DCT
2:12-cv-00877
Maxim Integrated Products Inc v. Starbucks Corp
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Maxim Integrated Products, Inc. (Delaware)
- Defendant: Starbucks Corporation (Washington)
- Plaintiff’s Counsel: Spangler Law P.C.; Agility IP Law, LLP; North Weber & Baugh LLP
- Case Identification: 4:12-cv-00005, E.D. Tex., 02/10/2012
- Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant has transacted business, offered for sale its products and services, and maintains numerous retail locations within the district.
- Core Dispute: Plaintiff alleges that Defendant’s mobile payment applications infringe five patents related to secure electronic modules and methods for transferring monetary value.
- Technical Context: The technology concerns systems for secure electronic transactions using portable hardware modules and cryptographic protocols, representing foundational concepts for digital wallets and mobile payment systems.
- Key Procedural History: The complaint alleges that Defendant had pre-suit knowledge of all asserted patents as of August 3, 2011, which forms the basis for the allegations of willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 1995-09-29 | Earliest Priority Date for all Asserted Patents |
| 1998-09-08 | U.S. Patent No. 5,805,702 Issued |
| 1999-08-17 | U.S. Patent No. 5,940,510 Issued |
| 1999-09-07 | U.S. Patent No. 5,949,880 Issued |
| 2000-08-15 | U.S. Patent No. 6,105,013 Issued |
| 2001-05-22 | U.S. Patent No. 6,237,095 Issued |
| 2011-08-03 | Alleged date of notice of all patents to Defendant |
| 2012-02-10 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 5,940,510 - Transfer of Valuable Information Between a Secure Module and Another Module
Issued Aug. 17, 1999
The Invention Explained
- Problem Addressed: The patent describes the limitations of contemporary payment systems, such as credit cards, which represent a credit transaction rather than a direct cash-equivalent exchange. The patent identifies a need for an electronic system that allows a consumer to fill a portable module with a "cash equivalent" and have it debited at the point of sale in a manner analogous to physical cash (Compl. Ex. A, ’510 Patent, col. 1:49-59).
- The Patented Solution: The invention proposes a system comprising a portable module, an intermediary reader device, and a secure module. The portable module stores an encrypted data packet containing its unique ID, a transaction count, and a monetary value. To perform a transaction, the secure module decrypts this packet using a public key, verifies its authenticity by comparing the ID and transaction count against plaintext values also read from the portable module, updates the monetary value, increments the transaction count, and then re-encrypts the new data into a packet using a private key for storage back on the portable module ('510 Patent, col. 7:51–8:50; Fig. 4).
- Technical Importance: The described system provided a cryptographic framework for secure value transfer between a portable user device and a point-of-sale terminal, a foundational architecture for later digital wallet and contactless payment technologies ('510 Patent, col. 1:11-17).
Key Claims at a Glance
- The complaint asserts "one or more claims" without specifying which ones (Compl. ¶14). Independent system claim 1 is representative and includes the following essential elements:
- A first portable module comprising a nonvolatile memory, a real time clock, a counter, an input/output circuit, and a unique identification number.
- A portable module reader for communicating with the first portable module.
- A secure microcontroller based module comprising a microcontroller core, a math coprocessor, an energy circuit, a memory circuit, and a second real time clock.
- The combination of these elements performing secure data transfers.
U.S. Patent No. 5,949,880 - Transfer of Valuable Information Between a Secure Module and Another Module
Issued Sep. 7, 1999
The Invention Explained
- Problem Addressed: Like the ’510 Patent, this patent addresses the need for an electronic cash system to overcome the limitations of credit-based transaction systems, where merchants do not receive funds at the time of the transaction (Compl. Ex. B, ’880 Patent, col. 1:41-50).
- The Patented Solution: The invention is a method for securely transferring units of exchange. It involves passing a "first value datum" (e.g., an encrypted data packet) from a first module to a second, secure module via an electronic device. The secure module performs a "mathematical calculation" on this datum—implying cryptographic verification, value modification, and re-encryption—to create a "second value datum." This updated datum is then passed back to the first module and stored, completing the secure transaction ('880 Patent, Abstract; Fig. 4).
- Technical Importance: The patent formalizes the method steps and data flow for a secure, cryptographically-verified transaction protocol between a user-held device and a trusted terminal ('880 Patent, col. 2:5-10).
Key Claims at a Glance
- The complaint asserts "one or more claims" without specifying which ones (Compl. ¶23). Independent method claim 1 is representative and includes the following essential elements:
- Initiating communication between a first module and an electronic device.
- Passing a first value datum from the first module to a second module via the electronic device.
- Performing a mathematical calculation on the first value datum in the second module to create a second value datum.
- Passing the second value datum back to the first module.
- Storing the second value datum in the first module.
U.S. Patent No. 6,105,013 - Method, Apparatus, System and Firmware for Secure Transactions
Issued Aug. 15, 2000
Technology Synopsis
The patent addresses secure electronic transactions by disclosing a module capable of communicating encrypted information with a service provider's equipment. The solution centers on a challenge-response protocol where the module generates a random number (a "SALT") that is incorporated into an encrypted certificate by the service provider to prevent replay attacks and ensure the authenticity of the transaction (Compl. Ex. C, ’013 Patent, Abstract; col. 8:16-29).
Asserted Claims & Accused Features
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶32).
- Accused Features: The accused features are the "Starbucks Card Mobile," "Starbucks for iPhone," and "Starbucks for Android" applications when combined with a mobile device to communicate with Starbucks' systems (Compl. ¶32).
U.S. Patent No. 6,237,095 - Apparatus for Transfer of Secure Information Between a Data Carrying Module and an Electronic Device
Issued May 22, 2001
Technology Synopsis
This patent describes an apparatus for secure transactions embodied in an electronic module. The module is capable of passing encrypted information to and from a service provider's equipment using secure cryptographic techniques to transfer value. The invention is described as a module capable of being programmed, tracking real time, recording transactions, and creating encryption key pairs (Compl. Ex. D, ’095 Patent, Abstract).
Asserted Claims & Accused Features
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶41).
- Accused Features: The accused features are the "Starbucks Card Mobile," "Starbucks for iPhone," and "Starbucks for Android" applications when combined with a mobile device to communicate with Starbucks' systems (Compl. ¶41).
U.S. Patent No. 5,805,702 - Method, Apparatus, and System for Transferring Units of Value
Issued Sep. 8, 1998
Technology Synopsis
The patent discloses a method and system for secure electronic transactions using an electronic module. The module communicates encrypted information with a service provider's equipment via a secure technique to transfer monetary value and other data. Key features include the module's ability to be programmed, maintain real time, record transactions, and create cryptographic key pairs (Compl. Ex. E, ’702 Patent, Abstract).
Asserted Claims & Accused Features
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶50).
- Accused Features: The accused features are the "Starbucks Card Mobile," "Starbucks for iPhone," and "Starbucks for Android" applications when combined with a mobile device to communicate with Starbucks' systems (Compl. ¶50).
III. The Accused Instrumentality
Product Identification
The accused instrumentalities are Defendant’s "Starbucks Card Mobile," "Starbucks for iPhone," and "Starbucks for Android" applications (Compl. ¶14).
Functionality and Market Context
The complaint alleges that these applications function as part of a system to "communicate with systems operated by or on behalf of Starbucks" to conduct transactions (Compl. ¶14). The infringement theory appears to encompass the entire end-to-end system, including the user's mobile device running the application and the backend servers operated by Starbucks that process the transactions. The complaint does not provide specific technical details on how the accused applications operate, their security protocols, or their data structures. No probative visual evidence provided in complaint.
IV. Analysis of Infringement Allegations
’510 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a first portable module comprising... a nonvolatile memory... a counter... | A user's smartphone or other mobile device running one of the accused Starbucks applications. | ¶14 | col. 23:55-col. 24:16 |
| a portable module reader that can be placed in communication with said first portable module... | The communication hardware (e.g., Wi-Fi, cellular radio) and software interfaces of the user's mobile device. | ¶14 | col. 24:17-21 |
| a secure microcontroller based module in electronic communication with said portable module reader... | Backend servers and systems operated by or on behalf of Starbucks that receive and process transaction data from the applications. | ¶14 | col. 24:22-34 |
| said combination... performing secure data transfers with said first portable module. | The end-to-end communication between the mobile application and Starbucks' servers to conduct a payment transaction. | ¶14 | col. 24:35-38 |
’880 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| initiating communication between said first module and an electronic device | A user initiating a transaction using one of the accused Starbucks applications on their mobile device. | ¶23 | col. 24:50-52 |
| passing a first value datum from said first module to... said second module | The mobile application sending encrypted transaction data to Starbucks' backend servers. | ¶23 | col. 24:53-57 |
| performing a mathematical calculation on said first value datum thereby creating a second value datum | Starbucks' servers cryptographically processing the transaction data, authorizing payment, and generating updated account data. | ¶23 | col. 24:58-61 |
| passing said second value datum from said second module to... said first module | Starbucks' servers transmitting the updated transaction result or account balance back to the mobile application. | ¶23 | col. 24:62-64 |
| storing said second value datum in said first module | The mobile application receiving and storing the updated account balance or transaction confirmation on the user's device. | ¶23 | col. 24:65-66 |
Identified Points of Contention
- Scope Questions: The patents consistently describe the "module" as a physical, often single-purpose, hardware device such as a token, smart card, or key fob. A central question for the court will be whether the term "module" can be construed to cover a general-purpose smartphone running a software application, and whether "secure microcontroller based module" reads on a general-purpose server infrastructure rather than a dedicated hardware security module.
- Technical Questions: The complaint lacks any specific allegations about the technical operation of the accused applications, such as the cryptographic protocols used, the structure of data packets, or the use of transaction counters for authentication. A key evidentiary question will be whether the accused system performs the particular cryptographic methods recited in the claims or employs different, standard security technologies (e.g., TLS/SSL).
V. Key Claim Terms for Construction
The Term: "module"
- Context and Importance: This term is foundational to the asserted claims. The patents describe the invention in the context of physical hardware tokens. Practitioners may focus on this term because its construction will determine whether the claims can read on a system where the user-side component is a software application running on a general-purpose device like a smartphone.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claims define the "module" functionally by its components (e.g., memory, processor, I/O circuit), all of which are present in a smartphone ('510 Patent, cl. 1). The specification also notes a module could be incorporated into a "computer" ('702 Patent, col. 2:28-30).
- Evidence for a Narrower Interpretation: The specifications repeatedly provide examples of the module as a physical, portable hardware device, such as a "token, a card, a ring, a...key fob, badge, jewelry" or a "durable stainless steel, token-like can" ('510 Patent, col. 4:35-39; ’702 Patent, col. 29:13-14), suggesting the invention is limited to dedicated hardware.
The Term: "secure microcontroller based module"
- Context and Importance: This term defines the trusted, server-side component of the claimed system. Its construction will be critical to determining if Starbucks' backend server infrastructure infringes.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The term "trusted computer" is used, which could be argued to cover any server employing modern security measures ('510 Patent, col. 4:40-41). The claims define the component by its functional parts (microcontroller, math coprocessor), which servers possess.
- Evidence for a Narrower Interpretation: The specification suggests a specialized device, describing it as potentially a "single integrated circuit" with a "BIOS...immune to alteration," which points toward a dedicated hardware security module (HSM) rather than a standard server farm running a commercial operating system ('510 Patent, col. 3:28-30, col. 4:26-44).
VI. Other Allegations
- Indirect Infringement: The complaint alleges both induced and contributory infringement. Inducement is based on allegations that Starbucks provides its mobile applications along with "instructions to use" them, with knowledge of the patents (Compl. ¶15). Contributory infringement is based on allegations that the applications are especially made or adapted for infringing and are not staple articles of commerce with substantial non-infringing uses (Compl. ¶16).
- Willful Infringement: Willfulness is alleged for all five patents based on Starbucks having received notice of the patents "by no later than on or about August 3, 2011," approximately six months prior to the complaint's filing (Compl. ¶¶17, 18, 26, 27, etc.).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: can the term "module," which is described in the patents with reference to dedicated hardware tokens, be construed broadly enough to cover a general-purpose smartphone running a software application? Likewise, can the "secure microcontroller based module" be construed to read on a standard server infrastructure, or is it limited to a specialized hardware device?
- A key evidentiary question will be one of technical operation: does the accused Starbucks system, which uses modern internet communication protocols, actually perform the specific cryptographic steps and utilize the components (such as transaction counters for authentication) recited in the patent claims, which were filed in the mid-1990s? The complaint’s lack of technical detail suggests this will be a central focus of discovery and expert testimony.