DCT
1:20-cv-02285
Rady v. Boston Consulting Group LLC
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Max A. Rady (U.S. and U.K. Citizen residing in France)
- Defendant: Boston Consulting Group, LLC (Delaware); De Beers Group (Jersey)
- Plaintiff’s Counsel: Whiteford, Taylor & Preston L.L.P.
- Case Identification: 1:20-cv-02285, S.D.N.Y., 03/13/2020
- Venue Allegations: Venue is alleged to be proper based on Defendants engaging in regular business, having established places of business, and/or having committed acts of patent infringement in the Southern District of New York.
- Core Dispute: Plaintiff alleges that Defendants’ TRACR platform, a system for tracking the provenance of gemstones, infringes a patent related to mapping physical items to a blockchain framework, and further alleges breach of contract and misappropriation of trade secrets.
- Technical Context: The technology addresses the challenge of creating a tamper-proof, decentralized digital record for physical assets, like diamonds, to ensure authenticity and provenance throughout the supply chain.
- Key Procedural History: The complaint details a history of alleged confidential disclosures by the Plaintiff, an inventor and then-employee of Defendant Boston Consulting Group (BCG), to BCG executives regarding his technology and pending patent application. The complaint further alleges that BCG, in partnership with De Beers, subsequently launched the accused TRACR platform incorporating this technology, leading to the Plaintiff's termination after he raised concerns. Plaintiff also alleges he was advised by BCG legal counsel to forgo a separate licensing opportunity with a third party (Rio Tinto) due to a conflict of interest with the De Beers project.
Case Timeline
| Date | Event |
|---|---|
| 2010-08 | Plaintiff Max A. Rady begins PhD program at King's College. |
| 2017-12-22 | Plaintiff files Provisional Patent Application No. 62/609,783 (Earliest Priority Date). |
| 2018-01-09 | Plaintiff allegedly discloses technology to BCG under confidentiality agreement. |
| 2018-05-10 | De Beers publishes article announcing the launch of TRACR. |
| 2018-10-31 | Plaintiff's employment with BCG is terminated. |
| 2018-11-25 | Anonymous whistleblower allegedly files complaint with De Beers regarding use of Plaintiff's patent. |
| 2018-12-21 | PCT Application No. PCT/US2018/067200 filed. |
| 2019-11-05 | U.S. Patent No. 10,469,250 issues. |
| 2020-03-13 | Complaint filed. |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 10,469,250 - "Physical Item Mapping to Blockchain Framework" (Issued Nov. 5, 2019)
The Invention Explained
- Problem Addressed: The patent identifies a fundamental weakness in applying blockchain technology to physical items: the need to trust a third party to accurately link the physical asset to its digital record, which "immediately destroys/diminishes the use of blockchain" (’250 Patent, col. 1:14-18).
- The Patented Solution: The invention proposes a system and method where a "network node" directly analyzes a physical item to create a "unique signature" based on its intrinsic, random properties. This signature is generated using techniques like 3D spatial mapping of spectral and scan data, capturing features like imperfections or other unique irregularities (’250 Patent, Abstract; col. 4:54-61). This signature is then used to record the item on a blockchain and later verify its identity, even if the item is modified (e.g., a diamond is cut), as long as a subset of the unique properties remains (’250 Patent, col. 5:11-15).
- Technical Importance: The technology aims to create a "fully transparent asset and supply chain management" system that does not rely on "outside trust in any way," by using the physical object’s own unique characteristics as the basis for its digital identity (’250 Patent, col. 3:49-52).
Key Claims at a Glance
- The complaint asserts independent claims 1 (a network node), 12 (a computer-implemented method), and 22 (a system) (Compl. ¶78).
- Independent Claim 1 recites the core elements of a network node, comprising:
- One or more processing devices and a coupled storage device.
- A communications subsystem for connecting to a peer-to-peer network.
- "Item analysis components" including an imaging device to determine "spectral analysis data and 3D scan data."
- The processing devices are configured to:
- Analyze a physical item to determine a "unique signature... using 3D spatial mapping."
- Determine if the item is "previously recorded to a blockchain" by "comparing the unique signature... to previously recorded unique signatures using 3D spatial analysis techniques, rotating in virtual space features of the physical item."
- Record the item to the blockchain if it is not previously recorded.
- The complaint does not explicitly reserve the right to assert dependent claims.
III. The Accused Instrumentality
Product Identification
- The accused instrumentality is the "TRACR" platform, developed by BCG and De Beers, along with associated services and programs like GemFair and the TRACR Association (Compl. ¶¶14, 57-59).
Functionality and Market Context
- The complaint alleges the TRACR platform is a system designed to "track diamonds from the mine to retail locations" by creating a "single, tamperproof, and permanent digital record for every diamond" on a blockchain (Compl. ¶¶46, 57).
- Technically, TRACR is alleged to utilize "3D image scanning of gemstones to identify a trio of anomalies (inclusions/scratches/defects) which are then vector mapped into a 3D spatial relationship along with spectral analysis to determine each gemstone's unique 'fingerprint'" (Compl. ¶51).
- These "fingerprints" are allegedly "stored on a blockchain to authenticate the provenance of each diamond through the entire supply chain" (Compl. ¶51). The complaint includes a screenshot from an internal whistleblower report that alleges the patent was used in the development of TRACR, referred to as "Project Midnight" (Compl. ¶¶64-65). This screenshot shows a confirmation page for a report submitted to an internal ethics hotline, lending support to the allegations of prior knowledge (Compl. ¶65).
- The platform is promoted through the TRACR Association, which includes major industry participants, for use by entities throughout the diamond supply chain (Compl. ¶59).
IV. Analysis of Infringement Allegations
’250 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A network node comprising... item analysis components... comprising at least one imaging device configured to determine spectral analysis data and 3D scan data... | The TRACR platform allegedly utilizes "3D image scanning of gemstones" and "spectral analysis" to analyze diamonds. | ¶51 | col. 2:1-6 |
| wherein the one or more processing devices operate to configure the network node to: analyze an instance of a physical item... to determine a unique signature... determined using 3D spatial mapping... | The TRACR platform allegedly identifies a "trio of anomalies" which are "vector mapped into a 3D spatial relationship" to determine a unique "fingerprint." | ¶51 | col. 20:30-38 |
| determine, using the unique signature, whether the instance of the physical item is previously recorded to a blockchain... | The TRACR platform allegedly "stored these fingerprints on a blockchain to authenticate the provenance of each diamond." | ¶51 | col. 20:39-42 |
| ...comparing the unique signature generated by the network node to previously recorded unique signatures using 3D spatial analysis techniques, rotating in virtual space features of the physical item... to determine a match... | The complaint alleges TRACR's description is "nearly identical in all material respects" to the technology claimed in the patent, which includes comparison techniques. | ¶52 | col. 20:42-49 |
| record the instance of the physical item to the blockchain in response to the determining whether the instance is previously recorded. | The TRACR system is described as creating a "permanent digital record for every diamond registered on the TRACR platform." | ¶57 | col. 20:50-53 |
- Identified Points of Contention:
- Technical Question: Claim 1 requires "rotating in virtual space features of the physical item" to compare signatures. The complaint alleges the TRACR platform is "nearly identical" to the claimed invention but does not provide specific factual allegations that the accused system performs this exact "rotating" step (Compl. ¶52). The evidence required to prove or disprove this specific algorithmic step will be a central technical question.
- Scope Question: A key issue will be whether the alleged functionality of TRACR—using a "trio of anomalies" that are "vector mapped" (Compl. ¶51)—falls within the scope of the claim term "unique signature determined using 3D spatial mapping." The parties may dispute the precise meaning of "3D spatial mapping" and what level of detail is required to constitute a "unique signature."
V. Key Claim Terms for Construction
The Term: "unique signature"
- Context and Importance: The entire invention rests on the ability to generate and compare a "unique signature" of a physical object. The scope of this term will define what types of physical characteristics and data representations are covered by the patent. Practitioners may focus on this term because the infringement allegation hinges on whether TRACR's "fingerprint" technology (Compl. ¶51) meets this limitation.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification suggests the signature can be based on a wide range of features, described as "anomalies, defects, imperfections, noise and geometric irregularities that are either naturally occurring or human made" (’250 Patent, col. 20:45-50).
- Evidence for a Narrower Interpretation: A narrower reading could be supported by the detailed examples focusing on "carbon imperfections/carbon flaws" in diamonds (’250 Patent, col. 4:54-55) and the process of aligning "two of the imperfections" to re-orient the item in virtual space (’250 Patent, col. 4:41-43).
The Term: "rotating in virtual space"
- Context and Importance: This term describes a specific action within the comparison step of the asserted claims. Whether the TRACR system performs an equivalent function is a primary question for infringement.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The language could be interpreted functionally to mean any computational re-orientation or alignment of 3D data models for comparison, not necessarily a literal, continuous "rotation."
- Evidence for a Narrower Interpretation: The specification describes a specific sequence: "once this is done, operations simply rotate along that axis and confirm that all N original imperfections sufficiently match" (’250 Patent, col. 4:43-46), which might suggest a more constrained, sequential process of alignment and rotation.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement under 35 U.S.C. § 271(b) (Compl. ¶79). This is supported by allegations that Defendants, through the TRACR Association, promote the use of the TRACR platform to third parties in the gemstone supply chain, and that marketing materials on partner websites act as instructions for its infringing use (Compl. ¶¶59, 62).
- Willful Infringement: Willfulness is alleged based on extensive pre-suit and post-suit knowledge (Compl. ¶81). The complaint alleges direct, repeated disclosures of the technology and unpublished patent application to BCG executives under confidentiality agreements (Compl. ¶¶34-39), an internal BCG investigation that allegedly confirmed "significant overlap" (Compl. ¶54), and a "Whistleblower Complaint" from a purported project team member confirming the use of the patented technology (Compl. ¶¶64-66). Plaintiff also sent cease-and-desist letters prior to filing suit (Compl. ¶¶67-69).
VII. Analyst’s Conclusion: Key Questions for the Case
- A central issue will be one of evidentiary proof: While the complaint provides detailed allegations about the functionality of the TRACR system, a key question is what evidence will show that its comparison algorithm performs the specific limitation of "rotating in virtual space" to find a match, as recited in the claims, or a legally equivalent function.
- The case will likely turn on the interplay between patent and non-patent claims: The extensive factual allegations regarding confidential disclosures, breach of contract, and trade secret misappropriation create a strong narrative. A key question for the court will be how these facts, if proven, influence the analysis of patent infringement, particularly on the issue of intent for willfulness and inducement.
- A core issue will be one of claim construction: The viability of the infringement claim will depend on whether the court construes the term "unique signature" broadly enough to encompass the alleged "vector mapped... trio of anomalies" of the TRACR system, or if it adopts a narrower definition tied more closely to the specific embodiments described in the patent.