DCT
1:22-cv-00882
SurgeTech, LLC v. Uber Tech Inc.
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: SurgeTech, LLC (Delaware)
- Defendant: Uber Technologies, Inc. d/b/a Uber (Delaware)
- Plaintiff’s Counsel: Morris, Nichols, Arsht & Tunnell LLP; Quinn Emanuel Urquhart & Sullivan LLP
- Case Identification: 1:22-cv-00882, D. Del., 11/28/2022
- Venue Allegations: Venue is alleged to be proper in the District of Delaware because Defendant is a Delaware corporation that has transacted business and committed acts of infringement in the district.
- Core Dispute: Plaintiff alleges that Defendant’s ride-hailing and delivery platform, specifically its "surge pricing" feature, infringes three patents related to dynamically managing and pricing transportation inventory across different distribution channels based on performance data.
- Technical Context: The lawsuit concerns dynamic pricing and resource allocation systems within the on-demand transportation and services market, a technology used to balance supply (drivers) and demand (riders).
- Key Procedural History: The complaint notes that Certificates of Correction were issued for all three patents-in-suit to correct errors on their respective title pages, primarily to add foreign priority application data.
Case Timeline
| Date | Event |
|---|---|
| 2006-05-18 | Earliest Priority Date for ’598, ’999, and ’047 Patents |
| 2022-05-17 | U.S. Patent No. 11,334,598 Issues |
| 2022-06-14 | U.S. Patent No. 11,360,999 Issues |
| 2022-07-19 | Certificate of Correction issued for ’999 Patent |
| 2022-08-23 | Certificate of Correction issued for ’598 Patent |
| 2022-10-18 | U.S. Patent No. 11,475,047 Issues |
| 2022-11-28 | First Amended Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 11,334,598 - Computer-implemented Management of Bookings For Transportation Services
The Invention Explained
- Problem Addressed: The patent’s background describes the difficulty and inefficiency faced by vendors of travel services (e.g., accommodation, transport) in allocating their inventory to various online re-sellers, referred to as "distribution channels," in an ad hoc manner (’598 Patent, col. 1:30-47).
- The Patented Solution: The invention provides a centralized, computer-implemented method to automate this process. The system links inventory items to multiple online channels, receives real-time sales data from them, and calculates a "performance rating" for each channel. Based on a comparison of these ratings, the system can automatically adjust the price of the inventory or re-allocate items from lower-performing channels to higher-performing ones to optimize sales. (’598 Patent, Abstract; col. 2:1-11; Fig. 2).
- Technical Importance: The technology provides a method for dynamic, data-driven optimization of inventory sales across a fragmented online marketplace, moving beyond static or manual allocation strategies (’598 Patent, col. 4:1-6).
Key Claims at a Glance
- The complaint asserts at least Claim 1 (Compl. ¶29, ¶31).
- The essential elements of independent Claim 1, a method claim, include:
- linking each item in a transportation services inventory with one of a plurality of online distribution channels;
- receiving, in real time, sale data from each of the channels;
- processing the sale data to obtain a performance rating for each channel;
- querying whether the performance rating of one channel is greater than that of other channels; and
- if the query is affirmative, performing at least one of: (1) adjusting the price of items, or (2) modifying the linkage of items by re-allocating them between channels.
- The complaint alleges infringement of "one or more claims," suggesting the right to assert dependent claims is reserved (Compl. ¶29).
U.S. Patent No. 11,360,999 - Computer-implemented Method For Managing Inventory Allocations
The Invention Explained
- Problem Addressed: The ’999 Patent addresses the same problem as the ’598 Patent: the inefficient and ad hoc allocation of inventory, such as travel services, to different online distribution channels (’999 Patent, col. 1:26-40).
- The Patented Solution: The patented solution is a computer-implemented method that manages inventory allocations by "cyclically" receiving and processing sales data in "near real time" from different distribution channels. This data is used to generate a performance rating for each channel. The system then queries whether one channel's rating is greater than another's and, based on the result, either adjusts the price of inventory items or re-allocates them between channels. (’999 Patent, Abstract; col. 1:65-col. 2:13).
- Technical Importance: This method provides a framework for continuous, near-real-time optimization of pricing and inventory allocation based on the relative performance of different sales channels (’999 Patent, col. 4:1-6).
Key Claims at a Glance
- The complaint asserts at least Claim 1 (Compl. ¶43, ¶45).
- The essential elements of independent Claim 1, a method claim, include:
- receiving sale data cyclically, in near real time, from respective distribution channels;
- processing the sale data cyclically to obtain a performance rating for each channel;
- querying whether the performance rating of one channel is greater than that of another; and
- based on the query, performing at least one of: (1) adjusting the price of inventory items, or (2) re-allocating inventory items between channels.
- The complaint reserves the right to assert claims beyond Claim 1 (Compl. ¶43).
U.S. Patent No. 11,475,047 - Computer-Implemented Interface For Bookings For Transportation Services
- Technology Synopsis: This patent discloses a method centered on a "channel interface" providing bidirectional communication between a server and vendor computing devices. The system creates "active" and "inactive" channel records based on vendor participation and receives sales data from other vendor devices. It determines a "performance indicator" and adjusts the price of a transportation service if that indicator fails to meet a predefined "performance threshold." (’047 Patent, Abstract).
- Asserted Claims: The complaint asserts at least Claim 1 (Compl. ¶56, ¶58).
- Accused Features: The complaint alleges that the Uber System's use of surge pricing to adjust trip prices and allocate drivers to "participant channels" (geographic areas) infringes Claim 1 by establishing a channel interface, designating channels as active based on driver location, and adjusting prices based on performance indicators failing to meet a threshold (e.g., high demand). (Compl. ¶59-68).
III. The Accused Instrumentality
Product Identification
- The accused instrumentality is the "Uber System," which collectively refers to the Uber Rider App, the Uber Driver App, backend computer servers, and the "Gairos" real-time data intelligence platform (Compl. ¶21, ¶24, ¶29). The complaint also lists numerous services offered through this system, such as UberX, Uber Eats, and Uber Freight, and identifies the "surge pricing" feature as a core infringing component (Compl. ¶22, ¶26).
Functionality and Market Context
- The Uber System facilitates on-demand transportation and other services by connecting providers (e.g., drivers) with consumers (e.g., riders) (Compl. ¶21). The complaint focuses on the "surge pricing" feature, which it alleges is a mechanism for inventory management that uses real-time data (ride requests, driver availability) to increase prices in areas of high demand (Compl. ¶22, ¶24). This price increase is alleged to serve a dual purpose: charging riders more and incentivizing drivers to re-allocate themselves to the high-demand geographic zones (Compl. ¶23). The complaint includes a screenshot from the Uber app that illustrates how drivers are notified of surge pricing areas as an "incentive" (Compl. p. 5).
IV. Analysis of Infringement Allegations
U.S. Patent No. 11,334,598 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| linking, via a computerized network, each item in the transportation services inventory with one of a plurality of online distributions channels by allocating the item to the respective online distribution channel; | The Uber System allegedly links available drivers ("items") to distinct geographic areas ("hyperlocal zones"), which are alleged to function as "online distribution channels" (Compl. ¶33). | ¶33 | col. 4:7-9 |
| receiving, from each of the plurality of online distribution channels in real time via the computerized network, sale data pertaining to the online bookings for the items... | The Uber System allegedly receives real-time data, such as driver information, location, availability, and ride requests, from mobile devices within each geographic channel (Compl. ¶34). | ¶34 | col. 4:51-55 |
| processing the sale data by carrying out calculations to obtain a performance rating for each of the respective online distribution channels; | The Uber System allegedly processes the real-time data to calculate a "relative level of surge" for a particular geographic area, which is alleged to be the "performance rating" (Compl. ¶35). This rating is visualized for drivers via colored maps (Compl. p. 5). | ¶35 | col. 4:63-65 |
| querying whether the performance rating of each of the respective online distribution channels is greater than a performance rating of other online distribution channels; | When a rider requests a trip, the Uber System allegedly queries the performance rating (surge level) of the rider's geographic area and compares it to other areas to determine if surge pricing should apply (Compl. ¶36). | ¶36 | col. 5:50-54 |
| based on the query being answered in the affirmative, carrying out at least one of the following: adjusting... a price... and modifying... the linkage of the items... by re-allocating the items... | Based on a finding of high relative demand (a greater performance rating), the system allegedly responds by both adjusting the price for riders via a "surge pricing modifier" and re-allocating inventory by using heatmaps to encourage drivers to move to the high-demand area (Compl. ¶37). | ¶37 | col. 6:1-11 |
Identified Points of Contention
- Scope Questions: A central question may be whether Uber's internal "hyperlocal zones" constitute "online distribution channels" as contemplated by the patent. The patent specification appears to describe channels as distinct re-sellers or third-party portals, raising the question of whether internal geographic partitions of a single platform meet that definition.
- Technical Questions: The analysis may turn on whether Uber's "level of surge," a metric of real-time supply/demand imbalance, is technically equivalent to the "performance rating" described in the patent, which is based on a calculated sales rate index (items sold vs. items available). Further, it may be disputed whether the Uber System performs a comparative "query" between channels before acting, as required by the claim, or if it applies a pricing formula to each zone based on its own absolute data.
U.S. Patent No. 11,360,999 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| receiving sale data cyclically, in near real time, from respective distribution channels and relating to sale of inventory items... | The Uber System is alleged to receive real-time "sale data" (e.g., driver location, availability, ride requests) from its "distribution channels" (geographic areas) on a continuous, cyclical basis (Compl. ¶47). | ¶47 | col. 4:52-56 |
| processing the sale data cyclically, the processing of the sale data including carrying out calculations to obtain a performance rating for each of the respective distribution channels; | The Uber System allegedly processes ride hail data "cyclically" to determine demand and calculate a "performance rating" (the level of surge), which is visualized on a heatmap showing areas from light orange (low surge) to dark red (high surge) (Compl. ¶23, ¶48). | ¶48 | col. 5:37-38 |
| querying whether the performance rating of each of the respective distribution channels is greater than a performance rating of other distribution channels; | When a user hails a ride, Uber allegedly queries the relative demand in particular areas to determine whether to apply surge pricing, which the complaint maps to the claimed query of performance ratings (Compl. ¶49). | ¶49 | col. 5:61-65 |
| based on the query, carrying out at least one of the following steps: adjusting a price... and re-allocating inventory items... | Based on the query, the Uber System allegedly adjusts the price of rides via a surge multiplier and simultaneously incentivizes drivers to re-allocate from low-demand to high-demand areas (Compl. ¶50). | ¶50 | col. 6:25-34 |
Identified Points of Contention
- Scope Questions: As with the ’598 Patent, the definition of "distribution channels" will likely be a key point of dispute.
- Technical Questions: A primary technical question may be whether the Uber System's data processing is "cyclical" as required by the claim. The complaint describes Uber's platform as processing data on a "minute-by-minute basis" and in response to discrete events, which may raise the question of whether this operation is truly cyclical (i.e., occurring in fixed, repeating intervals) or is more accurately described as asynchronous and event-driven.
V. Key Claim Terms for Construction
The Term: "online distribution channel(s)"
- Context and Importance: This term is foundational to the infringement allegations for all asserted patents. The plaintiff’s theory depends on construing Uber's internal, geographic "hyperlocal zones" as distinct "channels." Practitioners may focus on this term because if the zones are not "channels," a core element of the asserted claims may not be met.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification refers to channels as "various re-sellers," "portals and agencies," and "various online travel/accommodation reseller portals," which could be argued to encompass any distinct pathway for selling inventory, including virtual or geographic partitions within a single platform (’598 Patent, col. 1:33-34; col. 4:3-6).
- Evidence for a Narrower Interpretation: The patent's figures and description depict "channels" as distinct servers (18) communicating with a central computer (12), which may suggest they are separate commercial or technical entities rather than mere subdivisions of a single, integrated system (’598 Patent, Fig. 1; col. 4:26-29).
The Term: "performance rating"
- Context and Importance: The infringement theory equates Uber's "level of surge" with the claimed "performance rating." The viability of this argument depends on whether a real-time supply/demand imbalance metric functions in the same way as the rating described in the patent.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent describes the rating as a general "indicator of the performance in the sales channel" and states it can be based on a "number of parameters," which could support a definition broad enough to include a supply/demand metric (’598 Patent, col. 4:31-32; col. 6:66-68).
- Evidence for a Narrower Interpretation: The specification provides a specific formula for a "rate index," defined as a ratio of items sold to items available (S/A) over a predetermined time, and links this index to the performance rating. This may support a narrower construction limited to a metric of sales efficiency over time, rather than a real-time snapshot of market conditions. (’598 Patent, col. 4:56-62).
VI. Other Allegations
- Indirect Infringement: The complaint does not provide sufficient detail for analysis of indirect infringement, as it does not plead specific facts regarding intent to induce or knowledge of infringing use by third parties.
- Willful Infringement: The complaint alleges that Uber has knowledge of the patents-in-suit "at least through the filing and service of this Complaint" (Compl. ¶38, ¶51, ¶69). This allegation appears to support a claim for post-suit willfulness only and does not allege pre-suit knowledge of the patents.
VII. Analyst’s Conclusion: Key Questions for the Case
This case will likely focus on fundamental questions of claim scope and technical equivalence that are common in software patent litigation. The central issues for the court may include:
- A core issue will be one of definitional scope: can the term “online distribution channel,” which is described in the patent in the context of distinct third-party re-sellers, be construed to cover the algorithmically defined “hyperlocal zones” used internally by Uber’s single, integrated platform?
- A key evidentiary question will be one of functional equivalence: does Uber's real-time supply-and-demand calculation, known as "surge pricing," perform the same function as the "performance rating" claimed in the patents, which the specification ties to a sales-rate index (items sold vs. items available)?
- A third issue, specific to the '999 Patent, will be one of claim construction: does Uber's event-driven, "minute-by-minute" data processing system operate "cyclically" as required by Claim 1, or is there a fundamental mismatch between the claim language and the accused system's technical operation?