code obfuscation tool (Google's "AESObfuscator") as a "steganographic cipher" for generating identification information in a transaction (Compl. ¶57). This raises the question of whether a tool for protecting software from reverse engineering falls within the patent's definition of a steganographic cipher used to enhance trust between transacting parties.
    • Technical Questions: The allegations rely heavily on an analogy to Google's publicly described developer guidelines, based "on information and belief" (Compl. ¶55, ¶56). A key evidentiary question will be what proof demonstrates that SoundCloud's App Server actually implements these specific Google tools and processes in a manner that satisfies the claim limitations.

V. Key Claim Terms for Construction

  • The Term: "scrambling" (’506 Patent, Claim 6)

    • Context and Importance: This term is the central verb of the asserted method claim. The Plaintiff's infringement theory equates it with digital watermarking. The viability of the infringement case may depend on whether this construction is adopted.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The patent's abstract describes the invention as "scrambling the data object to degrade the data object to a predetermined signal quality level" (’506 Patent, Abstract). Plaintiff may argue that any technical process, including watermarking, that results in a "perceptibly degraded" signal meets this functional definition.
      • Evidence for a Narrower Interpretation: The specification repeatedly discusses scrambling in the context of creating distinct, tiered quality levels for distribution (e.g., streaming vs. downloads) (’506 Patent, col. 7:66-8:5). Defendant may argue this context limits "scrambling" to overt, wholesale signal degradation, as opposed to the subtle data hiding of watermarking, which is often intended to be imperceptible.

  • The Term: "steganographic cipher" (’116 Patent, Claim 14)

    • Context and Importance: Plaintiff's theory for the ’116 and ’011 patents depends on applying this term to software code obfuscation tools (Compl. ¶57, ¶68). Practitioners may focus on this term because its construction will determine whether a technology for protecting code can be considered an infringing component of a "trusted transaction" system.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The patent does not provide a formal definition. Plaintiff may argue that any technique that obscures data to hide its meaning or function, such as code obfuscation, falls under a broad definition of steganography.
      • Evidence for a Narrower Interpretation: The patent's abstract describes using "highly-secure steganographic computer processing means for data identification, authentication, and transmission" (’116 Patent, Abstract). Defendant may argue that this purpose—securing a transaction between parties—is distinct from the purpose of code obfuscation, which is to protect a developer's intellectual property from reverse engineering.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges inducement to infringe all three patents. For the ’506 Patent, this is based on SoundCloud allegedly instructing its users on how to access content via its website and applications (Compl. ¶48). For the ’116 and ’011 Patents, it is based on SoundCloud distributing the allegedly infringing App Server to partners and customers (Compl. ¶61, ¶78).
  • Willful Infringement: The complaint alleges that SoundCloud's infringement has been and continues to be willful, basing this claim on SoundCloud's alleged actual knowledge of the patents since at least June 15, 2018, from receiving a prior complaint (Compl. ¶49, ¶62, ¶79).

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

  • A central issue will be one of definitional scope: can the patent term "scrambling," rooted in the context of creating tiered-quality versions of media, be construed to cover the practice of digital watermarking? Likewise, can the term "steganographic cipher," used in the patent to secure online transactions, be construed to read on the alleged use of software code obfuscation tools?
  • A key evidentiary question will be one of attribution of conduct: for the ’506 Patent, does the complaint provide sufficient facts to suggest SoundCloud itself performs the claimed "scrambling" method, or does it merely distribute content that may have been watermarked by third parties? For the ’116 and ’011 Patents, what evidence will show that SoundCloud's servers actually implement the specific functions of the asserted claims, beyond a general reliance on industry-standard security practices?