Lodsys Group LLC v. Capcom USA Inc

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Lodsys Group, LLC (Texas)
  • Defendant: Capcom U.S.A., Inc. (California)
  • Plaintiff’s Counsel: The Davis Firm, PC; Kelley, Goldfarb, Huck & Roth, PLLC
• Case Identification: 2:13-cv-00389, E.D. Tex., 05/09/2013
• Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant conducts substantial business in the district, has a regular and established practice of business there, and has committed acts of infringement within the district.
• Core Dispute: Plaintiff alleges that Defendant’s "The Smurfs' Village" mobile application infringes two patents related to in-application systems for gathering user feedback and managing user interactions.
• Technical Context: The technology involves embedding modules within software or hardware products to interact with users during use, collect their perceptions or feedback, and transmit this data to a central location for analysis, aiming to accelerate product improvement cycles.
• Key Procedural History: The complaint alleges that prior to filing suit, Plaintiff informed Defendant of the patents-in-suit and offered a licensing arrangement, which Defendant declined. This allegation forms the basis for the claim of willful infringement.

Case Timeline

Date	Event
1992-08-06	Priority Date for ’565 and ’078 Patents
2007-05-22	U.S. Patent No. 7,222,078 Issued
2009-11-17	U.S. Patent No. 7,620,565 Issued
2013-05-09	Complaint Filed

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

U.S. Patent No. 7,620,565 - “Customer-Based Product Design Module”

The Invention Explained

• Problem Addressed: The patent’s background section describes that traditional methods for gathering customer feedback, such as market research and field trials, are too slow and expensive to keep pace with the rapid speed of modern product development cycles (ʼ565 Patent, col. 1:15-34).
• The Patented Solution: The invention proposes embedding a software or hardware “module” within a product that automatically monitors for specific “trigger events” during use. When a trigger occurs (e.g., a pre-set number of uses is reached), the module presents a user interface to solicit feedback, stores the user’s input, and transmits the data to the product vendor. The system also allows the vendor to download new or updated interactions to the module remotely (’565 Patent, col. 2:55-66, Fig. 1).
• Technical Importance: The invention describes a system for creating a direct, automated, and iterative feedback loop between end-users and product developers at the point of product use, intended to replace or augment slower, more costly, and less direct market research methods (’565 Patent, col. 2:1-13).

Key Claims at a Glance

• The complaint asserts independent claims 1 (a unit), 15 (a method), and 27 (a tangible computer readable medium) (Compl. ¶6).
• The essential elements of independent claim 1 include:
  • A unit comprising a memory, a transmitter, and a processor.
  • The processor is configured to monitor a product for a "trigger event" from a predefined plurality of trigger events.
  • The processor increments a "counter" corresponding to the trigger event upon detection.
  • If the counter exceeds a "threshold," the processor causes the display of a "user interface" to probe for information about the product's use.
  • The processor causes the memory to store an input received from the user interface.
  • The processor causes the transmitter to transmit the input to a server.
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 7,222,078 - “Methods and Systems for Gathering Information from Units of a Commodity Across a Network”

The Invention Explained

• Problem Addressed: The patent identifies the difficulty of obtaining actionable behavioral information and user perceptions during the actual, real-world use of products, services, and information systems, particularly across wide geographic areas (’078 Patent, col. 2:50-58).
• The Patented Solution: The invention describes a distributed system where multiple "units of a commodity" (e.g., devices or software) are each equipped with a user interface to conduct a "two-way local interaction." This interaction elicits the user's perceptions. The results are stored in a local memory within the unit and then transmitted via a "communication element" to a central location, where a component manages and collects the results from the various units (’078 Patent, Abstract; Fig. 1).
• Technical Importance: The technology outlines a distributed network architecture for gathering in-situ user feedback from many disparate product units and centralizing the data, creating the potential for a large-scale, interactive learning system connecting vendors and users globally (’078 Patent, col. 2:37-44, Fig. 15).

Key Claims at a Glance

• The complaint asserts independent claims 1 (a system) and 69 (a method) (Compl. ¶13).
• The essential elements of independent claim 1 include:
  • Units of a "commodity" used by users in different locations.
  • A "user interface" within each unit for "two-way local interaction" to elicit information about the user's "perception of the commodity."
  • A "memory" within each unit to store the results of the interaction.
  • A "communication element" in each unit to carry the results to a "central location."
  • A "component" for managing the interactions and collecting the results at the central location.
• The complaint does not explicitly reserve the right to assert dependent claims.

III. The Accused Instrumentality

Product Identification

• The complaint identifies "Capcom's applications such as The Smurfs' Village" as the accused instrumentality (Compl. ¶6, ¶13).

Functionality and Market Context

• The complaint alleges that Defendant manufactures, uses, sells, and/or offers to sell these applications, which are used by end users (Compl. ¶6, ¶8). The complaint does not provide specific details on the functionality of the accused application beyond identifying it by name and alleging that it infringes the patents-in-suit.

No probative visual evidence provided in complaint.

IV. Analysis of Infringement Allegations

The complaint alleges that "The Smurfs' Village" application infringes claims 1, 15, and 27 of the ’565 Patent and claims 1 and 69 of the ’078 Patent (Compl. ¶6, ¶13). However, it does not provide a claim chart or specific factual allegations mapping features of the accused product to the elements of the asserted claims. Therefore, the complaint does not provide sufficient detail for a claim-chart-based analysis of the infringement allegations.

• Identified Points of Contention:
  • Factual Questions: A primary factual question will be what specific functionality within "The Smurfs' Village" application, if any, constitutes the claimed elements. For the ’565 Patent, this includes identifying the "trigger event," "counter," and "threshold" that allegedly cause a "user interface" to be displayed. For the ’078 Patent, this includes identifying the "user interface" for "two-way local interaction" that elicits user "perception" and transmits the results to a "central location."
  • Scope Questions: The dispute may raise questions about the scope of the claims. For example, regarding the ’078 Patent, a question may arise as to whether a software application, such as a mobile game, qualifies as a "unit of a commodity" as that term is used in the patent.

V. Key Claim Terms for Construction

The complaint does not identify or provide context for any specific claim terms that may be central to the dispute. However, based on the technology and the nature of the accused product, the construction of certain terms may be critical.

• The Term: "trigger event" (’565 Patent, Claim 1)

• Context and Importance: This term defines the condition that initiates the patented feedback process. The scope of "trigger event" will be critical to determining infringement, as it addresses whether routine software occurrences (such as in-game achievements or notifications) meet the claim limitation, or if a more specific, pre-programmed condition is required.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification of the related ’078 Patent, which shares a common specification, discloses a wide range of potential triggers, including "error messages; menu commands; icons; buttons or other parts of the user interface; events during use; etc." (’078 Patent, col. 28:5-9).
  • Evidence for a Narrower Interpretation: A party might argue that the patent’s focus on user learning curves and performance metrics suggests a narrower definition, requiring a trigger to be a specific, programmed condition related to user proficiency or behavior rather than any generic user interaction (’078 Patent, Fig. 22; col. 30:1-10).

• The Term: "commodity" (’078 Patent, Claim 1)

• Context and Importance: Plaintiff's case depends on this term being construed to cover a software application. The definition of "commodity" is therefore fundamental to whether the patent applies to the accused product category at all.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification contemplates application to "software and computer-integrated products" and "information industry products," which may support a construction that includes software applications like mobile games (’078 Patent, col. 2:42-43; col. 12:27-28).
  • Evidence for a Narrower Interpretation: The patent’s figures and detailed embodiments consistently depict physical hardware devices, such as a fax machine (Fig. 3), a telephone (Fig. 4), and a VCR (’078 Patent, col. 12:49-50). This could support an argument that the term should be limited to tangible hardware.

VI. Other Allegations

• Indirect Infringement: The complaint alleges both induced and contributory infringement. It asserts that Capcom induced infringement by providing its applications to end users with the knowledge and expectation that their use would infringe the patents (Compl. ¶9, ¶16). It alleges contributory infringement by asserting that Capcom's applications are especially made or adapted for infringing use and are not staple articles of commerce suitable for substantially non-infringing use (Compl. ¶10, ¶17).
• Willful Infringement: The complaint alleges willful infringement based on Capcom’s alleged pre-suit knowledge of the patents. It states that Lodsys informed Capcom of the patents and offered a license, but Capcom "chose to continue its infringement" despite an "objectively high likelihood" that its actions constituted infringement (Compl. ¶7, ¶14).

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

• Evidentiary Basis: A central threshold question will be evidentiary: what specific features and functions within "The Smurfs' Village" application does Plaintiff contend meet the limitations of the asserted claims? The complaint's lack of factual specificity regarding the operation of the accused product places the burden on the Plaintiff to substantiate its infringement theory in discovery and claim construction.
• Definitional Scope: A core legal issue will be one of claim scope: can the term "commodity," exemplified in the ’078 Patent with physical hardware like fax machines, be construed broadly enough to read on a software application? Similarly, can a routine in-game event be considered a "trigger event" that increments a "counter" to a "threshold" as required by the ’565 Patent?
• Knowledge and Intent: A key secondary question will concern liability for indirect and willful infringement: what evidence exists to support the allegation that Capcom had the requisite knowledge and specific intent to encourage its users' infringement, particularly after receiving pre-suit notice from Lodsys?