Patent Armory Inc v. MTY Franchising USA Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:

  • Plaintiff: Patent Armory Inc. (Canada)
  • Defendant: MTY Franchising USA, Inc. (Delaware)
  • Plaintiff’s Counsel: Garibian Law Offices, P.C.; Rabicoff Law LLC

• Case Identification: 1:24-cv-00499, D. Del., 04/22/2024

• Venue Allegations: Venue is alleged to be proper in the District of Delaware because Defendant is incorporated in Delaware and maintains an established place of business in the District.

• Core Dispute: Plaintiff alleges that Defendant’s business operations infringe five patents related to intelligent call routing and auction-based systems for matching entities.

• Technical Context: The patents relate to sophisticated call-center technologies that use economic principles and multi-factor analysis to optimize the routing of communications between parties, such as customers and agents.

• Key Procedural History: The complaint does not allege any significant procedural events such as prior litigation, licensing history, or inter partes review proceedings involving the patents-in-suit.

Case Timeline

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

U.S. Patent No. 10,237,420 - Method and system for matching entities in an auction

Issued Mar. 19, 2019

The Invention Explained

• Problem Addressed: The patent describes the challenge in traditional call centers of efficiently handling electronic customer contacts while balancing service quality and resource utilization (’420 Patent, col. 1:26-34). Traditional systems, such as those using first-come-first-served routing, are often suboptimal when agents have varying skills or when complex business goals are at play (’420 Patent, col. 3:1-14).
• The Patented Solution: The invention proposes a system that treats the matching of an incoming communication (a "first entity") with an available agent (a "second entity") as an auction (’420 Patent, col. 17:9-18). It defines parameters for both the caller and the available agents and performs an "automated optimization" that considers not only the best match but also the "economic surplus" of that match and the "opportunity cost" of making a particular agent unavailable for other potential matches (’420 Patent, Abstract). This allows for dynamic, real-time routing decisions that align with broader business objectives beyond simply connecting the longest-waiting caller to the longest-idle agent (’420 Patent, Fig. 1).
• Technical Importance: This approach moves beyond simple, static routing rules to a dynamic, economically-driven model that can adapt to changing call loads and business priorities in real time, aiming for global optimization of call center resources (’420 Patent, col. 5:10-24).

Key Claims at a Glance

• The complaint does not specify which claims of the ’420 Patent are asserted, instead incorporating by reference an external claim chart exhibit (Compl. ¶¶17-18). Independent claim 1 is representative of the patent’s core method.
• Claim 1 Elements:
  • Defining a plurality of multivalued scalar data representing inferential targeting parameters for the first entity.
  • Defining a plurality of multivalued scalar data for each of a plurality of second entities, representing respective characteristic parameters.
  • Performing an automated optimization with respect to an economic surplus of a respective match of the first entity with one of the second entities.
  • The optimization also considers an opportunity cost of the unavailability of the selected second entity for matching with an alternate first entity.
• The complaint reserves the right to assert additional claims (Compl. ¶15).

U.S. Patent No. 10,491,748 - Intelligent communication routing system and method

Issued Nov. 26, 2019

The Invention Explained

• Problem Addressed: This patent addresses similar problems as the ’420 Patent, focusing on the limitations of traditional, non-deterministic operating systems in handling real-time communications control, which can lead to latencies and inefficiencies in call routing (’748 Patent, col. 1:26-2:24).
• The Patented Solution: The invention describes a communications routing system that uses processors to represent the "predicted characteristics" of both communication sources (e.g., callers) and communication targets (e.g., agents), with each having an associated "economic utility" (’748 Patent, Abstract). The system then determines an "optimal routing" by maximizing an "aggregate utility" based on these predicted characteristics, effectively creating an intelligent, low-level routing architecture that can make sophisticated decisions without relying on external high-level management systems for every transaction (’748 Patent, col. 17:9-25).
• Technical Importance: The invention integrates intelligent, economic-based decision-making directly into the low-level communications management system, aiming to reduce latency and improve the efficiency and optimality of routing decisions in real time (’748 Patent, col. 18:55-64).

Key Claims at a Glance

• The complaint does not specify which claims of the ’748 Patent are asserted, incorporating by reference an external claim chart exhibit (Compl. ¶¶26-27). Independent claim 1 is representative of the patent’s system.
• Claim 1 Elements:
  • A communications routing system with at least one processor executing instructions.
  • Representing a plurality of predicted characteristics of a plurality of communications sources, each having an economic utility.
  • Representing a plurality of predicted characteristics of a plurality of communications targets, each having an economic utility.
  • Determining an optimal routing between the sources and targets by maximizing an aggregate utility with respect to the predicted characteristics.
• The complaint reserves the right to assert additional claims (Compl. ¶21).

U.S. Patent No. 7,023,979 - Telephony control system with intelligent call routing

Issued Apr. 4, 2006

• Technology Synopsis: This patent describes a communications management system that receives a "communications classification" and uses a database of agent skill scores and skill weights to compute an optimal agent selection (’979 Patent, Abstract). The system directly controls the routing of the communication based on this computation, integrating the intelligent decision-making within the telephony control system itself (’979 Patent, col. 1:60-2:10).
• Asserted Claims: The complaint does not identify specific asserted claims (Compl. ¶¶32-33).
• Accused Features: The complaint alleges infringement by "Exemplary Defendant Products" but does not identify them or their specific features, instead referencing an external exhibit (Compl. ¶30).

U.S. Patent No. 7,269,253 - Telephony control system with intelligent call routing

Issued Sep. 11, 2007

• Technology Synopsis: This patent is related to the ’979 Patent and similarly discloses a system for intelligent call routing. It describes a combinatorial optimization based on communication classifications and target characteristics to determine an optimal routing, emphasizing the goal of maximizing a cost-benefit for the overall system (’253 Patent, Abstract).
• Asserted Claims: The complaint does not identify specific asserted claims (Compl. ¶¶38-39).
• Accused Features: The complaint alleges infringement by "Exemplary Defendant Products" but does not identify them or their specific features, instead referencing an external exhibit (Compl. ¶36).

U.S. Patent No. 9,456,086 - Method and system for matching entities in an auction

Issued Sep. 27, 2016

• Technology Synopsis: This patent, from the same family as the ’420 Patent, describes matching entities by defining their characteristics as "multivalued scalar data" and performing an automated optimization (’086 Patent, Abstract). The optimization considers the "economic surplus" of a potential match and the "opportunity cost" of making a resource unavailable for other potential matches, framing the routing decision as an economic auction (’086 Patent, Abstract).
• Asserted Claims: The complaint does not identify specific asserted claims (Compl. ¶¶47-48).
• Accused Features: The complaint alleges infringement by "Exemplary Defendant Products" but does not identify them or their specific features, instead referencing an external exhibit (Compl. ¶42).

III. The Accused Instrumentality

Product Identification

The complaint does not identify any specific accused products, methods, or services by name (Compl. ¶¶1-50). It refers generally to "Exemplary Defendant Products" which are purportedly identified in external exhibits not attached to the complaint itself (Compl. ¶15, ¶21, ¶30, ¶36, ¶42).

Functionality and Market Context

The complaint does not provide sufficient detail for analysis of the functionality or market context of the accused instrumentalities. It makes only conclusory allegations that the unidentified products "practice the technology claimed" by the patents-in-suit (Compl. ¶17, ¶26, ¶32, ¶38, ¶47).

IV. Analysis of Infringement Allegations

The complaint does not contain substantive infringement allegations within its body for any of the asserted patents. Instead, it incorporates by reference external claim chart exhibits (Exhibits 6-10), which were not provided with the complaint (Compl. ¶18, ¶27, ¶33, ¶39, ¶48). The narrative allegations are conclusory, stating only that Defendant's unidentified products "satisfy all elements" of the asserted claims (Compl. ¶17, ¶26, ¶32, ¶38, ¶47). Without the specific infringement theory from the plaintiff, a detailed analysis or claim chart summary is not possible based on the provided document.

No probative visual evidence provided in complaint.

• Identified Points of Contention:
  • Pleading Sufficiency: A primary question may be whether the complaint's reliance on external, unattached exhibits and its lack of factual detail regarding the accused products and how they infringe meet the pleading standards for patent infringement under Federal Rules of Civil Procedure 8 and the precedents set by Iqbal and Twombly.
  • Scope Questions: Assuming the asserted technology relates to call center routing, a central dispute may involve whether the claims, which use terms like "auction," "agent," and "economic surplus," can be construed to read on the business operations of a food service franchisor like MTY. For example, does a customer placing a food order constitute a "first entity" being matched with a "second entity" (a store or employee) through an "auction" as contemplated by the ’420 and ’086 Patents?
  • Technical Questions: A key factual question will be what evidence exists that Defendant's systems perform the specific "multifactorial optimization" required by the claims (’420 Patent, col. 37:7) or maximize an "aggregate utility" (’748 Patent, col. 1:60-63). The patents describe complex, economically-driven calculations, and a dispute may arise over whether the accused systems perform these specific functions or operate on simpler, conventional logic.

V. Key Claim Terms for Construction

Analysis based on representative independent claim 1 of the ’420 Patent.

• The Term: "auction"

• Context and Importance: This term is central to the inventive concept of the ’420 and ’086 Patents. The infringement case may turn on whether Defendant’s process for handling customer communications can be characterized as an "auction." Practitioners may focus on this term because its ordinary meaning implies a formal bidding process, which may not be present in the accused systems.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification describes the process of "routing communications between communications channels based on the results of an auction which is sensitive to both economic factors and non-economic factors" (’420 Patent, col. 11:15-19). This could be argued to encompass any selection process that weighs multiple factors, not just a formal bidding procedure.
  • Evidence for a Narrower Interpretation: The detailed description repeatedly discusses bidding, including scenarios where agents "bid for a caller" and an employer "gets the benefit of competition between agents" (’420 Patent, col. 22:50-60). This language may support a narrower construction requiring an actual competitive bidding mechanism.

• The Term: "economic surplus"

• Context and Importance: The performance of an "automated optimization with respect to an economic surplus" is a required step in claim 1 of the ’420 Patent. The viability of the infringement claim may depend on whether the accused system calculates or considers a metric that meets this definition.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The patent does not appear to provide an explicit definition. A party could argue it should be given its plain and ordinary meaning in economics, which might broadly cover any measure of utility or value gained from a transaction. The patent discusses optimizing for factors like "lowest cost," "customer satisfaction," and "sales volume," which could all be argued as components of an "economic surplus" (’420 Patent, col. 4:8-9; col. 24:30-41).
  • Evidence for a Narrower Interpretation: A defendant may argue that the term requires a specific, quantitative calculation of consumer and producer surplus as understood in formal economic theory. The lack of a specific formula or algorithm in the specification for calculating "economic surplus" could be a point of contention regarding both claim construction and indefiniteness.

VI. Other Allegations

• Indirect Infringement: The complaint alleges induced infringement of the ’748 and ’086 Patents. The allegations are based on the assertion that Defendant distributes "product literature and website materials" that instruct end users on how to use the accused products in an infringing manner (Compl. ¶24, ¶45).
• Willful Infringement: The complaint alleges willful infringement of the ’748 and ’086 Patents. The basis for this allegation is "actual knowledge" which, according to the complaint, "constitutes actual knowledge of infringement as alleged here" based on the "service of this Complaint" (Compl. ¶23, ¶44). This suggests the claim for willfulness is based on alleged post-suit continuation of infringement rather than pre-suit knowledge.

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

• Pleading and Specificity: A threshold issue will be whether the complaint, which identifies neither the accused products nor the specific infringement mechanisms, provides sufficient notice to the Defendant. The case may face an early motion to dismiss or a motion for a more definite statement based on the complaint’s reliance on conclusory allegations and unprovided external exhibits.
• Definitional Scope: The central substantive dispute will likely be one of claim construction. Can patent claims rooted in the technical field of economically optimized call-center routing, using terms like "auction" and "economic surplus," be construed broadly enough to cover the customer communication and order fulfillment processes of a quick-service restaurant franchisor?
• Functional Operation: An evidentiary question will be whether Defendant’s systems, once identified, actually perform the complex, multi-factor optimizations required by the claims. The case may turn on a technical comparison between the accused systems' actual functionality and the specific computational and logical steps recited in the patent claims, such as maximizing an "aggregate utility" or calculating an "opportunity cost."