DCT

1:19-cv-01113

Digimarc Corp v. U Nica Americas Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:19-cv-01113, S.D.N.Y., 07/12/2019
  • Venue Allegations: Venue is predicated on Defendant U-NICA Americas, Inc. maintaining a regular and established place of business in the Southern District of New York, and on the other U-NICA Defendants being foreign entities not resident in the United States.
  • Core Dispute: Plaintiff alleges that Defendant’s scryptoTRACE mobile application infringes patents related to authenticating physical objects using a smartphone camera and correcting for image distortion during capture.
  • Technical Context: The technology addresses the field of anti-counterfeiting and brand protection, enabling product authentication through ubiquitous consumer devices like smartphones.
  • Key Procedural History: The complaint alleges that Plaintiff provided Defendants with notice of the asserted patents and their alleged infringement via letters dated December 18, 2017, and February 28, 2018, which forms the basis for the willfulness allegations.

Case Timeline

Date Event
2004-11-09 Priority Date for U.S. Patent No. 9,718,296
2011-02-24 Priority Date for U.S. Patent No. 9,398,210
2016-07-19 U.S. Patent No. 9,398,210 Issued
2017-08-01 U.S. Patent No. 9,718,296 Issued
2017-12-18 First Pre-Suit Notice Letter Sent to Defendants
2018-02-28 Second Pre-Suit Notice Letter Sent to Defendants
2019-07-12 First Amended Complaint Filed

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

U.S. Patent No. 9,718,296 - “Authenticating identification and security documents and other objects” (Issued Aug. 1, 2017)

The Invention Explained

  • Problem Addressed: The patent addresses the need for robust technologies to authenticate physical items like security documents and currency, and to distinguish genuine articles from counterfeits (Compl. ¶5; ’296 Patent, col. 1:36-39, col. 5:1-7).
  • The Patented Solution: The invention describes a method where a mobile device captures an image of a physical object that contains "randomly or pseudo-randomly" occurring features, such as security fibers or modulated line patterns. The system then analyzes the captured image to determine the actual characteristics of these features (e.g., their spatial positioning) and compares them to expected characteristics to verify authenticity, providing feedback to the user on the device's display (’296 Patent, Abstract; col. 27:20-34).
  • Technical Importance: This approach leverages the widespread availability of smartphones to create a mobile, user-friendly system for authenticating physical objects in the field (’296 Patent, col. 27:6-14).

Key Claims at a Glance

  • The complaint asserts independent claim 26 (Compl. ¶29).
  • The essential elements of claim 26 are:
    • Obtaining captured image or video data of a physical object that has a plurality of randomly or pseudo-randomly placed features, where the features are lines with modulations forming a pattern.
    • Evaluating the captured data to obtain the actual spatial positioning information of the pattern.
    • Obtaining the expected characteristics of the pattern.
    • Controlling the display of user feedback on a mobile device based on a comparison of the actual and expected characteristics to facilitate an authenticity determination.
  • The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 9,398,210 - “Methods and systems for dealing with perspective distortion in connection with smartphone cameras” (Issued Jul. 19, 2016)

The Invention Explained

  • Problem Addressed: When a user images an object with a smartphone camera from an off-axis angle, the resulting perspective distortion can prevent machine-reading systems, such as digital watermark decoders, from functioning correctly (’210 Patent, col. 1:24-33).
  • The Patented Solution: The invention provides a method to mitigate this problem by capturing first and second images of an object from two different positions. By analyzing the differences between these two images, the system determines the "pose"—the geometrical relationship between the camera and the object—and uses this information to obtain a new image with reduced distortion, for example by guiding the user to a better viewing angle or by digitally warping the captured image (’210 Patent, Abstract; col.2:52-64).
  • Technical Importance: This technology aims to improve the success rate and user experience of mobile visual search and object authentication applications by actively managing and correcting for perspective distortion (’210 Patent, col. 2:7-13).

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶38).
  • The essential elements of claim 1 are:
    • Capturing a first image of an object from a first position.
    • Capturing a second image of the object from a second, different position.
    • Determining "pose data" characterizing the geometrical pose between the device and the object by referencing the first and second images.
    • Using the pose data to obtain image data with reduced perspective distortion.
    • Processing the reduced-distortion image data to derive identification data.
  • The complaint does not explicitly reserve the right to assert dependent claims.

III. The Accused Instrumentality

Product Identification

  • The accused instrumentality is the "scryptoTRACE app" for smartphones and tablets (Compl. ¶2, ¶26).

Functionality and Market Context

  • The scryptoTRACE app is a product verification tool that enables users to check the authenticity of products or packaging by scanning them with a smartphone (Compl. ¶26). The complaint alleges the app functions by comparing "randomly or pseudo-randomly occurring features" on a product with "expected features" to make an authenticity determination (Compl. ¶26).
  • The complaint also alleges the app includes a "ball-in-circle user interface to help align a smartphone camera" with the target object, a feature directly related to the perspective-correction technology of the '210 Patent (Compl. ¶26, ¶43-44).
  • The app is described as part of the "scryptoTRACE suite" and is provided to businesses for use in white-labeled applications, available in the U.S. on the Apple App Store and Google Play (Compl. ¶26-28).

IV. Analysis of Infringement Allegations

The complaint describes a "ball-in-circle user interface" designed to help users align the camera with a target object, which is central to the infringement theory for the '210 patent (Compl. ¶26).

'296 Patent Infringement Allegations

Claim Element (from Independent Claim 26) Alleged Infringing Functionality Complaint Citation Patent Citation
A method comprising: obtaining captured image or video data associated with a physical object, the physical object comprising a plurality of randomly or pseudo-randomly placed features, the plurality of randomly or pseudo-randomly placed features comprising a plurality of lines, the plurality of lines comprising modulations forming a pattern... The scryptoTRACE app, when run on a smartphone, obtains image data of features printed on products or packaging, which allegedly include lines whose position is randomly or pseudo-randomly modulated (Compl. ¶33). ¶32, ¶33 col. 28:1-4
evaluating the captured image or video data to obtain actual characteristics of the plurality of randomly or pseudo-randomly placed features, the actual characteristics of comprising spatial positioning information for the pattern used for authenticating the physical object The app evaluates a photograph to obtain the actual characteristics of the features, including their location, shape, and curve (Compl. ¶35). ¶35 col. 29:50-55
obtaining expected characteristics of the pattern used for authenticating the physical object The app obtains the expected characteristics of the areas on the product or packaging where unique markers are placed (Compl. ¶36). ¶36 col. 29:56-57
based at least on the expected characteristics and the actual characteristics, controlling display of user feedback on a display carried by a mobile device, the user feedback facilitating a determination of authenticity of the physical object The app evaluates the expected and actual characteristics and provides an alert on the smartphone screen indicating whether the product is authentic (Compl. ¶37). ¶37 col. 29:58-64

'210 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
capturing first imagery of an object, when the device is at a first position relative to the object The app uses the smartphone's camera to capture an initial image of product packaging (Compl. ¶41). ¶41 col. 2:55-58
capturing second imagery of the object, when the device is at a second, different, position relative to the object The app captures a second image of the packaging after the smartphone is moved to a different perspective (Compl. ¶42). ¶42 col. 2:58-59
by reference to the first and second imagery, determining pose data that characterizes at least part of a geometrical pose between the device and the object The app allegedly refers to the first and second images to determine the geometric pose between the smartphone and the packaging, which is used to compute and display its "ball-in-circle" user interface (Compl. ¶43). ¶43 col. 3:3-8
through use of said determined pose data, obtaining image data corresponding to the object with reduced perspective distortion... The app allegedly uses the determined pose data to prompt the user, via the "ball-in-circle" interface, to adjust the smartphone's position to obtain an image with reduced distortion (Compl. ¶44). ¶44 col. 3:8-14
and processing said obtained image data to derive identification data therefrom The app processes the image obtained after alignment to locate an identifying marking and verify authenticity (Compl. ¶45). ¶45 col. 2:64-65

Identified Points of Contention

  • Scope Questions: For the ’296 Patent, a central question may be whether the "unique markers encoded with a random number" allegedly used by Defendants (Compl. ¶36) qualify as "randomly or pseudo-randomly placed features" as defined in the patent. For the '210 patent, a question is whether the app's alignment guidance constitutes "obtaining image data...with reduced perspective distortion" as claimed, or if it merely aids in capturing a new, better image without meeting the claim's functional requirements.
  • Technical Questions: A key technical question for the ’210 patent is what evidence exists that the scryptoTRACE app actually captures and references two distinct images to "determin[e] pose data" (Compl. ¶43). The defense may argue that the "ball-in-circle" interface (Compl. ¶26) relies on a simpler, non-infringing mechanism, such as real-time sensor data, rather than the claimed multi-image analysis.

V. Key Claim Terms for Construction

The Term: "randomly or pseudo-randomly placed features" (from '296 Patent, Claim 26)

Context and Importance

  • The infringement case for the '296 patent depends on this term covering the specific markings used in the scryptoTRACE system. Practitioners may focus on this term because its construction will determine whether algorithmically generated patterns, as opposed to naturally random features, fall within the claim's scope.

Intrinsic Evidence for Interpretation

  • Evidence for a Broader Interpretation: The claim language itself recites "modulations forming a pattern," which suggests that algorithmically generated, or "pseudo-random," patterns are contemplated, not just naturally random features like fibers (’296 Patent, col. 32:40-44).
  • Evidence for a Narrower Interpretation: The specification provides examples of truly random features, such as "security fibers" in paper, which are physically and randomly dispersed during manufacturing (’296 Patent, FIG. 15; col. 25:12-24). A party might argue this context limits the term to features with inherent physical randomness rather than deterministic digital patterns.

The Term: "determining pose data" (from '210 Patent, Claim 1)

Context and Importance

  • This term is critical because the infringement allegation hinges on the "ball-in-circle" UI performing this specific function. If the UI's alignment method does not involve "determining pose data" by "reference to the first and second imagery," there may be no infringement.

Intrinsic Evidence for Interpretation

  • Evidence for a Broader Interpretation: The patent describes the process generally as determining a "geometrical relationship between the smartphone and the object" from two captured frames, which could be broadly interpreted to cover various methods of calculating relative position and orientation (’210 Patent, col. 2:59-61).
  • Evidence for a Narrower Interpretation: The detailed description provides specific examples of calculating pose using a Cartesian coordinate system and aeronautical terms like "pitch, roll and yaw" (’210 Patent, col. 3:41-57). A party could argue that "determining pose data" requires this specific type of multi-axis geometric analysis, potentially narrowing the claim scope to exclude simpler alignment checks.

VI. Other Allegations

Indirect Infringement

  • The complaint alleges both induced and contributory infringement for both patents. Inducement is based on allegations that Defendants provide "app instructions and promotional material" instructing end-users on how to use the scryptoTRACE app in an infringing manner (Compl. ¶56, ¶71). Contributory infringement is based on the allegation that the app is a material component of the patented methods, is not a staple article of commerce, and has no substantial non-infringing uses (Compl. ¶62, ¶77).

Willful Infringement

  • The complaint alleges willful infringement of both patents. The factual basis for this allegation is Defendants' alleged knowledge of the patents since at least December 18, 2017, and February 28, 2018, when they allegedly received pre-suit notice letters from Digimarc, and their subsequent continued infringement (Compl. ¶46-47, ¶52, ¶67).

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

  • A core issue will be one of technical implementation: for the '210 patent, does the accused "ball-in-circle" user interface function by capturing and analyzing two distinct images to "determin[e] pose data," as claimed, or does it rely on an alternative, non-infringing alignment technology?
  • A second central issue will be one of definitional scope: for the '296 patent, can the term "randomly or pseudo-randomly placed features" be construed to cover the "unique markers encoded with a random number" that the complaint alleges are used by the accused app?
  • A key evidentiary question for damages will be one of willfulness: did the Defendants' actions after receiving pre-suit notice in late 2017 constitute objective recklessness with regard to a high likelihood of infringement, potentially justifying enhanced damages?