IBM Corp v. Rakuten Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: International Business Machines Corporation (New York)
  • Defendant: Rakuten, Inc. (Japan); Ebates Performance Marketing, Inc. dba Rakuten Rewards (Delaware)
  • Plaintiff’s Counsel: Potter Anderson & Corroon LLP
• Case Identification: 1:21-cv-00461, D. Del., 02/17/2022
• Venue Allegations: Venue is alleged to be proper in Delaware based on the incorporation of Defendant Ebates Performance Marketing in the state, as well as all defendants conducting business in Delaware by offering products and services through websites and mobile applications accessible there.
• Core Dispute: Plaintiff alleges that Defendant’s e-commerce websites and mobile applications infringe five patents related to foundational internet technologies, including methods for presenting advertisements, single-sign-on user authentication, personalized search results, organization of web content, and targeted advertising.
• Technical Context: The patents-in-suit address core technical challenges in delivering efficient, personalized, and commercially viable online services, from the pre-World Wide Web era to the modern federated web.
• Key Procedural History: The complaint details extensive pre-suit licensing negotiations between the parties beginning in July 2015. It also recounts a history of prior litigation for several of the patents-in-suit. U.S. Patent Nos. 7,072,849 and 7,631,346 allegedly survived patent eligibility challenges in district court cases against Priceline and Groupon, with the latter case resulting in a jury verdict of willful infringement against Groupon. The complaint also notes that the Federal Circuit interpreted claims of the ’346 patent in an appeal from a PTAB decision, which may inform claim construction. U.S. Patent No. 7,076,443 also reportedly survived an eligibility challenge in a case against Chewy, Inc.

Case Timeline

Date	Event
1988-07-15	Earliest Priority Date ('849 Patent)
1997-01-01	Rakuten, Inc. founded
2000-05-31	Earliest Priority Date ('443 Patent)
2001-02-07	Earliest Priority Date ('676 Patent)
2004-04-01	Earliest Priority Date ('346 Patent)
2004-08-31	'676 Patent Issued
2005-07-01	Earliest Priority Date ('234 Patent)
2006-07-04	'849 Patent Issued
2006-07-11	'443 Patent Issued
2009-12-08	'346 Patent Issued
2011-01-01	Ebates Inc. and Ebates Performance Marketing founded
2014-10-01	Rakuten acquires Ebates Inc.
2015-07-01	IBM first contacts Rakuten regarding alleged infringement
2017-02-14	'234 Patent Issued
2022-02-17	Complaint Filing Date

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

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

• Issued: July 4, 2006

The Invention Explained

• Problem Addressed: In early interactive computer networks (pre-dating the modern internet), limited network bandwidth and server processing power created significant performance bottlenecks (Compl. ¶33). The patent background explains that when advertising data had to compete with application data for these limited resources, it had "the undesirable effect of diminishing service response time" (’849 Patent, col. 2:25-26).
• The Patented Solution: The invention addresses this by structuring both applications and advertising as discrete "objects" of data and code that can be sent to a user's local computer and stored in a local cache (Compl. ¶30). This allows the user's computer to compose the final screen display "on the fly" by assembling objects from local storage, reducing the need to constantly request data from a central host server over a slow network connection (’849 Patent, Abstract; col. 3:10-21).
• Technical Importance: This client-side processing and caching architecture was a key innovation that made graphically rich online services, such as the PRODIGY service, commercially viable in an era of slow modems and limited server capacity (Compl. ¶31).

Key Claims at a Glance

• The complaint asserts at least independent claim 1 (Compl. ¶150).
• Claim 1 of the ’849 Patent recites these essential elements:
  • A method of presenting advertising obtained from a computer network that includes multiple user reception systems.
  • Structuring applications so they may be presented at a first portion of a screen display.
  • Structuring advertising in a compatible manner so it may be presented at a second portion of the screen concurrently with the applications.
  • This structuring includes configuring the advertising as "objects" that include advertising data.
  • Selectively storing the advertising objects at a store (e.g., cache) established at the reception system.

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

• Issued: December 8, 2009

The Invention Explained

• Problem Addressed: The patent describes that prior art single-sign-on (SSO) methods were problematic because they required users to have a pre-existing account at the service provider they wished to access (’346 Patent, col. 2:19-42). This created a barrier for new users seeking to access resources across different, independent online services (Compl. ¶43).
• The Patented Solution: The invention provides a method for a user authenticated by a trusted "identity provider" to access resources at a "service provider" without a pre-existing account. The service provider's system is triggered by the SSO operation to dynamically create a new, linked user account "at runtime" based on an identifier received from the identity provider, allowing the user to complete their access request seamlessly (’346 Patent, Abstract; Compl. ¶44).
• Technical Importance: This technology extended the benefits of SSO to new users, streamlining account creation and access in a "federated" environment where users interact with numerous independent but interoperable online services (Compl. ¶44, ¶50).

Key Claims at a Glance

• The complaint asserts at least independent claim 1 (Compl. ¶181).
• Claim 1 of the ’346 Patent recites these essential elements:
  • A method for managing user authentication in a distributed system where a first system (e.g., identity provider) and a second system (e.g., service provider) interact in a "federated computing environment" and support SSO.
  • Triggering an SSO operation on behalf of a user to access a protected resource on the second system, where that system requires a user account.
  • Receiving an identifier for the user at the second system from the first system.
  • Creating a user account for the user at the second system based on the received identifier.
  • This account creation occurs after triggering the SSO operation but before the second system generates a response for accessing the protected resource.

U.S. Patent No. 6,785,676 - Customer Self Service Subsystem for Response Set Ordering and Annotation

• Issued: August 31, 2004
• Technology Synopsis: The patent addresses the problem of information overload in search systems by using machine learning to personalize and rank search results (Compl. ¶51, ¶53). The system creates a "user context vector" from data like a user's interaction history and preferences and uses it to apply an "ordering and annotation function" to the search results, making them more relevant to the specific user in real-time (Compl. ¶52, ¶54-55).
• Asserted Claims: At least independent claim 14 (Compl. ¶210).
• Accused Features: Rakuten's websites and mobile applications are accused of using an algorithm for ranking stores in response to a user search, where the ranking is based on a "user context vector" comprising data about the user's interaction state and preferences (Compl. ¶210.b-c).

U.S. Patent No. 7,543,234 - Stacking Portlets in Portal Pages

• Issued: February 14, 2017
• Technology Synopsis: The patent addresses the problem of "overcrowded and disorganized" portal pages that arise as users add more individual content windows, or "portlets" (Compl. ¶56). The invention provides a method for organizing and displaying portlets by determining if they are "stackable" (based on common characteristics) and then arranging them into "stacks" and "stacks of stacks," allowing a user to navigate between different views without cluttering the screen (Compl. ¶57-58).
• Asserted Claims: At least independent claims 1 and 4 (Compl. ¶238, ¶239).
• Accused Features: The Rakuten mobile application is accused of generating a portal page where different sets of offers (e.g., "In-Store Offers," "Dining Offers") are organized as selectable stacks, which are themselves presented as a "stack of stacks" that the user can navigate (Compl. ¶238.d).

U.S. Patent No. 7,076,443 - System and Technique for Automatically Associating Related Advertisements to Individual Search Results Items of a Search Result Set

• Issued: July 11, 2006
• Technology Synopsis: The patent describes an approach to targeted advertising that departs from relying on user profiles, which can be outdated or inaccurate (Compl. ¶73-74). Instead, the invention associates advertisements with the search results themselves, based on the principle that a user's interest is more narrowly defined by the results they are viewing than by their general search query (’443 Patent, col. 5:11-16; Compl. ¶74). The system analyzes search result items to find and correlate related advertisements (Compl. ¶75).
• Asserted Claims: Claims 1-20, with specific allegations for at least independent claims 1 and 15 (Compl. ¶267, ¶268, ¶274).
• Accused Features: The Rakuten website is accused of identifying search result items from a user's search, using identifiers from those items (e.g., a "ProdID") to search a database for associated advertisements, and then correlating and displaying the advertisement with the search result item (e.g., via a "Compare Stores" button) (Compl. ¶268.a-d).

III. The Accused Instrumentality

Product Identification

• The accused instrumentalities are the Rakuten e-commerce websites, including www.rakuten.com, and the Rakuten mobile applications for platforms such as Apple iOS and Google Android (Compl. ¶84).

Functionality and Market Context

• The complaint describes the accused products as e-commerce platforms that connect consumers with providers of products and offer cash back rewards (Compl. ¶83, ¶84). Their accused functionality includes presenting web content and advertisements through a client-server architecture that allegedly uses browser caching (Compl. ¶150.d); implementing third-party single-sign-on features to create new user accounts (Compl. ¶181.b); providing personalized search rankings for products and stores (Compl. ¶210); organizing offers into selectable stacks within the mobile application interface (Compl. ¶238); and providing a feature to compare stores or find related offers based on a user's initial search results (Compl. ¶268.d). A screenshot provided in the complaint shows the Rakuten webpage for LG products, which is the landing page from an AOL search (Compl. p. 83).
• The complaint alleges that Rakuten is a major e-commerce company with billions of dollars in annual revenue that has grown by appropriating IBM's patented inventions (Compl. ¶83, ¶84).

IV. Analysis of Infringement Allegations

U.S. Patent No. 7,072,849 Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
a method of presenting advertising obtained from a computer network ... the respective reception systems including a monitor...	Rakuten presents advertising, such as cash back offers, via the Internet to its customers' computers and mobile devices, which include monitors or screens.	¶150.a	col. 1:15-22
structuring applications ... so that they may be presented ... at a first portion ... of one or more screens of display	Rakuten's webpage is structured such that application content is presented in a portion of the webpage displayed on a user's screen.	¶150.b	col. 3:13-21
structuring advertising in a manner compatible to that of the applications so that it may be presented ... at a second portion ... concurrently with applications	Rakuten's advertising, such as cash back offers, is structured to be presented in a different portion of the webpage concurrently with the main application content.	¶150.c	col. 3:1-12
wherein structuring the advertising includes configuring the advertising as objects that include advertising data	The advertising is allegedly configured as "objects," identified as HTTP Responses that contain image files (png, gif, jpeg) and advertising data.	¶150.c	col. 4:50-55
selectively storing advertising objects at a store established at the reception system	Rakuten's systems allegedly cause the selective storing of advertising objects in the user's browser cache by setting cache control parameters.	¶150.d	col. 3:22-30

U.S. Patent No. 7,631,346 Infringement Allegations

Claim Element (from Independent Claim 1)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
managing user authentication within a distributed data processing system, wherein a first system and a second system interact within a federated computing environment and support single-sign-on operations	Rakuten (the second system) manages user authentication and interacts with services like Google (the first system) in a federated environment (the Internet) to support SSO operations.	¶181.a	col. 1:53-61
triggering a single-sign-on operation on behalf of the user in order to obtain access to a protected resource that is hosted by the second system, wherein the second system requires a user account for the user to complete the single-sign-on operation	A user on Rakuten's site triggers an SSO operation, such as "Sign up using Google," to obtain access to a protected resource, such as "Cash Back" offers, which requires a Rakuten account.	¶181.b	col. 2:33-42
receiving from the first system at the second system an identifier associated with the user	Rakuten receives an identifier, such as the user's email address, from the first system (Google).	¶181.c	col. 24:16-25
creating a user account for the user at the second system based at least in part on the received identifier associated with the user after triggering the single-sign-on operation but before generating at the second system a response for accessing the protected resource	Rakuten allegedly creates a new user account based on the identifier from Google after the SSO operation is triggered but before providing access to the "Cash Back" resource.	¶181.d	col. 14:8-15

Identified Points of Contention

• Scope Questions: A central issue for the '849 Patent may be whether the term "objects," defined in the context of the 1980s-era PRODIGY service, can be construed to read on modern web components like HTTP responses containing image files. For the '346 Patent, a question may arise as to whether a standard "Sign in with Google" implementation on a public website creates a "federated computing environment" within the specific meaning of the patent.
• Technical Questions: For the '849 Patent, a key factual question will be whether Rakuten's systems perform the "selectively storing" of advertising objects, or whether that function is performed independently by third-party systems like user browsers and CDNs, raising a question of divided infringement. The complaint alleges Rakuten directs or controls this activity (Compl. ¶152-153). For the '346 Patent, the analysis may turn on a precise sequence of events: what evidence demonstrates that Rakuten creates the user account after the SSO is triggered but before a response for accessing the protected resource is generated, as required by the claim?
• Evidentiary Questions for '443 Patent: The complaint provides specific evidence for its theory against the '443 Patent. A screenshot shows an AOL search result page with a link to www.rakuten.com (Compl. p. 81). Subsequent evidence shows the HTTP header from accessing Rakuten's site, which includes the AOL search page as the "referer" (Compl. p. 82). Further screenshots show the Rakuten landing page and a pop-up window with related advertisements that appears after a user initiates a comparison (Compl. p. 83, p. 88). This evidence suggests a direct link between an external search, the landing page, and the presentation of related ads, which may support the infringement allegations.

V. Key Claim Terms for Construction

For U.S. Patent No. 7,072,849:

• The Term: "objects"
• Context and Importance: This term is the foundational element for both the "applications" and "advertising" required by claim 1. The infringement case may depend on whether modern web assets (e.g., HTTP responses, image files, JavaScript) fall within the scope of this term, which was defined in a pre-World Wide Web context. Practitioners may focus on this term because its construction could determine whether the patent is applicable to modern internet technology or is limited to the legacy PRODIGY system described in the specification.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The Abstract describes structuring applications and advertising "in a manner comparable," suggesting interchangeability. The patent also states objects "comprise both data and program code" (’849 Patent, col. 4:50-52), a general definition that could be argued to encompass modern web components that package data (e.g., an image) with code for its display (e.g., HTML/CSS).
  • Evidence for a Narrower Interpretation: The specification is heavily rooted in the architecture of the PRODIGY service (’849 Patent, col. 1:34-41). A defendant could argue that the term "objects" is implicitly limited to the specific, proprietary object structures used in that system, which differ from standardized web technologies.

For U.S. Patent No. 7,631,346:

• The Term: "federated computing environment"
• Context and Importance: The entire method of claim 1 must be performed within this environment. The dispute may turn on whether the relatively common use of a third-party login service like Google's constitutes operation within a "federated computing environment" or if the term requires a more specific, formally defined relationship between the "identity provider" and "service provider".
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The complaint notes the Federal Circuit has interpreted this term as "an environment containing different enterprises that 'adhere to certain standards of interoperability'" (Compl. ¶50). This definition could be broad enough to cover systems that use open standards like OAuth for SSO.
  • Evidence for a Narrower Interpretation: The specification describes structuring this environment using a "nonconventional arrangement of computer components" (’346 Patent, col. 10:62-11:7). A defendant may argue this language requires a specific architecture beyond merely implementing a standard SSO protocol between two independent websites.

VI. Other Allegations

• Indirect Infringement: For all five patents-in-suit, the complaint alleges both inducement and contributory infringement. The inducement theory is based on allegations that Rakuten encourages and instructs its customers and end users to use its websites and mobile applications in a manner that directly infringes the patent claims (Compl. ¶160, ¶189, ¶217, ¶246, ¶287). The contributory infringement theory is based on allegations that Rakuten provides computer code (e.g., HTML, JavaScript) that is especially made for use in an infringing manner and is not a staple article of commerce suitable for substantial non-infringing use (Compl. ¶157, ¶186, ¶214, ¶243, ¶284).
• Willful Infringement: The complaint alleges willful infringement for all five patents. The allegations are based on extensive pre-suit knowledge, with IBM allegedly first notifying Rakuten of infringement of the '849 patent in July 2015 (Compl. ¶126), the '346 and '443 patents in July 2019 (Compl. ¶137), and the '676 and '234 patents in March 2021 (Compl. ¶144). The complaint also alleges IBM informed Rakuten of an $82.5 million jury verdict against Groupon for infringement of some of the same patents (Compl. ¶136).

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

• A core issue will be one of technological translation: can claim terms rooted in the context of 1980s-era online services, such as the "object" architecture of the PRODIGY system in the ’849 patent, be construed to cover their functional analogues in the modern web, such as HTTP responses and browser-cached assets?
• A key legal question will be one of divided infringement: for methods where some steps are performed by Rakuten's servers and others by the end-user's browser (e.g., the "selectively storing" step of the ’849 patent), can IBM establish that Rakuten directs or controls the actions of the user's device to the degree necessary to attribute all steps of the claimed method to the defendants?
• A central evidentiary question, particularly for the ’346 patent, will be one of operational sequence: does the accused single-sign-on system perform the specific, multi-part temporal sequence required by Claim 1—creating a user account after the SSO process is triggered but before access to the protected resource is granted—or is there a mismatch in the technical operation?