Vestcom New Century LLC v. Id Images LLC

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Vestcom New Century LLC (Delaware)
  • Defendant: I.D. Images LLC (Ohio) and Ready Flow Enterprises, LLC (Arkansas)
  • Plaintiff’s Counsel: Morgan, Lewis & Bockius LLP
• Case Identification: 1:19-cv-00600, N.D. Ill., 01/29/2019
• Venue Allegations: Plaintiff alleges venue is proper in the Northern District of Illinois because Defendants transact business in the district, have committed alleged acts of infringement there, and Defendant I.D. Images maintains a physical place of business and registered agent within the district.
• Core Dispute: Plaintiff alleges that Defendants’ retail shelf-edge labels and signage infringe two patents related to the construction of partially-secured labels that feature both active and selectively deactivated adhesive zones.
• Technical Context: The technology involves label sheets, often for in-store printing, designed to make the application and replacement of retail shelf tags more efficient by creating labels that only partially adhere to a surface.
• Key Procedural History: The complaint states that Plaintiff sent a letter to Defendant I.D. Images on November 8, 2018, providing notice of the patents-in-suit and the alleged infringement. The complaint also notes that I.D. Images acquired the assets of Ready Flow Enterprises in December 2017.

Case Timeline

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

U.S. Patent No. 6,926,942: “Partially-secured label, label sheet, and manufacturing method” (Issued Aug. 9, 2005)

The Invention Explained

• Problem Addressed: The patent describes prior art shelf-labeling as a labor-intensive process, requiring personnel to separate individual labels and remove specific liner portions before application, which is inefficient, particularly in retail environments with frequent price changes (’942 Patent, col. 2:60-64).
• The Patented Solution: The invention proposes a label sheet constructed from a face stock layer and a liner, joined by an adhesive. The key innovation is the selective application of an "adhesive deadening agent" to create distinct strips of active (sticky) and inactive (non-sticky) adhesive on the same layer. This allows a user to easily peel a label that has one end for attachment and another free end, simplifying handling and placement on a shelf edge (’942 Patent, Abstract; col. 2:11-27).
• Technical Importance: This method was designed to reduce material and labor costs associated with retail labeling by streamlining the process of applying and removing partially-adhered shelf tags (’942 Patent, col. 2:42-44).

Key Claims at a Glance

• The complaint asserts independent claim 1 (Compl. ¶15).
• Essential elements of claim 1 include:
  • A label sheet comprising:
  • (a) a face stock layer having a printed outer surface, an inner surface, an upper edge, and a lower edge;
  • (b) a liner adhesively attached to the inner surface of the face stock with a layer of adhesive;
  • The layer of adhesive comprising a strip of an active adhesive adjacent to a first side edge of the face stock layer and a strip of inactive adhesive positioned adjacent to a second opposite side edge;
  • The inactive adhesive including a layer of adhesive deactivating material applied over the layer of adhesive.

U.S. Patent No. 6,579,585: “Partially-secured label, label sheet and manufacturing method” (Issued Jun. 17, 2003)

The Invention Explained

• Problem Addressed: The patent identifies the inefficiency of conventional shelf labels, where removing liner backings from discrete labels is cumbersome and costly for retailers who must frequently update signage (’585 Patent, col. 1:55-66).
• The Patented Solution: The invention provides a label sheet where an "adhesive deadening material" is applied in strips to a layer of adhesive, creating zones of active and inactive adhesion. Individual labels formed from this sheet have an attachment end with active adhesive and a free end with inactive adhesive, making them "partially-secured" and easier to handle and mount (’585 Patent, Abstract; col. 2:10-27). Figure 2 of the patent illustrates a resulting label (28) attached to a shelf edge (50), with one end (28a) secured by adhesive and the other (28b) unattached.
• Technical Importance: The technology aimed to provide an economical and efficient label system for retail environments that could be produced with modified existing equipment and used for both pre-printing and on-demand customer printing (’585 Patent, col. 2:30-44).

Key Claims at a Glance

• The complaint asserts independent claim 1 (Compl. ¶25).
• Essential elements of claim 1 include:
  • A label sheet comprising:
  • (a) a face stock layer having a printed outer surface, an inner surface, an upper edge, and a lower edge;
  • (b) a liner adhesively attached to the inner surface of the face stock with a layer of adhesive;
  • The layer of adhesive comprising a strip of an active adhesive adjacent the upper edge of the face stock layer and a strip of inactive adhesive adjacent the lower edge;
  • The inactive adhesive including a layer of adhesive deactivating material applied over the layer of adhesive.

III. The Accused Instrumentality

• Product Identification: The accused products are identified as Point-of-Purchase ("POP") shelf and display signage, including "POP sign cards," "shelf edge tags," and "shelf edge talkers" (Compl. ¶7). Specific examples cited include "Vinyl Adhesive Shelf Talkers" and "Vu-Thru tags" (Compl. ¶16, Exs. 9, 13).
• Functionality and Market Context: The complaint alleges the accused products are sold as laser-printable sheets (e.g., 8½" x 11") comprising multiple tags (Compl. ¶16, Ex. 6; ¶16, Ex. 13). The complaint includes a diagram from Defendant’s materials showing a label construction with five components: an optional topcoat, face stock, adhesive, backing/liner, and substrate (Compl. ¶16, Ex. 8, p. 5). Product descriptions state that a "removable section of backing exposes top portion of adhesive to attach talker to shelf," suggesting a design for partial adhesion (Compl. ¶16, Ex. 9). The complaint presents these products as central to Defendants' offerings for the retail industry (Compl. ¶2, ¶7).

IV. Analysis of Infringement Allegations

’942 Patent Infringement Allegations

’585 Patent Infringement Allegations

• Identified Points of Contention:
  • Technical Question: The complaint's allegation of an "adhesive deactivating material" relies on unspecified testing. A central factual dispute may be whether the accused products create an inactive zone by applying a "deactivating material" over a uniform adhesive layer (as claimed), or by using an alternative method not covered by the patents, such as pattern-coating the adhesive only in active areas.
  • Scope Question: The ’942 Patent claims an active strip on a "first side edge" and an inactive strip on a "second opposite side edge," while the parent ’585 Patent claims active/inactive strips on the "upper edge" and "lower edge." The complaint applies both sets of terms to the same product configuration. This raises the question of whether the physical layout of the accused products meets the specific orientational language of each patent’s claims, or if there is a mismatch with one or both.

V. Key Claim Terms for Construction

• The Term: "adhesive deactivating material"

• Context and Importance: This term is the technological core of the asserted claims. The infringement analysis depends entirely on whether the accused products use such a material. Practitioners may focus on this term because the Defendants could argue their manufacturing process (e.g., selectively applying adhesive rather than deactivating it) does not involve a "deactivating material" at all.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification refers to the substance as an "adhesive deadening agent" and states its function is to "neutralize" the adhesive (’585 Patent, col. 3:57-60). This language may support a functional definition covering any substance applied to an adhesive layer that renders it non-tacky.
  • Evidence for a Narrower Interpretation: The specification describes a method where the "adhesive deadening agent is applied to the adhesive layer" after delamination, implying a sequence of steps where a material is added on top of an existing adhesive (’585 Patent, col. 4:60-63). This could support a narrower definition limited to substances applied post-adhesion, potentially excluding processes like pattern-coating.

• The Term: "upper edge" / "lower edge" (’585 Patent) and "first side edge" / "second opposite side edge" (’942 Patent)

• Context and Importance: The two patents use different directional language, yet the complaint alleges the same accused product infringes both. The definition of these terms relative to the product's structure is critical. Practitioners may focus on this distinction to argue that the accused product's fixed orientation cannot simultaneously satisfy the potentially different limitations of both patents.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The patents contemplate various orientations. For example, the ’585 patent discloses embodiments with both "longitudinally-extending strips" (claim 8) and "transversely-extending strips" (claim 9) of deactivating material, suggesting the terms are relative to the sheet's axis and not fixed.
  • Evidence for a Narrower Interpretation: The use of distinct terms like "upper," "lower," and "side" may imply specific, non-interchangeable orientations relative to the label sheet as depicted in figures like Figure 1. A court could find that "upper" has a distinct meaning from "side," and that a single product structure cannot meet both limitations.

VI. Other Allegations

• Indirect Infringement: The complaint alleges inducement by asserting that Defendants provide customers with marketing materials, online training resources, a glossary of terms, and customization services that instruct and encourage them to use the accused products in an infringing manner (Compl. ¶17, ¶27).
• Willful Infringement: Willfulness is alleged based on Defendants' continued infringement after receiving a notice letter from Plaintiff on November 8, 2018, which allegedly provided knowledge of the patents and the infringing activity (Compl. ¶18, ¶21, ¶28, ¶31).

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

• A central evidentiary question will be one of technical mechanism: Can Plaintiff prove that the accused products create their non-stick surfaces by applying an "adhesive deactivating material" over a pre-existing adhesive layer, as required by the claims, or will evidence show an alternative manufacturing process, such as pattern-coating adhesive, that may fall outside the claim scope?
• The case may also turn on a question of definitional orientation: Will the court construe the terms "upper/lower edge" from the ’585 patent and "first/second side edge" from the ’942 patent as functionally equivalent, or as distinct limitations? The answer could determine whether the accused products, with their fixed physical layout, can infringe both patents, one, or neither.
• A key question for damages and willfulness will be the effect of notice: Did the November 8, 2018 letter provide knowledge sufficiently specific to support a finding of willful infringement for post-notice conduct and to establish the intent required for induced infringement?