DCT
1:16-cv-00134
Scvngr v. Dailygobble
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: SCVNGR, Inc. d/b/a LevelUp (Delaware)
- Defendant: DailyGobble, Inc. d/b/a Relevant (Delaware)
- Plaintiff’s Counsel: Duffy & Sweeney, Ltd.
- Case Identification: 1:16-cv-00134, D.R.I., 03/18/2016
- Venue Allegations: Venue is asserted in the District of Rhode Island based on Defendant’s marketing and the use of its allegedly infringing mobile application at seven restaurant locations within the state, which are operated by CilantroMex, a Rhode Island LLC.
- Core Dispute: Plaintiff alleges that Defendant’s mobile payment application, developed for the CilantroMex restaurant chain, infringes a patent related to processing transactional data at the point of sale.
- Technical Context: The technology concerns mobile payment systems where a user presents a code (e.g., a QR code) on a smartphone to a merchant's point-of-sale (POS) terminal to initiate payment and redeem rewards.
- Key Procedural History: The complaint alleges a significant history between the parties, including a prior lawsuit ("Texas Action") where a court found Defendant infringed a different but related LevelUp patent (U.S. Patent No. 8,639,619). That action resulted in a judgment and an injunction against Defendant in January 2016, just two months before the filing of this complaint. Plaintiff alleges that Defendant’s new application for CilantroMex violates that injunction and infringes the new patent asserted in this case.
Case Timeline
| Date | Event |
|---|---|
| 2013-10-17 | LevelUp enters into a contractual agreement with CilantroMex. |
| 2014-02-04 | '260 Patent Priority Date (Filing Date). |
| 2014-12-30 | '260 Patent Issue Date. |
| Late 2014-Early 2015 | Relevant allegedly begins copying LevelUp's technology. |
| 2015-01-01 | Relevant launches a consumer mobile application for Le Pain Quotidien (LPQ). |
| Late 2015 | Relevant offers to provide CilantroMex with a new mobile application. |
| 2016-01-14 | Judgment entered against Relevant in the Texas Action for infringing the '619 Patent. |
| 2016-02-01 | Relevant launches its allegedly infringing mobile application for CilantroMex. |
| 2016-03-18 | Complaint Filing Date. |
II. Technology and Patent(s)-in-Suit Analysis
- Patent Identification: U.S. Patent No. 8,924,260, "Dynamic Ingestion and Processing of Transactional Data at the Point of Sale," issued December 30, 2014.
The Invention Explained
- Problem Addressed: Point-of-sale (POS) systems must process data from multiple sources, such as product barcode scanners, credit card readers, and mobile device scanners. The patent describes the technical burden on the POS system to "recognize and differentiate among data streams," which can slow down transaction processing or require manual intervention from a cashier ('260 Patent, col. 1:53-63).
- The Patented Solution: The invention proposes a method where a specific type of data stream (e.g., a mobile payment token) is encoded with unique start and end markers, referred to as "sentinels." When a POS terminal receives a data stream and recognizes the first sentinel, it knows to handle the enclosed data according to a specific, pre-defined protocol. After processing the data, it recognizes the second sentinel, which terminates the special handling. This allows the POS system to automatically and efficiently differentiate and process payment tokens from other data types ('260 Patent, Abstract; col. 2:1-5). Figure 3 illustrates this concept, showing data bracketed by "LU" sentinels (310₁, 310₂) being routed from an I/O port for special handling ('260 Patent, Fig. 3).
- Technical Importance: This approach offers a way to improve the efficiency and automation of integrating new payment technologies, like QR-code-based mobile payments, into existing, versatile POS environments without requiring complex runtime analysis or manual data-type designation ('260 Patent, col. 1:58-63).
Key Claims at a Glance
- The complaint asserts independent claims 1 and 11, as well as dependent claims 2 and 12 (Compl. ¶19). It also reserves the right to assert claims 3-8 and 13-14 (Compl. ¶28).
- Independent Claim 1 (Method):
- receiving, by the POS terminal, a stream of data from a credential reader;
- recognizing, by the POS terminal, a first data sequence in the received data stream;
- in response, handling transaction data following the first data sequence according to a data-processing protocol stored on the POS terminal;
- recognizing a second data sequence in the received data stream;
- in response, terminating data handling according to the protocol; and
- completing a transaction based on the transaction data.
- Independent Claim 11 (System): This claim recites a "terminal for processing transactions" comprising a communications interface, memory, an input port, and a processor configured to perform steps substantially similar to those in method claim 1.
III. The Accused Instrumentality
Product Identification
The "accused Relevant system," which includes the branded mobile application provided by Relevant for the CilantroMex restaurant chain and "related services and point-of-sale terminal software" (Compl. ¶¶ 19, 20).
Functionality and Market Context
The CilantroMex application enables customers to make payments and manage rewards by displaying a QR code on their mobile device screen (Compl. ¶22). This QR code is scanned by an optical reader at the POS terminal to initiate a transaction (Compl. ¶24). The complaint alleges that this system was launched for CilantroMex after Relevant was found to have infringed a related LevelUp patent with a similar system for a different client, Le Pain Quotidien (Compl. ¶¶ 12-15).
No probative visual evidence provided in complaint.
IV. Analysis of Infringement Allegations
'260 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| receiving, by the POS terminal, a stream of data from a credential reader; | The POS terminal receives a stream of data when a customer's QR code is scanned by an optical reader. | ¶24 | col. 2:59-62 |
| recognizing, by the POS terminal, a first data sequence in the received data stream; | The QR code encodes a data stream that begins with the data sequence "REL". | ¶24 | col. 2:62-63 |
| in response to the recognized first data sequence, handling, by the POS terminal, transaction data...according to a data-processing protocol stored on the POS terminal; | Upon recognizing the "REL" sequence, Relevant's POS software "handles the transaction data according to a stored processing protocol and transmits the data to a Relevant server". | ¶27 | col. 2:63-66 |
| recognizing, by the POS terminal, a second data sequence in the received data stream; | The data stream from the QR code ends with the identical data sequence "REL". | ¶24 | col. 9:8-10 |
| in response to the recognized second data sequence, terminating, by the POS terminal, data handling according to the data-processing protocol; and | This is implicitly alleged by the complaint's description of a complete transaction process bounded by the two "REL" sequences. | ¶¶24, 27 | col. 9:11-14 |
| completing, by the POS terminal, a transaction based on the transaction data. | The system transmits data to a server "in order to complete payment for the point of sale transaction." | ¶27 | col. 9:15-17 |
- Identified Points of Contention:
- Technical Questions: A central question will be what the "stored processing protocol" in the accused Relevant system actually entails (Compl. ¶27). The '260 Patent describes several specific protocols, such as caching, interrupting a current task, or multithreading (col. 6:1-58). The complaint does not specify which, if any, of these sophisticated handling methods the accused system employs, alleging only that it "handles the transaction data" and "transmits the data to a Relevant server" (Compl. ¶27). The extent to which the accused protocol aligns with the patent's teachings will be a key factual dispute.
- Scope Questions: The complaint alleges that Defendant "directly copied" LevelUp's system, which used "LU" as its sentinel sequence, and that Defendant's system uses "REL" (Compl. ¶¶ 24-25). A potential issue for the court is whether the claim term "data sequence" requires the specific functionality of a "sentinel" as described in the specification ('260 Patent, col. 2:1-5), and whether the accused "REL" sequences perform that function.
V. Key Claim Terms for Construction
- The Term: "a data-processing protocol"
- Context and Importance: This term is critical because it defines the specific action the POS terminal must take after recognizing the "first data sequence." The defendant may argue this term should be narrowly construed to require one of the specific, complex handling methods disclosed in the patent (e.g., caching, interrupting, multithreading), while the plaintiff may argue for a broader construction covering any stored set of rules for processing the data. The outcome will likely determine whether the defendant's alleged act of simply transmitting data to a server meets this limitation.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: Claim 1 itself does not specify the content of the protocol, only that it is "stored on the POS terminal" and used for "handling...transaction data" ('260 Patent, col. 9:6-7). This lack of explicit limitation in the claim language itself may support a broader reading.
- Evidence for a Narrower Interpretation: The specification provides detailed examples of what this protocol might entail, such as caching data until other tasks are complete (col. 5:26-32), interrupting a current task to process the payment data immediately (col. 5:32-39), or using multithreading to handle tasks concurrently (col. 5:48-51). A court may look to these specific embodiments to inform the meaning of the term.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement and contributory infringement, stating that Relevant produces, distributes (via Apple iTunes and Google Play stores), offers for sale, and sells the infringing mobile applications and related software to its clients, enabling them to infringe (Compl. ¶¶ 19, 21).
- Willful Infringement: The willfulness allegations are based on both pre- and post-suit knowledge. The complaint alleges that Relevant was aware of the '260 patent (Compl. ¶32) and had knowledge of LevelUp's patented technology due to a prior lawsuit that resulted in a judgment of infringement against Relevant for a related patent ('260 Patent, Compl. ¶¶ 12-15). The complaint further alleges that Relevant engaged in "direct[] cop[y]" of LevelUp's system (Compl. ¶25), suggesting deliberate misconduct.
VII. Analyst’s Conclusion: Key Questions for the Case
- A key evidentiary question will be one of technical implementation: what are the specific steps of the "stored processing protocol" in the accused Relevant system? Discovery will likely focus on whether this protocol involves more than simple data transmission and aligns with the more sophisticated caching, interrupting, or multithreading functions described as exemplary embodiments in the '260 patent's specification.
- A central legal issue will be one of claim scope: does the claim term "a data-processing protocol" require one of the complex handling methods detailed in the specification, or can it be satisfied by a simpler set of instructions for routing data? The construction of this term will likely be dispositive for the infringement analysis.
- Given the history alleged in the complaint, a significant focus of the litigation will be on willfulness and damages: Plaintiff has constructed a narrative of a competitor continuing to infringe with a copied product even after a prior adverse judgment and injunction. If infringement is found, the court will have to consider whether Defendant's conduct was egregious enough to warrant enhanced damages.