DCT
2:24-cv-08409
ADASA Inc v. CCL Industries Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: ADASA Inc. (Oregon)
- Defendant: CCL Industries Inc. (d/b/a Checkpoint Systems, Inc.) (Canada)
- Plaintiff’s Counsel: Friedman, Suder & Cooke
- Case Identification: 2:24-cv-08409, D.N.J., 08/12/2024
- Venue Allegations: Venue is alleged to be proper in the District of New Jersey because Defendant’s Checkpoint Systems division, which manufactures and sells the accused products, is headquartered in the district and conducts business there.
- Core Dispute: Plaintiff alleges that Defendant’s encoded radio frequency identification (RFID) tags and associated encoding systems infringe a patent related to a specific data structure for ensuring the global uniqueness of serial numbers.
- Technical Context: The technology addresses a foundational challenge in modern supply chain management: how to efficiently generate unique digital identifiers for billions of individual items without requiring constant, real-time communication with a central database.
- Key Procedural History: The complaint highlights that the patent-in-suit, U.S. Patent No. 9,798,967, was previously the subject of extensive litigation against Avery Dennison Corporation. This prior case involved a successful ex parte reexamination at the USPTO which confirmed the patent's validity with clarifying claim amendments, a jury verdict of infringement, a Federal Circuit affirmance on key issues including patent eligibility under 35 U.S.C. § 101, and a final judgment reportedly exceeding $88 million.
Case Timeline
| Date | Event |
|---|---|
| 2008-05-21 | ’967 Patent Priority Date |
| 2016-01-01 | CCL acquires Checkpoint Systems Inc. (Year only provided) |
| 2017-10-24 | U.S. Patent No. 9,798,967 Issues |
| 2017-11-29 | Ex parte reexamination of ’967 Patent requested |
| 2018-07-30 | Reexamination Certificate for ’967 Patent issues |
| 2021-01-01 | Avery Dennison jury verdict (Year only provided) |
| 2023-07-01 | Remand proceedings in Avery Dennison case held |
| 2024-04-24 | Plaintiff sends notice letter to Defendant |
| 2024-08-12 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 9,798,967 - "SYSTEMS, METHODS, AND DEVICES FOR COMMISSIONING WIRELESS SENSORS"
The Invention Explained
- Problem Addressed: The patent describes the challenge of ensuring that every RFID tag has a globally unique Electronic Product Code (EPC) when multiple, geographically dispersed encoders are commissioning tags for the same product type. Traditional methods required real-time access to a central database to assign the next available number, creating bottlenecks and points of failure (Compl. ¶14; ’967 Patent, col. 2:21-31).
- The Patented Solution: The invention proposes a data structure for an RFID tag’s memory that partitions the available serial number space. It dedicates a "limited number of most significant bits" (MSBs) within the serial number field to serve as a fixed identifier for a specific encoder or batch. This creates a unique "allocated block" or sector of serial numbers for each encoder. The encoder can then independently assign unique serial numbers using the remaining bits within its allocated block, guaranteeing global uniqueness without constant communication with a central server (’967 Patent, col. 8:5-24, col. 9:15-24; Compl. ¶16-18).
- Technical Importance: This decentralized approach allows for scalable, "on-demand" RFID tag commissioning, which enhances the speed, efficiency, and reliability of item-level tracking in complex, global supply chains (Compl. ¶26-27).
Key Claims at a Glance
- The complaint asserts at least Claim 1 (Compl. ¶60, ¶74).
- The essential elements of independent claim 1 (as amended by reexamination) are:
- An RFID transponder comprising a substrate, an antenna, and an electrically coupled RFID integrated circuit chip.
- The chip is encoded with a unique object number, which comprises an object class information space and a unique serial number space.
- The unique serial number space is encoded with one serial number instance from an allocated block of serial numbers.
- The allocated block is assigned a limited number of most significant bits.
- The unique serial number space comprises the limited number of most significant bits uniquely corresponding to the limited number of most significant bits of the allocated block and of remaining bits of lesser significance that together comprise the one serial number instance.
- The prayer for relief seeks judgment on "one or more claims" of the ’967 Patent, preserving the right to assert others (Compl. p. 27).
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are encoded RFID tags and labels sold by Defendant’s Checkpoint Systems division for item-level product tagging. The complaint identifies specific product lines by the type of inlay used, including Bunker, Cyclone, Due Mini, Kompasu, and others (Compl. ¶39, ¶45). The infringement allegations also extend to the systems and software used to encode these tags, such as the "CheckNet global ordering platform" (Compl. ¶42).
Functionality and Market Context
- The complaint alleges that Defendant is a "leading manufacturer" of RFID tagging solutions for global apparel brands and retailers, including Target, Walmart, and Uniqlo (Compl. ¶38, ¶41).
- Defendant is described as "vertically integrated," providing customers with complete RFID solutions that include encoding machines, software, and the tags themselves (Compl. ¶42).
- The accused functionality involves Defendant encoding RFID tags with an EPC, such as in the SGTIN-96 format. The complaint alleges this encoding process implements the patented data structure by fixing a set of MSBs in the serial number space to define a block of available numbers, which are then used to generate unique identifiers (Compl. ¶47-48). The complaint provides a diagram from an unspecified source illustrating the SGTIN-96 structure, highlighting the "Serial" number field where the invention is allegedly practiced (Compl. ¶17, p. 6).
IV. Analysis of Infringement Allegations
’971 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| An RFID transponder comprising: a substrate; an antenna structure formed on the substrate; and an RFID integrated circuit chip which is electrically coupled to the antenna structure... | Defendant makes and sells converted RFID tags that comprise a substrate, an antenna, and an RFID integrated circuit chip (the inlay) coupled to the antenna. | ¶46 | col. 35:36-39 |
| ...wherein the RFID integrated circuit chip is encoded with a unique object number, the unique object number comprising an object class information space and a unique serial number space... | Defendant encodes the tags with an EPC, such as in the SGTIN-96 format, which is a binary encoding that has an object class information space and a unique serial number space. | ¶47-48 | col. 36:1-6 |
| ...wherein the unique serial number space is encoded with one serial number instance from an allocated block of serial numbers, the allocated block being assigned a limited number of most significant bits... | Defendant allegedly uses a data structure where a limited number of most significant bits of the serial number space are fixed to correspond to an allocated block of serial numbers assigned to the encoder by the brand owner. | ¶47 | col. 36:7-11 |
| ...wherein the unique serial number space comprises the limited number of most significant bits uniquely corresponding to the limited number of most significant bits of the allocated block and of remaining bits of lesser significance that together comprise the one serial number instance. | Plaintiff presents scraped data from tags allegedly made by Defendant, showing a static 18-bit prefix followed by a variable 20-bit sequence, arguing this structure meets the claim limitation. This table is presented as direct evidence of the structure. | ¶53-55, p. 18 | col. 36:12-19 |
Identified Points of Contention
- Evidentiary Question: The complaint’s infringement theory relies heavily on data from RFID tags scanned at Walmart stores (Compl. ¶51-55). A key factual dispute will likely be the attribution of this data. The complaint alleges "upon information and belief" that Defendant encoded these tags (Compl. ¶51). Defendant may challenge whether Plaintiff can definitively prove that the specific scanned tags were encoded using Defendant's accused systems, as opposed to another of the retailer's approved suppliers.
- Scope Question: A central legal dispute may involve the claim term "allocated block." The patent describes a hierarchical system where blocks are formally assigned by an authority to an encoder (’967 Patent, col. 7:60-col. 8:4). The infringement analysis may turn on whether Defendant's process for defining and assigning serial number ranges to its encoders constitutes an "allocated block" within the meaning of the claims as construed by the court.
V. Key Claim Terms for Construction
The Term
- "uniquely corresponding to"
Context and Importance
- This phrase, added during reexamination, defines the relationship between the fixed MSBs in an encoded serial number and the "allocated block" from which it came. Its construction is critical because it qualifies the core inventive concept. Practitioners may focus on this term because its interpretation will determine whether nearly any system using a fixed-bit prefix infringes, or only those implementing a specific, formal allocation and correspondence scheme.
Intrinsic Evidence for Interpretation
- Evidence for a Broader Interpretation: The patent's general description of subdividing the serial number space into "sectors that are defined by a limited number of MSB's" could support an interpretation where any use of a fixed MSB prefix to partition the number space "uniquely corresponds" to that partition (’967 Patent, col. 8:12-16).
- Evidence for a Narrower Interpretation: The specification discusses a hierarchical system where authority is "passed down" and blocks are "allocated to a lower level" (’967 Patent, col. 7:60-col. 8:38). A defendant could argue "uniquely corresponding to" requires proof of this formal, hierarchical allocation, not just the de facto use of a prefix.
VI. Other Allegations
Indirect Infringement
- The complaint alleges indirect infringement under multiple theories. It alleges Defendant induces infringement by its customers who use the tags for inventory tracking (35 U.S.C. § 271(b)) and contributes to that infringement by providing tags especially designed for this purpose (§ 271(c)) (Compl. ¶71-74). It also specifically pleads infringement under § 271(f), alleging Defendant supplies encoding data from the U.S. to foreign locations with the intent that it be combined abroad to create infringing products (Compl. ¶67).
Willful Infringement
- Willfulness is alleged based on two grounds. First, Plaintiff alleges Defendant had actual knowledge of the patent and its infringement as of an April 24, 2024 notice letter (Compl. ¶76, ¶81). Second, it alleges Defendant was willfully blind to its infringement by failing to follow the widely-publicized, multi-year litigation over the same patent against its competitor, Avery Dennison (Compl. ¶80, ¶82).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of evidentiary proof: Can Plaintiff definitively attribute the data from RFID tags found in the stream of commerce to Defendant's specific encoding systems, moving beyond the "information and belief" pleading standard to withstand summary judgment and prevail at trial?
- A second key issue will be one of claim scope: How will the court construe the term "allocated block" and the reexamination-added phrase "uniquely corresponding to"? The outcome will likely determine whether Defendant's method of generating serial numbers falls within the patent's claims or if there is a fundamental mismatch in the required technical and procedural structure.
- A final question will be the strategic impact of prior litigation: While the prior judgment against Avery Dennison is not legally binding on Defendant, the extensive record of validity, eligibility, and infringement findings from that case will create significant tactical pressure and likely serve as a persuasive, if not dispositive, roadmap for the court.