DCT
1:23-cv-00278
PayRange Inc v. CSC ServiceWorks Inc
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: PayRange Inc. (Tennessee)
- Defendant: CSC ServiceWorks, Inc. (Florida)
- Plaintiff’s Counsel: Wilson Sonsini Goodrich & Rosati
- Case Identification: 1:23-cv-00278, D. Del., 03/15/2023
- Venue Allegations: Plaintiff alleges venue is proper in the District of Delaware because Defendant was previously a Delaware corporation, purposefully placed infringing products into the stream of commerce expecting use in the District, and has appointed a registered agent for service of process in Delaware.
- Core Dispute: Plaintiff alleges that Defendant’s mobile payment applications and associated hardware for laundry machines, CSCPay Mobile and CSC Go, infringe four patents related to systems for enabling mobile device payments on unattended retail machines.
- Technical Context: The technology at issue involves retrofitting legacy coin-operated machines with hardware modules that communicate via Bluetooth with a user's smartphone, which in turn communicates with a central server to authorize and process cashless payments.
- Key Procedural History: The complaint alleges that Defendant engaged in partnership discussions with Plaintiff beginning in October 2016, during which Plaintiff disclosed its patented technology and intellectual property portfolio. Plaintiff alleges that Defendant used this information to develop its own copycat products, which were released in April 2018, forming the basis for the allegations of willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 2013-12-18 | Earliest Priority Date for all Patents-in-Suit |
| 2014-10-07 | U.S. Patent No. 8,856,045 Issued |
| 2016-10-01 | Alleged partnership discussions between PayRange and CSC initiated |
| 2018-04-01 | Defendant CSC releases its accused mobile app (CSCPay Mobile) |
| 2019-10-08 | U.S. Patent No. 10,438,208 Issued |
| 2021-01-12 | U.S. Patent No. 10,891,608 Issued |
| 2022-10-25 | U.S. Patent No. 11,481,772 Issued |
| 2023-03-15 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 8,856,045 - “MOBILE-DEVICE-TO-MACHINE PAYMENT SYSTEMS”
The Invention Explained
- Problem Addressed: The patent addresses the challenge of enabling modern, cashless payments on legacy unattended machines (e.g., vending, laundry) that lack a persistent internet connection, which is typically required for credit card or other electronic payment processing (Compl. ¶3; ’045 Patent, col. 10:3-16).
- The Patented Solution: The invention provides a three-part system: (1) a physical "adapter module" installed in the machine that uses short-range communication like Bluetooth; (2) a user's mobile device with both short-range (e.g., Bluetooth) and long-range (e.g., cellular) communication; and (3) a remote server. The mobile device acts as a temporary communication bridge, relaying an authorization request from the machine's adapter to the server and then relaying the server's authorization grant back to the adapter, thereby enabling a cashless transaction without requiring the machine itself to be online (’045 Patent, Abstract; col. 4:1-24).
- Technical Importance: This architecture provided a cost-effective method for retrofitting millions of existing offline, coin-operated machines to accept mobile payments, bypassing the need for expensive, built-in cellular modems or Wi-Fi hardware at each machine (Compl. ¶3).
Key Claims at a Glance
- The complaint asserts infringement of at least independent claim 1 (Compl. ¶33).
- Essential elements of claim 1 include:
- A mobile-device-to-machine payment system comprising:
- (a) an adapter module associated with the payment accepting unit, having short-range communication technology;
- (b) a server having long-range communication technology;
- (c) the adapter module sending an authorization request for funds to the mobile device (via short-range), which forwards the request to the server (via long-range);
- (d) the server sending an authorization grant for funds to the mobile device (via long-range), which forwards the grant to the adapter module (via short-range);
- (e) the payment accepting unit dispensing a product or service after the adapter module receives the authorization grant.
U.S. Patent No. 10,438,208 - “SYSTEMS AND METHODS FOR INTERACTING WITH UNATTENDED MACHINES USING DETECTABLE TRIGGER CONDITIONS AND LIMITED-SCOPE AUTHORIZATION GRANTS”
The Invention Explained
- Problem Addressed: The patent’s background describes prior mobile payment methods for unattended machines as inconvenient, often requiring users to perform manual steps like dialing phone numbers or entering codes, which detracts from a seamless user experience (’208 Patent, col. 2:6-22).
- The Patented Solution: The patent describes a method to streamline the transaction process. A user's mobile device automatically detects when it enters a predefined "authorization zone" near a machine and preemptively requests and receives a time-limited authorization grant from a server. The device then waits for a "trigger condition" (e.g., the user swiping on the screen or moving into an even closer "payment zone") to send the pre-approved grant to the machine to initiate payment. This "store-and-forward" approach aims to reduce transaction latency from the user's perspective (’208 Patent, Abstract; col. 15:35-56).
- Technical Importance: This invention focuses on improving the user experience by reducing wait times and manual input, making mobile payments for unattended machines feel more instantaneous and automatic, akin to a "hands-free" model (Compl. ¶3).
Key Claims at a Glance
- The complaint asserts infringement of at least independent claim 1 (Compl. ¶46).
- Essential elements of claim 1 (a method claim performed at a mobile device) include:
- Prior to user selection of any items:
- Notifying an electronic payment device that the mobile device has entered an authorization zone;
- Receiving from the device a request to preemptively obtain authorization;
- Sending the request to a server;
- Receiving from the server an authorization grant that expires based on predetermined criteria;
- Detecting a trigger condition to initiate a cashless transaction; and
- In response to the trigger, sending the authorization grant to the electronic payment device to enable a user to make a selection.
U.S. Patent No. 10,891,608 - “METHOD AND SYSTEM FOR AN OFFLINE-PAYMENT OPERATED MACHINE TO ACCEPT ELECTRONIC PAYMENTS”
- Technology Synopsis: This patent focuses on the specific mechanism for retrofitting a coin-operated machine. The invention is a payment module that learns the electrical signals generated by coin insertions and then, upon receiving a wireless request from a mobile device, emulates those same electrical pulses to the machine's control unit, effectively tricking the legacy machine into thinking coins have been inserted (’608 Patent, Abstract).
- Asserted Claims: At least independent claim 1 is asserted (Compl. ¶56).
- Accused Features: The complaint alleges that CSC's payment modules for offline laundry machines infringe by using a short-range wireless transceiver to receive requests and outputting electrical pulses that emulate a coin signal to the machine's control unit (Compl. ¶57).
U.S. Patent No. 11,481,772 - “METHOD AND SYSTEM FOR PRESENTING REPRESENTATIONS OF PAYMENT ACCEPTING UNIT EVENTS”
- Technology Synopsis: This patent claims a method focused on the user interface of the mobile device during a transaction. It covers obtaining a notification from the payment module about an event at the machine (e.g., transaction complete, aborted, failed) and providing a representation of that notification (e.g., a message, banner, or vibration) to the user via the mobile device's output capabilities (’772 Patent, Abstract).
- Asserted Claims: At least independent claim 1 is asserted (Compl. ¶66).
- Accused Features: The complaint alleges that the CSCPay Mobile and CSC Go apps infringe by performing the claimed method of receiving event notifications from the payment module and displaying them to the user (Compl. ¶67).
III. The Accused Instrumentality
Product Identification
The accused instrumentalities are Defendant’s mobile applications, "CSCPay Mobile" and "CSC Go," and the associated payment modules installed in laundry machines (Compl. ¶¶ 5, 13, 34).
Functionality and Market Context
The accused products form a system that allows users to pay for laundry services at unattended machines, such as those in apartment complexes and hotels, using a mobile application instead of coins (Compl. ¶4). The complaint alleges that the apps communicate with a hardware module in the laundry machine, which in turn communicates with CSC’s servers to process payments (Compl. ¶¶ 34, 47). Plaintiff alleges that Defendant is the "preeminent owner, nationwide, of coin-operated laundry machines" and that the introduction of this mobile payment technology coincided with an increase in CSC's valuation from $3 billion to over $4 billion (Compl. ¶¶ 4, 13).
IV. Analysis of Infringement Allegations
The complaint includes a system architecture diagram that illustrates the data flow between the components of the Plaintiff's system, which is alleged to be copied by the Defendant (Compl. ¶10).
'045 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a mobile-device-to-machine payment system...comprising: (a) an adapter module associated with the payment accepting unit, said adapter having short-range communication technology... | The CSC system includes a payment module installed in laundry machines that uses short-range communication (e.g., Bluetooth) to connect with user smartphones. | ¶34 | col. 4:3-6 |
| (b) a server having long-range communication technology for communicating with the long-range communication technology of the mobile device | The CSC system includes a server that communicates with the CSCPay Mobile/Go apps via long-range technology (e.g., cellular/Wi-Fi). | ¶34 | col. 4:7-10 |
| (c) said adapter module for sending an authorization request for funds to the mobile device using short-range communication technology, the mobile device forwarding said...request...to said server using long-range...technology | The CSC module allegedly sends a payment authorization request to the user's mobile app, which then forwards the request to the CSC server. | ¶34 | col. 4:11-17 |
| (d) said server for sending an authorization grant for funds to the mobile device using long-range...technology, the mobile device forwarding said...grant...to said adapter module using short-range...technology | The CSC server allegedly sends an authorization grant back to the mobile app, which forwards the grant to the payment module in the machine. | ¶34 | col. 4:18-24 |
| (e) wherein the payment accepting unit dispenses the at least one product or service in response to receiving user input...if said adapter module has received said authorization grant | The CSC-equipped laundry machine initiates a cycle after the user makes a selection and the payment module has received the authorization grant. | ¶34 | col. 4:25-30 |
- Identified Points of Contention:
- Scope Questions: The dispute may center on the precise architecture of CSC's system. For example, does the hardware provided by CSC function as an "adapter module" that sends an "authorization request for funds" as claimed, or does it operate differently, perhaps by having the user's app initiate the entire transaction sequence?
- Technical Questions: A key question will be the sequence and content of the data packets exchanged. What evidence shows that the CSC module sends a specific "authorization request" to the phone, which is then forwarded, as opposed to the phone's app simply initiating a payment request to the server based on user action?
'208 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| notifying an electronic payment device...that the mobile device has entered an authorization zone associated with the automated retail machine | The CSC apps allegedly detect when they are in proximity to a CSC-equipped machine, which constitutes entering an "authorization zone." | ¶47 | col. 33:41-44 |
| in response to notifying the electronic payment device...receiving from the electronic payment device...a request to preemptively obtain authorization to make funds available | In response to entering the zone, the app allegedly receives a request from the payment module to preemptively obtain payment authorization. | ¶47 | col. 33:45-51 |
| sending the request to a server...in response...receiving, from the server, an authorization grant...wherein the authorization grant expires upon satisfaction of one or more predetermined criteria | The CSC app sends the request to a server and receives back a time-limited authorization grant for a certain amount of funds. | ¶47 | col. 33:52-60 |
| detecting, by an application executing on the mobile device, a trigger condition to initiate a cashless transaction | The CSC app detects a "trigger condition," such as the user initiating a payment action within the app interface. | ¶47 | col. 33:61-64 |
| in response to detecting the trigger condition...sending to the electronic payment device the authorization grant...enabling a user to select an item or service... | After the trigger, the CSC app sends the previously-obtained authorization grant to the payment module, allowing the user to start the laundry machine. | ¶47 | col. 33:65-68 |
- Identified Points of Contention:
- Scope Questions: A central issue will be the definition of "authorization zone" and whether the CSC system uses such a concept to preemptively authorize funds before a user decides to transact. Does simply opening the app and selecting a machine constitute entering the zone, or is there a more passive, proximity-based detection as described in the patent?
- Technical Questions: The infringement analysis will likely turn on timing. Does the CSC app receive an authorization grant before a separate and distinct "trigger condition" occurs, as required by the claim? Or does the user's initial action (e.g., scanning a QR code, selecting a machine in the app) trigger the entire sequence of requesting and receiving authorization in a single, non-preemptive workflow?
V. Key Claim Terms for Construction
The Term: "adapter module" (’045 Patent, claim 1)
- Context and Importance: The claim requires a system with three distinct components: an adapter module, a mobile device, and a server. The definition of "adapter module" is critical to determining if CSC's hardware at the machine meets this limitation or if its functionality is distributed differently in a way that might avoid infringement. Practitioners may focus on whether this term requires a physically separate, retrofitted hardware dongle, as depicted in the patent's embodiments.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claim language itself is functional, describing what the module does (sends/receives via short-range communication) rather than what it is. This may support an interpretation that covers any hardware at the machine performing these functions, regardless of its specific form factor or integration.
- Evidence for a Narrower Interpretation: The specification repeatedly describes the adapter module as an "in-line dongle" designed for easy, 30-second installation into the machine's existing wiring bus (’045 Patent, col. 9:8-31). This focus on a separate, retrofittable dongle could support a narrower construction.
The Term: "authorization zone" (’208 Patent, claim 1)
- Context and Importance: This term is foundational to the patent's claimed method of streamlining transactions. The claim requires notifying the payment device that the mobile device has entered this zone, which then kicks off a preemptive authorization process. The case may hinge on whether CSC's system has a cognizable "zone" that triggers this specific sequence, or if the entire transaction is initiated by a single user action.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification describes the zone functionally, for example, as a "computed area based on the RSSI [Received Signal Strength Indicator]" (’208 Patent, col. 23:20-22). This could support a broad definition covering any proximity-based determination.
- Evidence for a Narrower Interpretation: The patent depicts the "authorization zone" as a distinct geographical area larger than the "payment zone" but within "Bluetooth range" (’208 Patent, Fig. 1). The detailed description explains that entering this zone initiates the authorization request before the user gets close enough to pay, which is a specific sequence of events (’208 Patent, col. 23:40-44). This may support a narrower construction requiring a passive, proximity-based trigger for the authorization request, distinct from a later user-initiated trigger for payment.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement of infringement by asserting that CSC "actively encourages their business partners and/or customers to use" the accused apps and payment modules in an infringing manner (Compl. ¶¶ 38, 49, 59). Contributory infringement is alleged on the basis that CSC's products are material components of the patented system, are not staple articles of commerce, and are known to be especially made for use in an infringing manner (Compl. ¶¶ 36, 48, 58).
- Willful Infringement: Willfulness is alleged based on pre-suit knowledge. The complaint asserts that CSC had actual knowledge of PayRange's technology and specific patents, including the ’045 patent, as a result of partnership discussions and technical presentations that began in October 2016, well before the accused products were launched in 2018 (Compl. ¶¶ 6, 10-12, 42).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of temporal sequence: does the accused CSC system perform the specific two-step process claimed in the ’208 patent by first preemptively obtaining a time-limited authorization grant based on proximity (entering an "authorization zone"), and only later using that grant upon a separate "trigger condition"? Or is the entire transaction—request and grant—initiated by a single user action, potentially creating a mismatch with the claim's required sequence?
- A key architectural question will be one of component definition: does the hardware CSC installs in laundry machines meet the functional and structural definition of the "adapter module" as claimed in the ’045 patent, particularly regarding its role as the initiator of the "authorization request for funds" that is then relayed by the mobile device?
- A central factual question for damages will be one of intent: given the detailed allegations that CSC engaged in partnership discussions, received presentations on Plaintiff's patent portfolio, and then launched a competing product, what evidence will support the claim that CSC acted with objective recklessness regarding a known risk of infringement, which could support a finding of willfulness and enhanced damages?