DCT
2:24-cv-00794
Flexshopper Inc v. Upbound Group Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: FlexShopper, Inc. (Delaware)
- Defendant: Upbound Group, Inc. (Delaware); Acima Holdings, LLC (Utah); Acima Digital, LLC (Utah)
- Plaintiff’s Counsel: Quinn Emanuel Urquhart & Sullivan, LLP
- Case Identification: 2:24-cv-00794, E.D. Tex., 09/30/2024
- Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendants have a regular and established place of business in the district, have committed acts of infringement in the district, and provide their lease-to-own products and services to consumers and third-party retailers within the district.
- Core Dispute: Plaintiff alleges that Defendants’ e-commerce lease-to-own solutions infringe five patents related to integrating rent-to-own payment options into third-party e-commerce websites.
- Technical Context: The technology involves software plug-ins that allow online retailers to offer rent-to-own financing to consumers at the point of sale, a key feature in the financial technology (FinTech) sector for e-commerce.
- Key Procedural History: The complaint alleges Defendants have known of FlexShopper's patent portfolio since at least September 2022 following a meeting between the parties. It further alleges knowledge of the patent family since at least October 5, 2021, when U.S. Patent No. 10,282,778 was cited as prior art in an office action against one of Defendants' pending patent applications. These allegations form part of the basis for Plaintiff's claims of willful infringement.
Case Timeline
| Date | Event |
|---|---|
| 2013-05-31 | Earliest Priority Date for all Asserted Patents |
| 2018-10-02 | U.S. Patent No. 10,089,682 Issues |
| 2019-05-07 | U.S. Patent No. 10,282,778 Issues |
| 2021-01-12 | U.S. Patent No. 10,891,687 Issues |
| 2021-10-05 | ’778 Patent allegedly cited as prior art against Defendants |
| 2022-09-01 | Meeting allegedly held between FlexShopper and Defendants |
| 2024-04-23 | U.S. Patent No. 11,966,969 Issues |
| 2024-08-20 | U.S. Patent No. 12,067,611 Issues |
| 2024-09-30 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 11,966,969 - “Computer Implemented System and Method for a Rent-to-own Program”
The Invention Explained
- Problem Addressed: The patent addresses the limitations of traditional rent-to-own (RTO) models, which required consumers to visit brick-and-mortar stores with limited product selection. Early e-commerce RTO solutions were also problematic, as they were often cumbersome, inefficient, and complicated for online merchants to integrate (Compl. ¶¶22, 28-29).
- The Patented Solution: The invention provides a method for integrating an RTO payment option directly into an e-commerce website's user interface. In response to a consumer selecting this option, the system provides an embedded interface to complete the transaction, creating a "unified transaction screen" that avoids redirecting the consumer to a separate website. This allows the e-commerce merchant to maintain better control over the customer experience ('969 Patent, Abstract; Compl. ¶¶23-24, 42).
- Technical Importance: This technological approach aims to reduce checkout friction and cart abandonment, thereby increasing sales conversion rates for e-commerce merchants (Compl. ¶¶24-25, 39).
Key Claims at a Glance
- The complaint asserts independent claim 1 (Compl. ¶54).
- Claim 1 is a method claim with the following essential elements:
- Communicating with an e-commerce website to integrate an RTO payment option into its user interface.
- In response to consumer selection, providing an interface embedded within the e-commerce website to create a "unified transaction screen" for completing the RTO transaction.
- Receiving identifying data for the item to be purchased.
- Receiving identifying information of the consumer.
- Providing a spending limit and RTO transaction terms to the consumer.
- Receiving an indication of the consumer's acceptance of the terms.
- Providing a payment confirmation to the e-commerce website for the item.
U.S. Patent No. 12,067,611 - “Computer Implemented System and Method for a Rent-to-own Program”
The Invention Explained
- Problem Addressed: The technology addresses the same problems as the ’969 Patent: the inconvenience and limited selection of traditional RTO stores and the poor user experience of early online RTO systems that disrupted the checkout flow (Compl. ¶¶22-23, 38).
- The Patented Solution: The invention describes a method performed by an e-commerce server that uses an RTO "plug-in" to facilitate an RTO transaction. The plug-in integrates a selectable RTO control element into the e-commerce user interface. After selection, the server receives a plurality of RTO user interfaces from a separate RTO system and provides them to the consumer's device to complete the transaction "through the e-commerce website" ('611 Patent, Abstract; Compl. ¶¶38-39).
- Technical Importance: This method enables e-commerce servers to offer online RTO transactions as a native payment option, which improves the checkout process and allows the merchant to retain control of its consumers (Compl. ¶39).
Key Claims at a Glance
- The complaint asserts independent claim 16 (Compl. ¶79).
- Claim 16 is a method claim with the following essential elements:
- Providing, by an e-commerce server, an e-commerce website to a consumer device, the website including a user interface for a good and an RTO plug-in.
- The RTO plug-in integrates an RTO control element into the user interface.
- After selection of the RTO control element, the server receives a plurality of RTO user interfaces from an RTO system.
- The RTO user interfaces facilitate providing identifying data of the good to the RTO system, receiving an indication of transaction eligibility, receiving identifying information of a consumer, and transmitting that information to the RTO system.
- The RTO user interfaces also provide a spending limit and RTO transaction terms to the consumer.
U.S. Patent No. 10,089,682 - “Computer Implemented System and Method for a Rent-to-own Program”
- Technology Synopsis: The patent claims a system comprising a consumer computer device, an RTO system with an RTO management application, and an e-commerce server. The e-commerce server uses an RTO plug-in to integrate a selectable RTO control element into its checkout interface and, after selection, provides RTO user interfaces received from the RTO management application to the consumer device to complete the transaction through the e-commerce website ('682 Patent, Abstract, Claim 1).
- Asserted Claims: Independent claim 1 is asserted (Compl. ¶104).
- Accused Features: The complaint accuses Defendants' complete e-commerce lease-to-own solution, alleging Defendants provide the RTO system and plug-in, while consumers provide the consumer device and third-party merchants provide the e-commerce server (Compl. ¶¶106-111).
U.S. Patent No. 10,282,778 - “Computer Implemented System and Method for a Rent-to-own Program”
- Technology Synopsis: The patent claims a system comprising a consumer computer device, an RTO computer device, and a retailer computer device. The retailer device runs a retailer application and an RTO plug-in that integrates an RTO control element into a payment option field and receives a "payment call" from the retailer application to execute an RTO payment routine, which involves integrating RTO user interfaces into the retailer web page ('778 Patent, Abstract, Claim 1).
- Asserted Claims: Independent claim 1 is asserted (Compl. ¶131).
- Accused Features: The complaint accuses Defendants' systems that enable third-party e-commerce entities to integrate RTO payment options, alleging Defendants provide the RTO computer device and RTO plug-in components of the claimed system (Compl. ¶¶132-135).
U.S. Patent No. 10,891,687 - “Computer Implemented System and Method for a Rent-to-own Program”
- Technology Synopsis: The patent claims a system comprising an e-commerce server and a rent-to-own (RTO) system. The e-commerce server uses an e-commerce application and an integrated RTO plug-in to provide an e-commerce website to a consumer, integrate a selectable RTO control element, and provide RTO user interfaces received from the RTO management application to facilitate the transaction ('687 Patent, Abstract, Claim 1).
- Asserted Claims: Independent claim 1 is asserted (Compl. ¶158).
- Accused Features: The complaint accuses Defendants' systems that provide RTO functionality to e-commerce merchants, alleging Defendants make the RTO system and RTO plug-in components of the claimed system (Compl. ¶¶160-162).
III. The Accused Instrumentality
Product Identification
The accused instrumentalities are Defendants' "Acima e-commerce lease-to-own solutions," which include products such as software, website "plug-ins," and related hardware (Compl. ¶¶12, 47).
Functionality and Market Context
The complaint alleges these solutions are provided to third-party e-commerce entities for integration into their websites, often through platforms like BigCommerce, Woo Commerce, Shopify, and Magento (Compl. ¶¶55, 80). The core accused functionality is the integration of a selectable "Acima" payment option into the checkout process of a third-party retail website (Compl. ¶56). A screenshot from a promotional video allegedly shows "Acima" offered as a payment option on the checkout page of an e-commerce website (Compl. p. 24). Upon selection, the system allegedly provides an embedded interface for the consumer to complete the RTO application and transaction without being redirected away from the merchant's site, a feature marketed as allowing a customer to "complete their transaction without leaving your site" (Compl. ¶57). Another provided screenshot allegedly shows an embedded interface that allows a consumer to interact with Acima's RTO management system on the page of a third-party jeweler (Compl. p. 25).
IV. Analysis of Infringement Allegations
U.S. Patent No. 11,966,969 - Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| communicating, via a network, with an e-commerce website to integrate a rent-to-own (RTO) payment option into a user interface of the e-commerce website; | Defendants' servers communicate with third-party e-commerce websites to integrate the Acima RTO payment option. | ¶56 | col. 4:40-58 |
| in response to a consumer selecting the RTO payment option, providing an interface for communicating between the consumer and an RTO management system to complete an RTO payment transaction, the interface embedded within the e-commerce website to provide a unified transaction screen to the consumer; | After a consumer selects the Acima option, Defendants provide an embedded interface for communicating with their RTO management system, which allegedly provides a unified screen. | ¶57 | col. 8:24-29 |
| receiving identifying data corresponding to an item to be purchased using the RTO payment option... | Defendants' servers receive data describing the item, price, and type from the e-commerce website to determine transaction eligibility. | ¶58 | col. 6:6-12 |
| receiving, through the interface for communicating with the RTO management system, identifying information of the consumer; | The embedded interface receives identifying information from the consumer, such as a phone number. | ¶59 | col. 4:2-4 |
| providing, through the interface for communicating with the RTO management system, a spending limit and RTO transaction terms corresponding to the item... | The interface provides the consumer with a spending limit and lease agreement terms based on their information and the item data. | ¶60 | col. 6:21-26 |
| receiving, through the interface for communicating with the RTO management system, an indication of the consumer's acceptance of the RTO transaction terms; and | The interface receives the consumer's acceptance of the lease agreement terms. | ¶61 | col. 6:36-39 |
| providing a payment confirmation to the e-commerce website for the item. | Defendants' system informs the third-party e-commerce website that the purchase is complete. | ¶62 | col. 6:39-44 |
U.S. Patent No. 12,067,611 - Infringement Allegations
| Claim Element (from Independent Claim 16) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| providing, by an e-commerce server... an e-commerce website to a consumer device... the e-commerce server further including a rent-to-own (RTO) plug-in integrated with the e-commerce application... | Third-party e-commerce servers, using Defendants' products, provide websites to consumers that include the integrated Acima RTO plug-in. | ¶81, ¶82 | col. 4:40-58 |
| the RTO plug-in executable by the e-commerce server to integrate a RTO control element in the e-commerce user interface associated with the good, wherein the RTO control element is selectable... | The Acima plug-in, executed by the merchant's server, integrates a selectable RTO payment option (e.g., the "Acima" button) into the checkout page. | ¶82 | col. 45:5-15 |
| after selection of the RTO control element, receiving from a RTO system... a plurality of RTO user interfaces... for provision to the consumer device... to facilitate completion of the RTO transaction through the e-commerce website... | After the consumer selects the Acima option, the merchant's server receives multiple user interfaces from Acima's RTO system and provides them to the consumer through the merchant's website. | ¶83 | col. 45:16-24 |
| the one or more than one RTO user interface: providing the identifying data corresponding to the good selected... to the RTO system... | The provided interfaces transmit data about the selected product (description, price, type) from the consumer's interaction on the merchant site to Acima's RTO system. | ¶83 | col. 45:25-28 |
| receiving one or more inputs via one of the one or more than one RTO user interface, the one or more inputs providing identifying information of a consumer, and transmit the identifying information to the RTO system... | The interfaces receive consumer information (e.g., phone number) and transmit it to Acima's RTO system. A screenshot allegedly shows an RTO interface receiving inputs for consumer identification (Compl. p. 38). | ¶83 | col. 45:31-34 |
| providing a spending limit and RTO transaction terms via the one or more than one RTO user interface... | The interfaces display a spending limit and lease terms to the consumer, determined based on the consumer's data and the selected good. | ¶83 | col. 45:35-40 |
Identified Points of Contention
- Scope Questions: A central question may be whether the defendants' system, which allegedly operates within an embedded frame or window on a merchant's website, constitutes an "interface embedded within the e-commerce website" that provides a "unified transaction screen" as claimed in the '969 patent. The analysis may explore whether the claimed "plug-in integrated with the e-commerce application" requires a deeper level of technical integration than what is provided by the accused system.
- Technical Questions: What is the specific technical mechanism by which the accused system provides a "payment confirmation to the e-commerce website" ('969 Patent, Claim 1), and does this mechanism meet the claim limitation? Further, what is the precise nature of the "plurality of RTO user interfaces" ('611 Patent, Claim 16) that are allegedly received from the RTO system and provided to the consumer?
V. Key Claim Terms for Construction
"unified transaction screen" ('969 Patent, Claim 1)
- Context and Importance: This term appears central to the patent's purported technological improvement over prior art that may have redirected users to a separate financial services website. The infringement theory depends heavily on the allegation that the accused Acima interface is "embedded" and creates this "unified" experience, allowing the merchant to retain control of the consumer (Compl. ¶¶42-43, 57). Practitioners may focus on this term because its scope will likely determine whether providing an RTO application within an iFrame meets the limitation.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification describes the invention's objective as facilitating RTO transactions in a "seamless, easy, and efficient" manner that allows the e-commerce server to "retain better control over its consumers" ('969 Patent, col. 8:24-29). This language could support a functional interpretation where any interface that prevents a full browser redirect and maintains the context of the merchant's site could be considered "unified."
- Evidence for a Narrower Interpretation: Figures in the parent patents, which are referenced in the complaint (e.g., FIG. 39 from the '682 Patent), are described as combining "certain visual elements of the host website (e.g., 'Electronics Superstore' order summary interface) with content of a third-party (e.g., 'FlexShopper' header, login interface, etc.)" (Compl. ¶34). This could support a narrower construction requiring a visual blending of branding and interface elements from both the merchant and the RTO provider, not just the embedding of one self-contained interface within another.
"RTO plug-in integrated with the e-commerce application" ('611 Patent, Claim 16)
- Context and Importance: The technical nature of the "integration" between the accused "plug-in" and the merchant's "e-commerce application" is a critical point of potential dispute. The construction of this term will address whether the accused software, which Defendants market as offering "Pre-built Shopping Cart Plugins" (Compl. ¶80), functions as the claimed "plug-in."
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The abstract of the related '682 Patent describes the plug-in as a "computer software application ... for choosing an RTO payment option on an e-commerce website" ('682 Patent, Abstract). This broad functional description may support an interpretation that covers any software component that enables this choice, regardless of its specific architecture.
- Evidence for a Narrower Interpretation: The shared specification mentions that the plug-in is made available to platforms like "MAGENTO, VOLUSION, and SHOPIFY" and can be a "downloadable computer software application available from an online application store" ('682 Patent, col. 4:59-65). This could support a narrower definition limited to installable software modules designed for specific e-commerce platforms, as opposed to a more universal script or linked resource.
VI. Other Allegations
Indirect Infringement
The complaint alleges both induced and contributory infringement. The inducement allegations are based on Defendants allegedly providing their partners with products like "Pre-built Shopping Cart Plugins," APIs, and documentation that instruct and encourage the third-party e-commerce entities to integrate and use the technology in an infringing manner (Compl. ¶¶65-67, 90-91). The contributory infringement allegations state that Defendants' products are a material part of the invention, are not staple articles of commerce, and are especially made or adapted for use in an infringing manner (Compl. ¶¶69, 93).
Willful Infringement
The complaint alleges willful infringement based on both pre-suit and post-suit knowledge. Pre-suit knowledge is alleged based on a September 2022 meeting where FlexShopper's patent portfolio was discussed with a senior officer of Defendants, and from at least October 5, 2021, when a patent from the same family was cited as prior art against a pending application of Defendants (Compl. ¶¶63, 89, 117). Post-suit knowledge is alleged as of the filing and service of the complaint.
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of technical and definitional scope: can the term "unified transaction screen," rooted in the patent's description of combining visual elements, be construed to cover an RTO provider's interface that is fully rendered within an embedded frame on a merchant's webpage but is not otherwise visually integrated?
- A key legal question will be one of divided infringement: given that the claimed methods involve actions by a consumer, a third-party e-commerce entity, and the Defendants' RTO system, the case may turn on whether the complaint alleges sufficient facts to establish that Defendants "direct or control" the actions of the other parties to be held liable for infringement of the entire claim.
- An evidentiary question will be one of functional operation: does the accused Acima system technically provide a "payment confirmation to the e-commerce website" as required by claim 1 of the '969 patent, and what specific information is conveyed in that confirmation to complete the transaction loop between the RTO provider and the merchant?