Patent Armory Inc v. Liberty Sport Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Patent Armory Inc. (Canada)
  • Defendant: Liberty Sport, Inc. (New Jersey)
  • Plaintiff’s Counsel: Garibian Law; Rabicoff Law LLC
• Case Identification: 2:24-cv-09762, D.N.J., 10/13/2024
• Venue Allegations: Venue is alleged to be proper based on Defendant maintaining an established place of business within the District of New Jersey.
• Core Dispute: Plaintiff alleges that Defendant’s products and services infringe five U.S. patents related to intelligent call routing and systems for matching entities using auction-based optimization.
• Technical Context: The patents relate to the field of computer-telephony integration, specifically for managing call centers and other communication hubs to optimize connections between incoming communications (e.g., callers) and available resources (e.g., agents).
• Key Procedural History: The complaint does not specify any prior litigation, inter partes review proceedings, or licensing history related to the patents-in-suit. The asserted patents derive from a family of applications claiming priority to a provisional application filed in 2003, indicating a long prosecution history that may be relevant to claim construction and potential prosecution history estoppel arguments.

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: March 19, 2019

The Invention Explained

• Problem Addressed: The patent’s background describes inefficiencies in traditional call centers, such as the "under-skilled agent" and "over-skilled agent" problems, which arise from static groupings of agents and simplistic first-in, first-out call queuing. These inefficiencies reduce transactional throughput and lead to suboptimal customer service (’420 Patent, col. 4:35-61).
• The Patented Solution: The invention proposes a system for matching a "first entity" (e.g., a caller) with a "second entity" (e.g., a call center agent) by performing an "automated optimization" that goes beyond simple skill matching. This optimization considers not only the characteristics of the caller and agents but also the "economic surplus" of a potential match and the "opportunity cost" of making an agent unavailable for other potential matches (’420 Patent, Abstract; col. 21:3-22). The system architecture, depicted in Figure 3, involves a processor receiving call classification vectors and agent characteristics to control a call router (’420 Patent, Fig. 3).
• Technical Importance: The technology aims to apply sophisticated economic and game-theory principles to real-time communications routing, moving beyond static, rules-based systems to a dynamic, value-based optimization model (’420 Patent, col. 21:5-22).

Key Claims at a Glance

• The complaint asserts "one or more claims" of the ’420 Patent, including "exemplary method claims," without identifying specific claims (Compl. ¶15). Independent claim 1 is representative:
  • A method for matching a first entity with at least one second entity...
  • defining a plurality of multivalued scalar data representing inferential targeting parameters for the first entity...
  • defining a plurality of multivalued scalar data of each of the plurality of second entities, representing respective characteristic parameters...
  • performing an automated optimization with respect to an economic surplus of a respective match... and an opportunity cost of the unavailability of the at least one of the plurality of second entities for matching with an alternate first entity.
• The complaint does not explicitly reserve the right to assert dependent claims but references infringement of "one or more claims" (Compl. ¶15).

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

• Issued: November 26, 2019

The Invention Explained

• Problem Addressed: Similar to the ’420 Patent, this patent addresses the challenge of efficiently routing communications in environments like call centers, where matching a source (caller) with an optimal target (agent) is critical for operational efficiency and service quality (’748 Patent, col. 1:25-34).
• The Patented Solution: The patent describes a routing system that represents both communication sources and targets with "predicted characteristics," each having an "economic utility." The system then determines an "optimal routing" by maximizing an "aggregate utility" across all potential matches (’748 Patent, Abstract). This involves creating a cost-utility function that can account for factors like agent training value and long-term call center operations, as shown in the flowchart of Figure 1 (’748 Patent, Fig. 1; col. 24:40-50).
• Technical Importance: This approach formalizes the call routing decision as a utility-maximization problem, allowing for the integration of complex, long-term business goals directly into the low-level logic of the communication switch (’748 Patent, col. 18:55-62).

Key Claims at a Glance

• The complaint alleges infringement of "one or more claims" of the ’748 Patent without specifying them (Compl. ¶21). Independent claim 1 is representative:
  • A communications routing system, and method, for 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; and
  • determining an optimal routing between the plurality of communications sources and the plurality of communications targets, by maximizing an aggregate utility with respect to the respective predicted characteristics...
• The complaint does not explicitly reserve the right to assert dependent claims.

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

• Patent Identification: U.S. Patent No. 7,023,979, issued April 4, 2006.
• Technology Synopsis: This patent describes a communications management system with an input for receiving a communications classification, a database of agent skill scores, and a processor for computing an optimum agent selection. The system directly controls the routing of the communication based on this computation (’979 Patent, Abstract).
• Asserted Claims: The complaint asserts infringement of "one or more claims" (Compl. ¶30).
• Accused Features: The complaint alleges that the "Exemplary Defendant Products" practice the claimed technology (Compl. ¶30, ¶32).

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

• Patent Identification: U.S. Patent No. 7,269,253, issued September 11, 2007.
• Technology Synopsis: This patent discloses a system and method where communications are received and classified, characteristics of potential targets are stored, and an optimum target is determined in a combinatorial optimization. The optimization considers a cost-benefit analysis and the predicted availability of a target (’253 Patent, Abstract).
• Asserted Claims: The complaint asserts infringement of "one or more claims" (Compl. ¶36).
• Accused Features: The complaint alleges that the "Exemplary Defendant Products" practice the claimed technology (Compl. ¶36, ¶38).

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

• Patent Identification: U.S. Patent No. 9,456,086, issued September 27, 2016.
• Technology Synopsis: This patent describes a method for matching entities by defining multivalued scalar data for both the "first entity" (e.g., caller) and multiple "second entities" (e.g., agents). The system performs an automated optimization based on the economic surplus of a match and the opportunity cost of making an agent unavailable for other potential matches (’086 Patent, Abstract).
• Asserted Claims: The complaint asserts infringement of "one or more claims" (Compl. ¶42).
• Accused Features: The complaint alleges that the "Exemplary Defendant Products" practice the claimed technology (Compl. ¶42, ¶47).

III. The Accused Instrumentality

Product Identification

The complaint does not name any specific accused products, methods, or services in its narrative sections. It refers generally to "Exemplary Defendant Products" and states that these are identified in claim chart exhibits attached to the complaint (Compl. ¶15, ¶17, ¶21, ¶26). These exhibits were not provided.

Functionality and Market Context

The complaint alleges that Defendant makes, uses, sells, and imports infringing products and that its own employees internally test and use these products (Compl. ¶15, ¶16). Without the referenced exhibits, the specific functionality and market context of the accused instrumentalities cannot be analyzed from the complaint.

IV. Analysis of Infringement Allegations

The complaint alleges infringement of all five patents-in-suit but incorporates the specific allegations by reference to Exhibits 6, 7, 8, 9, and 10, which were not provided (Compl. ¶17, ¶26, ¶32, ¶38, ¶47). The complaint asserts that these charts demonstrate how the "Exemplary Defendant Products" practice the technology and satisfy all elements of the asserted claims (Compl. ¶17). As the claim charts are absent, a tabular summary cannot be constructed.

Identified Points of Contention

• Scope Questions: The asserted patents use specific, technical terminology drawn from economics and auction theory, such as "auction," "economic surplus," and "opportunity cost." A central issue for claim construction may be whether these terms should be limited to their technical meanings as described in the specification or construed more broadly. The dispute could turn on whether Defendant's system, which may perform a type of scoring or prioritization, can be said to conduct an "auction" or calculate an "economic surplus" as those terms are used in the claims.
• Technical Questions: A key evidentiary question will be what proof Plaintiff can offer that the accused products actually perform the complex optimizations required by the claims. The complaint's allegations are conclusory. The case may focus on whether the accused products execute a multi-factorial optimization considering opportunity costs, as the patents describe, or if they employ a simpler, rules-based matching algorithm that Plaintiff has characterized as infringing.

No probative visual evidence provided in complaint.

V. Key Claim Terms for Construction

Term for Construction: "auction"

• Context and Importance: This term appears in the titles of the ’420 and ’086 patents and is central to their claims. The infringement dispute may hinge on whether the accused products' method for matching entities constitutes an "auction." Practitioners may focus on this term because Defendant might argue its system is a rules-based routing engine, not an auction mechanism involving bids or price clearing, potentially placing its functionality outside the claim scope.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The specification discusses routing communications based on "economic factors and non-economic factors," which could be argued to encompass any system that weighs multiple variables to make a selection, not just a formal auction (’420 Patent, col. 11:9-11).
  • Evidence for a Narrower Interpretation: The specification explicitly describes scenarios where agents "bid for a caller" based on a commission rate and where the system may implement "Dutch-type auctions" or "English-type (progressive) auctions" (’420 Patent, col. 22:50-57; col. 13:26-31). This language could support a narrower construction requiring a bidding or price-clearing mechanism.

Term for Construction: "economic surplus"

• Context and Importance: This term is a key limitation in the optimization step of claims in the ’420 and ’086 patents. Proving infringement will likely require Plaintiff to show that the accused system calculates a value corresponding to this limitation. Defendant may argue its system calculates a generic "match score" that does not meet the specific definition of "economic surplus" taught in the patent.
• Intrinsic Evidence for Interpretation:
  • Evidence for a Broader Interpretation: The patent does not appear to provide a single, explicit definition, which may allow for arguments that any calculation of net value or benefit from a match meets the limitation.
  • Evidence for a Narrower Interpretation: The patent ties the concept to game theory and describes it in the context of balancing competing goals to "make efficient use of call center resources," suggesting a specific type of economic calculation beyond simple scoring (’420 Patent, col. 2:35-37; col. 22:64-67).

VI. Other Allegations

• Indirect Infringement: For the ’748 and ’086 patents, the complaint alleges induced infringement. It asserts that Defendant distributes "product literature and website materials" that instruct and encourage end users to use the accused products in a manner that directly infringes the patent claims (Compl. ¶24, ¶45).
• Willful Infringement: Willfulness is alleged for the ’748 and ’086 patents. The allegations are based on knowledge of infringement obtained from the service of the complaint itself, establishing a basis only for potential post-filing willfulness (Compl. ¶23, ¶44). The complaint does not allege pre-suit knowledge.

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

• A core issue will be one of definitional scope: can terms rooted in economic and auction theory, such as "auction" and "economic surplus", be construed to cover the functionality of Defendant’s communication routing systems? The outcome of claim construction for these terms will be critical in determining the scope of the asserted claims and, consequently, the viability of the infringement allegations.
• A key evidentiary question will be one of technical proof: given the complaint's reliance on unprovided exhibits, the case will likely turn on whether Plaintiff can produce sufficient technical evidence—such as source code, system specifications, or expert testimony—to demonstrate that the accused products actually perform the specific, multi-factorial optimization steps required by the claims, rather than a more conventional, non-infringing form of rules-based matching.
• A third question will be one of damages apportionment: with five patents asserted from the same family and covering similar technological concepts, if infringement is found, a significant dispute may arise over how to apportion damages among the patents to avoid double recovery, particularly given the overlapping subject matter.