DCT

1:18-cv-01815

Valentine Communications LLC v. Six Continents Hotels Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:17-cv-00754, E.D. Tex., 12/15/2017
  • Venue Allegations: Venue is based on allegations that the Defendant transacts business in the district and maintains at least one regular and established place of business within the district, specifically a Holiday Inn Express & Suites in Marshall, Texas.
  • Core Dispute: Plaintiff alleges that Defendant’s IHG Mobile App infringes two patents related to providing location-based discounts and facilitating commercial transactions on mobile devices.
  • Technical Context: The technology at issue falls within the e-commerce and mobile commerce domain, specifically concerning systems that provide customized offers to users based on criteria such as location, user-defined preferences, and purchasing history.
  • Key Procedural History: The operative pleading is a First Amended Complaint. No other significant procedural events, such as prior litigation or post-grant proceedings involving the patents-in-suit, are mentioned in the complaint.

Case Timeline

Date Event
2003-06-16 '672 Patent - Earliest Priority Date
2004-06-15 '785 Patent - Earliest Priority Date
2013-10-29 U.S. Patent No. 8,567,672 Issued
2013-11-26 U.S. Patent No. 8,590,785 Issued
2017-12-15 First Amended Complaint Filed

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

No probative visual evidence provided in complaint.

U.S. Patent No. 8,567,672 - "Location Based Discounts"

  • Patent Identification: U.S. Patent No. 8,567,672, titled "Location Based Discounts," issued on October 29, 2013 (’672 Patent).
  • The Invention Explained:
    • Problem Addressed: The patent’s background section describes the limitations of conventional e-commerce buying schemes, such as fixed-price or volume-based systems, which do not allow buyers to specify non-price criteria (e.g., delivery time, quality) that may be more important to them than cost. These systems also limit sellers' ability to tailor offers based on criteria other than price (’672 Patent, col. 1:30-2:23).
    • The Patented Solution: The invention proposes a "multiple criteria buying and selling methodology" that functions as an electronic forum. In this system, sellers can create deals based on a variety of parameters, and buyers can input their specific purchasing criteria to find matching offers. A key embodiment is a "dynamic discount card" that can access this system to obtain and display pricing and product information (’672 Patent, Abstract; col. 2:47-54).
    • Technical Importance: The described technology aimed to create a more sophisticated e-commerce marketplace that moved beyond simple price competition to accommodate multi-faceted commercial transactions, thereby better aligning with the complex needs of both buyers and sellers (’672 Patent, col. 3:1-5).
  • Key Claims at a Glance:
    • The complaint asserts independent claim 18 (’672 Patent, col. 28:5-42; Compl. ¶10).
    • The essential elements of independent claim 18, a non-transitory computer-readable storage medium claim, include instructions for:
      • Receiving real-time location information of a user device after the user has consented to the information being collected by a third party.
      • Receiving user-defined search criteria, including a quantity of a product/service and at least one date range.
      • Receiving a discount from a seller that includes pricing and quantity information for a specific date range.
      • Matching the discount to the user based on the quantity, the date range, and a user-specified location for the product/service.
      • Accessing a user account with past transaction information and a stored payment method.
      • Presenting the discount and requiring the user to redeem it within a preset time period or based on availability.
    • The complaint reserves the right to assert other claims, stating infringement of "one or more claims of the ’672 Patent" (Compl. ¶11).

U.S. Patent No. 8,590,785 - "Discounts in a Mobile Device"

  • Patent Identification: U.S. Patent No. 8,590,785, titled "Discounts in a Mobile Device," issued on November 26, 2013 (’785 Patent).
  • The Invention Explained:
    • Problem Addressed: The patent identifies a "commonality among all of the costing schemes is that each buyer operates independently," leading to "missed opportunities for both the buyer and seller" due to a lack of communication and aggregation of demand (’785 Patent, col. 2:16-47).
    • The Patented Solution: The patent describes a system centered on a "universal discount card" for mobile devices that allows consumers to participate in a "buying group." The system aggregates consumer purchases and releases rewards or discounts when the group's activity meets criteria set by sellers. The system also uses location data to provide targeted, contextual offers to the mobile device (’785 Patent, Abstract; col. 3:9-20).
    • Technical Importance: The invention leverages mobile technology to enable and automate demand aggregation (group buying), allowing sellers to target groups of consumers with dynamic offers based on collective purchasing behavior and location data (’785 Patent, col. 3:9-20).
  • Key Claims at a Glance:
    • The complaint asserts independent claim 1 (’785 Patent, col. 22:46-col. 23:7; Compl. ¶18).
    • The essential elements of independent claim 1, a mobile device claim, include:
      • A non-transitory computer-readable storage medium with instructions to prompt a user to accept terms and conditions to activate a service, with notice about data collection.
      • The medium further includes instructions to generate purchasing data associated with credit or debit card transactions.
      • A location-based service module to generate location data corresponding to the user's activities.
      • A wireless transmitter that transmits location data to a third party, automatically transmits a subset of the purchasing data, and receives a responsive offer based on a search function allowing user input of location and time criteria.
    • The complaint reserves the right to assert infringement of "one or more claims of the ’785 Patent" (Compl. ¶19).

III. The Accused Instrumentality

Product Identification

  • Product Identification: The "IHG Mobile App" (the "Accused Instrumentality") (Compl. ¶10, ¶18).

Functionality and Market Context

  • Functionality and Market Context: The complaint alleges the IHG Mobile App is a software application that runs on mobile phones and provides access to hotel booking services (Compl. ¶12, ¶20). Its relevant technical functions, as alleged, include receiving user-defined criteria such as number of rooms, guests, and date ranges to search for hotel deals (Compl. ¶12). It is alleged to receive real-time location data from the user's device after the user consents via a privacy policy (Compl. ¶12). The app allegedly presents discount and reward offers from IHG hotels, which include pricing and availability for a given date range, and matches these offers to the user based on the user's criteria and specified hotel location (Compl. ¶12). The app is also alleged to provide user accounts that store past transactional data ("My Bookings") and payment methods (Compl. ¶12). Functionality alleged to map to the ’785 Patent includes prompting users to accept terms to activate the booking service, generating purchasing data from transactions, using a location-based module, and transmitting location and purchasing data to third parties (such as a "phone carrier") to receive offers in return (Compl. ¶20). The complaint does not contain specific allegations regarding the app's market share but identifies the defendant as a major international hotel group.

IV. Analysis of Infringement Allegations

’672 Patent Infringement Allegations

Claim Element (from Independent Claim 18) Alleged Infringing Functionality Complaint Citation Patent Citation
receiving real-time location information of the user device when the user has consented to having information associated with the user device collected by a third party; The app receives the user's real-time location information after the user consents via a privacy policy that notes data collection and sharing with third-party vendors. ¶12 col. 9:18-34
receiving user-defined search criteria sent by the user device, wherein the criteria include: a quantity of a product or service, and at least one date range... IHG servers receive user-defined criteria from the app, such as the number of rooms, number of guests, and a date range for the stay. ¶12 col. 17:51-64
receiving a discount offered by at least one seller, the discount including pricing information... and a quantity of the product or service available for delivery or performance within a given date range... The app receives discount and reward offers from IHG hotels, which include pricing information and the quantity of available rooms for a given date range. ¶12 col. 18:11-20
matching the discount to the user based on: the quantity of the product or service, the date range..., and a location specified by the user... The app matches the discount to the user based on the criteria defined by the user (quantity of rooms, date range) for a service to be performed at a user-specified location (the hotel). ¶12 col. 18:1-8
accessing by way of the user device an account with past transactional information and a stored payment method associated with the user; The app provides a facility for user accounts that store past transactional information (e.g., "My Bookings") and stored payment methods. ¶12 col. 17:45-55
presenting the discount that requires the user to redeem the discount within a preset time period or based on availability of the product or service. The app requires the user to redeem reward points within a preset time period, and the discount is subject to the availability of rooms. ¶12 col. 10:11-15

’785 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
a non-transitory computer readable storage medium having embodied thereon instructions executable by a processor to: prompt a user to accept terms and conditions on the mobile device as a requirement to activate a service with at least one service provider... The IHG App prompts the user to accept terms and conditions on the mobile phone to activate the hotel booking service, providing a privacy policy. ¶20 col. 17:15-26
generate purchasing data associated with the user that includes information about products or services purchased by way of a credit or debit card; The IHG App generates purchasing data associated with the user, such as hotel price details, for purchases made with a credit or debit card. ¶20 col. 17:45-55
a location-based service module executable to generate location-based data, wherein the location-based data corresponds to activities associated with the user of the mobile device; The IHG App includes a location-based module that uses signals (e.g., cell tower, satellite, WiFi) to generate location-based data corresponding to the user's location. ¶20 col. 9:1-col. 10:65
a wireless transmitter that: transmits the location-based data to a third party, automatically transmits at least a subset of the purchasing data, and receives an offer... in response to the transmission... The app, via the phone's transmitter, sends location data to a third party (e.g., a phone carrier), automatically transmits purchasing data (hotel information), and receives offers (discounts/rewards) in response. ¶20 col. 15:46-54
  • Identified Points of Contention:
    • Scope Questions: A potential dispute for both patents may arise from the scope of the claims versus the teachings in the specification. The specification for both patents is heavily focused on a B2B electronic marketplace for goods (e.g., raw glass), while the asserted claims are directed at consumer-facing mobile services (e.g., hotel booking). A defense may raise the question of whether the specification provides adequate written description to support the full scope of the asserted claims as applied to the accused mobile app.
    • Technical Questions: For the ’672 Patent, a key question is whether the complaint provides sufficient evidence that the app's data flow meets the specific limitation of "receiving real-time location information... collected by a third party." For the ’785 Patent, the infringement analysis will turn on the identity of the "third party" that receives location and purchasing data, and whether the alleged transmission to a "phone carrier" or the IHG server meets the claim's requirements. Further, the allegation that the app "automatically transmits" purchasing data will be a factual question requiring evidence of the app's specific operation.

V. Key Claim Terms for Construction

For the ’672 Patent:

  • The Term: "receiving... information associated with the user device collected by a third party" (from claim 18).
  • Context and Importance: This limitation is central to the infringement theory, as it defines the source and pathway of the location data. The construction of "collected by a third party" will be critical. Practitioners may focus on this term because its basis in the patent's specification, which describes a direct client-server model, could be contested, raising questions of both claim scope and validity under 35 U.S.C. § 112.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The patent's general discussion of interacting with a "network" and external systems could be argued to implicitly cover interactions with third-party data collectors, even if not explicitly named (’672 Patent, col. 9:18-26). A plaintiff may argue "third party" simply means any entity other than the user or the direct seller.
    • Evidence for a Narrower Interpretation: The specification's detailed embodiments and figures (e.g., Fig. 7) depict a system architecture where buyers and sellers interact via a central server. Language tying the functionality to this specific architecture could support a narrower reading that requires the "third party" to be distinct from the central transaction facilitator.

For the ’785 Patent:

  • The Term: "a wireless transmitter that... transmits the location-based data to a third party" (from claim 1).
  • Context and Importance: The identity of the "third party" is dispositive. The complaint alleges this could be the user's "phone carrier," but it could also be interpreted as the defendant's own server system. The court's construction of this term will define the factual proof required for infringement.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The patent describes a client computer (the mobile device) communicating with a server computer over the internet (’785 Patent, col. 16:48-64, Fig. 8b). A plaintiff could argue that the server system, operated by or for the defendant, constitutes a "third party" relative to the user and their mobile device.
    • Evidence for a Narrower Interpretation: A defendant could argue that the "third party" must be an entity unaffiliated with the service provider (IHG). If IHG operates the server that receives the data, it may not be considered a "third party" in the context of the transaction. This would narrow the inquiry to entities like the mobile carrier, requiring a different and potentially more difficult showing of infringement.

VI. Other Allegations

  • Indirect Infringement: The complaint makes conclusory recitations of inducement and contributory infringement in its prayer for relief (Compl. ¶24). However, it does not plead specific facts in the body of the complaint to support the knowledge and intent elements required for such claims, such as referencing user manuals or other materials that instruct users to perform the claimed methods.

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

  • A core issue will be one of claim scope versus specification support: Can the specific, consumer-focused limitations in the asserted claims (e.g., '672's "real-time location information... collected by a third party") be validly construed to read on the accused mobile app, given that the patents' specifications heavily describe a B2B e-commerce system for physical goods?
  • A key evidentiary question will be one of architectural identity and data flow: What technical evidence will show which entity functions as the "third party" that receives location and purchasing data under the asserted claims, and does the accused IHG Mobile App’s actual operation match the specific transmission and data generation steps required by the patents?