DCT

1:23-cv-01667

SES-imagotag Sa v. Hanshow America Inc.

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Key Events
Amended Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:23-cv-01667, E.D.N.Y., 06/06/2023
  • Venue Allegations: Venue is alleged to be proper in the Eastern District of New York because Defendant Hanshow America is incorporated in New York and maintains a principal place of business within the district. The complaint further alleges that both defendants conduct continuous business activities, serve customers such as ALDI, and commit acts of infringement within the district.
  • Core Dispute: Plaintiff alleges that Defendant’s Electronic Shelf Label (ESL) systems and associated retail technology solutions infringe three U.S. patents related to in-store navigation, synchronized video playback on shelf displays, and dynamic planogram management.
  • Technical Context: The technology at issue involves the digitization of physical retail environments using Internet of Things (IoT) devices, primarily ESLs, to improve operational efficiency, enable dynamic pricing, manage inventory, and enhance the in-store customer experience.
  • Key Procedural History: This First Amended Complaint follows an original complaint filed on March 3, 2023. The filing of the original complaint is cited as the basis for Defendants' knowledge of the patents for the purposes of willful and indirect infringement. Subsequent to the filing of this amended complaint, an Inter Partes Review (IPR) was initiated against U.S. Patent No. 11,010,709. A provided certificate indicates the Patent Trial and Appeal Board (PTAB) found all challenged claims (1-20) patentable.

Case Timeline

Date Event
2012-04-11 U.S. Patent No. 10,674,340 Priority Date
2015-07-27 U.S. Patent No. 11,010,709 Priority Date
2017-11-10 U.S. Patent No. 11,405,669 Priority Date
2020-06-02 U.S. Patent No. 10,674,340 Issue Date
2021-05-18 U.S. Patent No. 11,010,709 Issue Date
2022-08-02 U.S. Patent No. 11,405,669 Issue Date
2023-01-15 Hanshow allegedly presents infringing products at NRF retail show in NYC
2023-03-03 Original Complaint Filed
2023-06-06 First Amended Complaint Filed
2023-11-21 IPR filed against U.S. Patent No. 11,010,709 (IPR2024-00208)

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

U.S. Patent No. 10,674,340 - "System and Method for Communicating Spatially Organized Information"

  • Patent Identification: U.S. Patent No. 10674340, "System and Method for Communicating Spatially Organized Information," issued on June 2, 2020.

The Invention Explained

  • Problem Addressed: The patent describes a lack of effective means to provide consumers with information that is specifically tailored to their precise location within a retail store, beyond what is available on static product labels (’340 Patent, col. 2:1-4).
  • The Patented Solution: The invention proposes a system where a central server maintains a "planogram," or a detailed map associating NFC-enabled electronic shelf labels with specific vertical and horizontal locations in a store. A shopper's mobile device interacts with a nearby label via NFC to obtain its unique ID. This ID is sent to the server, which then uses the planogram to pinpoint the shopper's location and transmit back relevant, "spatially localized" information, such as a map to a desired product or a targeted promotion (’340 Patent, Abstract; col. 2:15-37).
  • Technical Importance: This method provides location tracking with a "fine-granularity" not achievable with technologies like GPS inside a store, enabling highly contextual digital interactions for shoppers and operational tasks for employees (’340 Patent, col. 7:45-47).

Key Claims at a Glance

  • The complaint asserts independent claims 1 (method) and 5 (system) (Compl. ¶¶130-132).
  • The essential elements of independent claim 1 include:
    • A central server accessing a planogram that associates unique radio-frequency peripheral identifiers with specific vertical and horizontal locations.
    • Receiving a communication from a mobile terminal containing a unique identifier obtained from a nearby radio-frequency peripheral configured for near-field communication (range < 20cm).
    • Determining the mobile terminal's location, including its vertical and horizontal position, based on the identifier's associated location in the planogram.
    • Transmitting "spatially localized information" associated with that location back to the mobile terminal.
  • The complaint asserts infringement of all claims 1-9 (Compl. ¶130).

U.S. Patent No. 11,405,669 - "System for Synchronized Video Playback on a Number of Playback Devices"

  • Patent Identification: U.S. Patent No. 11,405,669, "System for Synchronized Video Playback on a Number of Playback Devices," issued on August 2, 2022.

The Invention Explained

  • Problem Addressed: The patent notes that conventional systems for synchronizing video across multiple displays require high-bandwidth streaming and expensive, powerful hardware at each display, making them impractical for large-scale retail deployments (’669 Patent, col. 1:26-34).
  • The Patented Solution: The patent describes a decentralized system where each playback device stores the video content locally. The devices communicate with each other, transmitting their own "playback progress-data" (e.g., the current frame number). Each device can then independently compare its progress to that of its peers and determine if it is out-of-sync, allowing the system to self-correct without a central timing controller (’669 Patent, Abstract; col. 2:1-5).
  • Technical Importance: This distributed approach creates an autonomous and inexpensive system for maintaining video synchronization, which is critical for cost-effectively deploying dynamic video content on hundreds or thousands of shelf-edge displays in a retail environment (’669 Patent, col. 2:5-12).

Key Claims at a Glance

  • The complaint asserts independent claims 1 (system) and 15 (use) (Compl. ¶¶149-151).
  • The essential elements of independent claim 1 include:
    • A video playback system comprising a number of playback devices.
    • Each device includes a memory to store video data and a communication stage.
    • The devices are designed to transmit "video playback progress-data" to other devices.
    • The devices are designed to determine, based on the received progress-data, whether they are in synchronous or asynchronous playback.
    • The devices are also designed to display product or price information via virtual electronic shelf labels within a portion of the screen's display area.
  • The complaint asserts infringement of at least claims 1-4, 7, and 10-15 (Compl. ¶149).

U.S. Patent No. 11,010,709 - "Method for Updating Association Data Between Articles and Locations"

  • Patent Identification: U.S. Patent No. 11,010,709, "Method for Updating Association Data Between Articles and Locations," issued May 18, 2021 (Compl. ¶31).

Technology Synopsis

The patent addresses the common problem of retail store planograms being inaccurate or outdated, which undermines inventory and location-based systems (’709 Patent, col. 2:28-36). The solution provides a method for an operator to update the planogram by using a reading device (e.g., a mobile phone or PDA) to scan a sequence of adjacent ESLs, including at least one newly added label and one label with a previously known location. By transmitting this sequence and its directional order to a central system, the precise location of the new label can be calculated and the planogram can be accurately updated (’709 Patent, Abstract).

Asserted Claims

The complaint asserts independent claims 1 (method), 10 (non-transitory computer program product), and 11 (system) (Compl. ¶¶168-170).

Accused Features

Hanshow’s "Planogram Management Solution" is accused of infringement. This solution allegedly enables store personnel to use a mobile device to manage and update the store planogram, for example, by scanning ESLs to reflect the addition of a new label to a shelf (Compl. ¶¶109-110, 118). A promotional video is referenced showing a store employee scanning multiple ESLs for what is described as "Planogram Management" (Compl. ¶118; Compl. Ex. EE at 2).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are Defendants' ESL products, including the Nebular, Stellar Pro, Lumina Aqua, Lumina Edge, and Lumina Max series. The infringement allegations also target the broader ecosystem of related hardware and software, including the ESL Controller, ESL Management Software, the All-Star Cloud System, and mobile applications like "Handy Link" (Compl. ¶¶12, 39). The complaint groups these into three "Accused Solutions": an "In-Store Navigation Solution," a "Video Synchronization Solution," and a "Planogram Management Solution" (Compl. ¶13).

Functionality and Market Context

The accused ESLs are described as interactive devices that use Near Field Communication (NFC) to communicate with external devices like mobile phones or PDAs (Compl. ¶43). The Lumina Edge and Lumina Max products are specialized LCD screens designed for shelf-edges that can function both as digital price labels and as displays for dynamic, synchronized video content (Compl. ¶¶52, 53). The entire system is managed by a backend computer server, which can be a local server or a cloud-based platform like "Hanshow All-Star," that communicates with the ESLs via access points and maintains a "planogram" to store the locations and product associations of the labels (Compl. ¶¶54, 56). The products are marketed as part of a "Holistic Digital Retail Solution" for retailers (Compl. ¶37).

IV. Analysis of Infringement Allegations

'340 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A method for communicating spatially localized information to a mobile terminal, the method being performed by a central server configured to access a planogram associating a plurality of unique identifiers... with a plurality of locations... Hanshow's backend server (e.g., All-Star Cloud System) accesses a planogram, which Hanshow defines as a "grid," to store and manage the locations of its ESLs in a retail store. ¶¶56, 58 col. 2:20-24
receiving a communication from a mobile terminal, the communication comprising a unique identifier received by the mobile terminal from a radio-frequency peripheral configured for near-field communication... A user with a mobile device (phone or PDA) uses an application to interact with a Hanshow ESL via NFC, which provides the ESL's unique ID to the mobile device. The mobile device then communicates this ID to Hanshow's server. ¶¶43, 49, 65 col. 2:28-31
determining a location of the mobile terminal within the predetermined area based on the location associated with the unique identifier of the received communication in the planogram... Upon receiving the ESL's unique ID, Hanshow's backend server references its planogram to determine the precise location of that ESL, thereby establishing the location of the user's mobile terminal. ¶¶28, 64 col. 2:32-34
transmitting to the mobile terminal spatially localized information associated with the location of the mobile terminal. The server transmits location-relevant information back to the user's mobile device, such as a map with directional guidance, product information, or targeted promotions. A demonstration video shows a map appearing on a phone after the user touches an ESL. ¶¶28, 64, 84; Ex. W at 12 col. 2:35-37

Identified Points of Contention

  • Technical Questions: A central evidentiary question for the '340 patent will be whether Plaintiff can demonstrate that the accused system performs the complete, closed-loop method as claimed. The complaint relies heavily on marketing materials and product demonstrations (Compl. ¶¶68, 70). The key dispute may center on the evidence proving that Hanshow's backend server actually performs the claimed steps of receiving a specific ESL identifier from a mobile terminal and using it to transmit spatially localized information, as opposed to the mobile app performing these functions locally or in a different manner.
  • Scope Questions: The case may raise the question of whether Hanshow's advertised "Smart Mapping" or "Geolocation" features (Compl. ¶¶63, 72) meet the specific requirements of the claim, which call for determining location based on a planogram that maps identifiers to vertical and horizontal positions.

'669 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A video playback system... comprising a number of playback devices... each playback device comprises a memory to store video data... The accused Lumina Edge and Lumina Max series are video playback devices sold as a "complete solution" with memory (e.g., 8GB eMMC) and processors running an Android OS to store and play video content. ¶¶52, 96, 101, 104 col. 1:47-50
a communication stage to communicate data with each other The Lumina devices are configured to communicate with a backend server and, by extension, each other over Wi-Fi or Hanshow's proprietary "RF system." ¶¶55, 104 col. 1:50-51
to transmit video playback progress-data via the communication stage to the other device and, to determine based on the received progress-data whether it is in a synchronous or asynchronous playback progress... The complaint alleges the accused devices are "technically capable" of this function, citing their hardware and the advertised ability to "sync content" and perform "multi-screen splicing." An annotated image shows how a video can be distributed across multiple screens with synchronized playback. ¶¶53, 96, 98, 103; Ex. O at 62 col. 1:51-55
wherein the display devices are designed to display product information or product price related information by means of virtual electronic shelf labels... The accused Lumina Edge device is marketed as an LCD screen that can function as a "digital price label," and system diagrams show the display of "ESL information." ¶¶52; Ex. DD at 8 col. 4:21-28

Identified Points of Contention

  • Technical Questions: A significant point of contention for the '669 patent will likely be the mechanism of synchronization. The patent claims a specific decentralized method where devices transmit "progress-data" and independently determine their sync status. The infringement allegations rest on the advertised capability to "sync content," but it is an open question whether Hanshow's system achieves this through the claimed distributed method or through a more conventional, centralized master-slave control architecture not covered by the claims.
  • Scope Questions: The definition of "video playback progress-data" will be critical. The court will need to determine if the signals exchanged between Hanshow's devices, whatever they may be, meet the specific definition required by the patent, which the specification suggests could be a frame number ('669 Patent, col. 2:47-49).

V. Key Claim Terms for Construction

Term from '340 Patent: "spatially localized information"

  • Context and Importance: This term defines the output of the entire claimed method and is central to the infringement analysis. The value of the invention lies in providing this specific type of information. The dispute will likely focus on whether the various types of data the Hanshow system is alleged to provide (e.g., maps, promotions, stock alerts) fall within the scope of this term.
  • Intrinsic Evidence for a Broader Interpretation: The specification provides a wide range of examples, including "a product offer or advertisement, information about a product, or in-store map routing or navigation guidance," as well as "in-store product picking information, inventory management information" (’340 Patent, col. 2:21-28). This language may support a broad construction covering commercial and operational data, not just navigation.
  • Intrinsic Evidence for a Narrower Interpretation: A party might argue that the term should be limited by the primary problem solved and the main embodiment described, which focuses on guiding a user to a specific item via a "path to be followed" (’340 Patent, col. 7:42-44). This could suggest the information must be primarily navigational in nature.

Term from '669 Patent: "determine based on the received progress data whether it is in a synchronous or asynchronous playback progress"

  • Context and Importance: This claim element describes the core inventive concept of a decentralized, self-correcting synchronization system. Practitioners may focus on this term because infringement hinges on whether Hanshow's devices perform this specific determination independently, rather than simply receiving a timing command from a central controller.
  • Intrinsic Evidence for a Broader Interpretation: The patent states that the object is to provide a system where each "individual display device can independently detect an asynchronous playback progress" (’669 Patent, col. 1:61-63). This emphasis on "independent" detection could support a construction that focuses on the outcome (distributed detection) rather than the precise algorithm used.
  • Intrinsic Evidence for a Narrower Interpretation: The preferred embodiment describes a specific mechanism: "each device is designed to compare a frame number received with a frame number of the frame currently played back at the device" (’669 Patent, col. 2:55-58). This could support a narrower construction requiring a direct comparison of specific progress markers like frame numbers, potentially excluding other forms of synchronization control.

VI. Other Allegations

Indirect Infringement

The complaint alleges both induced and contributory infringement for all three patents. It claims Hanshow induces its customers (e.g., retailers) and end-users (e.g., shoppers) to infringe by providing the complete system along with instructions, training, and advertising that encourage infringing uses, such as using the "In-Store Navigation Solution" (Compl. ¶¶134, 169). It further alleges contributory infringement, stating the accused products are material components specially designed for infringing uses in a retail environment and are not staple articles of commerce with substantial non-infringing uses (Compl. ¶¶136, 174).

Willful Infringement

Willfulness is alleged for all three patents. The primary basis for this allegation is that Hanshow has had knowledge of the patents and its infringement since "at least as of March 3, 2023, the date the original Complaint... was filed," and has continued its accused activities thereafter (Compl. ¶¶137, 156, 175).

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

  • A central issue will be one of evidentiary proof versus marketing claims: The complaint builds a detailed infringement narrative based largely on Hanshow's marketing documents, product manuals, and demonstration videos. A key question for the court will be whether the accused products, when operating in a real-world environment, actually function according to the specific technical steps and architectures required by the patent claims, or if there is a material disconnect between advertising and actual operation.
  • A second core issue will be one of technical mechanism: The case will likely turn on a deep analysis of how the accused systems achieve their advertised functionality. For the '669 patent, for example, does Hanshow's "sync" feature for video displays rely on the claimed decentralized exchange of "progress-data," or does it use a different, unclaimed control architecture? For the '709 patent, does the "Planogram Management" tool operate by processing a sequence of adjacent labels as claimed, or by another method?
  • A third key question will be the impact of the '709 patent's IPR survival: The confirmation by the PTAB that the claims of the '709 patent are patentable significantly strengthens Plaintiff's position on that patent. This development raises the question of how it will influence the parties' strategies and settlement posture concerning not only the '709 patent but the entire three-patent dispute.