DCT

1:24-cv-00279

PayRange Inc v. CSC ServiceWorks Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:24-cv-00279, D. Del., 03/04/2024
  • Venue Allegations: Plaintiff alleges venue is proper in the District of Delaware based on Defendant having previously been organized as a Delaware corporation, placing infringing products into the stream of commerce with the expectation of use in the District, and consenting to venue through the appointment of a registered agent in Delaware.
  • Core Dispute: Plaintiff alleges that Defendant’s mobile payment systems for unattended laundry machines infringe three patents related to mobile-device-to-machine payment technology.
  • Technical Context: The technology enables cashless payments at unattended machines, such as laundry or vending machines, by using a consumer's smartphone as an intermediary between a hardware module on the machine and a remote payment server.
  • Key Procedural History: The complaint alleges that claims of the asserted patents have been challenged at the Patent Trial and Appeal Board (PTAB) in other litigation and were confirmed patentable. It also alleges that Defendant was aware of the patented technology through a series of partnership discussions, technical presentations, and product evaluations beginning in 2016, as well as through prior litigation involving Defendant's technology supplier.

Case Timeline

Date Event
2013-12-18 Earliest Patent Priority Date for patents-in-suit
2016-10-01 Initial meeting alleged between Plaintiff and Defendant
2017-04-19 Defendant allegedly began registering Plaintiff's devices for evaluation
2017-06-01 "Clean Show" trade show meeting alleged between parties
2018-01-01 Defendant allegedly released its initial mobile app, CSCPay Mobile
2020-01-01 Defendant allegedly released its accused mobile app, CSC Go
2020-07-21 U.S. Patent No. 10,719,833 Issue Date
2021-01-12 U.S. Patent No. 10,891,614 Issue Date
2021-03-04 Defendant was allegedly deposed in another patent lawsuit involving Plaintiff
2022-11-01 U.S. Patent No. 11,488,174 Issue Date
2023-03-03 Plaintiff allegedly sent Defendant a presentation regarding infringement
2023-03-27 Post-Grant Review certificate issued for the ’614 Patent confirming patentability of asserted claims
2023-08-18 Post-Grant Review certificate issued for the ’833 Patent confirming patentability of asserted claims
2024-03-04 Complaint Filing Date

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

U.S. Patent No. 10,719,833 - "Method and System for Performing Mobile Device-to-Machine Payments"

The Invention Explained

  • Problem Addressed: The patent addresses the difficulty of enabling cashless payments on unattended retail machines (e.g., vending, laundry) that lack a persistent, reliable internet connection. It also seeks to reduce the amount of user interaction required compared to other mobile payment solutions. (’833 Patent, col. 2:48-61, 10:37-49).
  • The Patented Solution: The invention uses a hardware adapter module at the retail machine that communicates with a user's mobile device via a short-range wireless protocol like Bluetooth. The mobile device, in turn, uses its own long-range cellular or Wi-Fi connection to obtain a pre-authorization for payment from a remote server. This authorization grant is then relayed from the phone to the adapter module to enable a transaction, effectively using the phone as a communications bridge and removing the need for a dedicated network connection at the machine itself. (’833 Patent, Abstract; Fig. 5).
  • Technical Importance: This architecture allowed for the rapid and inexpensive retrofitting of millions of existing coin-operated machines to accept modern mobile payments without installing costly networking infrastructure at each location (Compl. ¶3).

Key Claims at a Glance

The complaint asserts claims 2-27 of the ’833 Patent, noting that claim 1 was canceled in a post-grant review (Compl. ¶52-53). Independent claims 14 and 21 are representative of the asserted technology.

  • Independent Claim 14 (a mobile device):

    • Comprises a short-range and a long-range transceiver.
    • Comprises processors and memory with instructions to perform steps prior to a user's selection of an item.
    • Identifying an automatic retail machine based on a transmission received from an electronic payment device associated with the machine.
    • In response, obtaining from the payment device a request to preemptively obtain authorization for a cashless transaction.
    • Sending the request to a server.
    • In response, obtaining an authorization grant from the server.
    • Detecting a trigger condition to perform the transaction.
    • In response to the trigger, sending the authorization grant to the payment device to complete the transaction.

  • Independent Claim 21 (a non-transitory computer readable storage medium):

    • Recites instructions that, when executed, cause a mobile device to perform steps substantially similar to those recited in claim 14.

The complaint reserves the right to assert dependent claims (Compl. ¶51).

U.S. Patent No. 10,891,614 - "Method and System for Presenting Representations of Payment Accepting Unit Events"

The Invention Explained

  • Problem Addressed: In mobile payment systems for unattended machines, users may lack clear and immediate feedback on the status of their transaction, as their primary interaction is with their phone, not the machine itself (’614 Patent, col. 2:1-6).
  • The Patented Solution: The invention describes a system where, after a transaction is initiated, the mobile device receives a notification from the payment module indicating an event at the machine (e.g., "transaction complete," "transaction aborted"). The mobile device then provides a representation of this event to the user, such as a message on the display, a vibration, or an audible alert, thereby providing direct feedback on the user's personal device. (’614 Patent, Abstract).
  • Technical Importance: This method enhances the user experience and builds consumer trust by providing real-time, unambiguous feedback on the outcome of a payment transaction directly on the device the user is holding (Compl. ¶68).

Key Claims at a Glance

The complaint asserts at least claim 11 of the ’614 Patent (Compl. ¶70).

  • Independent Claim 11 (a method at a mobile device):
    • Notifying a payment device that the mobile device has entered an authorization zone.
    • Receiving a request from the device to preemptively obtain authorization.
    • Sending the request to a server and receiving an authorization grant that expires upon satisfaction of criteria.
    • Detecting a trigger condition to initiate a cashless transaction.
    • Sending the authorization grant to the payment device.
    • Providing a visual representation of the payment unit, an indication of a prepared balance, and an affordance that when pressed indicates the initiation of the transaction.

U.S. Patent No. 11,488,174 - "Method and System for Performing Mobile Device-to-Machine Payments"

  • Technology Synopsis: The patent is a continuation within the same family as the ’833 Patent and addresses the same core technical problem of enabling mobile payments at unattended machines that lack persistent network connectivity (Compl. ¶79). The complaint notes this patent adds features for easy installation, manual and hands-free modes, and multi-vend transactions (Compl. ¶79).
  • Asserted Claims: At least claim 1 (Compl. ¶80).
  • Accused Features: The complaint accuses Defendant's CSC Go system of infringing by performing a method of receiving a request from a payment device, sending the request to a server to obtain an authorization grant, detecting a trigger condition, and sending the grant to the payment device to complete a transaction (Compl. ¶81).

III. The Accused Instrumentality

Product Identification

  • The accused instrumentalities are Defendant’s mobile payment systems, primarily the "CSC Go" mobile application and its associated hardware payment modules installed in unattended retail machines (Compl. ¶5, 22). An earlier "CSCPay Mobile" app is also mentioned (Compl. ¶22).

Functionality and Market Context

  • The CSC Go system is alleged to be a mobile payment solution that enables customers to pay for laundry services at Defendant’s machines using a smartphone application (Compl. ¶3, 5). The complaint alleges that this system was developed after Defendant engaged in partnership discussions with Plaintiff and evaluated Plaintiff's own patented technology (Compl. ¶5-7). The complaint includes a screenshot from Plaintiff's presentation to Defendant, which highlights PayRange's "patented technology" as a key feature (Compl. p. 3).
  • The complaint alleges that Defendant is a "preeminent owner, nationwide, of coin-operated laundry machines" and that the launch of the accused CSC Go system was part of a strategy to reposition itself as a technology company, coinciding with a valuation increase from $3 billion to over $4 billion (Compl. ¶4, 22).

IV. Analysis of Infringement Allegations

’833 Patent Infringement Allegations

Claim Element (from Independent Claim 14) Alleged Infringing Functionality Complaint Citation Patent Citation
a first transceiver corresponding to a short-range communication mode, and a second transceiver, distinct from the first transceiver, corresponding to a long-range communication mode The accused mobile device includes Bluetooth for short-range communication with the payment module and Wi-Fi/Cellular for long-range communication with a server. ¶54 col. 35:2-6
identifying the automatic retail machine based at least in part on a transmission received from an electronic payment device The CSC Go app identifies the retail machine based on a transmission received from the payment module installed at the machine. ¶54(a) col. 33:10-14
obtaining, from the electronic payment device, a request...to preemptively obtain authorization to make funds available In response to identifying the machine, the app obtains a request to get authorization for a cashless transaction. ¶54(b) col. 33:15-21
sending, to a server, the request via the communications unit of the mobile device The app sends the authorization request to Defendant’s server using its long-range communications unit. ¶54(c) col. 33:22-24
obtaining from the server an authorization grant of an amount of funds In response, the app obtains an authorization grant from the server for an amount of funds. ¶54(d) col. 33:25-29
detecting, by an application executing on the mobile device, a trigger condition to perform the cashless transaction The CSC Go app detects a trigger condition, such as user input, to initiate the transaction. ¶54(e) col. 33:30-33
sending to the electronic payment device the authorization grant to enable completion of the cashless transaction The app sends the received authorization grant to the payment module to complete the transaction and start the machine. ¶54(f) col. 33:34-38
  • Identified Points of Contention:
    • Scope Questions: Claim 14 requires the preemptive authorization sequence to occur "prior to user selection of any items or services provided by an automatic retail machine." A question for the court may be whether the accused CSC Go system's workflow always adheres to this sequence, or if authorization is requested at a different point in the process. The complaint includes a diagram from a presentation to CSC showing the "BluKey Connect scans all machines in range and uploads data" as a distinct step before a user would interact with a specific machine (Compl. p. 8).
    • Technical Questions: A technical question may arise regarding the precise nature of the "request... to preemptively obtain authorization." The court may need to determine if the communication from the payment module to the app in the accused system constitutes a "request" as contemplated by the patent, or if it is merely a broadcast of presence that the app acts upon independently.

’614 Patent Infringement Allegations

Claim Element (from Independent Claim 11) Alleged Infringing Functionality Complaint Citation Patent Citation
notifying an electronic payment device...that the mobile device has entered an authorization zone The CSC Go app notifies the payment device when the user's phone enters the required proximity zone. ¶71 col. 25:1-4
receiving from the electronic payment device... a request to preemptively obtain authorization to make funds available The app receives a request from the payment module to obtain funds for a transaction. ¶71 col. 25:5-9
sending the request to a server...[and] receiving, from the server, an authorization grant...wherein the authorization grant expires The app communicates with Defendant’s server to send the request and receive an authorization grant that has an expiration condition. ¶71 col. 25:10-18
detecting...a trigger condition to initiate a cashless transaction The app application detects a user-initiated trigger to start the transaction. ¶71 col. 25:19-21
sending to the electronic payment device the authorization grant The app sends the authorization grant to the payment module to enable the transaction. ¶71 col. 25:22-28
providing a visual representation of available payment accepting unit, an indication of a prepared balance: and an affordance that when pressed indicates the initiation of the vending transaction The CSC Go app provides a user interface showing the machine, the available balance, and a virtual button to start the transaction. ¶71 col. 25:29-33
  • Identified Points of Contention:
    • Scope Questions: A central dispute may be whether the accused system's user interface literally meets the limitation of "providing...an affordance that when pressed indicates the initiation of the vending transaction." The complaint itself raises the possibility of a doctrine of equivalents argument, stating that a "press of a virtual button on a touch screen is equivalent to sliding a button on a touch screen interface" (Compl. ¶71). This suggests the infringement theory may not be entirely literal.
    • Technical Questions: The claim requires determining that "one or more predetermined criteria have not been satisfied" before sending the authorization grant. The complaint's infringement narrative for this patent does not explicitly map this element. Evidence will be needed to show how the accused system handles the expiration criteria of the authorization grant in its workflow. The complaint provides a screenshot of CSC’s account on the PayRange management portal, which shows device registration dates and status, suggesting a system capable of tracking such criteria (Compl. p. 7).

V. Key Claim Terms for Construction

  • The Term: "trigger condition" (’833 Patent, Claim 14; ’614 Patent, Claim 11)

  • Context and Importance: This term defines the event that causes the mobile device to send the final authorization grant to the machine. The patent describes both automatic, proximity-based triggers ("hands-free" mode) and manual user-initiated triggers ("swipe to pay" mode). The construction of this term will be critical to determining whether the specific user interaction in the accused CSC Go app constitutes infringement. Practitioners may focus on this term because the difference between a "swipe," a "button press," and entering a "payment zone" could be a central non-infringement argument.

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The specification refers to the trigger being based on "heuristics performed by the Mobile Device" or a "swipe" on the device, suggesting the term is not limited to a single type of action (’833 Patent, col. 17:59-62, 18:8-16).
    • Evidence for a Narrower Interpretation: The patent’s figures and detailed descriptions heavily feature two specific embodiments: entering a geographically-defined "payment zone" for the automatic trigger and a "swipe" gesture for the manual one (’833 Patent, Fig. 1; col. 10:58-11:11). A defendant may argue the term should be limited to these disclosed examples.

  • The Term: "preemptively obtain authorization" (’833 Patent, Claim 14; ’614 Patent, Claim 11)

  • Context and Importance: This phrase captures the core architectural concept of securing payment authorization before a transaction is finalized. The infringement analysis will depend on whether the accused system's authorization workflow is considered "preemptive" as defined by the patent, which links it to a mobile device entering an "authorization zone."

  • Intrinsic Evidence for Interpretation:

    • Evidence for a Broader Interpretation: The patent claims a method to "preemptively obtain authorization to make funds available for a cashless transaction," which could be read broadly to cover any authorization obtained before the final command to vend is given (’833 Patent, col. 33:17-21).
    • Evidence for a Narrower Interpretation: The specification describes a specific two-zone proximity model, where the preemptive request occurs upon entering a wider "authorization zone," distinct from the smaller, closer "payment zone" where the transaction is triggered (’833 Patent, Fig. 1; col. 23:1-13). This could support an argument that "preemptively" is tied to this specific geographic sequence.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges active inducement, stating that Defendant "actively encourages their business partners and/or customers to use CSC Go" with the specific intent to cause infringement (Compl. ¶58, 72, 83). It also pleads contributory infringement, alleging the accused products are a material part of the invention and are especially made or adapted for infringement (Compl. ¶56, 82).
  • Willful Infringement: Willfulness is a central theme of the complaint. It alleges that Defendant had pre-suit knowledge of the patents and technology based on a detailed history of business dealings, including receiving technical presentations that explicitly referenced Plaintiff's "patented technology," receiving and testing hardware products with patent markings, and having its technology supplier (KioSoft) involved in prior litigation with Plaintiff over related patents (Compl. ¶7, 14, 23, 62). The complaint also alleges willful blindness, stating that to the extent Defendant did not have actual knowledge, it "willfully blinded itself to such knowledge by failing to investigate patent families which PayRange identified as relevant" (Compl. ¶19). The complaint includes an image of the back of a PayRange device provided to CSC, which clearly displays a patent number (Compl. p. 6).

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

  • A central issue will be one of willful infringement and pre-suit knowledge: The court will examine the extensive factual record alleged in the complaint—including partnership discussions, evaluation of marked products, and litigation involving a technology partner—to determine if Defendant's conduct rises to the level of willfulness. The outcome will depend heavily on the evidence presented regarding what Defendant knew about the patents and when.
  • A key question for infringement will be one of definitional scope: can the term "trigger condition," which the patent specification illustrates with examples like entering a proximity zone or performing a "swipe," be construed to cover the specific user interface interactions, such as a virtual button press, implemented in the accused "CSC Go" application?
  • A further infringement question will be one of literal scope versus equivalence: For the ’614 patent, which claims an "affordance that when pressed indicates the initiation of the vending transaction," does the accused system's interface meet this limitation literally, or will Plaintiff need to rely on the doctrine of equivalents, as suggested by the complaint's own language comparing a "press" to a "slide"?