DCT

2:22-cv-00452

Pardalis Technology Licensing, L.L.C. v. International Business Machines Corporation

I. Executive Summary and Procedural Information

Parties & Counsel:
- Plaintiff: Pardalis Technology Licensing, L.L.C. (Delaware)
- Defendant: International Business Machines Corporation (New York)
- Plaintiff’s Counsel: Nelson Bumgardner Conroy PC
Case Identification: 2:22-cv-00452, E.D. Tex., 10/11/2023
Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas based on Defendant’s regular and established place of business in the district, including an office in Plano, Texas, and its commission of alleged infringing acts within the district.
Core Dispute: Plaintiff alleges that Defendant’s IBM Blockchain platforms and related solutions infringe seven patents concerning systems and methods for authoring, tracking, authenticating, and controlling immutable digital records associated with products in a distribution chain.
Technical Context: The technology concerns systems for creating and managing unique, immutable data objects that track assets through complex, multi-party supply chains, a domain now heavily associated with blockchain and distributed ledger technology.
Key Procedural History: The asserted patents form a continuous chain of applications dating back to 2001. The complaint notes that several of the patents issued after the Supreme Court’s decision in Alice Corp. v. CLS Bank and describes prosecution history arguments distinguishing the claims from prior art and asserting patent eligibility. The complaint also alleges pre-suit correspondence between Pardalis and IBM regarding the patented technology.

Case Timeline

Date	Event
2001-08-20	Priority Date for all Asserted Patents
2003-12-30	U.S. Patent No. 6,671,696 Issues
2006-11-14	U.S. Patent No. 7,136,869 Issues
2011-05-24	U.S. Patent No. 7,949,668 Issues
2012-11-06	U.S. Patent No. 8,307,000 Issues
2017-06-27	U.S. Patent No. 9,690,765 Issues
2019-09-10	U.S. Patent No. 10,409,902 Issues
2021-09-21	U.S. Patent No. 11,126,790 Issues
2023-10-11	First Amended Complaint Filed

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

U.S. Patent No. 6,671,696 - "Informational Object Authoring and Distribution System"

Issued: December 30, 2003

The Invention Explained

Problem Addressed: The patent family addresses the difficulty of authoring and distributing immutable digital records (“Informational Objects”) that track a physical product through an “ownership segmented commercial supply, distribution, and consumption chain” (Compl. ¶23; ’668 Patent, col. 1:32-38). Using the beef livestock industry as an example, it notes that information is rarely passed between different owners in the supply chain, leading to inefficiencies and an inability to track product history (Compl. ¶24; ’668 Patent, col. 2:23-67).
The Patented Solution: The invention proposes a “Common Point Authoring system” that uses an “Internet-based paradigm and a centralized repository of unique-identified, immutable Data Elements” (Compl. ¶25; ’668 Patent, col. 4:52-56). An “Informational Object” does not contain all data itself but rather contains pointers to immutable “building blocks” of information (Data Elements) stored in a database, allowing for tracking and authentication without altering the historical record (Compl. ¶25; ’668 Patent, col. 5:21-25).
Technical Importance: The system provided a technological framework for managing data integrity and ownership in complex supply chains before the term "blockchain" was coined (Compl. ¶43).

Key Claims at a Glance

The complaint asserts independent claim 12 (Compl. ¶34).
The essential elements of Claim 12 include:
- maintaining in a read-only mode, a plurality of immutable data elements, each identified by a unique identifier;
- maintaining in a read-only mode, a set of data defining an informational object, comprising a plurality of said unique identifiers;
- enabling an authorized authoring member to create a draft data element or draft informational object;
- authenticating the draft data created by the authoring member;
- converting the authenticated draft data into a corresponding immutable data element or informational object; and
- writing the created immutable object into a memory.
The complaint reserves the right to assert additional claims (Compl. ¶71, fn. 16).

U.S. Patent No. 7,136,869 - "Common Point Authoring System for Tracking and Authenticating Objects in a Distribution Chain"

Issued: November 14, 2006

The Invention Explained

Problem Addressed: The ’869 Patent, a continuation-in-part of the ’696 Patent, addresses the same foundational problems of data tracking in segmented supply chains, with a further implicit problem of how to reflect changes or add new information in a system based on immutable records (Compl. ¶14; ’668 Patent, col. 1:32-38).
The Patented Solution: The invention builds on the “Informational Object” concept by introducing a method for “updating an informational object by creating a new informational object relating back to said informational object and containing new data” (Compl. ¶35). This allows for a historical chain of information to be built, where new data is added by creating a new, related object rather than altering an existing one, thereby preserving the integrity of the prior record (’668 Patent, col. 5:26-30).
Technical Importance: This approach established a method for versioning data within an immutable record-keeping system, a functional precursor to the sequential, cryptographically linked blocks in a blockchain (Compl. ¶105).

Key Claims at a Glance

The complaint asserts independent claim 9 (Compl. ¶35).
The essential elements of Claim 9 include:
- enabling an authorized authoring member to create a draft informational object that uniquely identifies a product for tracking;
- authenticating the draft informational object;
- converting the authenticated object into a corresponding immutable informational object with a unique identifier;
- writing the created immutable informational object into memory; and
- updating an informational object by creating a new informational object that relates back to the original and contains new data.
The complaint reserves the right to assert additional claims (Compl. ¶96).

U.S. Patent No. 7,949,668 - "Common Point Authoring System for the Complex Sharing of Hierarchically Authored Data Objects in a Distribution Chain"

Issued: May 24, 2011
Technology Synopsis: This patent describes a system for "complex sharing" of data objects. It uses means-plus-function language to claim components for authoring, authenticating, and completing the creation of immutable data objects for product tracking (Compl. ¶36).
Asserted Claims: Independent claim 1 is asserted (Compl. ¶36).
Accused Features: The complaint alleges IBM's blockchain products operate as a "common point authoring system for sharing a series of ordered and back-linked blocks" created by permissioned clients (Compl. ¶123).

U.S. Patent No. 8,307,000 - "Common Point Authoring System for the Complex Sharing of Hierarchically Authored Data Objects in a Distribution Chain"

Issued: November 6, 2012
Technology Synopsis: This patent claims a system that adds functionality for an authoring member to transmit "offer data" to other members, enabling those members to access and change data in an immutable object according to defined permissions (Compl. ¶37). This involves creating and revising copies of the immutable object.
Asserted Claims: Independent claim 8 is asserted (Compl. ¶37).
Accused Features: The accused feature is the ability of an administrator on an IBM Blockchain console to set permissions for other users to access and change data contained in a previous block by creating a new block (Compl. ¶¶161-162).

U.S. Patent No. 9,690,765 - "Common Point Authoring System for the Complex Sharing of Hierarchically Authored Data Objects in a Distribution Chain"

Issued: June 27, 2017
Technology Synopsis: This patent claims a method for maintaining and sharing data that enables an "independent member," in response to receiving offer data, to access and change an immutable informational object based on permissions set by the authoring member (Compl. ¶38).
Asserted Claims: Independent claim 1 is asserted (Compl. ¶38).
Accused Features: The complaint alleges that IBM's products enable a console administrator (the authoring member) to set permissions allowing other permissioned users (independent members) to access and change data associated with a previous block by creating a new one (Compl. ¶190).

U.S. Patent No. 10,409,902 - "Common Point Authoring System for the Complex Sharing of Hierarchically Authored Data Objects in a Distribution Chain"

Issued: September 10, 2019
Technology Synopsis: This patent claims a system with specific server components, including an "informational object offertory server." This server enables an independent member to access and change an immutable object based on permissions set by an authoring member in received "offer data" (Compl. ¶39).
Asserted Claims: Independent claim 6 is asserted (Compl. ¶39).
Accused Features: The complaint accuses IBM's console administration and identity and access management (IAM) features, which allegedly allow an authoring member to set permissions that enable independent members to access and revise data from a prior block (Compl. ¶¶215-216).

U.S. Patent No. 11,126,790 - "Common Point Authoring System for the Complex Sharing of Hierarchically Authored Data Objects in a Distribution Chain"

Issued: September 21, 2021
Technology Synopsis: This patent claims a method focused on tracking "processed products." It includes steps for enabling an independent member to access a copy of an immutable object and revise the data within that copy, according to permissions set by the authoring member (Compl. ¶40).
Asserted Claims: Independent claim 1 is asserted (Compl. ¶40).
Accused Features: The complaint again focuses on IBM's IAM and permissioning features, which allegedly allow an administrator to permit other users to access a copy of a previous block's data and revise it through the creation of a new block (Compl. ¶¶241-242).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are IBM’s blockchain products and solutions, including various versions of the IBM Blockchain Platform and specific applications such as IBM Food Trust, IBM Blockchain Transparent Supply, and IBM Digital Health Pass (collectively, the “Accused Products”) (Compl. ¶51).

Functionality and Market Context

The complaint alleges the Accused Products implement a permissioned blockchain platform described as a “shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network” (Compl. ¶52). This system allegedly uses distributed ledger technology to create a “single source of truth” for supply chain partners (Compl. ¶53). The complaint describes a multi-step transaction protocol that includes initiation by an authorized client, verification and signing by endorsers, validation by network peers, and the final appending of a new, immutable block to the blockchain (Compl. ¶55). The system allegedly uses certificate authorities to generate and manage trusted digital identities that control a user's permission to read or write to the shared ledger (Compl. ¶54). A diagram from IBM documentation illustrates how the system is used to track vehicle ownership through a shared ledger with multiple participants like dealers and regulators (Compl. ¶53, p. 24).

IV. Analysis of Infringement Allegations

’696 Patent Infringement Allegations

Claim Element (from Independent Claim 12)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
maintaining in a read-only mode, a plurality of immutable data elements, each of which is identified by a unique identifier	The Accused Products allegedly maintain transaction data in a read-only mode via an append-only shared ledger. Each transaction is identified by a unique hash or transaction ID.	¶73	col. 5:26-30
enabling an authorized authoring member to create data comprising at least one of a draft data element and a draft informational object	A permissioned client, acting as an authorized member via a certificate authority, is enabled to create transaction proposals (draft data) which are formed into ordered transactions (draft objects).	¶76	col. 18:7-20
authenticating said at least one of a draft data element and a draft informational object created by said authorized authoring member	Each endorsed transaction proposal within an ordered transaction is allegedly authenticated via a consensus protocol where channel peers validate the transaction before it is added to the ledger.	¶¶77-78	col. 19:24-30
converting said authenticated... draft informational object... to a corresponding immutable... informational object	Once authenticated by network peers, the ordered transaction is allegedly converted into an immutable block containing the validated transaction data.	¶79	col. 19:30-35
writing said created immutable... object into a memory for use by said first and said second means for maintaining	The authenticated block is allegedly appended (written) to the preceding block on the shared ledger (a memory) where it is maintained for access by network peers.	¶80	col. 17:31-43

’869 Patent Infringement Allegations

Claim Element (from Independent Claim 9)	Alleged Infringing Functionality	Complaint Citation	Patent Citation
enabling an authorized authoring member to create data comprising a draft informational object, which uniquely identifies a product for tracking purposes	A permissioned client is enabled to create an ordered transaction that uniquely identifies an asset (e.g., a food product in IBM Food Trust) for tracking.	¶98	col. 18:25-30
authenticating said draft informational object created by said authorized authoring member	The ordered transaction is allegedly distributed to channel peers for validation via a consensus protocol to ensure authenticity.	¶¶101-102	col. 19:24-30
converting said authenticated informational object... to a corresponding immutable informational object which is identified by a unique identifier	The validated transaction is allegedly converted into an immutable block, which is identified by a unique block hash. A diagram shows blocks with unique "Block Hash" identifiers (Compl. ¶103, p. 58).	¶103	col. 19:24-30
writing said created immutable informational object into a memory for use by authorized accessing members	The immutable block is appended (written) to the shared ledger (a memory), making it accessible to other permissioned users.	¶104	col. 17:31-43
updating an informational object by creating a new informational object relating back to said informational object and containing new data	The system allegedly updates information by appending a new block to the ledger, which relates back to the preceding block via the "Previous Block Hash," thus creating an immutable chain. A diagram illustrates this sequential, hash-linked block structure (Compl. ¶105, p. 59).	¶¶105-106	col. 5:26-30

Identified Points of Contention

Scope Questions: A potential issue is whether the patent family’s disclosure of a “centralized repository” can be construed to read on the accused products’ “distributed ledger” technology (Compl. ¶25, ¶52). The analysis may question if the claimed invention and the accused technology represent fundamentally different architectures (centralized vs. decentralized).
Technical Questions: The complaint maps the claim term "authenticating" to the accused products' use of a "consensus protocol" (Compl. ¶78, ¶102). A point of contention may be whether this protocol performs the specific checks for "proper content, format, and permissions" described in the patent specification or if it performs a different type of validation, such as verifying digital signatures ('668 Patent, col. 10:9-11).
Scope Questions: For the ’869 Patent, the analysis will question whether the blockchain method of adding a new block that cryptographically hashes the previous block is equivalent to the claimed method of “updating... by creating a new informational object relating back to said informational object.” The dispute may center on whether the patent's description of using "pointers" to "replacement data elements" covers the distinct technical implementation of a hash chain ('668 Patent, col. 5:21-30).

V. Key Claim Terms for Construction

The Term: "immutable data element" and "immutable informational object"

Source: '696 Claim 12 and '869 Claim 9
Context and Importance: This term is foundational to all asserted patents. Its construction is critical because the dispute involves mapping a patent from the era of centralized databases to modern blockchain technology. The case may turn on whether "immutable" simply means a record is not altered or deleted, or if it requires the specific cryptographic properties of a blockchain.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification states that "data elements are fixed and do not require updating; instead, a new version of an informational object would contain unique identifiers that point to a replacement data element that it maintained in a database" (’668 Patent, col. 5:26-30). This language could support a broader construction covering any system that preserves prior records by creating new ones rather than overwriting old ones.
- Evidence for a Narrower Interpretation: The description of a "centralized repository of uniquely-identified, immutable Data Elements" could be used to argue for a narrower construction tied to the specific database architecture disclosed, as opposed to a decentralized, distributed ledger (’668 Patent, col. 4:54-56).

The Term: "updating an informational object by creating a new informational object relating back to said informational object"

Source: '869 Claim 9
Context and Importance: This limitation is central to the infringement theory against a core function of blockchain technology—the sequential linking of blocks. Practitioners may focus on this term because its interpretation will determine whether the operation of adding a new, hash-linked block to a blockchain falls within the claim's scope.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The complaint alleges this element is met by appending a new block containing a hash of the previous block, which functionally "relat[es] back" to the prior object (Compl. ¶105). A party might argue that the claim requires only a functional relationship that preserves the data chain, regardless of the specific technical implementation (pointers vs. hashes).
- Evidence for a Narrower Interpretation: The specification describes a system where an "Object contains pointers that identify a plurality of immutable 'building blocks' of information" (’668 Patent, col. 5:21-23). A party could argue that "relating back" requires this specific pointer-based architecture and does not read on the cryptographic hashing used in the accused blockchain products.

VI. Other Allegations

Indirect Infringement

The complaint alleges inducement of infringement, stating that IBM knowingly and intentionally encourages its customers to infringe. The alleged inducing acts include providing user manuals, tutorials, developer tools like SDKs, and technical support materials that instruct users on how to operate the Accused Products in an infringing manner (Compl. ¶¶81, 88). Knowledge is alleged based on pre-suit correspondence with Pardalis and citations of the asserted patents by the USPTO during the prosecution of IBM's own patent applications (Compl. ¶¶82-84).

Willful Infringement

While not explicitly pleaded as a separate count, the prayer for relief requests a judgment that the case is exceptional and an award of enhanced damages (Compl., p. 153). The factual basis for this request appears to be the same pre-suit knowledge allegations asserted in support of inducement.

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

A core issue will be one of technological equivalence: can the patent family’s disclosure of a "centralized repository" with data objects linked by "pointers" be construed to cover the accused products’ decentralized, "distributed ledger" architecture where data blocks are linked by cryptographic hashes? The case may depend on whether the court views blockchain as a new invention or as a modern implementation of the older, patented concepts.
A key legal question will be one of claim scope: will the term "updating... by creating a new informational object relating back," which appears central to the infringement allegations, be interpreted functionally to cover the process of adding a new block to a blockchain, or will it be limited to the specific database-and-pointer embodiments described in the patent specification?
An evidentiary question will be one of knowledge and intent: what evidence will be presented to substantiate the allegations that IBM had pre-suit knowledge of the patents and their alleged infringement, and that it specifically intended for its customers to use the IBM Blockchain platform in a manner that directly infringed the patent claims?